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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 14, 1999
CALIFORNIA COASTAL COMMUNITIES, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
0-17189 02-0426634
(Commission File Number) (I.R.S. Employer Identification No.)
6 Executive Circle, Suite 250, Irvine, California 92614
(Address of principal executive offices) (Zip Code)
(949) 250-7700
(Registrant's Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address,
if Changed Since Last Report)
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Item 5. OTHER EVENTS
On October 14, 1999, the Registrant issued a press release (a copy of
which is filed herewith as Exhibit 99.4 and is incorporated herein by
reference) announcing that pursuant to an unsolicited written consent from a
majority of the Registrant's stockholders, the Registrant has filed certain
amendments to its certificate of incorporation. The effect of the amendments
is to prohibit the acquisition of the Registrant's common stock by anyone who
would become a 5% stockholder or by existing 5% stockholders, except in
certain permissible circumstances which would not significantly increase the
risk of an Ownership Change (as defined by the Internal Revenue Code of 1986,
as amended) and would not, therefore, jeopardize the Company's ability to use
its $190 million of tax loss carryforwards ("NOLs").
While these amendments will reduce the Registrant's risk of an
Ownership Change occurring due to the acquistition of shares by 5%
stockholders, the risk remains that an Ownership Change could result from the
sale of shares by existing 5% stockholders.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits:
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
3.1 Amended and Restated Certificate of Incorporation of
the Registrant dated October 14, 1999.
4.1 Incorporated by reference to Articles FIFTH and SIXTH
of the Registrant's Amended and Restated Certificate
of Incorporation filed herewith as Exhibit 3.1.
99.1 Notice of Stockholder Approval by Written Consent,
dated October 14, 1999.
99.2 Written Consent of Majority Stockholders, dated as of
September 16, 1999.
99.3 Consent of Stockholders, dated as of October 14, 1999.
99.4 Press Release, issued October 14, 1999.
</TABLE>
2.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CALIFORNIA COASTAL COMMUNITIES, INC.
Date: October 14, 1999 By: /s/ Raymond J. Pacini
---------------------------------
Raymond J. Pacini
Chief Executive Officer
3.
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AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
CALIFORNIA COASTAL COMMUNITIES, INC.
California Coastal Communities, Inc., a corporation organized and existing
under the laws of the State of Delaware (the "Corporation"), hereby certifies as
follows:
1. The name of the Corporation is California Coastal Communities, Inc.
The date of the filing of its original certificate of incorporation with the
Secretary of State of the State of Delaware was September 20, 1988. The name
under which the Corporation filed its original certificate of incorporation was
Henley Newco Inc.
2. This Amended and Restated Certificate of Incorporation (the
"Certificate") amends, restates and integrates the provisions of the amended and
restated certificate of incorporation of the Corporation, as heretofore amended.
This Certificate was duly adopted by the Board of Directors of the Corporation
in accordance with the provisions of Sections 242 and 245 of the Delaware
General Corporation Law, as amended from time to time (the "DGCL"), and was duly
adopted by the stockholders of the Corporation in accordance with the applicable
provisions of Sections 228, 242 and 245 of the DGCL.
3. The text of the amended and restated certificate of incorporation of
the Corporation, as amended to date, is hereby amended and restated in its
entirety to provide as herein set forth in full.
FIRST: The name of the Corporation is California Coastal
Communities, Inc.
SECOND: The address of the registered office of the Corporation
in the State of Delaware is 1013 Centre Road, in the City of
Wilmington, County of Newcastle. The name of the Corporation's
registered agent at that address is Corporation Service Company.
THIRD: The purpose of the Corporation is to engage in any
lawful act or activity for which a corporation may be organized under
the DGCL.
FOURTH: The Corporation shall have the authority to issue a
total of 36 million shares of stock, to be divided into two classes.
The Corporation shall have authority to issue18 million shares of
Common Stock, par value $0.05 per share (the "Common Stock"), and 18
million shares of Excess Stock, par value $0.05 per share (the "Excess
Stock").
FIFTH:
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(A) COMMON STOCK. The designations and the powers, preferences
and rights, and qualifications, limitations or restrictions thereof,
of each share of Common Stock shall be as follows:
1. Identical Rights. All shares of Common Stock shall
be identical and shall entitle the holders thereof to the same rights
and privileges.
2. Voting Rights. On all matters submitted to the
Corporation's stockholders, the holders of Common Stock shall be
entitled to one vote per share.
3. Dividend Rights. When and as dividends or other
distributions are declared, whether in cash, in property or in
securities of the Corporation, the holders of shares of Common Stock
shall be entitled to share equally, share for share, in such dividends
or distributions.
4. Stock Splits. If the Corporation shall in any manner
subdivide, split or combine the outstanding shares of Common Stock,
each share of outstanding Common Stock shall be proportionately
subdivided, split or combined.
(B) RESTRICTIONS ON OWNERSHIP AND TRANSFER OF COMMON STOCK.
1. DEFINITIONS. For purposes of this section (B) of
Article FIFTH and for purposes of Article SIXTH, the following terms
shall have the meanings set forth below:
(a) The term "1934 Act" shall mean the Securities
Exchange Act of 1934, as amended.
(b) The terms "Affiliate" and "Associate" shall have
the meanings ascribed to them in Rule 12b-2 of the General Rules and
Regulations under the 1934 Act.
(c) The terms "acquire", "acquisition" or
"acquiring" with respect to the acquisition of any security of the
Corporation shall refer to the acquisition of such security by any
means whatsoever, including without limitation, an acquisition of such
security by operation of law, by will or by intestacy.
(d) The term "Code" means the Internal Revenue Code
of 1986, as amended.
(e) The term "Common Stock" means all Common Stock
of the Corporation and any other securities issued by the Corporation
(other than Excess Stock or Rights) which are treated as stock for
purposes of Section 382 of the Code.
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(f) The term "Excess Shares" shall have the meaning
ascribed to it in paragraph (A)(1) of Article SIXTH.
(g) The term "5% Limitation" shall mean the
limitations on ownership of Common Stock or Rights as imposed by
paragraph (B)(2) of this Article FIFTH.
(h) The term "5% Shareholder" shall have the meaning
ascribed to it in paragraph (B)(2) of this Article FIFTH.
(i) The term "Net Operating Loss Carryovers" means
the net operating loss carryovers to which the Corporation is entitled
from time to time under the Code.
(j) The terms "own", "owned", "ownership" or
"owning" refer to the ownership of securities within the meaning of
Section 382 of the Code after taking into account the attribution
rules of Section 382(1)(3) of the Code and the regulations promulgated
thereunder (except insofar as such attribution would be inconsistent
with provisions of this Article FIFTH or of Article SIXTH relating to
the Rights).
(k) The term "Permitted Transferee" shall have the
meaning ascribed to it in paragraph (H) of Article SIXTH.
(l) The term "Person" shall mean any individual,
firm, corporation, partnership, joint venture or other entity and
shall include any group comprised of such Person and any other Person
with whom such Person or any Affiliate or Associate of such Person has
any agreement, arrangement or understanding, directly or indirectly,
for the purpose of acquiring, holding, voting or disposing of Common
Stock or Rights, and any other Person who is such a member of such
group, but does not include any underwriter which participates in an
underwritten public offering of the Corporation's Common Stock or
Rights, provided that such underwriter shall not own such Common Stock
or Rights on the last day of any fiscal year.
(m) The term "Purported Owner" shall have the
meaning ascribed to it in Section (A)(1) of Article SIXTH.
(n) The term "Purported Owner's Transferor" shall
have the meaning ascribed to it in Section (D) of Article SIXTH.
(o) The term "Restriction Termination Date" shall
have the meaning ascribed to it in Section (B)(2) of this Article
FIFTH.
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(p) The term "Rights" shall mean any securities
issued by the Corporation, or any securities issuable by the
Corporation in respect of issued securities, which are convertible
into, or which include the right to acquire, shares of Common Stock,
whether or not the right to make such conversion or acquisition is
subject to any contingencies, including, without limitation, warrants,
options and convertible debt instruments.
(q) The term "Share Trustee" shall mean the trustee
of the Excess Stock nominated and appointed by the Board of Directors
from time to time.
(r) The term "Testing Date" shall mean the date(s)
on which the Corporation is required by Section 382 of the Code to
make a determination of whether an ownership change has occurred.
(s) The term "Testing Period" shall mean the
three-year period ending on any Testing Date.
(t) The term "Transfer Agent" shall mean the
transfer agent with respect to the Common Stock nominated and
appointed by the Board of Directors from time to time.
(u) The term "Trust" shall have the meaning ascribed
to it in Section (A)(1)(b) of Article SIXTH.
2. At no time on or before the earlier of (i) the date on
which the Corporation has used all its existing Net Operating Loss
Carryovers and (ii) December 31, 2012 (the earlier to occur of such
dates being the "Restriction Termination Date"), shall (1) any Person
owning Common Stock or Rights which, in the aggregate, and assuming
conversion of such Rights into the maximum number of shares of Common
Stock issuable in respect of such Rights regardless of contingencies,
equal less than 5% of the fair market value of the sum total of the
outstanding Common Stock plus the shares of Common Stock deemed to be
outstanding by reason of the assumed conversion of such Rights owned
by such Person, acquire (whether voluntarily or involuntarily) any
shares of Common Stock or Rights which, together with the shares of
Common Stock or Rights owned by such Person, if any, would increase
such percentage ownership interest of such Person to 5% or more of the
fair market value of the sum total of the then outstanding Common
Stock plus the shares of Common Stock deemed to be outstanding by
reason of the assumed conversion of such Rights owned by such Person,
or (2) any Person who owns, or has owned at any time during the
Testing Period, Common Stock or Rights which, in the aggregate, and
assuming conversion of such Rights into the maximum number of shares
of Common Stock issuable in respect of such Rights regardless of
contingencies, equal or exceed 5% of the fair market value of the sum
total of the then outstanding Common Stock
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plus the shares of Common Stock deemed to be outstanding by reason of the
assumed conversion of such Rights then owned by such Person, increase the
ownership interest held by such Person in Common Stock or Rights (any such
Person who is or becomes the owner of such percentage being a "5%
Shareholder"); unless:
(a) The increase in ownership is due to the receipt
or exercise by any Person of Rights which were received by such Person
pursuant to the issuance of Rights by the Corporation; provided,
however, that the Corporation shall have the right to prevent the
exercise of Rights by any Person who would become a 5% Shareholder or
by any 5% Shareholder whose ownership interest would increase, as the
result of such exercise; or
(b) Such acquisition in each instance does not
jeopardize the Corporation's ability to preserve and use its Net
Operating Loss Carryovers as determined in a finding made in writing
by the Board of Directors or a duly authorized committee thereof and
filed with the Secretary of the Corporation; or
(c) Such acquisition is pursuant to any transaction,
including, but not limited to, a merger or consolidation, in which
holders of all outstanding shares of Common Stock receive, or are
offered the opportunity to receive, cash or other consideration for
all such shares, and upon the consummation of which the acquiror will
own at least a majority of the outstanding shares of Common Stock.
Notwithstanding the foregoing, (i) the Corporation pursuant to
regulations and procedures promulgated pursuant to paragraph (Q) of
Article SIXTH may identify additional 5% Shareholders as may be
required by Section 382 of the Code and (ii) the Corporation may make
appropriate adjustments to the calculations required by Section 382 of
the Code. The Corporation and the Board of Directors shall be fully
protected in relying in good faith upon the information, opinions,
reports or statements of the chief executive officer or the chief
financial officer of the Corporation or of the Corporation's legal
counsel, independent auditors, Transfer Agent, investment bankers, and
other employees and agents in making the determination and finding
contemplated by this paragraph (B)(2) of Article FIFTH.
3. To the extent permitted by regulations promulgated
under Section 382 of the Code, in determining whether any Person has
become a Purported Owner of Excess Shares:
(a) The Corporation may rely on the existence or
absence, as of the Testing Date, of filings on Schedules 13D and 13G
as required by Rule 13d-1 of the 1934 Act to identify any person who
is a 5% Shareholder, and the existence or absence of any amendments to
Schedule 13D and 13G
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showing any material increase or decrease in the percentage of Common
Stock or Rights owned by such Person, as required by Rule 13d-2 of the 1934
Act.
The Board of Directors shall be fully protected in relying in good
faith on the items set forth in subparagraph (a) of this paragraph
(3), together with such other items or sources of information as may
be required from time to time by the Code, to determine whether any
Person has become a Purported Owner of Excess Shares.
SIXTH: EXCESS STOCK.
(A) CONVERSION INTO EXCESS STOCK.
1. The transfer of any shares of Common Stock or Rights in
violation of Section (B) of Article FIFTH is prohibited and shall be
null and void. If, notwithstanding such prohibition, a Person shall,
voluntarily or involuntarily, purportedly become or attempt to become
the purported owner (the "Purported Owner") of shares of Common Stock
or Rights, or both, in excess of the 5% Limitation (the number of
shares of Common Stock or Rights, including shares of Common Stock
issued in respect of Rights, so exceeding the 5% Limitation being
herein the "Excess Shares"), then:
(a) the Purported Owner shall not obtain any rights
in and to the Excess Shares, and the purported transfer of the Excess
Shares to the Purported Owner shall not be recognized by the Transfer
Agent;
(b) the Excess Shares shall be automatically
converted into an equal number of shares of Excess Stock and
transferred to a trust (the "Trust") of which the Share Trustee shall
be the trustee in accordance with Section (D) of this Article SIXTH;
(c) the Purported Owner shall submit such number of
Excess Shares to the Corporation for registration of the automatically
converted shares of Excess Stock in the name of the Share Trustee.
Such conversion into Excess Stock and transfer to a Trust shall be
effective as of the close of trading on the trading day prior to the
date of the purported transfer which led to the 5% Limitation.
2. Upon the occurrence of such a conversion of shares of
Common Stock into an equal number of shares of Excess Stock, such
shares of Common Stock shall be automatically retired and canceled,
without any action required by the Board of Directors of the
Corporation, and shall thereupon be restored to the status of
authorized but unissued shares of the particular class or
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series of stock from which such Excess Stock was converted and may be
reissued by the Corporation as that particular class or series of stock.
(B) REMEDIES FOR BREACH. If the Corporation, or its designees,
shall at any time determine in good faith that a purported transfer
has taken place in violation of Section (B) of Article FIFTH or that a
Person intends to acquire or has attempted to acquire ownership of any
shares of Common Stock in violation of Section (B) of this Article
FIFTH, the Corporation shall take such action, or direct the Transfer
Agent to take such action, as it deems advisable to refuse to give
effect to or to prevent such transfer or acquisition, including, but
not limited to, refusing to give effect to such transfer on the stock
transfer books of the Corporation or instituting proceedings to enjoin
such transfer or acquisition.
(C) NOTICE OF RESTRICTED TRANSFER. Any Person who acquires or
attempts to acquire shares of Common Stock in excess of the 5%
Limitation, or any Person who owns shares of Common Stock that were
converted into shares of Excess Stock and transferred to a Trust
pursuant to Sections (A) and (D) of this Article SIXTH, shall
immediately give written notice to the Corporation of such event and
shall provide to the Corporation such other information as the
Corporation may request in order to determine the effect, if any, of
such purported transfer on the preservation and usage of the Net
Operating Loss Carryovers.
(D) OWNERSHIP IN TRUST. Upon any purported transfer that results
in Excess Stock pursuant to Section (A) of this Article SIXTH, such
Excess Stock shall be automatically transferred to the Trust to be
held for the exclusive benefit of the transferor of the Excess Shares
to the Purported Owner (the "Purported Owner's Transferor"). Any
conversion of Excess Shares into shares of Excess Stock and transfer to
the Trust shall be effective as of the close of trading on the trading
day prior to the date of the purported transfer. Shares of Excess
Stock so held in trust shall remain issued and outstanding shares of
stock of the Corporation.
(E) DIVIDEND RIGHTS. Each share of Excess Stock shall be
entitled to the same dividends and distributions (as to both timing
and amount) as may be declared by the Board of Directors upon shares
of the class or series of Common Stock from which such Excess Stock
was converted. The Share Trustee, as record holder of the shares of
Excess Stock, shall be entitled to receive all dividends and
distributions and shall hold all such dividends or distributions in
trust for the benefit of the Purported Owner's Transferor. The
Purported Owner with respect to such shares of Excess Stock shall
repay to the Trust the amount of any dividends or distributions
received by it (i) that are attributable to any shares of Common Stock
that have been converted into shares of Excess Stock and (ii) the
record date of which was on or after the date that such shares were
converted into shares of Excess Stock. The Corporation shall take all
measures that it determines reasonably necessary to recover the amount
of any such dividend or distribution paid to a Purported Owner,
including, if necessary, withholding any portion of
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future dividends or distributions payable on shares of Common Stock owned
by the Person who, but for the provisions of Article FIFTH and this Article
SIXTH, would own the shares of Common Stock that were converted into shares
of Excess Stock; and, as soon as reasonably practicable following the
Corporation's receipt or withholding thereof, shall pay over to the Trust
for the benefit of the Purported Owner's Transferor the dividends so
received or withheld, as the case may be.
(F) RIGHTS UPON LIQUIDATION. In the event of any voluntary or
involuntary liquidation of, or winding up of, or any distribution of
the assets of, the Corporation, each holder of shares of Excess Stock
shall be entitled to receive, ratably with each other holder of shares
of Common Stock of the same class or series from which the Common
Stock was converted, that portion of the assets of the Corporation
that is available for distribution to the holders of such class or
series of Common Stock. The Trust shall distribute to the Purported
Owner the amounts received upon such liquidation, dissolution, or
winding up, or distribution; provided, however, that the Purported
Owner shall not be entitled to receive amounts in excess of, in the
case of a purported transfer in which the Purported Owner gave value
for shares of Common Stock and which transfer resulted in the
conversion of the shares into shares of Excess Stock, the price per
share, if any, such Purported Owner paid for the shares of Common
Stock. Any remaining amount in such Trust shall be distributed to the
Purported Owner's Transferor.
(G) VOTING RIGHTS. Each share of Excess Stock shall entitle the
holder to the number of votes the holder would have, if such share of
Excess Stock was a share of Common Stock of the same class or series
from which such Excess Stock was converted, on all matters submitted
to a vote at any meeting of stockholders. The holders of shares of
Excess Stock converted from the same class or series of Common Stock
shall vote together with the holders of such Common Stock as a single
class on all such matters. The Share Trustee, as record holder of the
Excess Stock, shall be entitled to vote all shares of Excess Stock.
Any vote by a Purported Owner as a purported holder of shares of
Common Stock prior to the discovery by the Corporation that the shares
of Common Stock have been converted into shares of Excess Stock shall,
subject to applicable law, be rescinded and shall be void AB INITIO
with respect to such shares of Excess Stock, and the Purported Owner
shall be deemed to have given, as of the close of trading on the
trading day prior to the date of the purported transfer that results
in the conversion of the shares of Common Stock into shares of Excess
Stock and the transfer of such shares to the Trust pursuant to
Sections (A) and (D) of this Article SIXTH, an irrevocable proxy to
the Share Trustee to vote the shares of Excess Stock in the manner in
which the Share Trustee, in its sole and absolute discretion, desires.
(H) DESIGNATION OF PERMITTED TRANSFEREE.
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1. The Share Trustee shall have the exclusive and absolute
right to designate one or more persons whose acquisition of any and
all of the Excess Stock will not violate the 5% Limitation (the
"Permitted Transferees") if the Corporation fails to exercise its
option with respect to such shares pursuant to Section (J) hereof
within the time period set forth therein. As soon as practicable
after the transfer of Excess Stock to the Trust, but in an orderly
fashion so as not to materially adversely affect the market price of
the shares of Common Stock, the Share Trustee shall designate any one
or more Persons as Permitted Transferees; provided, however, that (i)
the Permitted Transferee so designated purchases for valuable
consideration (whether in a public or private sale) the shares of
Excess Stock, and (ii) the Permitted Transferee so designated may
acquire such shares of Excess Stock without violating any of the
restrictions set forth in Section (B) of Article FIFTH or Section (A)
of this Article SIXTH and without such acquisition resulting in the
conversion of the shares of Common Stock so acquired into shares of
Excess Stock and the transfer of such shares to a Trust pursuant to
Sections (A) and (D) of this Article SIXTH.
2. Upon the designation by the Share Trustee of a
Permitted Transferee in accordance with the provisions of this Section
(H), the Share Trustee shall cause to be transferred to the Permitted
Transferee that number of shares of Excess Stock acquired by the
Permitted Transferee. Upon such transfer of the shares of Excess
Stock to the Permitted Transferee, such shares of Excess Stock shall
be automatically converted into an equal number of shares of Common
Stock of the same class and series from which such Excess Stock was
converted. Upon the occurrence of such a conversion of shares of
Excess Stock into an equal number of shares of Common Stock, such
shares of Excess Stock shall be automatically retired and canceled,
without any action required by the Board of Directors of the
Corporation, and shall thereupon be restored to the status of
authorized but unissued shares of Excess Stock and may be reissued by
the Corporation as Excess Stock.
3. The Share Trustee shall (i) cause to be recorded on the
stock transfer books of the Corporation that the Permitted Transferee
is the holder of record of such number of shares of Common Stock, and
(ii) distribute to the Purported Owners' Transferor any and all
amounts held with respect to the shares of Excess Stock after making
payment to the Purported Owner pursuant to Section (I) of this Article
SIXTH.
4. If the transfer of shares of Excess Stock to a
purported Permitted Transferee shall violate any of the transfer
restrictions set forth in Section (B) of Article FIFTH or of this
Article SIXTH, such transfer shall be void AB INITIO as to that number
of shares of Excess Stock that cause the violation of any such
restriction when such shares are converted into shares of Common Stock
(as described in clause (2) above) and the purported Permitted
Transferee shall be
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deemed to be a Purported Owner and shall acquire no rights in such shares
of Excess Stock or Common Stock. Such shares of Common Stock shall be
automatically re-converted into Excess Stock and transferred to the Trust
from which they were originally transferred. Such conversion and transfer
to the Trust shall be effective as of the close of trading on the trading
day prior to the date of the transfer to the purported Permitted Transferee
and the provisions of this Article SIXTH shall apply to such shares,
including, without limitation, the provisions of Sections (H) through (J)
with respect to any future Transfer of such shares by the Trust.
(I) COMPENSATION TO RECORD HOLDER OF SHARES OF COMMON STOCK THAT
ARE CONVERTED INTO SHARES OF EXCESS STOCK. Any Purported Owner shall
be entitled (following discovery of the shares of Excess Stock and
subsequent designation of the Permitted Transferee in accordance with
Section (H) of this Article SIXTH or following the acceptance of the
offer to purchase such shares in accordance with Section (J) of this
Article SIXTH) to receive from the Share Trustee following the sale or
other disposition of such shares of Excess Stock the lesser of (i) (a)
in the case of a purported transfer in which the Purported Owner gave
value for shares of Common Stock and which transfer resulted in the
conversion of such shares into shares of Excess Stock, the price per
share, if any, such Purported Owner paid for the shares of Common
Stock and (b) in the case of a transfer in which the Purported Owner
did not give value for such shares (E.G., if the shares were received
through a gift or devise) and which transfer resulted in the
conversion of such shares into shares of Excess Stock, the price per
share equal to the market price on the date of such transfer or (ii)
the price per share received by the Share Trustee from the sale or
other disposition of such shares of Excess Stock in accordance with
this Section (I) or Section (J) of this Article SIXTH. Any amounts
received by the Share Trustee in respect of such shares of Excess
Stock and in excess of such amounts to be paid the Purported Owner
pursuant to this Section (I) shall be distributed to the Purported
Owner's Transferor in accordance with the provisions of Section (H) of
this Article SIXTH. Each Purported Owner's Transferor and Purported
Owner shall waive any and all claims that it may have against the
Share Trustee and the Trust arising out of the disposition of shares
of Excess Stock, except for claims arising out of the gross negligence
or willful misconduct of, or any failure to make payments in
accordance with this Article SIXTH by, such Share Trustee or the
Corporation.
(J) PURCHASE RIGHT IN EXCESS STOCK. Shares of Excess Stock
shall be deemed to have been offered for sale to the Corporation or
its designee, at a price per share equal to the lesser of (i) the
price per share in the transaction that created such shares of Excess
Stock or (ii) the market price on the date the Corporation, or its
designee, accepts such offer. The Corporation shall have the right to
accept such offer for a period of 60 days following the later of (a)
the date of the purported transfer which results in such shares of
Excess Stock or (b) the date on which the Corporation determines in
good faith that a transfer resulting in shares
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of Excess Stock previously has occurred, if the Corporation does not
receive a notice of such transfer pursuant to Section (C) of this Article
SIXTH.
(K) PREEMPTIVE RIGHTS. No holder of shares of Common Stock,
Excess Stock or any other class or series of capital stock shall as
such holder have any preemptive or preferential right to purchase or
subscribe to (i) any shares of any class or series of capital stock of
the Corporation, whether now or hereafter authorized, (ii) any
warrants, rights or options to purchase any such capital stock, or
(iii) any obligations convertible into any such capital stock or into
warrants, rights or options to purchase any such capital stock.
(L) REMEDIES NOT LIMITED. Nothing contained in this Article
SIXTH shall limit the authority of the Corporation to take such other
action as it deems necessary or advisable to protect the Corporation
and the interests of its stockholders in connection with the
preservation and usage of the Net Operating Loss Carryovers.
(M) AMBIGUITY. In the case of an ambiguity in the application
of any of the provisions of Article FIFTH or this Article SIXTH,
including any definition contained in Article FIFTH, the Board of
Directors shall have the power to determine the application of the
provisions of Article FIFTH and Article SIXTH with respect to any
situation based on the facts known to it.
(N) LEGEND. Each certificate for shares of Common Stock shall
bear the following legend:
"The shares of California Coastal Communities, Inc.
represented by this certificate are subject to restrictions
in the Amended and Restated Certificate of Incorporation of
the corporation which, subject to certain exceptions,
prohibit any Person owning Common Stock or Rights which, in
the aggregate, and assuming conversion of such Rights into
the maximum number of shares of Common Stock issuable in
respect of such Rights regardless of contingencies, equal
less than 5% of the fair market value of the sum total of
the outstanding Common Stock plus the shares of Common Stock
deemed to be outstanding by reason of the assumed conversion
of such Rights owned by such Person, from acquiring (whether
voluntarily or involuntarily) any shares of Common Stock or
Rights which, together with the shares of Common Stock or
Rights owned by such Person, if any, would increase such
percentage ownership interest of such Person to 5% or more
of the fair market value of the sum total of the then
outstanding Common Stock plus the shares of Common Stock
deemed to be outstanding by reason of the assumed conversion
of such Rights owned by such Person, and prohibit any Person
who
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owns, or has owned at any time during the Testing Period, Common Stock
or Rights which, in the aggregate, and assuming conversion of such
Rights into the maximum number of shares of Common Stock issuable in
respect of such Rights regardless of contingencies, equal or exceed 5%
of the fair market value of the sum total of the then outstanding
Common Stock plus the shares of Common Stock deemed to be outstanding
by reason of the assumed conversion of such Rights then owned by such
Person from increasing the ownership interest held by such Person in
Common Stock or Rights, and the holder of this certificate by his
acceptance hereof consents to be bound by such restrictions.
California Coastal Communities, Inc. will furnish without charge
to each stockholder who so requests a copy of the relevant provisions
of the Amended and Restated Certificate of Incorporation of the
corporation, and a copy of the provisions setting forth the
designations, preferences, privileges and rights of each class of
stock or series thereof that the corporation is authorized to issue
and the qualifications, limitations and restrictions of such
preferences and/or rights. Any such request may be addressed to the
Secretary of the corporation."
(O) SEVERABILITY. Each provision of Article FIFTH and Article
SIXTH hereof shall be severable, and an adverse determination as to
any such provision shall in no way affect the validity of any other
provision. If any provision of this Article FIFTH or of Article SIXTH
or any application of any such provision is determined to be invalid
by any federal or state court having jurisdiction over the issues, the
validity of the remaining provisions shall not be affected and other
application of such provision shall be affected only to the extent
necessary to comply with the determination of such court.
(P) It is the purpose of Article FIFTH and Article SIXTH to help
the Corporation attempt to preserve and use its Net Operating Loss
Carryovers and to that end the Board of Directors is authorized to
take such action, to the extent permitted by law and not inconsistent
with Article FIFTH or Article SIXTH, as it may deem necessary or
advisable to protect the Corporation or to carry out such purpose.
However, nothing in Article FIFTH or Article SIXTH shall restrict the
Corporation's ability to issue stock, within the meaning of Section
382 of the Code, if, in the Board of Directors' sole discretion, the
Corporation believes that such issuance would be in the best interest
of the Corporation, notwithstanding the fact that such issuance may
result in the limitation or disallowance of its Net Operating Loss
Carryovers.
(Q) The Board of Directors may, to the extent permitted by law,
from time to time establish, modify, amend or rescind, by contract,
by-law or
12
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otherwise, plans, regulations and procedures not inconsistent with the
express provisions of Article FIFTH and this Article SIXTH for determining
whether any acquisition of Common Stock or Rights would jeopardize the
Corporation's ability to preserve and use its Net Operating Loss
Carryovers, and for the orderly application, administration and
implementation of the provisions of Article FIFTH and this Article SIXTH.
Such procedures and regulations shall be kept on file with the Secretary of
the Corporation and with its Transfer Agent and shall be made available for
inspection by the public and, upon request, shall be mailed to any holder
of Common Stock or Rights of the Corporation.
SEVENTH: The duration of the Corporation is to be perpetual.
EIGHTH: (a) The number of directors of the Corporation
shall be determined from time to time in the manner described in the
Bylaws. Each director shall serve for a term ending at the next
annual meeting following the meeting at which such director was
elected, or on such later date as such director's successor shall have
been elected and qualified.
(b) Newly created directorships resulting from any
increase in the number of directors and any vacancies on the Board of
Directors resulting from death, resignation, disqualification, removal
or other cause shall be filled by the affirmative vote of a majority
of the remaining directors then in office, even if less than a quorum
of the Board of Directors, or by a sole remaining director. Any
director elected in accordance with the preceding sentence shall hold
office until the next annual meeting of stockholders and until such
director's successor shall have been duly elected and qualified. No
decrease in the number of directors constituting the Board of
Directors shall shorten the term of any incumbent director.
(c) Any director may be removed from office, with
or without cause, by the affirmative vote of the holders of a majority
of the voting power of the then outstanding shares of capital stock of
the Corporation entitled to vote generally in the election of
directors (the "Voting Stock"), voting together as a single class.
NINTH: Special meetings of stockholders may be called either
(i) by the Board of Directors or by the Chief Executive Officer
pursuant to a resolution approved by a majority of the then authorized
number of directors of the Corporation (as determined in accordance
with the By-Laws) or (ii) by the holders of capital stock of the
Corporation representing at least ten percent (10%) of the outstanding
shares of capital stock of the Corporation entitled to vote in the
election of directors.
13
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TENTH: Unless and except to the extent that the By-Laws of the
Corporation shall so require, the election of directors of the
Corporation need not be by written ballot.
ELEVENTH: No contract or other transaction of the Corporation
shall be void, voidable, fraudulent or otherwise invalidated, impaired
or affected, in any respect, by reason of the fact that any one or
more of the officers, directors or stockholders of the Corporation
shall individually be party or parties thereto or otherwise interested
therein, or shall be officers, directors or stockholders of any other
corporation or corporations which shall be party or parties thereto or
otherwise interested therein; PROVIDED that such contract or other
transactions be duly authorized or ratified by the Board of Directors,
with the assenting vote of a majority of the disinterested directors
then present, or, if only one such director is present, with his
assenting vote.
TWELFTH: The Board of Directors may from time to time make,
amend, supplement or repeal any By-Laws; PROVIDED, FURTHER, that no
amendment or supplement to the By-Laws adopted by the Board of
Directors shall vary or conflict with any amendment or supplement
adopted by the stockholders.
THIRTEENTH: The Corporation reserves the right to amend,
alter, change or repeal any provision contained in this Amended and
Restated Certificate of Incorporation, in the manner now or hereafter
prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
FOURTEENTH: (a) A director of the Corporation shall not be
personally liable to the Corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, provided that the
foregoing shall not limit or eliminate liability (i) for any breach of
the director's duty of loyalty to the Corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law, or (iv) for any
transaction from which the director derived an improper personal
benefit.
(b)(1) RIGHT TO INDEMNIFICATION. Each person who was or is
made a party or is threatened to be made a party to or is involved in
any action, suit or proceeding, whether civil, criminal,
administrative or investigative (hereinafter a "proceeding"), by
reason of the fact that he or she, or the person of whom he or she is
the legal representative, is or was a director or officer of the
Corporation or is or was serving at the request of the Corporation as
a director, officer, employee or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including
service with respect to employee benefit plans, whether the basis of
such proceeding is alleged action or inaction in an official capacity
as a
14
<PAGE>
director, officer, employee or agent or in any other capacity while serving
as a director, officer, employee or agent, shall be indemnified and held
harmless by the Corporation to the fullest extent authorized by the
Delaware General Corporation Law, as the same exists or may hereafter be
amended (but, in the case of any such amendment, only to the extent that
such amendment permits the Corporation to provide broader indemnification
rights than said law permitted the Corporation to provide prior to such
amendment), against all expense, liability and loss (including attorney's
fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or
to be paid in settlement) reasonably incurred or suffered by such person in
connection therewith and such indemnification shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure
to the benefit of his or her heirs, executors and administrators; PROVIDED,
HOWEVER, that except as provided in this paragraph (b), the Corporation
shall indemnify any such person seeking indemnification in connection with
a proceeding (or part thereof) initiated by such person only if such
proceeding (or part thereof) was authorized by the Board of Directors of
the Corporation. The right to indemnification conferred in this paragraph
(b) shall be a contract right and shall include the right to be paid by the
Corporation the expenses incurred in defending any such proceeding in
advance of its final disposition; PROVIDED, HOWEVER, that, if the Delaware
General Corporation Law requires, the payment of such expenses incurred by
a director or officer in his or her capacity as a director or officer of
the Corporation (and not in any other capacity in which service was or is
rendered by such person while a director or officer, including, without
limitation, service to an employee benefit plan) in advance of the final
disposition of a proceeding, shall be made only upon delivery to the
Corporation of an undertaking, by or on behalf of such director or officer,
to repay all amounts so advanced if it shall ultimately be determined that
such director or officer is not entitled to be indemnified under this
Section or otherwise. The Corporation may, by action of its Board of
Directors, provide indemnification to employees and agents of the
Corporation with the same scope and effect as the foregoing indemnification
of directors and officers.
(2) RIGHT OF CLAIMANT TO BRING SUIT. If a claim under
subparagraph (b)(1) is not paid in full by the Corporation within 30
days after a written claim has been received by the Corporation, the
claimant may at any time thereafter bring suit against the Corporation
to recover the unpaid amount of the claim and, if successful in whole
or in part, the claimant shall be entitled to be paid also the expense
of prosecuting such claim. It shall be a defense to any such action
(other than an action brought to enforce a claim for expenses incurred
in defending any proceeding in advance of its final disposition where
the required undertaking, if any is required, has been tendered to the
Corporation) that the claimant has not met the standards of conduct
which make it permissible under the Delaware General Corporation Law
for the Corporation to indemnify the claimant for the amount claimed,
but the burden of proving such defense shall be on the Corporation.
Neither the failure of the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) to have
made a
15
<PAGE>
determination prior to the commencement of such action that indemnification
of the claimant is proper in the circumstances because he or she has met
the applicable standard of conduct set forth in the Delaware General
Corporation Law, nor an actual determination by the Corporation (including
its Board of Directors, independent legal counsel, or its stockholders)
that the claimant has not met such applicable standard of conduct, shall be
a defense to the action or create a presumption that the claimant has not
met the applicable standard of conduct.
(3) NON-EXCLUSIVITY OF RIGHTS. The right to
indemnification and the payment of expenses incurred in defending a
proceeding in advance of its final disposition conferred in this
paragraph (b) shall not be exclusive of any other right which any
person may have or hereafter acquire under any statute, provision of
the Amended and Restated Certificate of Incorporation, By-Laws,
agreement, vote of stockholders or disinterested directors or
otherwise.
(4) INSURANCE. The Corporation may maintain insurance, at
its expense, to protect itself and any director, officer, employee or
agent of the Corporation or another corporation, partnership, joint
venture, trust or other enterprises against any such expenses,
liability or loss, whether or not the Corporation would have the power
to indemnify such person against such expense, liability or loss under
the Delaware General Corporation Law.
FIFTEENTH: The Corporation expressly elects not to be
governed by Section 203 of the Delaware General Corporation Law.
16
<PAGE>
IN WITNESS WHEREOF, the undersigned Corporation has caused this amended and
restated certificate of incorporation to be executed by its duly authorized
officer this 14th day of October, 1999.
CALIFORNIA COASTAL COMMUNITES, INC.
By: /s/ RAYMOND J. PACINI
------------------------------------
Raymond J. Pacini
Chief Executive Officer
17
<PAGE>
NOTICE OF STOCKHOLDER APPROVAL BY WRITTEN CONSENT
OF
AMENDMENT AND RESTATEMENT OF CERTIFICATE OF INCORPORATION
OF
CALIFORNIA COASTAL COMMUNITIES, INC.
To: Stockholders of California Coastal Communities, Inc.
PLEASE TAKE NOTICE, that pursuant to Section 228 of the General
Corporation Law of the State of Delaware (the "DGCL"), this Notice of
Stockholder Approval by Written Consent is being furnished by California
Coastal Communities, Inc., a Delaware corporation (the "Company"), to
stockholders of record of the Company in connection with actions taken by
consent of the stockholders of the Company concerning the amendment and
restatement (the "Amendments") of the Amended and Restated Certificate of
Incorporation of the Company, as theretofore amended (the "Certificate").
Notice is hereby given that on September 16, 1999, the Company received
an unsolicited written consent executed by stockholders holding a majority of
the outstanding shares of common stock, par value $.05 per share, of the
Company requesting that the Company evaluate alternatives for preserving the
Company's ability to use its tax loss carryforwards ("NOLs"). On October 14,
1999, the Company received a written consent executed by these same
stockholders holding a majority of the outstanding shares of the Company
approving the Amendments to the Certificate. The October 14, 1999 consent is
sufficient to authorize the Amendments, under the Company's Certificate and
By-laws, and under the relevant provisions of the DGCL. Pursuant to the
October 14, 1999 consent, an amended and restated certificate of
incorporation of the Company was filed with the Secretary of State of the
State of Delaware and was effective on October 14, 1999. The effect of the
Amendments is to prohibit the acquisition of the Company's common stock by
anyone who would become a 5% stockholder or by existing 5% stockholders,
except in certain permissible circumstances which would not jeopardize the
Company's ability to use its NOLs.
The actions described above, having been approved by stockholders having
the requisite voting power under the DGCL, can be effected without any
further action on the part of any other stockholder of the Company. A copy of
the Company's Amended and Restated Certificate of Incorporation as currently
on file in Delaware and copies of the stockholder consents may be obtained by
making a written request to the Secretary of the Company, or by obtaining an
internet copy of the Company's October 14, 1999 Form 8-K which is available
through the web site maintained by the Securities and Exchange Commission at:
http://www.sec.gov.
CALIFORNIA COASTAL COMMUNITIES, INC.
By: /s/ RAYMOND J. PACINI
-------------------------
Raymond J. Pacini
October 14, 1999 Chief Executive Officer
<PAGE>
WRITTEN CONSENT OF MAJORITY STOCKHOLDERS
WHEREAS, the undersigned are the majority stockholders (the "Majority
Stockholders") of California Coastal Communities, Inc. (the "Company") by virtue
of their holding more than 50% of the outstanding common stock, par value $.05
per share (the "Common Stock") of the Company;
WHEREAS, the Majority Stockholders are concerned that, under certain
circumstances the ability of the Company to fully utilize the net operating loss
carryovers (the "NOLs") to which it is entitled under the Internal Revenue Code
of 1986, as amended, as a result of certain concentrations of ownership and/or
stock exchange transactions; and
WHEREAS, the Majority Stockholders desire that the Company and its
Board of Directors take certain actions for the express purpose of preserving
the ability of the Company to use its NOLs.
NOW, THEREFORE, BE IT RESOLVED, that the Company is hereby instructed
to engage its legal council and its independent public accountants for the
purpose of preparing such amendments to the Company's Amended and Restated
Certificate of Incorporation as are deemed necessary or appropriate for the
purpose of reclassifying the Common Stock into a new class of stock that
contains transfer restrictions which will effectively protect the Company's use
of its NOLs (the "Reclassification");
RESOLVED, FURTHER, that, in order for the Majority Stockholders to duly
adopt the Reclassification by written consent in accordance with the provisions
of Delaware General Corporation Law ("Delaware Law"), the Board of Directors is
requested to review the Reclassification for the purpose of determining whether
to adopt a resolution approving the Reclassification as being in the best
interests of the Company and its stockholders; and
RESOLVED, FURTHER, that, if the Board of Directors approves the
Reclassification as described in the foregoing resolution, the Company is
instructed, in accordance with the requirements of Delaware Law, to submit the
Reclassification to the Majority Stockholders for their approval, following the
receipt of which, the appropriate officers of the Company shall make such
filings and take such other actions as may be deemed necessary or appropriate to
cause the Reclassification to become effective.
SIGNATURES BEGIN ON FOLLOWING PAGE
<PAGE>
IN WITNESS WHEREOF, the undersigned Majority Stockholders have executed
this written consent in accordance with the provisions of Section 228 of
Delaware Law as of this 16th day of September, 1999.
ING Barings (U.S.) Capital Credit Suisse First Boston
By /s/ P.R. BURNAMAN II By /s/ DAVID J. MATLIN
------------------------------------- ------------------------------
P.R. Burnaman II David J. Matlin
Managing Director Managing Director
Merrill Lynch & Co., Inc. Lone Star Securities Fund, L.L.C.
By /s/ GRAHAM GOLDSMITH By /s/ JEFFREY S. YARCKIN
------------------------------------- ------------------------------
Graham Goldsmith Jeffrey S. Yarckin
Director Vice President
Edelman Value Fund, Ltd. Edelman Value Partners, L.P.
By /s/ ASHER B. EDELMAN By /s/ ASHER B. EDELMAN
------------------------------------- ------------------------------
Asher B. Edelman Asher B. Edelman
<PAGE>
CALIFORNIA COASTAL COMMUNITIES, INC.
CONSENT OF STOCKHOLDERS
PURSUANT TO SECTION 228 OF THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
The undersigned, being holders of a majority of the outstanding common
stock, par value $.05 per share, of California Coastal Communities, Inc., a
Delaware corporation (the "Corporation"), pursuant to Section 228 of the General
Corporation Law of the State of Delaware, DO HEREBY CONSENT to the adoption of,
and DO HEREBY ADOPT, the following resolutions:
RESOLVED, that the Amended and Restated Certificate
of Incorporation of the Corporation, as heretofore amended, be
further amended and restated to read in its entirety in the
form attached hereto as EXHIBIT A;
RESOLVED, that the Board of Directors may abandon
such proposed amendment and restatement, before or after
stockholder approval thereof, without further action by
stockholders at any time prior to the effectiveness of the
amendment and restatement; and it is further
RESOLVED, that the officers of the Corporation be,
and each of them hereby is, authorized, empowered and
directed, for and on behalf of the Corporation, to take any
and all actions, to negotiate for and enter into agreements
and amendments to agreements, to perform all such acts and
things, to execute, file, deliver or record in the name and on
behalf of the Corporation, all such certificates, instruments,
agreements or other documents, and to make all such payments
as they, in their judgment, or in the judgment of any one or
more of them, may deem necessary, advisable or appropriate in
order to carry out the purpose and intent of, or consummate
the transactions contemplated by, the foregoing resolutions
and/or all of the transactions contemplated therein or
thereby, the authorization therefor to be conclusively
evidenced by the taking of such action or the execution and
delivery of such certificates, instruments, agreements or
documents.
<PAGE>
This Consent may be executed in counterparts.
The Secretary of the Corporation is hereby directed to file a signed
copy of this Consent in the minute book of the Corporation.
DATED: As of October 14, 1999
MERRILL LYNCH & CO., INC. ING BARINGS (U.S.) CAPITAL LLC
By: /s/ GRAHAM GOLDSMITH By: /s/ P.R. BURNAMAN II
----------------------------------- --------------------------------
Graham Goldsmith P.R. Burnaman II
Director Managing Director
LONE STAR SECURITIES FUND, L.L.C. EDELMAN VALUE PARTNERS, L.P.
By: /s/ JEFFREY S. YARCKIN By: /s/ ASHER B. EDELMAN
----------------------------------- --------------------------------
Jeffrey S. Yarckin Asher B. Edelman
Vice President
CREDIT SUISSE FIRST BOSTON EDELMAN VALUE FUND, LTD.
By: /s/ DAVID J. MATLIN By: /s/ ASHER B. EDELMAN
----------------------------------- --------------------------------
David J. Matlin Asher B. Edelman
Managing Director
<PAGE>
NEWS RELEASE
Contact: Raymond J. Pacini
Chief Executive Officer
California Coastal Communities, Inc.
(949) 250-7781
CALC STOCKHOLDERS APPROVE RESTRICTIONS ON 5%
HOLDERS IN ORDER TO PRESERVE TAX LOSS CARRYFORWARDS
IRVINE, California--October 14, 1999--California Coastal Communities,
Inc., (NASDAQ:CALC) announced today that, in response to an unsolicited
written consent from a majority of its stockholders, the Company has amended
its certificate of incorporation in order to preserve the ability of the
Company to utilize its $190 million of tax loss carryforwards ("NOLs"). The
amendments prohibit future purchases of the Company's common stock by persons
who would become new 5% holders, and also prohibit current holders of over 5%
from increasing their positions, except in certain permissible circumstances
which would not jeopardize the Company's ability to use its NOLs.
As a result of transactions by holders of over 5% of the Company's
common stock and repurchases by the Company over the past year, the Company
has experienced an ownership shift of approximately 38%. Since under the
Internal Revenue Code the Company's use of its NOLs would be severely
restricted (based on its market capitalization) if it experiences an
ownership change of 50% or more, the Company's majority stockholders
requested that the Board of Directors enact the amendments, which have been
determined to be in the best interests of the Company and its stockholders.
