from what it looks like in step one to step two. is that the double bond is acting as a nucleophile and the chloride is a leaving group probably via sn2..and due to additional resonance the benzyl like structure is place on carbon 2... not sure if that was your question but it just looks like a reactant from the attached pdf
From looking at this reaction, benzyl chloride is being attacked by the double bond, displacing the Cl in what looks a typical sn2 reaction. The double bond is acting as the Nu in the reaction shown.