Ambac Financial Group, Inc. (OTCMKTS:ABKFQ) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

On January 4, 2017 (the Effective Date), Ambac Financial Group,
Inc. (Ambac) and its principal subsidiary, Ambac Assurance
Corporation (Ambac Assurance; and together with Ambac, the
Company), entered into an Employment Agreement (the Agreement)
with Stephen M. Ksenak, to which Mr. Ksenak will continue to
serve as Senior Managing Director and General Counsel of both
companies. The Agreement has an initial term of one (1) year and
will automatically renew for successive one (1) year terms unless
either party notifies the other that it does not wish to renew
the Agreement at least 90 days before the end of the then-current
term (the initial one year period of employment under the
Agreement and any successor period is known as the Employment
Period).

Under the Agreement, Mr. Ksenak is entitled to an annual base
salary of no less than $600,000, commencing as of January 1,
2017, and is eligible for an annual bonus to the Companys annual
bonus plan for senior executives. A portion of Mr. Ksenaks bonus
may be awarded in the form of vested equity grants with deferred
settlement (not to exceed 25% of his bonus amount for any
calendar year), as determined in the discretion of the
Compensation Committees of the Boards of Directors of Ambac and
Ambac Assurance, acting jointly (together, the Joint Compensation
Committee). The amount of any annual bonus paid to Mr. Ksenak
during the Employment Period shall be based on the achievement of
pre-established performance goals that are established by the
Joint Compensation Committee. Mr. Ksenaks target bonus shall be
set at no less than 50% of base salary.

In addition, during the Employment Period, Mr. Ksenak will be
eligible to participate in Ambacs incentive compensation plan, or
any successor or additional plan, subject to the terms of any
such plan, as determined in the discretion the Joint Compensation
Committee. Equity awards granted to Mr. Ksenak under Ambacs
incentive compensation plan shall be similar in form and shall
have similar terms and conditions (other than amount) as equity
awards granted to other senior executives of the Company. With
respect to each calendar year that ends during the Employment
Period, Mr. Ksenaks target annual long-term incentive award
amount shall be no less than $225,000, as determined by the Joint
Compensation Committee in its discretion.

If the Company terminates Mr. Ksenaks employment other than for
Cause (including notice of non-renewal by the Company) or Mr.
Ksenak terminates his employment with Good Reason (as each such
term is defined in the Agreement), the Company will pay to Mr.
Ksenak his base salary due through the date of termination, any
unpaid bonus earned with respect to the year preceding the year
of termination and any other accrued benefits to which Mr. Ksenak
is entitled as of the date of termination. In addition, Mr.
Ksenak will be entitled to receive the following severance
payments and benefits: (a) a lump sum payment equal to 1.5 times
the sum of (i) his base salary and (ii) the amount of his target
bonus, (b) a lump sum payment equal to his target bonus for the
year in which the termination occurs pro-rated>to reflect the
time of service for such year through the date of termination,
and (c) Mr. Ksenak and his eligible dependents will be entitled
to continue to participate in such basic medical and life
insurance programs of the Company as are in effect from time to
time, on the same terms and conditions as applicable to active
senior executives of the Company, for twelve months or, if
earlier, until the date Mr. Ksenak becomes eligible to receive
coverage from another employer or is otherwise no longer eligible
to receive COBRA continuation coverage. With respect to all of
Mr. Ksenaks outstanding equity awards granted on and after the
Effective Date, (i) Mr. Ksenak will receive 12 months of vesting
acceleration on his then-outstanding awards or, if vesting is
less frequent than annually, a pro rata>portion, with the
period from the last vesting date (or, if none, the grant date)
as the numerator and the period from such last vesting date (or
grant date) to the next vesting date as the denominator, and (ii)
with respect to Mr. Ksenaks then-outstanding performance-based
equity awards, he will be deemed to have satisfied the
service-based component of such awards and will be eligible to
receive a portion of each such award based on actual performance
through the end of the applicable performance period,
pro-rated>to reflect Mr. Ksenaks actual service plus 12 months
during each performance period.

If the Company terminates Mr. Ksenaks employment other than for
Cause (including notice of non-renewal by the Company) or Mr.
Ksenak terminates his employment for Good Reason, in each case in
contemplation of and no more than 90 days prior to, or one year
following the occurrence of, a Change in Control (as defined in
the Agreement), then, the multiplier used to determine the
severance payments that Mr. Ksenak would otherwise be

entitled to receive, as described in clause (a) of the
immediately preceding paragraph shall be 2.0 instead of 1.5, and
(i) all of Mr. Ksenaks then-outstanding time-based equity awards
granted on or after the Effective Date will become immediately
vested and (ii) with respect to his then-outstanding
performance-based equity awards granted on or after the Effective
Date, Mr. Ksenak will be eligible to vest in each such award
based on actual performance through the end of the applicable
performance period.

Severance payments made to Mr. Ksenak in connection with his
termination of employment are subject to his delivery of a
general release of claims and his material compliance with the
restrictive covenants set forth in the Agreement. The Agreement
contains restrictive covenants relating to the non-disclosure of
confidential information, non-competition (which runs for 12
months following Mr. Ksenaks termination of employment),
non-solicitation (or hiring) of employees (which runs for 12
months following Mr. Ksenaks termination of employment), mutual
non-disparagement, and cooperation on certain matters (which runs
for 5 years following Mr. Ksenaks termination of employment). The
Agreement also sets forth certain stock ownership guidelines that
will apply to Mr. Ksenak. The guidelines generally require that
Mr. Ksenak hold shares of the Companys common stock equal in
value to two times his base salary. The Agreement also provides
that Mr. Ksenaks compensation will be subject to claw-back or
recoupment to the extent required by Company policy or applicable
law.

If Mr. Ksenaks employment terminates due to his death or
Disability (as defined in the Agreement) during the Employment
Period, then Mr. Ksenak (or his legal representative or estate)
will be entitled to receive his base salary through the date of
termination, any unpaid bonus earned with respect to the year
preceding the year of termination, and an annual bonus for the
year of termination based on actual full-year performance (with
any individual factor being rated at 50%), pro-rated>to
reflect the time of service for such year through the date of
termination, and any other accrued benefits to which Mr. Ksenak
is entitled as of the date of termination. With respect to all of
Mr. Ksenaks outstanding equity awards granted on and after the
Effective Date, (i) Mr. Ksenak will receive 12 months of vesting
acceleration on his then-outstanding awards or, if vesting is
less frequent than annually, a pro rata>portion, with the
period from the last vesting date (or, if none, the grant date)
as the numerator and the period from such last vesting date (or
grant date) to the next vesting date as the denominator, and (ii)
with respect to Mr. Ksenaks then-outstanding performance-based
equity awards, he will be deemed to have satisfied the
service-based component of such awards and will be eligible to
receive a portion of each such award based on actual performance
through the end of the applicable performance period,
pro-rated>to reflect Mr. Ksenaks actual service plus 12 months
during each performance period.

The preceding summary of the Agreement contained in this Item
5.02 is qualified in its entirety by reference to the full text
of the Agreement attached as Exhibit 10.1, as though it were
fully set forth herein.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits. The following exhibit is filed as part of this
Current Report on Form 8-K: