EXHIBIT 10.08

 

Ambac 1997 Equity Plan

 

FORM OF STOCK OPTION AWARD AGREEMENT

 

Table of Contents

 

1.

  

Incorporation of Plan Terms

   1

2.

  

Grant of Option

   1

3.

  

Terms and Conditions of the Option

   1

4.

  

Termination of Employment

   3

5.

  

Transfer; Option Exercisable Only by Participant and Permitted Transferees

   5

6.

  

Tax Withholding

   5

7.

  

No Restriction on Right to Effect Corporate Changes; No Right to Employment

   5

8.

  

Adjustment of and Changes in Shares

   6

9.

  

Change in Control

   6

10.

  

Preemption of Applicable Laws and Regulations

   7

11.

  

Committee Decisions Final

   7

12.

  

Amendments

   7

13.

  

Notice Requirements

   8

14.

  

Governing Law

   8

15.

  

Entire Agreement; Headings

   8

 

Annex A: Stock Option Award and Vesting Schedule

 

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Ambac 1997 Equity Plan

 

FORM OF STOCK OPTION AWARD AGREEMENT

 

Ambac Financial Group, Inc., a Delaware corporation (the “Company”), has adopted
the Ambac 1997 Equity Plan, as amended (the “Plan”), for the purposes of
providing an incentive to selected employees of the Company and its affiliates
to remain in its employ and to increase their interest in the success of the
Company by providing them with opportunities to increase their proprietary
interest in the Company and to receive compensation based upon the Company’s
success.

 

This 2005 Stock Option Award Agreement (the “Award Agreement”) sets forth the
terms and conditions of the stock options granted pursuant to the Plan. Annex A
of this Award Agreement (“Annex A”) names the individual to whom the option is
granted (the “Participant”) and sets forth the number of shares of common stock
of the Company (“Common Stock”) subject to the option, the exercise price of
such option, the date of grant and the expiration date of such option and the
vesting schedule applicable thereto.

 

  1. Incorporation of Plan Terms.

 

This Award Agreement and the option granted hereby shall be subject to the Plan,
the terms of which are incorporated herein by reference, and in the event of any
conflict or inconsistency between the Plan and this Award Agreement, the Plan
shall govern. Capitalized terms used herein without definition shall have the
meanings assigned to them in the Plan, a copy of which has been furnished to the
Participant.

 

  2. Grant of Option.

 

Subject to the conditions contained herein and in the Plan, the Company grants
to the Participant, as of the date of grant indicated on Annex A (the “Date of
Grant”), an option (the “Option”) to purchase the number of shares of Common
Stock specified on Annex A, at an exercise price (the “Exercise Price”)
specified on Annex A. The shares of Common Stock issuable upon exercise of the
Option are from time to time referred to herein as the “Option Shares.” The
grant of an Option shall impose no obligation on the part of the Participant to
exercise the Option. The Option shall vest and be exercisable as hereinafter
provided.

 

  3. Terms and Conditions of the Option.

 

The Option is granted subject to the following terms and conditions:

 

(a) Vesting; Exercisability. The Option shall vest and become exercisable in
accordance with the vesting schedule set forth on Annex A, unless the Option has
earlier vested or been forfeited in accordance with the terms hereof.

 

(b) Term of the Option. The Option shall terminate and no longer be exercisable
on the earlier of (i) the seventh anniversary of the Date of Grant or (ii) the
date specified for termination of the Option in Sections 4(a), 4(b) and 4(c)
below; provided, however, if the termination date falls on a date which the
Participant is prohibited by Corporation policy in effect on such date, from
engaging in transactions in the Corporation’s securities, such termination date
shall be extended to ten business days following the first date that the
Participant is permitted to engage in transactions in the Corporation’s
securities under such Corporation policy.

 

(c) Notice of Exercise. Subject to Sections 3(d), 3(f) and 4 hereof, the
Participant may exercise all or any portion of the Option (to the extent vested)
by giving notice of exercise to the Company or the Company’s agent, provided,
however, that no less than 10 Option Shares may be purchased upon any exercise
of the Option unless the

 

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number of Option Shares purchased at such time is the total number of Option
Shares in respect of which the Option is then exercisable, and provided,
further, that in no event shall the Option be exercisable for a fractional
share. The date of exercise of an Option shall be the later of (i) the date on
which the Company or the Company’s agent receives such notice or (ii) the date
on which the conditions provided in Sections 3(d) and 3(f) are satisfied.
Notwithstanding any other provision of this Award Agreement, the Participant may
not exercise the Option, whether in whole or in part, and no Option Shares will
be issued by the Company in respect of any such attempted exercise, at any time
when such exercise is prohibited by Company policy then in effect concerning
transactions by the Participant in the Company’s securities.

 

(d) Payment. Prior to the issuance of a certificate pursuant to Section 3(g)
hereof evidencing the Option Shares in respect of which all or a portion of the
Option shall have been exercised, the Participant shall have paid to the Company
the Exercise Price for all Option Shares purchased pursuant to the exercise of
such Option. Payment may be made by personal check, bank draft or postal or
express money order (such modes of payment are collectively referred to as
“cash”) payable to the order of the Company in U.S. dollars. Payment may also be
made in mature shares of Common Stock owned by the Participant, or in any
combination of cash or such mature shares as the Committee in its sole
discretion may approve. Such shares shall be valued at their Fair Market Value
as of the date of exercise. Payment of the Exercise Price in mature shares of
Common Stock owned by the Participant shall be made by delivering to the Company
the share certificate(s) representing the required number of shares, with the
Participant signing his or her name on the back, or by attaching executed stock
powers (with the signature of the Participant guaranteed in either case);
payment of the exercise price in mature shares of Common Stock owned by the
Participant may also be made through constructive surrender, by submission of an
attestation of ownership in the form approved by the Company and with such
signatures or other guarantees as may be required by the Company. The Company
may also permit the Participant to pay for such Option Shares by directing the
Company to withhold shares of Common Stock that would otherwise be received by
the Participant, pursuant to such rules as the Committee may establish from time
to time. In the discretion of the Committee, and in accordance with rules and
procedures established by the Committee (or by any person to whom authority to
establish such rules and procedures shall have been delegated by the Committee),
the Participant may be permitted to make a “cashless” exercise of all or a
portion of the Option.

 

(e) Stockholder Rights. The Participant shall have no rights as a stockholder
with respect to any shares of Common Stock issuable upon exercise of the Option
until the Participant shall become the holder of record thereof, and no
adjustment shall be made for dividends or distributions or other rights in
respect of any share for which the record date is prior to the date upon which
the Participant shall become the holder of record thereof.

 

(f) Limitation on Exercise. The Option shall not be exercisable unless the offer
and sale of Common Stock pursuant thereto has been registered under the
Securities Act of 1933, as amended (the “1933 Act”), and qualified under
applicable state “blue sky” laws or the Company has determined that an exemption
from registration under the 1933 Act and from qualification under such state
“blue sky” laws is available.

 

(g) Issuance of Shares. Subject to the foregoing conditions, as soon as is
reasonably practicable after its receipt of a proper notice of exercise and
payment of the Exercise Price for the number of shares with respect to which the
Option is exercised, the Company either (i) shall deliver or cause to be
delivered to the Participant (or to such person to whom the Option has been
transferred pursuant to Section 5 hereof; or following the Participant’s death,
to such other person entitled to exercise the Option), at the principal office
of the Company or at such other location as may be acceptable to the Company and
the Participant (or such other person), one or more stock certificates in the
name of the Participant (or of the person or persons to whom such option was
transferred by will or the laws of descent and distribution or pursuant to a
Qualified Domestic Relations Order) for the appropriate number of shares of
Common Stock issued in connection with such exercise or (ii) shall transfer the
appropriate number of shares of Common Stock issued in connection with such
exercise to the brokerage account designated by the Participant to the Company
in writing prior to exercise. Such shares shall be fully paid and nonassessable.

 

(h) Non-qualified Status of the Option. The Option granted hereby is not
intended to qualify, and shall not be treated, as an “incentive stock option”
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the “Code”).

 

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(i) Cancellation. Notwithstanding any other provision of this Award Agreement,
the Committee may cancel all or any unexercised portion of the Option, whether
or not vested, if at any time the Participant initiates or becomes a party to
any lawsuit or other legal action in any federal or state court in which the
Participant seeks damages or injunctive or other equitable relief from or
against the Company, any of its Subsidiaries or any of its officers, employees
or directors in connection with any claim arising from or relating to the
Participant’s employment with the Company or any of its Subsidiaries or the
termination of such employment (and regardless of whether any such termination
is the result of the Participant’s voluntary resignation or retirement or of the
involuntary termination of the Participant’s employment by the Company or one of
its subsidiaries). This Section 3(i) is not intended as a waiver by the
Participant of any claims the Participant may have against the Company, any of
its subsidiaries or any of its officers, employees or directors. Instead, it
provides for the consequences specified in the second preceding sentence in the
event the Participant engages in the conduct described therein.

 

  4. Termination of Employment.

 

(a) General. Subject to Section 4(c) hereof, if the Participant’s employment
with the Company and its Subsidiaries terminates for any reason other than death
or Permanent Disability (as defined herein) prior to the satisfaction of any
vesting period requirement under Section 3(a) hereof, the unvested portion of
the Option shall be forfeited to the Company, and the Participant shall have no
further right or interest therein, unless the Committee in its sole discretion
shall determine otherwise, provided, however, that in the case of a termination
of employment mutually agreed to by the Participant and the Company (or the
relevant employer Subsidiary), but not in the case of a termination for Cause
(as defined herein), if the Participant (A) signs a waiver and a release, in the
form requested by the Company, irrevocably waiving any and all claims and
liabilities relating to the Participant’s employment with the Company and its
affiliates and the termination thereof, (B) signs a noncompetition agreement in
the form requested by the Company, and (C) takes any further action requested by
the Company to perfect such release and waiver, then at the Company’s
discretion, the Option shall be deemed to have vested in full as of the date of
the Participant’s termination of employment.

 

(b) Exercise Following Termination of Employment. If the Participant’s
employment with the Company and its Subsidiaries terminates for any reason other
than death, Permanent Disability or Retirement (as defined herein) after the
Option has vested in accordance with Sections 3(a) and 4(a) hereof with respect
to all or a portion of the shares of Common Stock subject to the Option, the
Participant shall have the right, subject to the terms and conditions hereof and
of the Plan, to exercise the Option, to the extent it has vested as of the date
of such termination of employment, at any time within one year after the date of
such termination, subject to the earlier expiration of the Option as provided in
Section 3(b).

 

(c) Exercise Following Termination of Employment Due to Death, Permanent
Disability or Retirement.

 

(i) If the Participant’s employment with the Company and its Subsidiaries
terminates due to (A) death or (B) Permanent Disability or (C) Retirement at age
55 or older after at least three years of continuous service with the Company
and its Subsidiaries (including service with a corporation or other entity
acquired by the Company), in any such case prior to the satisfaction of any
vesting period requirement under Section 3(a) hereof, the Option shall be deemed
to have vested in full as of the date of death, termination due to Permanent
Disability or such Retirement.

 

(ii) Following termination of employment due to death or Permanent Disability,
the Option may be exercised by the Participant, or the Participant’s Permitted
Transferee, estate, personal representative or beneficiary, as the case may be,
within three years after the date of death or termination of employment due to
Permanent Disability, subject to the earlier expiration of the Option as
provided in Section 3(b). In the event of Retirement (whether or not Retirement
results in full vesting of the Option pursuant to clause (i) above), the
Participant or the Participant’s Permitted Transferee may exercise the Option,
to the extent it has vested as of the date of Retirement, within three years
after the date of Retirement, subject to the earlier expiration of the Option as
provided in Section 3(b).

 

(d) Definitions. For purposes hereof, the following terms shall have the
meanings specified below:

 

(i) Termination of Employment. The employment of the Participant shall be deemed
terminated if the Participant is no longer employed by the Company or any of its
Subsidiaries for any reason. The Committee shall have

 

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discretion to determine whether military or government service or an authorized
leave of absence (as a result of disability or otherwise) shall constitute a
termination of employment for purposes hereof.

 

(ii) Cause. Each of the following shall constitute “Cause” for termination of
employment:

 

(a) the willful commission by the Participant of acts that are dishonest and
demonstrably and materially injurious to the Company or any of its Subsidiaries
or affiliates, monetarily or otherwise;

 

(b) the conviction of the Participant for a felonious act resulting in material
harm to the financial condition or business reputation of the Company or any of
its Subsidiaries or affiliates; or

 

(c) except for actions taken in the course of the Participant’s employment or as
required by law, the Participant’s divulgation, furnishing or making accessible
to any person any information of a confidential or proprietary nature obtained
while in the employ of the Company or any of its Subsidiaries of affiliates, or
the Participant’s failure, upon termination of his employment with the Company
or any of its Subsidiaries or affiliates, to return to the Company all such
information which exists in written or any other form (including without
limitation in the form of computer files or disks) and all copies thereof in his
possession or under his control.

 

Notwithstanding the foregoing, if the Company or any of its Subsidiaries or
affiliates has entered or enters into any employment, management retention,
change in control, severance or similar agreement with the Participant, which
agreement sets forth a definition of “Cause”, then such definition, rather than
the definition set forth above, shall control for purposes of this Award
Agreement.

 

(iii) Permanent Disability. “Permanent Disability” shall mean circumstances that
entitle the Participant to receive benefits under the long-term disability
policy maintained by the Company or any of its Subsidiaries for the Participant.

 

(iv) Retirement. “Retirement” shall mean the termination of the Participant’s
employment on or after age 55, except for Cause.

 

(e) Exercise Following Termination of Employment Subject to Company Policies on
Insider Trading. Any exercise of the Option pursuant to Section 4(b) or 4(c)
above following termination of the Participant’s employment for any reason other
than death shall be subject to, and shall be permitted only to the extent such
exercise complies with, the policies of the Company concerning insider trading.

 

(f) Cancellation of Option and Repayment of Option Gain. Notwithstanding any
other provision of this Award Agreement, the Committee may cancel all or any
portion of the Option, whether or not vested, and may require the Participant to
repay to the Company all or any portion of the Option Gain (as defined herein)
that the Participant realizes from any full or partial exercise of the Option
occurring within six months before or after the termination of the Participant’s
employment with the Company and its Subsidiaries, if the Participant engages in
Competitive Activity (as defined herein) within six months following the
termination of the Participant’s employment. A Participant will be considered to
engage in “Competitive Activity” if the Participant (1) enters into a
relationship as an employee, officer, partner, member, director, independent
contractor, consultant, advisor or agent of, or in any similar relationship
with, any corporation, partnership, limited liability company, joint venture or
other business entity that engages in any activity which the Committee
determines is competitive with a principal business activity of the Company (a
“Competitor”), where the Participant will be responsible for providing services
which are similar or substantially related to the services that the Participant
provided during any of the last three years of the Participant’s employment with
the Company and its Subsidiaries or (2) either alone, or in concert with others,
acquires or maintains beneficial ownership (within the meaning of Section 13(d)
of the Exchange Act) of 5% or more of any class of equity securities of a
Competitor. The amount of a Participant’s “Option Gain” realized upon full or
partial exercise of an Option is the amount of income included (or to be
included) in respect of such exercise on the Form W-2 (or successor form) that
the Company or one

 

4

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of its Subsidiaries issues to the Participant for the year in which such
exercise occurs. The Company may require the Participant, in connection with any
full or partial exercise of an Option, to certify in a manner acceptable to the
Company that the Participant has not engaged in Competitive Activity and may
decline to give effect to such exercise if the Participant fails so to certify.
If the Participant is required to repay any Option Gain to the Company pursuant
to this Section 4(f), the Participant shall pay such amount in such manner and
on such terms and conditions as the Company may require, and the Company shall
be entitled to withhold or set-off against any other amount owed to the
Participant by the Company or any of its Subsidiaries (other than any amount
owed to the Participant under any retirement plan intended to be qualified under
Section 401(a) of the Code) up to any amount sufficient to satisfy any unpaid
obligation of the Participant under this Section 4(f).

 

  5. Transfer; Option Exercisable Only by Participant and Permitted Transferees.

 

The Option may not be transferred, pledged, assigned, or otherwise disposed of,
except (i) by will or the laws of descent and distribution, (ii) pursuant to a
domestic relations order or (iii) for no consideration, to a member or members
of the Participant’s immediate family (as defined below) or to one or more
trusts or partnerships established in whole or in part for the benefit of one or
more of such immediate family members (the parties identified in clauses (i),
(ii), and (iii) being referred to collectively as “Permitted Transferees”). If
the Option is transferred to a Permitted Transferee, it shall be further
transferable only by will or the laws of descent and distribution or, for no
consideration, to another Permitted Transferee of the Participant. The
Participant shall promptly notify the Company of any proposed transfer to a
Permitted Transferee in advance in writing and shall upon request provide the
Company with information concerning the Permitted Transferee’s financial
condition and investment experience. No assignment or transfer of the Option, or
of the rights represented thereby, whether voluntary or involuntary, by
operation of law or otherwise, except as permitted by this Section 5, shall vest
in the assignee or transferee any interest or right in the Option, but
immediately upon any attempt to assign or transfer the Option the same shall
terminate and be of no force or effect. For purposes of this Option Agreement,
the Participant’s “immediate family” means any child, stepchild, grandchild,
spouse, son-in-law or daughter-in-law and shall include adoptive relationships.

 

  6. Tax Withholding.

 

The Company shall have the right, prior to the issuance of shares as set forth
in section 3(g) hereor, to require the Participant to remit to the Company any
amount sufficient to satisfy the minimum required Federal, state or local tax
withholding requirements. The Company may permit the Participant to satisfy, in
whole or in part, such obligation to remit taxes, by directing the Company to
withhold shares of Common Stock that would otherwise be received by the
Participant, pursuant to such rules as the Committee may establish from time to
time. The Company shall also have the right to deduct from all cash payments
made pursuant to or in connection with the Option the minimum required Federal,
state or local taxes required to be withheld with respect to such payments or,
if the Participant so elects, up to the maximum Federal, state or local income
taxes or such lesser amount as determined by the Company in order to assure that
it complies with applicable accounting standards.

 

  7. No Restriction on Right to Effect Corporate Changes; No Right to
Employment.

 

Neither the Plan, this Award Agreement nor the existence of the Option shall
affect in any way the right or power of the Company or its stockholders to make
or authorize any or all adjustments, recapitalizations, reorganizations or other
changes in the Company’s capital structure or its business, or any merger or
consolidation of the Company, or any issue of bonds, debentures, preferred or
prior preference stocks ahead of or convertible into, or otherwise affecting the
Common Stock or the rights thereof, or the dissolution or liquidation of the
Company, or any sale or transfer of all or any part of its assets or business,
or any other corporate act or proceeding, whether of a similar character or
otherwise.

 

In addition, neither this Award Agreement, the grant of the Option nor any
action taken hereunder shall be deemed to limit or restrict the right of the
Company to terminate the Participant’s employment at any time, for any reason,
with or without Cause.

 

5

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  8. Adjustment of and Changes in Shares.

 

In the event of any merger, consolidation, recapitalization, reclassification,
stock dividend, special cash dividend, or other change in corporate structure
affecting the Common Stock, the Committee shall make such adjustments, if any,
as it deems appropriate in the number and class of shares subject to, and the
exercise price of, the Option. The foregoing adjustments shall be determined by
the Committee in its sole discretion.

 

  9. Change in Control.

 

(a) Committee Discretion to Take Certain Actions. The Committee, in its sole
discretion, may at any time prior to, coincident with or after the time of a
Change in Control (as defined herein):

 

(i) provide for the acceleration of any vesting conditions relating to the
exercise of the Option or that the Option may be exercised in full on or before
a date fixed by the Committee;

 

(ii) provide for the purchase of the Option, upon the Participant’s request, for
an amount of cash equal to the amount, as determined by the Committee in its
sole discretion, which could have been realized upon the exercise of the Option
had the Option been currently exercisable;

 

(iii) make such adjustments to the Option as the Committee deems appropriate to
reflect such Change in Control; or

 

(iv) cause the Option then to be assumed, or new rights substituted therefor, by
the surviving corporation in such Change in Control.

 

Any such actions shall be authorized by the Committee, whose determination as to
what actions shall be taken and the extent thereof, shall be final.

 

(b) Definitions. For purposes hereof, a “Change in Control” shall be deemed to
occur on the date on which one of the following events occurs:

 

(i) the acquisition by any Person of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 20% or more of the Common
Stock then outstanding, but shall not include any such acquisition by:

 

(A) the Company;

 

(B) any Subsidiary of the Company;

 

(C) any employee benefit plan of the Company or of any Subsidiary of the
Company;

 

(D) any Person or entity organized, appointed or established by the Company for
or pursuant to the terms of any such plan;

 

(E) any Person who as of January 31, 1996 was the beneficial owner of 15% or
more of the shares of Common stock outstanding on such date unless and until
such Person, together with all affiliates and associates of such Person, becomes
the beneficial owner of 25% or more of the shares of Common stock then
outstanding whereupon a Change in Control shall be deemed to have occurred; or

 

(F) any Person who becomes the beneficial owner of 20% or more, or, with respect
to a Person described in clause (E) above, 25% or more, of the shares of Common
Stock then outstanding as a result of a reduction in the number of shares of
Common Stock outstanding due to the repurchase of shares of Common Stock by the
Company unless and until such Person, after becoming aware that such Person has
become the beneficial owner of 20% or more, or 25% or more, as the case may be,
of the then outstanding shares of Common Stock, acquires beneficial ownership of
additional shares of Common

 

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Stock representing 1% or more of the shares of Common Stock then outstanding,
whereupon a Change in Control shall be deemed to have occurred; or

 

(ii) individuals who, as of July 30, 1997, constitute the Board, and
subsequently elected members of the Board whose election is approved or
recommended by at least a majority of such current members or their successors
whose election was so approved or recommended (other than any subsequently
elected members whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or consents by
or on behalf of a person other than the Board), cease for any reason to
constitute at least a majority of such Board; or

 

(iii) approval by the stockholders of the Company of (A) a merger or
consolidation of the Company with any other corporation, (B) the issuance of
voting securities of the Company in connection with a merger or consolidation of
the Company (or any Subsidiary) pursuant to applicable stock exchange
requirements, or (C) sale or disposition of all or substantially all of the
assets of the Company or the acquisition of assets of another corporation (each,
a “Business Combination”), unless, in each case, immediately following such
Business Combination, all or substantially all of the individuals and entities
who were the beneficial owners of the Common Stock outstanding immediately prior
to such Business Combination beneficially own, directly or indirectly, more than
70% of the then outstanding shares of Common Stock and 70% of the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the Company or all or
substantially all of the Company’s assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination, of the Common Stock.

 

As used herein, “Person” means any individual, firm, corporation, partnership or
other entity.

 

  10. Preemption of Applicable Laws and Regulations.

 

Anything herein to the contrary notwithstanding, if, at any time specified
herein for the issuance of shares of Common Stock to the Participant, any law,
regulation or requirement of any governmental authority having jurisdiction
shall require either the Company or the Participant to take any action in
connection with the shares then to be issued, the issuance of such shares shall
be deferred until such action shall have been taken.

 

  11. Committee Decisions Final.

 

Any dispute or disagreement which shall arise under, or as a result of, or
pursuant to, or in connection with, this Award Agreement or the Option shall be
determined by the Committee, and any such determination or any other
determination by the Committee under or pursuant to this Award Agreement and any
interpretation by the Committee of the terms of the Option shall be final and
binding on all persons affected thereby.

 

  12. Amendments.

 

The Committee shall have the power to alter or amend the terms of the Option as
set forth herein from time to time, in any manner consistent with the provisions
of Section 16 of the Plan, and any alteration or amendment of the terms of the
Option by the Committee shall, upon adoption, become and be binding on all
persons affected thereby without requirement for consent or other action with
respect thereto by any such person. The Committee shall give written notice to
the Participant of any such alteration or amendment as promptly as practicable
after the adoption thereof. The foregoing shall not restrict the ability of the
Participant and the Company by mutual consent to alter or amend the terms of the
Option in any manner which is consistent with the Plan and approved by the
Committee. In addition, the terms of the Option may be amended or supplemented
by any employment, management retention, severance or similar agreement (an
“Employment Agreement”) entered into between the Company and the Participant
(including any such agreement entered into prior to the Date of Grant) and
approved, to the extent such Employment Agreement amends or supplements the
terms of the Option, by the Committee.

 

 

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  13. Notice Requirements.

 

Any notice which either party hereto may be required or permitted to give to the
other shall be in writing. Such notice may be delivered to the Company
personally or by mail, postage prepaid, addressed as follows: Ambac Financial
Group, Inc., One State Street Plaza, New York, New York 10004, attention:
Managing Director, Human Resources, or at such other address as the Company, by
notice to the Participant, may designate in writing from time to time, and to
the Participant at the Participant’s address as shown on the records of the
Company or at such other address as the Participant, by notice to the Company,
may designate in writing from time to time.

 

  14. Governing Law.

 

The terms and conditions stated herein are to be governed by, and construed in
accordance with, the laws of the State of Delaware.

 

  15. Entire Agreement; Headings.

 

This Award Agreement (which includes Annex A) and the other related documents
expressly referred to herein (including, if applicable, any Employment
Agreement) set forth the entire agreement and understanding between the parties
hereto and supersede all prior agreements and understandings relating to the
subject matter hereof. In the event of a discrepancy or inconsistency in the
number of shares of common stock covered by the Option, the Date of Grant, the
vesting schedule, the Exercise Price or any other term in this Award Agreement
and the resolutions of the Committee authorizing the grant of the Option covered
hereby, such resolutions shall control and the Company shall have the right, in
its sole discretion, to replace the Award Agreement or any portion thereof
(including any portion of Annex A) with a correct version. The headings of
Sections and subsections herein are included solely for convenience of reference
and shall not affect the meaning of any of the provisions of this Award
Agreement.

 

AMBAC FINANCIAL GROUP, INC.

 

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