Exhibit 10.8

ASSIGNMENT AND SUBORDINATION OF MANAGEMENT AGREEMENT

THIS ASSIGNMENT AND SUBORDINATION OF MANAGEMENT AGREEMENT (“Assignment”) is made
as of July 27, 2012, which date shall be the effective date of this Assignment,
by and between FSP 50 SOUTH TENTH STREET CORP., a Delaware corporation
(“Borrower”), BANK OF AMERICA, N.A., a national banking association, as
administrative agent for itself and other lenders who become parties to the Loan
Agreement (including its successors, transferees and assigns, “Lender”), and
RYAN COMPANIES US, INC., a Minnesota corporation (“Agent”).

RECITALS:

A.     This Assignment is being executed in connection with the Lender making a
mortgage loan to the Borrower in the original principal amount of
$106,200,000.00 (the “Loan”) secured primarily by the real and personal property
and improvements located approximately at 50 South Tenth Street, Minneapolis,
Minnesota (the “Property”).

B.     The Loan is evidenced by one or more Promissory Notes (together with all
amendments or modifications thereto or restatements thereof, the “Note”), dated
the date of this Assignment, made by the Borrower, and a certain Loan Agreement
(together with all amendments or modifications thereto or restatements thereof,
the “Loan Agreement”), and is secured by, among other things, a certain
mortgage, assignment of leases and rents, security agreement and fixture filing
(together with all amendments or modifications thereto or restatements thereof,
the “Security Instrument”), dated the date of this Assignment, granting a first
lien on the Property (this Assignment, the Note, the Security Instrument, the
Loan Agreement and all other documents executed in connection with the Loan are
collectively referred to as the “Loan Documents”).

C.     Pursuant to a certain management agreement between the Borrower and the
Agent (including any amendments or modifications thereto or restatements
thereof, the “Management Agreement”), a true and correct copy of which is
attached hereto as Exhibit A, the Borrower employed the Agent exclusively to
operate and/or manage the Property.

D.     The Lender requires as a condition to the making of the Loan that the
Borrower assign the Management Agreement as set forth below.

NOW, THEREFORE, in consideration of the above and the mutual promises contained
in this Assignment, the receipt and sufficiency of which are acknowledged, the
parties hereto agree as follows:

1.     Definitions. All capitalized terms used herein and not otherwise defined
shall have the meanings set forth for such terms in the Loan Agreement.

 

 

 

2.     Assignment of Management Agreement. The Borrower hereby absolutely and
unconditionally transfers, sets over and assigns to the Lender all of the
Borrower’s rights, title, interests and benefits in and to the Management
Agreement. This is an absolute assignment, not an assignment for security only;
provided, however, until the occurrence of an Event of Default (as defined in
the Loan Agreement), the Borrower shall have a license to retain all rights,
title, interests and benefits under the Management Agreement, and provided
further that said assignment shall not be construed to impose any liability or
obligation on the Lender. Upon the occurrence of any such Event of Default, such
license shall be deemed immediately revoked.

3.     Termination; Security. The obligations of the Borrower hereunder shall be
secured hereby and by the Security Instrument and any other collateral securing
the Loan. At such time as the Loan is paid in full and the Security Instrument
is released of record, this Assignment and all of the Lender’s right, title and
interest hereunder with respect to the Management Agreement shall terminate.

4.     Borrower’s Covenants. The Borrower hereby covenants with the Lender that
during the term of this Assignment (a) the Borrower shall not transfer the
responsibility for the management of the Property from the Agent to any other
Person without the prior written consent of the Lender, which consent shall not
be unreasonably withheld, conditioned or delayed; (b) the Borrower shall not
terminate or amend any of the material terms or provisions of the Management
Agreement without the prior written consent of the Lender, which consent shall
not be unreasonably withheld, conditioned or delayed; and (c) the Borrower
shall, in the manner provided for in this Assignment, give notice to the Lender
of any notice or information that the Borrower receives which indicates that the
Agent is terminating the Management Agreement or that the Agent is otherwise
discontinuing its management of the Property. Notwithstanding the provisions of
this Section 4, Borrower may, without obtaining Lender’s prior consent,
terminate the Management Agreement in accordance with the terms of the
Management Agreement, (A) in the event such termination is a result of (i)
Agent’s negligence in the management, operation, maintenance or servicing of the
Property or other default by Agent in the performance of its obligations under
the Management Agreement and Agent shall have failed to cure such breach to the
satisfaction of Borrower after thirty (30) days prior written notice; (ii) Agent
having caused or allowed to exist a breach of any Basic Document (as defined in
the Management Agreement) and, only to the extent that such breach is curable,
shall have failed to cure such breach to the satisfaction of Borrower by the
earlier of any required date or after thirty (30) days prior written notice from
Borrower; (iii) a receiver, liquidator or trustee of Agent having been appointed
by court order or a petition to liquidate or reorganize Agent under any
bankruptcy, reorganization or insolvency law, and such order or petition is not
vacated or dismissed within sixty (60) days or Agent shall have filed a petition
in bankruptcy, for reorganization or under any insolvency laws, or if Agent
shall have made an assignment for the benefit of its creditors, or if Agent is
adjudicated a bankrupt; (iv) the present management of Agent having materially
changed by reason of the acquisition or merger of Agent by or with any other
entity; or (v) damage or destruction to the Property and Borrower decides not to
rebuild or restore the Property or there is a taking by condemnation, or similar
proceeding, of a substantial portion of the Property, and (B) provided that,
within 30 days of such termination, Borrower enters into a replacement
management agreement on then market terms and conditions, and otherwise
reasonably acceptable to Lender with a replacement manager reasonably acceptable
to Lender.

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5.     Agreement by Borrower and Agent. The Borrower and the Agent hereby agree
that upon the occurrence and during the continuance of any Event of Default, at
the option of the Lender exercised by written notice to the Borrower and the
Agent all rents, security deposits, issues, revenues, income, proceeds and
profits of the Property collected by the Agent, after payment of all costs and
expenses of operating the Property (including, without limitation, operating
expenses, real estate taxes, insurance premiums, repairs and maintenance and the
fees and commissions payable under the Management Agreement), shall be applied
in accordance with the Lender’s written directions to the Agent.

6.     Lender’s Right to Replace Agent. Borrower, upon the request of Lender,
shall, no later than thirty (30) days from the date of Lender’s request,
terminate the Management Agreement and replace the Agent, without penalty or
fee, if at any time during the Loan: (i) Agent shall become insolvent or a
debtor in a bankruptcy proceeding; (ii) there exists a default, beyond any
applicable notice and grace periods, by Agent under the Management Agreement; or
(iii) following Event of Default under the Loan Agreement with respect to which
Lender has elected to accelerate the Loan, Lender determines that a Manager
Termination Event (defined below) exists. Borrower, upon the request of Lender,
shall, no later than ten (10) days from the date of Lender’s request, terminate
the Management Agreement and replace the Agent, without penalty or fee, if
Manager has engaged in gross negligence, fraud, willful misconduct or
misappropriation of funds. At such time as the Agent may be removed, a
replacement manager selected by Borrower and approved by Lender shall assume
management of the Property on terms and conditions satisfactory to Lender, it
being understood and agreed that the management fee for such replacement manager
shall not exceed then prevailing market rates. “Manager Termination Event” shall
mean a determination by Lender, made in the exercise of Lender’s reasonable good
faith discretion, that replacing Agent with a replacement manager is likely to
result in a positive affect on the value of the Property. If Lender fails to
determine that a Manager Termination Event exists, then Lender (together with
any successor or any purchaser at foreclosure) shall be deemed to waive any
right to terminate the Management Agreement as a result of an Event of Default
under the Loan Agreement.

In addition to the foregoing, in the event that Lender, in Lender’s reasonable
discretion, at any time prior to the termination of this Assignment, determines
that the Property is not being managed in accordance with generally accepted
management practices for projects similarly situated, Lender may deliver written
notice thereof to Borrower and Agent, which notice shall specify with
particularity the grounds for Lender’s determination. If Lender reasonably
determines that the conditions specified in Lender’s notice are not remedied to
Lender’s reasonable satisfaction by Borrower or Agent within thirty (30) days
from the date of such notice or that Borrower or Agent have failed to diligently
undertake correcting such conditions within such thirty (30) day period, Lender
may direct Borrower to terminate the Management Agreement and to replace Agent
with a manager approved by Lender on terms and conditions reasonably
satisfactory to Lender, it being understood and agreed that the management fee
for such replacement manager shall not exceed then prevailing market rates.

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7.     Subordination of Management Agreement and Management Fees. The Borrower
and the Agent hereby agree that at all times prior to the termination of this
Assignment, the Management Agreement shall be subordinate, inferior and subject
to the Security Instrument and the other Loan Documents. The Borrower and the
Agent further agree that the Agent shall not be entitled to receive any fee,
commission or other amount payable to the Agent under the Management Agreement
(including, without limitation, incentive management fees, if any) for and
during any period of time that any amount due and owing the Lender under the
Note and the other Loan Documents is not paid when due; provided, however, that
(i) the Agent shall not be obligated to return or refund to the Lender any fee,
commission or other amount already received by the Agent, and to which the Agent
was entitled under this Assignment and (ii) so long as Agent is not in default
under the Management Agreement and so long as the Management Agreement has not
been terminated, Borrower shall be required to make and Agent shall be entitled
to receive the payments (including payments to employees of Agent) regularly
becoming due under the Management Agreement. Any incentives or other scheduled
compensation beyond the base management fee set forth in the Management
Agreement will be deferred and will be paid annually in arrears, provided that
all debts and other obligations or expenses have been paid in full for the prior
year and there has been no material adverse change in the Property since the
time of the last annual payment.

8.     Consent and Agreement by Agent. The Agent hereby acknowledges and
consents to this Assignment and agrees that the Agent will act in conformity
with the provisions of this Assignment and the Lender’s rights hereunder or
otherwise related to the Management Agreement. In the event that the
responsibility for the management of the Property is transferred from the Agent
in accordance with the provisions hereof, the Agent shall fully cooperate in
transferring its responsibility to a Person reasonably acceptable to the Lender
and agrees to effectuate such transfer no later than thirty (30) days after
notice from the Lender requiring such transfer. Further, the Agent hereby agrees
(a) not to contest or impede the exercise by the Lender of any right it has
under or in connection with this Assignment or any of the other Loan Documents;
and (b) that it shall, in the manner provided for in this Assignment, give to
the Lender at least thirty (30) days written notice of and opportunity to cure
any default by the Borrower under the Management Agreement (provided that the
Lender shall have no obligation to effect any such cure) prior to any
termination of the Management Agreement or discontinuance of its management of
the Property.

9.     Lender’s Agreement. So long as there exists no Event of Default, the
Lender agrees to permit any sums due to the Borrower under the Management
Agreement to be paid directly to the Borrower.

10.     Notice. All notices given hereunder shall be in writing to the other
party at the address, and in the manner set forth in the Loan Agreement, and in
the case of the Agent to the address below:

To Agent:

Ryan Companies US, Inc.

50 South Tenth Street, Suite 300

Minneapolis, Minnesota 55403

Attn: Lisa Adair

Telephone: (612) 492-4201

Telecopy: (612) 492-3201

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11.     Binding Nature of Assignment. This Assignment shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns.

12.     Counterparts. This Assignment may be executed in any number of
counterparts all of which taken together shall constitute one and the same
instrument.

13.     Governing Law: Recourse. This Assignment shall be governed by the laws
of the jurisdiction in which the Property is located, and applicable federal
law. This Agreement is being executed in connection with the making of the Loan
pursuant to the terms of the Note. The Borrower’s liability hereunder shall be
limited to the same extent provided in the Note.

14.     Attorneys’ Fees. In the event of any litigation or other legal
proceeding arising between the parties to this Assignment, whether relating to
the enforcement of a party’s rights under this Assignment or otherwise, the
prevailing party shall be entitled to receive its reasonable attorneys’ fees and
costs of suit from the non-prevailing party in such amount as the court shall
determine.

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IN WITNESS WHEREOF, the undersigned have executed this Assignment as of the day
and year first written above.

FSP 50 SOUTH TENTH STREET CORP.,

a Delaware corporation

 

 

By: /s/ George J. Carter_________

Name: George J. Carter

Title: President

BANK OF AMERICA, N.A., a national banking association

By: /s/ Israel Lopez_____________

Name: Israel Lopez

Title: Senior Vice President

AGENT:

 

RYAN COMPANIES US, INC.

 

 

By: /s/ Michael R. McElroy_______

Name: Michael R. McElroy

Title: EVP

 

 

 

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EXHIBIT A

COPY OF MANAGEMENT AGREEMENT

(attached hereto)

 

 

 

 

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