SECOND AMENDED AND RESTATED
SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT dated as of July 18, 1991, as
initially amended and restated in full as of December 30, 1994 and subsequently further amended and restated in
full as of December 2, 1997, by and between AMBAC FINANCIAL GROUP, INC., a Delaware corporation
(the "COMPANY"), and PHILLIP B. LASSITER (the "EXECUTIVE").
WHEREAS, the Company and the Executive originally entered into this Agreement as of July 18, 1991 providing
for the Executive to be employed by the Company as its Chairman and Chief Executive Officer upon the terms
and conditions set forth in such original agreement, the Executive's positions having subsequently been enlarged to
include President of the Company; and
WHEREAS, the Company and the Executive amended and restated this Agreement in its entirety as of
December 30, 1994 in order to reflect certain amendments to the terms thereof; and
WHEREAS, the Company and the Executive have agreed to amend this Agreement further, principally to
conform to certain terms set forth in Amended and Restated Management Retention Agreements between the
Company and certain of its senior officers, and to restate this Agreement in its entirety;
NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the parties
hereto hereby agree as follows (capitalized terms used herein without definition shall have the meanings ascribed
to such terms in Section 12 below):
1. EMPLOYMENT AND DUTIES.
(a) EFFECTIVE DATE. The effective date of this Agreement (the "EFFECTIVE DATE") was July 18, 1991,
such date being the date of the consummation of the "Equity Offerings," as such term is defined in Registration
Statement No. 33-40306 on Form S-1 of the Company.
(b) GENERAL. The Company hereby continues the employment of the Executive, and the Executive agrees
upon the terms and conditions herein set forth to continue to serve, as the Chairman, President and Chief