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 December 12, 2016, Ambac Financial Group, Inc. (“Ambac”)
issued a press release announcing that Mr. Nader Tavakoli has
resigned as a director and as President and Chief Executive
Officer of Ambac and its principal subsidiary, Ambac Assurance
Corporation (Ambac Assurance, and together with Ambac, the
Company), effective as of December 12, 2016, and that the term of
his employment will end on December 31, 2016. The Board of
Directors has named Mr. Claude LeBlanc as President and Chief
Executive Officer of both Ambac and Ambac Assurance effective as
of January 1, 2017. Mr. LeBlanc will also become a member of the
Board of Directors of each of Ambac and Ambac Assurance on
January 1, 2017.

A copy of the press release is filed herewith and attached hereto
as Exhibit 99.1.

Mr. LeBlanc has over 25 years of experience in structured finance,
debt and equity capital markets, business restructuring, and
capital management. Mr. LeBlanc will depart as Chief Financial
Officer and Chief Restructuring Officer of Syncora Holdings Ltd.,
effective December 31, 2016. In this role, which he has held since
2010, he actively led global remediation and asset recovery
initiatives, evaluated strategic alternatives for the company, and
oversaw all aspects of the finance function. He previously served
as Special Advisor to Syncoras Board of Directors beginning in
2008. As Special Advisor, he led the successful restructuring of
the company during the 2008-2009 financial crisis. Mr. LeBlanc
joined Syncora in 2006 as Executive Vice President and was
responsible for all corporate development activities, strategic
development, capital planning, and management of key bank and
rating agency relationships.

Prior to joining Syncora, Mr. LeBlanc served as Senior Vice
President of Corporate Development and Strategy and as a member
of the executive management group for XL Capital Ltd. In this
role, he led various global corporate development initiatives,
oversaw and managed significant capital market transactions, and,
reporting to the Chief Financial Officer and Chief of Staff, was
responsible for global strategy development and capital
management. Prior to joining XL Capital in 2002, he served as
Chief Operating Officer and a member of the executive management
team for Transworld Network International, a North American
telecommunications group where he led corporate development,
financial planning, and certain business operations. Mr. LeBlanc
began his career in 1991 at PricewaterhouseCoopers and later
served as Vice President of Financial Advisory Services in 1997
when he advised on mergers and acquisitions, corporate
restructurings, and transaction advisory.

Mr. LeBlanc holds a BA in Economics from York University, a BComm
from the University of Windsor and an MBA from the Schulich School
of Business. He is a Chartered Accountant and Certified Public
Accountant.

Ambac and Ambac Assurance have entered into an Employment
Agreement (the Agreement) with Mr. LeBlanc. The Agreement has an
initial term of one (1) year, beginning on January 1, 2017, 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. LeBlanc is entitled to an
annual base salary of no less than $900,000 (Base Salary) and,
for each calendar year that ends during the Employment Period
starting with the 2017 calendar year, he shall be eligible to
receive an annual bonus to the Companys annual bonus plan for
senior executives, a portion of which, not to exceed 50%, may be
awarded in the form of equity grants as determined in the
discretion of the Compensation Committees of the Boards of
Directors of Ambac and Ambac Assurance (together, the Joint
Compensation Committee). The amount of any such annual bonus paid
to Mr. LeBlanc during the Employment Period shall be based on the
achievement of performance goals that are established by the
Joint Compensation Committee. Mr. LeBlancs target annual bonus
amount shall be 50% of Base Salary and his maximum annual bonus
shall be 200% of Base Salary, as determined by the Joint
Compensation Committee, in its discretion. In addition, Mr.
LeBlanc will be eligible to participate in Ambacs incentive
compensation plan, or any successor or additional plan, subject
to the terms of such plan, as determined by the Joint
Compensation Committee, in its discretion. With respect to each
calendar year that ends during the Employment Period starting
with the 2017 calendar year, Mr. LeBlancs target annual long-term
incentive (LTI) award amount shall be no less than 150% of Base
Salary and Mr. LeBlancs

maximum annual LTI award amount shall be 300% of Base Salary, as
determined by the Joint Compensation Committee in its discretion.

During the Employment Period, Mr. LeBlanc shall be entitled to
participate in all employee benefit plans, practices and programs
maintained by the Company, as in effect from time to time, that
are generally made available to senior executives of the Company.
Any compensation paid to Mr. LeBlanc to this Agreement or any
other agreement or arrangement with the Company shall be subject
to mandatory repayment by Mr. LeBlanc to the Company to the
extent any such compensation paid to Mr. LeBlanc is, or in the
future becomes, subject to (i) the Companys Recoupment Policy as
in effect from time to time, or (ii) any Federal or state law,
rule or regulation which imposes mandatory recoupment. Mr.
LeBlanc shall be required to hold shares of the Companys common
stock as set forth in, and subject to the terms of, Ambacs
Executive Stock Ownership and Retention Policy (Stock Ownership
Policy) as in effect from time to time. The Stock Ownership
Policy generally requires that Mr. LeBlanc hold shares of the
Companys common stock equal in value to six times his Base
Salary.

If Mr. LeBlancs employment is terminated due to death or
disability, he would receive (i) his base salary and any accrued
benefits (as defined in the Agreement) through the date of
termination, and (ii) 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.

If Mr. LeBlancs employment is terminated by the Company for cause
(as defined in the Agreement), or if he resigns without good
reason (as defined in the Agreement), or his employment is
terminated due to the non-renewal of the Agreement by Mr.
LeBlanc, he would receive his base salary and any accrued
benefits through the date of termination; provided that his
accrued benefits shall not include any earned but unpaid annual
bonus for the year preceding the year of termination unless
otherwise determined by the Joint Compensation Committee.

If Mr. LeBlancs employment is terminated by the Company other
than for cause or if he resigns for good reason, or his
employment is terminated due to the non-renewal of the Agreement
by the Company, Mr. LeBlanc would be entitled to (i) receive his
base salary and any accrued benefits through the date of
termination, (ii) receive a lump sum payment equal to two (2)
times the sum of (a) one years Base Salary and (b) the amount of
the annual target bonus for the calendar year in which the date
of termination occurs (Target Bonus), and (iii) receive a lump
sum payment equal to the Target Bonus pro-rated to reflect the
time of service for such year through the date of termination,
and (iv) for up to twelve (12) months following the date of
termination, receive customary outplacement services provided to
senior executives of the Company. To the extent that Mr. LeBlanc
properly elects to continue health care coverage under COBRA, he
and his eligible dependents would also continue to participate in
the Companys basic medical and life insurance programs for twelve
months (subject to earlier discontinuation in certain
circumstances). Furthermore, Mr. LeBlance shall receive twelve
(12) months of vesting acceleration on all of his
then-outstanding time-based equity awards or, if vesting is less
frequent than annually, a pro rata portion in an amount
determined by multiplying the total number of shares or units
covered by the applicable award by a fraction where the numerator
is the number of days that have elapsed from the most recent
vesting date (or, if none, the grant date) and the denominator is
the total number of days covered by the vesting schedule starting
from the grant date and ending on the final scheduled vesting
date, and, with respect to Mr. LeBlancs then-outstanding
performance-based equity awards, Mr. LeBlanc shall be deemed to
have satisfied the service-based component of such awards and
shall 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 his actual service plus
twelve (12) months during each performance period. If Mr.
LeBlanc’s employment is terminated by the Company other than for
cause or if he resigns for good reason, in either case in
contemplation of and no more than 120 days prior to, or within
twelve (12) months following, a change in control (as defined in
the Agreement), he would be entitled to receive the same
compensation described above in this paragraph; provided, that
with respect to all of Mr. LeBlancs outstanding equity awards,
(x) all of the time-based equity awards shall become immediately
vested and (y) with respect to the performance-based equity
awards, Mr. LeBlanc shall 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. LeBlanc 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. LeBlancs termination of employment), non-solicitation
(or hiring) of employees (which runs for 12 months following Mr.
LeBlancs termination of employment), mutual non-disparagement, and
cooperation on certain matters (which runs for 60 months following
Mr. LeBlancs termination of employment).

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.

On December 12, 2016, the Company entered into a Separation
Agreement and General Release (the Separation Agreement) with Mr.
Tavakoli. The principal terms of the Separation Agreement are
summarized below. This summary is qualified in its entirety by
reference to the Separation Agreement, a copy of which is
attached hereto as Exhibit 10.2 and incorporated herein by
reference.

to the Separation Agreement, Mr. Tavakoli will be entitled to
receive (i) a lump sum gross payment of $3,000,000 in accordance
with the terms of the Employment Agreement entered into between
Ambac and Mr. Tavakoli as of January 4, 2016 (the Tavakoli
Employment Agreement) for a termination by Ambac other than for
cause, and (ii) a lump sum payment in the amount of $750,000. As
a consequence of Mr. Tavakolis December 31, 2016 termination
date, he will vest in the portion of the restricted stock units
granted to him on January 4, 2016 that vest on December 31, 2016,
subject to the terms of the Ambacs 2013 Incentive Compensation
Plan and the underlying restricted stock unit (RSU) Agreement
dated as of January 4, 2016. Mr. Tavakolis resignation will be
treated as removal from the Ambac Board without cause for
purposes of determining the vesting of the option and the time
based RSUs and associated dividend equivalents and the service
requirement for performance based RSUs and associated dividend
equivalents (collectively the option, time based RSUs,
performance based RSUs and their respective dividend equivalents
are the 2015 Grants) to Section 5(b) of the Ambac Restricted
Stock Unit and Stock Option Agreement dated as of March 31, 2015.

to the Separation Agreement Mr. Tavakoli provided the Company
with a general release of claims. Mr. Tavakoli will be subject to
certain post-employment obligations set forth in the Tavakoli
Employment Agreement, including, but not limited to, obligations
related to confidentiality, non-disclosure, materials,
non-solicitation, non-competition, compliance with Company
policies, non-disparagement, publicity, cooperation and
enforcement; provided, however, that the term of the cooperation
covenant has been extended to a period of five years following
his termination of employment. to the Separation Agreement, Mr.
Tavakoli will also be retained as a non-employee consultant to
provide certain consulting services to the Company through
December 31, 2017. Such services will include, but not be limited
to, assisting in a smooth leadership transition, advising on
asset or liability management issues, advising on issues arising
with respect to the rehabilitation of the Segregated Account of
Ambac Assurance, consulting on litigation, advising on
operational matters, assisting with year-end financial reporting,
and advising on other matters as may be reasonably requested by
the Company from time to time.

Item 8.01. Other Events.

On December 12, 2016, Ambac issued a press release announcing,
among other things, the management changes described above. A
copy of the press release is attached to this Report as Exhibit
99.1.

Item 9.01 Financial Statements and Exhibits

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