Exhibit 10.1
IAIN H. BRUCE
SEPARATION AGREEMENT
This SEPARATION AGREEMENT (the “Agreement”) is entered into as of the 31st day
of August 2015, by and among Ambac Financial Group, Inc., a Delaware corporation
(“Parent”), Ambac Assurance Corporation, a Wisconsin corporation (the “Company”
and, along with Parent, the “Employer,” as applicable) and Iain H. Bruce (the
“Executive”).
WHEREAS the Executive currently serves as Senior Managing Director of Parent and
the Company;
WHEREAS the Executive and the Employer have mutually agreed that the Executive
will retire from the Employer at the close of business on September 4, 2015 (the
“Separation Date”);
WHEREAS the Executive and the Employer have mutually agreed that the Executive
will provide certain consulting services to the Employer following the
Separation Date; and
WHEREAS Parent, the Company and the Executive desire to enter into this
Agreement to set out the terms and conditions of the Executive’s separation of
employment with the Employer,
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the parties hereto agree as
follows:
1.Separation of Employment. At the close of business on the Separation Date, the
Executive’s employment with the Employer shall terminate due to the Executive’s
retirement and the Executive shall cease to hold any position as an officer of
Parent, the Company or any Company Affiliates. For purposes of this Agreement,
“Company Affiliate” means any entity controlled by, in control of, or under
common control with, the Company, including, without limitation, Parent and its
subsidiaries.
2.Compensation Upon Separation. The Executive shall be entitled to receive the
payments and benefits set forth in this Section 2.
a.The Employer shall pay to the Executive (i) the Executive’s base salary due
through the Separation Date and (ii) all Accrued Benefits (as defined below), if
any, to which the Executive is entitled as of the Separation Date, in each case
at the time such payments are due. For purposes of this Agreement, “Accrued
Benefits” means, to the extent earned or vested, (v) compensation for any earned
but unused vacation days or personal days, (w) any compensation deferred by the
Executive prior to the Separation Date and not paid by the Employer or otherwise
specifically addressed by this Agreement; (x) any amounts or benefits owing to
the Executive or to the Executive’s beneficiaries under the then applicable
benefit plans of the Employer; (y) any amounts owing to the Executive for
reimbursement of expenses properly incurred by the Executive prior to the
Separation Date and which are reimbursable in accordance with the expense
reimbursement policies of the Employer; and (z) any other benefits or amounts
due and owing to the Executive under the terms of any plan, program or
arrangement of the Employer.
b.The Executive shall be entitled to receive the following payments and benefits
(collectively, the “Severance Benefits”), subject to (x) the Executive’s initial
execution of this Agreement and non-revocation of the Executive’s signature
during the Revocation Period (as defined below), (y) the

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Executive’s timely re-execution of this Agreement on or following the Separation
Date and non-revocation of the Executive’s signature during the Revocation
Period; and (z) the Executive’s compliance with the restrictive covenants in
Section 7 hereof:
i.a payment in the amount equal to $675,000, which is 150% of the Executive’s
current annual base salary, which shall be paid in a lump sum within 10 business
days of the end of the Revocation Period that begins following the Executive’s
re-execution of this Agreement;
ii.a payment in the amount of $140,000, which is approximately equal to the
product of (i) the Executive’s cash bonus for 2014 and (ii) a fraction, the
numerator of which is the number of days the Executive was employed by the
Employer during 2015 and the denominator of which is the number of days in such
year, which shall be paid in a lump sum within 10 business days of the end of
the Revocation Period that begins following the Executive’s re-execution of this
Agreement;
iii.provided the Executive and the Executive’s eligible dependents timely and
properly elect to continue health care coverage under the Consolidated Omnibus
Reconciliation Act of 1985 (“COBRA”), the Executive and such eligible dependents
will be entitled to continue to participate in such basic medical and life
insurance programs of the Employer as in effect from time to time, on the same
terms and conditions as applicable to active senior executives of the Employer,
for twelve (12) months or, if earlier, until the date the Executive become
eligible to receive coverage from another employer or is otherwise no longer
eligible to receive COBRA continuation coverage.
c.The Executive’s rights with respect to equity or equity-related awards shall
be governed by the applicable terms of the related plan or award agreements. For
the avoidance of doubt, these rights include any vested rights under Parent’s
Long Term Incentive Plan.
d.The Executive shall be entitled to participate in the Employer’s retiree
medical program, subject to the terms and conditions of such program as in
effect from time to time.
e.The Employer shall provide the Executive with the customary transition
services provided to senior executives of the Employer whose employment
terminates, which shall be provided by the Employer’s approved vendor.
3.Consulting Services. The Executive agrees that the Executive shall serve as a
consultant to the Employer following the Separation Date pursuant to the
Consulting Agreement attached hereto as Exhibit A (the “Consulting Agreement”),
subject to the Executive’s execution of such agreement.
4.No Other Entitlements. The parties acknowledge and agree that damages which
will result to the Executive for the Executive’s separation from service
hereunder shall be extremely difficult or impossible to establish or prove, and
agree that the Severance Benefits shall constitute liquidated damages for the
Executive’s separation from service. The Executive agrees that, except for such
other payments and benefits to which the Executive may be entitled as expressly
provided by the terms of any other applicable benefit plan, such liquidated
damages shall be in lieu of all other claims that the Executive may make by
reason of the Executive’s separation from service hereunder. The Executive shall
forfeit all rights to the Severance Benefits unless the Executive executes and
timely re-executes this Agreement and delivers the Agreement to the Employer,
and the Agreement has become irrevocable by virtue of the expiration of the
applicable Revocation Period without the Agreement having been revoked. The
Employer and Company Affiliates shall have no obligation to provide the
Severance Benefits prior to the end of the Revocation Period that begins
following the Executive’s re-execution of this Agreement. If the Executive fails
to comply with the Executive’s obligations under Section 7 hereof, the Executive
shall (i) forfeit outstanding equity awards, (ii) transfer the shares underlying
any equity awards that were

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accelerated pursuant to the terms of the related plan or award agreements and
settled in shares to Parent for no consideration and (iii) repay the after-tax
amount of the Severance Benefits and any equity awards that were accelerated
pursuant to the terms of the related plan or award agreements and settled in
cash or sold.
5.No Offset. Following the Separation Date, the Executive shall be under no
obligation to seek other employment and, there shall be no offset against
amounts due to the Executive on account of any remuneration or benefits provided
by any subsequent employment the Executive may obtain. The Employer’s and
Company Affiliates’ obligation to make any payment pursuant to, and otherwise to
perform its obligations under, this Agreement shall not be affected by any
offset, counterclaim or other right that the Employer or its affiliates may have
against the Executive for any reason.
6.Section 409A. To the extent the Executive would be subject to the additional
20% tax imposed on certain deferred compensation arrangements pursuant to
Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”)
as a result of any provision of this Agreement, such provision shall be deemed
amended to the minimum extent necessary to avoid application of such tax and
preserve to the maximum extent possible the original intent and economic benefit
to the Executive and the Employer, and the parties shall promptly execute any
amendment reasonably necessary to implement this Section 6.
a.For purposes of Section 409A, the Executive’s right to receive any installment
payments pursuant to this Agreement shall be treated as a right to receive a
series of separate and distinct payments.
b.Any payments or benefits to be paid or provided hereunder upon a termination
of employment that constitute deferred compensation (within the meaning of
Section 409A) shall only be paid or provided if such termination of employment
constitutes a “separation from service” within the meaning of Section 409A.
c.Notwithstanding any other provision of this Agreement to the contrary, if at
the time of the Executive’s separation from service, (i) the Executive is a
specified employee (within the meaning of Section 409A and using the
identification methodology selected by the Employer from time to time), and (ii)
the Employer makes a good faith determination that an amount payable on account
of such separation from service to the Executive constitutes deferred
compensation (within the meaning of Section 409A) the payment of which is
required to be delayed pursuant to the six-month delay rule set forth in Section
409A in order to avoid taxes or penalties under Section 409A (the “Delay
Period”), then the Employer shall not pay such amount on the otherwise scheduled
payment date but shall instead pay it in a lump sum on the first business day
after such six-month period (or upon the Executive’s death, if earlier),
together with interest for the period of delay, compounded annually, equal to
the prime rate (as published in the Wall Street Journal) in effect as of the
dates the payments should otherwise have been provided. To the extent that any
benefits to be provided during the Delay Period are considered deferred
compensation under Section 409A provided on account of a “separation from
service,” and such benefits are not otherwise exempt from Section 409A, the
Executive shall pay the cost of such benefit during the Delay Period, and the
Employer shall reimburse the Executive, to the extent that such costs would
otherwise have been paid by the Employer or to the extent that such benefits
would otherwise have been provided by the Employer at no cost to the Executive,
the Employer’s share of the cost of such benefits upon expiration of the Delay
Period, and any remaining benefits shall be reimbursed or provided by the
Employer in accordance with the procedures specified herein. Notwithstanding the
foregoing, it is understood and agreed that the payments required to be made
pursuant to this Agreement are intended to be exempt pursuant to the “short-term
deferral” exemption provided in Section 409A.

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d.(A) Any amount that the Executive is entitled to be reimbursed under this
Agreement shall be reimbursed to the Executive as promptly as practical and in
any event not later than the last day of the calendar year after the calendar
year in which the expenses are incurred, (B) any right to reimbursement or in
kind benefits will not be subject to liquidation or exchange for another
benefit, and (C) the amount of the expenses eligible for reimbursement during
any taxable year will not affect the amount of expenses eligible for
reimbursement in any other taxable year.
e.Whenever a payment under this Agreement specifies a payment period with
reference to a number of days (e.g., “payment shall be made within thirty (30)
days following the date of termination”), the actual date of payment within the
specified period shall be within the sole discretion of the Employer.
7.Confidentiality, Non-Disclosure and Non-Competition Agreement. The Employer
and the Executive acknowledge and agree that during the Executive’s employment
with the Employer, the Executive has had access to and has assisted in
developing Employer Confidential Information and has occupied a position of
trust and confidence with respect to the Employer’s affairs and business and the
affairs and business of the Company Affiliates. For purposes of this Agreement,
“Employer Confidential Information” means information constituting confidential
or proprietary information belonging to the Employer or Company Affiliates or
other non-public information, confidential financial information, operating
budgets, strategic plans or research methods, personnel data, projects or plans,
or non-public information regarding the terms of any existing or pending
transaction between Employer or any Company Affiliate and an existing or pending
client or customer or other person or entity, in each case, received by the
Executive in the course of the Executive’s employment by the Employer or in
connection with the Executive’s duties with the Employer. Notwithstanding
anything to the contrary contained herein, the general skills, knowledge and
experience gained during the Executive’s employment with the Employer,
information publicly available or generally known within the industry or trade
in which the Employer operates and information or knowledge possessed by the
Executive prior to his employment by the Employer, shall not be considered
Employer Confidential Information. The Executive agrees that the following
obligations are necessary to preserve the confidential and proprietary nature of
Employer Confidential Information and to protect the Employer and Company
Affiliates against harmful solicitation of employees and customers, harmful
effects on operations and other actions by the Executive that would result in
serious adverse consequences for the Employer and Company Affiliates:
a.Non-Disclosure. During and after the Executive’s employment with the Employer
or Company Affiliates, the Executive will not knowingly, directly or indirectly
through an intermediary, use, disclose or transfer any Employer Confidential
Information, other than as authorized in writing by the Employer or Company
Affiliates, or, during the Executive’s employment with the Employer or Company
Affiliates, where such use, disclosure or transfer is within the scope of the
Executive’s duties with the Employer or Company Affiliates. Anything herein to
the contrary notwithstanding, the provisions of this Section 7(a) shall not
apply (i) when disclosure is required by law or by any court, arbitrator,
mediator or administrative or legislative body (including any committee thereof)
with actual or apparent jurisdiction to order the Executive to disclose or make
accessible any information; (ii) with respect to any other litigation,
arbitration or mediation involving this Agreement, including, but not limited
to, the enforcement of this Agreement; (iii) as to information that becomes
generally known to the public or within the relevant trade or industry other
than due to the Executive’s violation of this Section 7(a); (iv) as to
information that is or becomes available to the Executive on a non-confidential
basis from a source which, to the knowledge of the Executive or in the good
faith belief of the Executive, is entitled to disclose it to the Executive; or
(v) as to information that the Executive possessed prior to the commencement of
employment with the Employer. In the event the Executive is required or
compelled by legal process to disclose any Employer Confidential Information,
the Executive

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will promptly inform the Employer so that the Employer may present and preserve
any objections that it may have to such disclosure and/or seek an appropriate
protective order.
b.Materials. The Executive will not remove, directly or indirectly through an
intermediary, any Employer Confidential Information or any other property of the
Employer or any Company Affiliate from the Employer’s or Company Affiliate’s
premises or make copies of such materials except for normal and customary use in
the Employer’s or the Company Affiliate’s business as determined reasonably and
in good faith by the Executive. The Employer acknowledges that the Executive, in
the ordinary course of the Executive’s duties, routinely uses and stores
Employer Confidential Information at home and other locations. The Executive
will return to the Employer, delete, or destroy all Employer Confidential
Information and copies thereof and all other property of the Employer or any
Company Affiliate at any time upon the request of the Employer and in any event
promptly after the Separation Date. Notwithstanding the foregoing, the Executive
may retain Employer Confidential Information following the Separation Date to
the extent necessary for the Executive to perform the services contemplated by
the Consulting Agreement; provided that the Executive will return to the
Employer, delete, or destroy all such Employer Confidential Information at any
time upon the request of the Employer and in any event promptly after the end of
the term of the Consulting Agreement. The Executive agrees to attempt in good
faith to identify and return to the Employer, delete, or destroy any copies of
any Employer Confidential Information after the Executive ceases to be employed
by the Employer; provided, however, with respect to any Employer Confidential
information retained by the Executive following the Separation Date pursuant to
the preceding sentence, the Executive agrees to attempt in good faith to
identify and return to the Employer, delete, or destroy any copies of any such
Employer Confidential Information after the end of the term of the Consulting
Agreement. Anything to the contrary notwithstanding, nothing in this Section
7(b) shall prevent the Executive from retaining a home computer, papers and
other materials of a personal nature, including diaries, calendars, Rolodexes or
contact lists, information relating to the Executive’s compensation or relating
to reimbursement of expenses, information that the Executive reasonably believes
may be needed for tax purposes, and copies of plans, programs and agreements
relating to the Executive’s employment.
c.No Solicitation or Hiring of Employees. During the period commencing on the
date hereof and ending on the later of (a) August 31, 2016 and (b) the last day
of the term of the Consulting Agreement (the “Non-Compete Period”), the
Executive shall not, directly or indirectly through an intermediary, solicit,
entice, persuade or induce any individual who is employed by the Employer or any
Company Affiliate (or who was so employed within 180 days prior to the
Executive’s action, other than any such individual whose employment was
involuntarily terminated by the Employer or any Company Affiliate) to terminate
or refrain from continuing such employment or to become employed by or enter
into contractual relations with any other individual or entity other than the
Employer or Company Affiliates, and the Executive shall not hire, directly or
indirectly, as an employee, consultant or otherwise, any such person. Anything
to the contrary notwithstanding, the Employer agrees that (i) the Executive’s
responding to an unsolicited request from any employee or former employee of the
Employer for advice on employment matters; and (ii) the Executive’s responding
to an unsolicited request for an employment reference regarding any employee or
former employee of the Employer from such employee or former employee, or from a
third party, by providing a reference setting forth the Executive’s personal
views about such former employee, shall not be deemed a violation of this
Section 7(c).
d.Non-Competition.
i.During the Non-Compete Period, the Executive shall not, directly or indirectly
through an intermediary, without the consent of the Company, (A) solicit or
encourage any client or customer of the Employer or any Company Affiliate, or
any person or entity who was a client or

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customer within 180 days prior to Executive’s action, to terminate, reduce or
alter in a manner adverse to the Employer or any Company Affiliate any existing
business arrangements with the Employer or any Company Affiliate or to transfer
existing business from the Employer or any Company Affiliate to any other person
or entity, or (B) be engaged by, or have a financial or any other interest in,
any corporation, firm, partnership, proprietorship or other business entity or
enterprise, whether as a principal, agent, employee, director, consultant,
stockholder, partner or in any other capacity, which (x) competes with the
Employer or any Company Affiliate or (y) is a financial institution which
currently has a material relationship with, or interests adverse to, the
Employer or any Company Affiliate and the Executive’s role with such financial
institution could involve such institution’s relationship with the Employer or
Company Affiliate or the Employer’s or Company Affiliate’s investments, or (C)
own an interest in any entity described in subsection (B) immediately above;
provided, however, that the Executive may own, as a passive investor, securities
of any such entity that has outstanding publicly traded securities so long as
his direct holdings in any such entity shall not in the aggregate constitute
more than 5% of the voting power of such entity and does not otherwise violate
any Employer or Company Affiliate policy applicable to the Executive. The
Executive agrees that, except with the consent of the Employer, before providing
services, whether as an employee or consultant, to any entity described in
subsection (B) above during the Non-Compete Period, the Executive will provide a
copy of this Agreement to such entity, and such entity shall acknowledge to the
Employer in writing that it has read this Agreement. The Executive’s provision
of a copy of this Agreement to a financial services entity during the
Non-Compete Period, as required by the preceding sentence, shall not constitute
a violation of the Executive’s confidentiality obligations under this Section 7.
The Executive acknowledges that this covenant has a unique, very substantial and
immeasurable value to the Employer and Company Affiliates, that the Executive
has sufficient assets and skills to provide a livelihood for the Executive while
such covenant remains in force and that, as a result of the foregoing, in the
event that the Executive breaches such covenant, monetary damages would be an
insufficient remedy for the Employer and equitable enforcement of the covenant
would be proper.
ii.If the restrictions contained in Section 7(d)(i) shall be determined by any
court of competent jurisdiction to be unenforceable by reason of their extending
for too great a period of time or over too great a geographical area or by
reason of their being too extensive in any other respect, Section 7(d)(i) shall
be modified to be effective for the maximum period of time for which it may be
enforceable and over the maximum geographical area as to which it may be
enforceable and to the maximum extent in all other respects as to which it may
be enforceable.
e.Compliance with Employer’s Policies. The Executive agrees to observe and
comply with the policies and rules of the Employer and Company Affiliates unless
such compliance is inconsistent with the terms of this Agreement.
f.Non-Disparagement. The Executive shall not initiate, participate or engage in
any communication whatsoever that could reasonably be interpreted as derogatory
or disparaging to the Employer or any Company Affiliate, as applicable,
including but not limited to the business, practices, policies, shareholders,
partners, members, directors, managers, officers, employees, agents, advisors
and attorneys of the Employer or any Company Affiliate. The foregoing shall not
be violated by truthful statements by the Executive in response to legal
process, required governmental testimony or filings, or administrative or
arbitral proceedings (including, without limitation, depositions in connection
with such proceedings). The Company shall instruct the executive management of
the Company, which shall be defined as the directors, CEO, CFO, and Senior
Managing Directors, that they shall not initiate, participate or engage in any
communication whatsoever that could reasonably be interpreted as derogatory or
disparaging to the Executive.

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g.Cooperation. The parties agree that certain matters in which the Executive has
been involved during the Executive’s employment with the Employer may
necessitate the Executive's cooperation in the future. Accordingly, for so long
as the Employer is involved in litigation relating to residential mortgage
backed securities matters, whether such litigation is presently pending or
instituted following the date hereof (including, for the avoidance of doubt,
during and following the term of the Consulting Agreement), to the extent
reasonably requested by Parent or the Company, the Executive shall cooperate
with the Employer, the Company Affiliates, and its or their counsel in
connection with matters arising out of or relating in any way to the Executive's
service to the Employer and the Company Affiliates, including information
requests relating to the business or affairs of the Employer, as well as any
investigation, litigation, arbitration or other proceeding related to the
business or affairs of the Employer; provided that, the Employer shall make
reasonable efforts to minimize disruption of the Executive's other activities.
The cooperation includes the Executive making himself available for reasonable
periods of time upon reasonable notice to the Executive in any such litigation
or investigation and providing testimony before or during such litigation or
investigation. The Employer shall reimburse the Executive for reasonable
out-of-pocket expenses incurred in connection with such cooperation. For the
avoidance of doubt, the Employer shall not compensate or reimburse the Executive
for any time spent by the Executive testifying at depositions, court
proceedings, trials, arbitrations or any other form of sworn testimony.
h.Enforcement. The Executive acknowledges that in the event of any breach of
this Section 7, the business interests of the Employer and the Company
Affiliates will be irreparably injured, the full extent of the damages to the
Employer and the Company Affiliates will be impossible to ascertain, monetary
damages will not be an adequate remedy for the Employer and the Company
Affiliates, and the Employer will be entitled to enforce this Agreement by a
temporary, preliminary and/or permanent injunction or other equitable relief,
without the necessity of posting bond or security, which the Executive expressly
waives. The Executive understands that the Employer may waive some of the
requirements expressed in this Agreement, but that such a waiver to be effective
must be made in writing and should not in any way be deemed a waiver of the
Employer’s right to enforce any other requirements or provisions of this
Agreement. The Executive agrees that each of the Executive’s obligations
specified in this Agreement is a separate and independent covenant and that the
unenforceability of any of them shall not preclude the enforcement of any other
covenants in this Agreement.
i.Disclosure of Material Information. The Executive hereby represents that he is
not in possession of any material information concerning the business,
operations or financial condition of Employer or any Company Affiliate that he
has not delivered or otherwise communicated to, or that he is not certain is
also possessed by, one or more other executive officers of the Parent or the
Company.
8.Indemnification. The Employer shall indemnify the Executive to the maximum
extent that its officers, directors, and employees are entitled to
indemnification pursuant to the Employer’s certificate of incorporation and
bylaws, subject to applicable law.
9.Clawback/Recoupment. Any compensation paid to the Executive shall be subject
to mandatory repayment by the Executive to the Company or Parent, as applicable,
to the extent the Executive is, or in the future becomes, subject to any law,
rule, requirement or regulation which imposes mandatory recoupment, under
circumstances set forth in such law, rule, requirement or regulation.
10.General Release of Claims
a.Consistent with Section 2(b) hereof and in consideration for and contingent
upon the Executive’s receipt of the Severance Benefits set forth in Section
2(b), the Executive, for himself, his attorneys, heirs, executors,
administrators, successors, and assigns, does hereby fully and forever release

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and discharge Parent and the Company and their past, current and future
affiliated entities, as well as their predecessors, successors, assigns, and
their past, current and former directors, officers, partners, agents, employees,
attorneys, and administrators from all suits, causes of action, and/or claims,
demands or entitlements of any nature whatsoever, whether known, unknown, or
unforeseen, which the Executive has or may have against any of them arising out
of or in connection with the Executive’s employment by the Employer, the
termination of the Executive’s employment with the Employer, or any event,
transaction, or matter occurring or existing on or before the date of the
Executive’s signing of this Agreement, except that the Executive is not
releasing any claims arising under Section 8 of this Agreement, any other right
to indemnification that the Executive may otherwise have, or any claims arising
after the date of the Executive’s signing this Agreement. The Executive agrees
not to file or otherwise institute any claim, demand or lawsuit seeking damages
or other relief and not to otherwise assert any claims, demands or entitlements
that are released herein. The Executive further hereby irrevocably and
unconditionally waives any and all rights to recover any relief or damages
concerning the claims, demands or entitlements that are released herein. The
Executive represents and warrants that the Executive has not previously filed or
joined in any such claims, demands or entitlements against the Employer or the
other persons or entities released herein and that the Executive will indemnify
and hold them harmless from all liabilities, claims, demands, costs, expenses
and/or attorney’s fees incurred as a result of any such claims, demands or
lawsuits.
b.Section 10(a) specifically includes, but is not limited to, all claims of
breach of contract, employment discrimination (including any claims coming
within the scope of Title VII of the Civil Rights Act, the Age Discrimination in
Employment Act, the Older Workers Benefit Protection Act, the Equal Pay Act, the
Americans with Disabilities Act, and the Family and Medical Leave Act, all as
amended, or any other applicable federal, state, or local law), claims under the
Employee Retirement Income Security Act, as amended, claims under the Fair Labor
Standards Act, as amended (or any other applicable federal, state or local
statute relating to payment of wages), wage orders, claims concerning
recruitment, hiring, termination, salary rate, severance pay, stock options,
wages or benefits due, sick leave, holiday pay, vacation pay, life insurance,
group medical insurance, any other fringe benefits, worker’s compensation,
termination, employment status, libel, slander, defamation, intentional or
negligent misrepresentation and/or infliction of emotional distress, together
with any and all tort, contract, or other claims which might have been asserted
by the Executive or on the Executive’s behalf in any suit, charge of
discrimination, or claim against the Employer or the persons or entities
released herein.
c.The Employer and the Executive acknowledge that different or additional facts
may be discovered in addition to what parties now know or believe to be true
with respect to the matters released in this Section 10, and the parties agree
that this Section 10 shall be and remain in effect in all respects as a complete
and final release of the matters released, notwithstanding any different or
additional facts.
d.Claims Excluded from this Release: However, notwithstanding the foregoing,
nothing in this Section 10 shall be construed to waive any right that is not
subject to waiver by private agreement, including, without limitation, any
claims arising under state unemployment insurance or workers compensation laws.
Additionally, nothing in this Agreement or the release is intended to, nor does
it, waive any claim the Executive has to enforce this Agreement. The Executive
understands that rights or claims under the Age Discrimination in Employment Act
that may arise after the Executive executes this Agreement are not waived.
Likewise, nothing in this Section 10 shall be construed to prohibit the
Executive from filing a charge with or participating in any investigation or
proceeding conducted by the EEOC, NLRB, or any comparable state or local agency.
Notwithstanding the foregoing, the Executive agrees to waive the Executive’s
right to recover individual relief in any charge, complaint, or lawsuit filed by
the Executive or by anyone on the Executive’s behalf.

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e.The Executive acknowledges that the Executive has been given an opportunity of
twenty-one (21) days to consider whether to sign this Agreement and that the
Executive has been encouraged by the Employer to discuss fully the terms of this
Agreement with legal counsel of the Executive’s own choosing. Moreover, for a
period of seven (7) days following the Executive’s execution and re-execution of
this Agreement (each such period, as applicable, the “Revocation Period”), the
Executive shall have the right to revoke the waiver of claims arising under the
Age Discrimination in Employment Act, a federal statute that prohibits employers
from discriminating against employees who are age 40 or over. If the Executive
elects to revoke this Agreement in whole or in part within the Revocation
Period, the Executive must inform the Employer by delivering a written notice of
revocation to the Employer’s General Counsel, One State Street Plaza, New York,
New York 10004, no later than 11:59 p.m. on the seventh calendar day after the
Executive signs this Agreement. The Executive understands that, if the Executive
elects to exercise this revocation right, this Agreement shall be voided in its
entirety at the election of the Employer and the Employer shall be relieved of
all obligations to pay or provide the Severance Benefits described in Section
2(b) hereof. The Executive may, if the Executive wishes, elect to sign this
Agreement prior to the expiration of the 21-day consideration period, and the
Executive agrees that if the Executive elects to do so, the Executive’s election
is made freely and voluntarily and after having an opportunity to consult
counsel.
11.Notice. All notices, demands, requests, or other communications which may be
or are required to be given or made by any party to any other party pursuant to
this Agreement shall be in writing and shall be hand delivered, mailed by
first-class registered or certified mail, return receipt requested, postage
prepaid, delivered by overnight air courier, addressed as follows:
a.
If to Parent or the Company, to both:

Ambac Financial Group, Inc.
One State Street Plaza
New York, New York 10004
Attn: General Counsel
and
Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Attn: General Counsel
b.
If to the Executive:

Iain H. Bruce
9 Winding Lane
Westport, CT 06880
Each party may designate by notice in writing a new address to which any notice,
demand, request or communication may thereafter be so given, served or sent.
Each notice, demand, request, or communication that shall be given or made in
the manner described above shall be deemed sufficiently given or made for all
purposes at such time as it is delivered to the addressee (with the return
receipt, the delivery receipt, confirmation of facsimile transmission or the
affidavit of messenger being deemed conclusive but not exclusive evidence of
such delivery) or at such time as delivery is refused by the addressee upon
presentation.

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12.Severability. The invalidity or unenforceability of any one or more
provisions of this Agreement shall not affect the validity or enforceability of
the other provisions of this Agreement, which shall remain in full force and
effect.
13.Entire Agreement. This Agreement, including, for the avoidance of doubt, the
Consulting Agreement attached hereto as Exhibit A, constitutes the entire
agreement between the parties respecting the subject matter hereof and
supersedes all prior and contemporaneous understandings, agreements,
representations and warranties, both written and oral, with respect to such
subject matter.
14.Survival. It is the express intention and agreement of the parties hereto
that the provisions of Sections 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 15, 16,
18, 19 and 21 hereof and this Section 14 shall survive the termination of
employment of the Executive. In addition, all obligations of the Employer to
make payments hereunder shall survive any termination of this Agreement on the
terms and conditions set forth herein.
15.Binding Effect. Subject to any provisions hereof restricting assignment, this
Agreement shall be binding upon the parties hereto and shall inure to the
benefit of the parties and their respective heirs, devisees, executors,
administrators, legal representatives and permitted successors and assigns.
16.Amendment; Waiver. This Agreement shall not be amended, altered or modified
except by an instrument in writing duly executed by all parties to this
Agreement. Neither the waiver by either of the parties hereto of a breach of or
a default under any of the provisions of this Agreement, nor the failure of
either of the parties, on one or more occasions, to enforce any of the
provisions of this Agreement or to exercise any right or privilege hereunder,
shall thereafter be construed as a waiver of any subsequent breach or default of
a similar nature, or as a waiver of any such provisions, rights or privileges
hereunder.
17.Headings. Section and subsection headings contained in this Agreement are
inserted for convenience of reference only, shall not be deemed to be a part of
this Agreement for any purpose, and shall not in any way define or affect the
meaning, construction or scope of any of the provisions hereof.
18.Governing Law. This Agreement, the rights and obligations of the parties
hereto, and any claims or disputes relating thereto, will be governed by and
construed in accordance with the laws of the State of New York (but not
including any choice of law rule thereof that would cause the laws of another
jurisdiction to apply).
19.Arbitration. Any dispute, controversy or claim arising out of or related to
this Agreement or any breach of this Agreement will be submitted to and decided
by binding arbitration in the County of New York. Arbitration will be
administered exclusively by the American Arbitration Association and will be
conducted consistent with the rules, regulations and requirements thereof as
well as any requirements imposed by state law. Any arbitral award determination
will be final and binding upon the parties. In the event of any claim arising
out of the Company’s alleged failure to make any payments under this Agreement
following any delay period required by Section 409A, the prevailing party in
such dispute shall be entitled to reasonable attorneys’ fees.
20.Counterparts. This Agreement may be executed in two counterparts, each of
which will be an original and all of which will be deemed to constitute one and
the same instrument.
21.Withholding. The Employer may withhold from any benefit payment or any other
payment or amount under this Agreement all federal, state, city or other taxes
as will be required pursuant to any law or governmental regulation or ruling.

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22.Legal Fees Incurred in Negotiating the Agreement. The Employer shall pay or
the Executive shall be reimbursed for the Executive's reasonable legal fees and
costs incurred in connection with this Agreement up to a maximum of $5,000. Any
payment required under this Section 22 shall be made within thirty (30) days
following the Separation Date but in no event later than March 15, 2016.
[remainder of page left blank]

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IN WITNESS WHEREOF, the undersigned have duly executed and delivered this
Agreement, or have caused this agreement to be duly executed and delivered on
their behalf.
AMBAC FINANCIAL GROUP, INC.
 
 
By
 
 
Stephen M. Ksenak, Senior Managing Director and General Counsel
 
 
 
 
AMBAC ASSURANCE CORPORATION
 
 
By
 
 
Stephen M. Ksenak, Senior Managing Director and General Counsel

FIRST EXECUTION
PLEASE READ CAREFULLY — THIS AGREEMENT INCLUDES A RELEASE OF ALL KNOWN AND
UNKNOWN CLAIMS
ACKNOWLEDGED AND AGREED
EXECUTIVE:
 
 
Iain H. Bruce

SECOND EXECUTION — YOU MUST EXECUTE BETWEEN SEPTEMBER 4, 2015 AND SEPTEMBER 10,
2015
PLEASE READ CAREFULLY — THIS AGREEMENT INCLUDES A RELEASE OF ALL KNOWN AND
UNKNOWN CLAIMS
ACKNOWLEDGED AND AGREED
EXECUTIVE:
 
 
Iain H. Bruce

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EXHIBIT A
Consulting Agreement
August 31, 2015
Iain H. Bruce
9 Winding Lane
Westport, CT 06880
Re:    Consulting Agreement
Dear Iain:
This letter (the “Letter”) sets forth the terms upon which you will provide
services to Ambac Financial Group, Inc., a Delaware corporation (“Ambac”), and
Ambac Assurance Corporation, a Wisconsin corporation (“AAC” and, along with
Ambac, the “Company”, as applicable), as an independent contractor commencing on
September 7, 2015 (the “Effective Date”).
1.
Engagement. During the Term (as defined in Section 2 hereof), you will serve as
a consultant to the Company and will be reasonably available to perform services
as reasonably requested by the Company. Such services will relate to the
following matters: (a) all litigation matters in which Ambac is a plaintiff or a
defendant or any investigations by any regulators seeking information from Ambac
even if Ambac is not formally named as a party, including but not limited to (i)
strategic, tactical, or other consultation on any case; (ii) preparation of
cases, briefs, and other court filings, and (iii) preparation for depositions
and/or trial testimony; (b) other residential mortgage backed securities
(“RMBS”) related matters, including but not limited to (i) servicing, (ii)
surveillance and (iii) portfolio analysis, strategy, or tactics; (c) new
business matters; (d) corporate strategy or analysis for Ambac or AAC; and (e)
such other matters as may be agreed upon from time to time (collectively, the
“Services”). You will perform the Services (x) on dates and times that you and
the Company may from time to time reasonably agree, and (y) at the Company’s
offices or at such other locations as you and the Company may from time to time
reasonably agree. During the time that you are not providing the Services to the
Company, you may accept other engagements and may participate in any other
activities without obtaining the Company’s approval thereof; provided, however,
that such other engagements and activities do not violate any Company policies
or the terms of this Letter or the Separation Agreement (as defined in Section
14 hereof) and do not prevent or interfere with your ability to provide the
Services hereunder.

2.
Term. The term of this Letter and your consulting arrangement hereunder will
begin on the Effective Date and will end on the later of (i) the one (1) year
anniversary of the Effective Date and (ii) the final disposition of all RMBS
litigations pending as of the Effective Date (such period, the “Term”), unless
earlier terminated by either party. On such termination, all earned, accrued,
but unpaid, fees and reasonable out-of-pocket expenses hereunder will be due and
payable to you, and for the avoidance of doubt, no further fees, expenses or
other amounts will be payable hereunder.

3.
Termination. Your consulting relationship and this Letter may be terminated at
any time on or after the one year anniversary of the Effective Date for any
reason by you or the Company, provided that the party exercising such right of
termination will be required to give to the other party at least ninety (90)
days advance written notice of any termination of the Services during the Term.
For the avoidance of doubt, you or the Company may terminate your consulting
relationship effective as of the one year anniversary of the Effective Date by
giving to the other party written notice at least ninety (90) days in advance of
such one year anniversary.

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4.
Fees. During the Term, the Company shall pay you a monthly retainer in the
amount of ten thousand dollars ($10,000.00) for your performance of the Services
hereunder for up to twenty-five (25) hours per month. The monthly retainer and
the 25 hour per month period shall be pro-rated for any partial months in which
you perform the Services during the Term. If you perform more than twenty-five
(25) hours of Services in a month, then, in addition to the monthly retainer,
the Company shall pay you an hourly consulting fee at a rate of $500 per hour
for each additional hour over twenty-five (25) hours that you performed the
Services during such month. Notwithstanding the foregoing, you shall not be
entitled to receive any hourly consulting fees for any time spent traveling or
testifying at depositions, court proceedings, trials, arbitrations or any other
form of sworn testimony, nor shall any such time count toward the twenty-five
(25) hour limit described above.

5.
Taxes. The Company will not withhold any federal, state or local taxes or other
withholdings from the fees payable to you hereunder, and all local, state or
federal taxes, together with all governmental filings related thereto, arising
out of the performance of the Services by you or resulting from the compensation
paid under this Letter will be the sole responsibility of you, and you agree to
indemnify the Company with respect to any liabilities arising from your failure
to satisfy any such obligations.

6.
Expenses. The Company will reimburse you for all reasonable, ordinary and
necessary expenses incurred by you in connection with the Services performed
hereunder. Reimbursement of expenses payable hereunder in respect of the
Services performed will be made within a reasonable period of time following
your submission to the Company of an invoice for such expenses. Each such
monthly invoice shall be accompanied by receipts of expenses incurred and other
necessary supporting documentation as reasonably requested by the Company.

7.
Independent Contractor.

a.
You will act in the capacity of an independent contractor with respect to the
Company. You will not be, nor represent yourself as being, an employee or agent
of the Company or as being authorized to bind the Company.

b.
As an independent contractor, you represent that you have the right to sole
control of the manner and the means and methods of performing the Services under
this Letter; provided, however, you will accept any reasonable directions issued
by the Company pertaining to the goals to be attained and the results to be
achieved by you.

c.
As an independent contractor, you will not have the status of or be considered
an employee of the Company. You will not be eligible to participate in any
employee benefit, group insurance or executive compensation plans or programs or
any other benefit or compensation maintained by the Company for its respective
employees and executives. In addition, the Company will not provide Social
Security, unemployment compensation, disability insurance, workers’ compensation
or similar coverage, or any other statutory benefits, to you. For the avoidance
of doubt, nothing in this paragraph shall be construed to limit your entitlement
to the compensation and benefits set forth in Section 2 of the Separation
Agreement.

d.
You agree to incur all expenses associated with performance of the Services
hereunder, except as expressly provided in this Letter.

8.
Confidential Information. You acknowledge that you will have access to
information that is treated as confidential and proprietary by the Company or
Company Affiliates, including, without limitation, information constituting
confidential or proprietary information belonging to the Company or

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Company Affiliates or other non-public information, confidential financial
information, operating budgets, strategic plans or research methods, personnel
data, projects or plans, or non-public information regarding the terms of any
existing or pending transaction between the Company or any Company Affiliate and
an existing or pending client or customer or other person or entity, in each
case whether spoken, written, printed, electronic or in any other form or medium
(collectively, the “Confidential Information”). Any Confidential Information
that you develop in connection with the performance of the Services hereunder
will be subject to the terms and conditions of this Section. You agree to treat
all Confidential Information as strictly confidential, not to disclose
Confidential Information or permit it to be disclosed, in whole or part, to any
third party without the prior written consent of the Company in each instance,
except as may be required in the performance of the Services hereunder, and not
to use any Confidential Information for any purpose except as may be required in
the performance of the Services hereunder. You will notify the Company
immediately in the event you become aware of any loss or disclosure of any
Confidential Information. Confidential Information will not include information
that (a) is or becomes generally available to the public other than through your
breach of this Letter, or (b) is communicated to you by a third party that had
no confidentiality obligations with respect to such information. Nothing herein
will be construed to prevent disclosure of Confidential Information as may be
required by applicable law or regulation, or pursuant to the valid order of a
court of competent jurisdiction or an authorized government agency, provided
that the disclosure does not exceed the extent of disclosure required by such
law, regulation or order. You agree to provide written notice of any such order
to an authorized officer of the Company sufficiently in advance of making any
disclosure to permit the Company to contest the order or seek confidentiality
protections, as determined in the Company’s sole discretion. For purposes of
this Letter, “Company Affiliate” means any entity controlled by, in control of,
or under common control with, AAC, including without limitation, Ambac and its
subsidiaries.
9.
Indemnification. The Company shall indemnify you to the maximum extent that its
officers, directors, and employees are entitled to indemnification pursuant to
the Employer’s certificate of incorporation and bylaws, subject to applicable
law.

10.
Amendments and Modifications. This Letter may not be amended, modified or
changed in any respect except in writing duly signed by both parties to this
Letter.

11.
Assignment. You will not assign any rights, or delegate or subcontract any
obligations, under this Letter without the Company's prior written consent. Any
assignment in violation of the foregoing will be deemed null and void. The
Company may freely assign its rights and obligations under this Letter at any
time.

12.
Section Headings. The section headings used in this Letter are included solely
for convenience and will not affect, or be used in connection with, the
interpretation of this Letter.

13.
Severability. The provisions of this Letter will be deemed severable and the
invalidity or unenforceability of any provision will not affect the validity or
enforceability of the other provisions hereof.

14.
Entire Agreement. This Letter constitutes the sole and entire agreement of the
parties with respect to the subject matter hereof. For the avoidance of doubt,
this Letter shall not supersede the restrictive covenants in Section 7 of your
Separation Agreement with Ambac and AAC, dated August 31, 2015 (the “Separation
Agreement”), which shall remain in full force and effect.

15.
Governing Law. This Letter, the rights and obligations of the parties hereto,
and any claims or disputes relating thereto, will be governed by and construed
in accordance with the laws of the State of New

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York (but not including any choice of law rule thereof that would cause the laws
of another jurisdiction to apply).
16.
Counterparts. This Letter may be executed in any number of counterparts, each of
which will be effective only upon delivery and thereafter will be deemed to be
an original, and all of which will be taken to be one and the same instrument
with the same effect as if each of the parties hereto had signed the same
signature page.

Iain, if this Letter correctly sets forth our agreement, please sign and date
the enclosed copy where indicated and return it to me.
If you have any questions, please do not hesitate to contact me.
Sincerely,
 
 
Stephen M. Ksenak
Senior Managing Director and General Counsel
 
 
ACKNOWLEDGED AND AGREED
 
 
 
Iain H. Bruce

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