AMBAC 1997 EQUITY PLAN
(AMENDED OCTOBER 28, 1997)
The purposes of the Ambac 1997 Equity Plan (the "PLAN") are to attract, retain and motivate key employees of
the Company, to compensate them for their contributions to the growth and profits of the Company and to
encourage ownership by them of Common Stock.
For purposes of the Plan, the following terms shall be defined as follows:
"ADMINISTRATOR" means the individual or individuals to whom the Committee delegates authority under the
Plan in accordance with Section 3(d).
"AMBAC" means Ambac Financial Group, Inc., a Delaware corporation.
"AWARD" means an award made pursuant to the terms of the Plan to an Eligible Individual in the form of Stock
Options, Stock Appreciation Rights, Stock Awards, Restricted Stock Units, Performance Units or Other
"AWARD AGREEMENT" means a written document approved in accordance with Section 3 which sets forth
the terms and conditions of the Award to the Participant. An Award Agreement may be in the form of (i) an
agreement between Ambac or one of its Subsidiaries which is executed by an officer on behalf of Ambac or such
Subsidiary and is signed by the Participant or (ii) a certificate issued by Ambac or one of its Subsidiaries which is
executed by an officer on behalf of Ambac or such Subsidiary but does not require the signature of the
"BOARD" means the Board of Directors of the Company.
"CODE" means the Internal Revenue Code of 1986, as amended, and the applicable rulings and regulations
(including any proposed regulations) thereunder.
"COMMITTEE" means the Compensation and Organization Committee of the Board, any successor committee
thereto or any other committee appointed from time to time by the Board to administer the Plan. The Committee
shall consist of at least two individuals and shall serve at the pleasure of the Board.
"COMMON STOCK" means the Common Stock, par value $.01 per share, of the Company.
"COMPANY" means Am