Document:

Form of Expenses Sharing and Cost Allocation Agreement

 Exhibit 10.2 
 EXPENSE SHARING AND COST ALLOCATION AGREEMENT 
 Expense Sharing and Cost
Allocation Agreement (this “Agreement”), effective as of the later of (a) the date on which an order is entered pursuant to Section 1129 of chapter 11 of title 11 of the United States Bankruptcy Code by the United States
Bankruptcy Court for the Southern District of New York confirming Ambac Financial Group, Inc.’s (“AFGI”) chapter 11 plan of reorganization, as amended, supplemented or modified, and (b) the date on which a non-stayed order is
entered by the Dane County Circuit Court (the “Rehabilitation Court”) approving this Agreement (such date, the “Effective Date”), by and among Ambac Assurance Corporation, a Wisconsin stock insurance corporation
(“Ambac”), AFGI and their respective subsidiaries and affiliates (other than Ambac Assurance UK Limited) as listed on Schedule A attached hereto and made a part hereof, as such Schedule A may be amended from time to time (together with
Ambac and AFGI, the “Affiliates”). 
 WHEREAS, certain of the Affiliates incur costs and expenses in support of
certain service departments or functions, which service departments or functions are necessary or beneficial for certain other Affiliates; 
 WHEREAS, the costs and expenses incurred in support of each service department or function should be allocated among the Affiliates benefiting from such service department or function according to a
defined allocation methodology; 
 WHEREAS, this Agreement terminates and supersedes all prior expense sharing and cost
allocation agreements among the Affiliates, including, but not limited to, that certain Expense Sharing and Cost Allocation Agreement effective as of January 1, 1997 and that certain Expense Sharing And Cost Allocation Agreement dated as of
January 1, 2007; 
 WHEREAS, the Wisconsin Office of the Commissioner of Insurance (“OCI”) commenced a
rehabilitation proceeding with respect to the Segregated Account of Ambac Assurance Corporation in the Wisconsin Circuit Court for Dane County on March 24, 2010 (the “Rehabilitation Proceeding”) in which the Wisconsin Commissioner of
Insurance was appointed Rehabilitator of the Segregated Account (the “Rehabilitator”); and 
 WHEREAS, AFGI filed a
voluntary petition for relief under chapter 11 of title 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) on
November 8, 2010 (the “Bankruptcy Case”), and continues to manage and operate its business as debtor in possession pursuant to Section 1107(a) and 1108 of the Bankruptcy Code. 

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows: 
 1. Direct Expenses. To the extent feasible, each of Ambac
and AFGI shall pay all of its own direct expenses, other than expenses in a de minimis amount incurred by it, including, but not limited to, compensation expenses (consisting of base salary, bonus and other compensation expenses), severance
expenses, payroll taxes and third-party expenses, including travel, legal and 

 
consulting expenses. Notwithstanding anything to the contrary in this Agreement, amounts owed by AFGI to Ambac pursuant to this Agreement for the actual and necessary costs and expenses of
preserving AFGI’s bankruptcy estate shall be allowed as administrative expenses pursuant to Section 503 of the Bankruptcy Code. 
 2. Expense Allocation and Methodology. 
 (a) Compensation costs and
accruals for compensation costs (including, but not limited to, base compensation, bonuses, severance and payroll taxes) for each shared services department shall be allocated among all Affiliates benefiting from such service department based on the
percentage of time spent supporting the activities of each Affiliate. Shared services departments include, but are not limited to, legal, treasury, tax, financial control, risk management, internal audit, investment portfolio management and
executive officers. The percentage of time spent supporting the activities of the Segregated Account of Ambac Assurance Corporation (the “Segregated Account”), Ambac and its subsidiaries, on the one hand, and AFGI and its subsidiaries
(other than Ambac and its subsidiaries) on the other, shall be determined on the basis of individual time sheets. Individual time sheets shall be completed by each shared services department employee who supports the activities of the Segregated
Account, Ambac and its subsidiaries, on the one hand, and AFGI and its subsidiaries (other than Ambac and its subsidiaries) on the other, as mutually determined by the parties. 

(b) Overhead department costs (including, but not limited to, premises, depreciation and corporate insurance other than D&O
insurance, as well as the total expenses of overhead departments) shall be allocated among all Affiliates based on the percentage of time spent by the shared services departments supporting the activities of each Affiliate. Overhead departments
include, but are not limited to, administration, technology and human resources. 
 (c) Notwithstanding Sections 2(a) and 2(b)
above, expenses incurred by any Affiliate relating to public disclosure and fresh start accounting in connection with the Bankruptcy Case (including compensation costs and all expenses arising from AFGI’s disclosure obligations as a publicly
traded company, including but not limited to operational and accounting expenses arising from the preparation of financial statements and other reporting requirements), D&O insurance, and director fees shall be allocated among all Affiliates
benefiting from such matters in accordance with the methodologies set forth in Schedule B attached hereto. 
 (d) The expense
allocation and methodology set forth in this Section 2 shall be implemented by the Affiliates no later than one hundred and twenty (120) days following the Effective Date. During this period, the Affiliates shall use reasonable efforts to
implement the processes set forth in this Agreement while the necessary IT systems are modified to operate according to the expense allocation and methodology set forth in this Section 2. 

3. Interim Payments by AFGI. Within twenty (20) days of the end of each month, Ambac shall provide to AFGI (i) an
estimate of the amount of AFGI’s expense allocation, which estimate may be based on AFGI’s actual expense allocation for the immediately prior quarter, and (ii) the amount of any direct expenses of AFGI paid directly by Ambac during
such month, which amounts contemplated by both clauses (i) and (ii) shall be paid by AFGI to Ambac within five (5) days of receipt. 

  
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 4. Interim Payments by Ambac. Within twenty (20) days of the end of each month,
AFGI shall provide to Ambac (i) an estimate of the amount of Ambac’s expense allocation, which estimate may be based on Ambac’s actual expense allocation for the immediately prior quarter, (ii) the amount of Ambac’s expense
allocation relating to the adversary proceeding initiated by AFGI as debtor in the Bankruptcy Case against the Internal Revenue Service (captioned Ambac Financial Group, Inc. vs. United States of America, Case No. 10-04210) (the “IRS
Dispute”) pursuant to Section 4 of the Mediation Agreement, and (iii) the amount of any direct expenses of Ambac paid directly by AFGI during such month, which amounts contemplated by clauses (i), (ii) and (iii) shall be
paid by Ambac to AFGI within five (5) days of receipt. 
 5. Quarterly Actual Cost. Within fifty-five (55) days
after the end of each quarter during the term of this Agreement, each of AFGI and Ambac shall calculate each Affiliate’s expense allocation for each service department or function (including fees and expenses relating to the IRS Dispute
pursuant to Section 4 of the Mediation Agreement), and prepare reports which provide the individual and aggregate expense allocation to each Affiliate (including AFGI and Ambac) for all service departments and functions for such quarter. The
expense allocation for each Affiliate will be recorded to each Affiliate’s intercompany account. All intercompany account balances, taking into account amounts paid pursuant to Sections 3 and 4, will be settled within sixty (60) days after
the end of each quarter; provided, that any balance owed from the Segregated Account shall automatically reduce the principal amount of that certain Secured Note, dated as of March 24, 2010, by and between Ambac and the Segregated Account, in
accordance with the terms thereof. 
 6. Reimbursement of AFGI Operating Expenses. 

(a) Within fifty-five (55) days of the first day of the month in which the Effective Date occurs (the “Anniversary Date”)
and in which this Section 6 is in effect, beginning in the calendar year following the year in which the Effective Date occurs, AFGI shall provide to Ambac a report of the amount of expenses incurred by AFGI (pursuant to Sections 1 and 2)
during the twelve months preceding such Anniversary Date. Within five (5) days of the receipt of such report, Ambac shall reimburse AFGI for such expenses to the extent that such amount does not exceed the per annum cap set forth in subsection
(b) below. 
 (b) Until (and including) the fifth anniversary of the Anniversary Date, Ambac’s obligation to reimburse
reasonable operating expenses incurred by AFGI pursuant to subsection (a) shall be subject to a $5 million per annum cap. Following the fifth anniversary of the Anniversary Date, Ambac shall, only with the approval of the Rehabilitator,
reimburse such expenses incurred by AFGI pursuant to subsection (a), subject to a $4 million per annum cap. 
 (c) AFGI shall
prepare in good faith an annual operating expense budget (based on reasonable assumptions) for the forthcoming fiscal year, in a form reasonably satisfactory to the Rehabilitator (each, an “Annual Budget”). As soon as available, and in any
event within 30 days prior to the commencement of each calendar year, AFGI shall provide each Annual Budget to the Rehabilitator. Within forty-five (45) days after each March 31, June 30 and September 30, AFGI shall provide
the Rehabilitator with a comparison (in form reasonably satisfactory to the Rehabilitator) of (a) actual expenses incurred through such date, and expenses 

  
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expected to be incurred from such date until the end of the then-current fiscal year, to (b) the projected expenses as set forth on the Annual Budget. AFGI’s actual operating expenses
shall not exceed the amounts set forth in the Annual Budget unless such excess expenses are reasonable. 
 (d) The provisions of
this Section 6 shall have no further force or effect, upon the occurrence of any of the following: 
 (i)
the conversion of the Bankruptcy Case to a case under Chapter 7 of the Bankruptcy Code, or the confirmation of a plan of reorganization that entails the liquidation of all or substantially all of AFGI’s assets and the subsequent distribution of
the proceeds of such assets to AFGI’s creditors; 
 (ii) the filing of a new petition for relief under
chapter 7 or chapter 11 of title 11 of the Bankruptcy Code by AFGI; 
 (iii) AFGI’s taking or refraining
from taking any action which impairs the ability of Ambac to continue to use net operating loss carryovers (“NOLs”) made available for use by Ambac as set forth in AFGI’s Plan of Reorganization filed in the Bankruptcy Case (the
“Plan of Reorganization”); 
 (iv) the imposition, under Section 382(a) of the Internal Revenue
Code of 1986 (the “Code”), of an annual “section 382 limitation” (within the meaning of Section 382(b) of the Code) of $37.5 million or less on the use of NOLs available to the AAC Subgroup (as defined in the Amended and
Restated Tax Sharing Agreement, effective on the Effective Date, by and among Ambac, AFGI and the other parties thereto (the “Tax Sharing Agreement”); 
 (v) AFGI’s material breach of, or its noncompliance with material obligations under, this Section 6 determined in accordance with procedures set forth in Section 9(b), or its material
breach of, or its noncompliance with material obligations under the Mediation Agreement (as defined below), the Tax Sharing Agreement or the Cooperation Agreement (as amended by Amendment No. 1 to Cooperation Agreement), determined in
accordance with procedures set forth in each respective agreement; provided, however, that any noncompliance by AFGI with its material obligations under this Section 6 or the aforementioned agreements which is primarily the result of any
material breach of this Agreement or such other agreements by Ambac shall be excepted from the provisions of this subsection (d)(v); 
 (vi) A condition to the Closing Date (as defined in Section 11 of the Mediation Agreement) not being able to be satisfied; 

(vii) at the option of Ambac, to the extent that none of the NOLs included in the Allocated NOLs Amount (as defined in the
Tax Sharing Agreement) remains available for use by the AAC Subgroup; or 

  
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 (viii) the Rehabilitator declining to approve the payment by Ambac or the
Segregated Account to AFGI of reasonable operating expenses at any time after (but excluding) the fifth anniversary of the Effective Date. 
 7. Right of Offset. Notwithstanding Section 362 of the Bankruptcy Code or any other provisions of the Bankruptcy Code to the contrary, (i) Ambac will have the right to offset any amounts
due from AFGI against cash or other assets owed to AFGI (in each case solely with respect to expenses incurred subsequent to November 8, 2010) without notice or further order of the Bankruptcy Court and AFGI will have the right to offset any
amounts due from Ambac against cash or other assets owed to Ambac (in each case solely with respect to expenses incurred subsequent to November 8, 2010) without notice or further order of the Bankruptcy Court and (ii) Ambac will have the
right to offset any amounts due from AFGI against cash or other assets owed to AFGI (in each case solely with respect to expenses incurred prior to November 8, 2010) without notice or further order of the Bankruptcy Court and AFGI will have the
right to offset any amounts due from Ambac against cash or other assets owed to Ambac (in each case solely with respect to expenses incurred prior to November 8, 2010) without notice or further order of the Bankruptcy Court. 

8. Binding Effect: Successors. This Agreement shall be binding upon the Affiliates and each Affiliate consents to the terms hereof
and guarantees the performance of the agreements contained herein. Ambac and AFGI shall cause each of their future affiliates or subsidiaries to assent to the terms of this Agreement promptly after becoming an affiliate or subsidiary. Each Affiliate
hereby assents to each new affiliate or subsidiary becoming a party to this Agreement and to each new affiliate or subsidiary being deemed to be an Affiliate hereunder. This Agreement shall inure to the benefit of and be binding upon any successors
or assigns of the parties hereto. 
 9. Termination and Enforcement. 

(a) This Agreement shall be terminated on the happening of any of the following events: 

(i) If each of Ambac and AFGI agree, in writing, to terminate this Agreement; 

(ii) With respect to any Affiliate, if such Affiliate ceases to be an affiliate or subsidiary of Ambac for any reason; or

 (iii) Upon the receipt of written direction from the Rehabilitator following (x) conversion of the
Bankruptcy Case to a case under Chapter 7 of the Bankruptcy Code, or (y) confirmation of a plan of reorganization that entails the liquidation of all or substantially all of AFGI’s assets and the subsequent distribution of the proceeds of
such assets to AFGI’s creditors. 
 Notwithstanding the termination of this Agreement, its provisions will remain in effect with respect to
amounts outstanding under this Agreement prior to its termination. 

  
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 (b) In the event that AFGI believes Ambac or the Rehabilitator to be, or in the event that
Ambac or the Rehabilitator believes AFGI to be, in material breach of, or otherwise not complying with their respective material obligations under, this agreement, such party shall provide the alleged breaching or non-complying party with a written
notice (copied to their last known legal counsel) describing, in reasonable detail, the nature of the alleged breach or non-compliance. Following delivery of such written notice, the parties shall attempt, in good faith, to resolve their dispute.
The party served with a notice of breach or non-compliance shall have 30 days to cure the alleged breach or non-compliance. In the event that there is no cure and the parties are unable to resolve their dispute, any party alleging such breach
or non-compliance may, not less than 45 days following delivery of such written notice, seek a judgment from the Rehabilitation Court that the other party has breached this agreement. Solely for purposes of resolving such dispute, AFGI shall consent
to the jurisdiction of the Rehabilitation Court. In the event that the Rehabilitation Court enters a final, non-appealable order in favor of any party alleging such breach or non-compliance, such party may ask the court to grant such further relief
as the court deems appropriate in light of the nature and severity of the breach or non-performance, including specific performance, termination of the parties’ obligations under this agreement and/or monetary damages. 

10. Severability. If any one or more of the covenants, agreements, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions and terms and shall in no way affect the validity or enforceability of the other provisions
of this Agreement. 
 11. Transfers and Assigns. Neither this Agreement nor any interest or obligation in or under this
Agreement may be transferred or assigned by any Affiliate without the prior written consent of both Ambac and AFGI. 
 12.
Amendments. This Agreement, including any schedules, appendices and exhibits hereto, may be amended from time to time; provided, however, that any amendment shall not be effective unless it is in writing and signed by Ambac and AFGI.

 13. Governing Law. This Agreement will be governed by and construed in accordance with the laws of the State of
Wisconsin (without reference to choice of law doctrine). 
 14. Counterparts. This Agreement may be executed in more than
one counterpart, each of which shall be deemed to be an original and all of which shall, together, constitute one and the same instrument. 

  
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 15. Notices. Any notice or communication in respect of this Agreement shall be
sufficiently given to a party if in writing and delivered in person, sent by recorded delivery or registered post or the equivalent (with return receipt requested) or by overnight courier or given by facsimile transmission, at the address or
facsimile number set out in Schedule C attached hereto, or to such other address or facsimile number as shall be notified in writing by one party to the other. A notice or communication shall be deemed to be given: 

(i) if delivered by hand or sent by overnight courier, on the day and at the time it is delivered or, if that day is not a
business day, or if delivered after the close of business on a business day, at 9:00 a.m. (local time to the recipient) on the immediately following business day; 

(ii) if sent by facsimile transmission or email, on the day and at the time the transmission is received or, if that is
not a business day, or if received after the close of business on a business day, at 9:00 a.m. (local time to the recipient) on the immediately following business day; or 

(iii) if sent by recorded delivery or registered post or the equivalent (return receipt requested), three business days
after being sent. 
 16. Parties to this Agreement. Nothing herein shall in any manner create any obligations or
establish any rights against any party to this Agreement in favor of any person not a party to this Agreement; provided, however, that the Rehabilitator shall be an express third party beneficiary of Section 2(c), subsections (b), (c) and
(d) of Section 6 and Section 9 of this Agreement to the same extent as if it were a party to this Agreement. 

17. Other Agreements. In the event of any conflict or inconsistency between this Agreement and the provisions of the Mediation
Agreement, dated as of September 21, 2011 (the “Mediation Agreement”), by and among AFGI, Ambac, the Segregated Account, the Rehabilitator, the OCI and the Official Committee of Unsecured Creditors of Ambac Financial Group, Inc., the
provisions of this Agreement shall govern. This Agreement supersedes all prior expense sharing and cost allocation agreements among the Affiliates, including, but not limited to, that certain Expense Sharing and Cost Allocation Agreement effective
as of January 1, 1997 and that certain Expense Sharing And Cost Allocation Agreement dated as of January 1, 2007, and such prior agreements are hereby terminated. 
 [Remainder of page intentionally left blank. Signatures to follow] 

  
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 IN WITNESS WHEREOF, the Affiliates have caused this Agreement to be duly executed and
delivered as of the day and year first above written. 
  

			
	AMBAC ASSURANCE CORPORATION
		
	By:	 	  

		 	Name:
		 	Title:
	
	AMBAC FINANCIAL GROUP, INC.
		
	By:	 	  

		 	Name:
		 	Title:
	
	[Add Signature Blocks for other Affiliates]

 SCHEDULE A 
 AFFILIATES 
 Ambac Financial Group, Inc. 

Ambac Bermuda, Ltd. 
 Ambac Assurance
Corporation 
 Segregated Account of Ambac Assurance Corporation 
 Connie Lee Holdings, Inc. 
 Everspan Financial Guarantee Corp. 

Ambac Credit Products, LLC 
 Ambac Financial
Services, LLC 
 Ambac Capital Corporation 
 Ambac Capital Funding, Inc. 
 Ambac Investments, Inc. 

Ambac Conduit Funding, LLC 
 Aleutian
Investments, LLC 
 Juneau Investments, LLC 
 Ambac Private Holdings, LLC 
 Ambac Capital Services, LLC 

Contingent Capital Company, LLC 
 SP Note
Investor I, LLC 
 AE Global Holding, LLC 
 AE Global Asset Funding, LLC 
 AE Global Investments, LLC 

AME Holdings, LLC 
 AME Asset Funding, LLC

 AME Investments, LLC 
 Ambac Asset
Funding Corporation 
 Ambac AII Corp. 

 SCHEDULE B 
 NON-COMPENSATION EXPENSE ALLOCATION METHODOLOGY 
 The expenses incurred by
any Affiliate with respect to the matters set forth below shall be allocated among the Affiliates benefitting from such matter as follows, with calculations made as of the first business day of the applicable quarter: 

 

			
	 Matter
	  	 Allocation Basis

	 Public Disclosure Costs
	  	50% allocated to Ambac and 50% allocated to AFGI for any such costs incurred following the Signing Date (as defined in the Mediation Agreement)
		
	 Fresh Start Accounting Costs
	  	50% allocated to Ambac (but not to exceed $1 million) and 50% allocated to AFGI (but in any event all amounts in excess of $2 million) for any such costs incurred, whether before
or after the Signing Date
		
	 D&O Insurance
	  	 82.5% allocated to Ambac and 17.5% allocated to AFGI for the policy ending on July 18, 2012.

 
 For all subsequent policies, Ambac shall request an independent broker to estimate
pricing for:
  

(i)     a policy for Ambac directors and officers solely in their capacity as Ambac
directors and officers, and
  

(ii)    a policy for Ambac and AFGI directors and officers in their respective capacities as
both Ambac and AFGI directors and officers, as applicable.
  
 To the extent
that pricing for (ii) exceeds the pricing for (i), such excess shall be allocated to AFGI.
  
 In the event that such pricing is not available for any policy year, costs shall be allocated on the same percentage basis as the prior policy year.

 
 Any D&O tail insurance or other insurance policy required by the Bankruptcy
Court or by the plan of reorganization in the Bankruptcy case shall be 50% allocated to Ambac (but not to exceed $2.5 million) and 50% allocated to AFGI (but in any event all amounts in excess of $5 million) for any such costs incurred following the
Signing Date.

			
	 Director Fees
	  	 With respect to the annual retainer, (i) for Ambac directors who do not serve on the board of AFGI, 100% allocated to Ambac and, (ii)
for Ambac directors who serve on the board of AFGI, 50% allocated to Ambac and 50% allocated to AFGI.
  
 With respect to meeting fees, each of Ambac and AFGI shall pay the fees relating to its respective board and committee meetings; provided, that in the case of a joint meeting of the boards or committees
of Ambac and AFGI, (i) for Ambac directors who do not serve on the board of AFGI, 100% allocated to Ambac and, (ii) for Ambac directors who serve on the board of AFGI, 50% allocated to Ambac and 50% allocated to AFGI.

 
 With respect to committee chair fees, (i) for joint committee chair fees between
Ambac and AFGI, 50% allocated to Ambac and 50% allocated to AFGI, (ii) for Ambac-only committee chair fees, 100% allocated to Ambac, and (iii) for AFGI-only committee chair fees, 100% allocated to AFGI.

  
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 SCHEDULE C 
 NOTICES 
 [Add notice information for each Affiliate listed in Schedule
A]Form of Amendment No. 1 to Cooperation Agreement

 Exhibit 10.3 
 AMENDMENT NO. 1 TO COOPERATION AGREEMENT 
 AMENDMENT NO. 1 TO
COOPERATION AGREEMENT (this “Amendment”), effective as of the later of (a) the date on which an order is entered pursuant to Section 1129 of chapter 11 of title 11 of the United States Bankruptcy Code (the “Bankruptcy
Code”) by the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) confirming Ambac Financial Group, Inc.’s (“AFGI”) chapter 11 plan of reorganization, as amended, supplemented
or modified, and (b) the date on which a non-stayed order is entered by the Dane County Circuit Court (the “Rehabilitation Court”) approving this Agreement (such date, the “Effective Date”), by and between the Segregated
Account of Ambac Assurance Corporation (the “Segregated Account”), Ambac Assurance Corporation (“Ambac”), AFGI and the Commissioner of Insurance of the State of Wisconsin, as the court-appointed Rehabilitator of the Segregated
Account (the “Rehabilitator”). 
 WHEREAS, Ambac and the Segregated Account entered into the Cooperation Agreement on
March 24, 2010 (the “Agreement”). 
 WHEREAS, AFGI filed a voluntary petition for relief under chapter 11 of
title 11 of the Bankruptcy Code in the Bankruptcy Court on November 8, 2010. 
 WHEREAS, Ambac and the Segregated Account
desire to amend the Cooperation Agreement to reflect certain terms and provisions of that certain Mediation Agreement (the “Mediation Agreement”) by and among Ambac, the Segregated Account, AFGI, the Wisconsin Office of the Commissioner of
Insurance (“OCI”), the Rehabilitator, and the Official Committee of Unsecured Creditors of AFGI, entered into as of September 21, 2011, and to expressly add AFGI and the Rehabilitator as parties to the Agreement. 

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto hereby agree as follows: 
 1. AFGI and the Rehabilitator shall become parties to the
Agreement. 
 2. The following shall be added to Article I of the Agreement: 

SECTION 1.05 Preservation of Net Operating Losses. Except as otherwise approved by the Rehabilitator, AFGI shall use its best
efforts to preserve the use of NOLs realized by the Group for the benefit of the AAC Subgroup, including but not limited to, refraining from taking any action that would result in, and taking such affirmative steps as are appropriate to avoid, any
Deconsolidation Event. In furtherance of the foregoing, AFGI shall use its best efforts to obtain a confirmation order from the Bankruptcy Court which (i) memorializes the parties’ intent to preserve the use of NOLs for the benefit of the
AAC Subgroup and AFGI as contemplated by the Amended and Restated Tax Sharing Agreement, dated as of the Effective Date, by and among Ambac, 

 
AFGI and the other parties thereto (the “Tax Sharing Agreement”), (ii) approves the adoption by reorganized AFGI of an NOL-preservation plan to remain in effect so long as NOLs
remain for the benefit of Ambac as contemplated by the Mediation Agreement and the Tax Sharing Agreement and vests continuing jurisdiction in the Bankruptcy Court to enforce restrictions adopted in connection with such plan, and
(iii) memorializes the parties’ intent that any subsequent bankruptcy filing by reorganized AFGI with the intent of rejecting this Agreement, the Mediation Agreement or the Tax Sharing Agreement and/or seeking additional value from the AAC
Subgroup for its use of the NOLs is a per se bad faith filing. 
 SECTION 1.06 Loss Reserving. Ambac
shall (i) provide the Rehabilitator the opportunity to participate in all meetings with Ambac management to discuss loss reserves to be included in any statutory financial report; (ii) provide the Rehabilitator with all reports provided to
Ambac management (when so provided) concerning the assumptions and vendors utilized or to be utilized in arriving at statutory loss reserves, together with any related reports or materials requested by the Rehabilitator; and (iii) obtain the
approval of the Rehabilitator prior to accepting repayment of any intercompany loan in an amount in excess of $50,000,000 per annum or any modification to or deemed repayment of any intercompany loan in an amount that would result in Ambac
recognizing income or a reduction in issue price in excess of $50,000,000 per annum. No later than
February 1st of each year (or more frequently if
requested by Ambac), if Ambac proposes to make any changes in the assumptions or vendors utilized in determining statutory loss reserves from the prior year’s statutory loss reserves (or, with respect to 2011, the statutory loss reserves for
the period from September 30, 2011 to December 31, 2011), which changes would cause the difference (whether positive or negative) between (w) Ambac’s statutory reserves determined with such proposed changes and
(x) Ambac’s statutory reserves determined without such proposed changes to exceed the lesser of (y) $200,000,000 or (z) 10% of Ambac’s statutory reserves determined without such proposed changes, Ambac shall seek and obtain
the approval of its loss reserves from the Rehabilitator, which approval shall not be unreasonably withheld or delayed. In the event that the Rehabilitator disputes Ambac’s loss reserves and does not provide such approval, then, unless OCI
prescribes an accounting practice requiring Ambac to follow the position of the Rehabilitator, the parties shall (i) immediately submit such dispute to expedited arbitration before a single arbitrator with requisite expertise to decide which of
the positions most appropriately reflects expected claim payments or (ii) jointly agree to an 

  
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alternative method of dispute resolution. The decision of an arbitrator shall be final and binding upon the parties, and shall be rendered in such form and substance as shall be necessary to
permit Ambac to reasonably rely thereon for purposes of filing its statutory financial statements. The parties shall agree to such procedures as are necessary and prudent to permit the arbitrator to issue a decision by no later than ten business
days before the date that the annual financial reports are required to be filed (the “Filing Date”). If the differences of the parties are not resolved in a manner described above at least ten business days before the Filing Date, then
Ambac shall request an extension of the Filing Date from OCI. If OCI agrees to such an extension, it will cooperate with Ambac to secure extensions in other jurisdictions as necessary. If such extension (or subsequent extension) is not granted,
Ambac shall be entitled to file its financial reports on the basis of its own loss reserving positions. 
 SECTION 1.07
Investment Portfolio Management. 
 (a) Any changes to Ambac’s existing Investment Policy (dated November 18,
2010) shall be submitted to the Rehabilitator for approval, which approval shall not be unreasonably withheld. The Rehabilitator shall meet with Ambac management (including the CFO) semi-annually to discuss the Investment Policy and any changes
appropriate thereto. The Rehabilitator may recommend changes to the Investment Policy and Ambac shall consider such recommendations in good faith. The Rehabilitator shall also be provided with periodic reports of investment transactions in the
ordinary course. Notwithstanding anything to the contrary in the Management Services Agreement or any other agreement, in the event that Ambac’s rejection of any proposed changes are not reasonable and fair to the interests of Ambac and the
Segregated Account, or are not protective or equitable to the interests of Ambac and the Segregated Account policyholders generally, the Rehabilitator may direct Ambac to transfer investment management functions relating to the investment portfolio
to a third party jointly chosen by the Rehabilitator and Ambac. With respect to any subsequent transfers to third parties of investment management functions relating to the investment portfolio, such third parties shall be jointly chosen by the
Rehabilitator and Ambac. 
 (b) The parties hereto acknowledge and agree that, if the investment management function is
transferred in accordance with the foregoing (a “Change of Investment Manager Event”), the parties’ respective obligations under Section 1.07 and elsewhere set forth in this Agreement shall remain in effect without alteration

  
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or diminishment. In furtherance of the foregoing, (i) the parties shall consult with each other in order to facilitate the uninterrupted provision of the information and other benefits
required to be provided hereunder by each party to the other party, (ii) the parties shall ensure that any new provider of investment management services as a result of a Change of Investment Manager Event (each a “Replacement Investment
Manager”) has the capacity to perform the investment management services formerly provided by Ambac, including without limitation either maintaining an annual Type II SAS 70 internal control letter reasonably acceptable to AFGI or providing
AFGI with copies of such Replacement Investment Manager’s current documentation of control procedures (such as policies and procedures, process models and process flowcharts) which record the design of internal controls and (iii) the
Segregated Account shall at all times following a Change of Investment Manager Event maintain appropriate internal controls and systems to ensure that Ambac will be able to meet its financial reporting, disclosure and legal obligations as described
in Section 2.01(H) below and as may be necessary for the Segregated Account to fulfill its obligations under this Agreement. Further, the Segregated Account shall immediately disclose to AFGI any instance of fraud or any significant change to
the internal control environment. In addition, the Rehabilitator shall cooperate with Ambac in causing each Replacement Investment Manager to permit Ambac and its affiliates, through Ambac’s employees and representatives (including, for the
avoidance of doubt, independent auditors of AFGI), the right to audit the Replacement Investment Manager’s internal control structure and to examine and make copies of any books and records pertaining to the Segregated Account, and to furnish
Ambac with such financial and reporting data and other information as Ambac may from time to time request. If a deficiency or control issue is noted, the Segregated Account will work with AFGI’s representatives (including, for the avoidance of
doubt, independent auditors of AFGI) to develop and implement an effective remediation strategy. In the event of any breach or threatened breach by any party of any of its obligations as set forth or described in this Agreement following a Change of
Investment Manager Event, the parties hereto agree that monetary damages would be an insufficient remedy for any such breach, and in addition to all other remedies available under applicable law, the non-breaching party shall be entitled to specific
performance and to injunctive or other equitable relief as a remedy for any such breach. 

  
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 SECTION 1.08 IRS Dispute. Ambac and the Rehabilitator shall be entitled to full
cooperation and all information and particulars they or either of them may request from AFGI in relation to the IRS Dispute and any other issues that Ambac may have relative to the IRS, including, without limitation, express authorization to engage
with the IRS directly on matters arising under the Plan of Rehabilitation in connection with the rehabilitation proceeding with respect to the Segregated Account and any amendment or subsequent iteration thereof (including any efforts to obtain a
private letter ruling, pre-filing agreement or other form of guidance or clarification). 
 3. Section 3.01 of the
Agreement shall be deleted and replaced with the following: 
 SECTION 3.01 Following each taxable year during any part of which
Ambac is a member of the Group, AFGI shall, no later than April 1 of such subsequent year, provide the Rehabilitator with a summary of the material provisions of AFGI’s expected tax position and the expected differences between
Ambac’s statutory financial statements and AFGI’s expected tax positions. The Rehabilitator shall notify AFGI and Ambac in writing of any concerns of the Rehabilitator with respect to any such expected tax positions no later than
May 1 of such year. Promptly thereafter, AFGI and Ambac shall meet with the Rehabilitator to resolve in good faith such concerns. In the event that the Rehabilitator is unable to resolve a dispute with AFGI and Ambac concerning an expected tax
position by July 1 of such year, the parties shall immediately submit such dispute to expedited arbitration before a single arbitrator with the requisite tax expertise whose decision shall be issued no later than August 31 of such year and
shall be final and binding upon the parties. The parties shall agree to such further procedures as are necessary and prudent to permit the arbitrator to issue a decision by August 31 of such year. If the expected tax position relates to the AAC
Subgroup, the sole issue before the arbitrator shall be whether the tax position advocated by the Rehabilitator is more likely than not to be upheld by a court of competent jurisdiction in a subsequent challenge to such position by the IRS. If the
expected tax position does not relate to the AAC Subgroup, the sole issue before the arbitrator shall be whether the tax position advocated by AFGI is more likely than not to be upheld by a court of competent jurisdiction in a subsequent challenge
to such position by the IRS. In the event that the arbitrator rules that the tax position advocated by the Rehabilitator (where the expected tax position relates to the AAC Subgroup) or the tax position advocated by AFGI (where the expected tax
position does not relate to the AAC Subgroup) is more likely than not to be upheld by a court of competent jurisdiction in a subsequent challenge to such position by the IRS, AFGI shall file 

  
 5 

 
its return on the basis of such advocated tax position, which position may be disclosed in such return. In the event that the arbitrator does not rule that a tax position advocated by either the
Rehabilitator or AFGI, as the case may be, is more likely than not to be upheld by a court of competent jurisdiction in a subsequent challenge to such position by the IRS, such party shall be precluded from advocating for such tax position in any
subsequent year absent any change or changes in facts or circumstances that would support such tax position. The cost of the arbitrator will be split between AFGI and Ambac. The Rehabilitator represents that it is not presently aware of any fact,
including, without limitation, any plan of rehabilitation for the Segregated Account that is presently being considered, upon which it would seek to change (under this Section 3.01) the method of realization or accrual of deductions for
interest and original issue discount on the surplus notes issued by Ambac in June 2010, including the application of Sections 163(e)(5) and 163(i) of the Code. 
 4. Section 6.06 of the Agreement shall be deleted and replaced with the following: 
 SECTION 6.06 Consent to Jurisdiction. AFGI and Ambac hereby consent to the jurisdiction of the state court in Wisconsin before which the rehabilitation proceedings with respect to the Segregated
Account are pending, and waive any objection based on lack of personal jurisdiction, improper venue or forum non conveniens, with regard to any actions, claims, disputes or proceedings relating to this Agreement or any other document delivered
hereunder or in connection herewith, or any transaction arising from or connected to any of the foregoing. 
 5.
Section 6.10 of the Agreement shall be deleted and replaced with the following: 
 SECTION 6.10. Parties to this
Agreement. Nothing herein shall in any manner create any obligations or establish any rights against the Rehabilitator, Ambac, the Segregated Account or AFGI in favor of any person or entity not a party to this Agreement. 

6. The following shall be added to Article VI of the Agreement: 
 SECTION 6.11 Interpretation. Capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Tax Sharing Agreement. 

  
 6 

 SECTION 6.12 Dispute Resolution. In the event that AFGI believes Ambac or the
Rehabilitator to be, or in the event that Ambac or the Rehabilitator believes AFGI to be, in material breach of, or otherwise not complying with Sections 1.05, 1.06, 1.07, 1.08, and 3.01 of this Agreement, such party shall provide the alleged
breaching or non-complying party with a written notice (copied to their last known legal counsel) describing, in reasonable detail, the nature of the alleged breach or non-compliance. Following delivery of such written notice, the parties shall
attempt, in good faith, to resolve their dispute. The party served with a notice of breach or non-compliance shall have 30 days to cure the alleged breach or non-compliance. In the event that there is no cure and the parties are unable to
resolve their dispute, any party alleging such breach or non-compliance may, not less than 45 days following delivery of such written notice, seek a judgment from the Rehabilitation Court that the other party has breached this Agreement. Solely for
purposes of resolving such dispute, AFGI shall consent to the jurisdiction of the Rehabilitation Court. In the event that the Rehabilitation Court enters a final, non-appealable order in favor of any party alleging such breach or non-compliance,
such party may ask the court to grant such further relief as the court deems appropriate in light of the nature and severity of the breach or non-performance, including specific performance, termination of the parties’ obligations under this
Agreement and/or monetary damages. 
 SECTION 6.13 Other Agreements. In the event of any conflict or inconsistency between
this Agreement and the provisions of the Mediation Agreement, the provisions of this Agreement shall govern. 
 7.
Termination. 
 (a) The provisions of Section 3.01 shall have no further force or effect after the due date
(including extensions) of the Group’s consolidated federal tax return for any Taxable Period if: 
 (i) all
of the following conditions are met as of the beginning of the immediately following Taxable Period: 
 (1) no
Pre-Determination Date NOLs remain available for use by the AAC Subgroup to offset income for Federal Tax purposes pursuant to subparagraphs 3(c)(i)(1) and (2) of the Tax Sharing Agreement; 

(2) no Pre-Determination Date AMT NOLs remain available for use by the AAC Subgroup to offset income for AMT purposes
pursuant to the provisions contained in subparagraph 3(c)(iii) of the Tax Sharing Agreement, and 

  
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 (3) no AFGI NOLs exist regardless of whether AFGI has consented to the use
of such AFGI NOLs by the AAC Subgroup to offset income for Federal Tax purposes pursuant to subparagraph 3(c)(i)(3) of the Tax Sharing Agreement; 
 or 
 (ii) a Deconsolidation Event has occurred prior to the
beginning of such Taxable Period. 
 (b) The provisions of this Amendment shall have no further force or effect to the extent
that a condition to the Closing Date (as defined in the Mediation Agreement) cannot be satisfied. 
 8. Counterparts.
This Amendment may be executed in more than one counterpart, each of which shall be deemed to be an original and all of which shall, together, constitute one and the same instrument. 

[Remainder of page intentionally left blank. Signatures to follow] 

  
 8 

 IN WITNESS WHEREOF, AFGI, Ambac, the Segregated Account and the Rehabilitator have caused
this Amendment to be duly executed and delivered as of the day and year first above written. 
  

			
	AMBAC FINANCIAL GROUP, INC.
		
	By:	 	  

		 	Name:
		 	Title:
	
	AMBAC ASSURANCE CORPORATION
		
	By:	 	  

		 	Name:
		 	Title:
	
	SEGREGATED ACCOUNT OF AMBAC ASSURANCE CORPORATION by Ambac Assurance Corporation, as Management Services Provider
		
	By:	 	  

		 	Name:
		 	Title:
	
	THE COMMISSIONER OF INSURANCE OF THE STATE OF WISCONSIN, AS THE COURT-APPOINTED REHABILITATOR OF THE SEGREGATED ACCOUNT
		
	By:	 	  

		 	Name: Roger A. Peterson
		 	Title: Special Deputy Commissioner

  
 9

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