X0202 3 2007-10-03 0 0001398632 Highlands Acquisition Corp HIA.U 0000935577 KANDERS WARREN B ONE LANDMARK SQUARE 22ND FLOOR STAMFORD CT 06901 1 0 1 0 0001414034 Highland Equity LLC C/O WARREN B. KANDERS, ONE LANDMARK SQ. 22ND FLOOR STAMFORD CT 06901 0 0 1 0 0001414033 Kanders & Company, Inc. C/O WARREN B. KANDERS, ONE LANDMARK SQ. 22ND FLOOR STAMFORD CT 06901 0 0 1 0 Common Stock 1683600 I Held by Highland Equity LLC Warrants 7.50 2012-10-02 Common Stock 1683600 I By Highland Equity LLC Warrants 7.50 2012-10-02 Common Stock 2125000 I By Kanders & Company, Inc. These securities are included in units, each unit consisting of one share of common stock and one warrant each to purchase one share of common stock. 219,600 units are subject to forfeiture to the extent that the underwriters' over-allotment option in the Company's initial public offering is not exercised in full or expires unexercised. The Reporting Persons have entered into a stockholders agreement dated as of October 2, 2007 (the "Agreement"), by and among each of the Reporting Persons and each of Russell F. Warren, Jr., Fieldpoint Capital, LLC, Robert W. Pangia, Ivy Healthcare Capital II, L.P., Dennis W. O'Dowd and Virgilio Rene Veloso (collectively, the "Non-Affiliated Entities"). By reason of the execution of the Agreement, the Reporting Persons and the Non-Affiliated Entities may be deemed to be members of a group ("Group") within the meaning of Rule 13d-5(b) promulgated under the Securities Exchange Act of 1934, as amended, with regard to their respective interests in equity securities of the Company. The amount of the Company's securities held by the Reporting Persons as reported herein does not include the holdings of any of the Non-Affiliated Entities. Each of the Reporting Persons disclaims any pecuniary interest in the Company's securities beneficially owned by the Non-Affiliated Entities. Mr. Kanders is the non-member manager of Highland Equity LLC and by virtue of such position Mr. Kanders has the power to vote and dispose of the reported securities owned by Highland Equity LLC. Mr. Kanders disclaims beneficial ownership of the reported securities except to the extent of his pecuniary interest therein. The warrants will become exercisable upon the later of the completion of a business combination with a target business and January 3, 2009; provided that the last sales price of the Company's common stock exceeds $14.25 per share for any 20 trading days within a 30-trading day period beginning 90 days after the consummation of a business combination. These warrants will be purchased by Kanders & Company for $1.00 per warrant in a private placement simultaneously with the consummation of the initial public offering of the Company. The warrants will become exercisable upon the later of the completion of a business combination with a target business and January 3, 2009. Mr. Kanders is President of Kanders & Company, Inc. and by virtue of such position Mr. Kanders has the power to vote and dispose of the reported securities owned by Kanders & Company, Inc. /s/ Warren B. Kanders 2007-10-03 /s/ Highland Equity LLC, by Warren B. Kanders 2007-10-03 /s/ Kanders & Company, Inc., by Warren B. Kanders 2007-10-03