SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): September 29, 1997
JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
---------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Massachusetts 0-15680 04-2921566
------------- ------- ----------
(State of (Commission (IRS Employer
Organization) File No.) Identification No.)
200 Clarendon Street
Boston, MA 02116 (800) 722-5457
----------------- --------------
(Address of principal executive (Registrant's telephone
offices, including zip code) number, including area
code)
Not Applicable
--------------
(Former name or former address, if changed since last report)
Page 1 of 10
<PAGE>
JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
ITEM 2 - Acquisition or Disposition of Assets
Disposition of 1300 North Dutton Avenue
- ---------------------------------------
Due to a five-year lease for the entire property that commenced in October
1996 and the present favorable conditions of the Santa Rosa, California
real estate market, the 1300 North Dutton Avenue property, a 24,120 square
foot office facility located in Santa Rosa, California, was listed for sale
during October 1996. Pursuant to a Purchase and Sale Agreement dated June
18, 1997, on September 29, 1997, John Hancock Realty Income Fund Limited
Partnership (the "Partnership") sold the 1300 North Dutton Avenue property
for a net sales price of approximately $2,673,000, after deductions for
commissions and selling expenses incurred in connection with the sale of
the property. The sale of the property resulted in a non-recurring loss of
approximately $5,000, which represents the difference between the net sales
price and the property's carrying value of approximately $2,678,000.
Based upon the General Partner's analysis of comparable sales transactions
and its review of the offers received during the property's marketing
period, the General Partner accepted the offer from GHB Holdings, Inc. (the
"Buyer") as the most favorable. There is no relationship between the Buyer
and the Partnership or any associate, director or officer of the General
Partner.
The sale was made pursuant to a Purchase and Sale Agreement dated June 18,
1997, which is included as Exhibit 1 of this report.
ITEM 7 - Financial Statements
- -----------------------------
(A) Financial Statements
Pro Forma Balance Sheet at June 30, 1997 4
Pro Forma Statement of Operations for the Six Months
Ended June 30, 1997 5
Pro Forma Statement of Operations for the Year Ended
December 31, 1996 6
Notes to Pro Forma Financial Statements 7
(B) Exhibits
1. Purchase and Sale Agreement (excluding exhibits) between
John Hancock Realty Income Fund Limited Partnership and
GHB Holdings, Inc. dated June 18, 1997 11
2
<PAGE>
JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
On September 29, 1997, the Partnership sold the 1300 North Dutton Avenue
property (the "Property") to the Buyer for a net sales price of
approximately $2,673,000. The Pro Forma Balance Sheet reflects the
financial position of the Partnership as if the Property had been sold on
June 30, 1997. The Pro Forma Statement of Operations for the six months
ended June 30, 1997 reflects the continued operations of the Partnership as
if the Property had been sold on December 31, 1996. In addition, the Pro
Forma Statement of Operations for the year ended December 31, 1996 reflects
the continued operations of the Partnership as if the Property had been
sold on December 31, 1995.
3
<PAGE>
JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
PRO FORMA BALANCE SHEET
JUNE 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustment for
Summary the 1300 Pro Forma
June 30, North Dutton June 30,
1997 Avenue 1997
---- ------ ----
<S> <C> <C> <C>
Cash and cash equivalents $1,977,273 $2,673,278 $4,650,551
Restricted cash 61,765 - 61,765
Other assets 192,369 - 192,369
Property held for sale 2,678,599 (2,678,599) -
Deferred expenses, net of accumulated
amortization of $421,255 415,575 - 415,575
Investment in property:
Land 6,198,330 - 6,198,330
Buildings and improvements 17,991,609 - 17,991,609
------------ ----------- ------------
24,189,939 - 24,189,939
Less: accumulated depreciation (4,552,146) - (4,552,146)
------------ ----------- ------------
19,637,793 - 19,637,793
------------ ----------- ------------
Total assets $24,963,374 ($5,321) $24,958,053
============ =========== ============
Liabilities:
Accounts payable and accrued expenses $289,726 $- $289,726
Accounts payable to affiliates 145,408 - 145,408
------------ ----------- ------------
Total liabilities 435,134 - 435,134
Partners' equity/(deficit):
General Partner (234,823) (53) (234,876)
Limited Partners 24,763,063 (5,268) 24,757,795
------------ ----------- ------------
Total partners' equity 24,528,240 (5,321) 24,522,919
------------ ----------- ------------
Total liabilities and
partners' equity $24,963,374 ($5,321) $24,958,053
============ =========== ============
</TABLE>
See Notes to Pro Forma Financial Statements
4
<PAGE>
JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
PRO FORMA STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Historical
Summary Pro Forma Pro Forma
For the Six Adjustment for For the Six
Months Ended the 1300 Months Ended
June 30, North Dutton June 30,
1997 Avenue 1997
---- ------ ----
<S> <C> <C> <C>
Income:
Rental income $1,442,396 ($188,325) $1,254,071
Interest income 43,802 - 43,802
---------- -------- ----------
Total income 1,486,198 (188,325) 1,297,873
Expenses:
Depreciation 338,012 - 338,012
General and administrative 206,610 - 206,610
Property operating expenses 199,214 (67,018) 132,196
Amortization of deferred expenses 60,123 - 60,123
Management fee 37,772 - 37,772
---------- -------- ----------
Total expenses 841,731 (67,018) 774,713
---------- -------- ----------
Net income $644,467 ($121,307) $523,160
========== ========== ==========
Allocation of net income:
General Partner $6,445 ($1,213) $5,232
John Hancock Limited Partner (24,582) - (24,582)
Investors 662,604 (120,094) 542,510
---------- -------- ----------
$644,467 ($121,307) $523,160
========== ========== ==========
Net income per Unit $7.23 ($1.31) $5.92
========== ========== ==========
</TABLE>
See Notes to Pro Forma Financial Statements
5
<PAGE>
JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Historical Pro Forma Pro Forma
Summary for Adjustment for For the
the Year Ended the 1300 Year Ended
December 31, North Dutton December 31,
1996 Avenue 1996
---- ------ ----
(Audited) (Unaudited) (Unaudited)
<S> <C> <C> <C>
Income:
Rental income $2,614,989 ($94,162) $2,520,827
Interest income 171,767 - 171,767
----------- -------- -----------
Total income 2,786,756 (94,162) 2,692,594
Expenses:
Depreciation 772,298 (73,819) 698,479
General and administrative 360,696 - 360,696
Property operating expenses 311,439 (63,269) 248,170
Amortization of deferred expenses 209,726 (32,799) 176,927
Management fee 76,619 - 76,619
Property write-downs 1,907,093 - 1,907,093
----------- -------- -----------
Total expenses 3,637,871 (169,887) 3,467,984
----------- -------- -----------
Net income ($851,115) $75,725 ($775,390)
=========== ======== ===========
Allocation of net income:
General Partner ($8,511) $757 ($7,754)
John Hancock Limited Partner (329,810) 4,196 (325,614)
Investors (512,794) 70,772 (442,022)
----------- -------- -----------
($851,115) $75,725 ($775,390)
=========== ======== ===========
Net income per Unit ($5.60) $0.77 ($4.83)
=========== ======== ===========
</TABLE>
See Notes to Pro Forma Financial Statements
6
<PAGE>
JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
Notes to Pro Forma Financial Statements
(Unaudited)
Note 1 - 1300 North Dutton Avenue
- ---------------------------------
On September 29, 1997, the Partnership sold the 1300 North Dutton Avenue
office property (the "Property") in Santa Rosa, California, for a net sales
price of approximately $2,673,000, after deductions for commissions and
selling expenses incurred in connection with the sale of the property. The
sale of the property resulted in a non-recurring loss of approximately
$5,000 which represents the difference between the net sales price and the
property's carrying value of approximately $2,678,000 (including
unamortized leasing costs of approximately $652,000).
The historical financial statements are adjusted to show the effects of the
sale of the Property on the Partnership's operations, assets and
liabilities. The Pro Forma Balance Sheet at June 30, 1997 reflects the
financial position of the Partnership as if the Property had been sold on
June 30, 1997. The Pro Forma Statement of Operations for the six months
ended June 30, 1997 reflects the continued operations of the Partnership as
if the Property had been sold on December 31, 1996. In addition, the Pro
Forma Statement of Operations for the year ended December 31, 1996 reflects
the continued operations of the Partnership as if the Property had been
sold on December 31, 1995.
Note 2 - Distributions and Allocations
- --------------------------------------
Distributable Cash from Operations, as defined in the Amended Agreement of
Limited Partnership of the Partnership (the "Partnership Agreement"), is
distributed 99% to the Limited Partners and 1% to the General Partner. The
Limited Partners' share of Distributable Cash from Operations is
distributed as follows: first, to the Investors until they receive a 7%
non-cumulative, non-compounded annual cash return on their Invested
Capital, as defined in the Partnership Agreement; second, to the John
Hancock Limited Partner until it receives a 7% non-cumulative, non-
compounded annual cash return on its Invested Capital; and third, to the
Investors and the John Hancock Limited Partner in proportion to their
respective Capital Contributions, as defined in the Partnership Agreement.
However, any Distributable Cash from Operations which is available as a
result of the reduction of working capital reserves funded by Capital
Contributions of the Investors is distributed 100% to the Investors.
7
<PAGE>
JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
Notes to Pro Forma Financial Statements (continued)
(Unaudited)
Note 2 - Distributions and Allocations (continued)
- --------------------------------------
Cash from Sales or Refinancings, as defined in the Partnership Agreement,
is first used to pay all debts and liabilities of the Partnership then due
and is then used to fund any reserves for contingent liabilities. Cash
from Sales or Refinancings is then distributed as follows: first, to the
Limited Partners until they receive an amount equal to their Invested
Capital with the distribution being made between the Investors and the John
Hancock Limited Partner in proportion to their respective Capital
Contributions; second, to the Investors until they have received, with
respect to all previous distributions during the year, their Cumulative
Return on Investment, as defined in the Partnership Agreement; third, to
the John Hancock Limited Partner until it has received, with respect to all
previous distributions during the year, its Cumulative Return on
Investment; fourth, to the General Partner to pay any Subordinated
Disposition Fees, as defined in the Partnership Agreement; and fifth, 99%
to the Limited Partners and 1% to the General Partner, with the
distribution being made between the Investors and the John Hancock Limited
Partner in proportion to their respective Capital Contributions.
Cash from the Sale of the last of the Partnership's properties is
distributed in the same manner as Cash from Sales or Refinancings, except
that before any other distribution is made to the Partners, each Partner
shall first receive from such cash, an amount equal to the then positive
balance, if any, in such Partner's Capital Account after crediting or
charging to such account the profits or losses for tax purposes from such
sale. To the extent, if any, that a Partner is entitled to receive a
distribution of cash based upon a positive balance in its capital account
prior to such distribution, such distribution will be credited against the
amount of such cash the Partner would have been entitled to receive based
upon the manner of distribution of Cash from Sales or Refinancings, as
specified in the previous paragraph.
Profits from the normal operations of the Partnership for each fiscal year
are allocated to the Limited Partners and General Partner in the same
amounts as Distributable Cash from Operations for that year. If such
profits are less than Distributable Cash from Operations for any year, they
are allocated in proportion to the amounts of Distributable Cash from
Operations for that year. If such profits are greater than Distributable
Cash from Operations for any year, they are allocated 99% to the Limited
Partners and 1% to the General Partner, with the allocation made between
the John Hancock Limited Partner and the Investors in proportion to their
respective Capital Contributions. Losses from the normal operations of the
Partnership are allocated 99% to the Limited Partners and 1% to the General
Partner, with the allocation made between the John Hancock Limited Partner
and the Investors in proportion to their respective Capital Contributions.
Depreciation deductions are allocated 1% to the General Partner and 99% to
the Investors, and not to the John Hancock Limited Partner.
8
<PAGE>
JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
Notes to Pro Forma Financial Statements (continued)
(Unaudited)
Note 2 - Distributions and Allocations (continued)
- --------------------------------------
Profits and Losses from Sales or Refinancings are generally allocated 99%
to the Limited Partners and 1% to the General Partners. In connection with
the sale of the last of the Partnership's properties, and therefore the
dissolution of the Partnership, profits will be allocated to any Partners
having a deficit balance in their Capital Account in an amount equal to the
deficit balance. Any remaining profits will be allocated in the same order
as cash from the sale would be distributed.
9
<PAGE>
JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report on Form 8-K to be signed on its
behalf by the undersigned, hereunto duly authorized, on the 14th day of
October, 1997.
John Hancock Realty Income Fund Limited
Partnership
By: John Hancock Realty Equities, Inc.,
General Partner
By: WILLIAM M. FITZGERALD
--------------------------------
William M. Fitzgerald, President
By: RICHARD E. FRANK
--------------------------------
Richard E. Frank, Treasurer
(Chief Accounting Officer)
10
PURCHASE AND SALE AGREEMENT
---------------------------
THIS AGREEMENT made and entered into as of the 18th day of June, 1997,
by and between JOHN HANCOCK REALTY INCOME FUND LIMITED PARTNERSHIP, a
Massachusetts limited partnership, having its principal address c/o The
Real Estate Investment Group, John Hancock Place, P.O. Box 111, Boston,
Massachusetts 02117 (hereinafter "Seller"), and GHB HOLDINGS, INC., a Rhode
Island corporation, having an office address at c/o G & H Enterprises, 7
Beach Road, Belvedere, California 94920 (hereinafter "Buyer");
WITNESSETH THAT:
WHEREAS, Seller is the owner of the premises known as the UNOCAL
Building and located at 1300 North Dutton Avenue with a building containing
approximately 24,126 square feet of space (the "Premises"), more
particularly described on EXHIBIT A attached hereto and made a part hereof;
and
WHEREAS, Buyer desires to purchase the Premises and acquire possession
thereof in accordance with the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth the parties hereto mutually agree as follows:
1. PURCHASE PRICE. The Premises are to be sold to Buyer for the sum of
Two Million Eight Hundred Twenty-Eight Thousand Dollars ($2,828,000.00)
(the "Purchase Price"), which Buyer shall pay to Seller on the Date of
Closing by wiring immediately available Federal funds to such bank account
as may be designated by Seller.
2. DEPOSIT. Buyer shall make an initial deposit of $25,000.00 (the
"Initial Deposit") by official bank cashier's check with First American
Title Insurance Company (Attention: Ms. Bonnie Wooley) (the "Title
Company") simultaneously with the execution of this Agreement as a good
faith deposit. Buyer shall make an additional deposit of $25,000.00 (the
"Additional Deposit") with the Title Company within one (1) business day of
the expiration of the Review Period (hereinafter, the Initial Deposit and
the Additional Deposit and such interest as is earned thereon shall be
referred to as the "Deposit"), which Deposit shall be disposed of in the
manner herein provided. If Buyer performs all of its obligations under
this Agreement, the Deposit shall either be applied against the Purchase
Price or returned by Seller to Buyer on the Date of Closing, as hereinafter
provided. If Seller shall be unable to deliver title and possession, as
hereinafter provided, or if Buyer shall fail to perform any of its
agreements hereunder, the Deposit shall be disposed of in the manner
hereinafter provided.
3. CLOSING. Subject to the provisions of this Agreement, the deed shall
be delivered at 10:00 o'clock A.M., Boston time, on or before no more than
60 days after loan commitment under section 21(b)July 22, 1997 (the "Date
of Closing"), at the offices of the Title Company, unless otherwise agreed
upon in writing.
<PAGE>
4. BUYER'S REVIEW. Buyer shall have until 5 o'clock P.M., Boston time, on
June 30, 1997 (the "Review Period") (a) to obtain and review a commitment
for title insurance and a survey; (b) to make or have made such reasonable
non-destructive inspections as it desires of the Premises, including,
without limitation, the interior, exterior, and structure of all
improvements, and the condition of soils and subsurfaces; and (c) to review
all of Seller's financial records, contracts, and leases relating to the
Premises. Notwithstanding the foregoing, Buyer shall have until July 15,
1997, to obtain lender's approval for matters set forth in (a) and (b)
above. All such items shall be obtained and reviewed at Buyer's sole cost
and expense, except as otherwise expressly provided herein. If Buyer has
any objection to any of the matters set out in (a), (b), or (c) of this
section 4, it may either notify Seller in writing of such objection on or
before the end of the Review Period ("Notice of Objection"), provided that
with such notice Buyer shall provide Seller with copies of all written
materials which provide or evidence the basis of any such objection, or
notify Seller in writing that this Agreement is terminated ("Notice of
Termination"). Any matters not objected to in writing as herein provided
shall be deemed waived. Upon the expiration of the Review Period without
Notice of Objection or Notice of Termination, as provided herein, or upon
Seller's cure of Buyer's objections, as provided in the following
paragraph, or upon Buyer's actual or deemed notification to Seller that
Buyer will proceed notwithstanding Seller's failure to cure Buyer's
objections, as provided in the following paragraph, the Deposit will become
nonrefundable, except in the case of Seller's default hereunder.
If Seller is unwilling or unable to correct to Buyer's satisfaction all
defects to which Buyer has objected within 30 days after receipt of Notice
of Objection (provided that correction of defects objected to in the title
commitment or survey may be accomplished either by removing such defects or
by arranging for the title insurance policy to insure over such defects;
and provided further that Seller may use the Purchase Price or any portion
thereof to cure any such defects which may be cured by instruments recorded
on the Date of Closing, or later if arrangements are made which are
satisfactory to Buyer and the Title Company), Seller shall, at any time
before the end of said 30-day period, so notify Buyer, provided that if
Seller fails to give such notice, Seller shall be deemed to have notified
Buyer on the 30th day after receipt of Notice of Objection that Seller is
unwilling or unable to cure all defects to which Buyer has objected. Buyer
shall, within ten days after Seller has given or is deemed to have given
said notice, either (i) notify Seller that it shall waive said defect(s)
and proceed to closing, as set out in section 3 hereof, or (ii) give Notice
of Termination, provided that if Buyer fails to give such notice, Buyer
shall be deemed to have notified Seller that it shall waive all defects and
proceed to closing.
Upon receipt of Notice of Termination the Deposit shall be refunded and
this Agreement shall become null and void, and neither party shall be
liable to the other for damages or otherwise, except as otherwise expressly
provided herein.
<PAGE>
5. CONDITION OF PREMISES. Buyer and Seller agree that Buyer is acquiring
the Premises and any related personal property in their "AS IS" condition,
WITH ALL FAULTS, IF ANY, AND WITHOUT ANY WARRANTY, EXPRESS OR IMPLIED.
Neither Seller nor any agents, representatives, or employees of Seller have
made any representations or warranties, direct or indirect, oral or
written, express or implied, to Buyer or any agents, representatives, or
employees of Buyer with respect to the condition of the Premises or
personal property, their fitness for any particular purpose, or their
compliance with any laws, and Buyer is not aware of and does not rely upon
any such representation to any other party. Buyer acknowledges that the
Purchase Price might be higher if Buyer were not acquiring the Premises and
personal property in "as is" condition. Buyer acknowledges that it either
has had or will have before the Date of Closing the opportunity to make
such inspections (or have such inspections made by consultants) as it
desires of the Premises and personal property and all factors relevant to
their use, including, without limitation, the interior, exterior, and
structure of all improvements, and the condition of soils and subsurfaces
(particularly with respect to the presence or absence of hazardous
substances).
After its inspections are completed, Buyer shall restore the Premises
and personal property to their condition prior to Buyer's inspections.
Buyer agrees to indemnify Seller for all claims or damages arising out of
Buyer's inspections, including, without limitation, claims for personal
injury or property damage, and including all costs and attorneys' fees.
The obligations in this paragraph shall survive the Closing or the
termination of this Agreement for any reason, including without limitation
pursuant to section 4, 9, or 14 hereof.
Buyer hereby releases Seller and its agents, representatives, and
employees from any and all claims, demands, and causes of action, past,
present, and future, that Buyer may have relating to (i) the condition of
the Premises and the personal property at any time, before or after the
Date of Closing, including, without limitation, the presence of any
hazardous substance, or (ii) any other matter pertaining to the Premises or
the personal property. This release shall survive the Closing or the
termination of this Agreement for any reason.
Seller shall deliver possession to Buyer, subject to the matters set
forth in section 7(a)(1) hereof, not later than the Date of Closing,
provided that all the terms and conditions of this Agreement have been
complied with. Seller until the Date of Closing shall maintain, repair
(subject to section 9 hereof), manage, and operate the Premises in a
businesslike manner in accordance with Seller's prior practices; shall
comply with its contractual obligations as owner of the Premises; shall
maintain the types and amounts of insurance that are in force on the date
of execution hereof; and shall not dissipate the Premises or remove any
material property therefrom, except in the ordinary course of business.
<PAGE>
6. ADJUSTMENTS AND PRORATIONS. All taxes, including, without limitation,
real estate taxes and personal property taxes, collected rents, charges for
utilities, including water, sewer, and fuel oil, and for utility services,
maintenance services, maintenance and service contracts, all operating
costs and expenses, and all other income, costs, and charges of every kind
which in any manner relate to the operation of the Premises (but not
including insurance premiums) shall be prorated to the Date of Closing,
except that if Seller does not receive the Purchase Price (by receipt of
wired funds or by receipt in hand of an official bank cashier's check) by
noon, Boston time, on the Date of Closing, all prorations shall be made as
of the following business day. Seller shall be entitled to all delinquent
rents, without adjustment or appointment, irrespective of which party
collects the same in the first instance, and Buyer shall pay any such
delinquent rents to Seller forthwith upon receipt. If the amount of said
taxes, assessments, or rents is not known on the Date of Closing, they
shall be apportioned on the basis of the amounts for the preceding year,
with a reapportionment as soon as the new amounts can be ascertained. If
such taxes and assessments shall thereafter be reduced by abatement, the
amount of such abatement, less the reasonable cost of obtaining the same,
shall be apportioned between the parties, provided that neither party shall
be obligated to institute or prosecute proceedings for an abatement unless
otherwise agreed. Buyer shall be responsible for the payment of any
assessments or notice of assessments made after the date of execution
hereof for any public improvement, provided Buyer takes title hereunder.
With respect to security deposits, if any, made by tenants on the Premises
and actually received in hand by Seller, Buyer shall receive credit
therefor in the proration of rents. Any deposits on utilities paid by
Seller shall be returned to Seller. The foregoing provisions of this
section shall not apply to any taxes, assessments, or other payments which
are directly payable by tenants under their leases or reimbursable by such
tenants to the owner of the Premises, as landlord, under their leases. On
the Date of Closing, Seller shall deliver to Buyer all inventories of
supplies on hand at the Premises owned by Seller, if any, at no additional
cost to Buyer.
7. CLOSING DOCUMENTS. (a) SELLER'S DELIVERIES. Conditioned upon
performance by Buyer hereunder, Seller shall execute and deliver to Buyer
at the Closing the following documents ("Seller's Closing Documents"):
(1) DEED. A grant deed conveying marketable title to the Premises
subject to the following:
(A) All easements, conditions, restrictions, and reservations of
record and all private and public rights in highways and rights-of-way;
(B) All building and zoning laws, ordinances, and State and
Federal regulations;
(C) Encroachments and all other matters that an accurate survey
might show, provided that the same do not unreasonably interfere with the
use of the Premises as an office building;
<PAGE>
(D) All possible objections waived by Buyer pursuant to section 4
hereof, either by Buyer's failure to object to such matters before the
expiration of the Review Period or by Buyer's response (or failure to
respond) to Seller's notice (or failure to give notice) that it will not
cure such matters;
(E) Rights of tenants in possession as tenants only; and
(F) Real estate taxes and all installments of special assessments or
levies not yet due and payable on the Date of Closing.
(2) BILL OF SALE. A bill of sale, assigning and transferring to
Buyer all of the right, title, and interest of Seller in and to all
tangible personal property, if any, owned by Seller and located upon the
Premises.
(3) ASSIGNMENT OF LEASES. An assignment of leases, tenancies, and
security deposits, which will include an indemnification by Seller of Buyer
for all landlord obligations accruing prior to the Date of Closing.
(4) ASSIGNMENT OF SERVICE CONTRACTS. An assignment of maintenance
and service contracts, which will include an indemnification by Seller of
Buyer for all owner obligations accruing prior to the Date of Closing.
(5) NON-FOREIGN CERTIFICATE. A certification that Seller is not a
non-resident alien (a foreign corporation, partnership, trust, or estate as
defined in the Internal Revenue Code and Treasury Regulations promulgated
thereunder).
(6) TENANT ESTOPPEL CERTIFICATE. An estoppel certificate from
tenant in the form of EXHIBIT B attached hereto.
(b) BUYER'S DELIVERIES. Conditioned upon performance by Seller
hereunder, Buyer shall execute and deliver to Seller at the Closing the
following documents:
(1) ASSUMPTION OF LEASES. An assumption of leases, tenancies, and
security deposits, which will include an indemnification by Buyer of Seller
for all landlord obligations accruing on or after the Date of Closing.
(2) ASSUMPTION OF SERVICE CONTRACTS. An assumption of maintenance
and service contracts, which will include an indemnification by Buyer of
Seller for all owner obligations accruing on or after the Date of Closing.
(c) OTHER CLOSING DOCUMENTS. Each party shall deliver to the other
party or the Title Company such duly executed and acknowledged or verified
certificates, affidavits, and other usual closing documents respecting the
power and authority to perform the obligations hereunder and as to the due
authorization thereof by the appropriate corporate, partnership, or other
representatives acting for it, as counsel for the other party or the Title
Company may reasonably request.
<PAGE>
8. COSTS. Buyer shall pay all settlement expenses, except as set forth in
the following sentence, in connection with the transfer of the Premises,
including, but not limited to, Buyer's attorneys' fees, the costs of
obtaining a binder or commitment from a title insurance company, the
premium for Buyer's title insurance policy, the cost of any survey desired
by Buyer, all escrow fees and all other costs and expenses incidental to or
in connection with closing this transaction. Seller shall pay only the
attorneys' fees, if any, incurred by Seller in connection with this
transaction, documentary transfer taxes, personal property sales taxes,
conveyance, recording fees and the Broker's commission, but only if, as,
and when the transaction contemplated hereby is fully consummated and the
deed is recorded and the full consideration therefor has been received by
Seller.
9. CASUALTY OR CONDEMNATION. In the event that prior to the Date of
Closing either the improvements on the Premises are damaged or destroyed,
in whole or in part, by fire or other cause, or any portion of the Premises
becomes the subject of a condemnation proceeding by a public or quasi-
public authority having the power of eminent domain, then either (a) the
parties shall proceed with the transaction contemplated herein, in which
event Buyer shall be entitled to receive any insurance proceeds or
condemnation awards, or (b) in the event such damage, destruction, or
condemnation involves, in the reasonable estimation of Seller, a loss in an
amount in excess of ten per cent (10%) of the Purchase Price, or loss of
all or a material portion of access to the Premises, either party, at its
option, may terminate this Agreement by notice to the other within ten (10)
days of Buyer's receipt of Seller's notice of such damage or proceeding, in
which case the Deposit shall be refunded, and thereafter neither party
shall have any further obligation or liability to the other by virtue of
this Agreement, except as otherwise expressly provided herein.
10. INSURANCE. Seller shall not be obligated to assign to Buyer any fire,
hazard, or liability insurance policies which it holds respecting the
Premises, and Seller shall have the right to any and all refunds or rebates
resulting from the termination of such policies.
11. BROKER'S COMMISSION. Buyer and Seller each hereby warrants and
represents to the other that it has dealt with no broker or finder in
connection with this transaction except Keegan & Coppin Company, Inc. and
CB Commercial Real Estate Group, Inc. (the "Brokers"), and that it is not
affiliated with the Brokers in any way. Buyer and Seller each hereby
agrees to indemnify and hold the other harmless from and against any and
all claims for brokerage or finder's fees or other similar commissions or
compensation made by any and all other brokers or finders claiming to have
dealt with the indemnifying party in connection with this Agreement or the
consummation of the transaction contemplated hereby. The obligations in
this section shall survive the Closing or the termination of this Agreement
for any reason, including without limitation pursuant to section 4, 9, or
14 hereof.
12. SELLER'S PERFORMANCE. The acceptance of Seller's Closing Documents by
Buyer shall be deemed to be a full performance and discharge of every
agreement and obligation of Seller herein contained and expressed, except
such as are, by the terms hereof, to be performed after the delivery of
said instruments.
<PAGE>
13. RECORDING PROHIBITED. This Agreement shall not be recorded with
Sonoma County Records or in any other office or place of public record. If
Buyer shall record this Agreement or cause or permit the same to be
recorded, Seller may, at its option, elect to treat such act as a default
by Buyer under this Agreement.
14. REMEDIES. If Seller defaults under this Agreement, Buyer's sole
remedy, at law or in equity, shall be one of either (a) the return of the
Deposit to Buyer, whereupon the obligations of Seller under this Agreement
shall terminate; or (b) the right to obtain specific performance of
Seller's obligation to convey the Premises pursuant to this Agreement,
provided that in no event shall Seller be obliged to cure defects objected
to by Buyer pursuant to section 4 hereof. In no event shall any officer,
director, employee, agent, or representative of Seller have any personal
liability in connection with this Agreement or transaction.
BUYER ACKNOWLEDGES THAT IF IT FAILS TO PURCHASE THE PREMISES FOR ANY REASON
OTHER THAN FAILURE OF A CONDITION TO ITS PERFORMANCE, SELLER SHOULD BE
ENTITLED TO COMPENSATION FOR THE DETRIMENT RESULTING THEREFROM, AND
THEREFORE THE PARTIES AGREE AS FOLLOWS: IF BUYER SHALL DEFAULT IN ITS
OBLIGATIONS TO PURCHASE THE PREMISES, SELLER SHALL BE ENTITLED TO RETAIN AS
AND FOR ITS OWN PROPERTY, AS LIQUIDATED DAMAGES AND NOT AS A PENALTY, AN
AMOUNT EQUAL TO THE DEPOSIT, TOGETHER WITH ANY AND ALL EXPENSES (INCLUDING
REASONABLE ATTORNEYS' FEES) THAT SELLER MAY INCUR IN COLLECTING SUCH
LIQUIDATED DAMAGES. BOTH PARTIES ACKNOWLEDGE AND AGREE THAT SAID AMOUNT IS
PRESENTLY A REASONABLE SUM CONSIDERING ALL OF THE CIRCUMSTANCES EXISTING ON
THE DATE OF THIS AGREEMENT, INCLUDING THE RELATIONSHIP OF THE SUM TO THE
RANGE OF HARM TO SELLER THAT REASONABLY COULD BE ANTICIPATED AND THE
ANTICIPATION THAT PROOF OF ACTUAL DAMAGES WOULD BE COSTLY OR INCONVENIENT.
IN PLACING THEIR INITIALS AT THE PLACES PROVIDED,
SELLER ------------------------ BUYER ------------------------------
EACH PARTY SPECIFICALLY CONFIRMS THE ACCURACY OF THE STATEMENTS MADE ABOVE
AND THE FACT THAT EACH PARTY WAS REPRESENTED BY COUNSEL WHO EXPLAINED THE
CONSEQUENCES OF THIS LIQUIDATED DAMAGES PROVISION AT THE TIME THIS
AGREEMENT WAS MADE. BOTH PARTIES AGREE THAT THIS SUM STATED AS LIQUIDATED
DAMAGES SHALL BE IN LIEU OF ANY OTHER RELIEF TO WHICH SELLER MIGHT
OTHERWISE BE ENTITLED BY VIRTUE OF THIS AGREEMENT OR OPERATION OF LAW.
Nothing in this section 14 shall limit the express provisions of this
Agreement obligating one party hereto to indemnify the other or to restore
the Premises, including without limitation sections 5 and 11 hereof.
15. ASSIGNMENT. This Agreement may not be assigned by Buyer without the
express written consent of Seller, which consent Seller may in its sole
discretion withhold, except that Buyer may, without Seller's consent,
assign this Agreement to a limited partnership of which Buyer (or a
principal of Buyer) or any parent or any wholly owned subsidiary of Buyer
are the sole general partners. No such assignment shall operate to relieve
Buyer from any obligation hereunder.
<PAGE>
16. WAIVER. No waiver of any breach of any agreement or provision
contained herein shall be deemed a waiver of any preceding or succeeding
breach of any other agreement or provision herein contained. No extension
of time for the performance of any obligation or act shall be deemed an
extension of time for the performance of any other obligation or act.
17. TIME. It is agreed that time is of the essence of this Agreement.
18. GOVERNING LAW. This Agreement shall be construed under the laws of
the state in which the Premises are located.
19. NOTICES. All notices required or permitted to be given hereunder
shall be in writing and sent by overnight delivery service (such as Federal
Express), in which case notice shall be deemed given on the day after the
date sent, or by personal delivery, in which case notice shall be deemed
given on the date received, or by certified mail, in which case notice
shall be deemed given three (3) days after the date sent, or by fax (with
copy by overnight delivery service), in which case notice shall be deemed
given on the date sent, to the appropriate address indicated below or at
such other place or places as either Buyer or Seller may, from time to
time, respectively, designate in a written notice given to the other in the
manner described above.
To Seller: c/o The Real Estate Investment Group
John Hancock Place, P.O. Box 111
Boston, MA 02117
Re: File No. LP-80401
Attention: Mr. John M. Garrison
Fax No.: (617) 572-3860 or 3866
With Copy To: John Hancock Realty Income Fund
Limited Partnership
Law Department (T-50)
John Hancock Place, P.O. Box 111
Boston, MA 02117
Re: File No. LP-80401
Attention: Sadie R. Gordon, Esq.
Fax No.: (617) 572-9268 or 9269
To Buyer: GHB Holdings, Inc.
c/o G & H Enterprises
7 Beach Road
Belvedere, CA 94920
Attention: Mr. Lawrence Y. Goldberg
Fax No.: (415) 789-9759
With Copy To: Richard Julien, Esq.
Richard Julien Law Corporation
220 Montgomery Street
Suite 393
San Francisco, CA 94104
Fax No.: (415) 421-1317
<PAGE>
20. CONFIDENTIALITY. Buyer shall not disclose the financial and economic
terms and conditions of the transaction contemplated herein except as may
be necessary in the ordinary course of its business. All press releases or
other dissemination of information to the media, or responses to requests
from the media, for information relating to the transaction contemplated
herein shall be subject to the prior written approval of Seller; provided
that, following the Closing, Seller's approval shall not be unreasonably
withheld or delayed. The obligations in this section shall survive the
Closing or termination of this Agreement for any reason.
21. CONDITIONS PRECEDENT. (a) SELLER'S APPROVALS. Seller's obligation to
close hereunder shall be conditioned upon the approval of this transaction
by Seller's internal committees. If on or before the last day of the
Review Period Seller has not notified Buyer that such approval has been
granted, such approval shall be deemed not to have been granted, and the
Deposit shall be refunded and this Agreement shall terminate, and neither
party shall be liable to the other for damages or otherwise except as
otherwise expressly provided herein.
(b) BUYER'S FINANCING PERIOD. Buyer shall have until 5:00 o'clock
P.M., Boston time, on July 15,ne 30, 1997 (the "Financing Period") to
obtain a written loan commitment upon terms and conditions satisfactory to
Buyer in Buyer's sole but reasonable discretion. In the event that Buyer
is unable to obtain financing during the Financing Period, provided that
Buyer has negotiated in good faith and diligently pursued the same, Buyer
shall be entitled to a refund of the Deposit, provided that Buyer delivers
to Seller a Notice of Termination prior to the expiration of the Financing
Period. Upon the expiration of the Financing Period without Notice of
Termination, as provided herein, the Deposit will become nonrefundable,
except in the case of Seller's default hereunder.
22. ENTIRE AGREEMENT. This instrument, executed in duplicate, sets forth
the entire agreement between the parties and may not be canceled, modified,
or amended except by a written instrument executed by both Seller and
Buyer.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused these presents to be
executed the day and year first above written.
SELLER:
JOHN HANCOCK REALTY FUND LIMITED PARTNERSHIP,
a Massachusetts limited partnership
By: John Hancock Realty Equities, Inc.,
a Delaware corporation,
its General Partner
By:____JOHN M. GARRISON______
--------------------------
Name: John M. Garrison
Title: Investment Officer
BUYER:
GHB HOLDINGS, INC.
By: LAWRENCE Y. GOLDBERG
----------------------------------
Name: Lawrence Y. Goldberg
Title: President and Chief
Financial Officer
