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EXHIBIT 2
CALL/PUT OPTION AGREEMENT
THIS CALL/PUT OPTION AGREEMENT ("Agreement") is entered into effective as of
April 8, 1999 ("Effective Date") by and between California Coastal
Communities, Inc. ("Company") and Wheelabrator Technologies Inc. and its
wholly-owned subsidiary Resco Holdings Inc. (collectively, the "Seller").
RECITALS
WHEREAS, the Company desires to grant to the Seller an option to
compel the Company to purchase One Million Two Hundred Twenty Six Thousand Six
Hundred and Eight (1,226,608) shares of its common stock ("Shares") owned of
record by the Seller on the terms and conditions set forth below; and
WHEREAS, the Seller desires to grant to the Company, an option to
compel the Seller to sell the Shares to the Company on the terms and conditions
set forth below.
AGREEMENT
NOW, THEREFORE, in consideration of the preceding recitals and the
mutual representations, warranties, covenants and agreements set forth herein,
and for other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto agree as follows:
1. Grant of Put Option. The Company hereby grants to the Seller an
option to compel the Company to purchase the Shares from the Seller ("Put
Option"), and the Company hereby agrees to purchase the Shares from the Seller
upon the Seller's exercise of the Put Option, subject to the terms and
provisions of this Agreement, at any time between June 1 and June 30, 1999
("Put Exercise Period").
2. Grant of Call Option. The Seller hereby grants to the Company an
option to compel the Seller to sell the Shares to the Company ("Call Option"),
and the Seller hereby agrees to sell the Shares to the Company upon the
Company's exercise of the Call Option, subject to the terms and provisions of
this Agreement, at any time during the period commencing on June 1, 1999, and
ending on June 30, 1999 ("Call Exercise Period").
3. Exercise of Options. The Seller may exercise the Put Option ("Put
Exercise") at any time during the Put Exercise Period by delivering to the
Company and the Escrow Agent (as defined below) the exercise notice attached
hereto as Exhibit A ("Put Exercise Notice"). The Company may exercise the Call
Option at any time during the Call Exercise Period by delivering to the Seller
and the Escrow Agent the exercise notice attached hereto as Exhibit B ("Call
Exercise Notice"). The parties hereby further agree that following any
delivery of a Put Exercise Notice or a Call Exercise Notice, they shall execute
and deliver such additional documents as may be reasonably necessary to effect
the transfer of the Shares and any matters related thereto.
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4. Exercise Price. The exercise price for the Put Option or the Call
Option ("Exercise Price") shall be Five Dollars and Seventy Five Cents ($5.75)
per Share, or an aggregate of Seven Million Fifty Two Thousand Nine Hundred
Ninety Six Dollars ($7,052,996).
5. Term. This Agreement shall have a term commencing on the
Effective Date and expiring at midnight, California time, on the earlier of the
first business day following June 30, 1999 or any Closing Date (as defined
here). The releases in Section 11 shall survive the expiration or termination
of this Agreement after any Closing Date.
6. Stockholder Rights. Prior to the receipt by the Escrow Agent of a
Put Exercise Notice or a Call Exercise Notice, the Seller shall retain all
stockholder rights with respect to such Shares, including without limitation,
the right to vote the Shares in any and all actions for which the Shares are
entitled to vote.
7. Escrow.
(a) Within six (6) business days following execution of this
Agreement, the parties shall deliver their respective closing deliveries
described below into the custody of Chase Manhattan Trust Company, National
Association as escrow agent ("Escrow Agent"). The Company and the Seller shall
share equally in the payment of any and all fees and expenses of the Escrow
Agent.
(b) The Seller's deliveries shall include: (i) all stock
certificates representing the Shares, (ii) a duly endorsed but undated stock
powers substantially in the form of Exhibits C-1 and C-2 attached hereto
(collectively, the "Stock Power") for the transfer of the Shares to the Company
upon any Put Exercise or Call Exercise, and (iii) an executed copy of the
Escrow Agreement, substantially in the form attached hereto as Exhibit D
("Escrow Agreement") which shall function in part as irrevocable escrow
instructions to the Escrow Agent.
(c) The Company's deliveries shall include: (i) cash or cash
equivalents in the full amount of the Exercise Price, which shall be deposited
into a separate account pending release of such funds upon any Put Exercise or
Call Exercise, and (ii) an executed copy of the Escrow Agreement which shall
function in part as irrevocable escrow instructions to the Escrow Agent.
(d) The Company and the Seller hereby agree that upon the Escrow
Agent's receipt of a Put Exercise Notice or a Call Exercise Notice, the Seller
shall be deemed to have sold, transferred and conveyed the Shares to the
Company and the Company shall be deemed to have purchased the Shares with no
additional actions being required by either party to consummate such purchase
and sale, except as may be otherwise provided herein.
8. Escrow Instructions. The Escrow Agreement shall provide the
following irrevocable escrow instructions:
(a) The Escrow Agent shall accept delivery of and hold in escrow
the parties' respective deliveries as provided in Section 7 above.
(b) The Exercise Price shall be deposited into a separate account
until released pursuant to the provisions of this Agreement.
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(c) Within two (2) business days following receipt by the Escrow
Agent of a Put Exercise Notice or a Call Exercise Notice ("Closing Date"), the
Escrow Agent shall (i) release to ChaseMellon Shareholder Services, LLC
("Transfer Agent") the fully endorsed Stock Power dated the date of the Put
Exercise or Call Exercise, as the case may be, together with the stock
certificates representing the Shares, (ii) release the Exercise Price (less the
amount of escrow fees payable by Seller) to the account of the Seller
designated in the Put Exercise Notice or the Call Exercise Notice, and (iii)
remit to the Company the balance of the funds representing any interest on the
Exercise Price not previously distributed to the Company (less the amount of
escrow fees payable by the Company). In the event the amount released to the
Seller by the Escrow Agent is less than the full Exercise Price (less the
amount of escrow fees payable by Seller), the Company shall wire transfer to
the Seller on the Closing Date any such deficiency to the account of the Seller
designated in the Put Exercise Notice or the Call Exercise Notice.
(d) The Escrow Agent shall distribute to the Company on a monthly
basis, all interest and dividends earned on the Exercise Price in excess of the
Exercise Price.
(e) If neither the Put Option is exercised during the Put Exercise
Period nor the Call Option is exercised during the Call Exercise Period, then
within one (1) business day following June 30, 1999, the Escrow Agent shall (i)
return to the Seller the stock certificates representing the Shares and the
Stock Power, and (ii) return to the Company the Exercise Price together with
any interest on the Exercise Price not previously distributed to the Company.
9. Representations and Warranties of the Parties.
(a) Representations and Warranties of Each Party. Each party
hereto represents and warrants to the other party hereof as of the date hereof
and as of any Closing Date as follows:
(i) Organization. Such party is a corporation, duly
organized, validly existing and in good standing under the laws of its state of
incorporation.
(ii) Authorization of Transaction. Such party has the
power and authority (including full corporate power and authority) to execute
and deliver this Agreement and to perform its obligations hereunder. All
corporate actions or proceedings to be taken by or on the part of such party to
authorize and permit the due execution and valid delivery by such party this
Agreement and the instruments required to be duly executed and validly
delivered by such party pursuant hereto, the performance by such party of its
obligations hereunder, and the consummation by such party of the transactions
contemplated herein, have been duly and properly taken. This Agreement has
been duly executed and validly delivered by such party, enforceable in
accordance with its terms and conditions, subject to applicable bankruptcy,
reorganization, insolvency, moratorium and other laws affecting creditors'
rights generally from time to time in effect and to general equitable
principles.
(iii) Noncontravention. Neither the execution and the
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby will (i) violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge, license or other
restriction of any governmental authority to which such party is subject or any
provision
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of the articles of organization or bylaws of such party, or (ii) conflict with,
result in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify, or cancel,
or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which such party is a party or by which it
is bound or to which any of its assets is subject.
(iv) Brokers' Fees. Such party has no liability or
obligation to pay any fees or commissions to any broker, finder or agent with
respect to the transactions contemplated by this Agreement.
(b) Representations and Warranties of the Company. In addition to
the foregoing representations and warranties, the Company represents and
warrants to the Seller that if the Company acquires the Shares it will acquire
the Shares for its own account for investment, without a view to, or for resale
in connection with, the distribution thereof in violation of federal or state
securities laws and with no present intention of distributing or reselling any
part thereof. The Company will not so distribute or resell any Shares in
violation of any such law.
10. No Reliance, Assumption of Risk. The Seller acknowledges that it
has been advised that the Company may have confidential information concerning
the Company's business and affairs which is not public and may be considered
material, including but not limited to information relating to (a) the
potential outcomes of certain litigation, and (b) various alternatives,
financial or otherwise, for the Company which might include, but not limited
to, (i) the status of strategic development plans for or the monetization of
the assets or business opportunities of the Company or its subsidiaries, (ii)
the sale or other disposition of all or a portion of the equity or assets of
the Company or one or more of the Company's subsidiaries, (iii) a public
offering of securities of the Company, (iv) a refinancing of all or a portion
of the Company's existing indebtedness, or (v) the purchase, in the open
market, in private transactions, through tender offers or otherwise, of all or
a portion of the outstanding common stock, and/or any other of the Company's
outstanding securities. Recognizing the foregoing, Seller does not request,
desire or require the Company as of the Effective Date or any Closing Date
hereunder to disclose any confidential information and specifically requests
the Company not to disclose any such information relating to the Shares, the
prospects for the Company or otherwise involving the business or operations of
the Company. In addition, Seller acknowledges and agrees as of the Effective
Date and any Closing Date hereunder that (1) Seller desires to consummate the
sale of the Shares to the Company in the event of an option exercise pursuant
to this Agreement, (2) Seller is fully satisfied with the Exercise Price and
the Exercise Price is all that Seller is or will be entitled to receive for the
Shares pursuant hereto, (3) Seller is voluntarily assuming all risks associated
with the sale of the Shares and is not relying on any disclosure (or non-
disclosure) made (or not made) in connection with or arising out of the
purchase of the Shares by the Company, and (4) Seller does not and will not
have or assert any claims against the Company or any of its respective
affiliates (as such term is defined in Rule 12b-2 under the Securities Exchange
Act of 1934, as amended) for any additional compensation or payments for any
reason whatsoever, including by reason of or as a result of the conclusion of
any litigation, or the entering into or consummation by the Company, or any of
its affiliates, of any of the potential transactions described above.
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11. Waivers and Releases.
(a) In further consideration for the purchase and sale of the
Shares, Seller, effective as of any Closing Date hereunder, on behalf of itself
and any of its successors, successors-in-interest and assignees (collectively,
the "Releasing Persons"), hereby waives and releases, to the fullest extent
permitted by law, any and all claims, rights and causes of action, whether
known or unknown (collectively, the "Claims"), that any of the Releasing
Persons had, has or may have against (i) the Company, (ii) any of the Company's
current or former parents, shareholders, affiliates, subsidiaries, divisions,
predecessors or assigns, or (iii) any of the Company's or such other persons'
or entities' current or former officers, directors, employees, consultants,
spouses, heirs, estates, executors, attorneys, auditors and associates and
members of their immediate families (collectively, the "Released Persons"),
arising out of or relating to any matter involving (x) the transactions
pursuant to which the Seller originally acquired the Shares, (y) the purchase
and sale of the Shares contemplated by this Agreement, or (z) the nondisclosure
of any information described in Section 10 hereof, except in the case of each
of the foregoing, for Claims arising out of breach by the Company of any
representations, warranties or covenants contained herein or in the Escrow
Agreement. Seller represents and warrants that it has not, and covenants that
it will not, assign any Claims based on the matters described in clauses (x),
(y) and (z) in the foregoing sentence (the "Released Claims") to any other
person or entity. Seller further represents and warrants that no parent,
affiliate, division, subsidiary, predecessor and, to its knowledge, any
director, officer, shareholder, employee, consultant, representative,
principal, agent, associate or attorney of Seller is entitled to assert any
Released Claims against the Released Persons. Seller shall indemnify, defend
and hold the Released Persons harmless from and against any Claims based on a
breach of the foregoing representations and warranties.
(b) In consideration for the foregoing, effective as of any
Closing Date hereunder, the Company on behalf of itself and any of its
trustees, partners, directors, officers, shareholders, employees, consultants,
representatives, predecessors, principals, agents, parents, associates,
affiliates, divisions, subsidiaries, attorneys, successors,
successors-in-interest and assignees hereby waives and releases, to the fullest
extent permitted by law, any and all Claims that it had, has or may have
against (i) the Seller, (ii) any of the Seller's current or former parents,
shareholders, affiliates, subsidiaries, divisions, predecessors or assigns, or
(iii) any of the Seller's or such other persons' or entities' current or former
officers, directors, employees, consultants, spouses, heirs, estates,
executors, attorneys, auditors and associates and members of their immediate
families, arising out of or relating to any matter involving (x) the
transactions pursuant to which the Seller originally acquired the Shares, or
(y) the purchase and sale of the Shares contemplated by this Agreement, except
for Claims arising out of the breach by Seller of any representations,
warranties or covenants contained herein or in the Escrow Agreement.
12. Assignment. Neither party hereto shall transfer or assign all
or any portion of its rights or obligations under this Agreement without the
prior written consent of the other party, which consent may be withheld in the
non-assigning party's sole discretion.
13. Binding Effect; Benefit. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective heirs,
successors, legal representatives and
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permitted assigns. Except as otherwise provided in Section 11 hereof, nothing
in this Agreement, expressed or implied, is intended to confer on any person
other than the parties hereto, and their respective heirs, successors, legal
representatives and permitted assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
14. Amendment; Waiver; Termination. No provision of this Agreement
may be waived except by an instrument in writing executed by the party against
whom the waiver is to be effective. No provision of this Agreement may be
amended or otherwise modified except by an instrument in writing executed by
both parties.
15. Notices. All notices and other communications given or made
pursuant hereto, unless otherwise specified, shall be in writing and shall be
deemed to have been duly given or made if sent by fax (with confirmation in
writing), delivered personally or sent by registered or certified mail (postage
prepaid, return receipt requested) to the parties at the fax number or address
set forth below or at such other addresses as shall be furnished by the parties
by like notice, and such notice or communication shall be deemed to have been
given or made upon receipt:
If to the Company: California Coastal Communities, Inc.
0 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Fax: (000) 000-0000
Phone: (000) 000-0000
With a copy to: XxXxxxxxx, Will & Xxxxx
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
Phone: (000) 000-0000
If to the Seller: Wheelabrator Technologies Inc.
Resco Holdings Inc.
0 Xxxxxxx Xxxx Xxxx
Xxxxxxx, Xxx Xxxxxxxxx 00000
Attention: Secretary
Fax: (000) 000-0000
Phone: (000) 000-0000
If to the Transfer Agent: Xxxxx Xxxxxx Shareholder Services, LLC
0 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxxxx
Fax: (000) 000-0000
Phone: (000) 000-0000
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16. Attorneys' Fees. If any action at law or in equity is necessary
to enforce or interpret the terms of this Agreement, the prevailing party shall
be entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
17. Arbitration. Any controversy or dispute arising out of this
Agreement, the interpretation of any of the provisions hereof, or the action or
inaction of any party hereto (other than a claim for injunctive or other
equitable relief) shall be finally settled by arbitration in accordance with
the then-current rules for arbitration as established by J.A.M.S./ENDISPUTE
("JAMS"), and judgment upon the award rendered by such arbitration may be
entered in any court having jurisdiction thereof. Such arbitration shall be
conducted in Dallas, Texas by one (1) arbitrator mutually agreed to by the
parties in dispute from the JAMS panel of retired judges, or an arbitrator
appointed by JAMS in event that no such mutual agreement is reached. The
prevailing party will be entitled to recover reasonable attorneys' fees, costs,
and necessary disbursements in addition to any other relief awarded by the
arbitrator. The costs of the arbitrations including any JAMS administration
fee, the arbitrator's fee, and costs for the use of facilities during the
hearings, shall be born equally by the parties to the arbitration. Attorneys'
fees may be awarded to the prevailing or most prevailing party at the
discretion of the arbitrator.
18. Headings. The headings contained in this Agreement are for
convenience only and shall not affect the meaning or interpretation of this
Agreement.
19. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument. Facsimile
signatures shall be considered equivalent to originals.
20. Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws effective during
the term hereof, such provision shall be fully severable and this Agreement
shall be construed and enforced as if such illegal, invalid or unenforceable
provision never comprised a part hereof; and the remaining provisions hereof
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance therefrom. Furthermore,
in lieu of such illegal, invalid or unenforceable provision, there shall be
added automatically as part of this Agreement a provision as similar in its
terms to such illegal, invalid or unenforceable provision as may be possible
and be legal, valid and enforceable.
21. Injunctive Relief. In the event of a breach or threatened breach
by any party to this Agreement, each party to this Agreement hereby agrees any
such breach or threatened breach will result in irreparable harm to the non-
breaching party and that the non-breaching party to this Agreement shall be
entitled, without posting a bond, to an injunction restraining the party or
parties involved in the breach or threatened breach from any such conduct.
Nothing herein shall be construed as prohibiting the exercise of any other
available remedy for such breach or threatened breach, including the recovery
of damages.
22. Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of
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proof shall arise favoring or disfavoring a party by virtue of the authorship
of any of the provisions of this Agreement.
23. Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, without regard
to the conflicts of law rules of such state.
24. Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter of this Agreement and
supersedes all prior agreements and understandings, both oral and written,
between the parties with respect to the subject matter of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the day and year first written above.
CALIFORNIA COASTAL COMMUNITIES, INC.
By
-------------------------------
Xxxxxxx X. Xxxxxx
Chief Executive Officer
WHEELABRATOR TECHNOLOGIES INC.
By
-------------------------------
Name:
----------------------------
Title:
--------------------------
RESCO HOLDINGS INC.
By
-------------------------------
Name:
----------------------------
Title:
---------------------------
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EXHIBIT A
PUT EXERCISE NOTICE
THIS PUT EXERCISE NOTICE is delivered effective as of the date set
forth below pursuant to that certain Put/Call Option Agreement (the "Option
Agreement") dated as of April ___ 1999, by and between California Coastal
Communities, Inc. (the "Company") and Wheelabrator Technologies Inc. and its
wholly-owned subsidiary Resco Holdings Inc. (collectively, the "Seller").
Capitalized terms used herein and not otherwise defined shall have the meanings
set forth in the Option Agreement.
RECITALS
WHEREAS, the Company and the Seller are parties to the Option
Agreement pursuant to which Seller holds an option to compel the Company,
during the Put Exercise Period set forth in Section 1 of the Option Agreement,
to purchase One Million Two Hundred Twenty Six Thousand Six Hundred Eight
(1,226,608) shares of the Company's Common Stock (the "Shares") owned of record
by Seller which Shares have been delivered into the custody of the Escrow Agent
established pursuant to the Option Agreement; and
WHEREAS, the Seller hereby desires to exercise the Put Option
and for the sale, transfer and conveyance of the Shares to the Company in
accordance with the terms and conditions set forth in the Option Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the above and for other good and
valuable consideration the receipt and adequacy of which is hereby
acknowledged, the Seller hereby provides the Company and the Escrow Agent with
a Put Exercise Notice as follows:
1. Put Option Exercise. The Seller hereby exercises the Put
Option pursuant to the Option Agreement and directs the Escrow Agent (i) to
release the Shares and related Stock Power to the Transfer Agent, (ii) to wire
transfer the Exercise Price to the Seller in the amount of Seven Million Fifty
Two Thousand Nine Hundred Ninety Six Dollars ($7,052,996) to account #
__________________________________________________________________, and (iii)
to remit the interest or dividends earned on the Exercise Price during the
custody arrangement established in accordance with the provisions of the Option
Agreement.
2. Purchase and Sale. The Seller hereby acknowledges that this
Put Exercise Notice shall constitute the Seller's sale of the Shares to the
Company on the terms and conditions set forth herein and in the Option
Agreement.
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IN WITNESS WHEREOF, the undersigned in its capacity as Seller has
caused this Put Exercise Notice to be duly executed as of June _____, 1999.
SELLER:
WHEELABRATOR TECHNOLOGIES INC.
By
---------------------------------
Name:
Title:
RESCO HOLDINGS INC.
By
---------------------------------
Name:
Title:
A-2
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EXHIBIT B
CALL EXERCISE NOTICE
THIS CALL EXERCISE NOTICE is delivered effective as of the date set
forth below pursuant to that certain Put/Call Option Agreement (the "Option
Agreement") dated as of April ___ 1999, by and between California Coastal
Communities, Inc. (the "Company") and Wheelabrator Technologies Inc. and its
wholly-owned subsidiary Resco Holdings Inc. (collectively, the "Seller").
Capitalized terms used herein and not otherwise defined shall have the meanings
set forth in the Option Agreement.
RECITALS
WHEREAS, the Company and the Seller are parties to the Option Agreement
pursuant to which the Company desires an option to compel the Seller, during
the Call Exercise Period set forth in Section 2 of the Option Agreement, to
sell One Million Two Hundred Twenty Six Thousand Six Hundred Eight (1,226,608)
shares of the Company's Common Stock (the "Shares") owned of record by Seller
which Shares have been delivered into the custody of the Escrow Agent
established pursuant to the Option Agreement; and
WHEREAS, the Company hereby desires to exercise the Call Option for the
purchase of the Shares from the Seller in accordance with the terms and
conditions set forth in the Option Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the above and for other good and
valuable consideration the receipt and adequacy of which is hereby acknowledged
the Company hereby provides the Seller and the Escrow Agent with a Call
Exercise Notice as follows:
1. Call Option Exercise. The Company hereby exercises the Call
Option pursuant to the Option Agreement and directs the Escrow Agent (i) to
release the Shares and related Stock Power to the Transfer Agent, (ii) to wire
transfer the Exercise Price to the Seller in the amount of Seven Million Fifty
Two Thousand Nine Hundred Ninety Six Dollars ($7,052,996) to account #
________________________________________________________________, and (iii) to
remit the interest or dividends earned on the Exercise Price during the custody
arrangement in accordance with the Option Agreement.
2. Purchase and Sale. The Company hereby acknowledges that this
Call Exercise Notice shall constitute the Company's purchase of the Shares from
the Seller on the terms and conditions set forth herein and in the Option
Agreement.
B-1
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IN WITNESS WHEREOF, the Company has caused this Call Option Exercise
Notice to be duly executed as of June ______, 1999.
COMPANY:
CALIFORNIA COASTAL COMMUNITIES, INC.
By:
-----------------------------
Name:
Title:
B-2
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EXHIBIT C-1
STOCK POWER
FOR VALUE RECEIVED, the undersigned does hereby sell, assign and
transfer unto California Coastal Communities, Inc., Four Hundred Seventy-Three
Thousand One Hundred Thirty-Three (473,133) shares (the "Shares") of the
Company's Common Stock, standing in the undersigned's name on the books of the
Company represented by Certificate Nos. ________________ and does hereby
irrevocably constitute and appoint ChaseMellon Shareholder Services, LLC as its
attorney to transfer said Shares on the books of the Company with full power of
substitution in the premises.
Dated: June ___, 1999 WHEELABRATOR TECHNOLOGIES INC.
By:
---------------------------
Name:
Title:
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EXHIBIT C-2
STOCK POWER
FOR VALUE RECEIVED, the undersigned does hereby sell, assign and
transfer unto California Coastal Communities, Inc., Seven Hundred Fifth-Three
Thousand Four Hundred Seventy-Five (753,475) shares (the "Shares") of the
Company's Common Stock, standing in the undersigned's name on the books of the
Company represented by Certificate Nos. ________________ and does hereby
irrevocably constitute and appoint ChaseMellon Shareholder Services, LLC as its
attorney to transfer said Shares on the books of the Company with full power of
substitution in the premises.
Dated: June ___, 1999 RESCO HOLDINGS INC.
By:
------------------------------------
Name:
Title:
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EXHIBIT D
ESCROW AGREEMENT
This escrow agreement ("Escrow Agreement") is entered into as of April
8, 1999 by and among California Coastal Communities, Inc., a corporation of the
State of Delaware ("Purchaser"), Wheelabrator Technologies Inc., a corporation
of the State of Delaware and its wholly-owned subsidiary Resco Holdings Inc., a
corporation of the State of Delaware (collectively, the "Seller") and Chase
Manhattan Trust Company, National Association, a national banking association,
organized and existing under the laws of the United States of America ("Escrow
Agent").
WITNESSETH
WHEREAS, pursuant to a certain Call/Put Option Agreement dated April 8,
1999 between the Purchaser and Seller, there is required to be deposited in
escrow certain funds and securities to be held by the Escrow Agent subject to
the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants hereinafter set forth, the parties hereto agree as follows:
1. The Purchaser and Seller do hereby appoint and designate the Escrow
Agent as escrow agent for the purposes set forth herein, and the Escrow Agent
does hereby accept such appointment under the terms and conditions set forth
herein.
(a) Simultaneous with the execution of this Escrow Agreement, (i)
Purchaser shall deposit with the Escrow Agent cash or cash equivalents in an
amount equal to the sum of Seven Million Fifty Two Thousand Nine Hundred Ninety
Six Dollars ($7,052,996) which shall be invested and reinvested as may be
permitted pursuant to Section 2 hereof (which, together with the income from
such investments, are hereinafter referred to as the "Escrow Fund"); and (ii)
Seller shall deposit stock certificates for One Million Two Hundred Twenty Six
Thousand Six Hundred Eight (1,226,608) shares of Purchaser's common stock
("Shares") together with a duly endorsed but undated stock power ("Stock
Power") for transfer of the Shares to Purchaser.
(b) The Escrow Agent shall hold, subject to the terms and conditions
hereof, the Shares and the Escrow Fund.
2. During the term of this Escrow Agreement, the portion of the Escrow Fund
in cash shall be invested and reinvested by the Escrow Agent, in one or more
portfolios of the Chase VistaSM Money Market Mutual Funds for which the Escrow
Agent or any affiliate of the Escrow Agent serves as investment manager,
administrator, shareholder servicing agent, and/or custodian or subcustodian,
notwithstanding that (i) the Escrow Agent or an affiliate of the Escrow Agent
receives fees from such funds for services rendered, (ii) the Escrow Agent
charges and collects fees for services rendered pursuant to this Escrow
Agreement, which fees are separate from the
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fees received from such funds, and (iii) services performed for such funds and
pursuant to this Escrow Agreement may at times duplicate those provided to such
funds by the Escrow Agent or its affiliates.
The Escrow Agent shall have the right to liquidate any
investments held, in order to provide funds necessary to make required
payments under this Escrow Agreement. The Escrow Agent in its capacity as
escrow agent hereunder shall not have any liability for any loss sustained
as a result of any investment made pursuant to the instructions of the
parties hereto or as a result of any liquidation of any investment prior to
its maturity or for the failure of the parties to give the Escrow Agent
instructions to invest or reinvest the Escrow Fund or any earnings thereon.
3. The Escrow Agent shall deliver the Shares and the Escrow Fund upon, and
pursuant to, the following irrevocable instructions of Purchaser and Seller:
(a) The Escrow Agent shall accept delivery of and hold in custody the
parties' respective deliveries as provided in Section 1(a) above.
(b) The Escrow Fund shall be deposited into a separate account until
released pursuant to the provisions of this Escrow Agreement.
(c) Within two (2) business days following receipt by the Escrow Agent
of a Put Exercise Notice or a Call Exercise Notice (copies of the forms of
which are attached hereto as Annex A and Annex B, respectively), the Escrow
Agent shall (i) release to the Purchaser's Transfer Agent (as designated below
in Section 12) the fully endorsed Stock Power (a copy of the form of which is
attached hereto as Annexes C-1 and C-2) dated the date of the Put Exercise or
Call Exercise, as the case may be, together with the stock certificates
representing the Shares; (ii) release Seven Million Fifty Two Thousand Nine
Hundred Ninety Six Dollars ($7,052,996) of the Escrow Fund to the account of
the Seller designated in the Put Exercise Notice or the Call Exercise Notice,
less an amount equal to the Seller's portion of the fees and expenses of the
Escrow Agent payable hereunder; and (iii) remit to the Purchaser the balance of
the funds representing the Escrow Fund, less an amount equal to the Purchaser's
portion of the fees and expenses of the Escrow Agent payable hereunder,
provided that if there are insufficient funds to fully pay such portion, the
Purchaser shall promptly remit the balance payable to the Escrow Agent.
(d) The Escrow Agent shall distribute to the Purchaser on a monthly
basis, all interest and dividends earned on the Escrow Fund in excess of the
initial deposit to the Escrow Fund pursuant to Section 1(a).
(e) If the Escrow Agent does not receive a Put Exercise Notice or a
Call Exercise Notice on or before June 30, 1999 then within one (1) business
day following June 30, 1999, the Escrow Agent shall (i) return to the Seller
the stock certificates representing the Shares and the Stock Power, and (ii)
return to the Purchaser the Escrow Fund together with any interest thereon not
previously distributed to the Purchaser.
-2-
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Upon delivery by the Escrow Agent of the amounts and documents in Sections 1(c)
or (e), or in the event that a Put Exercise Notice or a Call Exercise Notice is
not received on or prior to June 30, 1999, this Escrow Agreement shall
terminate, subject to the provisions of Section 9 hereunder, which section shall
survive such termination.
4. The Escrow Agent undertakes to perform only such duties as are expressly
set forth herein.
5. The Escrow Agent may rely and shall be protected in acting or refraining
from acting upon any written notice, instruction or request furnished to it
hereunder and believed by it to be genuine and to have been signed or presented
by the proper party or parties. The Escrow Agent shall be under no duty to
inquire into or investigate the validity, accuracy or content of any such
document. The Escrow Agent shall have no duty to solicit any payments which may
be due it hereunder.
6. The Escrow Agent shall not be liable for any action taken or omitted by
it in good faith unless a court of competent jurisdiction determines that the
Escrow Agent's willful misconduct was the primary cause of any loss to the
Purchaser or Seller. In the administration of the escrow account hereunder, the
Escrow Agent may execute any of its powers and perform its duties hereunder
directly or through agents or attorneys and may, consult with counsel,
accountants and other skilled persons to be selected and retained by it. The
Escrow Agent shall not be liable for anything done, suffered or omitted in good
faith by it in accordance with the advice or opinion of any such counsel,
accountants or other skilled persons.
7. The Escrow Agent may resign and be discharged from its duties or
obligations hereunder by giving notice in writing of such resignation at least
thirty (30) days prior to the date when such resignation shall take effect. The
Escrow Agent shall deliver all monies, documents and instruments held hereunder
to a successor escrow agent appointed by the Purchaser and the Seller jointly.
If no successor is appointed within twenty (20) days of the Escrow Agent's
giving of notice of its resignation, the Escrow Agent or either Seller or the
Purchaser may petition any court of competent jurisdiction to appoint a
successor. The Escrow Agent shall have the right to withhold an amount equal to
the amount due and owing to the Escrow Agent, plus any costs and expenses the
Escrow Agent shall reasonably believe may be incurred by the Escrow Agent in
connection with the termination of the Escrow Agreement.
8. The Purchaser and Seller hereby agree to jointly and severally (i) pay
the Escrow Agent upon execution of this Agreement reasonable compensation for
the services to be rendered hereunder, as described in Schedule I attached
hereto, and (ii) pay or reimburse the Escrow Agent upon request for all
expenses, disbursement and advances, including reasonable attorney's fees,
incurred or made by it in connection with the preparation, execution,
performance, delivery modification and termination of this Escrow Agreement.
9. (a) The Purchaser and the Seller jointly and severally agree to
indemnify and hold the Escrow Agent and its directors, officers, agents and
employees (collectively the "Indemnitees") harmless from and against any and all
claims, liabilities, losses, damages, fines, penalties, and
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18
expenses, including out-of-pocket and incidental expenses and legal fees
("Losses") that may be imposed on, incurred by, or asserted against, the
Indemnitees or any of them for following any instructions or other directions
upon which the Escrow Agent is authorized to rely pursuant to the terms of this
Escrow Agreement provided the Indemnities have not acted with willful
misconduct.
(b) In addition to and not in limitation of paragraph (a) immediately
above, the Purchaser and the Seller, jointly and severally, also agree to
indemnify and hold the Indemnitees and each of them harmless from and against
any and all Losses that may be imposed on, incurred by, or asserted against,
the Indemnitees or any of them in connection with or arising out of the Escrow
Agent's performance under this Escrow Agreement, provided the Indemnitees have
not acted with gross negligence or engaged in willful misconduct.
(c) Anything in this Escrow Agreement to the contrary notwithstanding,
in no event shall the Escrow Agent be liable for special, indirect or
consequential loss or damage of any kind whatsoever (including but not limited
to lost profits), even if the Escrow Agent has been advised of the likelihood
of such loss or damage and regardless of the form of action.
10. Each party hereto, except the Escrow Agent, shall, in the notice
section of this agreement, provide the Escrow Agent with their Tax
Identification Number (TIN) as assigned by the Internal Revenue Service. All
interest or other income earned under this Escrow Agreement shall be allocated
and paid as provided herein and reported by the recipient to the Internal
Revenue Service as having been so allocated and paid.
11. The duties and responsibilities of the Escrow Agent hereunder shall be
determined solely by the express provisions of this Escrow Agreement, and no
other or further duties or responsibilities shall be implied. The Escrow Agent
shall not have any liability under, nor duty to inquire into the terms and
provisions of any agreement or instructions, other than outlined in this Escrow
Agreement.
12. All deliveries shall be made to the respective addresses set forth
below and all notices and communications hereunder shall be in writing and shall
be deemed to be duly given if sent by first class mail, postage prepaid, a
recognized overnight delivery service, or by facsimile transmission, as follows:
If to the Escrow Agent: Chase Manhattan Trust Company, National Association
One Oxford Centre
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attention: XxXxxx Xxxxxx
Facsimile Number: (000) 000-0000
Telephone Number: (000) 000-0000
-4-
19
If to the Purchaser: California Coastal Communities, Inc.
0 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Fax: (000) 000-0000
Phone: (000) 000-0000
With a copy to: XxXxxxxxx, Will & Xxxxx
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
Phone: (000) 000-0000
If to the Seller: Wheelabrator Technologies Inc.
0 Xxxxxxx Xxxx Xxxx
Xxxxxxx, Xxx Xxxxxxxxx 00000
Attention: Secretary
Fax: (000) 000-0000
Phone: (000) 000-0000
If to the Transfer Agent: ChaseMellon Shareholder Services, LLC
0 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxxxx
Fax: (000) 000-0000
Phone: (000) 000-0000
or at such other address or facsimile number as any of the above may have
furnished to the other parties in writing in a manner provided in this Paragraph
12. Any such notice or communication given in the manner specified in this
Paragraph 12 shall be deemed to have been given as of the date so mailed or
otherwise sent except with respect to the Escrow Agent as to which date shall be
deemed to have been given on the date received by the Escrow Agent. In the event
that the Escrow Agent, in its sole discretion, shall determine that an emergency
exists, the Escrow Agent may use such other means of communications as the
Escrow Agent deems advisable.
13. (a) In the event funds transfer instructions are given (other than in
writing at the time of execution of this Escrow Agreement), whether in writing,
by telecopier or otherwise, the Escrow Agent is authorized to seek confirmation
of such instructions by telephone call-back to the person or persons designated
on Schedule 2 hereto, and the Escrow Agent may rely upon the confirmations of
anyone purporting to be the person or persons so designated. The persons and
telephone numbers for call-backs may be changed only in a writing actually
received and
-5-
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acknowledged by the Escrow Agent. The parties to this Escrow Agreement
acknowledge that such security procedure is commercially reasonable.
(b) It is understood that the Escrow Agent and the beneficiary's bank
in any funds transfer may rely solely upon any account numbers or similar
identifying number provided by either of the Purchaser or the Seller to
identify (i) the beneficiary, (ii) the beneficiary's bank, or (iii) an
intermediary bank. The Escrow Agent may apply any of the escrowed funds for any
payment order it executes using any such identifying number, even where its use
may result in a person other than the beneficiary being paid, or the transfer
of funds to a bank other than the beneficiary's bank, or an intermediary bank
designated.
14. The provisions of this Escrow Agreement may be waived, altered, amended
or supplemented, in whole or in part, only by a writing signed by all of the
parties hereto.
15. Neither this Escrow Agreement nor any right or interest hereunder may
be assigned in whole or in part by any party without the prior consent of the
other parties.
16. This Escrow Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
17. The Escrow Agent shall not incur any liability for following the
instructions herein contained or expressly provided for, or written instructions
given by the parties hereto provided the Escrow Agent has not acted with willful
misconduct.
18. In the event that the Escrow Agent shall be uncertain as to its duties
or rights hereunder or shall receive instructions, claims or demands from any
party hereto which, in its opinion, conflict with any of the provisions of this
Escrow Agreement, it shall be entitled to refrain from taking any action and its
sole obligation shall be to keep safely all property held in escrow until it
shall be directed otherwise in writing by all of the other parties hereto or by
a final order or judgment of a court of competent jurisdiction.
19. Any corporation or association into which the Escrow Agent in its
individual capacity may be merged or converted or with which it may be
consolidated, or any corporation or association resulting from any merger,
conversion or consolidation to which the Escrow Agent in its individual capacity
shall be a party, or any corporation or association to which all or
substantially all the corporate trust business of the Escrow Agent in its
individual capacity may be sold or otherwise transferred, shall be the Escrow
Agent under this Escrow Agreement without further act.
20. This Escrow Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Pennsylvania without regard to its
principles of conflicts of laws and any action brought hereunder shall be
brought in the courts of the Commonwealth of Pennsylvania, located in the
Allegheny County or in the United States District Court for the Western District
of Pennsylvania. Each party hereto irrevocably waives any objection on the
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21
grounds of venue, forum non-conveniens or any similar grounds and irrevocably
consents to service of process by mail or in any other manner permitted by
applicable law and consents to the jurisdiction of said courts.
IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement
on the date and year first above written.
CHASE MANHATTAN TRUST COMPANY,
NATIONAL ASSOCIATION
AS ESCROW AGENT
By:
---------------------------------------
Name:
Title:
CALIFORNIA COASTAL COMMUNITIES, INC.
By:
---------------------------------------
Xxxxxxx X. Xxxxxx
Chief Executive Officer
WHEELABRATOR TECHNOLOGIES INC.
By:
---------------------------------------
Name:
Title:
RESCO HOLDINGS INC.
-7-
22
SCHEDULE 1
SCHEDULE OF FEES
Initial Fee: $500.00
Chase Vista Account Maintenance Fee: 10 basis points, annualized, of the average monthly
balance, taken monthly.
Assumptions: The Purchaser's deposit will be invested in one or
more portfolios of the Chase Vista Money Market
Mutual Funds through the duration of this contract.
23
SCHEDULE 2
TELEPHONE NUMBER(S) FOR CALL-BACKS AND
PERSON(S) DESIGNATED TO CONFIRM FUNDS TRANSFER INSTRUCTIONS
If to Purchaser:
Name Telephone Number
1.
---------------------- -----------------------
2.
---------------------- -----------------------
3.
---------------------- -----------------------
If to Seller:
Name Telephone Number
1.
---------------------- -----------------------
2.
---------------------- -----------------------
3.
---------------------- -----------------------
Telephone call-backs shall be made to each of Purchaser and Seller if joint
instructions are required pursuant to the Agreement.
24
ANNEX A
PUT EXERCISE NOTICE
THIS PUT EXERCISE NOTICE is delivered effective as of the date set
forth below pursuant to that certain Put/Call Option Agreement (the "Option
Agreement") dated as of April 8, 1999, by and between California Coastal
Communities, Inc. (the "Company") and Wheelabrator Technologies Inc. and its
wholly-owned subsidiary Resco Holdings Inc. (collectively, the "Seller").
Capitalized terms used herein and not otherwise defined shall have the meanings
set forth in the Option Agreement.
RECITALS
WHEREAS, the Company and the Seller are parties to the Option Agreement
pursuant to which Seller holds an option to compel the Company, during the Put
Exercise Period set forth in Section 1 of the Option Agreement, to purchase One
Million Two Hundred Twenty Six Thousand Six Hundred Eight (1,226,608) shares of
the Company's Common Stock (the "Shares") owned of record by Seller which Shares
have been delivered into the custody of the Escrow Agent established pursuant to
the Option Agreement; and
WHEREAS, the Seller hereby desires to exercise the Put Option and for
the sale, transfer and conveyance of the Shares to the Company in accordance
with the terms and conditions set forth in the Option Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the above and for other good and
valuable consideration the receipt and adequacy of which is hereby acknowledged,
the Seller hereby provides the Company and the Escrow Agent with a Put Exercise
Notice as follows:
1. Put Option Exercise. The Seller hereby exercises the Put Option
pursuant to the Option Agreement and directs the Escrow Agent (i) to release the
Shares and related Stock Power to the Transfer Agent, (ii) to wire transfer the
Exercise Price to the Seller in the amount of Seven Million Fifty Two Thousand
Nine Hundred Ninety Six Dollars ($7,052,996) to account #
__________________________________________________________________, and (iii) to
remit the interest or dividends earned on the Exercise Price during the custody
arrangement established in accordance with the provisions of the Option
Agreement.
2. Purchase and Sale. The Seller hereby acknowledges that this Put
Exercise Notice shall constitute the Seller's sale of the Shares to the Company
on the terms and conditions set forth herein and in the Option Agreement.
A-1
25
IN WITNESS WHEREOF, the undersigned in its capacity as Seller has
caused this Put Exercise Notice to be duly executed as of June _____, 1999.
SELLER:
WHEELABRATOR TECHNOLOGIES INC.
By:
---------------------------------------
Name:
Title:
RESCO HOLDINGS INC.
By:
---------------------------------------
Name:
Title:
X-0
00
XXXXX X
CALL EXERCISE NOTICE
THIS CALL EXERCISE NOTICE is delivered effective as of the date set
forth below pursuant to that certain Put/Call Option Agreement (the "Option
Agreement") dated as of April 8 1999, by and between California Coastal
Communities, Inc. (the "Company") and Wheelabrator Technologies Inc. and its
wholly-owned subsidiary Resco Holdings Inc. (collectively, the "Seller").
Capitalized terms used herein and not otherwise defined shall have the meanings
set forth in the Option Agreement.
RECITALS
WHEREAS, the Company and the Seller are parties to the Option
Agreement pursuant to which the Company desires an option to compel the Seller,
during the Call Exercise Period set forth in Section 2 of the Option Agreement,
to sell One Million Two Hundred Twenty Six Thousand Six Hundred Eight
(1,226,608) shares of the Company's Common Stock (the "Shares") owned of record
by Seller which Shares have been delivered into the custody of the Escrow Agent
established pursuant to the Option Agreement; and
WHEREAS, the Company hereby desires to exercise the Call Option for
the purchase of the Shares from the Seller in accordance with the terms and
conditions set forth in the Option Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the above and for other good and
valuable consideration the receipt and adequacy of which is hereby acknowledged
the Company hereby provides the Seller and the Escrow Agent with a Call Exercise
Notice as follows:
1. Call Option Exercise. The Company hereby exercises the Call Option
pursuant to the Option Agreement and directs the Escrow Agent (i) to release the
Shares and related Stock Power to the Transfer Agent, (ii) to wire transfer the
Exercise Price to the Seller in the amount of Seven Million Fifty Two Thousand
Nine Hundred Ninety Six Dollars ($7,052,996) to account #
________________________________________________________________, and (iii) to
remit the interest or dividends earned on the Exercise Price during the custody
arrangement in accordance with the Option Agreement.
2. Purchase and Sale. The Company hereby acknowledges that this Call
Exercise Notice shall constitute the Company's purchase of the Shares from the
Seller on the terms and conditions set forth herein and in the Option Agreement.
B-1
27
IN WITNESS WHEREOF, the Company has caused this Call Option Exercise
Notice to be duly executed as of June ______, 1999.
COMPANY:
CALIFORNIA COASTAL COMMUNITIES, INC.
By:
---------------------------------------
Name:
Title:
B-2
28
ANNEX C-1
STOCK POWER
FOR VALUE RECEIVED, the undersigned does hereby sell, assign and
transfer unto California Coastal Communities, Inc., Four Hundred Seventy-Three
Thousand One Hundred Thirty-Three (473,133) shares (the "Shares") of the
Company's Common Stock, standing in the undersigned's name on the books of the
Company represented by Certificate Nos. ________________ and does hereby
irrevocably constitute and appoint ChaseMellon Shareholder Services, LLC as its
attorney to transfer said Shares on the books of the Company with full power of
substitution in the premises.
Dated: June ___, 1999 WHEELABRATOR TECHNOLOGIES INC.
By:
---------------------------------------
Name:
Title:
29
ANNEX C-2
STOCK POWER
FOR VALUE RECEIVED, the undersigned does hereby sell, assign and
transfer unto California Coastal Communities, Inc., Seven Hundred Fifth-Three
Thousand Four Hundred Seventy-Five (753,475) shares (the "Shares") of the
Company's Common Stock, standing in the undersigned's name on the books of the
Company represented by Certificate Nos. ________________ and does hereby
irrevocably constitute and appoint ChaseMellon Shareholder Services, LLC as its
attorney to transfer said Shares on the books of the Company with full power of
substitution in the premises.
Dated: June ___, 1999 RESCO HOLDINGS INC.
By:
---------------------------------------
Name:
Title:
