Document:

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                                                                    Exhibit 10.4

                           HIGHLANDS INSURANCE GROUP
                          1997 RESTRICTED STOCK PLAN
                       (as amended through May 10, 1999)

1.   Purpose

     This Plan's purpose is to align the interests of management more closely
with those of stockholders, by providing an incentive to invest in Highlands
Insurance Group, Inc. common stock, and by rewarding long service with the
Company and its Subsidiaries.

2.   Definitions

     For purposes of this Plan, the following terms shall have the definitions
set forth below:

     (a) "Board."  The Company's Board of Directors.

     (b) "Committee."  The Compensation Committee of the Board.  No member of
the Committee shall participate in the administration of the Plan unless he is a
nonemployee director described in Rule 16b-3(e)(3) promulgated by the Securities
and Exchange Commission or any successor definition thereto.

     (c) "Company."  Highlands Insurance Group, Inc., a Delaware corporation.

     (d) "Date of Issuance."  The date Restricted Shares are issued to a
Participant.

     (e) "Escrow Agent."  The bank or other institution appointed by the Company
from time to time to hold Restricted Shares during the Restricted Period.

     (f) "Participant."  An employee of the Company or a Subsidiary selected for
participation in the Plan pursuant to Section 4.

     (g) "Plan."  The Highlands Insurance Group 1997 Restricted Stock Plan.

     (h) "Restricted Period."  The period described in Section 6(c).

     (i) "Restricted Shares."  The shares of common stock of the Company
reserved pursuant to Section 3 hereof and any such shares issued to a
Participant pursuant to this Plan.

     (j) "Subsidiary" or "Subsidiaries."  A corporation or corporations of which
the Company owns, directly or indirectly, shares having a majority of the
ordinary voting power for the election of directors.
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3.   Restricted Share Reserve

     (a) Establishment.  The Company shall establish a Restricted Share reserve
to which shall be credited 350,000 shares of the common stock of the Company,
par value $.01 per share.  Should the shares of the Company's common  stock be
increased or decreased, or changed into or exchanged for, a different number or
kind of shares of stock or other securities of the Company or of another
corporation, due to a stock split or stock dividend or combination of shares or
any other change, or exchange for other securities, by reclassification,
reorganization, merger, consolidation, recapitalization or otherwise, the number
of shares then remaining in the Restricted Share reserve shall be adjusted
appropriately to reflect such action.  If any such adjustment results in a
fractional share, the fraction shall be disregarded.

     (b) Adjustments to Reserve.  Upon the grant of shares hereunder, the
reserve shall be reduced by the number of shares so granted.  Upon the
forfeiture of any Restricted Shares, the reserve shall be increased by such
number of shares, and such shares may again be the subject of grants hereunder.

     (c) Source of Restricted Shares.  As the Board shall in its sole discretion
determine, Restricted Shares may be authorized but unissued shares or treasury
shares.  All authorized and unissued shares issued as Restricted Shares in
accordance with the Plan shall be fully paid and non-assessable shares and free
from preemptive rights.

4.   Eligibility

     (a) Eligible Employees.  Any management employee of the Company or any
Subsidiary (including officers and directors, except for persons serving as
directors only) shall be eligible to receive a grant of Restricted Shares
pursuant to the Plan.

     (b) Selection by the Committee.  From the employees eligible to receive
grants pursuant to the Plan, the Committee may from time to time select
employees to receive grants.  The Committee shall base its selections on the
positions and responsibilities of the eligible employees, the value of their
services to the Company and its Subsidiaries and such other factors as the
Committee deems pertinent.

     (c) Participation in Other Stock Plans.  A person who has received options
or other rights to purchase stock of the Company or a Subsidiary may exercise
the same in accordance with their terms, and shall not by reason thereof be
ineligible to receive Restricted Shares under this Plan.  A person who has
received Restricted Shares hereunder shall not be ineligible for that reason to
be granted any option or other rights to purchase stock.

5.   Amounts of Grants

     (a) Participant Election.  The number of Restricted Shares granted to each
Participant shall be equal to the number of shares of common stock of the
Company, if any, that the Participant purchases under the Plan.  Each
Participant shall elect in writing, within

                                      -2-
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the time permitted by the Committee, how many shares of common stock of the
Company to purchase pursuant to the Plan. Such an election shall be made by
delivering to the Secretary of the Company a written election on the form
provided by the Company. Any such election shall be accompanied by a stock power
endorsed in blank in order to permit the Escrow Agent to transfer Restricted
Shares to the Company in the event they are forfeited.

     (b) Purchase of Shares.  The Secretary of the Company shall arrange for
purchase in the market of the number of shares elected by Participants.  The
Secretary shall inform each Participant promptly of the amount needed to
purchase the shares elected by the Participant, and of the date by which payment
must be received.  The election of any Participant who fails to make timely
payment in full to the Secretary shall be null and void.

     (c) Disposition of Purchased Shares.  The Secretary of the Company shall
cause all shares purchased at the election of Participants to be delivered to
the respective Participants or their designees by the broker executing the
transaction.

     (d) Listing on Stock Exchange.  The Company shall take such action as shall
be necessary to cause any Restricted Shares issued pursuant to this Plan and not
previously listed to be listed on the New York Stock Exchange and/or such other
exchange(s) on which shares of the same class as the Restricted Shares are then
listed.

     (e) Delivery of Written Notice.  All elections and notices in writing
required pursuant to this Plan shall be sufficient only if actually delivered or
if sent via registered or certified mail, postage prepaid, to the Company,
attention Secretary, and/or the Escrow Agent at its principal office, and shall
be conclusively deemed given on the third business day following the date of
such mailing, if mailed.

5A.  Exchange Offer

     (a) Offer.  Each Participant shall be entitled to exchange his Restricted
Shares granted under Section 5 for new Restricted Shares in accordance with this
Section 5A.  The number of new Restricted Shares granted shall be 75% of the
number of Restricted Shares that the Participant elects to exchange.

     (b) Participant Election.  Each Participant shall elect in writing, within
the time specified on the Exchange Offer Election form, whether he wishes to
accept the exchange offer described in (a) above.  Such an election shall apply
to all of a Participant's Restricted Shares.  The election shall be made by
delivering to the Secretary of the Company a written election on the form
provided by the Company.  An election to accept the exchange offer shall be
accompanied by a stock power endorsed in blank in order to permit the Escrow
Agent to transfer the new Restricted Shares to the Company in the event they are
forfeited.

     (c) Date of Issuance.  The Date of Issuance of new Restricted Shares issued
under this Section 5A shall be March 10, 1999 for all purposes under this Plan.

6.   Restrictions

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     (a) Transfer/Issuance.  Restricted Shares shall be issued or transferred to
Participants promptly after completion of the purchases pursuant to Section
5(b), and certificates for such shares shall be issued in the respective
Participants' names.  Each Participant shall thereupon be the record owner of
all the shares represented by the certificate or certificates.  As such, the
Participant shall have all the rights of a shareholder with respect to such
shares, including the right to vote them and to receive all dividends and other
distributions (subject to (b), below) paid with respect to them, provided,
however, that the shares shall be subject to the restrictions in (d), below.
The shares represented thereby may not be sold, exchanged, transferred, pledged,
hypothecated, or otherwise disposed of during the Restricted Period, and each
transfer agent for the common stock shall be instructed to that effect.  In aid
of such restrictions, all certificates for Restricted Shares shall be deposited
by the Company with the Escrow Agent.

     (b) Adjustments to Restricted Shares.  If, due to a stock split, stock
dividend, combination of shares, or any other change or exchange for other
securities by reclassification, reorganization, merger, consolidation,
recapitalization or otherwise, the Participant, as the owner of Restricted
Shares subject to restrictions hereunder, shall be entitled during the
Restricted Period to new, additional, or different shares of stock or other
securities, the certificate or certificates for, or other evidences of, such
new, additional, or different shares or securities also shall be deposited by
the issuer with the Escrow Agent.  If any of the event(s) described in the
preceding sentence occur, all Plan provisions relating to restrictions and lapse
of restrictions shall apply to such new, additional, or different shares or
securities, provided, however, that if the Participant shall receive rights,
warrants or fractional interests in respect of any of such Restricted Shares,
such rights or warrants may be held, exercised, sold or otherwise disposed of,
and such fractional interests may be settled, by the Participant free and clear
of the restrictions hereinafter set forth.

     (c) Restricted Period.  The restrictions set forth in (d), below, shall
apply to Restricted Shares during a period starting on the Date of Issuance of
such shares and ending on the fifth anniversary of such date.

     (d) Restrictions.  The restrictions to which Restricted Shares shall be
subject are the following:

         (i)   During the Restricted Period applicable to Restricted Shares,
none of such shares shall be sold, exchanged, transferred, pledged,
hypothecated, or otherwise disposed of; provided, that Restricted Shares may be
transferred to the Company if the Committee offers an exchange for new
Restricted Shares.

         (ii)  If a Participant's employment with the Company and its
Subsidiaries terminates for any reason, including such Participant's death or
disability, at any time before the third anniversary of the Date of Issuance of
Restricted Shares, the Restricted Shares shall be forfeited and transferred to
the Company.

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         (iii) If a Participant resigns, or is terminated for cause, from
employment with the Company and its Subsidiaries at any time before the
Restricted Period ends, the Participant's Restricted Shares shall be forfeited
and transferred to the Company.

         (iv)  If the price on the date the Restricted Period ends is less than
161% of the price at the Date of Issuance, all or a portion of the Restricted
Shares shall be forfeited, and transferred to the Company, as determined by the
following table.

         Price at End Compared with
         Beginning of Restricted Period              Forfeited Percentage
         ------------------------------              --------------------
         Less than 140%                                        100%
         140% but less than 150%                                75%
         150% but less than 161%                                50%

     (e) Special Definitions.  For purposes of this Section 6, the following
terms shall have the definitions set forth below.

         (i)   Cause means fraud, dishonesty or similar willful misconduct on
the part of a Participant; a material breach by a Participant of any of his
obligations under any employment agreement with the Company or any of its
Subsidiaries or otherwise in connection with any position that such Participant
holds, or in the future may hold, at the Company or any Subsidiary (provided
that the Participant shall first be notified of and be given a reasonable
opportunity to cure such breach); gross negligence by a Participant in the
performance of the services contemplated by such Participant's employment
agreement (if any) or performed in connection with the Participant's position as
an employee of the Company or its Subsidiary; or conviction of a Participant (or
the entering of a plea of guilty, nolo contendere, or request for deferred
adjudication) for fraud, misappropriation, embezzlement, financial misconduct,
any felony, or any lesser criminal offense which carries a potential penalty of
imprisonment for a term of one year or more and/or a fine of $5,000 or more
(other than such a lesser criminal offense that relates solely to the action or
omission of one or more persons other than the Participant), whether or not a
lesser penalty or fine is assessed.

         (ii)  Price on a given date means the average closing price of the
common stock of the Company on the preceding five trading days, as reported on
the principal national securities exchange on which the common stock is then
listed, or if there were no sales on any of such days, on the most recent five
days on which there were sales.

7.   Delivery of Vested Shares

     (a) Lapse of Restricted Period.  After the end of the Restricted Period,
the Escrow Agent shall transfer to the Company any Restricted Shares that are
forfeited pursuant to Section 6(d), above.  Subject to (b), below, the Escrow
Agent shall release to the respective Participants, free of such restrictions,
the remaining Restricted Shares.

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<PAGE>

     (b) The Escrow Agent shall not release shares from escrow to a Participant
or executor or administrator until the Participant or executor or administrator
has remitted to the Company or its Subsidiary all federal, state and local taxes
that the Company or its Subsidiary determines it is required to withhold.

8.   Death of a Participant

     In the event of the death of a Participant prior to the third anniversary
of the Date of Issuance, the Restricted Shares shall be forfeited and the Escrow
Agent shall transfer them to the Company.  If a Participant dies after the third
anniversary of the Date of Issuance, but before the end of the Restricted
Period, the Restricted Shares that are not forfeited pursuant to Section 6(d),
if any, shall be released as provided in Section 7 to the Participant's executor
or administrator.

9.   Finality of Determination

     The Committee shall administer this Plan and construe its provisions.  Any
determination by the Committee in carrying out, administering, or construing
this Plan shall be final and binding for all purposes and upon all interested
persons and their heirs, successors, and personal representatives.

10.  No Right to Continued Employment

     Neither the Company's action in establishing the Plan, nor any action taken
by it or by the Board or the Committee under the Plan, nor any provision of the
Plan, shall be construed as giving to any person the right to be retained in the
employ of the Company or any Subsidiary.

11.  Amendment, Suspension or Termination of Plan

     (a) The Plan shall be submitted for approval by the stockholders of the
Company at the 1998 annual meeting of stockholders.  If the Plan is not approved
by a majority of shares present in person or by proxy, it shall be void and of
no effect, and all Restricted Shares shall be transferred to the Company.

     (b) The Board may amend, suspend or terminate the Plan in whole or in part
at any time; provided that such amendment shall not affect adversely rights or
obligations with respect to grants previously made.

12.  Governing Law

     The Plan shall be governed by the laws of the State of New Jersey.

                                      -6-
<PAGE>

13.  Expenses of Administration

     All costs and expenses incurred in the operation and administration of this
Plan shall be borne by the Company.

14.  Registration of Restricted Shares

     The Company, at its expense, shall register the Plan under the Securities
Act of 1933.

                                      -7-<PAGE>

                                                                    Exhibit 10.6

                       RETIREMENT AND RELEASE AGREEMENT
                       --------------------------------

          This Retirement and Release Agreement (the "Agreement")  is made and
entered into as of the 1st day of June 1999, by and between Highlands Insurance
Group, Inc., a Delaware corporation, 1000 Lenox Drive, Lawrenceville, New Jersey
("Highlands") and Richard M. Haverland, a citizen of New Jersey employed by
Highlands and its subsidiaries in Lawrenceville, New Jersey (hereinafter
"Haverland").

                                  WITNESSETH:

          WHEREAS, Haverland has been employed by Highlands and its subsidiaries
as President and Chief Executive Officer and has been a member of the boards of
directors of Highlands and certain of its subsidiaries;

          WHEREAS, Haverland wishes to retire and resign from all his positions
with Highlands and its subsidiaries, effective June 1, 1999 (except that
Haverland shall continue as a member of the Board of Directors of Highlands);

          NOW, THEREFORE, for and in consideration of the agreements, covenants
and conditions of this Agreement, the adequacy and sufficiency of which are
hereby acknowledged by each of the parties hereto, the parties agree as follows:

          1.  Resignation of Offices and Directorships.  Haverland hereby
              ----------------------------------------
resigns and relinquishes any rights to reinstatement to any and all his offices
and directorships with Highlands and each of its subsidiaries, effective June 1,
1999, and shall have no further active duties or responsibilities as of that
date (except that Haverland shall continue as a member of the Board of Directors
of Highlands).

          2.  Consideration.  Highlands agrees that Haverland shall continue to
              -------------
be paid an amount equal to his salary ($43,750 per month) in semi-monthly
payments until December 31, 1999.  During this period, Haverland agrees to
provide consulting services to Highlands and to assist in the transition of his
duties as requested by Highlands.  Highlands also agrees to pay Haverland a
bonus equal to $231,000.

          3.  Other Benefits.
              --------------

              a.  Haverland may continue to participate in Highlands' standard
health insurance plans until the earlier of May 31, 2001 or his obtaining
employment with another company. Highlands agrees to pay the portion of the cost
of such standard health insurance to the extent of and consistent with
Highlands' then current normal payment practices.
<PAGE>

              b.  Haverland shall be paid his earned and unused vacation through
June 1, 1999 and shall be entitled to receive his amounts in the Highlands
Insurance Group Employees' Retirement and Savings Plan which are vested as of
June 1, 1999.

              c.  If Haverland's membership on the Board of Directors of
Highlands terminates, such termination shall be treated as a retirement at
normal retirement age in connection with the 1995 Directors' Stock Plan
Nonstatutory Stock Option Agreement dated January 4, 1996 between Highlands
Insurance Group, Inc. and Haverland.

              d.  Haverland shall be treated as an employee of Highlands in
connection with the Purchase, Redemption and Bonus Agreement dated January 23,
1996 between Highlands and Haverland on the fifth anniversary of such agreement.

          4.  Method of Payment.  The semi-monthly payments shall be sent to
              -----------------
Haverland via direct deposit into his bank account in accordance with Highlands'
normal payroll practices. The bonus payment shall be paid to Haverland in the
payroll following the Effective Date (defined in Section 17).

          5.  No Other Benefits.  Except as specifically stated in this
              -----------------
Agreement, Haverland shall not be entitled to any other compensation or benefits
of any kind from Highlands and its subsidiaries.

          6.  Attorneys Fees and Costs.  Highlands shall reimburse Haverland for
              ------------------------
his reasonable attorneys fees and costs incurred in connection with the
enforcement of the terms of this Agreement in the event Highlands breaches any
terms of this Agreement, including, but not limited to, the fees and expenses
incurred in any suit to recover the severance payments and/or benefits due under
this Agreement.  In the event that Haverland commences such a lawsuit and does
not prevail, then Haverland agrees to reimburse Highlands for the reasonable
attorneys fees and costs incurred by it in defending such a lawsuit.

          7.  General Releases and Covenants Not to Sue.
              -----------------------------------------

              a.  Effective upon the signing of this Agreement, Haverland, for
himself and his agents, trustees, attorneys, assigns, estate, heirs,
---
administrators, executors, personal representatives and affiliates (the
"Releasing Parties"), hereby remises, releases and forever discharges Highlands
and its employees, agents, officers, directors, trustees, attorneys, assigns,
subsidiaries and affiliates (the "Released Parties"), of and from all claims,
demands, actions, liabilities and other claims for relief of any kind, whether
known or unknown, arising at any time out of or relating to the conduct of any
of the Released Parties, and any tort or contract claims, whether known or
unknown, choate or inchoate, past, present or future concerning or emanating
from the conduct or operations of the Released Parties. Haverland acknowledges
and understands that the claims being released in this paragraph include, but
are not limited to, (i) any claim based on contract or in tort or common law;
(ii) any claim based on or arising under any employment laws, such as the
federal Age Discrimination in Employment Act (29 U.S.C. (S) 621 et seq.), Title
                                                                -- ---
VII of the Civil Rights Act of 1964 (42 U.S.C. (S) 2000e et seq.), the Americans
                                                         -- ---
with Disabilities Act (42 U.S.C. (S) 12101 et seq.), the Rehabilitation Act (29
                                           -- ---
U.S.C. (S) 791 et
               --

                                      -2-
<PAGE>

seq.), the Employee Retirement Income Security Act (29 U.S.C. (S) 1001 et seq.),
---                                                                    -- ---
the Equal Pay Act (29 U.S.C. (S) 206 (d)(1)), the Civil Rights Act of 1991, and
any state laws; (iii) any claim based on or arising out of Haverland's
employment by Highlands and/or the termination thereof; and (iv) any claims for
compensatory, liquidated or punitive damages, damages for emotional distress,
back pay, front pay, benefits, counsel fees, costs and expenses. Haverland
understands that, by signing this Agreement, he waives all claims he ever had or
now has against any of the Released Parties that arose or may have arisen before
he signs this Agreement. This release also applies to any claims brought by any
person or agency or any class action under which Haverland may have any right or
benefit. Further, Haverland promises never to file a lawsuit asserting any
claims that are released by Haverland and promises not to accept any recoveries
or benefits which may be obtained on Haverland's behalf by any other person or
agency or any class action. Notwithstanding the foregoing, Haverland shall not
be deemed to have released the Released Parties from any breach of this
Agreement or for any claims for defense, contribution and indemnification as a
former employee, officer or director pursuant to Highlands' and its
subsidiaries' Articles of Incorporation, Bylaws, insurance contracts, or the
corporation law governing them.

              b.  Effective upon the signing of this Agreement, Highlands, for
itself and its agents, officers, directors, employees, trustees, attorneys,
assigns, subsidiaries and affiliates (the "Releasing Parties"), hereby remises,
releases and forever discharges Haverland and his agents, trustees, attorneys,
assigns, estate, heirs, administrators, executors, personal representatives and
affiliates (the "Released Parties"), of and from all claims, demands, actions,
liabilities and other claims for relief of any kind, whether known or unknown,
including, but not limited to, claims arising at any time out of or relating to
the conduct of the Released Parties, any tort, contract or defamation claims,
whether known or unknown, choate or inchoate, past, present or future, and any
claims concerning or emanating from the conduct or operations of the Released
Parties. Notwithstanding the foregoing, Highlands shall not be deemed to have
released Haverland from any breach of this Agreement.

              c.  Haverland and Highlands further covenant and agree not to sue
or otherwise assert a claim against any of the Released Parties for any claims
released hereunder. If Haverland or Highlands brings a legal action or asserts a
claim against any Released Party in violation of this provision, he or it will
be liable to such Released Party for all of its or his expenses and legal fees
for opposing such claim, plus any other relief the court may award.

          8.  Confidentiality Provisions.
              --------------------------

              a.  In connection with Haverland's employment, Highlands, its
subsidiaries, advisors and agents made available to Haverland information which
is non-public, confidential or proprietary in nature ("Confidential Material").

              b.  By execution of this Agreement, Haverland agrees to treat such
Confidential Material confidentially and to observe the terms and conditions set
forth herein. For purposes of this Agreement, Confidential Material shall
include all non-public information, regardless of the form in which it is
communicated or maintained (whether prepared by

                                      -3-
<PAGE>

Highlands or otherwise), that contains or otherwise reflects non-public
information concerning Highlands or its subsidiaries obtained in the course of
Haverland's employment with Highlands and its subsidiaries, including, but not
limited to, non-public information about Highlands and its subsidiaries' (i)
existing business and business techniques, (ii) current financial condition,
(iii) agreements, (iv) current agents and employees, (v) current policyholders,
(vi) technology and software and (vii) present or future business plans and
strategies.

              c.  Except as specifically permitted by this Agreement or as
otherwise authorized by Highlands, Haverland will not disclose Confidential
Material to any person or entity whatsoever.

              d.  In the event that Haverland is requested or required (by
deposition, interrogatories, requests for information or documents in legal
proceedings, subpoenas, civil investigative demand or similar process), in
connection with any proceeding, to disclose any Confidential Material, Haverland
will give Highlands prompt notice of such request or requirement so that
Highlands may, at its own expense, have the opportunity to seek an appropriate
protective order or other remedy and/or waive compliance with the provisions of
this Agreement. In the event that such protective order or other remedy is not
obtained or Highlands waives compliance with the relevant provisions of this
Agreement, Haverland will furnish only that portion of the Confidential Material
which, in the written opinion of his counsel, is legally required to be
disclosed.

              e.  Haverland agrees that money damages would not be a sufficient
remedy for any breach of this paragraph 8 of this Agreement by him and that in
addition to all other remedies, Highlands shall be entitled to specific
performance and injunctive or other equitable relief as a remedy for any such
breach.

              f.  In the event that Haverland materially breaches the provisions
of this paragraph 8 of this Agreement, then Haverland agrees to pay Highlands
for its reasonable attorneys fees and costs incurred in connection with the
enforcement of these provisions; provided that Highlands prevails in such a
lawsuit to enforce the Agreement. In the event that Highlands commences such a
lawsuit and does not prevail, then Highlands agrees to reimburse Haverland for
the reasonable attorneys fees and costs incurred by his in defending such a
lawsuit.

          9.  Entire Agreement; Amendment.  This Agreement contains the entire
              ---------------------------
agreement between the parties hereto with respect to the subject matter hereof,
and supersedes and cancels all previous agreements, commitments and writings
between the parties, except to the extent such agreements are expressly retained
hereunder. This Agreement may not be modified in any manner except by an
instrument in writing signed by the parties hereto.

          10. Binding on Successors and Assigns.  This Agreement shall be
              ---------------------------------
binding upon and inure to the benefit of each of the parties hereto, and their
respective parents, subsidiaries, affiliates, legal representatives, estates,
purchasers, successors, assigns, heirs, administrators, personal
representatives, executors and trustees.

                                      -4-
<PAGE>

          11.  Governing Law.  This Agreement shall be construed and enforced in
               -------------
accordance with the laws of the State of New Jersey.

          12.  Notices.  All notices, requests, demands and other communications
               -------
hereunder shall be in writing, and shall be deemed to have been duly given if
made by hand delivery, by telex, by facsimile transmission or by registered or
certified mail (postage prepaid and return receipt requested) or by overnight
express delivery service to the parties at the following address (or at such
other address for a party as shall be specified by it by like notice):

                    If to Highlands:

                         Highlands Insurance Group, Inc.
                         1000 Lenox Drive
                         Lawrenceville, New Jersey  08648-0426
                         Attn:  Stephen L. Kibblehouse, Esquire
                         Facsimile:  (609) 219-1774

                    If to Haverland:

                         821 Pretty Brook Road
                         Princeton, New Jersey  08540
                         Telephone:  (609) 430-9352
                         Facsimile:  (609) 430-9354

All such notices, requests, demands or other communications shall be deemed to
have been duly given: when delivered by hand, if personally delivered; five (5)
business days after being deposited in the mail, postage prepaid, if delivered
by mail; two (2) business days after being sent by overnight express delivery
service; when answered back, if telexed; and within one (1) day of confirmed
transmission, if sent by facsimile transmission.

          13.  Counterparts.  This Agreement may be executed by each of the
               ------------
parties hereto in separate counterparts and has the same force and effect as if
the parties had executed it as a single document.

          14.  Acknowledgment.  Haverland acknowledges that he has been advised
               --------------
of his right to consult with an attorney before signing this Agreement and that
he has been given a period of twenty-one (21) days to consider the Agreement
before signing it.

          15.  Representations.  Haverland represents that he has read the
               ---------------
Agreement and understands it, and that he is signing this Agreement voluntarily
and of his own free will, without any coercion or duress. Haverland further
warrants and represents that in deciding whether to enter into this Agreement,
he is not relying on any promises, statements or representations other than
those expressly set forth herein.

                                      -5-
<PAGE>

          16.  No Admission.  By offering or entering into this Agreement,
               ------------
Highlands does not admit that it or any of its employees violated any law or any
legal right of Haverland and, in fact, Highlands expressly denies liability.
Highlands is entering into this Agreement solely for the purpose of effectuating
a mutually satisfactory severance of Haverland's employment.

          17.  Effective Date.  This Agreement will not become effective or
               --------------
enforceable until seven (7) days after Haverland executes it. Haverland may
revoke this Agreement at any time within that seven (7) day period, by sending a
written notice to Stephen L. Kibblehouse, Esquire, at the address indicated
above. Such written notice may be sent by mail, overnight express delivery
service, fax or hand delivery. If a revocation is sent within that seven (7) day
period, this Agreement shall be null and void for all purposes. If revocation is
not sent within that seven (7) day period, this Agreement will go into effect on
the first day immediately following the expiration of said seven (7) day period
("Effective Date").

          IN WITNESS WHEREOF, the parties have caused this Agreement to be
properly executed as of the date first written above.

HIGHLANDS INSURANCE GROUP, INC.

By:_____________________________
    Stephen J. Greenberg
    Vice President

________________________________             _______________________________
RICHARD M. HAVERLAND                         Witness

________________________________
Date of Signing

                                      -6-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00005-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00005-of-00352.parquet"}]]