Document:

Ambac Financial Group, Inc. 1997 Executive Incentive Plan

 EXHIBIT 10.43 
 AMBAC EXECUTIVE INCENTIVE PLAN 
 1. Purposes 
 The purposes of the Ambac Executive Incentive Plan (the “Plan”) are to enable Ambac Financial Group, Inc. (the
“Company”) to attract, retain, motivate and reward executives and key employees of the highest caliber and quality by providing them with the opportunity to earn incentive compensation directly linked to the Company’s
performance. 
 2. Definitions 
 For
purposes of the Plan, the following terms shall be defined as follows: 
 “Board” means the Board of
Directors of the Company. 
 “Code” means the Internal Revenue Code of 1986, as amended, and the applicable rulings
and regulations (including any proposed regulations) thereunder. 
 “Committee” means the Compensation Committee of
the Board, any successor committee thereto or any other committee appointed by the Board to administer the Plan. The Committee shall consist of at least two individuals, each of whom shall be qualified as an “outside director” (or shall
satisfy any successor standard thereto) for purposes of Section 162(m), and shall serve at the pleasure of the Board; provided, however, that an inadvertent failure of any member of the Committee to be so qualified shall not invalidate
any action or determination made by the Committee. 
 “Common Stock” means the Common Stock, par value $.01 per
share, of the Company. 
 “Covered Employee” means a Participant who has been designated by the Committee as a
Participant whose compensation for the relevant fiscal year may be subject to the limit on deductible compensation imposed by Section 162(m) of the Code. 
 “Disability” means eligibility for disability benefits under the terms of the Company’s long-term disability plan in effect at the time the Participant becomes disabled. 
 “Equity Plan” means the AMBAC 1997 Equity Incentive Plan and any successor or similar plan of the Company. 
 “Fair Market Value” means the closing price of a share of Common Stock as reported on the composite tape for securities listed on
the New York Stock Exchange, or such other national securities exchange as may be designated by the Committee, or in the event that the Common Stock is not listed for trading on a national securities exchange but is quoted on an automated quotation
system, on such automated quotation system, in any such case on the valuation date (or if there were no sales on the valuation date, the closing price as reported on such composite tape or automated quotation system for the most recent day during
which a sale occurred). 
 “Participant” means each executive officer, senior officer or key employee of the Company
or a Subsidiary whom the Committee designates as a participant under the Plan. 
 “Performance Period” means each
fiscal year of the Company or such other period as may be designated by the Committee. 
  

 “Performance Targets” means the targets related to the performance goals
designated in Section 4(d), which Performance Targets will be established by the Committee for a Performance Period. 
 “Section 162(m)” means Section 162(m) of the Code. 
 “Subsidiary” means
(i) a corporation or other entity with respect to which the Company, directly or indirectly, has the power, whether through the ownership of voting securities, by contract or otherwise, to elect at least a majority of the members of such
corporation’s board of directors or analogous governing body, or (ii) any other corporation or other entity in which the Company, directly or indirectly, has an equity or similar interest and which the Committee designates as a Subsidiary
for purposes of the Plan. 
 3. Administration 
 (a) Power and Authority of the Committee. The Plan shall be administered by the Committee which shall have full power and authority, subject to the express provisions hereof: 
 (i) to select Participants from executive officers, senior officers and key employees of the Company; 
 (ii) to establish the Performance Targets for achievement during a Performance Period and to determine whether such Performance Targets
have been achieved; 
 (iii) to determine the cash amount and/or number of shares of Common Stock payable in connection with
an award; 
 (iv) to prescribe, amend and rescind rules and procedures relating to the Plan; 
 (v) to vary the terms of awards to take account of tax, securities law and other regulatory requirements of foreign jurisdictions;

 (vi) subject to the provisions of the Plan and subject to such additional limitations and restrictions as the Committee may
impose, to delegate to one or more officers of the Company some or all of its authority under the Plan; 
 (vii) to employ
such legal counsel, independent auditors and consultants as it deems desirable for the administration of the Plan and to rely upon any opinion or computation received therefrom; and 
 (viii) to make all other determinations and to formulate such procedures as may be necessary or advisable for the administration of the
Plan. 
 (b) Plan Construction and Interpretation. The Committee shall have full power and authority, subject to the express
provisions hereof, to construe and interpret the Plan. 
 (c) Determinations of Committee Final and Binding. All determinations
by the Committee in carrying out and administering the Plan and in construing and interpreting the Plan shall be final, binding and conclusive for all purposes and upon all persons interested herein. 
 (d) Liability of Committee. No member of the Committee shall be liable for any action nor determination made in good faith, and the members
of the Committee shall be entitled to indemnification and reimbursement in the manner provided in the Company’s Certificate of Incorporation as it may be amended from time to time. In the performance of its responsibilities with respect to the
Plan, the Committee shall be entitled to rely upon information and advice furnished by the Company’s officers, the Company’s accountants, the Company’s counsel and any other party the Committee deems necessary, and no member of the
Committee shall be liable for any action taken or not taken in reliance upon any such advice. 
  

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 4. Awards 
 (a) Performance Targets. The Committee shall determine in its sole discretion whether any executive officer, senior officer or other employee of the Company shall have the opportunity to earn incentive compensation under this
Plan during any Performance Period. If the Committee decides to offer such opportunity to one or more executive officers, senior officers or other employees of the Company, then no later than 90 days after the beginning of a Performance Period (or
such other time as may be required or permitted by Section 162(m)), the Committee shall (i) designate each Participant for the Performance Period, (ii) select from the performance goals set forth in Section 4(d) below the
performance goal or goals to be applicable to the Performance Period, (iii) establish specific Performance Targets related to such performance goals and the incentive amounts which may be earned for the Performance Period by each Participant
and (iv) specify the relationship between Performance Targets and the incentive amount to be earned by each Participant for the Performance Period. The Committee may specify that the incentive amount for a Performance Period will be earned if
the applicable Performance Target is achieved for one performance goal or for any one of a number of performance goals. The Committee may also provide that the incentive amount for a Performance Period will be earned only if a Performance Target is
achieved for more than one performance goal, or that the incentive amount to be earned for a given Performance Period will vary based upon different levels of achievement of the applicable Performance Targets. 
 (b) Following the completion of each Performance Period, the Committee shall certify in writing whether the applicable Performance Targets
have been achieved for such Performance Period and the incentive amounts, if any, payable to Participants for such Performance Period. In determining the incentive amount earned by a Participant for a given Performance Period, the Committee shall
have the right to reduce (but not to increase) the incentive amount payable at a given level of performance to take into account additional factors that the Committee may deem relevant to the assessment of individual or corporate performance for the
Performance Period. 
 (c) Payment of Awards; Maximum Limitation. Anything in this Plan to the contrary notwithstanding, the
maximum aggregate incentive amount that may be earned under the Plan by a Participant for all Performance Periods beginning in any given fiscal year of the Company shall be $5,000,000. 
 (d) Performance Goals. For purposes of this Plan, the performance goals from which the Committee shall establish Performance Targets
applicable to specific Performance Periods shall be limited to the following: 
 (i) return on equity; 
 (ii) core earnings/operating earnings growth; 
 (iii) total return to stockholders; 
 (iv) expense management; 
 (v) risk management 
 (vi) market share;

 (vii) industry leadership/image building; 
 (viii) new products/initiatives; 
 (ix) organizational development/corporate culture; 
  

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 each of which may be established (x) on a corporate-wide basis or with respect to one or more operating units,
divisions, acquired businesses, minority investments, partnerships or joint ventures, or, where applicable, (y) on a relative or an absolute basis or (z) on a per share or an aggregate basis. 
 (e) Adjustments. Certain adjustments shall apply to the Performance Targets to take into account any one or more of the following with
respect to the relevant Performance Period; 
  

	 	(i)	the gain, loss, income or expense resulting from changes in accounting principles that become effective during the Performance Period; 

  

	 	(ii)	the gain, loss, income or expense reported publicly by the Company with respect to the Performance Period that are extraordinary or unusual in nature or infrequent in occurrence as
defined by the United States Generally Accepted Accounting Principles (GAAP), excluding gains or losses on the early extinguishment of debt; 

  

	 	(iii)	the gains or losses resulting from, and the direct expenses incurred in connection with, the disposition of a business, in whole or in part, or the sale of investments or non-core
assets; 

  

	 	(iv)	the impact of impairment of tangible or intangible assets as defined by GAAP; 

  

	 	(v)	the impact of restructuring or business recharacterization activities, including but not limited to reductions in force, as reported publicly by the Company; and

  

	 	(vi)	the impact of investments or acquisitions made during the year. 

 5.
Termination of Employment 
 If a Participant’s employment with the Company or a Subsidiary terminates during a Performance Period by
reason of death, Disability or retirement or with the approval of the Committee, the Participant may, subject to Section 4, hereof, receive a payment. If a Participant’s employment with the Company or a Subsidiary terminates during a
Performance Period for any reason other than death, Disability or retirement or other than with the approval of the Committee, the Participant’s participation in the Plan shall terminate forthwith and he or she shall not be entitled to an award
for such Performance Period. 
 6. Payment of Awards 
 Payment of awards determined under Section 4 shall be made to each Participant as soon as practicable after the Committee determines that the applicable Performance Targets have been achieved. The Committee in
its sole discretion shall determine whether awards shall be payable in cash, in the form of stock awards or restricted stock units issued pursuant to an Equity Plan or from treasury, or in any combination thereof. If the Committee determines that an
award shall be paid in the form of stock awards or restricted stock units issued under an Equity Plan or from treasury, then for purposes of determining the number of shares of Common Stock subject to an award the Committee will value such shares at
a discount to Fair Market Value to reflect any restrictions, conditions and limitations set forth in the relevant Equity Plan or the applicable award agreement or certificate or otherwise applicable to the shares, provided, that such discount
shall not exceed 50% of the Fair Market Value as of the relevant date of determination. 
 7. Effective Date; Term 
 The Plan shall become effective upon its adoption by the Board subject to its approval by the stockholders of the Company. Prior to such stockholder
approval, the Committee may grant awards conditioned on stockholder approval. If such stockholder approval is not obtained at or before the first annual meeting of stockholders to occur after the adoption of the Plan by the Board (including any
adjournment or adjournments thereof), the Plan and any awards made hereunder shall terminate ab initio and be of no further force and effect. Unless earlier terminated in accordance with Section 8 below, no award shall be made under the
Plan with respect to Performance Periods beginning after January 1, 2010. 
  

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 8. Amendment and Termination 
 Notwithstanding Section 7, the Board or the Committee may at any time amend, suspend, discontinue or terminate the Plan; provided, however, that no such action shall be effective without approval by the
stockholders of the Company to the extent necessary to continue to qualify the amounts payable hereunder to Covered Employees as performance-based compensation under Section 162(m). 
 9. Miscellaneous 
 (a) Tax Withholding. No later than the date as of which an amount
first becomes includable in the gross income of the Participant for applicable income tax purposes with respect to any award under the Plan, the Participant shall pay to the Company or make arrangements satisfactory to the Committee regarding the
payment of any federal, state or local taxes of any kind required by law to be withheld with respect to such amount. In the case of an award that is payable in shares of Common Stock, 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 such individual, pursuant to such rules as the Committee may establish from time to time. 
 (b) No Rights to Awards or Employment. No Participant shall have any claim or right to receive awards under the Plan. Nothing in the Plan
shall confer upon any employee of the Company any right to continued employment with the Company or interfere in any way with the right of the Company to terminate the employment of any of its employees at any time, with or without cause.

 (c) Other Compensation. Nothing in this Plan shall preclude or limit the ability of the Company to pay any compensation to a
Participant under the Company’s other compensation and benefit plans and programs, including without limitation any Equity Plan or bonus plan or program. 
 (d) No Limitation on Corporate Actions. Nothing contained in the Plan shall be construed to prevent the Company or any Subsidiary from taking any corporate action, which is deemed by it to be appropriate
or in its best interest, whether or not such action would have an adverse effect on any awards made under the Plan. No Participant, beneficiary or other person shall have any claim against the Company or any Subsidiary as a result of any such
action. 
 (e) Unfunded Plan. The Plan is intended to constitute an unfunded plan for incentive compensation. Prior to the
payment of any award, nothing contained herein shall give any Participant any rights that are greater than those of a general creditor of the Company. In its sole discretion, the Committee may authorize the creation of trusts or other arrangements
to meet the obligations created under the Plan to deliver payment in cash or Common Stock with respect to awards hereunder. 
 (f)
Non-Transferability. Except as expressly provided herein, no Participant or beneficiary shall have the power or right to sell, transfer, assign, pledge or otherwise encumber or dispose of the Participant’s interest under the Plan.

 (g) Designation of Beneficiary. A Participant may designate a beneficiary or beneficiaries to receive any payments which may
be made following the Participant’s death. Such designation may be changed or canceled at any time without the consent of such beneficiary. Any such designation, change or cancellation must be made in a form approved by the Committee and shall
not be effective until received by the Committee. If a Participant does not designate a beneficiary, or the designated beneficiary or beneficiaries predeceases the Participant, any payments which may be made following the Participant’s death
shall be made to the Participant’s estate. 
  

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 (h) Severability. If any provision of this Plan is held unenforceable, the remainder of the
Plan shall continue in full force and effect without regard to such unenforceable provision and shall be applied as though the unenforceable provision were not contained in the Plan. 
 (i) Expenses. The costs and expenses of administering the Plan shall be borne by the Company. 
 (j) Governing Law. The Plan and all actions taken thereunder shall be governed by and construed in accordance with and governed by the laws
of the State of New York, without reference to the principles of conflict of laws. 
  

 6Ambac Financial Group, Inc. Deferred Compensation Plan for Outside Directors

 EXHIBIT 10.44 
 AMBAC FINANCIAL GROUP, INC. 
 DEFERRED COMPENSATION PLAN 
 FOR OUTSIDE DIRECTORS 
 Effective as
of December 1, 1993, 
 As Amended through December 4, 2006 

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 Deferred Compensation Plan for Outside Directors 
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 AMBAC FINANCIAL GROUP, INC. 
 DEFERRED COMPENSATION PLAN FOR 
 OUTSIDE DIRECTORS 
  

	1.	Definitions 

 “Account” and
“Deferred Compensation Account” are used interchangeably and mean the bookkeeping record established for each Participant. A Deferred Compensation Account is established only for purposes of measuring a Deferred Benefit and not to
segregate assets or to identify assets that may be used to pay a Deferred Benefit. 
 “Account Value” means the amount
reflected on the books and records of the Company as the value of a Participant’s Deferred Compensation Account at any date of determination, as determined in accordance with this Plan. 
 “Annual Fees” means the cash portion of (i) any annual fee payable to an Outside Director for service on the Board, (ii) any
other fee determined on an annual basis and payable for service on (as distinguished from attendance at meetings of), or for acting as chairperson of, any committee of, or as Presiding Director of the Board and (iii) any similar annual fee
payable in respect of service on the board of directors of any Subsidiary or any committee of any such board of directors. 
 “Beneficiary” or “Beneficiaries” means a person or other entity designated by a Participant on a Beneficiary Designation Form to receive Deferred Benefit payments in the event of the Participant’s
death. 
 “Beneficiary Designation Form” means a document, in form approved by the Committee, to be used by Participants to
name their respective Beneficiaries. 
 “Board” means the Board of Directors of the Company. 
 “Cash Deferral Option” means a Performance Option under which the Deferred Amount credited to a Participant’s Deferred Compensation
Account is carried as a cash balance to which interest equivalents are credited from time to time as provided in Section 6(c)(i). 
 “Committee” means the Compensation Committee of the Board or any successor committee thereto. 
 “Common
Stock” means the Company’s common stock, par value $0.01 per share. 
 “Conversion Date” has the meaning
assigned to such term in Section 6(e). 

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 “Deemed Capital Gain Tax Charge” has the meaning assigned to such term in
Section 6(c). 
 “Deferral Election” means the election of a Participant, made in accordance with the terms and
conditions of the Plan, to defer all or a portion of his/her Directors Fees for a Deferral Year. 
 “Deferral Election Form”
means a document, in form approved by the Committee, pursuant to which a Participant makes a Deferral Election. 
 “Deferral
Year” means the calendar year, starting with calendar year 1994. If an individual becomes eligible to participate in the Plan after the commencement of a Deferral Year, the Deferral Year for the individual shall be the remainder of such
Deferral Year. 
 “Deferred Amount” means the amount of Directors Fees, deferred by a Participant pursuant to a Deferral
Election. 
 “Deferred Benefit” means the amount that will be paid on a deferred basis under the Plan to a Participant who
has made a Deferral Election. A Participant’s Deferred Benefit will equal the Account Value of his or her Deferred Compensation Account, calculated as provided herein. 
 “Director Fees” means the aggregate of a Participant’s Annual Fees and Meeting Fees. 
 “Election Date” means December 31 of the year preceding the beginning of the Deferral Year, provided, however, that
if an individual becomes an Outside Director for the first time during a Deferral Year, that Outside Director’s Election Date for such Deferral Year is any day within thirty days of the date he/she becomes an Outside Director. 
 “Exchange Act” means the Securities Exchange Act of 1934, as amended. 
 “Fair Market Value” of a share of Common Stock means the closing price of a share of Common Stock as reported on the composite tape for
securities listed on the New York Stock Exchange, or such other national securities exchange as may be designated by the Committee, or in the event that the Common Stock is not listed for trading on a national securities exchange but is quoted on an
automated quotation system, on such automated quotation system, in any such case on the valuation date (or if there were no sales on the valuation date, the closing price as reported on such composite tape or automated quotation system for the most
recent day during which a sale occurred). 
 “Meeting Fees” means (i) any meeting fee payable in respect of attendance
at or participation in meetings of the Board or any committee of the Board or any meeting of the stockholders of the Company and (ii) any similar meeting fee payable in respect of service on the board of directors of any Subsidiary or any
committee of any such board of directors. 

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 Deferred Compensation Plan for Outside Directors 
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 “Outside Director” means a duly-elected member of the Board who is not an employee
of the Company or any Subsidiary. 
 “Participant” means an Outside Director who participates in the Plan pursuant to
Section 4. 
 “Performance Option” means the performance options made available from time to time for selection by
Participants to measure the return (positive or negative) to be attributed to Deferred Amounts. 
 “Phantom Stock Option”
means a Performance Option under which a Deferred Amount is credited to a Participant’s Deferred Compensation Account as a number of Phantom Stock Units. 
 “Phantom Stock Unit” means a bookkeeping unit representing one share of Common Stock. 
 “Subsidiary” means any corporation 50 percent or more of the voting stock of which is owned directly or indirectly by the Company. 
  

	2.	Purpose 

 The purpose of the Plan is to provide the
Company’s Outside Directors an opportunity to defer payment of all or part of their Directors Fees in accordance with the terms and conditions set forth herein. 
  

	3.	Administration 

 (a) Authority. The Committee
will be responsible for administering the Plan. The Committee will have authority to adopt such rules as it may deem appropriate to carry out the purposes of the Plan, and shall have authority to interpret and construe the provisions of the Plan and
any agreements under the Plan and to make determinations pursuant to any Plan provision. Each interpretation, determination or other action made or taken by the Committee pursuant to the Plan shall be final and binding on all persons. No member of
the Committee shall be liable for any action or determination made in good faith, and the members of the Committee shall be entitled to indemnification and reimbursement in the manner provided in the Company’s Amended and Restated Certificate
of Incorporation as it may be amended from time to time. 
 (b) Delegation. The Committee may designate a committee composed of one or
more members of the Board to carry out its responsibilities under such conditions as it may set. 

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 Deferred Compensation Plan for Outside Directors 
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	4.	Eligibility 

 (a) Directors. Any Outside
Director may participate in the Plan. 
 (b) Becoming a Participant. An Outside Director becomes a Participant for any Deferral Year
by filing a Deferral Election Form according to Section 5 of the Plan. 
  

	5.	Deferral Elections 

 (a) General Provisions.
A Participant may elect to defer all or a specified percentage (in multiples of 10 percent) of Directors Fees for a Deferral Year, in the manner provided in this Section 5. A Participant’s Deferred Benefit is at all times nonforfeitable.

 (b) Deferral Election Forms. Before the Election Date applicable to a Deferral Year, each Outside Director will be provided with a
Deferral Election Form and a Beneficiary Designation Form. In order for an Outside Director to participate in the Plan for a given Deferral Year, a Deferral Election Form, completed and signed by him/her, must be delivered to the Secretary of the
Board on or prior to the applicable Election Date. An Outside Director electing to participate in the Plan for a given Deferral Year shall indicate on his/her Deferral Election Form: 
 (i) the percentage of Director Fees for the applicable Deferral Year to be deferred; 
 (ii) the allocation of the Deferred Amount among the several Performance Options then available to Participants, in accordance with the
terms and conditions of Section 6(b); and 
 (iii) the Participant’s election either to have distribution of his/her
Deferred Benefit commence following termination of service as an Outside Director or to have such distribution commence as of a date specified on such Form, provided, however, that any such election concerning the commencement of
distribution of a Participant’s Deferred Benefit shall be subject to the terms and conditions of Section 6(e). 
 (c) Effect of
No Deferral Election. An Outside Director who does not submit a completed and signed Deferral Election Form to the Secretary of the Board before the relevant Election Date is not a Participant for the Deferral Year and may not defer his/her
Directors Fee for the Deferral Year. 
 (d) Revocation of Deferral Election. 
 (i) A Participant may revoke a Deferral Election applicable to a Deferral 

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Year, but only pursuant to the procedure described in subsection (ii) below. Any purported revocation that does not comply with subsection
(ii) below will not be given effect. 
 (ii) To be effective, a revocation must be in writing and signed by the
Participant, must express the Participant’s intention to revoke his Deferral Election applicable to that Deferral Year, and must be delivered to the Secretary of the Board before the close of business on the Election Date applicable to such
Deferral Year. For example, to revoke a Deferral Election relating to calendar year 2004, a written revocation of such Deferral Election must be delivered to the Secretary of the Board before the close of business on December 31, 2003.

  

	6.	Deferred Compensation Accounts; Distributions 

 (a)
Deferred Compensation Accounts. 
 (i) Establishment of Accounts. A Participant’s deferrals will be
credited to a Deferred Compensation Account set up for that Participant. Each Deferred Compensation Account will be credited with Deferred Amounts, as provided in Section 6(b), and credited (or charged) with earnings (or loss) as provided in
Section 6(c). 
 (ii) Crediting of Deferred Amounts. 
 Director Fees. As of the dividend payment date following the last calendar quarter, an Outside Director’s Deferred
Compensation Account will be credited with (A) 25% of Annual Fees deferred for the Deferral Year in which such quarter occurs and (B) 100% of deferred Meeting Fees earned during such quarter. 
 (b) Allocations Among Performance Options. A Participant shall have the right to allocate the Deferred Amount for any Deferral Year, in minimum
allocations of at least 10%, among one or more Performance Options made available from time to time under the Plan. The Performance Options generally available to Participants shall include: 
 (i) A Cash Deferral Option; 
 (ii) A Phantom
Stock Option; and 
 (iii) Such other Performance Options as the Committee may make available to Participants from time to time. Deemed allocations among the
available Performance Options shall be made exclusively for the purpose of determining the Account Value from time to time, and the Company will have no obligation to invest amounts corresponding to Deferred Amounts in investment vehicles
corresponding to the Performance Options selected by the Participant. Participants may change the deemed allocation of their Account Value among the Performance Options then available under the Plan in accordance with procedures established by the

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Committee from time to time; provided, however, that, unless otherwise determined by the Committee, no such reallocation shall be made more
frequently than quarterly; and provided further that no such reallocation may result in less than 10% of the Account Value being deemed allocated to any single Performance Option. 
 (c) Determination of Account Value. 
 The Company will from time to time calculate the Account Value based on the Participant’s Deferred Amounts and his/her then-effective elections with respect to deemed allocation of the Account among the available Performance Options.
Such calculation will be based on the best information available to the Company as of the date of determination, which information may include estimates. In addition, the following shall apply: 
 (i) Amounts allocated to the Cash Deferral Option (including amounts resulting from the conversion of Phantom Stock Units as provided in
Section 6(c)(ii)), will be credited with interest equivalents as of the first business day of each calendar quarter based upon the average daily balance credited to such Cash Option (which balance shall include any earnings on amounts so
credited pursuant to this Section 6(c)(i)) during the preceding quarter. Interest equivalents will be calculated using the 90-day commercial paper composite rate published by the Federal Reserve Bank as of the last business day of such
preceding calendar quarter, or such other rate as the Committee may designate from time to time by resolution. 
 (ii) The
number of Phantom Stock Units credited to a Participant’s Deferred Compensation Account (including fractions of Phantom Stock Units) will be determined by dividing (A) the amount of Director Fees deferred by (B) the Fair Market Value
of a share of Common Stock on the date of crediting. 
 (iii) If the Company pays any cash or other dividend or makes any
other distribution in respect of the Common Stock, each Phantom Stock Unit credited to the Deferred Compensation Account of a Participant will be credited with an additional number of Phantom Stock Units (including fractions thereof) determined by
dividing (A) the amount of cash, or the value (as determined by the Committee) of any securities or other property, paid or distributed in respect of one outstanding share of Common Stock by (B) the Fair Market Value of a share of Common
Stock on the date of such payment or distribution. Such credit shall be made effective as of the date of the dividend or other distribution in respect of the Common Stock. 
 (iv) In determining the value attributable to that portion of a Participant’s Deferred Compensation Account allocated to Performance
Options other than the Cash Deferral Option and the Phantom Share Option, the Company will track the rate of return (positive or negative) over the relevant measurement period of the investment fund, index or other vehicle by reference to which the
Performance Option is defined. 
 (v) Upon any reallocation of all or any portion of a Participant’s Deferred
Compensation Account from one Performance Option to any other Performance Option, 

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the Company may charge such Account with an amount not to exceed 5% of the amount so reallocated. The amount of the charge shall be determined by the Company
in its discretion and may vary depending on the Performance Options from which and into which the Account is being reallocated. 
 (vi) In addition, the returns attributable to a Deferred Compensation Account shall be subject to the following adjustments: 
 (A) Returns attributable to any Performance Option other than the Phantom Stock Option shall be reduced to reflect the amount that a corporate taxpayer in the highest tax bracket for federal corporate tax
purposes would pay on the interests, dividends, distribution or similar items of income that it would receive if it had invested in the commercial paper, investment fund, index or other vehicle by reference to which the Performance Option is defined
for the period of time, and in the same amounts, that the relevant Deferred Compensation Account was deemed allocated to such Performance Option. 
 (B) Upon any change in the deemed allocation of a Participant’s Deferred Compensation Account among the Performance Options then available, the Account shall be charged with the amount (if any) (the
“Deemed Capital Gain Tax Charge”) of capital gains tax that a corporate taxpayer in the highest bracket for federal corporate tax purposes would pay upon the amount of gain it would recognize had it invested in the investment fund,
index or other vehicle by reference to which the Performance Option is defined for the period of time, and in the same amounts, that the relevant Deferred Compensation Account was deemed allocated to such Performance Option. No credit shall be made
to an Account for any loss that would be recognized by a corporate taxpayer that had invested in such Performance Option for such period and in such amount. 
 The amount of the adjustments described in this subparagrpah (vi) shall be determined by the Company in its discretion. The Company shall use its best efforts to apply adjustments on a consistent basis to all
Participants who invest in any particular Performance Option. 
 (d) Manner of Payment of Deferred Benefit. All payments of Deferred
Benefits under the Plan will be in cash. The Company shall pay a Participant’s Deferred Benefit either in a single lump sum or in a series of installments, as the Committee in its sole discretion shall determine, provided,
however, that if the Committee elects to pay a Participant’s Deferred Benefit in a series of installments, such installments shall be paid no more frequently than quarterly and the Deferred Benefit must be distributed over a period not
exceeding five years. The Committee may, but shall not be required to, consult with the Participant prior to determining the manner of payment of such Participant’s Deferred Benefit. If the Committee elects to pay a Participant’s Deferred
Benefit in a series of installments, the relative size of such installments shall be determined by the Committee in its discretion, and such installments need not be in equal amounts or equal percentages of such Benefit. The unpaid portion of a
Participant’s Deferred Benefit shall continue to be credited with earnings as provided in Section 6(c) until paid. 

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 (e) Commencement of Payment of Deferred Benefit. For purposes of this Agreement a
“Conversion Date” means the earliest to occur of: 
 (i)(A) termination of service as an Outside
Director (unless upon such termination of service the Participant becomes an employee of the Company or any Subsidiary, in which case the following clause (B) shall apply), and (B) termination of employment with the Company and its
Subsidiaries (unless upon such termination of employment the Participant becomes an Outside Director, in which case the foregoing clause (A) shall apply); 
 (ii) the date specified in the Deferral Election Form executed by the Participant; or 
 (iii) the Participant’s death. 
 Notwithstanding any other term or provision of this Plan, upon the occurrence of a Conversion Date, any portion of a Participant’s Deferred Compensation Account that is allocated either to the Phantom Unit Option or to any Performance
Option other than the Cash Deferral Option will be converted into the Cash Deferral Option based upon (X) in the case of amounts allocated to the Phantom Unit Option, the Fair Market Value of the Common Stock as of the Conversion Date and
(Y) in the case of any Performance Option other than the Phantom Stock Option, the net asset value or other relevant valuation measure of the investment fund, index or other vehicle by reference to which the Performance Option is defined,
determined as of the Conversion Date or, if such net asset value or other valuation information is not available as of the Conversion Date, as of the latest date preceding the Conversion Date for which the same is generally available. The amount
credited to the Cash Deferral Option as a result of such conversion shall, in the case of conversions from any Performance Option other than the Phantom Stock Option, be subject to the Deemed Capital Gain Tax Charge as described in Section 6(c)
above. Following conversion, amounts so credited to the Cash Deferral Option will be credited with interest equivalents as provided in Section 6(c)(i). Except as provided in Section 6(f), a Participant’s Deferred Benefit shall be paid
(if payable in a lump sum), or commence to be paid (if payable in a series of installments), to the Participant as soon as practicable (but in no event more than 60 days) after the Conversion Date. 
 (f) Death. In the event of a Participant’s death, the Participant’s entire Deferred Benefit (including any unpaid portion thereof
corresponding to installments not yet paid at the time of death), to the extent not distributed earlier pursuant to Section 6(e), will be distributed in a lump sum to the Participant’s Beneficiary or Beneficiaries (or, in the absence of
any Beneficiary, to the Participant’s estate) on a date, selected by the Committee, no more than six months after the Participant’s date of death. 
 (g) Statements. The Company will furnish each Participant with a statement setting forth the value of the Participant’s Deferred Compensation Account as of the end of each calendar year and all credits to
and payments from the Deferred Compensation Account during such year. Such statement will be furnished no later than 60 days after the end of each calendar year. 

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	7.	Designation of Beneficiary 

 (a) Beneficiary
Designations. Each Participant may designate a Beneficiary to receive any Deferred Benefit due under the Plan upon the Participant’s death by executing a Beneficiary Designation Form. A Beneficiary designation is not binding on the Company
until the Secretary of the Board receives the Beneficiary Designation Form. If no designation is made or no designated Beneficiary is alive (or in the case of an entity designated as a Beneficiary, in existence) at the time of the Participant’s
death, payments due under the Plan will be made to the Participant’s estate. 
 (b) Change of Beneficiary Designation. A
Participant may change an earlier Beneficiary designation by executing a later Beneficiary Designation Form. The execution of a Beneficiary Designation Form revokes and rescinds any prior Beneficiary Designation Form. 
  

	8.	Amendments 

 (a) General Power of Committee.
Subject to Section 8(b), the Plan may be altered, amended, suspended, or terminated at any time by the Committee in its sole discretion. 
 (b) When Participants’ Consents Required. Except for a termination of the Plan caused by the Committee’s determination that the laws upon which the Plan is based have changed in a manner that negates the Plan’s
objectives, the Committee may not alter, amend, suspend, or terminate the Plan without the consent of any Participant to the extent that such action would result in the distribution to such Participant of amounts then credited to his/her Deferred
Compensation Account in any manner other than as provided in the Plan or could reasonably be expected to result in the immediate taxation to such Participant of Deferred Benefits. 
  

	9.	Employer’s Obligation 

 This Plan is unfunded.
A Deferred Compensation Account represents at all times an unfunded and unsecured contractual obligation of the Company. Each Participant or Beneficiary will be an unsecured creditor of the Company. Amounts payable under the Plan will be satisfied
solely out of the general assets of the Company subject to the claims of the Company’s creditors. No Participant, Beneficiary or any other person shall have any interest in any fund or in any specific asset of the Company by reason of any
amount credited to him/her hereunder, nor shall any Participant, Beneficiary or any other person have any right to receive any distribution under the Plan except as, and to the extent, expressly provided in the Plan. The Company will not segregate
any funds or assets for Deferred Benefits or issue any notes or security for the payment of any Deferred Benefits. Any reserve or other asset that the Company 

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may establish or acquire to assure itself of the funds to provide benefits under the Plan shall not serve in any way as security to any Participant,
Beneficiary or other person for the performance of the Company under the Plan. 
  

	10.	No Control by Participant 

 A Participant shall have
no control over his Deferred Compensation Account except for (i) designating initial allocation among Performance Options and subsequently revising such allocation, in all cases to the extent permitted by the Plan, (ii) designating the
date of initial distribution of benefits on his Deferral Election Form (which designation shall be subject to the terms and conditions of the Plan, including without limitation Section 6) and (iii) designating his or her Beneficiary on a
Beneficiary Designation Form. 
  

	11.	Restrictions on Transfer 

 The Company shall pay all
amounts payable under the Plan only to the Participant or Beneficiary designated under the Plan to receive such amounts. Neither a Participant nor his Beneficiary shall have any right to anticipate, alienate, sell, transfer, assign, pledge, encumber
or change any benefits to which he may become entitled under the Plan, and any attempt to do so shall be void. A Deferred Benefit shall not be subject to attachment, execution by levy, garnishment, or other legal or equitable process for a
Participant’s or Beneficiary’s debts or other obligations. 
  

	12.	Election and Revocation Notices 

 Notices of
elections or revocations of elections under the Plan must be in writing. A notice of election or revocation of election will be deemed delivered to the Secretary of the Board on the date it is (i) delivered personally to the Secretary of the
Board at One State Street Plaza, New York, New York 10004 (or at such other address as the Company may from time to time designate as the address for elections and revocations of elections under the Plan), (ii) mailed by registered mail or
certified mail to the Secretary of the Board at such address or (iii) sent by facsimile transmission to the Secretary of the Board at 212-208-3558 (or such other facsimile transmission number as the Company may designate from time to time for
elections and revocations of elections under the Plan), provided that an original signed election or revocation of election is received by the Secretary of the Board no later than 10 business days after such transmission. 
  

	13.	Waivers 

 The waiver of a breach of any provision in
the Plan shall not operate as and may not be construed as a waiver of any later breach. 

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	14.	Governing Law 

 The Plan shall be construed in
accordance with and governed by the laws of the State of New York. 
  

	15.	Effective Date 

 The Plan shall be effective as of
December 1, 1993 and Deferral Elections may be made beginning with Eligible Compensation earned during the year beginning January 1, 1994. 
  

	16.	Construction 

 The headings in the Plan have been
inserted for convenience of reference only and are to be ignored in any construction of the Plan’s provisions. If a provision of the Plan is not valid or enforceable, that fact shall in no way affect the validity or enforceability of any other
Provision. Use of one gender includes the other, and the singular and plural include each other. The provisions of the Plan are binding on the Company, each Participating Subsidiary and their respective successors or assigns, and on the
Participants, their Beneficiaries, heirs, and personal representatives. 
  

	17.	Tax Withholding 

 The Company shall have the right,
in connection with any Deferral Election, (i) to require the Participant to remit to the Company an amount sufficient to satisfy any Federal, state or local tax withholding requirements, (ii) to withhold an amount necessary to satisfy such
requirements from other cash compensation owed to the Participant or (iii) to reduce the amount of Director Fees deferred pursuant to the Plan in order to ensure that all such requirements are satisfied. The Company shall also have the right to
deduct from all cash payments made pursuant to the Plan any Federal, state or local taxes required to be withheld with respect to such payments. 
  

	18.	No Right to Reelection or Continued Employment 

 Nothing in the Plan shall be deemed to create any obligation on the part of the Board to nominate any of its members for reelection by the Company’s stockholders, nor confer upon any Outside Director the right to remain a member of the
Board for any period of time, or at any particular rate of compensation. 

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	19.	No Stockholder Rights 

 The crediting of Phantom
Stock Units to a Participant’s Deferred Compensation Account shall not confer on the Participant any rights as a stockholder of the Company, nor shall such Units confer on any Participant any right to receive stock of the Company in settlement
thereof. 
  

	20.	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 of Phantom Stock Units credited to a Participant’s Deferred Compensation Account. The foregoing adjustments shall be decided by the Committee in its discretion. 
  

	21.	About the Plan 

 The Deferred Compensation Plan for
Outside Directors and Senior Officers was established as of December 1, 1993 by Ambac Inc. In 1997 Ambac Inc. became Ambac Financial Group, Inc. The Plan was amended on October 28, 1998 in order to offer its participants more investment
options. 
 The Plan was amended and restated, effective October 26, 1999 to provide that this Plan be available only to Outside
Directors. Senior Officers no longer participate in this Plan as a new deferred plan has been adopted for them.

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