Document:

Form of Stock Option Award

 Exhibit 10.07 
 Ambac 1997 Equity Plan 
 2007 NOTICE OF 2006 STOCK OPTION AWARD 
 Table of Contents 
  

					
	1.	  	Incorporation of Plan Terms	  	1
			
	2.	  	Grant of Option	  	1
			
	3.	  	Terms and Conditions of the Option	  	1
			
	4.	  	Termination of Employment	  	4
			
	5.	  	Transfer; Option Exercisable Only by Participant and Permitted Transferees	  	6
			
	6.	  	Tax Withholding	  	7
			
	7.	  	No Restriction on Right to Effect Corporate Changes; No Right to Employment	  	7
			
	8.	  	Adjustment of and Changes in Shares	  	7
			
	9.	  	Change in Control	  	7
			
	10.	  	Preemption of Applicable Laws and Regulations	  	9
			
	11.	  	Committee Decisions Final	  	9
			
	12.	  	Amendments	  	9
			
	13.	  	Notice Requirements	  	9
			
	14.	  	Governing Law	  	9
			
	15.	  	Entire Agreement; Headings	  	9
		
	Annex A: Stock Option Award and Vesting Schedule	  	

 Ambac 1997 Equity Plan 
 2007 NOTICE OF 2006 STOCK OPTION AWARD 
 Ambac Financial Group, Inc., a Delaware
corporation (the “Company”), has adopted the Ambac 1997 Equity Plan, as amended (the “Plan”), for the purposes of providing an incentive to selected employees of the Company and its affiliates to
remain in its employ and to increase their interest in the success of the Company by providing them with opportunities to increase their proprietary interest in the Company and to receive compensation based upon the Company’s success.

 This 2007 Notice of 2006 Stock Option Award (the “Award Agreement”) sets forth the terms and conditions of the
stock options granted pursuant to the Plan. Annex A of this Award Agreement (“Annex A”) names the individual to whom the option is granted (the “Participant”) and sets forth the number of shares of
common stock of the Company (“Common Stock”) subject to the option, the exercise price of such option, the date of grant and the expiration date of such option and the vesting schedule applicable thereto. 
 1. Incorporation of Plan Terms. 
 This Award Agreement and the option granted hereby shall be subject to the Plan, the terms of which are incorporated herein by reference, and in the event of any conflict or inconsistency between the Plan and this Award Agreement, the Plan
shall govern. Capitalized terms used herein without definition shall have the meanings assigned to them in the Plan, a copy of which has been furnished to the Participant. 
 2. Grant of Option. 
 Subject to the
conditions contained herein and in the Plan, the Company grants to the Participant, as of the date of grant indicated on Annex A (the “Date of Grant”), an option (the “Option”) to purchase the number
of shares of Common Stock specified on Annex A, at an exercise price (the “Exercise Price”) specified on Annex A. The shares of Common Stock issuable upon exercise of the Option are from time to time referred to herein as the
“Option Shares.” The grant of an Option shall impose no obligation on the part of the Participant to exercise the Option. The Option shall vest and be exercisable as hereinafter provided. 
 3. Terms and Conditions of the Option. 
 The Option is granted subject to the following terms and conditions: 
 (a) Vesting; Exercisability. The Option shall vest
and become exercisable in accordance with the vesting schedule set forth on Annex A, unless the Option has earlier vested or been forfeited in accordance with the terms hereof. 
 (b) Term of the Option. The Option shall terminate and no longer be exercisable on the earlier of (i) the seventh anniversary of the Date of
Grant or (ii) the date specified for termination of the Option in Sections 4(a), 4(b) and 4(c) below; provided, however, if the termination date falls on a date which the Participant is prohibited by Corporation policy in effect on such
date, from engaging in transactions in the Corporation’s securities, such termination date shall be extended to the first date that the Participant is permitted to engage in transactions in the Corporation’s securities under such
Corporation policy. 
 (c) Notice of Exercise. Subject to Sections 3(d), 3(f) and 4 hereof, the Participant may exercise all or any
portion of the Option (to the extent vested) by giving notice of exercise to the Company or the Company’s agent, 

 
provided, however, that no less than 10 Option Shares may be purchased upon any exercise of the Option unless the number of Option Shares purchased at such
time is the total number of Option Shares in respect of which the Option is then exercisable, and provided, further, that in no event shall the Option be exercisable for a fractional share. The date of exercise of an Option shall be the later of
(i) the date on which the Company or the Company’s agent receives such notice or (ii) the date on which the conditions provided in Sections 3(d) and 3(f) are satisfied. Notwithstanding any other provision of this Award Agreement, the
Participant may not exercise the Option, whether in whole or in part, and no Option Shares will be issued by the Company in respect of any such attempted exercise, at any time when such exercise is prohibited by Company policy then in effect
concerning transactions by the Participant in the Company’s securities. 
 (d) Payment. Prior to the issuance of a certificate
pursuant to Section 3(g) hereof evidencing the Option Shares in respect of which all or a portion of the Option shall have been exercised, the Participant shall have paid to the Company the Exercise Price for all Option Shares purchased
pursuant to the exercise of such Option. Payment may be made by personal check, bank draft or postal or express money order (such modes of payment are collectively referred to as “cash”) payable to the order of the Company in
U.S. dollars. Payment may also be made in mature shares of Common Stock owned by the Participant, or in any combination of cash or such mature shares as the Committee in its sole discretion may approve. Such shares shall be valued at their Fair
Market Value as of the date of exercise. Payment of the Exercise Price in mature shares of Common Stock owned by the Participant shall be made by delivering to the Company the share certificate(s) representing the required number of shares, with the
Participant signing his or her name on the back, or by attaching executed stock powers (with the signature of the Participant guaranteed in either case); payment of the exercise price in mature shares of Common Stock owned by the Participant
may also be made through constructive surrender, by submission of an attestation of ownership in the form approved by the Company and with such signatures or other guarantees as may be required by the Company. The Company may also permit the
Participant to pay for such Option Shares by directing the Company to withhold shares of Common Stock that would otherwise be received by the Participant, pursuant to such rules as the Committee may establish from time to time. In the discretion of
the Committee, and in accordance with rules and procedures established by the Committee (or by any person to whom authority to establish such rules and procedures shall have been delegated by the Committee), the Participant may be permitted
to make a “cashless” exercise of all or a portion of the Option. 
 (e) Stockholder Rights. The Participant shall have no
rights as a stockholder with respect to any shares of Common Stock issuable upon exercise of the Option until the Participant shall become the holder of record thereof, and no adjustment shall be made for dividends or distributions or other rights
in respect of any share for which the record date is prior to the date upon which the Participant shall become the holder of record thereof. 
 (f) Limitation on Exercise. The Option shall not be exercisable unless the offer and sale of Common Stock pursuant thereto has been registered under the Securities Act of 1933, as amended (the “1933 Act”), and
qualified under applicable state “blue sky” laws or the Company has determined that an exemption from registration under the 1933 Act and from qualification under such state “blue sky” laws is available. 

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

 (h) Non-qualified Status of the Option. The Option granted hereby is not intended to qualify, and
shall not be treated, as an “incentive stock option” within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”). 
 (i) Cancellation. Notwithstanding any other provision of this Award Agreement, the Committee may cancel all or any unexercised portion of the
Option, whether or not vested, if at any time the Participant initiates or becomes a party to any lawsuit or other legal action in any federal or state court in which the Participant seeks damages or injunctive or other equitable relief from or
against the Company, any of its Subsidiaries or any of its officers, employees or directors in connection with any claim arising from or relating to the Participant’s employment with the Company or any of its Subsidiaries or the termination of
such employment (and regardless of whether any such termination is the result of the Participant’s voluntary resignation or retirement or of the involuntary termination of the Participant’s employment by the Company or one of its
subsidiaries). This Section 3(i) is not intended as a waiver by the Participant of any claims the Participant may have against the Company, any of its subsidiaries or any of its officers, employees or directors. Instead, it provides for the
consequences specified in the second preceding sentence in the event the Participant engages in the conduct described therein. 
 (j)
Notice Period. Notwithstanding any other provision of this Award Agreement, the Committee may cancel all or any unexercised portion of the Option, whether or not vested, if the Participant resigns his or her employment with the Company and
its Subsidiaries without having provided the Company or the Subsidiary that employs the Participant with at least three months advance written notice (the “Notice Period”) prior to termination of employment. During this Notice
Period the Participant (i) shall remain employed by the Company and its Subsidiaries and receive base salary and certain benefits, but will not accrue any rights to a bonus, and (ii) shall not commence employment with any other employer or
directly or indirectly induce or solicit any client of the Company or any of its subsidiaries to terminate or modify its relationship with any of them. 
 4. Termination of Employment. 
 (a) General. Subject to Section 4(c) hereof, if the
Participant’s employment with the Company and its Subsidiaries terminates for any reason other than death or Permanent Disability (as defined herein) prior to the satisfaction of any vesting period requirement under Section 3(a)
hereof, the unvested portion of the Option shall be forfeited to the Company, and the Participant shall have no further right or interest therein, unless the Committee in its sole discretion shall determine otherwise, provided,
however, that in the case of a termination of employment mutually agreed to by the Participant and the Company (or the relevant employer Subsidiary), but not in the case of a termination for Cause (as defined herein), if the
Participant (A) signs a waiver and a release, in the form requested by the Company, irrevocably waiving any and all claims and liabilities relating to the Participant’s employment with the Company and its affiliates and the termination
thereof, (B) signs a noncompetition agreement in the form requested by the Company, and (C) takes any further action requested by the Company to perfect such release and waiver, then at the Company’s discretion, the Option shall be
deemed to have vested in full as of the date of the Participant’s termination of employment. 
 (b) Exercise Following Termination of
Employment. If the Participant’s employment with the Company and its Subsidiaries terminates for any reason other than death, Permanent Disability or Retirement (as defined herein) after the Option has vested in accordance with
Sections 3(a) and 4(a) hereof with respect to all or a portion of the shares of Common Stock subject to the Option, the Participant shall have the right, subject to the terms and conditions hereof and of the Plan, to exercise the Option, to the
extent it has vested as of the date of such termination of employment, at any time within one year after the date of such termination, subject to the earlier expiration of the Option as provided in Section 3(b). 
 (c) Exercise Following Termination of Employment Due to Death, Permanent Disability or Retirement. 
 (i) If the Participant’s employment with the Company and its Subsidiaries terminates due to (A) death or (B) Permanent
Disability or (C) Retirement at age 55 or older after at least five years of continuous service with the Company and its Subsidiaries (including service with a corporation or other entity acquired by the 

 
Company), in any such case prior to the satisfaction of any vesting period requirement under Section 3(a) hereof, the Option shall be deemed to
have vested in full as of the date of death, termination due to Permanent Disability or such Retirement. 
 (ii) Following
termination of employment due to death or Permanent Disability, the Option may be exercised by the Participant, or the Participant’s Permitted Transferee, estate, personal representative or beneficiary, as the case may be, within three years
after the date of death or termination of employment due to Permanent Disability, subject to the earlier expiration of the Option as provided in Section 3(b). In the event of Retirement (whether or not Retirement results in full vesting of the
Option pursuant to clause (i) above), the Participant or the Participant’s Permitted Transferee may exercise the Option, to the extent it has vested as of the date of Retirement, within three years after the date of Retirement, subject to
the earlier expiration of the Option as provided in Section 3(b). 
 (d) Definitions. For purposes hereof, the following terms
shall have the meanings specified below: 
 (i) Termination of Employment. The employment of the Participant shall be
deemed terminated if the Participant is no longer employed by the Company or any of its Subsidiaries for any reason. The Committee shall have discretion to determine whether military or government service or an authorized leave of absence (as a
result of disability or otherwise) shall constitute a termination of employment for purposes hereof. 
 (ii)
Cause. Each of the following shall constitute “Cause” for termination of employment: 
 (a) the willful
commission by the Participant of acts that are dishonest and demonstrably and materially injurious to the Company or any of its Subsidiaries or affiliates, monetarily or otherwise; 
 (b) the conviction of the Participant for a felonious act resulting in material harm to the financial condition or business reputation of the Company or
any of its Subsidiaries or affiliates; or 
 (c) except for actions taken in the course of the Participant’s employment or as required
by law, the Participant’s divulgation, furnishing or making accessible to any person any information of a confidential or proprietary nature obtained while in the employ of the Company or any of its Subsidiaries of affiliates, or the
Participant’s failure, upon termination of his employment with the Company or any of its Subsidiaries or affiliates, to return to the Company all such information which exists in written or any other form (including without limitation in the
form of computer files or disks) and all copies thereof in his possession or under his control. 
 Notwithstanding the foregoing, if the
Company or any of its Subsidiaries or affiliates has entered or enters into any employment, management retention, change in control, severance or similar agreement with the Participant, which agreement sets forth a definition of
“Cause”, then such definition, rather than the definition set forth above, shall control for purposes of this Award Agreement. 
 (iii) Permanent Disability. “Permanent Disability” shall mean circumstances that entitle the Participant to receive benefits under the long-term disability policy maintained by the
Company or any of its Subsidiaries for the Participant. 
 (iv) Retirement. “Retirement” shall
mean the termination of the Participant’s employment on or after age 55 and at least 5 years of service, except for Cause; provided , however, that the termination of the Participant’s employment will not be considered a Retirement
if the Participant fails to provide the Company or the Subsidiary that employs the Participant with the written notice required by Section 3(j) hereof or fails to comply with the Participant’s obligations during the Notice Period as set
forth in Section 3(j) hereof. 

 (e) Exercise Following Termination of Employment Subject to Company Policies on Insider Trading.
Any exercise of the Option pursuant to Section 4(b) or 4(c) above following termination of the Participant’s employment for any reason other than death shall be subject to, and shall be permitted only to the extent such exercise complies
with, the policies of the Company concerning insider trading. 
 (f) Cancellation of Option and Repayment of Option Gain.
Notwithstanding any other provision of this Award Agreement, the Committee may cancel all or any portion of the Option, whether or not vested, and may require the Participant to repay to the Company all or any portion of the Option Gain (as
defined herein) that the Participant realizes from any full or partial exercise of the Option occurring within six months before or after the termination of the Participant’s employment with the Company and its Subsidiaries, if (A) the
Participant engages in Competitive Activity (as defined herein) within six months following the termination of the Participant’s employment or (B) the Participant fails to provide the Company or the Subsidiary that employs the
Participant with the written notice required by Section 3(j) hereof or fails to comply with the Participant’s obligations during the Period Notice as set forth in Section 3(j) hereof. A Participant will be considered to engage in
“Competitive Activity” if the Participant (1) enters into a relationship as an employee, officer, partner, member, director, independent contractor, consultant, advisor or agent of, or in any similar relationship with,
any corporation, partnership, limited liability company, joint venture or other business entity that engages in any activity which the Committee determines is competitive with a principal business activity of the Company (a
“Competitor”), where the Participant will be responsible for providing services which are similar or substantially related to the services that the Participant provided during any of the last three years of the
Participant’s employment with the Company and its Subsidiaries or (2) either alone, or in concert with others, acquires or maintains beneficial ownership (within the meaning of Section 13(d) of the Exchange Act) of 5% or more of any
class of equity securities of a Competitor. The amount of a Participant’s “Option Gain” realized upon full or partial exercise of an Option is the amount of income included (or to be included) in respect of such
exercise on the Form W-2 (or successor form) that the Company or one of its Subsidiaries issues to the Participant for the year in which such exercise occurs. The Company may require the Participant, in connection with any full or partial
exercise of an Option, to certify in a manner acceptable to the Company that the Participant has not engaged in Competitive Activity and may decline to give effect to such exercise if the Participant fails so to certify. If the Participant is
required to repay any Option Gain to the Company pursuant to this Section 4(f), the Participant shall pay such amount in such manner and on such terms and conditions as the Company may require, and the Company shall be entitled to withhold or
set-off against any other amount owed to the Participant by the Company or any of its Subsidiaries (other than any amount owed to the Participant under any retirement plan intended to be qualified under Section 401(a) of the Code) up to any
amount sufficient to satisfy any unpaid obligation of the Participant under this Section 4(f). 
 5. Transfer; Option Exercisable
Only by Participant and Permitted Transferees. 
 The Option may not be transferred, pledged, assigned, or otherwise disposed of, except
(i) by will or the laws of descent and distribution, (ii) pursuant to a domestic relations order or (iii) for no consideration, to a member or members of the Participant’s immediate family (as defined below) or to one or
more trusts or partnerships established in whole or in part for the benefit of one or more of such immediate family members (the parties identified in clauses (i), (ii), and (iii) being referred to collectively as “Permitted
Transferees”). If the Option is transferred to a Permitted Transferee, it shall be further transferable only by will or the laws of descent and distribution or, for no consideration, to another Permitted Transferee of the Participant.
The Participant shall promptly notify the Company of any proposed transfer to a Permitted Transferee in advance in writing and shall upon request provide the Company with information concerning the Permitted Transferee’s financial condition and
investment experience. No assignment or transfer of the Option, or of the rights represented thereby, whether voluntary or involuntary, by operation of law or otherwise, except as permitted by this Section 5, shall vest in the assignee or
transferee any interest or right in the Option, but immediately upon any attempt to assign or transfer the Option the same shall terminate and be of no force or effect. For purposes of this Option Agreement, the Participant’s “immediate
family” means any child, stepchild, grandchild, spouse, son-in-law or daughter-in-law and shall include adoptive relationships. 

 6. Tax Withholding. 
 The Company shall have the right, prior to the issuance of shares as set forth in section 3(g) hereof, to require the Participant to remit to the Company an amount sufficient to satisfy the minimum required Federal,
state or local tax withholding requirements. The Company may permit the Participant to satisfy, in whole or in part, such obligation to remit taxes, by directing the Company to withhold shares of Common Stock that would otherwise be received by the
Participant, pursuant to such rules as the Committee may establish from time to time. The Company shall also have the right to deduct from all cash payments made pursuant to or in connection with the Option the minimum required Federal, state or
local taxes required to be withheld with respect to such payments or such lesser amount as determined by the Company in order to assure that it complies with applicable accounting standards. 
 7. No Restriction on Right to Effect Corporate Changes; No Right to Employment. 
 Neither the Plan, this Award Agreement nor the existence of the Option shall affect in any way the right or power of the Company or its stockholders to
make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the Company’s capital structure or its business, or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or
prior preference stocks ahead of or convertible into, or otherwise affecting the Common Stock or the rights thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or otherwise. 
 In addition, neither this Award Agreement, the grant of the
Option nor any action taken hereunder shall be deemed to limit or restrict the right of the Company to terminate the Participant’s employment at any time, for any reason, with or without Cause. 
 8. Adjustment of and Changes in Shares. 
 In the event of any merger, consolidation, recapitalization, reclassification, stock split, stock dividend, special cash dividend, split-up, spin-off, or other transaction or change in corporate structure affecting the Common Stock, the
Committee shall make equitable adjustments in order to preserve, but not increase, the benefits or potential benefits intended to be made available to participants granted stock options. Any adjustments shall be determined by the
Committee, whose determination as to what adjustments shall be made, and the extent thereof, shall be final. 
 9. Change in
Control. 
 (a) Committee Discretion to Take Certain Actions. The Committee, in its sole discretion, may at any time prior to,
coincident with or after the time of a Change in Control (as defined herein): 
 (i) provide for the acceleration of
any vesting conditions relating to the exercise of the Option or that the Option may be exercised in full on or before a date fixed by the Committee; 
 (ii) provide for the purchase of the Option, upon the Participant’s request, for an amount of cash equal to the amount, as determined by the Committee in its sole discretion, which could have been realized upon
the exercise of the Option had the Option been currently exercisable; 
 (iii) make such adjustments to the Option as the
Committee deems appropriate to reflect such Change in Control; or 
 (iv) cause the Option then to be assumed, or new rights
substituted therefor, by the surviving corporation in such Change in Control. 

 Any such actions shall be authorized by the Committee, whose determination as to what actions shall be taken and the
extent thereof, shall be final. 
 (b) Definitions. For purposes hereof, a “Change in Control” shall be deemed
to occur on the date on which one of the following events occurs: 
 (i) the acquisition by any Person of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of the Common Stock then outstanding, but shall not include any such acquisition by: 
 (A) the Company; 
 (B) any Subsidiary of the Company; 
 (C) any employee benefit plan of the Company or of any Subsidiary of the
Company; 
 (D) any Person or entity organized, appointed or established by the Company for or pursuant to the terms of any
such plan; 
 (E) any Person who as of January 31, 1996 was the beneficial owner of 15% or more of the shares of Common
stock outstanding on such date unless and until such Person, together with all affiliates and associates of such Person, becomes the beneficial owner of 25% or more of the shares of Common stock then outstanding whereupon a Change in Control shall
be deemed to have occurred; or 
 (F) any Person who becomes the beneficial owner of 20% or more, or, with respect to a
Person described in clause (E) above, 25% or more, of the shares of Common Stock then outstanding as a result of a reduction in the number of shares of Common Stock outstanding due to the repurchase of shares of Common Stock by the Company
unless and until such Person, after becoming aware that such Person has become the beneficial owner of 20% or more, or 25% or more, as the case may be, of the then outstanding shares of Common Stock, acquires beneficial ownership of additional
shares of Common Stock representing 1% or more of the shares of Common Stock then outstanding, whereupon a Change in Control shall be deemed to have occurred; or 
 (ii) individuals who, as of July 30, 1997, constitute the Board, and subsequently elected members of the Board whose election is
approved or recommended by at least a majority of such current members or their successors whose election was so approved or recommended (other than any subsequently elected members whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board), cease for any reason to constitute at
least a majority of such Board; or 
 (iii) approval by the stockholders of the Company of (A) a merger or consolidation
of the Company with any other corporation, (B) the issuance of voting securities of the Company in connection with a merger or consolidation of the Company (or any Subsidiary) pursuant to applicable stock exchange requirements, or
(C) sale or disposition of all or substantially all of the assets of the Company or the acquisition of assets of another corporation (each, a “Business Combination”), unless, in each case, immediately following such
Business Combination, all or substantially all of the individuals and entities who were the beneficial owners of the Common Stock outstanding immediately prior to such Business Combination beneficially own, directly or indirectly, more than 70% of
the then outstanding shares of Common Stock and 70% of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or 

 
through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the
Common Stock. 
 As used herein, “Person” means any individual, firm, corporation, partnership or other entity.

 10. Preemption of Applicable Laws and Regulations. 
 Anything herein to the contrary notwithstanding, if, at any time specified herein for the issuance of shares of Common Stock to the Participant, any law, regulation or requirement of any governmental authority having
jurisdiction shall require either the Company or the Participant to take any action in connection with the shares then to be issued, the issuance of such shares shall be deferred until such action shall have been taken. 
 11. Committee Decisions Final. 
 Any
dispute or disagreement which shall arise under, or as a result of, or pursuant to, or in connection with, this Award Agreement or the Option shall be determined by the Committee, and any such determination or any other determination by the
Committee under or pursuant to this Award Agreement and any interpretation by the Committee of the terms of the Option shall be final and binding on all persons affected thereby. 
 12. Amendments. 
 The Committee shall
have the power to alter or amend the terms of the Option as set forth herein from time to time, in any manner consistent with the provisions of Section 16 of the Plan, and any alteration or amendment of the terms of the Option by the Committee
shall, upon adoption, become and be binding on all persons affected thereby without requirement for consent or other action with respect thereto by any such person. The Committee shall give written notice to the Participant of any such alteration or
amendment as promptly as practicable after the adoption thereof. The foregoing shall not restrict the ability of the Participant and the Company by mutual consent to alter or amend the terms of the Option in any manner which is consistent with the
Plan and approved by the Committee. In addition, the terms of the Option may be amended or supplemented by any employment, management retention, severance or similar agreement (an “Employment Agreement”) entered into between
the Company and the Participant (including any such agreement entered into prior to the Date of Grant) and approved, to the extent such Employment Agreement amends or supplements the terms of the Option, by the Committee. 
 13. Notice Requirements. 
 Any notice
which either party hereto may be required or permitted to give to the other shall be in writing. Such notice may be delivered to the Company personally or by mail, postage prepaid, addressed as follows: Ambac Financial Group, Inc., One State Street
Plaza, New York, New York 10004, attention: Senior Vice President, Chief Administrative Officer and Employment Counsel, or at such other address as the Company, by notice to the Participant, may designate in writing from time to time, and to the
Participant at the Participant’s address as shown on the records of the Company or at such other address as the Participant, by notice to the Company, may designate in writing from time to time. 
 14. Governing Law. 
 The terms and
conditions stated herein are to be governed by, and construed in accordance with, the laws of the State of Delaware. 
 15. Entire
Agreement; Headings. 
 This Award Agreement (which includes Annex A) and the other related documents expressly referred to herein
(including, if applicable, any Employment Agreement) set forth the entire agreement and understanding 

 
between the parties hereto and supersede all prior agreements and understandings relating to the subject matter hereof. In the event of a discrepancy or
inconsistency in the number of shares of common stock covered by the Option, the Date of Grant, the vesting schedule, the Exercise Price or any other term in this Award Agreement and the resolutions of the Committee authorizing the grant of the
Option covered hereby, such resolutions shall control and the Company shall have the right, in its sole discretion, to replace the Award Agreement or any portion thereof (including any portion of Annex A) with a correct version. The headings
of Sections and subsections herein are included solely for convenience of reference and shall not affect the meaning of any of the provisions of this Award Agreement. 
 AMBAC FINANCIAL GROUP, INC.January 2007 Award of Restricted Stock Units to William McKinnon

 Exhibit 10.08 
 AMBAC FINANCIAL GROUP, INC. 
 1997 EQUITY PLAN 
 JANUARY 2007 NOTICE OF SPECIAL KEY SENIOR EXECUTIVE OFFICER AWARD OF 2006 LONG TERM 
 INCENTIVE COMPENSATION IN THE FORM OF RESTRICTED STOCK UNITS 
 Ambac Financial
Group, Inc., a Delaware corporation and its Subsidiaries (referred to herein as either the "Company" or "Ambac"), have adopted the Ambac 1997 Equity Plan (the "Plan"), for the purposes of providing an
incentive to selected employees of the Company and its affiliates to remain in its employ and to increase their interest in the success of the Company. The Company pursues these goals by providing selected employees with opportunities through the
Plan to increase their proprietary interest in the Company and to receive compensation based upon the Company’s success. 
 This 2007
Restricted Stock Unit notice of award (the "Notice of Award") is being made in accordance with the terms set forth in a certain employment agreement between William T. McKinnon and Ambac dated as of January 29, 2007 (the
“McKinnon Employment Agreement”). This Notice of Award sets forth the terms and conditions of the restricted stock units that have been granted under the Plan to the Mr. McKinnon (the "Participant"). This
Notice of Award sets forth the number of restricted stock units that the Participant will receive, the date of grant and the applicable vesting schedule. 
 1. Incorporation of Plan Terms. 
 This Notice of Award and the restricted stock units granted hereby
are subject to the Plan, the terms of which are incorporated herein by reference. If there is any conflict or inconsistency between the Plan and this Notice of Award, the Plan shall govern. Capitalized terms used in this Notice of Award without
definition shall have the meanings assigned to them in the Plan. A copy of the Plan is available on Ambac’s intranet site. 
 2.
Grant of Restricted Stock Units. 
 Subject to the conditions contained herein and in the Plan, the Company grants to the Participant,
as of the date of grant indicated on Annex A (the "Date of Grant"), the number of restricted stock units (the "RSUs") specified on Annex A. 

 3. Terms and Conditions of the RSUs. 
 The RSUs shall have the following terms and conditions: 
 (a) General. Each RSU shall represent the unsecured promise of the Company to transfer to the Participant, on the settlement date of such RSU and subject to the terms and conditions set forth in this Notice of
Award, one share of the Company’s common stock, par value $0.01 per share (the "Common Stock"). 
 (b) Vesting.

  

	 	(i)	Normal Vesting. The RSUs will ordinarily vest in accordance with the vesting schedule set forth on Annex A hereto. 

  

	 	(ii)	Accelerated Vesting. Notwithstanding Section 3(b)(i), any RSUs that have not previously vested shall vest in full upon the termination of the Participant’s
employment with the Company and its Subsidiaries by reason of death or Permanent Disability. "Permanent Disability" shall mean circumstances that entitled the Participant to receive benefits under the long-term disability policy maintained by the
Company or any of its Subsidiaries for the participant. 

  

	 	(iii)	Partial Vesting. Notwithstanding Section 3(b)(i) or the terms of the Plan, if the Participant elects to retire at any time prior to the third anniversary of the Date of
Grant, only that portion of RSUs proportionate to time worked, defined as X divided by Y (X = the number of whole months worked from the Term (as defined in the McKinnon Employment Agreement) through the retirement date; Y =thirty-six) will vest.
Regardless of when they vest, the RSUs awarded pursuant to this Notice of Award shall be settled by delivery of the corresponding shares of Common Stock. 

  

	 	(iv)	     

 (c) Dividends and
Distribution on Common Stock. In the event that, following the Date of Grant and prior to the settlement of any RSU, the Company pays any cash or other dividend or makes any other distribution in respect of the Common Stock, each RSU shall be
credited with an additional number of RSUs (including fractions thereof) determined by dividing (i) the amount or cash, or the value (as determined by the Committee) of any other property, paid or distributed in respect of one outstanding share
of Common Stock by (ii) 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 for the date of such payment or distribution (or if
there were no sales on the date 

	 	 
of such payment or distribution, the closing price as reported on such composite tape or automated quotation system for the most recent day during which a
sale occurred). Any RSUs so credited shall be subject to the same vesting provisions as the RSU in respect of which they are credited. Except as otherwise expressly provided in this Notice of Award, the Participant shall have no right as a
shareholder with respect to any RSUs until a certificate or certificates evidencing such shares shall have been issued to the Participant according to the terms of Section 3(d) below. 

 (d) Delivery of Share Certificates. 
 Settlement. Regardless of when they vest, the RSUs awarded pursuant to this Notice of Award shall be settled on (A) (i) July 29, 2010 or (ii) the six month anniversary of the Participant’s retirement, which
ever is sooner, or (B) the date of the Participant’s death following termination of employment by delivery of the corresponding shares of Common Stock to the Participant, as promptly thereafter as practicable. Such settlement shall be
subject to the provisions of Section 5(b) of the McKinnon Employment Agreement. 
  

	 	(i)	RSUs will be settled, at the election of the Participant, either by: 

  

	 	(A)	Delivery of a stock certificate or certificates representing the number of shares of Common Stock equal to the number of RSUs being settled (any fractional RSU being rounded up
to the next whole RSU). Certificates shall be issued in the name of the Participant (or of the person or persons to whom such RSUs were transferred by will or the laws of descent and distribution or pursuant to a Qualified Domestic Relations
Order). 

  

	 	(B)	The transfer of the corresponding number of shares of Common Stock equal to the number of RSUs being settled (or any fractional RSU being rounded up to the next whole RSU) to
the brokerage account designated by the Participant to the Company in writing prior to settlement. 

  

	 	(ii)	Payment Restrictions for Specified Employees. If the Participant is a “Specified Employee” within the meaning of Section 409(a)(2)(B) of the Code, then,
anything in this Notice of Award to the contrary notwithstanding, no settlement of RSUs in connection with the Participant’s termination of employment (other than by reason of death) shall be made before the earlier to occur of (X) the
date which is six months and one day following the date of such termination of employment and (Y) the date of the Participant’s death following termination of employment. 

  

	 	(iii)	 Transfer Restrictions on Common Stock. Shares of Common Stock issued upon the settlement of RSUs will not be subject to restrictions on transfer (except
for any restrictions imposed by the federal securities laws or other applicable laws or regulations and for any restrictions under the Company’s trading policies applicable to employees). However, shares of common stock issued upon 

	 	 
settlement of RSUs granted at a discount to the Fair Market Value of Ambac stock on the date of grant will be subject to transfer restrictions until such
time as the Eligible Individual meets and/or exceeds Ambac’s Stock Ownership Guidelines. 

  

	 	(iv)	Normal Settlement and Deferral of Payment Subject to Section 162(m). Subject to the other terms and conditions of this Notice of Award and the terms of the Plan, Ambac
shall settle RSUs on or as soon as practicable following the vesting date (the “Settlement Date”); provided, however, that to the extent that, as of the Settlement Date, Ambac reasonably
anticipates that its federal tax deduction with respect to such settlement would be limited or eliminated by application of Section 162(m) of the Internal Revenue Code of 1986, as amended, or any regulations thereunder (or under any
successor provisions thereto) (the "Code"), then the settlement of the RSUs shall automatically be deferred until the earliest date at which Ambac reasonably anticipates that its deduction of the amount of the settlement will not be so
limited or eliminated (it being understood that so many of such RSUs as can be settled on the Settlement Date without limiting or eliminating Ambac’s deduction will be settled on the Settlement Date and that any RSUs whose settlement is
deferred past the Settlement Date shall be settled on one or more future dates as and to the extent that the conditions to settlement set forth in this sentence are satisfied). 

 (e) Transfer Restrictions on RSUs. RSUs may not be transferred, except by will or the laws of descent and distribution or pursuant to a Qualified
Domestic Relations Order. 
 (f) Immediate Cancellation of RSUs and Return of Share Value. Notwithstanding any other provision of this
Notice of Award, the Committee may (i) cancel all or any portion of the RSUs then outstanding (whether or not then vested and whether or not subject to a deferred settlement election) and (ii) may require the Participant to repay to the
Company all or any portion of the Share Value (as hereinafter defined) that the Participant realizes from the settlement of RSUs occurring within six months before or after the Participant’s termination of employment for any reason with the
Company and its Subsidiaries, if the Participant engages in Competitive Activity (as defined herein) within six months following termination of such employment. The Participant will be considered to engage in "Competitive Activity" if the
Participant (1) enters into a relationship as an employee, officer, partner, member, director, independent contractor, consultant, advisor, or agent of, or in any similar relationship with, any corporation, partnership, limited liability
company, joint venture or other business entity that engages in any activity which the Committee determines to be competitive with a principal business activity of the Company (a "Competitor"), where the Participant will be responsible for
providing services which are similar or substantially related to the services that the Participant provided during any of the last three years of the Participant’s employment with the Company and its Subsidiaries or (2) either alone, or in
concert with others, acquires or maintains beneficial ownership (within the meaning of Section 13(d) of the Securities Exchange Act of 1934, as amended) of 5% or more of any class of equity securities of a Competitor. For purposes hereof,
"Share Value" in respect of an RSU means a cash amount equal to the amount of income 

 
included (or to be included) in respect of the settlement of such RSU on the Form W-2 (or successor form) that the Company or one of its Subsidiaries issues
to the Participant for the year in which such settlement occurs. If the Participant is required to repay any Share Value to the Company pursuant to this Section 3(f), the Participant shall pay such amount in such manner and on such terms and
conditions as the Company may require, and the Company shall be entitled to withhold or set-off against any other amount owed to the Participant by the Company or its Subsidiaries (other than any amount owed to the Participant under any retirement
plan intended to be qualified under Section 401(a) of the Code) up to an amount sufficient to satisfy the unpaid obligation of the Participant under this Section 3(f). 
 (g) Cancellation for Specified Activity. Notwithstanding any other provision of this Notice of Award, the Committee may cancel all or any portion
of the RSUs then outstanding (whether or not vested) if at any time the Participant initiates or becomes a party to any lawsuit or other legal action in any federal or state court in which the Participant seeks damages or injunctive or other
equitable relief from or against the Company, any of its Subsidiaries or any of its officers, employees or directors in connection with any claim arising from or relating to the Participant’s employment with the Company or any of its
Subsidiaries or the termination of such employment (and regardless of whether any such termination is the result of the Participant’s voluntary resignation or retirement or of the involuntary termination of the Participant’s employment by
the Company or one of its subsidiaries). This Section 3(g) is not intended as a waiver by the Participant of any claims the Participant may have against the Company, any of its subsidiaries or any of its officers, employees or directors.
Instead, it provides for the consequences specified in the second preceding sentence in the event the Participant engages in the conduct described therein. 
 4. Tax Withholding. 
 (a) Prior to either the transfer of shares of Common Stock to the
Participant’s brokerage account or the delivery of any certificates evidencing shares of Common Stock to be issued in connection with the full or partial settlement of the RSUs, the Company shall have the right to require the Participant to
remit to the Company an amount sufficient to satisfy the minimum Federal, State and local tax withholding requirements. The Company may permit the Participant to satisfy this obligation, in whole or in part, by directing the Company to withhold
shares of Common Stock that would otherwise be received by the Participant, pursuant to such rules as the Committee may establish from time to time. Under no circumstances will the Company permit the Participant to withhold shares of Common Stock in
excess of the maximum Federal, state and local withholding requirements. 
 (b) Upon vesting of any portion of the RSUs, the Participant
shall be required to satisfy, within 30 days of vesting, all Social Security and Medicare taxes due upon vesting. The Participant must either submit a check or money order, payable to Ambac Financial Group, Inc., to Ambac’s Senior Vice
President and Chief Administrative Officers or his or her designee designee or direct the Company to withhold a portion of his or her salary to pay for any Social Security and Medicare taxes due upon vesting. 

 5. No Restriction on Right to Effect Corporate Changes; No Right to Continued Employment.

 (a) Neither the Plan, this Notice of Award, the grant of the RSUs nor any action taken hereunder shall affect in any way the right or
power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the Company’s capital structure or its business, or any merger or consolidation of the Company, or any
issue of bonds, debentures, preferred or prior preference stocks ahead of or convertible into, or otherwise affecting the Common Stock or the rights thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any
part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise. 
 (b) This Notice of
Award is not an employment agreement. Nothing in this Notice of Award or the Plan, or the granting to the Participant of the RSUs, shall alter the Participant’s status as an "at-will" employee of the Company or be construed as guaranteeing
employment by, or as giving the Participant any right to continue in the employ of, the Company or any of its subsidiaries during any period (including without limitation the period between the Date of Grant and the settlement date of any RSUs,
or any portion thereof), or as limiting or restricting the right of the Company to terminate the Participant’s employment at any time, for any reason, with or without cause. 
 6. Adjustment of and Changes in Shares. 
 In the event of any merger, consolidation, recapitalization, reclassification, stock split, stock dividend, special cash dividend, split-up, spin-off, or other transaction or change in corporate structure affecting the Common Stock, the
Committee shall make equitable adjustments in order to preserve, but not increase, the benefits or potential benefits intended to be made available to participants granted RSUs. Any adjustments shall be determined by the Committee, whose
determination as to what adjustments shall be made, and the extent thereof, shall be final. 
 7. Preemption of Applicable Laws and
Regulations. 
 Anything herein to the contrary notwithstanding, if, at any time specified herein for the issuance of shares of Common
Stock to the Participant, any law, regulation or requirement of any governmental authority having jurisdiction requires either the Company or the Participant to take any action in connection with the shares then to be issued, the issuance of such
shares shall be deferred until such action shall have been taken. 
 8. Committee Decisions Final. 
 Any dispute or disagreement which shall rise under, or as a result of, or pursuant to, or in connection with, this Notice of Award shall be determined by
the Committee, and any such determination or any other determination by the Committee under or pursuant to this Notice of 

 
Award and any interpretation by the Committee of the terms hereof shall be final and binding on all persons affected thereby. 
 9. Amendments. 
 The Committee shall
have the power to alter or amend the terms of the RSUs as set forth herein, from time to time, in any manner consistent with the Plan; provided, however, that no amendment will be made that is inconsistent with the American Jobs
Creation Act of 2004. Any alteration or amendment of the terms of the RSUs by the Committee shall, upon adoption, become and be binding on all persons affected thereby without requirement for consent or other action with respect thereto by any such
person. The Committee shall give written notice to the Participant of any such alteration or amendment as promptly as practicable after it is adopted. The foregoing shall not restrict the ability of the Participant and the Company by mutual consent
to alter or amend the terms of the RSUs in any manner which is consistent with the Plan and approved by the Committee. Notwithstanding anything in the Plan to the contrary, the Committee may amend or terminate the Plan, without the consent of any
Participant, to the extent it deems necessary or desirable to comply with the American Jobs Creation Act of 2004. 
 10. Notice
Requirements. 
 Any notice which either party hereto may be required or permitted to give to the other shall be in writing. Notice may
be delivered to the Company personally or by mail, postage prepaid, addressed as follows: Ambac Financial Group, Inc., One State Street Plaza, New York, New York 10004, attention: Senior Vice President, Chief Administrative Officer, Employment
Counsel, or at such other address as the Company, by notice to the Participant, may designate in writing from time to time. Notice to the Participant shall be directed either to the Participant’s address as shown on the records of the Company
or at such other address as the Participant, by notice to the Company, may designate in writing from time to time or to the Participant by a combination of interoffice mail and email. 
 11. Governing Law. 
 The terms and
conditions stated herein are to be governed by, and construed in accordance with, the laws of the State of Delaware. 
 12. Entire
Agreement; Headings. 
 This Notice of Award (which includes Annex A) and the other related documents expressly referred to herein
set forth the entire agreement and understanding between the parties hereto and supersede all prior agreements and understandings relating to the subject matter hereof. The headings of Sections and subsections herein are included solely for
convenience of reference and shall not affect the meaning of any of the provisions of this Notice of Award.

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