Exhibit 10.2

 

EXECUTION VERSION

 

REGISTRATION RIGHTS AGREEMENT

 

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of October 27,
2020, by and among MEDALIST DIVERSIFIED REIT, INC., a company formed and
existing under the laws of Maryland(the “Company”), and YA II PN, Ltd., a Cayman
Islands exempt limited partnership (the “Investor”).

 

WHEREAS:

 

A.            In connection with the Securities Purchase Agreement by and among
the parties hereto of even date herewith (the “Securities Purchase Agreement”),
the Company has agreed, upon the terms and subject to the conditions of the
Securities Purchase Agreement, to issue and sell to the Investor up to
$5,000,000 of convertible debentures (the “Convertible Debentures”), which shall
be convertible into the Company’s Common Stock, par value $0.01 per share (the
“Common Stock”) (as converted, the “Conversion Shares”). Capitalized terms not
defined herein shall have the meaning ascribed to them in the Securities
Purchase Agreement.

 

B.            To induce the Investors to execute and deliver the Securities
Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
“Securities Act”), and applicable state securities laws and other rights as
provided for herein.

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Investors
hereby agree as follows:

 

1.            DEFINITIONS.

 

As used in this Agreement, the following terms shall have the following
meanings:

 

(a)            “Filing Deadline means, with respect to a Registration Statement
required hereunder, 45 days from the date hereof.

 

(b)            “Person” means a corporation, a limited liability company, an
association, a partnership, an organization, a business, an individual, a
governmental or political subdivision thereof or a governmental agency.

 

(c)            “Prospectus” means the prospectus included in a Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A or Rule 430B promulgated under
the Securities Act), as amended or supplemented by any prospectus supplement,
with respect to the terms of the offering of any portion of the Registrable
Securities covered by a Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.

 

 

 

 

(d)            “Registrable Securities” means all of (i) the shares of Common
Stock issuable upon conversion of the Convertible Debentures, (ii) shares of
Common Stock issuable in connection with any anti-dilution provisions of the
Convertible Debentures (without giving effect to any limitations on exercise set
forth in the Convertible Debentures), (iii) any shares of Common Stock issued or
issuable with respect to the Conversion Shares as a result of any stock split,
dividend or other distribution, recapitalization or similar event or otherwise
(in each case without giving effect to any limitations on exercise set forth in
the Convertible Debentures), and (iv) the Commitment Shares (as defined in the
Securities Purchase Agreement).

 

(e)            “Registration Statement” means a registration statement required
to be filed hereunder, including (in each case) the Prospectus, amendments and
supplements to such registration statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material incorporated
by reference or deemed to be incorporated by reference in such registration
statement.

 

(f)            “Required Registration Amount” means (i) with respect to the
initial Registration Statement at least 1,000,000 shares of Common Stock issued
or to be issued upon conversion of the Convertible Debentures and the Commitment
Shares, and (ii) with respect to subsequent Registration Statements at least
such number shares of Common Stock as shall equal the maximum number of shares
of shares issuable upon conversion of all Convertible Debentures then
outstanding (assuming for purposes hereof that (x) such Convertible Debentures
are convertible at the Conversion Price (as defined therein) in effect as of the
date of determination, and (y) any such conversion shall not take into account
any limitations on the conversion of the Convertible Debentures set forth in
Section 5(c) of the Convertible Debentures), in each case subject to any cutback
set forth in Section 2(d).

 

(g)            “Rule 415” means Rule 415 promulgated by the U.S. Securities and
Exchange Commission (“SEC”) pursuant to the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC having substantially the same purpose and effect as such Rule.

 

(h)            “Trading Day” shall have the meaning set forth in the Convertible
Debentures.

 

2.            REGISTRATION.

 

(a)            The Company’s registration obligations set forth in this
Section 2 including its obligations to file one or more Registration Statements,
obtain effectiveness of such Registration Statements, and maintain the
continuous effectiveness of such Registration Statements that have been declared
effective shall begin on the date hereof and continue until all the Registrable
Securities have been sold or may permanently be sold without any restrictions
pursuant to Rule 144, as determined by the counsel to the Company pursuant to a
written opinion letter to such effect, addressed and acceptable to the Company’s
transfer agent and the affected Holders (the “Registration Period”).

 

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(b)            Subject to the terms and conditions of this Agreement, the
Company shall, on or prior to the Filing Deadline, prepare and file with the SEC
a Registration Statement on Form S-11 or Form S-3 covering the resale by the
Investor of Registrable Securities. Each Registration Statement prepared
pursuant hereto shall register for resale at least the number of shares of
Common Stock equal to the Required Registration Amount as of date the
Registration Statement is initially filed with the SEC. Each Registration
Statement shall contain the “Selling Stockholders” and “Plan of Distribution”.
The Company shall use its best efforts to have each Registration Statement
declared effective by the SEC as soon as practicable. By 9:30 am (New York time)
on the date following the date of effectiveness, the Company shall file with the
SEC in accordance with Rule 424 under the 1933 Act the final Prospectus to be
used in connection with sales pursuant to such Registration Statement. Prior to
the filing of the Registration Statement with the SEC, the Company shall furnish
a draft of the Registration Statement to the Investor for their review and
comment in accordance with the procedures set forth in Section 3(a) hereof. The
Investor shall furnish comments (if any) on the Registration Statement to the
Company within twenty-four (24) hours of the receipt thereof from the Company.

 

(c)            During the Registration Period the Company shall (i) promptly
prepare and file with the SEC such amendments (including post-effective
amendments) and supplements to each Registration Statement and Prospectus used
in connection with a Registration Statement, which Prospectus is to be filed
pursuant to Rule 424 promulgated under the Securities Act, as may be necessary
to keep each such Registration Statement effective at all times during the
applicable times in the Registration Period, (ii) prepare and file with the SEC
additional Registration Statements in order to register for resale under the
Securities Act all of the Registrable Securities (to the extent not previously
covered by a Registration Statement filed and declared effective in the
applicable times in the Registration Period)); (iii) cause the Prospectus for
each Registration Statement filed and declared effective in the applicable times
in the Registration Period to be amended or supplemented by any required
Prospectus supplement (subject to the terms of this Agreement), and as so
supplemented or amended to be filed pursuant to Rule 424; (iv) respond as
promptly as reasonably possible to any comments received from the SEC with
respect to a Registration Statement or any amendment thereto and as promptly as
reasonably possible provide the Investors true and complete copies of all
correspondence from and to the SEC relating to a Registration Statement
(provided that the Company may excise any information contained therein which
would constitute material non-public information as to any Investor which has
not executed a confidentiality agreement with the Company); and (v) comply with
the provisions of the Securities Act with respect to the disposition of all
Registrable Securities of the Company covered by each effective Registration
Statement until such time as all of such Registrable Securities shall have been
disposed of in accordance with the intended methods of disposition by the seller
or sellers thereof as set forth in such Registration Statement. In the case of
amendments and supplements to a Registration Statement which are required to be
filed pursuant to this Agreement (including pursuant to this Section 2(c)) by
reason of the Company’s filing a report on Form 10-K, or Form 8-K or any
analogous report under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), the Company shall incorporate such report by reference into the
Registration Statement, if applicable, or shall file such amendments or
supplements with the SEC on the same day on which the Exchange Act report is
filed which created the requirement for the Company to amend or supplement the
Registration Statement.

 

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(d)            Reduction of Registrable Securities Included in a Registration
Statement. Notwithstanding anything contained herein, in the event that the SEC
requires the Company to reduce the number of Registrable Securities to be
included in a Registration Statement in order to allow the Company to rely on
Rule 415 with respect to a Registration Statement, then the Company shall be
obligated to include in such Registration Statement (which may be a subsequent
Registration Statement if the Company needs to withdraw a Registration Statement
and refile a new Registration Statement in order to rely on Rule 415) only such
limited portion of the Registrable Securities as the SEC shall permit. Any
Registrable Securities that are excluded in accordance with the foregoing terms
are hereinafter referred to as “Cut Back Securities.” To the extent Cut Back
Securities exist, as soon as may be permitted by the SEC, the Company shall be
required to file a Registration Statement covering the resale of the Cut Back
Securities (subject also to the terms of this Section) and shall use best
efforts to cause such Registration Statement to be declared effective as
promptly as practicable thereafter.

 

3.            RELATED OBLIGATIONS.

 

(a)            The Company shall, not less than three (3) Trading Days prior to
the filing of each Registration Statement and not less than one (1) Trading Day
prior to the filing of any related amendments and supplements to all
Registration Statements (except for annual reports on Form 10-K), furnish to
each Investor copies of all such documents proposed to be filed, which documents
(other than those incorporated or deemed to be incorporated by reference) will
be subject to the reasonable and prompt review of such Investors. The Company
shall not file a Registration Statement or any such Prospectus or any amendments
or supplements thereto to which the Investors shall reasonably object in good
faith; provided that, the Company is notified of such objection in writing no
later than two (2) Trading Days after the Investors have been so furnished
copies of such document.

 

(b)            The Company shall use its best efforts to (i) register and
qualify the Registrable Securities covered by a Registration Statement under
such other securities or “blue sky” laws of such jurisdictions in the United
States as any Investor reasonably requests, (ii) prepare and file in those
jurisdictions, such amendments (including post-effective amendments) and
supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof during the Registration Period, (iii) take
such other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period, and
(iv) take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided, however, that
the Company shall not be required in connection therewith or as a condition
thereto to (w) make any change to its articles of incorporation or by-laws,
(x) qualify to do business in any jurisdiction where it would not otherwise be
required to qualify but for this Section 3(b), (y) subject itself to general
taxation in any such jurisdiction, or (z) file a general consent to service of
process in any such jurisdiction. The Company shall promptly notify each
Investor who holds Registrable Securities of the receipt by the Company of any
notification with respect to the suspension of the registration or qualification
of any of the Registrable Securities for sale under the securities or “blue sky”
laws of any jurisdiction in the United States or its receipt of actual notice of
the initiation or threat of any proceeding for such purpose.

 

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(c)            As promptly as practicable after becoming aware of such event or
development, the Company shall notify each Investor in writing of the happening
of any event as a result of which the Prospectus included in a Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omission to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading (provided that in no event shall such notice contain any
material, nonpublic information), and promptly prepare a supplement or amendment
to such Registration Statement to correct such untrue statement or omission, and
deliver ten (10) copies of such supplement or amendment to each Investor. The
Company shall also promptly notify each Investor in writing (i) when a
Prospectus or any Prospectus supplement or post-effective amendment has been
filed, and when a Registration Statement or any post-effective amendment has
become effective (notification of such effectiveness shall be delivered to each
Investor by facsimile on the same day of such effectiveness), (ii) of any
request by the SEC for amendments or supplements to a Registration Statement or
related prospectus or related information, and (iii) of the Company’s reasonable
determination that a post-effective amendment to a Registration Statement would
be appropriate.

 

(d)            The Company shall use its best efforts to prevent the issuance of
any stop order or other suspension of effectiveness of a Registration Statement,
or the suspension of the qualification of any of the Registrable Securities for
sale in any jurisdiction within the United States of America and, if such an
order or suspension is issued, to obtain the withdrawal of such order or
suspension at the earliest possible moment and to notify each Investor who holds
Registrable Securities being sold of the issuance of such order and the
resolution thereof or its receipt of actual notice of the initiation or threat
of any proceeding for such purpose.

 

(e)            If, after the execution of this Agreement, an Investor believes,
after consultation with its legal counsel, that it could reasonably be deemed to
be an underwriter of Registrable Securities, at the request of any Investor, the
Company shall furnish to such Investor, on the date of the effectiveness of the
Registration Statement and thereafter from time to time on such dates as an
Investor may reasonably request (i) a letter, dated such date, from the
Company’s independent certified public accountants in form and substance as is
customarily given by independent certified public accountants to underwriters in
an underwritten public offering, and (ii) an opinion, dated as of such date, of
counsel representing the Company for purposes of such Registration Statement, in
form, scope and substance as is customarily given in an underwritten public
offering, addressed to the Investors. Upon the request of the documents
discussed above pursuant to this Section 3(e), the Investor shall provide
documents to the Company typically provided by an underwriter of its securities
in form, scope and substance as is customarily given in an underwritten public
offering, including an opinion of counsel representing the Investor for purposes
of such Registration Statement, addressed to the Company.

 

(f)            If, after the execution of this Agreement, an Investor believes,
after consultation with its legal counsel, that it could reasonably be deemed to
be an underwriter of Registrable Securities, at the request of any Investor, the
Company shall make available for inspection by (i) any Investor and (ii) one
(1) firm of accountants or other agents retained by the Investors (collectively,
the “Inspectors”) all pertinent financial and other records, and pertinent
corporate documents and properties of the Company (collectively, the “Records”),
as shall be reasonably deemed necessary by each Inspector, and cause the
Company’s officers, directors and employees to supply all information which any
Inspector may reasonably request; provided, however, that each Inspector shall
agree, and each Investor hereby agrees, to hold in strict confidence and shall
not make any disclosure (except to an Investor) or use any Record or other
information which the Company determines in good faith to be confidential, and
of which determination the Inspectors are so notified, unless (a) the disclosure
of such Records is necessary to avoid or correct a misstatement or omission in
any Registration Statement or is otherwise required under the Securities Act,
(b) the release of such Records is ordered pursuant to a final, non-appealable
subpoena or order from a court or government body of competent jurisdiction, or
(c) the information in such Records has been made generally available to the
public other than by disclosure in violation of this or any other agreement of
which the Inspector and the Investor has knowledge. Each Investor agrees that it
shall, upon learning that disclosure of such Records is sought in or by a court
or governmental body of competent jurisdiction or through other means, give
prompt notice to the Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, the Records deemed confidential.

 

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(g)            The Company shall hold in confidence and not make any disclosure
of information concerning the Investor provided to the Company unless
(i) disclosure of such information is necessary to comply with U.S. federal or
state securities laws, (ii) the disclosure of such information is necessary to
avoid or correct a misstatement or omission in any Registration Statement,
(iii) the release of such information is ordered pursuant to a subpoena or other
final, non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to the
public other than by disclosure in violation of this Agreement or any other
agreement. The Company agrees that it shall, upon learning that disclosure of
such information concerning an Investor is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
written notice to such Investor and allow such Investor, at the Investor’s
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, such information.

 

(h)            The Company shall either cause all the Registrable Securities
covered by a Registration Statement (i) to be listed on each securities exchange
on which securities of the same class or series issued by the Company are then
listed, if any, if the listing of such Registrable Securities is then permitted
under the rules of such exchange or (ii) to be included for quotation on the
Nasdaq Capital Markets for such Registrable Securities.

 

(i)            The Company shall cooperate with each Investor who holds
Registrable Securities being offered and, to the extent applicable, to
facilitate the timely preparation and delivery of certificates (not bearing any
restrictive legend) representing the Registrable Securities to be offered
pursuant to a Registration Statement and enable such certificates to be in such
denominations or amounts, as the case may be, as the Investors may reasonably
request and registered in such names as the Investors may request. The Company
shall pay all fees and expenses in connection with satisfying its obligation
under this Section 3(i).

 

(j)            The Company shall use its best efforts to cause the Registrable
Securities covered by the applicable Registration Statement to be registered
with or approved by such other governmental agencies or authorities as may be
necessary to consummate the disposition of such Registrable Securities.

 

(k)            The Company shall otherwise use its best efforts to comply with
all applicable rules and regulations of the SEC in connection with any
registration hereunder.

 

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(l)            Within two (2) business days after a Registration Statement which
covers Registrable Securities is declared effective by the SEC, the Company
shall deliver to the transfer agent for such Registrable Securities (with copies
to the Investor whose Registrable Securities are included in such Registration
Statement) confirmation that such Registration Statement has been declared
effective by the SEC in the form attached hereto as Exhibit A.

 

(m)            The Company shall take all other reasonable actions necessary to
expedite and facilitate disposition by each Investor of Registrable Securities
pursuant to a Registration Statement.

 

4.            OBLIGATIONS OF THE INVESTORS.

 

(a)            The Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(c) such
Investor will immediately discontinue disposition of Registrable Securities
pursuant to any Registration Statement covering such Registrable Securities
until the Investor’s receipt of the copies of the supplemented or amended
prospectus contemplated by Section 3(c) or receipt of notice that no supplement
or amendment is required. Notwithstanding anything to the contrary, the Company
shall cause its transfer agent to deliver unlegended certificates for shares to
a transferee of an Investor in accordance with the terms of the Securities
Purchase Agreement in connection with any sale of Registrable Securities with
respect to which an Investor has entered into a contract for sale prior to the
Investor’s receipt of a notice from the Company of the happening of any event of
the kind described in Section 3(c) and for which the Investor has not yet
settled.

 

(b)            The Investor covenants and agrees that it will comply with the
prospectus delivery requirements of the Securities Act as applicable to it or an
exemption therefrom in connection with sales of Registrable Securities pursuant
to the Registration Statement.

 

5.            EXPENSES OF REGISTRATION.

 

All expenses incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation, all
registration, listing and qualifications fees, printers, legal and accounting
fees, except (i) legal fees of Investor’s counsel associated with the review of
the Registration Statement and any comment letters issued by the SEC relating to
such Registration Statement or (ii) fees incurred by any Inspectors associated
with their review of Records as contemplated in Section 3(f), shall be paid by
the Company.

 

6.            INDEMNIFICATION.

 

With respect to Registrable Securities which are included in a Registration
Statement under this Agreement:

 

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(a)            To the fullest extent permitted by law, the Company will, and
hereby does, indemnify, hold harmless and defend the Investor, the directors,
officers, partners, employees, and each Person, if any, who controls any
Investor within the meaning of the Securities Act or the Exchange Act (each, an
“Indemnified Person”), against any losses, claims, damages, liabilities,
judgments, fines, penalties, charges, costs, reasonable attorneys’ fees, amounts
paid in settlement or expenses, joint or several (collectively, “Claims”)
incurred in investigating, preparing or defending any action, claim, suit,
inquiry, proceeding, investigation or appeal taken from the foregoing by or
before any court or governmental, administrative or other regulatory agency,
body or the SEC, whether pending or threatened, whether or not an indemnified
party is or may be a party thereto (“Indemnified Damages”), to which any of them
may become subject insofar as such Claims (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement of a material fact in a
Registration Statement or any post-effective amendment thereto or in any filing
made in connection with the qualification of the offering under the securities
or other “blue sky” laws of any jurisdiction in which Registrable Securities are
offered (“Blue Sky Filing”), or the omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; (ii) any untrue statement or alleged untrue statement of
a material fact contained in any final Prospectus (as amended or supplemented,
if the Company files any amendment thereof or supplement thereto with the SEC)
or the omission or alleged omission to state therein any material fact necessary
to make the statements made therein, in light of the circumstances under which
the statements therein were made, not misleading; or (iii) any violation or
alleged violation by the Company of the Securities Act, the Exchange Act, any
other law, including, without limitation, any state securities law, or any
rule or regulation thereunder relating to the offer or sale of the Registrable
Securities pursuant to a Registration Statement (the matters in the foregoing
clauses (i) through (iii) being, collectively, “Violations”). The Company shall
reimburse the Investors and each such controlling person promptly as such
expenses are incurred and are due and payable, for any legal fees or
disbursements or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 6(a): (x) shall not apply to a Claim by an Indemnified Person arising
out of or based upon a Violation which occurs in reliance upon and in conformity
with information furnished in writing to the Company by such Indemnified Person
expressly for use in connection with the preparation of the Registration
Statement or any such amendment thereof or supplement or Prospectus related
thereto; (y) shall not be available to the extent such Claim is based on a
failure of the Investor to deliver or to cause to be delivered the Prospectus
made available by the Company, if such Prospectus was timely made available by
the Company pursuant to Section 3(b); and (z) shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of the Company, which consent shall not be unreasonably withheld. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Indemnified Person.

 

(b)            In connection with a Registration Statement, the Investor agrees
to severally and not jointly indemnify, hold harmless and defend, to the same
extent and in the same manner as is set forth in Section 6(a), the Company, each
of its directors, each of its officers, employees, representatives, or agents
and each Person, if any, who controls the Company within the meaning of the
Securities Act or the Exchange Act (each an “Indemnified Party”), against any
Claim or Indemnified Damages to which any of them may become subject, under the
Securities Act, the Exchange Act or otherwise, insofar as such Claim or
Indemnified Damages arise out of or are based upon any Violation, in each case
to the extent, and only to the extent, that such Violation occurs in reliance
upon and in conformity with written information furnished to the Company by such
Investor expressly for use in connection with such Registration Statement; and,
subject to Section 6(d), such Investor will reimburse any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such Claim; provided, however, that the indemnity agreement
contained in this Section 6(b) and the agreement with respect to contribution
contained in Section 7 shall not apply to amounts paid in settlement of any
Claim if such settlement is effected without the prior written consent of such
Investor, which consent shall not be unreasonably withheld; provided, further,
however, that the Investor shall be liable under this Section 6(b) for only that
amount of a Claim or Indemnified Damages as does not exceed the net proceeds to
such Investor as a result of the sale of Registrable Securities pursuant to such
Registration Statement. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such Indemnified Party.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(b) with respect to any prospectus shall
not inure to the benefit of any Indemnified Party if the untrue statement or
omission of material fact contained in the prospectus was corrected and such new
prospectus was delivered to each Investor prior to such Investor’s use of the
prospectus to which the Claim relates.

 

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(c)            Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement of any action or
proceeding (including any governmental action or proceeding) involving a Claim,
such Indemnified Person or Indemnified Party shall, if a Claim in respect
thereof is to be made against any indemnifying party under this Section 6,
deliver to the indemnifying party a written notice of the commencement thereof,
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Person or
the Indemnified Party, as the case may be; provided, however, that an
Indemnified Person or Indemnified Party shall have the right to retain its own
counsel with the reasonable fees and expenses of not more than one (1) counsel
for such Indemnified Person or Indemnified Party to be paid by the indemnifying
party, if, in the reasonable opinion of counsel retained by the indemnifying
party, the representation by such counsel of the Indemnified Person or
Indemnified Party and the indemnifying party would be inappropriate due to
actual or potential differing interests between such Indemnified Person or
Indemnified Party and any other party represented by such counsel in such
proceeding. The Indemnified Party or Indemnified Person shall cooperate fully
with the indemnifying party in connection with any negotiation or defense of any
such action or claim by the indemnifying party and shall furnish to the
indemnifying party all information reasonably available to the Indemnified Party
or Indemnified Person which relates to such action or claim. The indemnifying
party shall keep the Indemnified Party or Indemnified Person fully apprised at
all times as to the status of the defense or any settlement negotiations with
respect thereto. No indemnifying party shall be liable for any settlement of any
action, claim or proceeding effected without its prior written consent;
provided, however, that the indemnifying party shall not unreasonably withhold,
delay or condition its consent. No indemnifying party shall, without the prior
written consent of the Indemnified Party or Indemnified Person, consent to entry
of any judgment or enter into any settlement or other compromise which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party or Indemnified Person of a release from all liability
in respect to such claim or litigation. Following indemnification as provided
for hereunder, the indemnifying party shall be subrogated to all rights of the
Indemnified Party or Indemnified Person with respect to all third parties, firms
or corporations relating to the matter for which indemnification has been made.
The failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action shall not relieve such
indemnifying party of any liability to the Indemnified Person or Indemnified
Party under this Section 6, except to the extent that the indemnifying party is
prejudiced in its ability to defend such action.

 

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(d)            The indemnification required by this Section 6 shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or Indemnified Damages are incurred.

 

(e)            The indemnity agreements contained herein shall be in addition to
(i) any cause of action or similar right of the Indemnified Party or Indemnified
Person against the indemnifying party or others, and (ii) any liabilities the
indemnifying party may be subject to pursuant to the law.

 

7.            CONTRIBUTION.

 

To the extent any indemnification by an indemnifying party is prohibited or
limited by law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under
Section 6 to the fullest extent permitted by law; provided, however, that:
(i) no seller of Registrable Securities guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any seller of Registrable Securities who was not guilty of
fraudulent misrepresentation; and (ii) contribution by any seller of Registrable
Securities shall be limited in amount to the net amount of proceeds received by
such seller from the sale of such Registrable Securities.

 

8.            REPORTS UNDER THE EXCHANGE ACT.

 

With a view to making available to the Investors the benefits of Rule 144
promulgated under the Securities Act or any similar rule or regulation of the
SEC that may at any time permit the Investors to sell securities of the Company
to the public without registration (“Rule 144”), and as a material inducement to
the Investor’s purchase of the Convertible Debentures, the Company represents,
warrants, and covenants to the following:

 

(a)            The Company is subject to the reporting requirements of section
13 or 15(d) of the Exchange Act and has filed all required reports under section
13 or 15(d) of the Exchange Act during the 12 months prior to the date hereof
(or for such shorter period that the issuer was required to file such reports),
other than Form 8-K reports.

 

(b)            During the Registration Period, the Company shall file with the
SEC in a timely manner all required reports under section 13 or 15(d) of the
Exchange Act (it being understood that nothing herein shall limit the Company’s
obligations under the Securities Purchase Agreement) and such reports shall
conform to the requirements of the Exchange Act and the SEC for filing
thereunder.

 

(c)            The Company shall furnish to the Investor so long as such
Investor owns Registrable Securities, promptly upon request, (i) a written
statement by the Company that it has complied with the reporting requirements of
Rule 144, (ii) a copy of the most recent annual report of the Company and such
other reports and documents so filed by the Company, and (iii) such other
information as may be reasonably requested to permit the Investors to sell such
securities pursuant to Rule 144 without registration.

 

- 10 -

 

 

9.            AMENDMENT OF REGISTRATION RIGHTS.

 

Provisions of this Agreement may be amended and the observance thereof may be
waived (either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and Investors who
then hold at least two-thirds (2/3) of the Registrable Securities. Any amendment
or waiver effected in accordance with this Section 9 shall be binding upon each
Investor and the Company. No such amendment shall be effective to the extent
that it applies to fewer than all of the holders of the Registrable Securities.
No consideration shall be offered or paid to any Person to amend or consent to a
waiver or modification of any provision of this Agreement unless the same
consideration also is offered to all of the parties to this Agreement.

 

10.            MISCELLANEOUS.

 

(a)            A Person is deemed to be a holder of Registrable Securities
whenever such Person owns such Registrable Securities. If the Company receives
conflicting instructions, notices or elections from two (2) or more Persons with
respect to the same Registrable Securities, the Company shall act upon the basis
of instructions, notice or election received from the registered owner of such
Registrable Securities.

 

(b)            Piggy-Back Registrations. If at any time there is not an
effective Registration Statement covering all of the Registrable Securities and
the Company shall determine to prepare and file with the SEC a registration
statement relating to an offering for its own account or the account of others
under the Securities Act of its Common Stock, other than on Form S-4 or Form S-8
(each as promulgated under the Securities Act) or their then equivalents
relating to equity securities to be issued solely in connection with any
acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans, then the Company
shall send to each Investor a written notice of such determination and, if
within fifteen (15) days after the date of such notice, any such Investor shall
so request in writing, the Company shall include in such registration statement
all or any part of such Registrable Securities such Investor requests to be
registered; provided, however, that, the Company shall not be required to
register any Registrable Securities pursuant to this Section 10(b) that are
eligible for resale pursuant to Rule 144 promulgated under the Securities Act or
that are the subject of a then effective Registration Statement.

 

(c)            Any notices, consents, waivers or other communications required
or permitted to be given under the terms of this Agreement must be in writing
and will be deemed to have been delivered: (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by email (provided confirmation of
transmission is electronically generated and kept on file by the sending party);
or (iii) one (1) business day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the party to
receive the same. The addresses and email for such communications shall be:

 

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If to the Company, to: MEDALIST DIVERSIFIED REIT, INC.  

Three James Center

1051 E. Cary Street, Suite 601

Richmond, VA 23219

 

Telephone:  804-344-4435
Attention:  Thomas E. Messier
E-Mail:  tmessier@medalistprop.com

 

With Copy to:

Kaplan Voekler Cunningham & Frank PLC

1401 E. Cary Street

Richmond, VA 23219

 

Attention: Thomas Voekler

Telephone: 804-823-4001

Email: tvoekler@kv-legal.com.

    If to the Investor(s): YA II PN, Ltd.   1012 Springfield Avenue  
Mountainside, NJ 07092   Attention:      Mark Angelo   Portfolio Manager  
Telephone:    (201) 985-8300  

Email: mangelo@yorkvilleadvisors.com

 

With a Copy (which shall not

Constitute notice or delivery of process) to:

   

David Fine, Esq.

1012 Springfield Avenue

  Mountainside, NJ 07092   Telephone:    (201) 985-8300  
Email:              legal@yorkvilleadvisors.com

 

or to such other address and/or email and/or to the attention of such other
person as the recipient party has specified by written notice given to each
other party five (5) days prior to the effectiveness of such change. Written
confirmation of receipt (A) given by the recipient of such notice, consent,
waiver or other communication, (B) electronically generated by the sender’s
email service provider containing the time, date, and recipient email or
(C) provided by a courier or overnight courier service shall be rebuttable
evidence of personal service, receipt by e-mail or receipt from a nationally
recognized overnight delivery service in accordance with clause (i), (ii) or
(iii) above, respectively.

 

- 12 -

 

 

(d)            Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.

 

(e)            The laws of New York shall govern all issues concerning the
relative rights of the Company and the Investors as its shareholders. All other
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of New
York, without giving effect to any choice of law or conflict of law provision or
rule (whether of the State of New York or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State of
New York. Each party hereby irrevocably submits to the non-exclusive
jurisdiction of the Supreme Court of the State of New York, sitting in New York
County, New York and federal courts for the Southern District of New York
sitting in New York, New York, for the adjudication of any dispute hereunder or
in connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
If any provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of any provision of this Agreement in any other
jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND
AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.

 

(f)            This Agreement shall inure to the benefit of and be binding upon
the permitted successors and assigns of each of the parties hereto.

 

(g)            The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.

 

(h)            This Agreement may be executed in identical counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same agreement. This Agreement, once executed by a party, may be delivered to
the other party hereto as an attachment to an email of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.

 

(i)            Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.

 

- 13 -

 

 

(j)            The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent and no rules of
strict construction will be applied against any party.

 

(k)            This Agreement is intended for the benefit of the parties hereto
and their respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any other Person.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

- 14 -

 

 

IN WITNESS WHEREOF, the Investor and the Company have caused their signature
page to this Registration Rights Agreement to be duly executed as of the date
first above written.

 

  COMPANY:   Medalist Diversified REIT, Inc.       By: /s/ Thomas E. Messier  
Name:   Thomas E. Messier   Title: Chairman and Chief Executive Officer      
INVESTOR:   YA II PN, Ltd.       By: Yorkville Advisors Global, LP   Its:
Investment Manager           By: Yorkville Advisors Global II, LLC     Its:
General Partner           By: /s/ David Gonzalez     Name:   David Gonzalez    
Title:     Member

 

- 15 -

 

 

EXECUTION VERSION

 

EXHIBIT A

 

FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT

 

Attention:

 

Re:MEDALIST DIVERSIFIED REIT, INC.

 

Ladies and Gentlemen:

 

We are U.S. counsel to MEDALIST DIVERSIFIED REIT, INC., a company formed and
existing under the laws of the State of Maryland (the “Company”), and have
represented the Company in connection with that certain Securities Purchase
Agreement (the “Securities Purchase Agreement”) entered into by and among the
Company and the Investors named therein (collectively, the “Investors”) pursuant
to which the Company issued to the Investors up to $5,000,000 of convertible
debentures (the “Convertible Debentures”), which are convertible into the
Company’s Common Stock, par value $0.01 per share (the “Common Stock”) (as
converted, the “Conversion Shares”). Pursuant to the Securities Purchase
Agreement, the Company also has entered into a Registration Rights Agreement
with the Investors (the “Registration Rights Agreement”) pursuant to which the
Company agreed, among other things, to register the Registrable Securities (as
defined in the Registration Rights Agreement) under the Securities Act of 1933,
as amended (the “Securities Act”). In connection with the Company’s obligations
under the Registration Rights Agreement, on ____________ ____, the Company filed
a Registration Statement on Form ________ (File No. 333-_____________) (the
“Registration Statement”) with the Securities and Exchange Commission (the
“SEC”) relating to the Registrable Securities which names each of the Investors
as a selling stockholder thereunder.

 

In connection with the foregoing, we advise you that a member of the SEC’s staff
has advised us by telephone that the SEC has entered an order declaring the
Registration Statement effective under the Securities Act at [ENTER TIME OF
EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge, after
telephonic inquiry of a member of the SEC’s staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and the Registrable
Securities are available for resale under the Securities Act pursuant to the
Registration Statement.

 

  Very truly yours,       [Law Firm]       By:        

 

cc:          [LIST NAMES OF Investors]