AMENDMENT NUMBER 1
TO
COMMON STOCK SUBSCRIPTION WARRANT, SERIES B-2 No. 1
To Subscribe for and Purchase Shares
of Common Stock of
Highlands Insurance Group, Inc.
THIS AMENDMENT NUMBER 1, dated as of April 30, 1997 (this
"Amendment"), is entered into by and between Highlands Insurance Group, Inc., a
Delaware corporation (the "Company"), and the undersigned Holder of that certain
Common Stock Subscription Warrant, Series X-0, Xx. 0, dated January 23, 1996
(the "Warrant"), to purchase from the Company up to THIRTY-FOUR THOUSAND NINE
HUNDRED ELEVEN (34,911) fully paid and non-assessable shares of the Common Stock
of the Company pursuant to the terms of the Warrant. Unless otherwise defined
herein, capitalized terms shall have the meanings ascribed thereto in the
Warrant.
RECITALS
A. The Company has entered into that certain Amended and
Restated Agreement and Plan of Merger, dated as of February 13, 1997 (as amended
by Amendment Number 1 thereto, the "Merger Agreement"), by and among the
Company, Highlands Acquisition Corp. and Vik Brothers Insurance, Inc.
B. Section 6.9(a) of the Merger Agreement requires certain
amendments to be made to the terms of the Warrant.
C. Pursuant to Section 14(a) of the Warrant, the Company and
the Holder wish to amend the terms of the Warrant as set forth below in order to
comply with Section 6.9(a) of the Merger Agreement.
Now therefore, in consideration of the foregoing and good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, each of the Company and the Holder agrees as follows:
AGREEMENT
1. The following terms and definitions shall be inserted in
alphabetical order into Section 13 of the Warrant:
"Affiliate" shall mean, with respect to a
specified Person, any other Person which controls, is
controlled by or is under common control with such specified
Person.
"Change of Control" shall mean
(i) the occurrence of any event
(including any merger or consolidation of the Company
or any Subsidiary of the Company with or into another
Person, any merger of another Person into the Company
or any Subsidiary of the Company or any other similar
transaction) that results in any Person or group
(other than one or more of IP and its Affiliates)
having "beneficial ownership" (within the meaning of
Rule 13d-3 under the Exchange Act) of Voting
Securities of the Company representing, at the time
of determination, in excess of 25% of the number of
votes that could be cast in the election of directors
of the Company at such time by the holders of all
outstanding Voting Securities of the Company;
(ii) the sale, lease, assignment,
transfer or other disposition (including, without
limitation, by reinsurance, liquidation or
dissolution), of all or substantially all of the
assets or business of (A) the Company and its
Subsidiaries considered as a whole or (B) Highlands
Insurance Company and its Subsidiaries considered as
a whole, in any such case to any Person or group
(other than one or more of IP and its Affiliates) in
one transaction or a series of related transactions;
or
(iii) the occurrence of any event
(including any merger or consolidation of Highlands
Insurance Company with or into another Person, any
merger of another Person into Highlands Insurance
Company or any other similar transaction) that
results in any Person or group (other than one or
more of the Company, IP, and any Affiliate of IP)
having "beneficial ownership" (within the meaning of
Rule 13d-3 under the Exchange Act) of any Voting
Securities of Highlands Insurance Company.
"IP" shall mean, collectively, Insurance
Partners, L.P. and Insurance Partners Offshore (Bermuda),
L.P.
"Voting Securities" shall mean any class of
capital stock of a Person pursuant to which the holders
thereof have, at the time of determination, the general voting
power under ordinary circumstances to vote for the election
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of directors, managers, trustees or general partners of such
Person (irrespective of whether or not at the time any other
class or classes will have or might have voting power by
reason of the happening of any contingency).
2. Notwithstanding any provision of the Warrant to the
contrary, no adjustment shall be made to the number of shares of Common Stock
issuable upon exercise of the Warrant as a result of any Additional Adverse
Development.
3. Notwithstanding any provision of the Warrant to the
contrary, the issuance of Common Stock pursuant to, and in transactions entered
into in connection with, the Merger Agreement and the transactions contemplated
thereby shall not (i) constitute a Change of Control pursuant to the Warrant,
(ii) result in an adjustment to the number of shares of Common Stock issuable
upon exercise of the Warrant and (iii) result in an adjustment of the exercise
or conversion price of the Warrant.
4. This Amendment may be executed in two or more counterparts
and each counterpart shall be deemed to be an original and which counterparts
together shall constitute one and the same agreement of the parties hereto.
5. All other provisions of the Warrant shall not be affected
by this Amendment and shall remain in full force and effect.
[SIGNATURES CONTAINED ON NEXT PAGE]
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IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Amendment as of the date first written above.
HIGHLANDS INSURANCE GROUP, INC.
By: _______________________________________
Name:______________________________________
Title:_____________________________________
HOLDER: __________________________________________
XXXXXXX X. XXXXXXXXX
