<PAGE>
PRELIMINARY PROXY
P R O X Y
THE SOUTHSHORE CORPORATION
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Kenhneth M. Dalton and Eric Nelson,
proxies, with the power to appoint a substitute, and hereby authorizes them
to represent and to vote as designated below, all the shares of common stock
of The Southshore Corporation held of record by the undersigned on July __,
1998, at the Special Meeting of Shareholders to be held on August __, 1998, or
any adjournment thereof.
1. The sale of substantially all the Company's assets pursuant to
a Contract to Buy and Sell Real Estate for $2 million.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. The sale of substantially all of the Company's assets to a back-
up purchaser, South Suburban Park & Recreation District, in the event
there is no closing on the Contract to Buy and Sell Real Estate.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To transact such other business as may properly come before the
meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS
MADE,
THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2.
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AT THE MEETING IN
ACCORDANCE WITH THE SHAREHOLDER'S SPECIFICATIONS ABOVE. THIS PROXY
CONFERS
DISCRETIONARY AUTHORITY IN RESPECT TO MATTERS NOT KNOWN OR
DETERMINED AT THE
TIME OF THE MAILING OF THE NOTICE OF THE ANNUAL MEETING OF
SHAREHOLDERS TO THE
UNDERSIGNED.
The undersigned hereby acknowledges receipt of the Notice of Special
Meetingnof Shareholders, Proxy Statement and Form 10-K Annual Report for year
ended March 31, 1998.
Dated: _____________, 1998.
________________________________________
________________________________________
Signature(s) of Shareholder(s)
Signature(s) should agree with the name(s) stenciled hereon. Executors,
administrators, trustees, guardians and attorneys should indicate when
signing. Attorneys should submit powers of attorney.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE
SOUTHSHORE CORPORATION. PLEASE SIGN AND RETURN THIS PROXY IN THE
ENCLOSED PRE-ADDRESSED ENVELOPE. THE GIVING OF A PROXY WILL NOT
AFFECT YOUR
RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING.
<PAGE>
PRELIMINARY PROXY STATEMENT
THE SOUTHSHORE CORPORATION
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To the Shareholders of The Southshore Corporation
PLEASE TAKE NOTICE, that a Special Meeting of Shareholders
of The Southshore Corporation will be held on August ___, 1998,
at 10:00 a.m. at 10750 East Briarwood, Englewood, Colorado, for
the following purposes:
1. To consider the sale of substantially all the
Company's assets pursuant to a Contract to Buy and Sell Real
Estate for $2 million.
2.To consider the sale of substantially all of the
Company's assets to a back-up purchaser, South Suburban Park
& Recreation District, in the event there is no closing on
the Contract to Buy and Sell Real Estate.
3. To transact such other business as may properly
come before the meeting.
Accompanying this notice is a Proxy and Proxy Statement with
respect to these matters.
Whether or not you expect to be present at the meeting,
please sign and date the Proxy and return it in the enclosed
envelope provided for that purpose. The Proxy may be revoked at
any time prior to the time that it is voted. Only shareholders
of record at the close of business on July ___, 1998, will be
entitled to vote at the meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Kenneth M. Dalton
President
July ___, 1998
IT IS IMPORTANT THAT YOU SIGN THE ENCLOSED PROXY AND
RETURN IT TO THE COMPANY IMMEDIATELY.
<PAGE>
PRELIMINARY PROXY STATEMENT
THE SOUTHSHORE CORPORATION
10750 East Briarwood
Englewood, Colorado 80112
PROXY STATEMENT
Special Meeting of Shareholders - August __, 1998
GENERAL
A Special Meeting of the Shareholders of The Southshore
Corporation (the "Company") is scheduled for August __, 1998, for
the purpose of considering the sale of substantially all of the
Company's assets, pursuant to a Contract to Buy and Sell Real
Estate ("Purchase Agreement") with Marc W. Logan, Robb MacMillan
and Jack Wasserman, M.D., a Professional Corporation (the
"Buyers"), dated June 16, 1998.
The enclosed Proxy is solicited by the Board of Directors of
the Company. This solicitation is being made by mail, and may also
be made by directors, officers and employees of the Company. Any
Proxy given pursuant to this solicitation may be revoked by the
shareholder at any time prior to the voting of the Proxy.
Shares represented by Proxies will be voted as specified in
such Proxies. In the absence of specific instructions. Proxies
received by the Board of Directors will be voted in favor of all
the proposals.
All of the expenses involved in preparing, assembling and
mailing this Proxy Statement and the material enclosed herewith
will be paid by the Company. The Company may reimburse banks,
brokerage firms and other custodians, nominees and fiduciaries for
reasonable expenses incurred by them in sending proxy material to
beneficial owners of stock. This Proxy Statement and accompanying
form of Proxy are being mailed to shareholders on or about July __,
1998.
PROPOSAL TO SELL SUBSTANTIALLY ALL THE COMPANY'S ASSETS
Recommendation of Board of Directors. The Company's Board of
Directors unanimously recommends to the shareholders that the
shareholders approve the sale of substantially all the Company's
assets to Buyers pursuant to the Purchase Agreement as described
herein, and approve a sale to a possible back-up purchaser on
similar terms. See "Possible Back-Up Purchaser" below.
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The Purchase Agreement. The Company has entered into a
Contract to Buy and Sell Real Estate dated June 16, 1998 with the
Buyers who are non-affiliates of the Company. Marc W. Logan is a
resident of Highland Ranch, Colorado. Robb MacMillan and Dr. Jack
Wasserman reside in the San Diego, California area. Jack
Wasserman, M.D., Professional Corporation, is a California
corporation owned by Dr. Wasserman. A copy of the Agreement is
attached as Appendix 1.
Sale of Assets. Pursuant to the Purchase Agreement, the
Company has agreed to sell the Company's 16 acre water park
property to Buyers which constitutes substantially all of its
assets. Included within the assets sold are the real property
owned by the Company, as well as each and all of the Company's
personal property located on the real property (collectively "the
Property").
Purchase Price. Buyers have agreed to pay to the Company the
sum of $2 million subject to certain conditions, including
obtaining satisfactory financing by July 30, 1998. The Company's
obligation is subject to obtaining agreement with 35 holders of 10%
promissory notes (totalling $955,000) secured by a lien on the
Property and approval of shareholders of the Company. The Purchase
Agreement contains provisions standard in typical real estate
contracts for title, inspection and survey.
Closing. The Purchase Agreement contemplates a closing within
90 days of execution of the Purchase Agreement.
Pursuant to the Purchase Agreement, the Company is to call a
special meeting of its shareholders for the purpose of seeking
approval of the sale transaction. The Company's management, Board
of Directors and certain other persons have indicated they intend
to vote for the sale of assets at the special meeting of
shareholders. See "Required Vote of Shareholders."
The Purchase Agreement requires the Company to continue
reasonable management and maintenance of the property, maintain
insurance, not remove personal property and assign manufacturer's
warranties.
The Buyers. According to the Purchase Agreement, the Buyers
are licensed real estate brokers purchasing the Property for their
own account. None of the Buyers is a shareholder, director or
officer of the Company.
Background and Reasons for the Sale Transaction. During the
past approximate two years, management of the Company has actively
sought, without success, to refinance its debt, including its past
due property taxes and principal debt of $955,000 which is secured
by a lien on the Property which became due in mid-1997. All
Company debt, including past due property taxes, approached or
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exceeded $2 million during the period and is all currently due.
Refinancing was not available because of the history of losses from
the property, exceeding $4,575,000 from the Company's inception in
1991. At the same time the Company was seeking to refinance its
debt, it also tested the waters with respect to selling the 16 acre
water park. During 1997 the Company listed the property with a
local commercial realtor, placed ads in trade publications and at
water park conventions, and initiated contacts with possible
prospective purchasers.
The principal reasons why a proposed sale of the property was
undertaken were:
(1) That refinancing of debt or obtaining of additional
financing was not available;
(2) The Company had five consecutive years of operating
losses from its water park for accumulated loss of $4,575,000
at March 31, 1998;
(3) The Property is subject to a tax lien certificate
issued by Arapahoe County, Colorado, to a New Jersey bank for
failure to pay property taxes since the 1993 tax year for an
aggregate of approximately $566,000, including accrued
interest and which permits the holder at anytime to apply for
an Arapahoe County Treasurer's Deed to the Property;
(4) Management considered the fact that no firm offers
to acquire the Property involving cash consideration exceeding
that of the Buyers and South Suburban Park & Recreation
District, Littleton, Colorado (possible Back-Up Purchaser -
see below) had been received by the Company, even though it
has publicly announced that the Company was exploring the
possibility of making a sale of the Property, and had listed
the Property for sale and made other efforts to sell the
Property;
(5) Management considered favorably the structure of the
offer by Buyers as a cash transaction; and
(6) Management considered the fact that the terms of the
Purchase Agreement were the result of arms length
negotiations.
In view of the wide variety of factors considered in
connection with its evaluation of the sale of the Company's assets,
management found it impractical to and therefore did not quantify
or otherwise attempt to assign relative weights to the various
factors considered in reaching a decision to approve and recommend
to the shareholders the sale of the Company's principal asset
pursuant to the Purchase Agreement.
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The Company has not obtained an independent appraisal on the
Property; however, the Property was listed with a commercial real
estate broker during the past year and the Company has been advised
that the 16 acre tract has an estimated fair market value of $1.2
million to $1.4 million if purchased for general use. Management
believes the $2 million purchase price to be paid by Buyers is due
in part to the water park facilities on the Property. The Company
did not utilize a real estate broker in the Agreement to sell the
Property and is not required to pay a sales commission. Buyers had
indicated interest in the Property in the past but only recently
made the offer for $2 million.
Required Vote of Shareholders. The Purchase Agreement
requires approval of the sale by the vote of the holders of the
Company's shares of common stock. In addition, pursuant to the
Colorado Business Corporation Act, Section 7-112-102, a shareholder
vote is required for the sale, transfer or other disposition of all
or substantially all of a Colorado corporation's property and
assets, including its goodwill, not in the usual and regular course
of its business.
Possible Back-Up Purchaser. Since April, 1998 South Suburban
Park & Recreation District ("District") has been interested in
acquiring the Property, has held public hearings, inspected the
Property, obtained an appraisal and environmental audit. The
District has indicated it is interested in contracting for the
purchase of the Property if there is no closing on the current
Purchase Contract. See Letter from District attached as Appendix
2. Thus, the Company is soliciting authority to sell the Property
to the District if the contract with the Buyers does not close.
The purchase price under negotiation with the District was also $2
million. The authority to sell to the District is limited to a
price of at least $2 million pursuant to a contract similar to
Appendix 1, except that County Commissioner approval would be
required.
Company officers and directors holding directly or indirectly
the power to vote 812,592 shares, or 31.1% of the outstanding
shares, have indicated they intend to vote their shares in favor of
the sale transaction. No proxies nor agreements relating to shares
held by management have been entered into by members of management.
RIGHTS OF DISSENTING SHAREHOLDERS
IF THE SHAREHOLDERS APPROVE THE DISSOLUTION AND LIQUIDATION OF
THE COMPANY AS PROPOSED, THEN, AS PROVIDED IN THE COLORADO BUSINESS
CORPORATION, ACT, SECTION 7-112-102, DISSENTERS' RIGHTS ARE
AVAILABLE.
Shareholders of the Company are entitled to exercise
dissenters' rights pursuant to the provisions of Sections 7-113-102
and 7-113-103 of the Colorado Business Corporation Act (the
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<PAGE>
"CBCA"), copies of which sections are included with this proxy
statement as Appendix 3. In accordance with these sections, the
Company's shareholders have the right to dissent from the sale of
the Company's assets and to be paid the "fair value" of their
common stock. (See, CBCA Section 7-113-102) In this context, the
term "fair value" means the value of a shareholder's common stock
immediately before the Closing Date of the sale. Holders of
options to purchase Company common stock have no similar rights of
appraisal under applicable Colorado law.
Under Section 7-113-102 of the CBCA, where a sale of
substantially all the corporation's property and assets is to be
submitted for approval at a meeting of shareholders, the
corporation must notify each of its shareholders of the right to
dissent and must include in the notice a copy of Sections
7-113-101-103, 201-209 and 301-302 of the CBCA. This Proxy
Statement constitutes this notice to the shareholders of the
Company. The applicable statutory provisions of the CBCA are
attached as Appendix 3.
The following discussion is not a complete statement of the
law pertaining to a dissenting shareholder's rights under the CBCA
and is qualified in its entirety by the full text of the Sections
attached as Appendix 3. Any shareholder who wishes to exercise the
right to dissent and demand the fair value of his or her shares, or
who wishes to preserve the right to do so, should review the
following discussion and Appendix 3 carefully because failure to
timely and properly comply with the procedures will result in the
loss of a shareholder's right to dissent under the CBCA.
A shareholder of the Company wishing to exercise the right to
demand payment for his or her common stock must first file, before
the vote of shareholders is taken at the Special Meeting, a written
notice of intent to demand payment for his or her common stock and
must, in addition, not vote in favor of the sale of substantially
all the Company's assets pursuant to the Purchase Agreement.
Because a proxy which does not contain voting instructions will,
unless revoked, be voted FOR the sale of substantially all the
Company's assets, a shareholder who votes by proxy and who wishes
to exercise dissenter's rights must (i) vote AGAINST the resolution
to sell, or (ii) ABSTAIN from voting on this resolution. A vote
against the resolution, in person or by proxy, will not in and of
itself constitute a written notice of intent to demand payment for
a shareholder's common stock satisfying the requirements of Section
7-113-204 of the CBCA.
A demand for payment must be executed by or for the
shareholder pursuant to a Dissenters' Notice provided by the
Company within 10 days after the Special Meeting. If the common
stock is owned of record in a fiduciary capacity, such as by a
trustee, guardian or custodian, the demand must be executed by the
fiduciary. If the common stock is owned of record by more than one
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person, as in a joint tenancy or tenancy in common, the demand must
be executed by all joint owners. An authorized agent, including an
agent for two or more joint owners, may execute the Dissenters'
Notice for a shareholder of record; however, the agent must
identify the record owner and expressly disclose the fact that, in
exercising the demand, he is acting as agent for the record owner.
A record owner who holds shares as a nominee for others, such
as a broker, may demand payment for the shares held for all, or
fewer than all, of the beneficial owners of such shares. In such
a case, the Dissenters' Notice should set forth the number of
shares to which it relates. When no number of shares is expressly
mentioned, the Dissenters' Notice will be presumed to cover all
shares standing in the name of the record owner. Beneficial owners
of common stock who are not record owners and who intend to
exercise payment rights should instruct the record owner to comply
with the statutory requirements with respect to the exercise of
payment rights before the date of the applicable Special Meeting.
Within 10 days after the Special Meeting in which the sale
pursuant to the Purchase Agreement is authorized, the Company will
cause to be mailed to each shareholder who has properly asserted
dissenter's rights a Dissenters' Notice that contains (i) the
address to which a demand for payment and stock certificates must
be sent in order to receive payment; and (ii) a form to be used by
the shareholder who dissents, and to demand payment and the date by
which such demand must be made. To receive the fair value of his
or her common stock a dissenting shareholder must demand payment
and deposit his or her certificates within 30 days after the
aforesaid notice is given.
After the Company receives a valid demand for payment, it will
cause to be remitted to each dissenting shareholder who has
properly asserted dissenter's rights the fair value of his or her
shares of Common Stock, with interest at the legal rate computed
from the Closing Date. Payment will be accompanied by (i) the
financial statements of the Company for its most recently completed
fiscal year; (ii) an estimate of the fair value of the common
shares with respect to which dissenters' rights have been exercised
and a brief description of the method used to reach the estimate;
and (iii) an statement of the dissenter's right to demand payment
if he or she is dissatisfied with the payment made as provided in
Section 7-113-209 and a copy of the dissenter's provisions in
Sections 7-113-101-103, 201-209 and 301-302 of the CBCA.
If a dissenting shareholder believes that the amount remitted
by the Company is less than the fair value of his or her common
shares plus interest, the dissenting shareholder may give written
notice to the Company of his or her own estimate of the fair value
for the common shares plus interest and demand a supplemental
payment for the difference. Any written demand for supplemental
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payment must be made within 30 days after the Company mailed its
original remittance.
Within 60 days after receiving a demand for supplemental
payment, the Company must either pay the amount of the supplemental
payment demanded (or agreed to between the dissenting shareholder
and the Company) or file a petition in the state courts of Colorado
requesting that the court determine the fair value of the common
shares plus interest. Any petition so filed must name as parties
all dissenting shareholders who have demanded supplemental payments
and who have been unable to reach an agreement with the Company
concerning the fair value of their common shares. The court may
appoint appraisers, with such power and authority as the court
deems proper, to receive evidence on and recommend the amount of
fair value of the common shares. The jurisdiction of the court is
plenary and exclusive, and the fair value as determined by the
court is binding on all shareholders, wherever located. A
dissenting shareholder, if successful, is entitled to a judgment
for the amount by which the fair value of his or her common shares
as determined by the court exceeds the amount originally remitted
by the Company.
Generally the costs and expenses associated with a court
proceeding to determine the fair value of the Company's common
stock will be borne by the Company, unless the court finds that a
dissenting shareholder has demanded supplemental payment in a
manner which is arbitrary, vexatious or not in good faith. Similar
costs and expenses may also be assessed in instances where the
Company has failed to comply with the procedures in Section
7-113-302 pertaining to dissenters' rights discussed above. The
court may award attorneys' fees to an attorney representing
dissenting shareholders out of any amount awarded to such
dissenters if the court finds such services were substantial.
Failure to follow the steps required by the CBCA for asserting
dissenters' rights may result in the loss of a shareholder's rights
to demand the fair value of his or her shares of the Company's
common stock. Shareholders considering seeking appraisal should
realize that the fair value of their shares, as determined under
the CBCA in the manner outlined above, could be more than, the same
as or less than the value of the cash and assumption of liabilities
they would be entitled to as a result of the sale if they did not
seek appraisal of their shares.
ACTIVITIES OF THE COMPANY FOLLOWING THE PROPOSED SALE
Following the proposed sale of the Property, the Company's
assets are expected to consist of refunds of prepaid deposits and
cash to the extent that such have not been utilized to pay debt and
past due and accrued property taxes without adjustment for
operating results through closing of the Purchase Agreement. In
view of the fact that the net sale price, approximately $1,995,000
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net, is expected to be less than the amount due creditors, property
taxes and estimated expenses through closing, the Company has
negotiated with its principal creditors for them to accept less
than the full amount due them. Obviously there is no assurance
that such negotiations will be successful; however, the fact that
the issuance of an Arapahoe County Treasurer's Deed on the property
would effectively eliminate the Property as a source of funds to
pay creditors, except Arapahoe County, should likely provide
incentive to creditors to accept less than full payment for their
respective claims.
If and when the Company completes the sale of the water park
property and eliminates all or most of its liabilities, management
intends to seek out an appropriate operating privately-held entity
which is seeking to become a publicly-held company and hopefully
effect a business combination with such entity. The Company has not
made any contacts in that respect, nor established any criteria for
such entity, nor engaged any agents for the purpose of locating
such an entity. No activities in that respect are expected to
occur until after closing on the Purchase Agreement. Obviously,
there is no assurance that a suitable entity for a proposed
business combination will be located or, if located, that such
business combination can be negotiated on terms acceptable to the
parties.
FEDERAL INCOME TAX CONSEQUENCES
In General. The following summary of the anticipated federal
income tax consequences to the Company of the proposed sale of
assets is not intended as tax advice and is not intended to be a
complete description of the federal income tax consequences of the
proposed transactions. This summary is based upon the Internal
Revenue Code of 1986 (the "Code"), as presently in effect, the
rules and regulations promulgated thereunder, current
administrative interpretations and court decisions. No assurance
can be given that future legislation, regulations, administrative
interpretations or court decisions will not significantly change
these authorities (possibly with retroactive effect).
No rulings have been requested or received from the Internal
Revenue Service ("IRS") as to the matters discussed and there is no
intent to seek any such ruling. Accordingly, no assurance can be
given that the IRS will not challenge the tax treatment of certain
matters discussed or, if it does challenge the tax treatment, that
it will not be successful.
The discussion of federal income tax consequences set forth
below is directed primarily toward individual taxpayers who are
citizens or residents of the United States. However, because of
the complexities of federal, state and local income tax laws, it is
recommended that the Company's shareholders consult their own tax
advisors concerning the federal, state and local tax consequences
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of the proposed transactions to them. Further, persons who are
trusts, tax-exempt entities, corporations subject to specialized
federal income tax rules (for example, insurance companies) or
non-U.S. citizens or residents are particularly cautioned to
consult their tax advisors in considering the tax consequences of
the proposed transactions.
Federal Income Tax Consequences to the Company. The sale of
substantially all of the assets of the Company pursuant to the
Purchase Agreement will be a taxable sale by the Company upon which
gain or loss may be recognized by the Company. The amount of gain
or loss recognized by the Company with respect to the sale of a
particular asset will be measured by the difference between the
amount realized by the Company on the sale of that asset and the
Company's tax basis in that asset. The amount realized by the
Company on the sale of substantially all of its assets will include
the amount of cash received, the fair market value of any other
property received. For purposes of determining the amount realized
by the Company with respect to specific assets, the total amount
realized by the Company will generally be allocated among the
assets according to the rules prescribed under the Code. The
Company's basis in its assets is generally equal to their cost, as
adjusted for certain items, such as depreciation.
The determination of whether gain or loss is recognized by the
Company will be made with respect to each of the assets to be sold.
Accordingly, the Company may recognize gain on the sale of certain
assets and loss on the sale of certain others, depending on the
amount of consideration allocated to an asset as compared with the
basis of that asset. The gains and losses may offset, except that
capital losses may be used to offset only capital gains. The
Company may recognize a net gain as a result of the sale of all its
assets. Nevertheless, the Company believes its net operating loss
carryover and its capital loss carryover to the year of sale are
sufficient to offset gain, if any. Therefore, the Company believes
it will incur no federal income tax liability as a result of the
sale of its assets.
MARKET INFORMATION ON THE COMPANY'S COMMON STOCK
The Company's common stock is traded on the NASD Electronic
Bulletin Board. The range of high and low bid prices set forth
below have been obtained from sources believed to be reliable based
on reports from the National Association of Securities Dealers.
Calendar 1996 Calendar 1997 Calendar 1998
------------- ------------- -------------
Quarter Low High Low High Low High
------- --- ---- --- ---- --- ----
First .25 .50 .50 .50 .12 .21
Second .25 .50 .37 .50
Third .50 .50 .37 .50
Fourth .50 .50 .25 .50
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The Company is informed there has been very little volume in
trading of its common stock during the above periods.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The common stock, par value $.01 per share, of the Company is
the only class of stock entitled to vote at the meeting. As of
July __, 1998, the Company had issued and outstanding 2,610,475
shares of common stock. Each shareholder will be entitled to cast
one vote in person or by proxy for each share of common stock held
by him. Only shareholders of record at the close of business on
July __, 1998 will be entitled to vote at the meeting.
Information as to the name, address and holdings of each
person known by the Company to be the beneficial owner of more than
5% of its common stock as of July __, 1998, is set forth below.
Beneficial ownership of common stock has been determined for
purposes of this table based on Rule 13d-3 promulgated by the
Securities and Exchange Commission under the Securities Exchange
Act of 1934. Under this rule, a person is, in general, deemed to
be the beneficial owner of a security if the person has or shares
voting power or investment power in respect of such security or has
the right to acquire beneficial ownership of the security within
sixty (60) days.
Members of management intend to vote all shares of common
stock held by them respectively FOR the sale of all the Company's
assets pursuant to the Contract to Buy and Sell Real Estate and FOR
such sale of all the Company's assets to South Suburban Park and
Recreation District as a back-up purchaser.
Amount of
Name and Address Common Stock Percent
of Beneficial Owner Beneficially Owned of Class
------------------- ------------------ --------
Kenneth M. Dalton (1)(2) 668,419 25.6%
26 Tamarade Drive
Littleton, CO 80127
Rod K. Barksdale (1)(2) 88,007 3.3%
2921 Sopris Avenue
Glenwood Springs, CO 81601
Ren Berggren (1)(2)(3) 0 0%
1700 East 68th Avenue
Denver, CO 80229
James F. Silliman, M.D. 192,142 7.4%
7408 Greenbriar
Dallas, TX 75225
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Keith A. Lowery 144,734 5.5%
7477 Singing Hills Drive
Boulder, CO 80301
Officers and Directors 812,592(4) 31.1%
as a Group (3 Persons)
____________________
(1) Directors of the Company.
(2) Officers of the Company
(3) Mr. Berggren is an officer, director and shareholder of Vancol
Industries, Inc. which company owns 56,166 shares of common
stock of the Company. He disclaims personal beneficial
ownership of the shares of common stock of the Company owned
by Vancol Industries, Inc.
(4) For purposes hereof the shares held by Vancol Industries, Inc.
are included in the calculation.
FINANCIAL AND OTHER INFORMATION
Financial Statements. The Company's audited financial
statements at March 31, 1998 and 1997 and for the periods ended
March 31, 1998, 1997 and 1996 and Management's Discussion and
Analysis of Results of Operations are included in the Form 10-K
Annual Report as filed with the U.S. Securities and Exchange
Commission for the year ended March 31, 1998 enclosed herewith.
Pro Forma Financial Information. The following unaudited Pro
Forma Balance Sheet at March 31, 1998 gives effect to the proposed
sale of substantially all the assets of the Company, as if the
proposed September 14, 1998 transaction had occurred on March 31,
1998. No pro forma statement of operations has been presented.
Since after the sale there will be no operations, a pro forma
statement of operations would show no material revenue and no
material expenses assuming the sale of the Company's assets. The
Company's operating season with the water park property will be
completed September 7, 1998, except for closing and winterizing.
Scheduled closing on the Purchase Contract is September 14, 1998.
The Company will retain all operating revenues and pay all
operating expenses of the water park through closing, including
prorated property taxes for 1998. The Company is not in a position
to predict operating results for the 1998 season with a reasonable
degree of accuracy. Readers are referred to historical financial
operating data included in the Company's Form 10-K Annual Report
for the year ended March 31, 1998 which is enclosed with the proxy
statement.
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PRO FORMA BALANCE SHEET
<TABLE>
<CAPTION>
BALANCE SHEET (Unaudited) 3/31/98 Adjustment As Adjusted
- ------------- ------- ---------- -----------
<S> <C> <C> <C>
CURRENT ASSETS
Cash 1,841 1,995,000 (1) 130,051
(1,866,790)(3)
Prepaid Expenses 6,607 0 6,607
--------- ---------
Total Current Assets 8,448 136,658
OTHER ASSETS
Property and Equipment,
-net of accumulated
depreciation 1,885,031 (1,885,031)(1) 0
Deposits 17,245 0 17,245
--------- ---------
1,902,276 17,245
Total Assets 1,910,724 153,903
CURRENT LIABILITIES
Notes Payable-Current 1,201,567 (238,750)(2) 0
(962,817)(3)
Notes Payable-Related
Parties 97,400 (97,400)(3) 0
Property Taxes Payable 566,762 (566,762)(3) 0
Accrued Interest 151,176 (151,176)(3) 0
Accounts Payable-Trade 18,926 (18,926)(3) 0
Deferred Income 31,845 (31,845)(3) 0
--------- ---------
Total Current
Liabilities 2,067,676 0
Notes Payable
-net of current
portion 37,864 (37,864)(3) 0
--------- ---------
Total Liabilities 2,105,540 0
--------- ---------
</TABLE>
-12-
<PAGE>
<TABLE>
<CAPTION>
BALANCE SHEET (Unaudited) 3/31/98 Adjustment As Adjusted
- ------------- ------- ---------- -----------
<S> <C> <C> <C>
STOCKHOLDERS' EQUITY
Preferred Stock, $.01 Par
Value 25,000,000 Shares
Authorized; None Issued
and Outstanding
Common Stock, $.001 Par Value
100,000,000 Shares Authorized;
2,610,470 Issued and
Outstanding 2,611 0 2,611
Additional Paid-In Capital 4,377,574 0 (1) 4,377,574
Retained Earnings (4,575,001) (109,969)(1)
(238,750)(2) (4,225,282)
---------- ---------
Total Stockholders' Equity (194,816) 153,903
Total Liabilities and
Stockholders' Equity 1,910,724 153,903
========= =========
</TABLE>
____________________
Notes to Pro Forma Financial Statements
(1) To record proposed sale of property assuming net proceeds from the
sale of $1,995,000.
(2) To record gain of $238,750 estimated through negotiated reductions
in outstanding indebtedness. Assumes creditors, particularly
holders of 10% Secured Promissory Notes, agree to accept $238,750
less than full amount of the amounts due thereon which will result
in excess cash of $238,750 without adjustment for operations
through closing date including 1998 property taxes, estimated at
$75,000, through closing date on the sale of the Property.
(3) To record payment of liabilities.
-13-
<PAGE>
DESCRIPTION OF BUSINESS AND PROPERTY
The Company is engaged in one business only, that is the ownership
and operation of one water park located in the southeast part of the
Denver Metro Area. The park is on 16 acres, has various water features,
including a wave pool, kiddie pool and various water slides. It also
has volleyball courts and offers food and beverages through concession
facilities. The property is encumbered with a tax lien certificate and
two liens securing indebtedness which are currently in default. See
Financial Statements and Management's Discussion and Analysis of Results
of Operations in Form 10-K Annual Report for the year ended March 31,
1998 enclosed herewith for further details.
AUDITORS
Schumacher & Associates, Inc. served as independent auditors of the
Company during the fiscal year ended March 31, 1998. A representative
of Schumacher & Associates, Inc., who will have an opportunity to make
a statement if he so desires, will be present at the meeting and will be
available to respond to appropriate questions.
FORM 10-K ANNUAL REPORT
Included with this Proxy Statement is a copy of the Company's Form
10-K Annual Report for the year ended March 31, 1998 as filed with the
U.S. Securities and Exchange Commission.
OTHER MATTERS
The Board of Directors does not intend to bring before the meeting
any business other than as set forth in this Proxy Statement, and has
not been informed that any other business is to be presented to the
meeting. However, if any matters other than those referred to above
should properly come before the meeting, it is the intention of the
persons named in the enclosed Proxy to vote such proxy in accordance
with their best judgment.
Please sign and return promptly the enclosed Proxy in the envelope
provided. The signing of a Proxy will not prevent your attending the
meeting and voting in person.
BY ORDER OF THE BOARD OF DIRECTORS
Kenneth M. Dalton
President
Dated: July __, 1998
-14-
<PAGE>
APPENDIXES
Appendix 1 Contract to Buy and Sell Real Estate - Marc W. Logan,
Robb MacMillan and Jack Wasserman, M.D., a Professional
Corporation
Appendix 2 Letter from South Suburban Park & Recreation District
Appendix 3 Sections 7-113-101-103, 301-209 and 301-302 of the
Colorado Business Corporation Act
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<PAGE>
APPENDIX 1
THIS FORM HAS IMPORTANT LEGAL CONSEQUENCES AND THE PARTIES
SHOULD CONSULT LEGAL AND TAX OR OTHER COUNSEL BEFORE SIGNING
COMMERCIAL
CONTRACT TO BUY AND SELL REAL ESTATE
June 12, 1998
1) PARTIES AND PROPERTY.
Marc W. Logan, Robb MacMillan and Jack Wasserman, M.D. a
Professional Corporation
Buyer(s) , agree to buy, and the undersigned seller, The Southshore
Corporation, agrees to sell, on the terms and conditions set forth
in this contract, the following described real estate in the County
of Arapaho, Colorado, to wit:
See attached Exhibit "A":
known as 10750 East Briarwood Avenue, Englewood, Colorado 80112,
together with all interest of Seller in vacated streets and alleys
adjacent thereto, all assessments and other appurtenances thereto,
all improvements thereon and all attached fixtures thereon, except
as herein excluded (collectively the Property).
2) INCLUSIONS/EXCLUSIONS. The purchase price includes the
following items (a) if attached to the Property on the date of this
contract: lighting, heating, softeners, smoke/fire/burglar alarms,
security devices, inside telephone wiring and connecting
blocks/jacks, plants, mirrors, floor coverings, intercom systems,
built-in kitchen appliances, sprinkler systems and controls; (b)
if on the Property whether attached or not on the date of this
contract: storm windows, storm doors, window and porch shades,
awnings, blinds, screens, curtain rods, drapery rods, all keys and
(c) all personal property owned by the Seller presently located on
the Property used in the operation or maintenance of the Property
in its "as is" condition.
The Above-described included items (Inclusions) are to be conveyed
to Buyer by Seller by bill of sale at the closing, free and clear
of all taxes, liens and encumbrances, except as provided in Section
12. The following attached fixtures are excluded from this sale:\
NONE
3) PURCHASE PRICE AND TERMS. The purchase price shall be
$2,000,000.00, payable in U.S. dollars by Buyer as follows:
(Complete the applicable terms below.)
(a) Earnest Money.
$75,000.00 in the form of cash, bank cashier s check or bank wire
transfer, as earnest money deposit and part payment of the purchase
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<PAGE>
price, payable to and held by Stewart Title in it s trust account
on behalf of both Seller and Buyer. Stewart Title is authorized to
deliver the earnest money deposit and any accrued interest to the
closing agent, if any, at or before closing.
The balance of $1,925,000.00 (purchase price less earnest
money) shall be paid as follows:
(b) Cash at Closing.
$1,925,000.00, plus closing costs, to be paid by Buyer at Closing
in Funds which comply with all applicable Colorado laws, which
include cash, electronic transfer funds, certified check, savings
and loan teller s check, and cashier s check (Good Funds).
(c) New Loan. [See Section 4]
(d) Assumption. N/A
4. FINANCING CONDITIONS AND OBLIGATIONS.
This offer is specifically contingent on Buyer s ability to
obtain a loan of $1,400,000.00 at an interest rate not to exceed
10% for a term no less than 15 years, and an amortization rate no
less than 25 years and with origination fees no greater than 3%
within 45 days of CDMEC. Buyer shall deliver to seller a true copy
of the financing commitment from seller s lender.
5. APPRAISAL PROVISION. (Check only one box.) This Section 5
________shall apply __X_____shall not apply
If this Section 5 applies, as indicated above, Buyer shall have the
sole option and election to terminate this contract if the purchase
price exceeds the Property s valuation as determined by an
appraiser engaged by Buyer. The contract shall be terminated by
the Buyer causing the Seller to receive written notice from lender
which confirms the Property s valuation is less than the purchase
price, on or notice of termination on or before the appraisal
deadline, Buyer waives any right to terminate under this section.
6. COST OF APPRAISAL. Cost of any appraisal to be obtained after
the date of this contract shall be timely paid by Buyer.
7. ASSIGNABLE. This contract shall be assignable by Buyer with
Seller s prior written consent; such consent shall not be
unreasonably withheld. It is anticipated that Buyer s will be
organizers, incorporators or founders of a business entity, such as
a corporation or limited liability company formed to hold title to
the Southshore Property. Except as so restricted, this contract
shall inure to the benefit of and be binding upon the heirs,
personal representatives, successors and assigns of the parties.
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<PAGE>
8. EVIDENCE OF TITLE. Seller shall furnish to Buyer, at Seller s
expense, a current commitment for owner s title insurance policy in
an amount equal to the purchase price on or before 14 CDMEC (Title
Deadline). Buyer may require of Seller that copies of instruments
listed in the schedule of exceptions (Exceptions) in the title
insurance commitment also be furnished to Buyer at Seller s
expense. This requirement shall pertain only to instruments shown
of record in the office of the clerk and recorder of the designated
county or counties. The title insurance commitment, together with
any copies of instruments furnished pursuant to this Section 8,
constitute the title documents (Title Documents). Buyer, or
Buyer s designee, must request Seller, in writing, to furnish
copies of instruments listed in the schedule of exceptions no later
than 10 calendar days after title Deadline. Seller will pay the
premium at closing and have the title insurance policy delivered to
Buyer as soon as practicable after closing.
9. TITLE.
(a)Title Review. Buyer shall have the right to inspect the
title Documents. Written notice by Buyer of unmerchantability of
title or of any other unsatisfactory title condition shown by the
Title Documents shall be signed by or on behalf of Buyer and given
to Seller on or before 10 calendar days after Title Deadline, or
within five (5) calendar days after receipt by Buyer of any Title
Document(s) or endorsement (s) adding new Exception(s) to the title
commitment together with a copy of the Title Document adding new
Exception(s) to title. If seller does not receive Buyer s notice
by the date(s) specified above, Buyer accepts the condition of
title as disclosed by the Title Documents as satisfactory.
(b)Matters Not Shown by the Public Records. Seller shall
deliver to Buyer, on or before the Title Deadline set forth in
Section 8, true copies of all lease(s) and survey(s) in Seller s
possession pertaining to the Property and shall disclose to Buyer
all easements, liens or other title matters not shown by the public
records of which Seller has actual knowledge. Buyer shall have the
right to inspect the Property to determine if any third party(s)
has any right in the Property not shown by the public records (such
as an unrecorded easement, unrecorded lease, or boundary line
discrepancy). Written notice of any unsatisfactory condition (s)
disclosed by Seller or revealed by such inspection shall be signed
by or on behalf of Buyer and given to Seller on or before 30 CDMEC.
If Seller does not receive Buyer s notice by said date, Buyer
accepts title subject to such rights, if any, of third parties of
which Buyer has actual knowledge.
(c)Right to Cure. If Seller receives notice of
unmerchantability of title or any other unsatisfactory title
condition(s) as provided in subsection (a) or (b) above, Seller
shall use reasonable effort to correct said unsatisfactory title
condition(s) on or before the date of closing, this contract shall
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<PAGE>
then terminate; provided, however, Buyer may, by written notice
received by Seller, on or before closing, waive objection to said
unsatisfactory title conditional(s).
10. INSPECTION. Buyer or any designee shall have the right to
have inspection(s) of the physical condition of the Property and
Inclusions at Buyer s expense. If written notice of any
unsatisfactory condition, signed by or on behalf of Buyer, is not
received by Seller on or before 45 CDMEC (Objection Deadline), the
physical condition of the Property and Inclusions shall be deemed
to be satisfactory to Buyer. If such notice is received by Seller
as set forth above, and if Buyer and Seller have not agreed, in
writing, to a settlement thereof on or before 60 CDMEC (Resolution
Deadline), this contract shall terminated three calendar days
following the Resolution Deadline, and the Deposit shall be
returned; unless, within the three calendar days, Seller receives
written notice from Buyer waiving objection to any unsatisfactory
conditions. Buyer is responsible for and shall pay for any damage
which occurs to the Property and Inclusions as a result of such
inspection.
11. DATE OF CLOSING. The date of closing shall be 90 CDMEC, or by
mutual agreement at an earlier date. The place of closing shall be
at Stewart Title, 50 South Steele Street, Suite 600, Denver,
Colorado, at an hour to be mutually agreed upon.
12. TRANSFER OF TITLE. Subject to tender or payment at closing as
required herein and compliance by Buyer with the other terms and
provisions hereof, Seller shall execute and deliver a good and
sufficient General Warranty deed to Buyer, on closing, conveying
the Property free and clear of all taxes except the general taxes
for the year of closing, and except none other. Title shall be
conveyed free and clear of all liens for special improvements
installed as of the date of Buyer s signature hereon, whether
assessed or not, except (I) distribution utility assessments
(including cable TV), (ii) those matters reflected by the Title
Documents accepted by Buyer in accordance with subsection 9(a),
(iii) those rights, if any, of third parties in the property not
shown by the public records in accordance with subsection 9(b),
(iv) inclusion of the Property within any special taxing district,
and (v) subject to building and zoning regulations.
13. PAYMENT OF ENCUMBRANCES. Any encumbrance required to be paid
shall be paid by Seller at or before closing from the proceeds of
this transaction or from any other source.
14. CLOSING COSTS, DOCUMENTS AND SERVICES. Buyer and Seller shall
pay, in Good Funds, their respective closing costs and all other
items required to be paid at closing, except as otherwise provided
herein. Buyer and Seller shall sign and complete all customary or
required documents at or before closing. Fees for real estate
closing services shall not exceed $400.00 and shall be paid at
-4-
<PAGE>
closing by Buyer and Seller equally. The local transfer tax,if
any, shall be paid at closing by Seller. Any sales and use tax
that may accrue because of this transaction shall be paid when due
by Buyer.
15. PRORATIONS. General taxes for the year of closing, based on
the most recent levy and the most recent assessment, rents, water
and sewer charges, owner s association dues, and other similar
items shall be prorated to date of closing.
16. POSSESSION. Possession of the Property shall be delivered to
Buyer as follows:
On date of delivery of deed at the Closing.
If Seller, after closing, fails to deliver possession on the date
herein specified, Seller shall be subject to eviction and shall be
additionally liable to Buyer for payment of $1,000 per day from the
date of agreed possession until possession is delivered.
17. CONDITION OF AND DAMAGE TO PROPERTY. Except as otherwise
provided in this contract, the Property and Inclusions shall be
delivered in the condition existing as of the date of this
contract, ordinary wear and tear excepted. In the event the
Property shall be damaged by fire or other casualty prior to time
of closing, in an amount of not more than ten percent of the total
purchase price, Seller shall be obligated to repair the same before
the date of closing. In the event such damage is not repaired
within said time or if the damages exceed such sum, this contract
may be terminated at the option of Buyer and all Deposits shall be
immediately returned. Should Buyer elect to carry out this
contract despite such damage, Buyer shall be entitled to credit for
all the insurance proceeds resulting from such damage to the
Property and Inclusions, not exceeding, however, the total purchase
price. Should any Inclusion(s) or Service(s) fail or be damaged
between the date of this contract and the date of closing or the
date of possession, whichever shall be earlier, then Seller shall
be liable for the repair or replacement of such Inclusion(s) or
service(s) with a unit of similar size, age and quality, or an
equivalent credit, less any insurance proceeds received by Buyer
covering such repair or replacement.
18. TIME OF ESSENCE/REMEDIES. Time is of the essence hereof. If
any note or check received as earnest money hereunder or any other
payment due hereunder is not paid, honored or tendered when due, or
if any other obligation hereunder is not performed or waived as
herein provided, there shall be the following remedies:
(a) IF BUYER IS IN DEFAULT: (Check one box only.)
(1) Specific Performance. N/A
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<PAGE>
(2) Liquidated Damages. All payments and things of
value received hereunder shall be forfeited by Buyer and retained
on behalf of Seller and both parties shall thereafter be released
from all obligations hereunder. It is agreed that such payments
and things of value are LIQUIDATED DAMAGES and (except as provided
in subsection (c) are SELLER S SOLE AND ONLY REMEDY for Buyer s
failure to perform the obligations of this contract. Seller
expressly waives the remedies of specific performance and
additional damages.
(b) IF SELLER IS IN DEFAULT: Buyer may elect to treat this
contract as cancelled, in which case all payments and things of
value received hereunder shall be returned and Buyer may recover
such damages as may be proper, or Buyer may elect to treat this
contract as being in full force and effect and Buyer shall have the
right to specific performance or damages, or both.
(c) COSTS AND EXPENSES: Anything to the contrary herein
notwithstanding, in the event of any arbitration or litigation
arising out of this contract, the arbitrator or court shall award
to the prevailing party all reasonable costs and expenses,
including attorney fees.
19. EARNEST MONEY DISPUTE. Notwithstanding any termination of
this contract, Buyer and Seller agree that, in the event of any
controversy regarding the earnest money and things of value held by
broker or closing agent, unless mutual written instructions are
received by the holder of the earnest money and things of value,
broker or closing agent shall not be required to take any action
but may await any proceeding, or at broker s or closing agent s
option and sole discretion, may interplead all parties and deposit
any moneys or things of value into a court of competent
jurisdiction and shall recover court costs and reasonable attorney
fees.
20. ALTERNATIVE DISPUTE RESOLUTION: MEDIATION. If a dispute
arises relating to this contract, and is not resolved, the parties
involved in such dispute (Disputants) shall first proceed in good
faith to submit the matter to mediation. The Disputants will
jointly appoint an acceptable mediator and will share equally in
the cost of such mediation. In the event the entire dispute is not
resolved within thirty (30) calendar days from the date written
notice requesting mediation is sent by one Disputant to the
other(s), the mediation, unless otherwise agree, shall terminate.
This section shall not alter any date in this contract, unless
otherwise agreed.
21. ADDITIONAL PROVISIONS: (The language of these additional
provisions has not been approved by the Colorado Real Estate
Commission.)
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<PAGE>
See attached Addendum for Additional Provisions, Paragraphs a)
through o).
22. RECOMMENDATION OF LEGAL COUNSEL. By signing this document,
Buyer and Seller acknowledge that the Selling Company or the
Listing Company has advised that this document has important legal
consequences and has recommended the examination of title and
consultation with legal and tax or other counsel before signing
this contract.
23. TERMINATION. In the event this contract is terminated, all
payments and things of value received hereunder shall be returned
and the parties shall be relieved of all obligations hereunder,
subject to Section 19.
24. SELLING COMPANY BROKER RELATIONSHIP. The selling broker,
(none), and its salespersons have been engaged as (none). Selling
Company has previously disclosed in writing to the Buyer that
different relationships are available which include buyer agency,
seller agency, subagency, or transaction-broker.
25. NOTICE TO BUYER. Any notice to Buyer shall be effective when
received by Buyer, or if this box is checked ______ when received
by Selling Company.
26. NOTICE TO SELLER. Any notice to Seller shall be effective
when received by Seller or Listing Company.
27. MODIFICATION OF THIS CONTRACT. No subsequent Modification of
any of the Terms of this contract shall be valid, binding upon the
parties, or enforceable unless made in writing and signed by the
parties.
28. ENTIRE AGREEMENT. This contract, along with the attached
ADDENDUM, paragraphs a) through p), constitutes the entire contract
between the parties relating to the subject hereof, and any prior
agreements pertaining thereto, whether oral or written, have been
merged and integrated into this contract.
29. NOTICE OF ACCEPTANCE: COUNTERPARTS. This proposal shall
expire unless accepted in writing, by Buyer and Seller, as
evidenced by their signatures below, and the offering party
receives notice of such acceptance on or before June 16, 1998 at
5:30 P. M. MST (Acceptance Deadline). If accepted, this document
shall become a contract between Seller and Buyer. A copy of this
document may be executed by each party, separately, and when each
party has executed a copy thereof, such copies taken together shall
be deemed to be a full and complete contract between the parties.
-7-
<PAGE>
Marc W. Logan
Robb MacMillan
Jack Wasserman, M.D. a Professional Corporation
9361 S. Princeton Lane
Highlands Ranch, Colorado 80126
BUYER: /s/ Marc W. Logan DATE: 6/16/98
By: Marc W. Logan
BUYER: /s/ Robb MacMillan DATE: 6/16/98
By: Robb MacMillan
BUYER: /s/ Jack Waserman, M.D. DATE: 6/16/98
By: Jack Wasserman, M.D. a Professional Corporation
SOUTHSHORE CORPORATION
10750 East Briarwood Avenue
Englewood, Colorado 80112
SELLER: /s/ Kenneth M. Dalton DATE: 6/16/98
By: Kenneth M. Dalton, President
-8-
<PAGE>
ADDENDUM
To that certain Commercial Contract to Buy and Sell Real Estate
dated June 12, 1998 by and between Marc W. Logan, Robb MacMillan
and Jack Wasserman, M.D. a Professional Corporation as Buyer, and
Southshore Corporation, as Seller, concerning certain real property
located at 10750 East Briarwood Avenue, Englewood, Colorado. If
any provision in the printed form of said contract is inconsistent
with any provision contained herein, then and in that event the
provision contained in this Addendum shall control.
21. ADDITIONAL PROVISIONS:
a)Hazardous Materials/ADA Disclosure. The parties acknowledge
that various materials utilized in the construction of any
improvements situated on the Property may contain materials that
may have been or may be in the future determined to be toxic,
hazardous or undesirable ("Hazardous Materials"), and may need to
be specifically treated or removed. In addition, the land ("Land")
upon which the Property is situated may have been subjected to
underground sources. Current and future federal, state and local
laws may require the cleanup of the Hazardous Materials at the
expense of those parties who have been in the chain of title of
ownership of the Property. The parties further acknowledge that
the Property may be subject to the Americans With Disabilities Act
("ADA"), a federal law, which requires, among other matters, that
tenants and/or owners of "public accommodations" remove barriers in
order to make the Property accessible by disabled persons and
provide auxiliary aids and services for hearing, vision or speech
impaired persons. Seller warrants that a Phase I Environmental
Report has been prepared in the last 60 days and that no hazards of
any kind were shown.
b)Inspection. Section 10 shall be amended by the addition of
the following language: The term "inspection" shall include but not
be limited to an inspection of the roof, walls, structural
integrity of the Property, and inspection of the inclusions, and a
determination of the existence or nonexistence of asbestos and urea
formaldehyde insulation or lead-based paint, PCB transformers,
radon gas, hazardous or toxic substances, and/or underground
storage tanks in or on the Property and all books, records,
maintenance agreements, construction documents or any other
documents relating to the waterpark, it s finances or operation.
The Buyer shall not permit any mechanic s or materialmen s liens to
be filed against the Property and hereby indemnifies and holds the
Seller harmless from and against any liability, damage, expense or
cost which may be incurred by the Seller in connection with any
mechanic s or materialmen s liens which may be filed against the
Property as a result of the provisions of this contract. This
indemnity shall specifically include attorneys fees and any costs
incurred by the Seller to enforce this indemnity.
-9-
<PAGE>
c)Calendar Days. In the event any date called for herein falls
on a Saturday, Sunday or Federal or State holiday, said date shall
be extended to the next business day following such Saturday,
Sunday or Federal or State holiday.
d)CDMEC. As used in this contract, the term "CDMEC" shall be
defined as calendar days from mutual execution of this contract.
e)Survey. On or before sixty (60) calendar days from the waiver
or satisfaction of the contingencies set forth in Section 10 and 21
(e), Seller shall furnish to Buyer, at Seller s expense, a current
monumented or pinned Improvement Survey Plat ("Survey") prepared by
a land surveyor licenses in the State of Colorado. The Survey
shall be verified to Seller, Buyer, and the title insurance company
and performed on the Property and shall show thereon the correct
legal description, acreage and square footage; location of all
fences, hedges or walls on or within two (2) feet of all sides of
all boundaries of the Property; all boundary line dimensions; the
dimension and location of all improvements; any and all ditches,
easements, rights-of-way, and adjacent roadways, if any; and the
location of all visible utilities on the Property and all
underground utilities for which there is visible surface Property
and all underground utilities for which there is visible surface
evidence. The Survey shall reflect all exceptions to title (where
applicable) as reflected on the title commitment and shall disclose
that a physical inspection on the Property revealed no improvements
situated upon or adjacent to the Property are the subject of any
encroachments, and that no easements or rights-of-way have been
physically violated in any respect. In the event the items
reflected in the Survey are not in conformance with the provisions
of this paragraph and written notice of Buyer s objections is
received by Seller within seven (7) calendar days from the date of
receipt of said Survey by Buyer, Seller shall have a period of
seven (7) calendar days from the date of receipt of said notice in
which to cure any such defects. In the event such defects are not
cured within said seven (7) calendar-day period, this contract
shall terminate at Buyer s option. If said written notice of
Buyer s objections to the Survey is not received by Seller or if
Buyer elects to waive the objections to the Survey, the Survey
shall be accepted and this contract shall remain in full force and
effect.
Seller shall deliver to Buyer the foregoing items, in Seller s
possession, within seven (7) calendar days from mutual execution of
this contract. If Buyer is not satisfied with the results of said
examination and written notice thereof is received by Seller within
thirty (30) calendar days from the mutual execution of this
contract, this contract shall terminate. If said written notice is
not received by the Seller within the time period specified above,
this contingency shall be waived and the contract shall remain in
full force and effect.
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<PAGE>
f)Health and Hospitals Notice. Seller represents that as of
this date no notices, either written or verbal, have been received
from the Department of Health and Hospitals or from any local,
county, state or federal governmental agency requiring corrective
measures to the Property. If any such notices are received prior
to closing, Seller agrees to disclose the same, in writing, to
Buyer immediately upon receipt thereof. Upon the receipt of any
notice, Seller shall have a period of thirty (30) calendar days in
which to correct and cure the defect. The closing shall take place
five (5) calendar days after said 30-calendar-day period expires,
unless such date falls on a Saturday, Sunday or Federal or State
holiday, in which event the closing shall take place on the next
business day following such Saturday, Sunday or Federal or State
holiday or on the date of closing a set forth in the contract,
whichever is later. However, in the event the defect is not cured
within said 30-calendar-day period, this contract shall terminate
at Buyer option. If Buyer is not satisfied with Seller s cure of
any defects and written notice thereof is received by Seller within
two (2) calendar days after said 30-calendar-day period expires,
this contract shall terminate. If said written notice is not
received by Seller within the time period specified above, the
provisions of this paragraph shall be waived and this contract
shall remain in full force and effect.
g)Management and Maintenance. Seller agrees to continue
reasonable management and maintenance of the improvements on the
Property from and after the date of mutual execution of this
contract to the closing date, to commit no waste or nuisance and
not to knowingly violate any zoning ordinance or building permit.
Seller agrees that all insurance shall be kept in effect by the
Seller until the closing date. Seller further agrees to maintain
the Property in good repair and in the same condition, ordinary
wear and tear excepted, as of this date and not to remove any
personal property from the Property. Seller further agrees to
assign to Buyer on the closing date all existing contractors or
manufacturers warranties on the Property, if any. Seller shall
complete replacement of all stairways.
h)Notice Provision. All notices, demands and requests required
to be given by either party to the other shall be in writing and
shall either be hand mail, return receipt requested, postage
prepaid, addressed to the parties at the addresses set forth herein
or at such other addresses as the parties may designate in writing
delivered pursuant to this provision. Any notice when given as
provided herein shall be deemed to have been delivered on the date
personally served or transmitted by facsimile, or two (2) calendar
days subsequent to the date that said notice was deposited with the
United States Postal Service.
i)Fax Transmittals. The Buyer and Seller agree that a facsimile
transmittal of this contract shall be considered as an originally
executed document and shall be binding upon the parities hereto.
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The Buyer and Seller further agree that each, originally executed
contract which was transmitted by facsimile shall be delivered to
the appropriate party via U.S. mail, messenger, or other acceptable
delivery service within seven (7) calendar days from the date of
said facsimile transmittal.
j)Indemnification. Seller shall not permit any mechanic s or
materialmen s liens to be filed against the Property and hereby
indemnifies and holds the Buyer harmless from and against any
liability, damage, expense or cost which may be incurred by the
Buyer in connection with any mechanic s or materialmen s liens
which may be filed against the Property as a result of the
provisions of this contract. This indemnity shall specifically
include attorney s fees and any costs incurred by the Buyer to
enforce this indemnity.
k)Lien Release. This contract is contingent upon Seller
obtaining agreement with the approximately 35 holders of $955,000
in 10% notes secured by the indenture which is security for the
loan.
l)Shareholder Approval. The proposed sale of the Southshore
Property is subject to a vote of shareholders of Southshore at a
meeting duly called for that purpose and pursuant to a Proxy
Statement or Information Statement to be filed with and cleared by
the U.S. Securities and Exchange Commission as soon as possible and
prior to closing.
If such shareholder approval is not forthcoming and Buyer is ready,
willing and able to perform under the terms and conditions of this
contract, Seller will immediately reimburse Buyer for all actual
and documented costs and expenses of Due Diligence of the
Southshore Property incurred by principals, excluding any fees or
salaries paid to principles. These costs shall not exceed
$75,000.00. Seller shall receive all copies of reports and Due
Diligence if Board approval is not obtained and upon reimbursement
of expenses to Buyer.
m)Seller acknowledges that Buyers are licensed Real Estate
Brokers acting on their own behalf as principles.
n)Buyers acknowledge that Seller has obtained a backup purchase
arrangement for the Southshore Property from South Suburban Parks
and Recreation District, subject to approval by Arapahoe, Jefferson
and Douglas Counties. Buyers agree that neither they nor their
agents, employees, attorneys, nor assigns will interfere, directly
or indirectly, in any process, hearing or decision making procedure
whereby the foregoing counties consider or decide said matter.
o)Buyer agrees that Seller may, at it s option, deem this
contract terminated on the 45th day of CDMEC if buyer has not
delivered to Seller a financing commitment letter. The deposit
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will be returned in full to Buyer at that time. Seller thereafter
shall be free to contract with South Suburban Park and Recreation
District.
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APPENDIX 2
SOUTH SUBURBAN
Park and Recreation District
Administrative Office
6631 S. University Blvd. 303/798-5131
Littleton, CO 80121 Fax: 303/798-3030
www.ssprd.org
June 22, 1998
Kenneth M. Dalton, President
The Southshore Corporation
10750 East Briarwood Avenue
Englewood, Colorado 80112
IN RE: Proposed Sale of Southshore Water Park
Dear Mr. Dalton:
South Suburban Park and Recreation District Board of Directors had
agreed to enter into a contract to purchase Southshore Water Park for $2
million. The contract was subject to the District receiving required
approvals from the county commissioners of Arapahoe, Douglas, and
Jefferson County (a statutory requirement), and satisfactory completion
of its due diligence requirements.
The District's due diligence process included a Phase I Environmental
Audit, an engineering report on the condition of the equipment, an
appraisal of the value of the land by an MAI, and a review of
Southshore's financial information by the District's CPA firm. As of
this writing, all of the reports were positive and did not identify any
serious concerns. In addition, the District had scheduled the required
hearings before the county commissioners in the three counties and
posted required notice on the Southshore property.
When I was notified by you that an offer to purchase Southshore had been
submitted by private investors, I shared that information with the South
Suburban Board of Directors. The Board directed me to put our proposal
on hold while the current offer is being considered by you. The Board's
primary interest in the facility was to preserve a well attended,
quality recreation amenity and not permit it to be sold for
redevelopment for some other use. Should it become apparent that the
facility is in jeopardy of closing as a recreation facility, we will
restart our efforts to evaluate the purchase and operation of Southshore
as a water park.
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Kenneth M. Dalton
June 22, 1998
page 2
The applicable state law in this situation is clearly intended to give
preference in the ownership and operation of water theme parks (and
several other recreation amenities) to the private sector. While I
continue to believe that Southshore could be operated successfully by
the District, our Board of Directors does not want this public entity to
be in competition with the private sector.
You are authorized to include a copy of this letter in your proxy
statement or information statement in connection with the proposed
shareholders' meeting to vote on the approval of the sale of the
property.
I appreciate your diligence, integrity, and responsiveness in this
matter over the past several months. I sincerely hope that the offer
before you will allow for the continued operation of Southshore as it
has proven to be a popular recreation amenity for the residents in this
region.
Sincerely,
/s/ David A. Lorenz
David A. Lorenz
Executive Director
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