8-K - MDRR - Equibles

UNITEDSTATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

**Pursuantto Section 13 or 15(**d)of the Securities Exchange Act of 1934

Date of Report (Date ofearliest event reported): May 24, 2023

Medalist Diversified REIT, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Maryland	001-38719	47-5201540
(State or other<br> jurisdiction of incorporation<br><br> or organization)	(Commission File Number)	(I.R.S. Employer <br><br>Identification No.)

1051 E. Cary Street Suite 601

James Center Three

Richmond, VA, 23219

(Address of principal executive offices)

(804) 344-4435

(Registrant’s telephone number, including area code)

None

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨	Written communications pursuant to Rule 425 under the Securities<br>Act (17 CFR 230.425)
¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of each Exchange on Which Registered	Trading Symbol(s)
Common Stock, $0.01 par value	Nasdaq Capital Market	MDRR
8.0% Series A Cumulative Redeemable Preferred Stock, $0.01 par value	Nasdaq Capital Market	MDRRP

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging Growth Company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Item 5.02	Departure of Directors or Certain Officers; Election of Directors;Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On May 24, 2023, in connection with the Cooperation Agreement described in Item 8.01 below, the Board of Directors (the “Board”) of Medalist Diversified REIT, Inc. (the “Company”) increased the size of the Board from five (5) to six (6) directors and appointed Francis P. Kavanaugh to the Board, effective May 24, 2023, for a term expiring at the Company’s 2023 annual meeting of stockholders (the “2023 Annual Meeting”). The Cooperation Agreement also provides that the Company will nominate Mr. Kavanaugh for re-election at the 2023 Annual Meeting, for a term expiring at the Company’s 2024 annual meeting of stockholders (the “2024 Annual Meeting”). In addition, pursuant to the Cooperation Agreement, Mr. Kavanaugh was appointed as a member of the previously announced Special Committee of the Board charged with the exploration of potential strategic alternatives in order to maximize stockholder value.

The Board has determined that Mr. Kavanaugh is an independent director as defined in the listing standards of The Nasdaq Stock Market LLC and the applicable rules of the U.S. Securities and Exchange Commission (the “SEC”). Mr. Kavanaugh will participate in the Company’s compensation program for its independent directors.

Other than the Cooperation Agreement, there are no arrangements or understandings between Mr. Kavanaugh and any other person pursuant to which he was selected as a director, and Mr. Kavanaugh is not a party to any transaction that would require disclosure under Item 404(a) of Regulation S-K.

Item 7.01	Regulation FD Disclosure.

On May 24, 2023, the Company issued a press release announcing the appointment of Mr. Kavanaugh to the Board and the Special Committee of the Board. A copy of the press release is attached to this Current Report on Form 8-K as Exhibit 99.1 and is incorporated herein by reference.

The information in this Item 7.01 and Exhibit 99.1 attached hereto is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

Item 8.01	Other Events.

On May 24, 2023, the Company entered into a cooperation agreement (the “Cooperation Agreement”) with Mr. Kavanaugh. The information contained in Item 5.02 of this Current Report on Form 8-K regarding the Cooperation Agreement is incorporated by reference into this Item 8.01.

During the term of the Cooperation Agreement (as described below), Mr. Kavanaugh will be subject to customary standstill restrictions, including, but not limited to, nominating, recommending for nomination or giving notice of intent to nominate or recommend for nomination a person for election at any annual or special meeting of stockholders at which the Company’s directors are to be elected (a “Stockholder Meeting”), initiating, encouraging or participating in any solicitation of proxies or consents in respect of any election contest or removal contest at any Stockholder Meeting with respect to the Company’s directors, and submitting, initiating, making or being a proponent of any stockholder proposal for consideration at, or bringing any business before, any Stockholder Meeting.

The term of the Cooperation Agreement begins on May 24, 2023 and continues until the earlier of (i) the day following the 2024 Annual Meeting, (ii) the consummation of a sale of all or substantially all of the assets of the Company, (iii) the consummation of a merger or other business combination, or (iv) Mr. Kavanaugh’s resignation from the Board.

The foregoing summary of the Cooperation Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Cooperation Agreement, a copy of which is attached to this Current Report on Form 8-K as Exhibit 10.1 and is incorporated herein by reference.

Item 9.01	Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.	Description
10.1	Cooperation Agreement, dated May 24, 2023, by and among Francis P. Kavanaugh and the Company
99.1	Press Release dated May 24, 2023
104	Cover Page Interactive Data File – the cover page XBRL tags are embedded within the Inline XBRL Document

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	MEDALIST DIVERSIFIED REIT, INC.
Dated: May 24, 2023	By:	/s/ Thomas E. Messier
		Thomas E. Messier
		Chief Executive Officer, Chairman of the Board, Treasurer and Secretary

Exhibit 10.1

COOPERATION AGREEMENT

This COOPERATION AGREEMENT (this “Agreement”) is made and entered into as of May 24, 2023 by and between Medalist Diversified REIT, Inc., a Maryland corporation (the “Company”), and Francis P. Kavanaugh (the “Investor”). The Company and the Investor are each herein referred to as a “party” and collectively, the “parties.”

WHEREAS, this Agreement is being executed and delivered by the parties in connection with the appointment of the Investor to the Board of Directors (the “Board”) of the Company.

NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound hereby, agree as follows:

1. BoardComposition and Related Matters.

(a) Effective upon the execution and delivery of this Agreement, the Board shall increase the size of the Board from five to six directors and appoint the Investor to the Board to fill the vacancy resulting from the increase in the size of the Board with a term expiring at the 2023 Annual Meeting of Stockholders (the “2023 Annual Meeting”) and until his successor is elected and qualified. In addition, the Board will include the Investor in the Board’s slate of directors for election to the Board at the 2023 Annual Meeting.

(b) Upon his appointment to the Board, the Investor shall be appointed as a member of the “Special Committee” of the Board, comprised solely of Neil P. Farmer, Timothy O’Brien, Charles S. Pearson and the Investor.

(c) The Investor agrees to comply with the terms of the Company’s Articles of Incorporation (as may be amended and supplemented from time to time, the “Charter”), By-Laws (as may be amended from time to time, the “By-Laws”), committee charters and corporate governance documents that are applicable to all of the Company’s non-employee directors.

(d) The Investor will be entitled to the same director benefits as other non-employee members of the Board, including (i) compensation for such director’s service as a director and reimbursement of such director’s expenses on the same basis as all other non-employee directors of Company (but with the first annual retainer payable to the Investor at the time of the 2023 Annual Meeting and with the form of the retainer payable in common stock of the Company or the cash equivalent (at the election of the Board)) and (ii) the same rights of indemnification and directors’ and officers’ liability insurance coverage as the other non-employee directors of Company as such rights may exist from time to time.

**2.**Standstill. Prior to the Termination Date, without the prior written consent of the Board, the Investor shall not, and shall instruct his Affiliates not to, directly or indirectly:

(a) nominate, recommend for nomination or give notice of an intent to nominate or recommend for nomination a person for election at any Stockholder Meeting at which the Company’s directors are to be elected; (ii) initiate, encourage or participate in any solicitation of proxies or consents in respect of any election contest or removal contest at any Stockholder Meeting with respect to the Company’s directors; (iii) submit, initiate, make or be a proponent of any stockholder proposal for consideration at, or bring any other business before, any Stockholder Meeting; (iv) initiate, encourage or participate in any solicitation of proxies or consents in respect of any stockholder proposal for consideration at, or other business brought before, any Stockholder Meeting; or (v) initiate, encourage or participate in any “withhold,” “against,” “vote no,” defeat quorum or similar campaign with respect to any Stockholder Meeting;

(b) form, join or act in concert with any group or agreement with respect to any voting securities of the Company, including in connection with any election or removal contest with respect to the Company’s directors or any stockholder proposal or other business brought before any Stockholder Meeting;

(d) make any public statement to encourage: (A) any change in the number or term of directors serving on the Board or the filling of any vacancies on the Board, (B) any change in the capitalization or dividend policy of the Company, (C) any other change in the Company’s management, governance, corporate structure, affairs or policies or (D) any Extraordinary Transaction or any material acquisition of any assets or businesses of the Company or any of its subsidiaries;

(e) initiate, make or participate (other than as a stockholder) in any Extraordinary Transaction or make any proposal, alone or in concert with others, to the Company or the Board that would reasonably be expected to require a public announcement or disclosure regarding any such matter;

(f) enter into any negotiations, agreements or understandings with any third party with respect to the foregoing, or advise, assist, encourage or seek to persuade any third party to take any action with respect to any of the foregoing; or

(g) publicly request that the Company or the Board amend or waive any provision of this Agreement.

3. SECFilings.

(a) Promptly following the execution and delivery of this Agreement, the Company shall file with the SEC a Current Report on Form 8-K reporting its entry into this Agreement and including this Agreement as an exhibit thereto (the “Form 8-K”).

(b) Promptly following the execution and delivery of this Agreement, the Investor shall file with the SEC an amendment to his Schedule 13D in compliance with the Exchange Act reporting his entry into this Agreement, disclosing applicable items to conform to his obligations hereunder and including the terms of this Agreement and including this Agreement as an exhibit thereto (the “Schedule 13D Amendment”).

**4.**Affiliates. Each party shall instruct its controlled Affiliates to comply with the terms of this Agreement.

**5.**Representationsand Warranties. The Investor represents and warrants that the information contained in the D&O Questionnaire delivered by the Investor to the Company prior to the date hereof is true and correct. The Investor acknowledges that he understands his obligations under the U.S. securities laws.

**6.**Termination. This Agreement shall terminate on the earlier of (“Termination Date”): (i) the day following the Company’s 2024 Annual Meeting of Stockholders, (ii) the consummation of a sale of all or substantially all of the assets of the Company (iii) the consummation of a merger or other business combination in which persons who are not stockholders of the Company immediately prior to the consummation of such merger or other business combination own more than a majority of the voting equity of the Company or the resulting entity immediately following the consummation of such merger or other business combination; or (iv) Investor’s resignation from the Board, in which case the provisions of Section 2 shall survive for thirty (30) days thereafter.

**7.****Expenses.**Each party shall be responsible for its own fees and expenses incurred in connection with this Agreement.

**8.**GoverningLaw. This Agreement shall be governed by and construed in accordance with the laws of the State of Maryland without giving effect to the choice of law principles of such state that may direct application of laws of another jurisdiction.

**9.**CertainDefinitions and Interpretations. As used in this Agreement: (a) the term “Affiliate” has the meaning given to such term under Rule 12b-2 promulgated by the SEC under the Exchange Act; (b) the term “Annual Meeting” means each annual meeting of stockholders of the Company and any adjournment, postponement, rescheduling or continuation thereof; (c) the terms “group,” “proxy” and “solicitation” have the meanings given to such terms under the Exchange Act and the rules and regulations promulgated thereunder, provided, that the meaning of “solicitation” shall be without regard to the exclusions set forth in Rules 14a-1(l)(2)(iv) and 14a-2 under the Exchange Act; (d) the term “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder; (e) the term “Extraordinary Transaction” means any tender offer, exchange offer, merger, consolidation, acquisition, business combination, sale, recapitalization, restructuring, or other transaction with a third party that, in each case, results in a change in control of the Company or the sale of all or substantially all of its assets; (f) the term “SEC” means the U.S. Securities and Exchange Commission; and (g) the term “Stockholder Meeting” means each annual or special meeting of stockholders of the Company, or any action by written consent of the Company’s stockholders in lieu thereof.

10. Miscellaneous.

(a) Nothing in this Agreement will prohibit or restrict the Investor from any action or inaction consistent with or required by the standard of conduct required of directors of a Maryland corporation.

(b) This Agreement, including all exhibits hereto, with the exception of the Confidentiality Agreement, contains the entire agreement between the parties and supersedes all other prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof.

(d) This Agreement may be executed in one or more textually identical counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same agreement. Signatures to this Agreement transmitted by facsimile transmission, by electronic mail in “portable document format” (“.pdf”) form, or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, shall have the same effect as physical delivery of the paper document bearing the original signature.

[Signature Pages Follow]

IN WITNESS WHEREOF, each of the parties has executed this Agreement, or caused the same to be executed by its duly authorized representative, as of the date first above written.

THE COMPANY:
MEDALIST DIVERSIFIED REIT, INC.
By:	/s/<br> William R. Elliott
Name:	William R. Elliott
Title:	President
INVESTOR:
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/s/<br> Francis P. Kavanaugh
Francis P. Kavanaugh

Exhibit 99.1

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Medalist Diversified REIT, Inc. Announces theAppointment of Francis P. Kavanaugh to its Board of Directors

RICHMOND, VA, May 24, 2023. Medalist Diversified REIT, Inc. (NASDAQ:MDRR) (the “Company”), a Virginia-based real estate investment trust that specializes in acquiring, owning and managing commercial real estate in the Southeast region of the U.S., today announced the appointment of Francis P. Kavanaugh to its Board of Directors (the “Board”), effective immediately.

Mr. Kavanaugh has also been appointed as a member of the previously disclosed Special Committee of the Board charged with exploration of potential strategic alternatives in order to maximize stockholder value.

Mr. Kavanaugh has 30+ years of diverse experience in real estate investment, business restructuring, and operational leadership. Mr. Kavanaugh is currently employed as a Managing Director of Fort Ashford Funds, LLC. He has served as its manager since the company’s inception in 2004. “We are pleased to add a leader of Frank’s caliber to our Board,” said Bill Elliott, President and Chief Operating Officer. “We understand the value of having experienced, diverse and independent perspectives in our boardroom and have taken significant steps to ensure the Board reflects an appropriate mix of backgrounds. Mr. Kavanaugh brings substantial expertise and a new perspective to the Board. The addition of Mr. Kavanaugh reflects our commitment to enhancing value for our stockholders. We look forward to optimizing the Company’s exploration of potential strategic alternatives with Mr. Kavanaugh’s strong operational leadership background and vision for strategic changes.”

"I appreciate the Board and Special Committee’s decision,” said Frank Kavanaugh. “It emphasizes their efforts for transparency and thorough evaluation of all strategic options, all while maintaining a core focus on prioritizing the best interests of the stockholders."

Concurrently with his appointment to the Board, Mr. Kavanaugh and the Company have entered into a cooperation agreement, which will be included as an exhibit to the Company’s Current Report on Form 8-K to be filed with the Securities and Exchange Commission.

Forward-Looking Statements

This press release contains statements that are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. Forward looking statements are not historical and are typically identified by such words as “believe,” “expect,” “anticipate,” “intend,” “estimate, “may,” “will,” “should” and “could.” Forward-looking statements are based upon the Company’s present expectations, but are not guarantees or assurances as to future developments or results. Factors that may cause actual developments or results to differ from those reflected in forward-looking statements include, without limitation, those included in the Company’s most recent Annual Report on Form 10-K and in the Company’s other filings with the Securities and Exchange Commission. Investors should not place undue reliance upon forward-looking statements. The Company disclaims any obligation to publicly update or revise any forward-looking statements to reflect changes and new developments except as required by law or regulation.

Brent Winn

Medalist Diversified REIT, Inc.

brent.winn@medalistprop.com