Document:

Exhibit 10.1

 

MANAGEMENT AGREEMENT

 

among

 

Medalist Diversified
REIT, Inc.

 

Medalist Diversified
Holdings, L.P.

 

and

 

Medalist Fund Manager,
Inc.

 

Dated as of
March 15, 2016

 

    	 	1	 

     

    

 

MANAGEMENT AGREEMENT,
dated as of March 15, 2016, among Medalist Diversified REIT, Inc., a Maryland corporation (“Medalist”),
Medalist Diversified Holdings, L.P., a Delaware limited partnership (the “Operating Partnership”) and Medalist
Fund Manager, Inc., a Virginia corporation (the “Manager”).

 

WITNESSETH:

 

WHEREAS, Medalist intends
to invest in Target Assets (as defined below) and intends to qualify as a real estate investment trust for federal income tax purposes
under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”) beginning
with its taxable year ended December 31, 2016; and

 

WHEREAS, Medalist is
the general partner of the Operating Partnership, and Medalist intends to conduct substantially all of its business and make all
Investments (as defined below) through the Operating Partnership;

 

WHEREAS, Medalist and
the Operating Partnership desire to retain the Manager to administer the business activities and day-to-day operations of the Company
(as defined below) and to perform services for the Company in the manner and on the terms set forth herein and the Manager wishes
to be retained to provide such services, subject to the supervision of the Board (as defined below), on the terms and conditions
hereinafter set forth;

 

WHEREAS, the Manager
wishes to be retained to administer such business activities and day-to-day operations and to provide such services;

 

NOW THEREFORE, in consideration
of the premises and agreements hereinafter set forth, the parties hereto hereby agree as follows:

 

Section 1. Definitions.

 

(a)          The
following terms shall have the meanings set forth in this Section 1(a):

 

“Above-Market
Rates” has the meaning set forth in Section 10(b).

 

“Acquisition
Cost” shall mean the final purchase price of the acquired Investment, following all closing adjustments, plus all transaction
costs and fees associated with the applicable Investment.

 

“Acquisition
Expenses” means any and all expenses incurred by the Company, the Manager or any of their respective Affiliates in connection
with the selection, evaluation, acquisition, origination, making or development of any Investment, whether or not acquired, including,
but not limited to, legal fees and expenses, travel and communications expenses, property inspection expenses, third party brokerage
or finder’s fees, costs of appraisals, nonrefundable option payments on property not acquired, accounting fees and expenses,
title insurance premiums and expenses, survey expenses, closing costs and the costs of performing due diligence.

 

“Acquisition
Fee” shall have the meaning given it in Section 6(e).

 

“Affiliate”
means (i) any Person directly or indirectly controlling, controlled by, or under common control with such other Person, (ii) any
executive officer or general partner of such other Person, (iii) any member of the board of directors or board of managers
(or bodies performing similar functions) of such Person, and (iv) any legal entity for which such Person acts as an executive
officer or general partner.

 

“AFFO”
means adjusted funds from operations, calculated by adjusting FFO by adding back acquisition expenses, equity based compensation
expenses, and any other non-recurring on non-cash expenses, and subtracting recurring capital expenditures (and, when calculating
the Incentive Fee only, further adjusting FFO to include any realized gains or losses on the Company’s real estate investments).

 

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“Agreement”
means this Management Agreement, as amended, supplemented or otherwise modified from time to time.

 

“Asset
Management Fee” means the management fee in an amount equal to the sum of 1.5% of the amount of Stockholder’s
Equity, which will be paid on a monthly basis.

 

“Automatic
Renewal Term” has the meaning set forth in Section 10(a) hereof.

 

“Bankruptcy”
means, with respect to any Person, (a) the filing by such Person of a voluntary petition seeking liquidation, reorganization,
arrangement or readjustment, in any form, of its debts under Title 11 of the United States Code or any other U.S. federal or state
or foreign insolvency law, or such Person’s filing an answer consenting to or acquiescing in any such petition, (b) the
making by such Person of any assignment for the benefit of its creditors, (c) the expiration of 60 days after the filing
of an involuntary petition under Title 11 of the United States Code, an application for the appointment of a receiver for a material
portion of the assets of such Person, or an involuntary petition seeking liquidation, reorganization, arrangement or readjustment
of its debts under any other U.S. federal or state or foreign insolvency law; provided, that the same shall not have been
vacated, set aside or stayed within such 60-day period or (d) the entry against such Person of a final and non-appealable
order for relief under any bankruptcy, insolvency or similar law now or hereinafter in effect.

 

“Board”
means the board of directors of Medalist. In every instance herein requiring approval of the Board or referring to policies or
directions of the Board, for purposes of this Agreement, the Board shall be deemed to include any duly appointed and constituted
committee of the Board with respect to each and every act that under the Governing Instruments or applicable law may be taken with
the approval of a duly appointed and constituted committee of the Board, and references herein to the Board shall be deemed to
include references to each such committee.

 

“Business
Day” means any day except a Saturday, a Sunday or a day on which banking institutions in Richmond, Virginia are not required
to be open.

 

“Cause
Termination Notice” has the meaning set forth in Section 11(a).

 

“Claim”
has the meaning set forth in Section 8(d) hereof.

 

“Common
Stock” means the common stock, par value $0.01 per share, of Medalist.

 

“Closing
Date” means the date of closing of the Public Offering.

 

“Code”
has the meaning set forth in the Recitals.

 

“Common
Stock Equivalents” means shares of the Common Stock issuable pursuant to outstanding rights, options or warrants to subscribe
for, purchase or otherwise acquire shares of Common Stock that are in-the-money on such date.

 

“Company”
means, collectively, Medalist and the Operating Partnership.

 

“Company
Entities” means, collectively, Medalist, the Operating Partnership and each of their respective subsidiaries.

 

“Company
Indemnified Party” has meaning set forth in Section 8(c) hereof.

 

“Competing
Program” means any REIT or similar investment vehicle engaged primarily in the business of investing in real estate assets
that are substantially similar to the Target Assets and that offers and sells its securities pursuant to a registration statement
effective or offering statement qualified under the Securities Act and the regulations promulgated thereunder.

 

“Confidential
Information” has the meaning set forth in Section 5 hereof.

 

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“Effective
Termination Date” has the meaning set forth in Section 10(b) hereof, and shall also mean the effective date of
termination of this Agreement by any notice given pursuant to Sections 10(d), 11(a) or 11(b) hereof.

 

“Equity
Incentive Plans” means the equity incentive plans adopted by Medalist to provide incentive compensation to attract and
retain qualified independent directors, executive officers and other key employees, including officers and employees of the Manager
and Operating Partnership and their Affiliates and other service providers, including the Manager and its Affiliates.

 

“Exchange
Act” means the Securities Exchange Act of 1934, as amended.

 

“FFO”
means funds from operations as such term is from time to time defined by the National Association of Real Estate Investment Trusts,
as net income, computed in accordance with GAAP, excluding gains (or losses) from sales of property, plus depreciation and amortization
of real estate assets, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated
partnerships and joint ventures will be calculated to reflect FFO on the same basis.

 

“Financing
Transaction” means any financing transaction with respect to any Investment involving any of the Company Entities incurring
any mortgage or other indebtedness, including the entering into any line of credit, mezzanine financing, preferred equity financing,
and any transaction involving the creation of any commercial mortgage-backed security.

 

“GAAP”
means generally accepted accounting principles in effect in the United States on the date such principles are applied.

 

“Governing
Instruments” means, with regard to any entity, the articles of incorporation or certificate of incorporation and bylaws
in the case of a corporation, the partnership agreement in the case of a general partnership, the certificate of limited partnership
and the partnership agreement in the case of a limited partnership, the certificate of formation and operating agreement in the
case of a limited liability company, the trust instrument in the case of a trust, or similar governing documents, in each case
as amended from time to time.

 

“Incentive
Fee” means the incentive fee payable to the Manager, which shall be calculated and payable with respect to each calendar
quarter (or part thereof that this Agreement is in effect) in arrears in an amount, not less than zero, equal to the difference
between (1) the product of (a) 20% and (b) the difference between (i) AFFO of the Company for the previous
12-month period, and (ii) the product of (A) the weighted average of the issue price of equity securities issued in the
Public Offering and in future offerings and transactions of the Company, multiplied by the weighted average number of all shares
of common stock outstanding on a fully-diluted basis (including, for the avoidance of doubt, any restricted stock units, any restricted
shares of common stock, Equity Incentive Plan units, and other shares of common stock underlying other awards granted under one
or more of the Company’s Equity Incentive Plans, if any, and units of limited partnership interest in the Operating Partnership)
in the previous 12-month period, exclusive of equity securities issued prior to the Public Offering, and (B) 7%, and (2) the
sum of any Incentive Fees paid to the Manager with respect to the first three calendar quarters of such previous 12-month period.
For purposes of calculating the Incentive Fee during the first 12 months after completion of the Public Offering, AFFO will be
determined by annualizing the applicable period following completion of the Public Offering. An example calculation of the Incentive
Fee is set forth on Exhibit B hereto. “Indemnified Party” has the meaning set forth in Section 8(c)
hereof.

 

“Independent
Director” means a member of the Board who is “independent” in accordance with Medalist’s Governing
Instruments and the rules of the Securities Exchange on which the shares of Common Stock are listed, if applicable.

 

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“Initial
Term” has the meaning set forth in Section 10(a) hereof.

 

“Invested
Proceeds” shall mean the New Stockholders’ Equity being used by the Manager to fund Investments.

 

“Investment”
means any investment by the Company, directly or through a subsidiary, in a Target Asset.

 

“Investment
Company Act” means the Investment Company Act of 1940, as amended.

 

“Investment
Guidelines” means the investment guidelines approved by the Board, a copy of which is attached hereto as Exhibit A,
as the same may be amended, restated, modified, supplemented or waived pursuant to the approval of a majority of the entire Board
(which must include a majority of the Independent Directors).

 

“Investment
Transaction” means any purchase, acquisition, exchange, sale or disposition, merger or interest exchange that results
in the acquisition or disposition of, or other transaction involving, an Investment.

 

“Losses”
has the meaning set forth in Section 8(b) hereof.

 

“Manager”
has the meaning set forth in the Recitals.

 

“Manager
Change of Control” means a change in the direct or indirect (i) beneficial ownership of more than fifty percent
(50%) of the combined voting power of the Manager’s then outstanding equity interests, or (ii) power to direct or control
the management policies of the Manager, whether through the ownership of beneficial equity interests, common directors or officers,
by contract or otherwise. Manager Change of Control shall not include (i) public offerings of the equity interests of the Manager,
or (ii) any assignment of this Agreement by the Manager as permitted hereby and in accordance with the terms hereof.

 

“Manager
Indemnified Party” has the meaning set forth in Section 8(a) hereof.

 

“Manager
Permitted Disclosure Parties” has the meaning set forth in Section 5(a) hereof.

 

“Stockholders’
Equity” means (a) the sum of (1) the net proceeds from (or equity value assigned to) all issuances of the Company’s
equity and equity equivalent securities (including Common Stock, Common Stock Equivalents, preferred stock and units of limited
partnership interest in the Operating Partnership) since inception (allocated on a pro rata daily basis for such issuances during
the fiscal quarter of any such issuance), plus (2) the Company’s retained earnings at the end of the most recently completed
calendar quarter (without taking into account any non-cash equity compensation expense incurred in current or prior periods), less
(b) any amount that the Company has paid to repurchase Medalist’s Common Stock issued in the Public Offering or any subsequent
offering. Stockholders’ Equity also excludes (1) any unrealized gains and losses and other non-cash items (including depreciation
and amortization) that have impacted stockholders’ equity as reported in the Company’s financial statements prepared
in accordance with GAAP, and (2) one-time events pursuant to changes in GAAP, and certain non-cash items not otherwise described
above, in each case after discussions between the Manager and the Independent Directors and approval by a majority of the Independent
Directors.

 

“NYSE”
means the New York Stock Exchange.

 

“Person”
means any natural person, corporation, partnership, association, limited liability company, estate, trust, joint venture, any federal,
state, county or municipal government or any bureau, department or agency thereof or any other legal entity and any fiduciary acting
in such capacity on behalf of the foregoing.

 

“Public
Offering” means the REIT’s sale of common stock to the public pursuant to the REIT’s Offering Statement on
Form 1-A (No. 024-10487).

 

“Regulation FD”
means Regulation FD as promulgated by the SEC.

 

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“REIT”
means a “real estate investment trust” as defined under the Code.

 

“SEC”
means the United States Securities and Exchange Commission.

 

“Securities
Act” means the Securities Act of 1933, as amended.

 

“Securities
Exchange” means the NYSE, NYSE MKT, OTCQX, OTCQB and any other nationally recognized securities exchange or other quotation
system.

 

“Target
Assets” means the types of assets described under “Our Business” in the prospectus contained in Medalist’s
Offering Statement on Form 1-A (No. 024-10487) relating to the Public Offering, subject to, and including any changes to the Company’s
Investment Guidelines that may be approved by the Board from time to time.

 

“Termination
Fee” means a termination fee equal to three (3) times the sum of (i) the Asset Management Fee and (ii) the
Incentive Fee, in each case, earned by the Manager during the 12-month period immediately preceding the most recently completed
fiscal quarter prior to the Effective Termination Date.

 

“Termination
Notice” has the meaning set forth in Section 10(b) hereof.

 

“Termination
Without Cause” has the meaning set forth in Section 10(b) hereof.

 

(b)          As
used herein, accounting terms relating to any Company Entity, if any, not defined in Section 1(a) and accounting terms partly
defined in Section 1(a), to the extent not defined, shall have the respective meanings given to them under GAAP. As
used herein, “calendar quarters” shall mean the period from January 1 to March 31, April 1 to June 30, July
1 to September 30 and October 1 to December 31 of the applicable year.

 

(c)          The
words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section references are to this
Agreement unless otherwise specified.

 

(d)          The
meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms. The words
include, includes and including shall be deemed to be followed by the phrase “without limitation.”

 

Section 2. Appointment
and Duties of the Manager.

 

(a)          Medalist
and the Operating Partnership hereby appoint the Manager to manage the investments and day-to-day operations of the Company Entities,
subject at all times to the further terms and conditions set forth in this Agreement and to the supervision and direction of, and
such further limitations or parameters as may be imposed from time to time by, the Board. The Manager hereby agrees to use its
commercially reasonable efforts to perform each of the duties set forth herein, provided that funds are made available by the Company
for such purposes as set forth in Section 7 hereof, and further subject to Section 6 hereof. The appointment
of the Manager shall be exclusive to the Board.

 

(b)          The
Manager, in its capacity as manager of the Investments and the operations of the Company Entities, at all times will be subject
to the supervision and direction of the Board and will use commercially reasonable efforts to present to the Company potential
investment opportunities and will perform its duties hereunder, including managing the Company’s business affairs in conformity
with the Investment Guidelines and other policies that are approved and monitored by the Board. Medalist, the Operating Partnership
and the Manager hereby acknowledge the recommendation by the Manager and the approval by the Board of the Investment Guidelines,
including, but not limited to the Company’s investment strategy in the Target Assets. Medalist, the Operating Partnership
and the Manager hereby acknowledge and agree that, during the term of this Agreement, any proposed changes to the Company’s
investment strategy that would modify or expand the Target Assets shall require a change in, or supplement to, the Investment Guidelines.
The Company shall notify the Manager promptly of any amended, restated, supplemented or waived Investment Guidelines, including
any modification or revocation of the Manager’s authority set forth in the Investment Guidelines; provided, however,
that such modification or revocation shall not be applicable to Investment Transactions to which the Manager has committed any
Company Entity prior to the date of receipt by the Manager of such notification.

 

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(c)          The
Manager will be responsible for (1) the selection, purchase, sale and disposition of Investments, (2) the Company’s financing
activities, and (3) providing the Company with advisory services. In addition, the Manager will be responsible for the day-to-day
operations of the Company Entities (which, for purposes of the Manager’s responsibilities in this Agreement, includes their
respective subsidiaries) and will perform (or cause to be performed) such services and activities relating to the Investments and
operations of the Company Entities as may be appropriate, which may include, without limitation:

 

(i)          serving
as the Company’s consultant with respect to the periodic review of the Investment Guidelines and other parameters for the
Company’s Investments, financing activities and operations, any modification to which will be approved by the Board (including
a majority of the Independent Directors);

 

(ii)         investigating,
analyzing, and selecting possible Investment opportunities and acquiring, financing, retaining, selling, restructuring, exchanging
or disposing of Investments consistent with the Investment Guidelines;

 

(iii)        with
respect to prospective Investment Transactions and Financing Transactions, conducting negotiations (including negotiation of definitive
agreements) on the Company’s behalf with sellers, purchasers, and brokers and, if applicable, their respective agents and
representatives;

 

(iv)        negotiating
and entering into, on the Company’s behalf, interest rate swap agreements and other agreements and instruments required for
the Company to conduct the Company’s business;

 

(v)         effecting
any private placement of interest in the Operating Partnership, tenancy-in-common or other interests in Investments as may be approved
by the Board;

 

(vi)        engaging
and supervising, on the Company’s behalf and at the Company’s expense, independent contractors that provide investment
banking, securities brokerage, mortgage brokerage, real estate brokerage, other financial services, due diligence services, underwriting
review services, legal and accounting services, and all other services (including transfer agent and registrar services) as may
be required relating to the Company’s operations and actual or potential Investments Investment Transactions or Financing
Transactions;

 

(vii)       coordinating
and managing operations of any joint venture or co-investment interests held by the Company and conducting all matters with the
joint venture or co-investment partners;

 

(viii)      providing
executive and administrative personnel, office space and office services required in rendering services to the Company;

 

(ix)         administering
the day-to-day operations and performing and supervising the performance of such other administrative functions necessary to the
Company’s management as may be agreed upon by the Manager and the Board, including, without limitation, the collection of
revenues and the payment of the Company’s debts and obligations and maintenance of appropriate computer services to perform
such administrative functions;

 

(x)          communicating
on the Company’s behalf with the holders of any of the Company’s equity or debt securities of Medalist or the Operating
Partnership as required to satisfy the reporting and other requirements of any governmental bodies or agencies or trading markets
and to maintain effective relations with such holders;

 

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(xi)         counseling
the Board and the Company in connection with policy decisions to be made by the Board;

 

(xii)        evaluating
and recommending to the Board hedging strategies and engaging in hedging activities on the Company’s behalf, consistent with
such strategies as so modified from time to time, Medalist’s qualification as a REIT and with the Investment Guidelines;

 

(xiii)       counseling
the Board and the Company regarding the maintenance of Medalist’s qualification as a REIT and monitoring compliance with
the various REIT qualification tests and other rules set out in the Code and Treasury Regulations thereunder and using commercially
reasonable efforts to cause Medalist to continue to qualify for taxation as a REIT;

 

(xiv)      counseling
the Company regarding the maintenance of the Company’s exemption from the status of an investment company required to register
under the Investment Company Act, monitoring compliance with the requirements for maintaining such exemption and using commercially
reasonable efforts to cause the Company to maintain such exemption from such status;

 

(xv)       furnishing
reports and statistical and economic research to the Company regarding the Company’s activities and services performed for
the Company by the Manager, including reports to the Board with respect to potential conflicts of interest involving the Manager
or any of its Affiliates;

 

(xvi)      monitoring
the operating performance of the Company’s Investments and providing periodic reports with respect thereto to the Board,
including comparative information with respect to such operating performance and budgeted or projected operating results;

 

(xvii)     investing
and reinvesting any moneys and securities of the Company (including investing in short-term investments pending investment in other
investments, payment of fees, costs and expenses, or payments of dividends or distributions to Medalist’s stockholders and
the Operating Partnership’s partners) and advising the Company as to its capital structure and capital raising;

 

(xviii)    causing
the Company to retain qualified accountants and legal counsel, as applicable, to assist in developing appropriate accounting procedures
and systems, internal controls and other compliance procedures and testing systems with respect to financial reporting obligations
and compliance with the provisions of the Code applicable to REITs and, if applicable, taxable REIT subsidiaries, and to conduct
quarterly compliance reviews with respect thereto;

 

(xix)       assisting
the Company in qualifying to do business in all applicable jurisdictions and to obtain and maintain all appropriate licenses;

 

(xx)        assisting
the Company in complying with all regulatory requirements applicable to the Company in respect of the Company’s business
activities, including preparing or causing to be prepared all financial statements required under applicable regulations and contractual
undertakings and all reports and documents, if any, required under the Exchange Act or the Securities Act, or by the applicable
Securities Exchange;

 

(xxi)       assisting
the Company in taking all necessary action to enable the Company to make required tax filings and reports, including soliciting
stockholders for required information to the extent required by the provisions of the Code applicable to REITs;

 

(xxii)      handling
and resolving all claims, disputes or controversies (including all litigation, arbitration, settlement or other proceedings or
negotiations) in which the Company may be involved or to which the Company may be subject arising out of the Company’s day-to-day
operations (other than with the Manager or its Affiliates), subject to such limitations or parameters as may be imposed from time
to time by the Board;

 

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(xxiii)     using
commercially reasonable efforts to cause expenses incurred by the Company or on the Company’s behalf to be commercially reasonable
or commercially customary and within any budgeted parameters or expense guidelines set by the Board from time to time;

 

(xxiv)    serving
as the Company’s consultant with respect to decisions regarding any of its financings, hedging activities, borrowings or
joint venture arrangements undertaken by the Company, including (1) assisting the Company in developing criteria for debt and equity
financing that is specifically tailored to its investment objectives, and (2) advising the Company with respect to obtaining appropriate
financing for its investments;

 

(xxv)     arranging
marketing materials, advertising, industry group activities (such as conference participations and industry organization memberships)
and other promotional efforts designed to promote the Company’s business;

 

(xxvi) performing such
other services as may be required from time to time for management and other activities relating to the Company’s assets
and business as the Board shall reasonably request or the Manager shall deem appropriate under the particular circumstances; and

 

(xxvii)   using
its best efforts to cause the Company to comply with all applicable laws.

 

(d)          The
Manager may retain, for and on behalf, and at the sole cost and expense, of the Company, such services of the persons and firms
referred to in Section 7(b) hereof as the Manager deems necessary or advisable in connection with the management and operations
of the Company. In performing its duties under this Section 2, the Manager shall be entitled to rely reasonably on
qualified experts and professionals (including, without limitation, accountants, legal counsel and other professional service providers)
hired by the Manager at the Company’s sole cost and expense.

 

(e)          The
Manager shall refrain from any action that, in its sole judgment made in good faith, (i) is not in compliance with the Investment
Guidelines, (ii) would adversely and materially affect the qualification of Medalist as a REIT or the Operating Partnership
as a partnership under the Code or the Company’s status as an entity exempted or excluded from investment company status
under the Investment Company Act, or (iii) would conflict with or violate any law, rule or regulation of any governmental
body or agency having jurisdiction over the Company or of any exchange on which the securities of the Company may be listed or
any applicable Governing Instruments. If the Manager is ordered to take any action by the Board, the Manager shall promptly notify
the Board if it is the Manager’s judgment that such action would adversely and materially affect such status or conflict
with or violate any such law, rule or regulation or Governing Instruments. Notwithstanding the foregoing, neither the Manager nor
any of its Affiliates shall be liable to the Company, the Board, or the Company’s stockholders or partners, as applicable,
for any act or omission by the Manager or any of its Affiliates, except as provided in Section 8 of this Agreement.

 

(f)          The
Manager shall notify the Board in advance of all proposed Investment Transactions before they are completed. The Manager shall
seek and obtain Board approval of any Investment Transaction that does not meet the Investment Guidelines. Subject to this Section
2(f), the Manager may execute without Board approval (but, in all cases, with advance notice to the Board) any Investment Transaction
that fits within the Investment Guidelines, if then permitted by the Investment Guidelines. If any proposed Investment Transaction
requires approval by the Independent Directors, the Manager will deliver to the Independent Directors all documents and other information
reasonably required by them to evaluate properly the proposed transaction. With respect to Investment Transactions for which Board
approval is not required but advance notice is required, the Manager shall provide to the Board a summary of its investment analysis
with respect to the proposed Investment Transaction. The Board may, at any time upon the giving of notice to the Manager, modify
or revoke the authority set forth in this Section 2(f); provided, however, that such modification or revocation shall
be effective upon receipt by the Manager and shall not be applicable to Investment Transactions to which the Manager has committed
the Company prior to the date of receipt by the Manager of such notification.

 

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(g)          The
Company (including the Board) agrees to take all actions reasonably required to permit and enable the Manager to carry out its
duties and obligations under this Agreement, including, without limitation, all steps reasonably necessary to allow the Manager
to file any registration statement or other filing required to be made under the Securities Act, Exchange Act, the applicable Securities
Exchange’s Listed Company Manual, the Code or other applicable law, rule or regulation on behalf of the Company in a timely
manner. The Company further agrees to use commercially reasonable efforts to make available to the Manager all resources, information
and materials reasonably requested by the Manager to enable the Manager to satisfy its obligations hereunder, including its obligations
to deliver financial statements and any other information or reports with respect to the Company.

 

(h)          As
frequently as the Manager may deem reasonably necessary or advisable, or at the direction of the Board, the Manager shall prepare,
or, at the sole cost and expense of the Company, cause to be prepared, any reports and other information relating to any proposed
or consummated Investment as may be reasonably requested by the Company.

 

(i)          The
Manager shall prepare, or, at the sole cost and expense of the Company, cause to be prepared, all reports, financial or otherwise,
with respect to the Company reasonably required by the Board in order for the Company Entities to comply with their respective
Governing Instruments or as otherwise reasonably requested by the Board, or any other materials required to be filed with any governmental
body or agency, and shall prepare, or, at the sole cost and expense of the Company, cause to be prepared, all materials and data
necessary to complete such reports and other materials, including, without limitation, an annual audit of Medalist’s consolidated
financial statements by a nationally recognized independent accounting firm.

 

(ii)         The
Manager shall prepare, or, at the sole cost and expense to the Company, cause to be prepared, regular reports for the Board to
enable the Board to review the Company’s acquisitions, portfolio composition and characteristics, performance and compliance
with the Investment Guidelines and policies approved by the Board.

 

(i)          Officers,
employees and agents of the Manager and its Affiliates may serve as directors, officers, agents, nominees or signatories for any
Company Entity, to the extent permitted by their respective Governing Instruments or by any resolutions duly adopted by the Board,
the Operating Partnership or such Company Entity. When executing documents or otherwise acting in such capacities for any Company
Entity, such Persons shall indicate in what capacity they are executing on behalf of such Company Entity. Without limiting the
foregoing, while this Agreement is in effect, the Manager will provide the Company with a management team, including a Chief Executive
Officer, President, Chief Financial Officer, and Chief Operating Officer, along with appropriate support personnel, to provide
the management services to be provided by the Manager to the Company Entities hereunder, who shall devote such of their time to
the management of the Company as necessary and appropriate, commensurate with the level of activity of the Company from time to
time.

 

(j)          The
Manager, at its sole cost and expense, shall at all times during the term of this Agreement maintain reasonable and customary “errors
and omissions” insurance coverage and other customary insurance coverage in respect to its obligations and activities under,
or pursuant to, this Agreement, naming Medalist and the Operating Partnership as additional insureds.

 

(k)          The
Manager, at its sole cost and expense, shall provide such third party internal audit, compliance and control services as may be
required for the Company to comply with applicable law (including the Securities Act and Exchange Act), regulation (including SEC
regulations) and the rules and requirements of the applicable Securities Exchange and as otherwise reasonably requested by the
Company or the Board from time to time.

 

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(l)          The
Manager, at its sole cost and expense, shall maintain any required registration of the Manager or any Affiliate with the SEC under
the Investment Advisers Act of 1940, as amended, or with any state securities authority in any state in which the Manager or its
Affiliate is required to be registered as an investment advisor under applicable state securities laws.

 

Section 3. Additional
Activities of the Manager; Non-Solicitation; Restrictions.

 

(a)          Except
as provided in the last sentence of this Section 3(a), Section 3(b) and/or the Investment Guidelines, nothing
in this Agreement shall (i) prevent the Manager or any of its Affiliates, officers, directors or employees, from engaging
in other businesses or from rendering services of any kind to any other Person or entity, whether or not the investment objectives
or policies of any such other Person or entity are similar to those of the Company; provided,
however, that the Manager shall devote sufficient resources to the Company’s business to discharge its obligations to
the Company Entities under this Agreement; or (ii) in any way bind or restrict the Manager or any of its Affiliates, officers,
directors or employees from buying, selling or trading any securities or commodities for their own accounts or for the account
of others for whom the Manager or any of its Affiliates, officers, directors or employees may be acting. While information and
recommendations supplied to the Company shall, in the Manager’s reasonable and good faith judgment, be appropriate under
the circumstances and in light of the investment objectives and policies of the Company, they may be different from the information
and recommendations supplied by the Manager or any Affiliate of the Manager to others. The Company shall be entitled to equitable
treatment under the circumstances in receiving information, recommendations and any other services, but the Company recognizes
that it is not entitled to receive preferential treatment as compared with the treatment given by the Manager or any Affiliate
of the Manager to others. Notwithstanding anything to the contrary contained herein, the Company shall have the benefit of the
Manager’s best judgment and effort in rendering services hereunder and, in furtherance of the foregoing, the Manager shall
not undertake activities that, in its good faith judgment, will adversely affect the performance of its obligations under this
Agreement. 

 

(b)          The
Manager shall report to the Board any condition or circumstance, existing or anticipated, of which it has knowledge, which creates
or could create a conflict of interest between the Manager’s obligations to the Company and its obligations to or its interest
in any other Person. Until such time as the Public Offering is complete, or has been terminated, and the net proceeds thereof have
been invested in the Target Assets (or such other assets as approved by the Board), the Manager shall not enter into any management
agreement or similar arrangement with any other real estate fund or investment vehicle, however organized, without the prior consent
of Medalist’s Board, including a majority of the Independent Directors, except in respect of funds or other investment vehicles
sponsored by the Manager which antedate this Agreement, specifically Medalist Fund I, LLC and Medalist Fund II, LLC. If the Manager
sponsors or manages any Competing Program that has investment funds available at the same time as the Company, the Manager shall
inform the Board of the method to be applied by the Manager in allocating investment opportunities among the Company and competing
investment entities and shall provide regular updates to the Board of the investment opportunities provided by the Manager to competing
programs in order for the Board (including the Independent Directors) to evaluate that the Manager is allocating such opportunities
in accordance with such method.

 

Section 4. Bank
Accounts.

 

At the direction of
the Board, the Manager may establish and maintain one or more bank accounts in the name of any Company Entity, and may collect
and deposit into any such account or accounts, and disburse funds from any such account or accounts, under such terms and conditions
as the Board may approve; and the Manager shall from time to time render appropriate accountings of such collections and payments
to the Board and, upon request, to the Company’s auditors.

 

    	 	11	 

     

    

 

Section 5. Records;
Confidentiality.

 

(a)          The
Manager shall maintain appropriate books of accounts and records relating to services performed hereunder, and such books of account
and records shall be accessible for inspection by representatives of the Company Entities at any time during normal business hours.
The Manager shall keep confidential any and all non-public information, written or oral, obtained by it in connection with the
services rendered hereunder (“Confidential Information”) and shall not use Confidential Information except in
furtherance of its duties under this Agreement or disclose Confidential Information, in whole or in part, to any Person other than
(i) to its Affiliates, officers, directors, employees, agents, representatives or advisors who need to know such Confidential
Information for the purpose of rendering services hereunder, (ii) to appraisers, financing sources and others in the ordinary
course of the Company’s business ((i) and (ii) collectively, “Manager Permitted Disclosure Parties”),
(iii) in connection with any governmental or regulatory filings of the Company or filings with any applicable Securities Exchange
, market, or Listed Company Manual or disclosure or presentations to Company investors (subject to compliance with Regulation FD),
if applicable, (iv) to governmental officials having jurisdiction over the Company, (v) as requested by law or legal
process to which the Manager or any Person to whom disclosure is permitted hereunder is a party, or (vi) with the consent
of the Company. The Manager agrees to inform each of its Manager Permitted Disclosure Parties of the non-public nature of the Confidential
Information and to obtain agreement from such Persons to treat such Confidential Information in accordance with the terms hereof.

 

(b)          Nothing
herein shall prevent the Manager from disclosing Confidential Information (i) upon the order of any court or administrative
agency, (ii) upon the request or demand of, or pursuant to any law or regulation to, any regulatory agency or authority, (iii) to
the extent reasonably required in connection with the exercise of any remedy hereunder, or (iv) to its legal counsel or independent
auditors; provided, however that with respect to clauses (i) and (ii), it is agreed that, so long as not legally prohibited,
the Manager will provide the Company with prompt written notice of such order, request or demand so that the Company may seek,
at its sole expense, an appropriate protective order and/or waive the Manager’s compliance with the provisions of this Agreement.
If, failing the entry of a protective order or the receipt of a waiver hereunder, the Manager is required to disclose Confidential
Information, the Manager may disclose only that portion of such information that is legally required without liability hereunder;
provided, that the Manager agrees to exercise its reasonable best efforts to obtain reliable assurance that confidential
treatment will be accorded such information.

 

(c)          Notwithstanding
anything herein to the contrary, each of the following shall be deemed to be excluded from the provisions of this Section 5: any
Confidential Information that (A) is available to the public from a source other than the Manager, (B) is released in
writing by the Company to the public or to persons who are not under similar obligation of confidentiality to the Company, or (C) is
obtained by the Manager from a third party where such disclosure, to the best of the Manager’s knowledge, does not constitute
a breach by such third party of an obligation of confidence with respect to the Confidential Information disclosed.

 

(d)          The
provisions of this Agreement shall survive the expiration or earlier termination of this Agreement for a period of one (1) year;
provided that the parties will maintain trade secrets of the other party identified in writing as trade secrets, and which
in fact constitute trade secrets, for a period of no longer than five (5) years thereafter.

 

Section 6. Compensation.

 

(a)          For
the services rendered under this Agreement, the Company shall pay the Asset Management Fee, Acquisition Fee and the Incentive Fee
to the Manager. The Manager will not receive any compensation for the period prior to the Closing Date other than expenses incurred
and reimbursed pursuant to Section 7 hereof.

 

    	 	12	 

     

    

 

(b)          The
parties acknowledge that the Asset Management Fee is intended to compensate the Manager for advisory services and certain general
management services rendered under this Agreement.

 

(c)          The
Asset Management Fee is payable on a monthly basis. If applicable, the initial and final installments of the Asset Management Fee
shall be pro-rated based on the number of days during the initial and final months, respectively, that this Agreement is in effect.
The Asset Management Fee shall be calculated within 5 days after the end of each month and such calculation shall be promptly delivered
to the Company. The Company will be obligated to pay each monthly installment of the Asset Management Fee calculated for that quarter
in cash within five (5) Business Days after delivery to the Company of the written statement of the Manager setting forth the computation
of the Asset Management Fee for such month.

 

(d)          The
Incentive Fee shall be payable in arrears, in quarterly installments commencing with the quarter in which this Agreement is executed.
The Manager shall compute each quarterly installment of the Incentive Fee within forty-five (45) days after the end of the
calendar quarter with respect to which such installment is payable. A copy of the computations made by the Manager to calculate
such installment shall thereafter promptly be delivered to the Board and, upon such delivery, payment of such installment of the
Incentive Fee shown therein shall be due and payable no later than the date which is five (5) Business Days after the date
of delivery to the Board of such computations.

 

(e)          The
Manager will receive an Acquisition Fee of 2.0% of the Acquisition Cost for each Investment made on behalf of the Company at the
closing of the acquisition of such Investment for its services in identifying Investments for purchase, arranging for the purchase
of such Investments, coordinating the closing on such Investments and following up on and resolving post-closing transaction issues
on behalf of the Company. The Acquisition Fee will be in addition to any third party real estate brokerage commissions incurred
by the Company.

 

Section 7. Expenses
of the Company.

 

(a)          Except
as otherwise set forth in Section 7(b)(iv) hereof with respect to the costs of legal tax, accounting, consulting, auditing
and other similar services rendered for the Company as specified therein, which costs shall be the expense of the Company, the
Manager shall be responsible for the expenses related to any and all personnel of the Manager and its Affiliates who provide services
to the Company Entities pursuant to this Agreement (including, without limitation, each of the officers of the Company and any
directors of Medalist who are also directors, officers, employees or agents of the Manager or any of its Affiliates), including,
without limitation, salaries, bonus and other wages, payroll taxes and the cost of employee benefit plans of such personnel, and
costs of insurance with respect to such personnel. For the avoidance of doubt, any Equity Incentive Plan of Medalist or the Operating
Partnership in which any person referred to above participates shall be excluded from the operation of this Section 7(a).

 

(b)          The
Company shall pay (or cause to be paid) all of the costs and expenses of each Company Entity and shall reimburse the Manager or
its Affiliates for documented expenses of the Manager and its Affiliates incurred on behalf of any Company Entity that are reasonably
necessary for the performance by the Manager of its duties and functions hereunder, provided, that such expenses are in
amounts no greater than those that would be payable to third-party professionals or consultants engaged to perform such services
pursuant to agreements negotiated on an arm’s-length basis, and excepting only those expenses that are specifically the responsibility
of the Manager pursuant to Section 7(a) of this Agreement. Without limiting the generality of the foregoing, it is specifically
agreed that the following costs and expenses of the Company Entities shall be paid by the Company and shall not be paid by the
Manager or Affiliates of the Manager:

 

(i)          Acquisition
Expenses incurred in connection with the selection and acquisition of Investments;

 

    	 	13	 

     

    

 

(ii)          general
and administrative expenses of the Company Entities, if any;

 

(iii)         expenses
in connection with the issuance of securities of the Company, any Financing Transaction and other costs incident to the acquisition,
development, redevelopment, construction, repositioning, leasing, disposition and financing of the Investments;

 

(iv)         costs
of legal, tax, accounting, consulting, auditing and other similar services rendered for the Company by providers retained by the
Manager or, if provided by the Manager’s personnel, in amounts which are no greater than those which would be payable to
outside professionals or consultants engaged to perform such services pursuant to agreements negotiated on an arm’s-length
basis. For the avoidance of doubt, (a) any Equity Incentive Plan of Medalist or the Operating Partnership in which any person referred
to in Section 7(a) above participates, and (b) all salaries, bonuses and other wages, payroll taxes and the cost of employee benefit
plans of any persons referred to in Section 7(a) above, and costs of insurance with respect to any such person, shall be included
in the operation of this Section 7(b)(iv);

 

(v)          the
compensation and expenses of Medalist’s directors and the cost of liability insurance to indemnify the Company and its directors
and officers;

 

(vi)         costs
associated with the establishment and maintenance of any of the Company’s credit facilities, other financing arrangements,
or other indebtedness of the Company (including commitment fees, accounting fees, legal fees, closing and other similar costs)
or any of Medalist’s securities offerings;

 

(vii)        expenses
connected with communications to holders of the securities of any Company Entity and other bookkeeping and clerical work necessary
in maintaining relations with holders of such securities and in complying with the continuous reporting and other requirements
of governmental bodies or agencies, including, without limitation, all costs of preparing and filing required reports with the
SEC, the costs payable by the Company to any transfer agent and registrar in connection with the listing and/or trading of Medalist’s
securities on any exchange, the fees payable by the Company to any such exchange in connection with its listing, costs of preparing,
printing and mailing Medalist’s annual report to its stockholders or the Operating Partnership’s partners, as applicable,
and proxy materials with respect to any meeting of Medalist’s stockholders or the Operating Partnership’s partners,
as applicable;

 

(viii)      costs
associated with any computer software or hardware, electronic equipment or purchased information technology services from third-party
vendors that is used for the Company Entities;

 

(ix)         expenses
incurred by managers, officers, personnel and agents of the Manager for travel on the Company’s behalf and other out-of-pocket
expenses incurred by managers, officers, personnel and agents of the Manager in connection with the acquisition, development, redevelopment,
construction, repositioning, leasing, financing, refinancing, sale or other disposition of an Investment or establishment of any
of Medalist’s securities offerings, or in connection with any Financing Transaction;

 

(x)          costs
and expenses incurred with respect to market information systems and publications, research publications and materials, and settlement,
clearing and custodial fees and expenses;

 

(xi)         compensation
and expenses of Medalist’s custodian and transfer agent, if any;

 

(xii)        the
costs of maintaining compliance with all federal, state and local rules and regulations or any other regulatory agency;

 

(xiii)       all
taxes and license fees;

 

    	 	14	 

     

    

 

(xiv)      all
insurance costs incurred in connection with the operation of the Company’s business except for the costs attributable to
the insurance that the Manager elects to carry for itself and its personnel;

 

(xv)       costs
and expenses incurred in contracting with third parties;

 

(xvi)      all
other costs and expenses relating to the Company’s business and investment operations, including, without limitation, the
costs and expenses of acquiring, owning, protecting, maintaining, developing and disposing of Investments, including appraisal,
reporting, audit and legal fees;

 

(xvii)     expenses
relating to any office(s) or office facilities, including, but not limited to, disaster backup recovery sites and facilities, maintained
for any Company Entity or their Investments separate from the office or offices of the Manager, if any;

 

(xviii)    expenses
connected with the payments of interest, dividends or distributions in cash or any other form authorized or caused to be made by
the Board to or on account of holders of the securities of any Company Entity, including, without limitation, in connection with
any dividend reinvestment plan;

 

(xix)       any
judgment or settlement of pending or threatened proceedings (whether civil, criminal or otherwise) against any Company Entity,
or against any trustee, director, partner, member or officer of such Company Entity in his capacity as such for which any Company
Entity is required to indemnify such trustee, director, partner, member or officer pursuant to the applicable Governing Instruments
or any agreement or other instrument or by any court or governmental agency; and

 

(xx)        all
other expenses actually incurred by the Manager (except as otherwise specified herein) that are reasonably necessary for the performance
by the Manager of its duties and functions under this Agreement.

 

(c)          Costs
and expenses incurred by the Manager on behalf of the Company shall be reimbursed monthly to the Manager. The Manager shall prepare
a written statement in reasonable detail documenting the costs and expenses of the Company and those incurred by the Manager on
behalf of the Company during each month, and shall deliver such written statement to the Company within thirty (30) days after
the end of each month. The Company shall pay all amounts payable to the Manager pursuant to this Section 7(c) within five
(5) Business Days after the receipt of the written statement without demand, deduction, offset or delay. Cost and expense
reimbursement to the Manager shall be subject to adjustment at the end of each calendar year in connection with the annual audit
of the Company. The provisions of this Section 7 shall survive the expiration or earlier termination of this Agreement
to the extent such expenses have previously been incurred or are incurred in connection with such expiration or termination.

 

Section 8. Limits
of the Manager’s Responsibility.

 

(a)          The
Manager assumes no responsibility under this Agreement other than to render the services called for hereunder in good faith and
shall not be responsible for any action of the Board in following or declining to follow any advice or recommendations of the Manager,
including as set forth in the Investment Guidelines. The Manager, its officers, members, managers, directors, personnel, Affiliates,
and any Person providing sub-advisory services to the Manager (each, a “Manager Indemnified Party”), will not
be liable to any Company Entity or any of the stockholders, partners, members or other holders of equity interests of any Company
Entity for any acts or omissions by any Manager Indemnified Party performed in accordance with and pursuant to this Agreement,
except by reason of any act or omission on the part of such Manager Indemnified Party constituting bad faith, willful misconduct,
gross negligence or reckless disregard of their duties under the Management Agreement as determined by a final, non-appealable
order of a court of competent jurisdiction. Notwithstanding anything herein to the contrary, the Manager shall perform its duties
with a standard of care utilizing its best business judgment given the circumstances and the resources, in a commercially reasonable
manner.

 

    	 	15	 

     

    

 

(b)          The
Company shall, to the full extent lawful, reimburse, indemnify and hold harmless each Manager Indemnified Party, of and from any
and all expenses, losses, damages, liabilities, demands, charges and claims of any nature whatsoever (including reasonable attorneys’
fees) (collectively, “Losses”) in respect of or arising from any acts or omissions of such Manager Indemnified
Party performed in good faith under this Agreement and the standards set forth in Sections 3(a) and 8(a) and the in accordance
with the standard set forth in Section 3(a) and not constituting bad faith, willful misconduct, gross negligence or reckless disregard
of duties of such Manager Indemnified Party under this Agreement as determined by a final, non-appealable order of a court of competent
jurisdiction. In addition, the Company shall advance funds to a Manager Indemnified Party for legal fees and other costs and expenses
incurred as a result of any claim, suit, action or proceeding for which indemnification is being sought pursuant to the terms of
this Agreement, provided, that such Manager Indemnified Party undertakes to repay the advanced funds to the Company, together
with the applicable legal rate of interest thereon, if it shall ultimately be determined that such Manager Indemnified Party is
not entitled to be indemnified by the Company as provided herein in connection with such claim, suit, action or proceeding.

 

(c)          The
Manager shall, to the full extent lawful, reimburse, indemnify and hold harmless the Company, its directors and officers, personnel,
agents and Affiliates (each, a “Company Indemnified Party,” and collectively with a Manager Indemnified Party,
each an “Indemnified Party”) of and from any and all Losses in respect of or arising from (i) any acts
or omissions of the Manager constituting bad faith, willful misconduct, gross negligence or reckless disregard of the duties of
the Manager under this Agreement, or (ii) any claims by the Manager’s personnel relating to the terms and conditions
of their employment by the Manager.

 

(d)          In
case any such claim, suit, action or proceeding (a “Claim”) is brought against any Indemnified Party in respect
of which indemnification may be sought by such Indemnified Party pursuant hereto, the Indemnified Party shall give prompt written
notice thereof to the indemnifying party, which notice shall include all documents and information in the possession of or under
the control of such Indemnified Party reasonably necessary for the evaluation and/or defense of such Claim and shall specifically
state that indemnification for such Claim is being sought under this Section 8; provided, however, that the failure
of the Indemnified Party to so notify the indemnifying party shall not limit or affect such Indemnified Party’s rights other
than pursuant to this Section 8. Upon receipt of such notice of Claim (together with such documents and information from
such Indemnified Party), the indemnifying party shall, at its sole cost and expense, in good faith defend any such Claim with counsel
reasonably satisfactory to such Indemnified Party, which counsel may, without limiting the rights of such Indemnified Party pursuant
to the next sentence of this Section 8(c), also represent the indemnifying party in such investigation, action or proceeding.
In the alternative, such Indemnified Party may elect to conduct the defense of the Claim, if (i) such Indemnified Party reasonably
determines that the conduct of its defense by the indemnifying party could be materially prejudicial to its interests, (ii) the
indemnifying party refuses to assume such defense (or fails to give written notice to the Indemnified Party within ten (10) days
of receipt of a notice of Claim that the indemnifying party assumes such defense), or (iii) the indemnifying party shall have
failed, in such Indemnified Party’s reasonable judgment, to defend the Claim in good faith. The indemnifying party may settle
any Claim against such Indemnified Party without such Indemnified Party’s consent, provided (i) such settlement is without
any Losses whatsoever to such Indemnified Party, (ii) the settlement does not include or require any admission of liability
or culpability by such Indemnified Party and (iii) the indemnifying party obtains an effective written release of liability
for such Indemnified Party from the party to the Claim with whom such settlement is being made, which release must be reasonably
acceptable to such Indemnified Party, and a dismissal with prejudice with respect to all claims made by the party against such
Indemnified Party in connection with such Claim. The applicable Indemnified Party shall reasonably cooperate with the indemnifying
party, at the indemnifying party’s sole cost and expense, in connection with the defense or settlement of any Claim in accordance
with the terms hereof. If such Indemnified Party is entitled pursuant to this Section 8 to elect to defend such Claim by
counsel of its own choosing and so elects, then the indemnifying party shall be responsible for any good faith settlement of such
Claim entered into by such Indemnified Party. Except as provided in the immediately preceding sentence, no Indemnified Party may
pay or settle any Claim and seek reimbursement therefor under this Section 8.

 

    	 	16	 

     

    

 

(e)          Any
Indemnified Party entitled to indemnification hereunder shall seek recovery under any insurance policies by which such Indemnified
Party is covered and any Indemnified Party shall obtain the written consent of the indemnifying party prior to entering into any
compromise or settlement which would result in an obligation of such indemnifying party to indemnify such Indemnified Party; provided,
however, that the possibility of recovery under any such insurance policies shall not preclude an Indemnified Party from seeking
indemnification pursuant to this Agreement. If such Indemnified Party shall actually recover any amounts under any
applicable insurance policies, it shall offset the net proceeds so received against any amounts owed by the indemnifying party
by reason of the indemnity provided hereunder or, if all such amounts shall have been paid by the indemnifying party in full prior
to the actual receipt of such net insurance proceeds, it shall pay over such proceeds (up to the amount of indemnification paid
by the indemnifying party to such Indemnified Party) to the indemnifying party. If the amounts in respect of which indemnification
is sought arise out of the conduct of the business and affairs of the Company or any Subsidiary and also of any other Person or
entity for which the Indemnified Party hereunder was then acting in a similar capacity, the amount of the indemnification to be
provided by the Company may be limited to the Company Parties’ proportionate share thereof if so determined by the Company
in good faith.

 

(f)          The
provisions of this Section 8 shall survive the expiration or earlier termination of this Agreement.

 

Section 9. No
Joint Venture.

 

The parties to this
Agreement are not partners or joint venturers with each other and nothing herein shall be construed to make them such partners
or joint venturers or impose any liability as such on any of them.

 

Section 10. Term;
Renewal; Termination Without Cause.

 

(a)          This
Agreement shall become effective on the Closing Date and shall continue in operation, unless terminated in accordance with the
terms hereof for an initial term through December 31, 2018 (the “Initial Term”), and then will automatically
renew annually. After the Initial Term, this Agreement shall be deemed renewed automatically each year for an additional one-year
period (an “Automatic Renewal Term”) unless the Company or the Manager elects not to renew this Agreement in
accordance with Section 10(b) or Section 10(d), respectively.

 

(b)          Notwithstanding
any other provision of this Agreement to the contrary, upon the expiration of the Initial Term or any Automatic Renewal Term and
upon 180 days’ prior written notice to the Manager (the “Termination Notice”), the Company may, without
cause, in connection with the expiration of the Initial Term or the then current Automatic Renewal Term, decline to renew this
Agreement (any such nonrenewal, a “Termination Without Cause”) upon the affirmative vote of at least two-thirds
of the Independent Directors that there has been unsatisfactory performance by the Manager that is materially detrimental to the
Company Entities taken as a whole. The Company may terminate this Agreement for cause pursuant to Section 11 hereof
even after a Termination Notice and, in such case, no Termination Fee shall be payable.

 

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(c)          No
later than 180 days prior to the expiration of the Initial Term or the then current Automatic Renewal Term, the Manager may
deliver written notice to the Company informing it of the Manager’s intention to decline to renew this Agreement, whereupon
this Agreement shall not be renewed and extended and this Agreement shall terminate effective on the anniversary date of this Agreement
next following the delivery of such notice. The Company is not required to pay to the Manager the Termination Fee if the Manager
terminates this Agreement pursuant to this Section 10(c).

 

(d)          Except
as set forth in this Section 10, a nonrenewal of this Agreement pursuant to this Section 10 shall be without any
further liability or obligation of either party to the other, except as provided in Section 5, Section 7,
Section 8 and Section 14 of this Agreement.

 

Section 11. Termination
for Cause.

 

(a)          The
Company may terminate this Agreement effective upon 30 days’ prior written notice of termination from the Company to
the Manager (a “Cause Termination Notice”), without payment of any Termination Fee, if (i)  the Manager,
its agents or assignees breaches any material provision of this Agreement and such breach shall continue for a period of 30 days
after written notice thereof specifying such breach and requesting that the same be remedied in such 30-day period (or 45 days
after written notice of such breach if the Manager takes steps to cure such breach within 30 days of the written notice),
(ii) there is a commencement of any proceeding relating to the Manager’s Bankruptcy or insolvency, including an order
for relief in an involuntary bankruptcy case or the Manager authorizing or filing a voluntary bankruptcy petition, (iii) any
Manager Change of Control which a majority of the Independent Directors determines is materially detrimental to the Company Entities
taken as a whole, (iv) the Manager is unable to perform its obligations under this Agreement; (v) the dissolution of the Manager,
or (vi) the Manager commits fraud against the Company, misappropriates or embezzles funds of the Company, or acts, or fails
to act, in a manner constituting gross negligence, or acts in a manner constituting bad faith or willful misconduct, in the performance
of its duties under this Agreement; provided, however, that if any of the actions or omissions described in this clause
(vi) are caused by an employee and/or officer of the Manager or one of its Affiliates and the Manager takes all necessary
and appropriate action against such person and cures the damage caused by such actions or omissions within 30 days of the
Manager actual knowledge of its commission or omission, the Company shall not have the right to terminate this Agreement pursuant
to this Section 11(a)(vi) and any Cause Termination Notice previously given in reliance on this clause (vi)
automatically shall be deemed to have been rescinded and nugatory.

 

(b)          The
Manager may terminate this Agreement effective upon 60 days’ prior written notice of termination to the Company in the
event that the Company shall default in the performance of any material term, condition or covenant contained in this Agreement
and such default shall continue for a period of 30 days after written notice thereof specifying such default and requesting
that the same be remedied in such 30-day period. The Company is required to pay to the Manager the Termination Fee if the termination
of this Agreement is made pursuant to this Section 11(b).

 

(c)          The
Manager may terminate this Agreement if the Company becomes required to register as an investment company under the Investment
Company Act, with such termination deemed to occur immediately before such event, in which case the Company shall not be required
to pay the Termination Fee.

 

Section 12. Action
Upon Termination.

 

From and after the
effective date of termination of this Agreement pursuant to Sections 10 or 11 of this Agreement, the Manager shall
not be entitled to compensation for further services hereunder, but shall be paid all compensation accruing to the date of termination
and, if (x) terminated pursuant to Section 11(b) hereof or (y) not renewed pursuant to Section 10(b) hereof (subject
to Section 10(c) hereof), the Termination Fee. Upon any such termination, the Manager shall forthwith:

 

    	 	18	 

     

    

 

(a)          after
deducting any accrued compensation and reimbursement for its expenses that have been submitted to the Company prior to the effective
date of termination, pay over to each Company Entity all money collected and held for the account of such Company Entity pursuant
to this Agreement;

 

(b)          deliver
to the Board a full accounting, including a statement showing all payments collected by it and a statement of all money held by
it, covering the period following the date of the last accounting furnished to the Board with respect to the Company Entities;

 

(c)          deliver
to the Board all property and documents of the Company Entities then in the custody of the Manager; and

 

(d)          cooperate
with the Company Entities to provide an orderly management transition, including, but not limited to, the transition to a new manager
of control of the assets of the Company Entities.

 

Section 13. Assignments.

 

(a)          Assignments
by the Manager. This Agreement shall terminate automatically without payment of the Termination Fee in the event of its assignment,
in whole or in part, by the Manager, unless such assignment is consented to in writing by Medalist with the consent of a majority
of the Independent Directors and the Operating Partnership. Any such permitted assignment shall bind the assignee under this Agreement
in the same manner as the Manager is bound, and the Manager shall be liable to the Company for all acts or omissions of the assignee
under any such assignment. In addition, the assignee shall execute and deliver to the Company a counterpart of this Agreement naming
such assignee as the Manager. Notwithstanding the foregoing, the Manager may, without the approval of the Company’s Independent
Directors, (i) assign this Agreement to an Affiliate of the Manager, conditioned on such Affiliate becoming a party to, or
becoming subject to the rights and obligations of, the Investment Allocation Agreement, and (ii) delegate to one or more of
its Affiliates the performance of any of its responsibilities hereunder so long as it remains liable for any such Affiliate’s
performance. Nothing contained in this Agreement shall preclude any pledge, hypothecation or other transfer of any amounts payable
to the Manager under this Agreement.

 

(b)          Assignments
by the Company. This Agreement shall not be assigned by the Company without the prior written consent of the Manager, except
in the case of assignment by the Company to another REIT or other organization which is a successor (by merger, consolidation,
purchase of assets, or other transaction) to the Company, in which case such successor organization shall be bound under this Agreement
and by the terms of such assignment in the same manner as the Company is bound under this Agreement.

 

Section 14. Release
of Money or Other Property Upon Written Request.

 

The Manager agrees
that any money or other property of the Company Entities held by the Manager shall be held by the Manager as custodian for the
Company, and the Manager’s records shall be appropriately and clearly marked to reflect the ownership of such money or other
property by the Company. Upon the receipt by the Manager of a written request signed by a duly authorized officer of the Company
requesting the Manager to release to the Company any money or other property then held by the Manager for the account of the Company
under this Agreement, then subject to the Manager’s right to offset pursuant to Section 12(a) hereof, the Manager shall release
such money or other property to the Company within a reasonable period of time, but in no event later than 60 days following
such request. Upon delivery of such money or other property to the Company, the Manager shall not be liable to the Company, the
Board, Medalist’s stockholders or Operating Partnership’s partners or any of the directors or equity holders of any
subsidiary of the Company for any acts or omissions by the Company in connection with the money or other property released to the
Company in accordance with this Section 14. The Company shall indemnify the Manager Indemnified Parties against any and
all Losses which arise in connection with the Manager’s proper release of such money or other property to the Company in
accordance with the terms of this Section 14. Indemnification pursuant to this provision shall be in addition to any
right of the Manager Indemnified Parties to indemnification under Section 8 of this Agreement.

 

    	 	19	 

     

    

 

Section 15. Representations
and Warranties.

 

(a)          Medalist
hereby represents and warrants to the Manager as follows:

 

(i)          Medalist
is duly incorporated, validly existing and in good standing under the laws of the State of Maryland, has the corporate power and
authority and the legal right to own and operate its assets, to lease any property it may operate as lessee and to conduct the
business in which it is now engaged and is duly qualified as a foreign corporation and in good standing under the laws of each
jurisdiction where its ownership or lease of property or the conduct of its business requires such qualification, except for failures
to be so qualified, authorized or licensed that could not in the aggregate have a material adverse effect on the business operations,
assets or financial condition of the Company Entities, taken as a whole.

 

(ii)         Medalist
has the corporate power and authority and the legal right to make, deliver and perform this Agreement and all obligations required
hereunder and has taken all necessary corporate action to authorize this Agreement on the terms and conditions hereof and the execution,
delivery and performance of this Agreement and all obligations required hereunder. No consent of any other Person, including stockholders
and creditors of Medalist, and no license, permit, approval or authorization of, exemption by, notice or report to, or registration,
filing or declaration with, any governmental authority is required by Medalist in connection with this Agreement or the execution,
delivery, performance, validity or enforceability of this Agreement and all obligations required hereunder. This Agreement has
been, and each instrument or document required hereunder will be, executed and delivered by a duly authorized officer of Medalist,
and this Agreement constitutes, and each instrument or document required hereunder when executed and delivered hereunder will constitute,
the legally valid and binding obligation of Medalist enforceable against Medalist in accordance with its terms.

 

(iii)        The
execution, delivery and performance of this Agreement and the documents or instruments required hereunder will not violate any
provision of any existing law or regulation binding on Medalist, or any order, judgment, award or decree of any court, arbitrator
or governmental authority binding on Medalist, or the Governing Instruments of, or any securities issued by Medalist or of any
mortgage, indenture, lease, contract or other agreement, instrument or undertaking to which Medalist is a party or by which Medalist
or any of its assets may be bound, the violation of which would have a material adverse effect on the business operations, assets
or financial condition of the Company Entities, taken as a whole, and will not result in, or require, the creation or imposition
of any lien or any of its property, assets or revenues pursuant to the provisions of any such mortgage, indenture, lease, contract
or other agreement, instrument or undertaking.

 

(b)          The
Operating Partnership hereby represents and warrants to the Manager as follows:

 

(i)          The
Operating Partnership is duly organized, validly existing and in good standing under the laws of the State of Delaware, has the
limited partnership power and authority and the legal right to own and operate its assets, to lease any property it may operate
as lessee and to conduct the business in which it is now engaged and is duly qualified as a foreign limited partnership and in
good standing under the laws of each jurisdiction where its ownership or lease of property or the conduct of its business requires
such qualification, except for failures to be so qualified, authorized or licensed that could not in the aggregate have a material
adverse effect on the business operations, assets or financial condition of the Company Entities, taken as a whole.

 

    	 	20	 

     

    

 

(ii)         The
Operating Partnership has the limited partnership power and authority and the legal right to make, deliver and perform this Agreement
and all obligations required hereunder and has taken all necessary limited partnership action to authorize this Agreement on the
terms and conditions hereof and the execution, delivery and performance of this Agreement and all obligations required hereunder.
No consent of any other Person, including partners and creditors of the Operating Partnership, and no license, permit, approval
or authorization of, exemption by, notice or report to, or registration, filing or declaration with, any governmental authority
is required by the Operating Partnership in connection with this Agreement or the execution, delivery, performance, validity or
enforceability of this Agreement and all obligations required hereunder. This Agreement has been, and each instrument or document
required hereunder will be, executed and delivered by a duly authorized officer of the Operating Partnership, and this Agreement
constitutes, and each instrument or document required hereunder when executed and delivered hereunder will constitute, the legally
valid and binding obligation of the Operating Partnership enforceable against the Operating Partnership in accordance with its
terms.

 

(iii)        The
execution, delivery and performance of this Agreement and the documents or instruments required hereunder will not violate any
provision of any existing law or regulation binding on the Operating Partnership, or any order, judgment, award or decree of any
court, arbitrator or governmental authority binding on the Operating Partnership, or the Governing Instruments of, or any securities
issued by the Operating Partnership or of any mortgage, indenture, lease, contract or other agreement, instrument or undertaking
to which the Operating Partnership is a party or by which the Operating Partnership or any of its assets may be bound, the violation
of which would have a material adverse effect on the business operations, assets or financial condition of the Company Entities,
taken as a whole, and will not result in, or require, the creation or imposition of any lien or any of its property, assets or
revenues pursuant to the provisions of any such mortgage, indenture, lease, contract or other agreement, instrument or undertaking.

 

(c)          The
Manager hereby represents and warrants to the Company as follows:

 

(i)          The
Manager is duly incorporated, validly existing and in good standing under the laws of the Commonwealth of Virginia, has the corporate
power and authority and the legal right to own and operate its assets, to lease the property it operates as lessee and to conduct
the business in which it is now engaged and is duly qualified as a foreign corporation and in good standing under the laws of each
jurisdiction where its ownership or lease of property or the conduct of its business requires such qualification, except for failures
to be so qualified, authorized or licensed that could not in the aggregate have a material adverse effect on the business operations,
assets or financial condition of the Manager.

 

(ii)         The
Manager has the corporate power and authority and the legal right to make, deliver and perform this Agreement and all obligations
required hereunder and has taken all necessary corporate action to authorize this Agreement on the terms and conditions hereof
and the execution, delivery and performance of this Agreement and all obligations required hereunder. No consent of any other Person,
including shareholders and creditors of the Manager, and no license, permit, approval or authorization of, exemption by, notice
or report to, or registration, filing or declaration with, any governmental authority is required by the Manager in connection
with this Agreement or the execution, delivery, performance, validity or enforceability of this Agreement and all obligations required
hereunder. This Agreement has been, and each instrument or document required hereunder will be, executed and delivered by a duly
authorized officer of the Manager, and this Agreement constitutes, and each instrument or document required hereunder when executed
and delivered hereunder will constitute, the legally valid and binding obligation of the Manager enforceable against the Manager
in accordance with its terms.

 

(iii)        The
execution, delivery and performance of this Agreement and the documents or instruments required hereunder will not violate any
provision of any existing law or regulation binding on the Manager, or any order, judgment, award or decree of any court, arbitrator
or governmental authority binding on the Manager, or the Governing Instruments of, or any securities issued by the Manager or of
any mortgage, indenture, lease, contract or other agreement, instrument or undertaking to which the Manager is a party or by which
the Manager or any of its assets may be bound, the violation of which would have a material adverse effect on the business operations,
assets or financial condition of the Manager, and will not result in, or require, the creation or imposition of any lien or any
of its property, assets or revenues pursuant to the provisions of any such mortgage, indenture, lease, contract or other agreement,
instrument or undertaking.

 

    	 	21	 

     

    

 

Section 16. Miscellaneous.

 

(a)          Notices.
All notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by telecopy),
and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered against receipt
or upon actual receipt of (i) personal delivery, (ii) delivery by reputable overnight courier, (iii) delivery by facsimile
transmission with telephonic confirmation or (iv) delivery by registered or certified mail, postage prepaid, return receipt
requested, addressed as set forth below (or to such other address as may be hereafter notified by the respective parties hereto
in accordance with this Section 16):

 

	Medalist:	 	
        Medalist Diversified REIT,
        Inc.

        11 S. 12th Street,
        Suite 401

        Richmond, Virginia 23219

        Attention: Thomas E. Messier

        Tele: (804) 344-4435

	 	 	 
	with a copy to:	 	Kaplan Voekler Cunningham & Frank, PLC
	 	 	1401 E. Cary Street
	 	 	Richmond, Virginia 23219
	 	 	Attention: Thomas G. Voekler, Esq.
	 	 	Fax: (804) 823-4099
	 	 	 
	The Operating Partnership:	 	
        Medalist Diversified Holdings,
        L.P.

        11 S. 12th Street, Suite
        401

        Richmond, Virginia 23219

        Attention: Thomas E. Messier

        Tele: (804) 344-4435

	 	 	 
	with a copy to:	 	Kaplan Voekler Cunningham & Frank, PLC
	 	 	1401 E. Cary Street
	 	 	Richmond, Virginia 23219
	 	 	Attention: Thomas G. Voekler, Esq.
	 	 	Fax: (804) 823-4099
	 	 	 
	The Manager:	 	
        Medalist Fund Manager, Inc.

        11 S. 12th Street,
        Suite 401

        Richmond, Virginia 23219

        Attention: Thomas E. Messier

        Tele: (804) 344-4435

 

    	 	22	 

     

    

 

(b)          Binding
Nature of Agreement; Successors and Assigns; No Third Party Beneficiaries. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, personal representatives, successors and assigns as provided herein.
Except as provided in this Agreement with respect to indemnification of Indemnified Parties hereunder, nothing in this Agreement
shall confer any rights upon any Person other than the parties hereto and their respective heirs, legal representatives, successors
and permitted assigns.

 

(c)          Integration.
This Agreement contains the entire agreement and understanding among the parties hereto with respect to the subject matter hereof,
and supersedes all prior and contemporaneous agreements, understandings, inducements and conditions, express or implied, oral or
written, of any nature whatsoever with respect to the subject matter hereof. The express terms hereof control and supersede any
course of performance and/or usage of the trade inconsistent with any of the terms hereof.

 

(d)          Amendments.
This Agreement, nor any terms hereof, may not be amended, supplemented or modified except in an instrument in writing executed
by the parties hereto.

 

(e)          GOVERNING
LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THECOMMONWEALTH OF VIRGINIA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH
OF THE PARTIES HERETO IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE COMMONWEALTH OF VIRGINIA AND THE UNITED
STATES DISTRICT COURT FOR ANY DISTRICT WITHIN SUCH STATE FOR THE PURPOSE OF ANY ACTION OR JUDGMENT RELATING TO OR ARISING OUT OF
THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY, IRREVOCABLY WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY SUCH
ACTION OR JUDGMENT IN SUCH COURTS, AND IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH SUIT
OR PROCEEDING IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

 

(f)          WAIVER
OF JURY TRIAL. EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO
INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND, THEREFORE, EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY ACTION DIRECTLY
OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT.

 

(g)          Survival
of Representations and Warranties. All representations and warranties made hereunder, and in any document, certificate or statement
delivered pursuant hereto or in connection herewith, shall survive the execution and delivery of this Agreement.

 

(h)          No
Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of a party hereto, any right, remedy,
power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies,
powers and privileges provided by law.

 

(i)          Costs
and Expenses. Each party hereto shall bear its own costs and expenses (including the fees and disbursements of counsel and
accountants) incurred in connection with the negotiations and preparation of and the closing under this Agreement, and all matter
incident thereto.

 

    	 	23	 

     

    

 

(j)          Section Headings.
The section and subsection headings in this Agreement are for convenience in reference only and shall not be deemed to alter or
affect the interpretation of any provisions hereof.

 

(k)          Counterparts.
This Agreement may be executed by the parties to this Agreement on any number of separate counterparts (including by telecopy),
and all of said counterparts taken together shall be deemed to constitute one and the same instrument.

 

(l)          Severability.
Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition
or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

[REMAINDER OF PAGE INTENTIONALLY
LEFT BLANK]

 

    	 	24	 

     

    

 

IN WITNESS WHEREOF,
each of the parties hereto has executed this Management Agreement as of the date first written above.

 

	 	Medalist Diversified REIT, Inc. 
	 	 
	 	By:	/s/ Thomas E. Messier
	 	 	Name:
	 	 	Title:
	 	 	 
	 	Medalist Diversified Holdings, L.P. 
	 	 	 
	 	By:	Medalist Diversified REIT, Inc.,
	 	 	its General Partner
	 	 	 	 
	 	 	By:	/s/ William R. Elliott
	 	 	Name:	 
	 	 	Title:	 
	 	 	 
	 	Medalist Fund Manager, Inc. 
	 	 	 	 
	 	 	By:	/s/  William R. Elliott
	 	 	Name:	 
	 	 	Title:	 

 

[Signature for Management
Agreement for Medalist Diversified REIT, Inc.]

 

    	 	25	 

     

    

 

Exhibit A
to Management Agreement

 

Investment Guidelines

 

(Effective March
15, 2016)

 

1. No investment
shall be made that would cause Medalist to fail to qualify as a REIT under the Code.

 

2. No investment
shall be made that would cause Medalist or the Operating Partnership to be regulated as an investment company under the Investment
Company Act.

 

3. The Company’s
investments shall be in the Target Assets.

 

4. Until
appropriate investments in the Target Assets are identified, the Manager may invest the proceeds of the Public Offering and any
future offerings of Medalist’s or the Operating Partnership’s securities for cash in interest-bearing, short-term investment-grade
investments, subject to the requirements for Medalist’s qualification as a REIT under the Code.

 

5. The Manager will
generally target equity investments ranging from approximately $1 million to $6 million and will target aggregate portfolio leverage
of between 75-80%.

 

6. The approval of
the full Board shall be required for any Investment Transaction involving an equity investment that: (i) requires equity investment
in excess of $10 million; (ii) would be leveraged, on an individual basis, more than 85%; (iii) would cause the aggregate leverage
of our portfolio to exceed 80%; or (iv) would be materially differ from the investment parameters approved by our board.

 

These Investment Guidelines
may be amended, restated, modified, supplemented or waived by the Board (which must include a majority of the Independent Directors)
without the approval of Medalist’s stockholders.

 

    	 	26	 

     

    

 

Exhibit B to Management
Agreement

 

Example Incentive
Fee Calculation

 

Set forth below is an
example of the calculation of the Manager’s quarterly Incentive Fee based upon various assumptions described herein.

 

Assume the
following:

 

		•	AFFO for the 12-month period equals $4,000,000;

 

		•	3,000,000 shares of Common Stock are outstanding and the weighted average number of shares of Common
Stock outstanding during the 12-month period is 3,000,000;

 

		•	weighted average issue price per share of common stock is $10.00; and

 

		•	Incentive Fees paid during the first three quarters of such 12-month period are $300,000.

 

Under these
assumptions, the quarterly incentive fee payable to our Manager would be $80,000, as calculated below:

 

	1.	 	AFFO	 	$	4,000,000	 
	 	 	 	 	 	 	 
	2.	 	Weighted average issue price per share of common stock of $10.00 multiplied by the weighted average number of shares of common stock outstanding of 3,000,000 multiplied by 7%	 	$	2,100,000	 
	 	 	 	 	 	 	 
	3.	 	Excess of AFFO over amount calculated in 2 above	 	$	1,900,000	 
	 	 	 	 	 	 	 
	4.	 	20% of the amount calculated in 3 above	 	$	380,000	 
	 	 	 	 	 	 	 
	5.	 	Incentive fee equals the amount calculated in 4 above less the incentive fees paid during the first three quarters of such previous 12-month period;	 	$	300,000	 
	 	 	 	 	 	 	 
	6.	 	Quarterly incentive fee payable to our Manager:	 	$	80,000	 

 

    	 	27Exhibit 10.2

 

[·], 2018

 

Gores Holdings III, Inc.
 9800 Wilshire Blvd.

Beverly Hills, CA 90212

 

Re: Initial Public Offering

 

Gentlemen:

 

This letter (this “Letter Agreement”) is being delivered to you in accordance with the Underwriting Agreement (the “Underwriting Agreement”) to be entered into by and between Gores Holdings III, Inc., a Delaware corporation (the “Company”), and Deutsche Bank Securities Inc., as representative (the “Representative”) of the several underwriters (each, an “Underwriter” and collectively, the “Underwriters”), relating to an underwritten initial public offering (the “Public Offering”), of 43,125,000 of the Company’s units (including up to 5,625,000 units that may be purchased to cover over-allotments, if any) (the “Units”), each comprised of one share of the Company’s Class A common stock, par value $0.0001 per share (the “Common Stock”), and one-third of one warrant. Each whole Warrant (each, a “Warrant”) entitles the holder thereof to purchase one share of Common Stock at a price of $11.50 per share, subject to adjustment. The Units shall be sold in the Public Offering pursuant to a registration statement on Form S-1 and prospectus (the “Prospectus”) filed by the Company with the Securities and Exchange Commission (the “Commission”) and the Company shall apply to have the Units listed on the Nasdaq Capital Market. Certain capitalized terms used herein are defined in paragraph 11 hereof.

 

In order to induce the Company and the Underwriters to enter into the Underwriting Agreement and to proceed with the Public Offering and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Gores Sponsor III LLC (the “Sponsor”) and the undersigned individual, whom is a member of the Company’s board of directors and/or management team (the “Insider”), hereby agrees with the Company as follows:

 

1.  The Sponsor and Insider agrees that if the Company seeks stockholder approval of a proposed Business Combination, then in connection with such proposed Business Combination, it or he shall (i) vote any shares of Capital Stock owned by it or him in favor of any proposed Business Combination and (ii) not redeem any shares of Common Stock owned by it or him in connection with such stockholder approval.

 

2.  The Sponsor and Insider hereby agrees that in the event that the Company fails to consummate a Business Combination within 24 months from the closing of the Public Offering, or such later period approved by the Company’s stockholders in accordance with the Company’s amended and restated certificate of incorporation, the Sponsor and Insider shall take all reasonable steps to cause the Company to (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than 10 business days thereafter, subject to lawfully available funds therefor, redeem 100% of the Common Stock sold as part of the Units in the Public Offering (the “Offering Shares”), at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest

 

 

earned on the funds held in the Trust Account and not previously released to the Company for regulatory withdrawals and/or to pay its franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Offering Shares, which redemption will completely extinguish all Public Stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and other requirements of applicable law. The Sponsor and Insider agrees to not propose any amendment to the Company’s amended and restated certificate of incorporation that would affect the substance or timing of the Company’s obligation to redeem 100% of the Offering Shares if the Company does not complete a Business Combination within 24 months from the closing of the Public Offering, unless the Company provides its public stockholders with the opportunity to redeem their shares of Common Stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to the Company for regulatory withdrawals and/or to pay its franchise and income taxes, divided by the number of then outstanding Offering Shares.

 

The Sponsor and Insider acknowledges that it or he has no right, title, interest or claim of any kind in or to any monies held in the Trust Account or any other asset of the Company as a result of any liquidation of the Company with respect to the Founder Shares held by it. The Sponsor and Insider hereby further waives, with respect to any shares of Common Stock held by it or him, if any, any redemption rights it or he may have in connection with the consummation of a Business Combination, including, without limitation, any such rights available in the context of a stockholder vote to approve such Business Combination or in the context of a tender offer made by the Company to purchase shares of Common Stock (although the Sponsor, the Insider and their respective affiliates shall be entitled to redemption and liquidation rights with respect to any Offering Shares it or they hold if the Company fails to consummate a Business Combination within 24 months from the date of the closing of the Public Offering).

 

3.  During the period commencing on the effective date of the Underwriting Agreement and ending 180 days after such date, the Sponsor and Insider shall not, without the prior written consent of the Representative, (i) sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or indirectly, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder, with respect to any Units, shares of Common Stock, Founder Shares, Warrants or any securities convertible into, or exercisable, or exchangeable for, shares of Common Stock owned by it or him, (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any Units, shares of Common Stock, Founder Shares, Warrants or any securities convertible into, or exercisable, or exchangeable for, shares of Common Stock owned by it or him, whether any such transaction is to be settled by delivery of such securities, in cash or otherwise, or (iii) publicly announce any intention to effect any

 

2

 

transaction specified in clause (i) or (ii). The Insider and the Sponsor acknowledges and agrees that, prior to the effective date of any release or waiver, of the restrictions set forth in this paragraph 3 or paragraph 7 below, the Company shall announce the impending release or waiver by press release through a major news service at least two business days before the effective date of the release or waiver. Any release or waiver granted shall only be effective two business days after the publication date of such press release. The provisions of this paragraph will not apply if the release or waiver is effected solely to permit a transfer not for consideration and the transferee has agreed in writing to be bound by the same terms described in this Letter Agreement to the extent and for the duration that such terms remain in effect at the time of the transfer.

 

4.  In the event of the liquidation of the Trust Account, the Sponsor (which for purposes of clarification shall not extend to any other shareholders, members or managers of the Sponsor) agrees to indemnify and hold harmless the Company against any and all loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all legal or other expenses reasonably incurred in investigating, preparing or defending against any litigation, whether pending or threatened, or any claim whatsoever) to which the Company may become subject as a result of any claim by (i) any third party for services rendered or products sold to the Company or (ii) a prospective target business with which the Company has entered into an acquisition agreement (a “Target”); provided, however, that such indemnification of the Company by the Sponsor shall apply only to the extent necessary to ensure that such claims by a third party for services rendered (other than the Company’s independent public accountants) or products sold to the Company or a Target do not reduce the amount of funds in the Trust Account to below (i) $10.00 per share of the Offering Shares or (ii) such lesser amount per share of the Offering Shares held in the Trust Account due to reductions in the value of the trust assets as of the date of the liquidation of the Trust Account, in each case, net of the amount of interest earned on the property in the Trust Account which may be withdrawn to pay taxes, except as to any claims by a third party (including a Target) who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under the Company’s indemnity of the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended. In the event that any such executed waiver is deemed to be unenforceable against such third party, the Sponsor shall not be responsible to the extent of any liability for such third party claims. The Sponsor shall have the right to defend against any such claim with counsel of its choice reasonably satisfactory to the Company if, within 15 days following written receipt of notice of the claim to the Sponsor, the Sponsor notifies the Company in writing that it shall undertake such defense.

 

5.  To the extent that the Underwriters do not exercise their over-allotment option to purchase up to an additional 5,625,000 Units within 45 days from the date of the Prospectus (and as further described in the Prospectus), the Sponsor agrees to forfeit, at no cost, a number of Founder Shares in the aggregate equal to 1,406,250 multiplied by a fraction, (i) the numerator of which is 5,625,000 minus the number of Units purchased by the Underwriters upon the exercise of their over-allotment option, and (ii) the denominator of which is 5,625,000. The forfeiture will be adjusted to the extent that the over-allotment option is not exercised in full by the Underwriters so that the Initial Stockholders will own an aggregate of 20.0% of the Company’s issued and outstanding shares of Capital Stock after the Public Offering.

 

3

 

6.  The Sponsor and Insider hereby agrees and acknowledges that: (i) the Underwriters and the Company would be irreparably injured in the event of a breach by such Sponsor or Insider of its or his obligations under paragraphs 1, 2, 3, 4, 5, 7(a), 7(b), and 9 of this Letter Agreement (ii) monetary damages may not be an adequate remedy for such breach and (iii) the non-breaching party shall be entitled to injunctive relief, in addition to any other remedy that such party may have in law or in equity, in the event of such breach.

 

7.  (a)  The Sponsor and Insider agrees that it or he shall not Transfer any Founder Shares (or shares of Common Stock issuable upon conversion thereof) until 180 days after the completion of the Company’s initial Business Combination (the “Founder Shares Lock-up Period”).

 

(b)  The Sponsor and Insider agrees that it or he shall not Transfer any Private Placement Warrants (or shares of Common Stock issued or issuable upon the conversion of the Private Placement Warrants), until 30 days after the completion of a Business Combination (the “Private Placement Warrants Lock-up Period”, together with the Founder Shares Lock-up Period, the “Lock-up Periods”).

 

(c)  Notwithstanding the provisions set forth in paragraphs 7(a) and (b), Transfers of the Founder Shares, Private Placement Warrants and shares of Common Stock issued or issuable upon the exercise or conversion of the Private Placement Warrants or the Founder Shares and that are held by the Sponsor, Insider or any of their permitted transferees (that have complied with this paragraph 7(c)), are permitted (a) to the Company’s officers or directors, any affiliates or family members of any of the Company’s officers or directors, any members of the Sponsor, or any affiliates of the Sponsor; (b) in the case of an individual, transfers by gift to a member of the individual’s immediate family, to a trust, the beneficiary of which is a member of the individual’s immediate family or an affiliate of such person, or to a charitable organization; (c) in the case of an individual, transfers by virtue of laws of descent and distribution upon death of the individual; (d) in the case of an individual, transfers pursuant to a qualified domestic relations order; (e) transfers by private sales or transfers made in connection with the consummation of a Business Combination at prices no greater than the price at which the securities were originally purchased; (f) transfers in the event of the Company’s liquidation prior to the completion of an initial Business Combination; (g) transfers by virtue of the laws of the State of Delaware or the Sponsor’s limited liability company agreement upon dissolution of the Sponsor; and (h) in the event of the Company’s liquidation, merger, capital stock exchange, reorganization or other similar transaction which results in all of the Company’s stockholders having the right to exchange their shares of Common Stock for cash, securities or other property subsequent to the completion of the Company’s initial Business Combination; provided, however, that in the case of clauses (a) through (e), these permitted transferees must enter into a written agreement agreeing to be bound by the restrictions herein.

 

8.  The Sponsor and Insider represents and warrants that it or he has never been suspended or expelled from membership in any securities or commodities exchange or association or had a securities or commodities license or registration denied, suspended or revoked. The Insider’s biographical information furnished to the Company (including any such information included in the Prospectus) is true and accurate in all respects and does not omit any material information with respect to the Insider’s background. The Insider’s questionnaire furnished to the Company is true and accurate in all respects. The Insider represents and

 

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warrants that: it is not subject to or a respondent in any legal action for, any injunction, cease-and-desist order or order or stipulation to desist or refrain from any act or practice relating to the offering of securities in any jurisdiction; it has never been convicted of, or pleaded guilty to, any crime (i) involving fraud, (ii) relating to any financial transaction or handling of funds of another person, or (iii) pertaining to any dealings in any securities and it is not currently a defendant in any such criminal proceeding.

 

9.  There will be no restrictions on payments made to the Insider. However, prior to consummation of the Business Combination the Company shall not make any payment to the Insider from the proceeds held in the Trust Account including, but not limited to repayment of a loan and advances of up to an aggregate of $300,000 made to the Company by the Sponsor; payment to an affiliate of the Sponsor for office space, utilities and secretarial and administrative support for a total of $20,000 per month; reimbursement of legal fees and expenses incurred by the Sponsor or Insider in connection with the Company’s formation, the initial Business Combination and their services to the Company; payment of fees and reimbursement of out-of-pocket expenses related to identifying, investigating and consummating an initial Business Combination; and repayment of loans, if any, and on such terms as to be determined by the Company from time to time, made by the Sponsor or any of the Company’s officers or directors to finance transaction costs in connection with an intended initial Business Combination, provided, that, if the Company does not consummate an initial Business Combination, a portion of the working capital held outside the Trust Account may be used by the Company to repay such loaned amounts so long as no proceeds from the Trust Account are used for such repayment. Up to $1,500,000 of such loans may be convertible into warrants at a price of $1.50 per warrant at the option of the lender. Such warrants would be identical to the Private Placement Warrants, including as to exercise price, exercisability and exercise period.

 

10.  The Sponsor and Insider has full right and power, without violating any agreement to which it is bound (including, without limitation, any non-competition or non-solicitation agreement with any employer or former employer), to enter into this Letter Agreement and, as applicable, to serve as a director on the board of directors of the Company and hereby consents to being named in the Prospectus as a director of the Company.

 

11.  As used herein, (i) “Business Combination” shall mean a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination, involving the Company and one or more businesses; (ii) “Capital Stock” shall mean, collectively, the Common Stock and the Founder Shares; (iii) “Founder Shares” shall mean the 10,781,250 shares of the Company’s Class F common stock, par value $0.0001 per share, initially issued to the Sponsor (or 9,375,000 shares if the over-allotment option is not exercised by the Underwriters) for an aggregate purchase price of $25,000, or approximately $0.002 per share, prior to the consummation of the Public Offering; (iv) “Initial Stockholders” shall mean the Sponsor and Insider that holds Founder Shares; (v) “Private Placement Warrants” shall mean the Warrants to purchase up to 6,333,334 shares of Common Stock of the Company (or 7,083,334 shares of Common Stock if the over-allotment option is exercised in full) that the Sponsor has agreed to purchase for an aggregate purchase price of $9,500,000 in the aggregate (or $10,625,000 if the over-allotment option is exercised in full), or $1.50 per Warrant, in a private placement that shall occur simultaneously with the consummation of the Public Offering; (vi) “Public Stockholders” shall mean the holders of securities issued in the Public Offering; (vii) “Trust Account” shall mean the trust fund into which a portion of the net proceeds of the

 

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Public Offering shall be deposited; and (viii) “Transfer” shall mean the (a) sale of, offer to sell, contract or agreement to sell, hypothecate, pledge, grant of any option to purchase or otherwise dispose of or agreement to dispose of, directly or indirectly, or establishment or increase of a put equivalent position or liquidation with respect to or decrease of a call equivalent position within the meaning of Section 16 of the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder with respect to, any security, (b) entry into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any security, whether any such transaction is to be settled by delivery of such securities, in cash or otherwise, or (c) public announcement of any intention to effect any transaction specified in clause (a) or (b).

 

12.  This Letter Agreement constitutes the entire agreement and understanding of the parties hereto in respect of the subject matter hereof and supersedes all prior understandings, agreements, or representations by or among the parties hereto, written or oral, to the extent they relate in any way to the subject matter hereof or the transactions contemplated hereby. This Letter Agreement may not be changed, amended, modified or waived (other than to correct a typographical error) as to any particular provision, except by a written instrument executed by all parties hereto.

 

13.  No party hereto may assign either this Letter Agreement or any of its rights, interests, or obligations hereunder without the prior written consent of the other party. Any purported assignment in violation of this paragraph shall be void and ineffectual and shall not operate to transfer or assign any interest or title to the purported assignee. This Letter Agreement shall be binding on the Sponsor and Insider and their respective successors, heirs and assigns and permitted transferees.

 

14.  This Letter Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York, without giving effect to conflicts of law principles that would result in the application of the substantive laws of another jurisdiction. The parties hereto (i) all agree that any action, proceeding, claim or dispute arising out of, or relating in any way to, this Letter Agreement shall be brought and enforced in the courts of New York City, in the State of New York, and irrevocably submit to such jurisdiction and venue, which jurisdiction and venue shall be exclusive and (ii) waive any objection to such exclusive jurisdiction and venue or that such courts represent an inconvenient forum.

 

15.  Any notice, consent or request to be given in connection with any of the terms or provisions of this Letter Agreement shall be in writing and shall be sent by express mail or similar private courier service, by certified mail (return receipt requested), by hand delivery or facsimile transmission.

 

16.  This Letter Agreement shall terminate on the earlier of (i) the expiration of the Lock-up Periods or (ii) the liquidation of the Company; provided, however, that this Letter Agreement shall earlier terminate in the event that the Public Offering is not consummated and closed by January 31, 2019; provided further that paragraph 4 of this Letter Agreement shall survive such liquidation.

 

[Signature Page Follows]

 

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Sincerely,
    
	
 
    	
 
    
	
 
    	
GORES Holdings III, Inc.
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:   
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:   [Holder]
    

 

[Signature Page to Letter Agreement]

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