As filed with the Securities and Exchange Commission on April 25, 2003March 31, 2009
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER
UNDER THE SECURITIES ACT OF 1933
AMBAC FINANCIAL GROUP, INC.
(Exact name of Registrant as specified in its charter)
| DELAWARE | 6351 | 13-3621676 | ||
(State or other jurisdiction of incorporation or organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification No.) |
One State Street Plaza
New York, New York 10004
(212) 668-0340
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant’s Principal Executive Offices)
Anne G. Gill Kelly, Esq.
First Vice President,Managing Director, Corporate Secretary and Assistant General Counsel
Ambac Financial Group, Inc.
One State Street Plaza
New York, New York 10004
(212) 208-3355
(Name, Address, Including Zip Code, and Telephone Number, Including
Including Area Code, of Agent for Service)
Copy to:
Michael Groll, Esq.
Dewey & LeBoeuf LLP 1301 Avenue of the Americas New York, New York 10019 (212) 259-8000 |
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Approximate date of commencement of proposed sale to the public:public: From time to time after the effective date of this registration statement as determined by the registrantRegistration Statement.
If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, check the following box. ¨
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. x
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨
If delivery ofthis Form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become effective upon filing with the prospectus is expected to be madeCommission pursuant to Rule 434, please462(e) under the Securities Act, check the following box. ¨
If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box. ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b–2 of the Exchange Act. (Check one):
| Large Accelerated Filer ¨ | Accelerated Filer x | |||
| Non-Accelerated Filer ¨ (Do not check if a smaller reporting company) | Smaller Reporting Company ¨ | |||
CALCULATION OF REGISTRATION FEE
Title of Each Class of Securities to be Registered | Amount to be Registered | Proposed Maximum Offering Price Per Unit(1) | Proposed Maximum Aggregate Offering Price(2)(3) | Amount of Registration Fee(2) | ||||
Debt Securities(4) | — | — | — | — | ||||
Preferred Stock, $0.01 par value(5) | — | — | — | — | ||||
Common Stock, $0.01 par value, including Series A junior participating preferred share purchase rights attached thereto(6) | — | — | — | — | ||||
TOTAL | $495,000,000 | 100% | $495,000,000 | $40,045.50 | ||||
Title of Each Class of Securities to be Registered | Amount to be Registered | Proposed Maximum Offering Price Per Unit(1) | Proposed Maximum Offering Price(2)(3) | Amount of Registration Fee(2) | ||||
Senior Debt Securities(4) | — | — | ||||||
Junior Subordinated Debt Securities(4) | — | — | — | — | ||||
Preferred Stock, $0.01 par value(4) | — | — | — | — | ||||
Common Stock, $0.01 par value(4) | — | — | — | — | ||||
Warrants to purchase Debt Securities, Preferred Stock or Common Stock(4) | — | — | — | — | ||||
Stock Purchase Contracts(4) | — | — | — | — | ||||
Stock Purchase Units(4) | — | — | — | — | ||||
TOTAL | $1,000,000,000 | 100% | $1,000,000,000 | $55,800 | ||||
| (1) | The proposed maximum offering price per unit will be determined from time to time by the registrant in connection with the issuance by the registrant of the securities registered hereunder. |
| (2) | The proposed maximum aggregate offering price has been estimated solely for the purpose of calculating the registration fee pursuant to Rule 457 under the Securities Act of 1933, as amended. |
| (3) | Exclusive of accrued interest, distributions and dividends, if any. |
| (4) | Including such indeterminate principal amount of senior debt securities, junior subordinated debt securities, preferred stock, common stock, warrants, stock purchase contracts or stock purchase units as may, from time, be issued |
Pursuant to Rule 429 under the Securities Act of 1933, as amended, this registration statement also relates to the securities of the registrant previously registered pursuant to Rule 462(b) under the Registration Statement on Form S-3 (No. 333-103868) of the registrant. This registration statement also constitutes post-effective amendment No. 1 to the Registration Statement on Form S-3 (No. 333-103868). A filing fee of $404.50 was paid in connection with $5,000,000 of securities that remain eligible to be sold under the Registration Statement on Form S-3 (No. 333-103868) of the registrant as of the date of the filing of this registration statement. If any such previously registered securities are sold prior to the effective date of this registration statement, they will not be included in this registration statement.
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said section 8(a), may determine.
The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
Subject to completion, dated April 25, 2003
PROSPECTUS
$500,000,000
Ambac Financial Group, Inc.
Common Stock, Preferred Stock and Debt Securities
Ambac Financial Group, Inc. may sell from time to time
Common Stock
Preferred Stock
Senior Debt Securities
Junior Subordinated Debt Securities
Warrants
Stock Purchase Contracts
Stock Purchase Units
We urge youThis prospectus describes some of the general terms that may apply to read this prospectus and the accompanying prospectus supplement, which will describe thethese securities. The specific terms of the common stock, the preferred stock, and thesenior debt securities, junior subordinated debt securities, warrants to purchase our capital stock or debt securities, stock purchase contracts and stock purchase units then being offered will be described in supplements to this prospectus. The prospectus supplements may also add, update or change information contained in this prospectus. You should read this prospectus and the applicable prospectus supplement carefully before you make your investment decision.
We may offer and sell these securities through one or more underwriters, dealers and agents, underwriting syndicates managed or co-managed by one or more underwriters, or directly to purchasers, on a continuous or delayed basis.
This prospectus may not be used to sell securities unless accompanied by a prospectus supplement.
The prospectus supplement for each offering of securities will describe in detail the plan of distribution for that offering. Our common stock is listed on the New York Stock Exchange under the trading symbol “ABK”. Each prospectus supplement will indicate if the securities offered thereby will be listed on any securities exchange.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus or the accompanying prospectus supplement is truthful or complete. Any representation to the contrary is a criminal offense.
This prospectus may not be used to sell securities unless accompanied by a prospectus supplement.
The date of this prospectus is , 2003.March 31, 2009.
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DESCRIPTION OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITS | 18 | |
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This prospectus is part of a registration statement that we filed with the SEC using a “shelf” registration process. Under this shelf process, we may, from time to time, sell any combination of the securities described in this prospectus in one or more offerings up to an aggregate initial offering price of $500,000,000.offerings. This prospectus provides you with a general description of the securities we may offer. Each time we sell securities, we will provide a prospectus supplement that will contain specific information about the terms of that offering. The prospectus supplement may also add, update or change information contained in this prospectus. You should read both this prospectus and any prospectus supplement together with additional information described under the heading “Where You Can Find More Information.”
Unless otherwise stated or the context otherwise requires, references in this prospectus to “Ambac”, “we”, “our” or “us” refer to Ambac Financial Group, Inc., and its direct and indirect subsidiaries.
Ambac Financial Group, Inc., headquartered in New York City, is a holding company whoseincorporated in the state of Delaware. Ambac, through its subsidiaries, provideprovides financial guarantee productsguarantees and other financial services to clients in both the public and private sectors around the world. Ambac was incorporated on April 29, 1991. The long-term senior unsecured debt of Ambac providesis rated BBB with a negative outlook by Standard & Poor’s Ratings Service, a division of the McGraw-Hill Companies, Inc. (“S&P”), and Ba1 on review for possible downgrade by Moody’s Investors Services, Inc. (“Moody’s”). Ambac’s activities are divided into two business segments: (i) Financial Guarantee and (ii) Financial Services.
Ambac has historically provided financial guaranteesguarantee insurance for public finance and structured finance obligations through its principal operating subsidiary, Ambac Assurance Corporation.
Generally,Corporation (“Ambac Assurance”). Ambac Assurance’s financial strength ratings were downgraded during 2008; it now has a Baa1 financial strength rating on review for possible downgrade from Moody’s and is rated A with a negative outlook from S&P. As a result of these rating agency actions, as well as investor concern with respect to these actions, Ambac Assurance and its operating subsidiaries have been able to originate only a de minimis amount of new financial guarantee products writtenbusiness since November 2007.
During the first quarter of 2008, Ambac announced that it would discontinue writing new business in its Financial Services segment as part of its refocused business strategy. The interest rate swap and investment agreement businesses are in active runoff, which may include terminations, settlements, restructuring, assignments of and scheduled amortization of contracts. In the course of managing the inherent risks of these portfolios during runoff, the Financial Services segment may enter into new financial instrument transactions for hedging purposes to the extent we are able to do so.
In addition, in 2008, Ambac undertook a review of all its businesses in its Financial Guarantee segment. In conducting this review, Ambac considered the risk exposure within each business (including management’s view of the probability of default, the potential loss given default and the relevant correlations), the risk adjusted returns over the course of an economic cycle and Ambac’s franchise value and competitive advantages. As a result of this review, Ambac has decided to emphasize global public finance (including municipal finance, healthcare, infrastructure and global utilities) and re-evaluate and/or discontinue its participation in certain sectors of the structured finance market. Additionally, Ambac has revised its underwriting and risk management guidelines and determined to discontinue credit enhancement transactions in credit default swap or other derivative formats; however, it may execute restructuring or hedging transactions in derivative format for purposes of mitigating losses and/or improving our position relative to existing credit exposures.
In December 2008, Ambac also discontinued the quarterly dividend payable on its common stock.
Ambac is working to reduce risk and mitigate losses in its insured portfolio and is seeking to preserve and grow its business franchise. Efforts to preserve and grow Ambac’s business franchise are currently focused primarily on the reactivation of its subsidiary, Connie Lee Insurance Company (which has been renamed Everspan Financial Guarantee Corp.) (“Everspan”). Ambac is also exploring other initiatives including mortgage servicing and consulting businesses in various sectors of the credit markets. If Ambac is unable to accomplish the reactivation of Everspan in a timely manner, Ambac Assurance will need to reduce its operating expenses. Ambac’s efforts to preserve and grow its business will then be primarily focused on initiatives outside the financial guarantee insurance industry; and these initiatives will likely need to be financed by Ambac Financial Group, Inc.
Receipt of financial strength ratings which are sufficiently high to enable Everspan to successfully market its financial guarantees is critical to Everspan’s business plan. To that end, Ambac is engaged in discussions with Moody’s and S&P and is attempting to address their requirements. Foremost among these requirements is the infusion of third party capital, and Ambac is actively seeking third party capital providers. Ambac plans to finance its investment in Everspan by means of a capital contribution by Ambac Assurance. Any such contribution requires the approval of the Office of the Commissioner of Insurance of the State of Wisconsin (“OCI”). The OCI is currently considering Ambac’s request for approval of such a contribution. The OCI has indicated that it will not approve an investment in Everspan by Ambac Assurance guarantee payment when dueunless Everspan receives financial strength ratings of the principal ofat least “AA” from S&P and interest“A2” from Moody’s. Everspan’s success is dependent on the guaranteed obligation. In essence, Ambac steps inwillingness of municipal issuers to make payments if the party responsible for making payments fails to do so.
Ambac Assurance has earned triple-A ratings, the highest ratings available from Moody’s Investors Service, Inc. in 1987, Standard & Poor’s Ratings Services in 1979, Fitch, Inc. in 1994 and Rating and Investment Information, Inc. in 1993. Ambac Assurance’s ratings have been periodically affirmed by each of the rating agencies and have never been revised downward or put on review for a possible downgrade. Moody’s and S&P’s ratings were last reaffirmed in 2002. Fitch’s rating was last reaffirmed in 2001, and R&I’s rating was last reaffirmed in 2003. These ratings are an essential part of Ambac Assurance’s ability to provide credit enhancement.
Ambac Assurance provides itsuse Everspan’s financial guarantees for a variety of products, including:
Ambac Assurance, which serves the global capital markets, is primarily engaged in guaranteeing public finance securities, mortgage-backed securities and asset-backed securities. Global capital markets include the U.S. financial markets and international markets such as the United Kingdom, Japanese and Australian financial markets. Ambac Assurance is the successor of the founding financial guarantee insurance company, which wrote the first bond insurance policy in 1971.
Ambac Assurance seeks to minimize the risk inherent in its financial guarantee portfolio by maintaining a diverse portfolio which spreads its risk across a number of criteria, including issue size, type of obligation, geographic area and obligor, which is the entity responsible for making payments. In the case of default on a guaranteed obligation, payments under the financial guarantee policy generally may not be accelerated by the policyholder without Ambac Assurance’s consent. As of December 31, 2002, Ambac Assurance’s net financial guarantee in force, after giving effect for reinsurance, was $557.4 billion.
Ambac Credit Products, LLC, a wholly owned subsidiary of Ambac Assurance, provides credit protection in the global markets in the form of structured credit derivatives. Structured credit derivatives are privately negotiated contracts that require Ambac Credit to make payments upon the occurrence of certain defined credit events relating
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to an underlying obligation; generally a fixed income obligation. Structured credit derivatives issued by Ambac Credit are guaranteed by Ambac Assurance. Ambac Credit generally enters into structured credit derivative contracts in which its exposure is to highly rated risks.
Ambac provides financial services and investment products principally to its financial guarantee clients which include municipalities and their authorities, school districts, health care organizations and asset-backed issuers.
Through its financial services subsidiaries, Ambac provides financial and investment products that include:
We conduct our investment agreement business through our subsidiary, Ambac Capital Funding, Inc. Ambac Capital provides investment agreements primarily to municipalities and their authorities, mortgage-backed security issuers, asset-backed security issuers and international issuers. The investment agreements written by Ambac Capital are guaranteed by Ambac Assurance. Investment agreements are primarily used by issuers to investmunicipal bond proceeds until the proceeds can be used for their intended purpose.
Ambac provides interest rate swaps through its subsidiary, Ambac Financial Services, L.P., primarily to states, municipalities and their authorities, issuers of asset-backed securities and other entities in connection with their financings. The interest rate swaps provided by Ambac Financial Services are guaranteed by Ambac Assurance and provide a financing alternative that is intended to reduce an issuer’s overall borrowing costs and/or help manage their interest rate risk.
Ambac provides investment advisory, cash management and fund administration services through its subsidiary, Cadre Financial Services, Inc., and broker/dealer services through its subsidiary, Ambac Securities, Inc., primarily to school districts, hospitals and health care organizations, and municipalities.
As a holding company, Ambac Financial Group, Inc. is largely dependent on dividends from Ambac Assurance, its principal operating subsidiary, to pay dividends on its capital stock, to pay principal of and interest on its indebtedness, to pay its operating expenses,investors to purchase its common stock in the open market and to make capital investments in its subsidiaries. Dividends from Ambac Assurance are subject to certain insurance regulatory restrictions.
such securities.
Our principal executive offices are located at One State Street Plaza, New York, New York 10004 and our telephone number is (212) 668-0340.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and accompanying prospectus supplement may contain or incorporate by reference information that includes or is based upon forward-looking statements within the meaning of the Securities Litigation Reform Act of 1995. Forward-looking statements give Ambac’s expectations or forecastsare not historical facts but instead represent management’s belief regarding future events, many of future events.which, by their nature, are inherently uncertain and outside our control. You can identify these statements by the fact that they do not relate strictly to historical or current facts and relate to future operatingplans or financial performance.
objectives and results.
Any or all of our forward-looking statements here or in other publications may turn out to be wrong and are based on current expectations and the current economic environment. Ambac’s actual results may vary materially, and there are no guarantees about the performance of our securities. Among factors that could cause actual results to differ materially are:
difficult economic conditions, which may not improve in the near future, and adverse changes in the economic, credit, foreign currency or interest rate environment in the United States and abroad;
the levelactions of activity within the nationalU.S. Government, Federal Reserve and worldwide debtother government and regulatory bodies to stabilize the financial markets;
the risk that market risks impact assets in our investment portfolio or the value of our assets posted as collateral in respect of investment agreements and pricing levels;interest rate swap and currency swap transactions;
changes in Ambac’s and/or Ambac Assurance’s credit or financial strength ratings;
risks relating to the re-launch of Connie Lee as Everspan Financial Guaranty Corp.;
competitive conditions, pricing levels and reduction in demand for financial guarantee products;
credit and liquidity risks due to unscheduled and unanticipated withdrawals on investment agreements;
inadequacy of reserves established for losses and loss expenses;
changes in capital requirements whether resulting from downgrades in our insured portfolio or changes in rating agencies’ rating criteria or other reasons;
the risk that we may be required to raise additional capital, which could have a dilutive effect on our outstanding equity capital and/or future earnings;
our ability or inability to raise additional capital, including the risks that regulatory or other approvals for any plan to raise capital are not obtained, or that various conditions to such a plan, either imposed by third parties or imposed by Ambac or its Board of Directors, are not satisfied and thus potentially necessary capital raising transactions do not occur, or the risk that for other reasons the Company cannot accomplish any potentially necessary capital raising transactions;
credit risk throughout our business, including credit risk related to residential mortgage-backed securities and collateralized debt obligations and large single exposures to reinsurers;
market spreads and pricing on insured collateralized debt obligations and other derivative products insured or issued by Ambac;
the risk that holders of debt securities or counterparties on credit default swaps or other similar agreements seek to declare events of default or seek judicial relief or bring claims alleging violation or breach of covenants by Ambac or one of its subsidiaries;
default by one or more of Ambac Assurance’s portfolio investments, insured counterparties or reinsurers;
Ambac’s financial position and lack of financial flexibility, resulting principally from the uncertainty of Ambac Assurance’s ability to pay dividends to Ambac without the consent of the office of the Commissioner of Insurance of the State of Wisconsin;
legislative and regulatory developments;developments, including the Troubled Asset Relief Program and other programs under the Emergency Economic Stabilization Act and other similar programs;
changes in accounting principles or practices relating to the financial guarantee industry or that may impact Ambac’s reported financial results;
changes in expectations regarding future realization of gross deferred tax assets;
the risk of volatility in income and earnings, including volatility due to the application of fair value accounting, or SFAS 133, to the portion of our credit enhancement business which is executed in credit derivative form;
the risk that our underwriting and risk management policies and practices do not anticipate certain risks and/or the magnitude of potential for loss as a result of unforeseen risks;
operational risks, including with respect to internal processes, risk models, systems and employees;
factors that may influence the amount of installment premiums paid to Ambac;
the risk of litigation and regulatory inquiries or investigations, and the risk of adverse outcomes in connection therewith, which could have a material adverse effect on our business, operations, financial position, profitability or cash flows;
changes in tax laws; and
Ambac is not obligated to publicly correct or update any forward-looking statement if we later become aware that it is not likely to be achieved, except as required by law. You are advised, however, to consult any further disclosures we make on related subjects in our reports to the SEC.
WeUnless otherwise indicated in the applicable prospectus supplement, we intend to use the proceeds of any securities sold for general corporate purposes.
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RATIO OF EARNINGS TO FIXED CHARGES
The following table contains our ratio of earnings to fixed charges for each of the periods indicated:
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| Years Ended December 31, | ||||||||||||
| 2008 | 2007 | 2006 | 2005 | 2004 | ||||||||
Ratio of earnings (loss) to fixed charges | (46.8x | ) | (56.8x | ) | 16.4x | 18.3x | 18.1x | |||||
We computed the ratio of earnings to fixed charges by dividing earnings (loss) before income taxes and extraordinary items plus fixed charges by the fixed charges. For the purpose of this ratio, fixed charges consist of interest expense incurred, capitalized interest, amortization of debt expense and one-third of rental payments under operating leases, an amount deemed representative of the appropriate interest factor. Since we did not have any preferred stock outstanding during the periods indicated above, our ratio of earnings to combined fixed charges and preference dividends for each relevant period will be the same as our ratio of earnings to fixed charges.
The decline in the ratio of earnings to fixed charges from December 31, 2006 to December 31, 2007 was primarily a result of the impact on earnings of Financial Guarantee insurance losses and the net change in fair value of credit derivatives and net mark-to-market losses on total return derivatives of $256.1 million and ($5,961.3) million, respectively, for the year ended December 31, 2007 versus Financial Guarantee insurance losses and the net change in fair value of credit derivatives and net mark-to-market gains on total return derivatives of $20.0 million and $71.3 million, respectively, for the year ended December 31, 2006.
6The increase in the ratio of earnings to fixed charges from December 31, 2007 to December 31, 2008 was primarily a result of higher incurred interest expenses; partially offset by a higher net loss before taxes for the year ended December 31, 2008 versus 2007. The increase in interest expenses was primarily attributable to the public offering of $250 million of Equity Units on March 12, 2008.
This prospectus contains a summary of the capital stock (including common stock and preferred stock andstock), debt securities (including senior debt securities and junior subordinated debt securities), warrants to purchase our capital stock or debt securities, stock purchase contracts and stock purchase units that we may sell. These summaries are not meant to be a complete description of each security. However, this prospectus, andtogether with the applicable accompanying prospectus supplement, contain all the material terms of the securities being offered.
DESCRIPTION OF CAPITAL STOCKDescription of Capital Stock
Our authorized capital stock consists of 200,000,000650,000,000 shares of common stock, par value $0.01 per share, and 4,000,000 shares of preferred stock, par value $0.01 per share. No shares of preferred stock were issued or outstanding as of April 22, 2003.
March 31, 2009.
Common stockStock
Voting rights.rights. Each holder of common stock is entitled to one vote for each share held on all matters to be voted upon by stockholders.
Dividends.Dividends. The holders of common stock, after any preferences of holders of any preferred stock, are entitled to receive dividends as determined by the board of directors.
Liquidation and dissolution.dissolution. If we liquidate or dissolve, the holders of the common stock will be entitled to share in our assets available for distribution to common stockholders in proportion to the amount of common stock they own. The amount available for common stockholders is calculated after payment of liabilities. Holders of any preferred stock will receive a preferential share of our assets before the holders of the common stock receive any assets.
Other rights.rights. Holders of the common stock have no right toto:
convert or exchange the stock into any other security;
have the stock redeemed; or
purchase additional stock or to maintain their proportionate ownership interest.
The common stock does not have cumulative voting rights. Holders of shares of our common stock are not required to make additional capital contributions.
Our common stock is listed and traded on the New York Stock Exchange under the symbol “ABK.”
Directors’ liabilityTransfer Agent and Registrar
Our amended and restated certificateThe Bank of incorporation provides that, to the fullest extent permitted under Delaware law, a member of the board of directors will not be personally liable to us or our stockholders for monetary damages for any breach of fiduciary duty as a director.
Our amended and restated certificate of incorporation allows us to indemnify directors and officers. We also maintain a directors’ and officers’ liability insurance policy.
Transfer agent and registrar
Citibank, N.A.New York Mellon is the transfer agent and registrar for the common stock.
Removal of directorsDirectors by stockholders.Stockholders
Delaware law provides that members of a board of directors may be removed, with or without cause, by a majority of the outstanding shares entitled to vote on the election of the directors.
Stockholder Nomination of Directors
Stockholder nomination of directors.Our by-laws provide that a stockholder must notify us in writing of any stockholder nomination of a director at least sixty, but not more than ninety, days prior to the date of the meeting for the election of directors. Except
that if we give less than seventy days notice or prior public disclosure of the date for the meeting, then notice by a stockholder is timely if received by us no later than the close of business on the tenth day onafter which such notice was mailed or such public disclosure was made.
10% Stockholder Provision
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10% stockholder provision.Our subsidiary,subsidiaries, Ambac Assurance is aand Everspan, are Wisconsin corporationcorporations and subject to the insurance and regulatory laws of the State of Wisconsin. Under Wisconsin insurance holding company laws, any acquisition of control of Ambac Assurance or Everspan requires the prior approval of the Office of the Commissioner of Insurance of the State of Wisconsin. As a result, section 4.5 of our amended and restated certificate of incorporation provides that no stockholder may cast votes with respect to 10% or more of our voting stock, regardless of the actual number of shares of voting stock beneficially held by the stockholder. In addition, any voting stock held by a stockholder in excess of 10% will not count in the calculation of or toward a quorum at any meeting of stockholders. These voting restrictions will not apply to any stockholder whose acquisition or ownership of 10% or more of our voting stock has been approved by the WisconsinOffice of the Commissioner of Insurance Commissioner.
of the State of Wisconsin.
Delaware Business Combination Statute.Statute
Section 203 of the Delaware General Corporation Law (“DGCL”DGCL”) is applicable to us. Section 203 of the DGCL restricts some types of transactions and business combinations between a corporation and a 15% stockholder. A 15% stockholder is generally considered by Section 203 to be a person owning 15% or more of the corporation’s outstanding voting stock. Section 203 refers to a 15% stockholder as an “interested stockholder.” Section 203 restricts these transactions for a period of three years from the date the stockholder acquired 15% or more of our outstanding voting stock. With some exceptions, unless the transaction is approved by the board of directors and the holders of at least two-thirds of the outstanding voting stock of the corporation, Section 203 prohibits significant business transactions such as:
a merger with, disposition of significant assets to, or receipt of disproportionate financial benefits by, the 15% stockholder, or
any other transaction that would increase the 15% stockholder’s proportionate ownership of any class or series of our capital stock.
The shares held by the 15% stockholder are not counted as outstanding when calculating the two-thirds of the outstanding voting stock needed for approval.
The prohibition against these transactions does not apply if:
prior to the time that any stockholder became a 15% stockholder, the board of directors approved either the business combination or the transaction in which such stockholder acquired 15% or more of our outstanding voting stock, or
the 15% stockholder owns at least 85% of the outstanding voting stock of the corporation as a result of the transaction in which such stockholder acquired 15% or more of our outstanding voting stock. Shares held by persons who are both directors and officers or by some types of employee stock plans are not counted as outstanding when making this calculation.
Stockholders rights plan
Under Delaware law, a corporation may create and issue rights entitling the holders of such rights to purchase from the corporation shares of its capital stock of any class or classes, unless prohibited by its certificate of incorporation. The price and terms of these shares must be stated in the certificate of incorporation or in a resolution adopted by the board of directors.
We have entered into a stockholder rights agreement. As with most stockholder rights agreements, the terms of our rights agreement are complex and not easily summarized, particularly as they relate to the acquisition of our common stock and to the exercisability of the rights. This summary may not contain all of the information that is important to you. Accordingly, you should carefully read our rights agreement, which is incorporated by reference into this prospectus in its entirety.
Our rights agreement provides that each share of our common stock outstanding will initially have attached to it the right to purchase one one-hundredth of a Series A junior participating preferred share of Ambac. As a result of stock splits effected since the adoption of our stockholders rights agreement, each share of common stock presently has attached to it one-third of a share. The purchase price per one one-hundredth of a share of preferred stock is $190, but this amount may be adjusted in some circumstances.
Initially, the rights are attached to all common stock certificates representing shares then outstanding, and no separate rights certificates will be distributed. The rights will separate from the common stock and a distribution date will occur upon the earlier of
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Until the distribution date the rights will be evidenced by the common stock certificates and will be transferred with and only with such common stock certificates, new common stock certificates issued after the record date will contain a notation incorporating the rights agreement by reference and the surrender for transfer of any certificates for common stock outstanding will also constitute the transfer of the rights associated with the common stock represented by such certificate.
The rights are not exercisable until the distribution date and will expire at the close of business on January 31, 2006, unless earlier redeemed or exchanged by Ambac as described below.
As soon as practicable after the distribution date, rights certificates will be mailed to holders of record of the common stock as of the close of business on the distribution date and, thereafter, the separate rights certificates alone will represent the rights. Except as otherwise determined by the board, only shares of common stock issued prior to the distribution date will be issued with rights.
In the event that a person becomes an acquiring person, except pursuant to an offer for all outstanding shares of common stock that the independent directors determine to be fair to and otherwise in the best interests of Ambac and its stockholders, each holder of a right will then have the right to receive, upon exercise, common stock having a value equal to two times the exercise price of the right. Following the occurrence of the event set forth in this paragraph, all rights that are, or were, beneficially owned by any acquiring person will be null and void.
In the event that, at any time following the stock acquisition date,
each holder of a right shall thereafter have the right to receive, upon exercise, common stock of the acquiring company having a value equal to two times the exercise price of the right.
At any time after a person becomes an acquiring person and prior to the acquisition by such person or group of 50% or more of the outstanding common stock, the board may exchange the rights, other than rights owned by such person or groups which have become void, in whole or in part, at an exchange ratio of three shares of common stock, or one one-hundredth of a share of preferred stock, per right, subject to adjustment.
At any time until 10 days following the stock acquisition date, Ambac may redeem the rights in whole, but not in part, at a price of $.01 per right. Immediately upon the action of the board ordering redemption of the rights, the rights will terminate and the only right of the holders of rights will be to receive the $.01 redemption price.
Any of the provisions of the rights agreement may be amended by the board prior to the distribution date. After the distribution date, the provisions of the rights agreement may be amended by the board in order to cure any ambiguity, to make changes which do not adversely affect the interests of holders of rights, or to shorten or lengthen any time period under the rights agreement; however, no amendment may be made at the time when the rights are not redeemable.
The rights may have certain anti-takeover effects. The rights will cause substantial dilution to a person or group that attempts to acquire Ambac in a manner which causes the rights to become discount rights unless the offer is conditional on a substantial number of rights being acquired. The rights, however, should not affect any prospective
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offeror willing to make an offer at a fair price and otherwise in the best interests of Ambac and its stockholders as determined by a majority of the directors who are not affiliated with the person making the offer, or willing to negotiate with the board. The rights should not interfere with any merger or other business combination approved by the board since the board may, at its option, at any time until ten days following the stock acquisition date redeem all but not less than all the then outstanding rights at the redemption price.
The terms of our amended and restated certificate of incorporation and by-laws are complex and not easily summarized. The above summary may not contain all of the information that is important to you. Accordingly, you should carefully read our amended and restated certificate of incorporation and by-laws, which are incorporated by reference into this prospectus in their entirety.
Preferred stockStock
General.General. We are authorized to issue 4,000,000 shares of preferred stock. No shares of preferred stock are currently issued or outstanding. However, shares of preferred stock designated as Series A junior participating preferred stock are authorized and reserved for issuance in connection with the rights agreement described above. Our board of directors may, without stockholder approval, issue shares of preferred stock. The board can issue more than one series of preferred stock. The board has the right to fix the number of shares, dividend rights, conversion rights, voting rights, redemption rights, liquidation preferences and any other rights, preferences, privileges and restrictions applicable to the preferred stock it decides to issue.
Voting rights.rights. The DGCL provides that the holders of preferred stock will have the right to vote separately as a class on any proposal involving fundamental changes in the rights of holders of such preferred stock.
Conversion or exchange.exchange. The prospectus supplement will describe the terms, if any, on which the preferred stock may be convertible into or exchangeable for our debt securities, common stock, debt securitieswarrants or other preferred stock. These terms will include provisions as to whether conversion or exchange is mandatory, at the option of the holder or at our option. These provisions may allow or require the number of our shares of common stock or other securities to be received by the holders of preferred stock to be adjusted.
DESCRIPTION OF DEBT SECURITIESDescription of Debt Securities
The debt securities covered by this prospectus will be our direct unsecured obligations. The debt securities will be either senior debt securities that rank on an equal basis with all our other unsecured and unsubordinated debt, or they will be junior subordinated debt securities that will rank junior to all of our senior unsecured debt including any senior subordinated debt.
The following description briefly sets forth certain general terms and provisions of the debt securities. The prospectus supplement for a particular series of debt securities will describe the particular terms of the debt securities we offer and the extent to which these general provisions may apply to that particular series of debt securities.
Our senior debt securities have been or will be issued under ana senior debt indenture, dated as of April 22, 2003,February 15, 2006, by and between Ambacus and JPMorgan ChaseThe Bank of New York Mellon, as trustee, as supplemented by an officers’ certificate issued pursuant thereto or a supplemental indenture entered into by us and the trustee pursuant thereto. Our junior subordinated debt securities have been or will be issued under a junior subordinated debt indenture, dated as of February 12, 2007, by and between us and The Bank of New York Mellon, as trustee, as supplemented by an officers’ certificate issued pursuant thereto or a supplemental indenture entered into by us and the trustee pursuant thereto. Forms of the senior debt indenture and the junior subordinated debt indenture have been filed with the SEC and are incorporated by reference as Exhibits 4.1 and 4.4, respectively, to the registration statement on Form S-3 under the Securities Act of 1933, of which servesthis prospectus forms a part. The senior debt indenture and the junior subordinated debt indenture are sometimes referred to in this prospectus individually as an “indenture” and collectively as the trustee under the indenture.
“indentures.”
We have summarized all material provisions of the indentureindentures below. The form of the indenture has been filed as an exhibit to the registration statement and youYou should read the indentureindentures for provisions that may be importantfurther information. If we make no distinction in the following summaries between the senior debt securities and the junior subordinated debt securities or between the indentures, such summaries refer to you.
any debt securities and either indenture.
General
The indentures allow us to issue either senior or junior subordinated debt securities will be our direct unsecured general obligations. Thefrom time to time under the applicable indenture without limitation as to amount. We may issue the debt securities will rank equallyin one or more series with all of our other debt.
the same or different terms.
Because we are a holding company, our rights and the rights of our creditors, including the holders of debt securities, to participate in the assets of any subsidiary upon its liquidation or recapitalization will be subject to the prior claims of the subsidiary’s creditors, except to the extent that we may ourself be a creditor with recognized claims against the subsidiary.
We may sell debt securities at a substantial discount below their stated principal amount that bear no interest or below market rates of interest. The applicable prospectus supplement will describe the material federal income tax consequences and special investment considerations applicable to any such series of debt securities.
Provisions Generally Applicable to Both Senior and Junior Subordinated Debt Securities
Unless otherwise indicated, the following terms apply to both the senior debt securities and the junior subordinated debt securities and to both of the indentures.
Terms Specified in the Prospectus Supplement
A prospectus supplement relating to any series of debt securities being offered will include specific terms relating to the offering. The
With respect to either indenture, the prospectus supplement will include some or all of the following for a particular series of debt securities:
the title of debt securities;
any limit on the aggregate principal amount of the debt securities;
the price or prices at which we will sell the debt securities;
the maturity date or dates of the debt securities;
the per annum interest rate or rates, if any, on the series and the date or dates from which any such interest will accrue;
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the dates or dates, or the method by which such date or dates will be determined or, in the case of the junior subordinated indenture, extended, on which we will pay interest on the debt securities and the regular record date for determining who is entitled to the interest payable on any interest payment date;
the place or places where the principal of and premium, if any, and interest on the debt securities will be payable;
if we possess the option to do so, the periods within which and the prices at which we may redeem the debt securities, in whole or in part, pursuant to optional redemption provisions, and the other terms and conditions of any such provisions;
our obligation, if any, to redeem, repay or purchase debt securities by making periodic payments to a sinking fund or through an analogous provision or at the option of holders of the debt securities, and the period or periods within which and the price or prices at which we will redeem, repay or purchase the debt securities, in whole or in part, pursuant to such obligation, and the other terms and conditions of such obligation;
the denominations in which the debt securities will be issued, if other than $1,000 and integral multiples of $1,000;
the portion or methods of determining the portion of the principal amount of the debt securities which we must pay upon the acceleration of the maturity of the debt securities in connection with an Event of Default, as described below, if other than the full principal amount;
the currency, currencies or currency unit in which we will pay the principal of and premium, if any or interest, if any, on the debt securities, if not United States dollars;
provisions, if any, granting special rights to holders of the debt securities upon the occurrence of specified events;
any deletions from, modifications of or additions to the Events of Default or our covenants with respect to the applicable series of debt securities, and whether or not such Events of Default or covenants are consistent with those contained in the applicable indenture;
the application, if any, of the terms of the applicable indenture relating to defeasance and covenant defeasance, which terms are described below, to the debt securities;
whether any of the debt securities will be issued in global form and, if so, the terms and conditions upon which global debt securities may be exchanged for certificated debt securities;
the depositary for global or certificated debt securities;
any trustees, authenticating or paying agents, transfer agents or registrars or other agents with respect to the debt securities; and
whether and under what circumstances we may from time to time, without the consent of holders of debt securities, issue additional debt securities, having the same ranking and the same interest rate, maturity and other terms as the debt securities being offered, except for the issue price and issue date and, in some cases, the first interest payment date, whereby such additional securities will, together with the then outstanding debt securities, constitute a single class of debt securities under the applicable indenture, and will vote together on matters under the applicable indenture; and
any other terms of the debt securities consistent with the provisions of the applicable indenture.
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Restrictive Covenants
Unless we tell you otherwise in an accompanyingWith respect to the junior subordinated indenture, the prospectus supplement may also include some or all of the following restrictive covenants shall apply to eachfor a particular series of debt securities:
Limitation on Liens. So long asour right, if any, and/or obligation, if any, at any time and/or from time to time, during the term of the junior subordinated debt securities are outstanding, neither Ambac norof any series, to defer payments of its subsidiaries will create, incur or guarantee any debt which is secured by any mortgage, pledge, lien, security interest or other encumbrance on any capital stock of Ambac Assurance, any successor to the business of Ambac Assurance which is also a subsidiary of Ambac or any corporation, other than Ambac, having direct or indirect control of Ambac Assurance or any such successor. However, this restriction will not apply if thejunior subordinated debt securities then outstanding are secured at least equally and ratably with the otherwise prohibited secured debt so long as it is outstanding.
Limitations on Dispositions of Stock of Certain Subsidiaries. So long as any debt securities are outstanding and subject to the provisions of the indenture regarding mergers, consolidations and sales of assets, neither Ambac nor any of its subsidiaries will sell or otherwise dispose of any shares of capital stock of Ambac Assurance, any successor to the business of Ambac Assurance which is also a subsidiary of Ambac or any corporation, other than Ambac, having direct or indirect control of Ambac Assurance or any such successor, except for:
| • | our right, if any, and/or obligation, if any, to satisfy our obligation to pay interest then outstanding on and/or principal of the junior subordinated debt securities of a series by selling our common stock, warrants on common stock, securities mandatorily convertible into common stock or non-cumulative perpetual preferred stock or other qualifying securities specified in connection with establishment of the junior subordinated debt securities of such series to third parties that are not our subsidiaries(i.e., a “share settlement mechanism”), the proceeds of which shall be paid to the holders of the junior subordinated debt securities, in satisfaction of interest or principal, as applicable, then due on such junior subordinated debt securities and the terms and conditions of such right and/or obligation, if applicable. |
Consolidation, Merger, Sale of Assets and Other Transactions
Under each of the indenture,indentures, so long as any debt securities are outstanding, we may not consolidate or merge with another corporation or convey, transfer or lease its properties or assets as an entirety or substantially as an entirety to another person, unless:
the successor or purchaser is a corporation organized under the laws of the United States, any state within the United States or the District of Columbia;
the successor or purchaser expressly assumes our obligations under the applicable indenture and the applicable debt securities; and
immediately after the transaction, no Event of Default, and no event which, if notice was given and/or a certain period of time passed, would become an Event of Default, shall exist.
Except as described above, neither of the indentureindentures nor the applicable debt securities contain change of control or similar provisions intended to protect you by requiring us to repurchase or redeem the debt securities if we become involved in a merger or other significant corporate event. In addition, except as described above, no indenture provisions prohibit us from entering into a merger or a significant corporate event.
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Events of Default
Unless we tell you otherwise in an accompanying prospectus supplement, the following shall constitute “Events of Default” under each of the indentureindentures with respect to each series of the applicable debt securities:
our failure for 30 days to pay any interest on any debt security of such series when due;
our failure to pay principal or premium, if any, on any debt security of such series when due, regardless of whether such payment became due because of maturity, redemption, acceleration or otherwise;at maturity;
our failure to pay any sinking fund installment on any debt security of such series when due;
our failure to perform any of our covenants with respect to such debt securities for 60 days after we receive notice of such failure; and
certain events of bankruptcy, insolvency or reorganization of Ambac, Ambac Assurance or any successor to the business of Ambac Assurance which is also a subsidiary of Ambac.Ambac; and
any other event of default established for the debt securities of such series.
We are required to file with the trustee each year a written statement as to our compliance with certain of our obligations under each of the indenture.
indentures.
Remedies
IfUnder each of the indentures, if an Event of Default resulting from the failure to pay interest or principal or premium, if any, on the debt securities of any series exists, either the trustee or the holders of 25% in aggregate principal amount of outstanding debt securities of such series may declare the principal of all the outstanding debt securities of that series and all accrued interest on thosethe applicable debt securities immediately due.
If one of the other Events of Default exists, either the trustee or the holders of 25% in aggregate principal amount of the outstanding debt securities of all existing series, voting together as one class, may declare the principal of all the outstanding debt securities of all series and all accrued interest on thosethe applicable debt securities immediately due.
Under certain conditions, these declarations may be annulled and defaults which have been cured may be waived by the holders of a majority in aggregate principal amount of the outstanding debt securities of the affected series, voting separately, or of all series of the applicable debt securities, voting together as one class, whichever was required to make the declaration in the first place.
Before the principal of the debt securities of any series is declared immediately due as described above, the holders of a majority in aggregate principal amount of the outstanding debt securities of the affected series, voting separately, or of all series, voting together as one class, depending on the nature of the Event of Default, may waive any Event of Default other than an Event of Default:
resulting from a failure to pay principal of and premium, if any, or interest on any of the debt securities or
in respect of a provision of the applicable indenture which cannot be modified without the consent of the holder of each debt security affected by the modification.
If an Event of Default occurs, the holders of a majority in aggregate principal amount of the outstanding debt securities of the affected series, voting separately, or of all series of the applicable debt securities, voting together as one class, depending on the nature of the proceeding, may direct the time, method and place of conducting any proceeding for any remedy available to the trustee, or exercising any trust or power conferred on the trustee. However, unless the applicable indenture requires otherwise, the trustee is not under any obligation to exercise any of its rights or powers under the applicable indenture at the request or direction of holders of applicable debt securities unless such holders offer reasonable indemnity reasonably satisfactory to the trustee.
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Defeasance and Covenant Defeasance
We may, at our option, irrevocably deposit with the trustee money and/or United States government obligations in an amount that would be sufficient to pay the principal of and premium, if any, and interest on the debt securities of a series when each payment becomes due. If we do so, we may then elect to take advantage of the concept of defeasance, which allows us to be discharged from our obligations on the debt securities of such series, other than certain continuing obligations specified in theeach indenture relating to:
the transfer of debt securities;
the replacement of temporary or mutilated, lost or stolen debt securities; and
the place we maintain for payments of the debt securities.
Alternately, we may elect to take advantage of the concept of covenant defeasance, which allows us to be discharged from our obligations with respect to the debt securities of such series under certain covenants.
Notwithstanding the deposit of funds and/or United States government obligations described above, in order to effect defeasance or covenant defeasance, theeach indenture requires us to deliver to the trustee an opinion of counsel that the contemplated defeasance or covenant defeasance will not cause the holders of debt securities of the relevant series to recognize income, gain or loss for federal income tax purposes.
Modification and Waiver
Under each of the indenture,indentures, Ambac and the trustee may supplementmodify the indenture for certain purposes which would not materially adversely affect the interests of the holders of debt securities of a series without the consent of those holders. Ambac and the trustee may also modify theapplicable indenture or any supplemental indenture in a manner that affects the interests or rights of the holders of debt securities with the consent of the holders of at least a majority in principal amount of the outstanding debt securities of all affected series, voting together as one class. However, anyno modification which would
requiresmay, without the consent of eachthe holder of each outstanding debt security affected by the modification, among other things:
change the stated maturity of the principal of, or any installment of interest, if any, on any debt securities;
reduce the principal of or any premium on any debt securities or reduce the rate of interest on any debt security;
reduce the amount of principal of any original issue discount securities that would be due and payable upon an acceleration of the maturity of the debt security;
adversely affect any right of repayment at the option of any holder;
change any currency in which the principal of, premium on or interest on any debt securities are payable;
impair the holder’s right to institute suit to enforce the payment of any debt securities on or after their stated maturity or, in the case of redemption, on or after the redemption date; or
reduce the percentage of debt securities of any series issued whose holders must consent to, or modify any provisions of the applicable indenture relating to, any supplemental indenture or any waiver of compliance with specific provisions of the indenture or specified defaults under the indenture and their consequences, except to increase any such percentage or to provide that certain other provisions of the indenture cannot be modified or waived without the consent of holders affected bythereby.
Each of the modification.indentures also contain provisions permitting us and the trustee, without the consent of the holders of any debt securities issued thereunder, to modify or amend the indenture, among other things:
Theto evidence the succession of another corporation to us and the assumption of our covenants contained in the applicable indenture and the debt securities;
to add to our covenants for the benefit of the holders of all or any series of debt securities or to surrender any right or power conferred upon us;
to add any additional events of default with respect to all or any series of debt securities;
to add to or change any provisions of the indenture to facilitate the issuance of bearer securities;
to add, change or eliminate any of the provisions of this indenture with respect to all or any series of debt securities;
to secure the debt securities in accordance with the indenture;
to establish the form or terms of debt securities of any series permitted under the indenture;
to allow for the issuance of additional debt securities of any series;
to evidence and provide for the acceptance of appointment by a successor trustee and to add or change any provisions of the indenture as shall be necessary to facilitate the administration of the trusts under the indenture;
to cure any ambiguity or correct or supplement any provision in the indenture which may be inconsistent with other provisions in the indenture, or to make any other provisions with respect to matters or questions arising under the indenture which will not adversely affect the interests in any material respect of the holders of the debt securities of any series then outstanding; or
to make any changes to the indenture in order to conform the indenture to the final prospectus provided to investors in connection with the initial offering of the debt securities.
In addition, under the junior subordinated indenture, the following modifications and amendments will not be effective against any holder without its consent:
a change in the manner of calculating payments due on the junior subordinated debt securities of any series in a manner adverse to holders of such junior subordinated debt securities;
a change in the place of payment for any payment on the junior subordinated debt securities of any series that is adverse to holders of such junior subordinated debt securities or a change in the currency in which any payment on such junior subordinated debt securities is payable; and
a change in the subordination of the junior subordinated debt securities of any series in a manner adverse to holders of such junior subordinated debt securities.
Each of the indentures permits the holders of a majority in aggregate principal amount of the outstanding debt securities of all series, voting together as one class, to waive our compliance with certain covenants contained in the applicable indenture.
Payment and Paying Agents
We will make payment of principal of and premium, if any, and interest on debt securities at the place we designate. We may, at our option, make payments of interest by check mailed to the address of the person entitled to receive such interest payment according to the register for the debt securities or by transfer to an account of such person. Interest payments will be made to the person in whose name a debt security is registered as of a certain number of days prior to the relevant payment date. Although we may designate additional paying agents or remove paying agents, we will at all times maintain a paying agent in each place we designate for payment.
If the debt securities are represented by global certificates, payments will be made to The Depository Trust Company.
14Company (“DTC”).
Denominations, Registrations and Transfer
Unless we tell you otherwise in an accompanying prospectus supplement, debt securities will be represented by one or more global certificates registered in the name of a nominee for The Depository Trust Company.DTC. In such case, each owner’s beneficial interest in the global securities will be shown on the records of DTC and transfers of beneficial interests will only be effected through DTC’s records.
Beneficial interests in a global security may only be exchanged for certificated securities registered in the particular owner’s name if:
DTC notifies us that it is unwilling or unable to continue serving as the depositary for the relevant global securities or DTC ceases to maintain certain qualifications under the Securities Exchange Act of 1934, as amended, and no successor depositary has been appointed for 90 days;
we determine, in our sole discretion, that the global security shall be exchangeable; or
an Event of Default has occurred and is continuing.
If debt securities are issued in certificated form, they will only be issued in the minimum denomination specified in the accompanying prospectus supplement and integral multiples of such denomination. Transfers and exchanges of such debt securities will only be permitted in such minimum denomination. Transfers of debt securities in certificated form may be registered at the trustee’s corporate office or at the offices of any paying agent or trustee appointed by Ambac under the applicable indenture. Exchanges of debt securities for an equal aggregate principal amount of debt securities in different denominations may also be made at such locations.
Governing Law
The indentureEach of the indentures and the applicable debt securities will be governed by the laws of the State of New York.
Our Relationship with the Trustee
The Trust Indenture Act of 1939 contains limitations on the rights of a trustee, should it become a creditor of Ambac, to obtain payment of claims in certain cases or to realize on certain property received by it in respect of those claims, as security or otherwise. The Bank of New York Mellon, as trustee, is permitted to engage in other transactions with Ambac and its subsidiaries from time to time, provided that if The Bank of New York Mellon acquires any conflicting interest it must eliminate the conflict upon the occurrence of an event of default under the relevant indenture, or else resign. The trustee under the indenture, JPMorgan Chaseindentures, The Bank of New York Mellon, occasionally acts as trustee in connection with obligations insured by Ambac and its subsidiaries. JPMorgan Chase Bank is also acting as a trustee in connection with certain debt obligations that were previously issued by us. In addition, we have various business dealings with J.P. Morgan Securities Inc., an affiliateaffiliates of the trustee.
Conversion or exchange rightsExchange Rights
The prospectus supplement will describe the terms, if any, on which a series of debt securities may be convertible into or exchangeable for our preferred stock, common stock, preferred stockwarrants or other debt securities. These terms will include provisions as to whether conversion or exchange is mandatory, at the option of the holder or at our option. These provisions may allow or require the number of our shares of common stock, shares of preferred stock, warrants or other debt securities to be received by the holders of such series of debt securities to be adjusted.
Provisions Applicable Solely to Senior Debt Securities
15Unless we tell you otherwise in an accompanying prospectus supplement, the following restrictive covenants shall apply with respect to each series of our senior debt securities:
Limitation on Liens. So long as any senior debt securities are outstanding, neither Ambac nor any of its subsidiaries will create, incur or guarantee any debt which is secured by any mortgage, pledge, lien, security
interest or other encumbrance on any capital stock of Ambac Assurance, any successor to the business of Ambac Assurance which is also a subsidiary of Ambac or any corporation, other than Ambac, having direct or indirect control of Ambac Assurance or any such successor. However, this restriction will not apply if the senior debt securities then outstanding are secured at least equally and ratably with the otherwise prohibited secured debt so long as it is outstanding.
Limitations on Dispositions of Stock of Certain Subsidiaries. So long as any debt securities are outstanding and subject to the provisions of the senior indenture regarding mergers, consolidations and sales of assets, neither Ambac nor any of its subsidiaries will sell or otherwise dispose of any shares of capital stock of Ambac Assurance, any successor to the business of Ambac Assurance which is also a subsidiary of Ambac or any corporation, other than Ambac, having direct or indirect control of Ambac Assurance or any such successor, except for:
a sale or other disposition of any of such stock to a wholly-owned subsidiary of Ambac or of such subsidiary;
a sale or other disposition of all of such stock for at least fair value, as determined by Ambac’s board of directors acting in good faith, or
a sale or other disposition of any of such stock for at least fair value, as determined by Ambac’s board of directors acting in good faith, if, after such transaction, Ambac and its subsidiaries would own more than 80% of the issued and outstanding voting stock of Ambac Assurance or any such successor.
Provisions Applicable Solely to Junior Subordinated Debt Securities
General
Our junior subordinated debt securities will be issued under the junior subordinated indenture. Holders of junior subordinated debt securities should recognize that contractual provisions in the junior subordinated debt indenture may prohibit us from making payments on these securities. The junior subordinated debt securities will rank on an equal basis with certain of our other junior subordinated debt that may be outstanding from time to time and will rank junior to all of our senior indebtedness, as defined below, including any senior debt securities that may be outstanding from time to time.
If we issue junior subordinated debt securities, the aggregate principal amount of senior indebtedness outstanding as of a recent date will be set forth in the applicable prospectus supplement. Neither the senior nor the junior subordinated debt indenture restricts the amount of senior indebtedness that we may incur.
Subordination
The payment of the principal of, and premium, if any, and interest on the junior subordinated debt securities is expressly subordinated, to the extent and in the manner set forth in the junior subordinated indenture, in right of payment to the prior payment in full of all of our senior indebtedness.
Subject to the qualifications described below, the term “senior indebtedness” is defined in the junior subordinated indenture to include principal of, and interest and premium (if any) on, the following:
all indebtedness of Ambac (other than indebtedness issued pursuant to the junior subordinated indenture), whether outstanding on the date of the issuance of the junior subordinated debt securities of any series or thereafter created, incurred or assumed, which is for money borrowed, or which is evidenced by a note, bond, indenture or similar instrument;
all obligations of Ambac under leases required or permitted to be capitalized under generally accepted accounting principles;
all of Ambac’s reimbursement obligations with respect to any letter of credit, banker’s acceptance, security purchase facility or similar credit transactions;
all obligations of the types referred to in the preceding bullet points of another person, the payment of which Ambac is responsible or liable as guarantor or otherwise;
any agreements or obligations to pay deferred purchase price or conditional sales agreements other than in the ordinary course of business;
all obligations of the types referred to in the preceding bullet points of another person secured by any lien on any property or assets of Ambac (whether or not that obligation has been assumed by Ambac); and
amendments, modifications, renewals, extensions, deferrals and refundings of any of the above types of indebtedness.
The junior subordinated debt securities will rank senior to all of our equity securities, including any preferred stock we may issue in the future.
The senior indebtedness will continue to be senior indebtedness and entitled to the benefits of the subordination provisions irrespective of any amendment, modification or waiver of any term of the senior indebtedness or extension or renewal of the senior indebtedness. Notwithstanding anything to the contrary in the foregoing, senior indebtedness will not include (1) indebtedness incurred for the purchase of goods, materials or property, or for services obtained in the ordinary course of business or for other liabilities arising in the ordinary course of business and (2) any indebtedness which by its terms is expressly made equal in rank and payment with or subordinated to the junior subordinated debt securities of any series.
The junior subordinated indenture provides that, unless all principal of, and any premium or interest on, the senior indebtedness has been paid in full, or provision has been made to make these payments in full, no payment or other distribution may be made with respect to the junior subordinated indebtedness in the following circumstances.
any insolvency, bankruptcy, receivership, liquidation, reorganization, readjustment, composition or other similar proceeding relating to Ambac, its creditors or its property;
any proceeding for the liquidation, dissolution or other winding-up of Ambac, voluntary or involuntary, whether or not involving insolvency or bankruptcy proceedings;
any assignment by Ambac for the benefit of creditors;
any other marshaling of the assets of Ambac;
a default in the payment of principal, premium, if any, sinking fund or interest with respect to any of our senior indebtedness, whether at maturity or at a date fixed for prepayment or declaration or otherwise; or
an event of default occurs with respect to any senior indebtedness permitting the holders to accelerate the maturity and written notice of such event of default, requesting that payments on the junior subordinated debt securities cease, is given to Ambac by the holders of senior indebtedness unless and until such default in payment or event of default has been cured or waived or ceases to exist.
A merger, consolidation or conveyance of all or substantially all of our assets on the terms and conditions provided in the junior subordinated indenture will not be deemed a liquidation, dissolution or winding-up for the purposes of these subordination provisions.
Notwithstanding the foregoing subordination provisions, we may make payments or distributions on the junior subordinated debt securities of any series so long as:
the payments or distributions consist of securities issued by us or another company in connection with a plan of reorganization or readjustment; and
payment on those securities is subordinate to outstanding senior debt and any securities issued with respect to senior debt under such plan of reorganization or readjustment at least to the same extent provided in the subordination provisions of such junior subordinated debt securities.
If the holders of junior subordinated securities receive any payment or distribution of our assets not permitted by the subordination provisions, the holders of junior subordinated debt securities will have to repay that amount to the holders of the senior debt securities or to the trustee.
Subrogation
After the payment in full of all senior indebtedness, the holders of the junior subordinated debt securities will be subrogated to the rights of the holders of senior indebtedness to receive payments or distributions of our assets or securities applicable to the senior indebtedness until the junior subordinated debt securities are paid in full. Under these subrogation provisions, no payments or distributions to the holders of senior indebtedness which otherwise would have been payable or distributable to holders of the junior subordinated debt securities will be deemed to be a payment by us to holders of or on the account of the senior indebtedness. These provisions of the junior subordinated indenture are intended solely for the purpose of defining the relative rights of the holders of the junior subordinated debt securities and the holders of the senior debt securities. Nothing contained in the junior subordinated indenture is intended to impair our absolute obligation to pay the principal of and premium and interest on the junior subordinated debt securities in accordance with their terms or to affect the relative rights of the holders of the junior subordinated debt securities and our creditors other than the holders of the senior indebtedness. These subrogation provisions of the junior subordinated indenture will not prevent the holder of any junior subordinated debt security from exercising all remedies otherwise permitted by applicable law upon default of that security, subject to the rights of subordination described above.
We may issue warrants to purchase our debt securities, preferred stock or common stock. Each warrant will entitle the holder of warrants to purchase for cash the amount of debt securities, preferred stock or common stock at the exercise price stated or determinable in the prospectus supplement for the warrants. We may issue warrants independently or together with any offered securities. The warrants may be attached to or separate from those offered securities. We will issue the warrants under warrant agreements to be entered into between us and a bank or trust company, as warrant agent, all as described in the applicable prospectus supplement. The warrant agent will act solely as our agent in connection with the warrants and will not assume any obligation or relationship of agency or trust for or with any holders or beneficial owners of warrants.
The prospectus supplement relating to any warrants that we may offer will contain the specific terms of the warrants. These terms may include the following:
the title of the warrants;
the price or prices at which the warrants will be issued;
the designation, amount and terms of the securities for which the warrants are exercisable;
the designation and terms of our debt securities, preferred stock or common stock, if any, with which the warrants are to be issued and the number of warrants issued with each such debt security, preferred stock or common stock;
the aggregate number of warrants;
any provisions for adjustment of the number or amount of securities receivable upon exercise of the warrants or the exercise price of the warrants;
the price or prices at which the securities purchasable upon exercise of the warrants may be purchased;
the date on and after which the warrants and the securities purchasable upon exercise of the warrants will be separately transferable, if applicable;
a discussion of any material U.S. federal income tax considerations applicable to the exercise of the warrants;
the date on which the right to exercise the warrants will commence, and the date on which the right will expire;
the maximum or minimum number of warrants that may be exercised at any time;
information with respect to book-entry procedures, if any; and
any other terms of the warrants, including terms, procedures and limitations relating to the exchange and exercise of the warrants.
Description of Stock Purchase Contracts and Stock Purchase Units
The following is a general description of the terms of the stock purchase contracts and stock purchase units we may issue from time to time.
The applicable prospectus supplement will describe the terms of any stock purchase contracts or stock purchase units and, if applicable, prepaid stock purchase contracts. The description in the prospectus supplement will be qualified in its entirety by reference to (1) the stock purchase contracts, (2) the collateral arrangements and depositary arrangements, if applicable, relating to such stock purchase contracts or stock purchase units and (3) if applicable, the prepaid stock purchase contracts and the document pursuant to which such prepaid stock purchase contracts will be issued.
Stock Purchase Contracts
We may issue stock purchase contracts, including contracts obligating holders to purchase from us, and obligating us to sell to holders, a fixed or varying number of common stock or preferred stock at a future date or dates. The consideration per share of common stock or preferred stock may be fixed at the time that the stock purchase contracts are issued or may be determined by reference to a specific formula set forth in the stock purchase contracts. Any stock purchase contract may include anti-dilution provisions to adjust the number of shares issuable pursuant to such stock purchase contract upon the occurrence of certain events.
Stock Purchase Units
The stock purchase contracts may be issued separately or as a part of units (“stock purchase units”), consisting of a stock purchase contract and debt securities, preferred securities or debt or equity obligations of third parties, including U.S. Treasury securities, in each case securing holders’ obligations to purchase common stock or preferred stock under the stock purchase contracts. The stock purchase contracts may require us to make periodic payments to holders of the stock purchase units, or vice versa, and such payments may be unsecured or prefunded and may be paid on a current or on a deferred basis. The stock purchase contracts may require holders to secure their obligations thereunder in a specified manner and in certain circumstances we may deliver newly issued prepaid stock purchase contracts upon release to a holder of any collateral securing such holder’s obligations under the original stock purchase contract. Any one or more of the above securities, common stock or the stock purchase contracts or other collateral may be pledged as security for the holders’ obligations to purchase or sell, as the case may be, the common stock or preferred stock under the stock purchase contracts. The stock purchase contracts may also allow the holders, under certain circumstances, to obtain the release of the security for their obligations under such contracts by depositing with the collateral agent as substitute collateral U.S. Treasury securities with a principal amount at maturity equal to the collateral so released or the maximum number of shares deliverable by such holders under stock purchase contracts requiring the holders to sell common stock or preferred stock to us.
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements, and other information with the SEC. These reports, proxy statements, and other information can be read and copied at the SEC’s public reference roomPublic Reference Room at 450 Fifth100 F Street, N.W.N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room.Public Reference Room. The SEC maintains an internet site at http://www.sec.gov that contains reports, proxy and information statements and other information regarding companies that file electronically with the SEC, including Ambac. These reports, proxy statements and other information can also be read at the offices of the NYSE, 20 Broad Street, New York, New York 10005.
10005 or on our internet site at www.ambac.com. Information on our website is not incorporated into this prospectus or our other SEC filings and is not a part of this prospectus or those filings.
This prospectus is part of a registration statement filed by us with the SEC. The full registration statement can be obtained from the SEC as indicated above, or from us.
The SEC allows us to “incorporate by reference” the information we file with the SEC. This permits us to disclose important information to you by referencing these filed documents. Any information referenced this way is considered part of this prospectus, and any information filed with the SEC subsequent to this prospectus and prior to the termination of the particular offering referred to in such prospectus supplement will automatically be deemed to update and supersede this information. We incorporate by reference the following documents which have been filed with the SEC:
Annual Report on Form 10-K for the fiscal year ended December 31, 20022008 (filed on March 28, 2003)16, 2009);
Current ReportsReport on Form 8-K filed January 24, 2003,on February 28, 2003, March 4, 2003, March 20, 2003, March 26, 2003, March 31, 2003 and April 21, 2003;2, 2009;
Portions of our Definitive Proxy Statement on Schedule 14A filed on March 25, 2009 that are incorporated by reference into Part III of our Annual Report on Form 10-K for the fiscal year ended December 31, 2008; and
Registration Statements on Form 8-A dated June 12, 1991 and February 28, 1996; and1991.
We incorporate by reference the documents listed above and any future filings made with the SEC in accordance with Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, with the exception of any documents deemed not to be filed and any documents filed pursuant to Item 402(a)(8) of Regulation S-K under the Securities Act.
We will provide without charge upon written or oral request, a copy of any or all of the documents which are incorporated by reference toin this prospectus, other than exhibits which are specifically incorporated by reference into those documents. Requests should be directed to Peter R. Poillon,Vandana Sharma, First Vice President, Investor Relations, Ambac Financial Group, Inc., One State Street Plaza, New York, New York 10004 (telephone number (212) 668-0340)208-3314 or at vsharma@ambac.com).
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We may sell the common stock, preferred stock or any series of debt securities in one or more of the following ways from time to time:
The prospectus supplements will state the terms of the offering of the securities, including:
If we use underwriters in the sale, the securities will be acquired by the underwriters for their own account and may be resold from time to time in one or more transactions, including:
Unless otherwise stated in a prospectus supplement, the obligations of the underwriters to purchase any securities will be conditioned on customary closing conditions and the underwriters will be obligated to purchase all of such securities, if any are purchased.
Underwriters and agents may be entitled under agreements entered into with us to indemnification by us against certain civil liabilities, including liabilities under the Securities Act of 1933, or to contribution with respect to payments which the underwriters or agents may be required to make.
Underwriters and agents may be customers of, engage in transactions with, or perform services for us and our affiliates in the ordinary course of business.
Any underwriters to whom securities are sold by us for public offering and sale may make a market in the securities, but such underwriters will not be obligated to do so and may discontinue any market making at any time without notice. The securities, other than the common stock, may or may not be listed on a national securities exchange. Securities offered by a prospectus supplement will be a new issue of securities and will have no established trading market, other than our common stock which is listed on the New York Stock Exchange. Any common stock sold will be listed on the New York Stock Exchange, upon official notice of issuance.
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Anne G. Gill Kelly, Esq., First Vice President,Managing Director, Corporate Secretary and Assistant General Counsel of Ambac, One State Street Plaza, New York, New York 10004, and/or Skadden, Arps, Slate, MeagherDewey & FlomLeBoeuf LLP, New York, New York 1003610019 will act as our legal counsel. Anne G. Gill Kelly, Esq. will issue an opinion aboutregarding the legality of the securities.securities registered hereby. Anne G. Gill Kelly, Esq. beneficially owns, or has the right to acquire under Ambac’s employee benefit plans, an aggregate of less than 1% of Ambac’s common stock. Sidley Austin Brown & Wood LLP, New York, New York, will act as counsel to the underwriters or agents.
Ambac and Ambac Assurance’sAmbac’s consolidated financial statements and related financial statement schedules as of December 31, 20022008 and 20012007 and for each of the years in the three-year period ended December 31, 2002,2008 and management’s assessment of the effectiveness of internal control over financial statements which appear in the Annual Reportreporting as of Employee Stock Purchase Plans on Form 11-K,December 31, 2008, have been incorporated by reference herein and in this prospectus (and the registration statement of which it forms a part) in reliance upon the reports of KPMG LLP, independent certifiedregistered public accountants,accounting firm, thereon, which reports are also incorporated by reference herein,in this prospectus (and the registration statement of which it forms a part), and upon the authority of said firm as experts in accounting and auditing.
18 The report of KPMG LLP on such consolidated financial statements and related financial statement schedules refers to changes in Ambac’s method of accounting regarding Fair Value Measurements in 2008 and notes that Ambac experienced significant credit rating downgrades during 2008 and has not written measurable financial guarantee business since November 2007. The credit rating downgrades have adversely impacted Ambac’s ability to generate new business and will negatively impact Ambac’s future business, operations and financial results.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
| Item 14. | Other Expenses of Issuance and Distribution. |
The expenses relating to the registration of the debenturessecurities will be borne by the registrant. Such expenses are estimated to be as follows:
Securities and Exchange Commission Registration Fee | $ | 40,045.50 | $ | 55,800 | ||
Transfer Agents and Trustees’ Fees and Expenses | $ | 25,000 | $ | 70,000 | ||
Printing and Engraving Fees and Expenses | $ | 150,000 | $ | 100,000 | ||
Accounting Fees and Expenses | $ | 75,000 | $ | 100,000 | ||
Legal Fees | $ | 125,000 | $ | 300,000 | ||
Rating Agency Fees | $ | 75,000 | $ | 100,000 | ||
Stock Exchange Listing Fees | $ | 10,000 | $ | 25,000 | ||
Miscellaneous | $ | 10,000 | $ | 100,000 | ||
Total | $ | 510,045.50 | $ | 850,800 | ||
Item 15. Indemnification of Directors and Officers.
| Item 15. | Indemnification of Directors and Officers. |
As authorized by Section 145 of the General Corporation Law of the State of Delaware, each director and officer of Ambac may be indemnified by Ambac against expenses (including attorney’s fees, judgments, fines and amounts paid in settlement) actually and reasonably incurred in connection with the defense or settlement of any threatened, pending or completed legal proceedings in which he is involved by reason of the fact that he is or was a director or officer of Ambac if he acted in good faith and in manner that he reasonably believed to be in or not opposed to the best interests of Ambac and, with respect to any criminal action or proceeding, if he had no reasonable cause to believe that his conduct was unlawful. In addition, Article VII of the amended and restated certificate of incorporation of Ambac and Article IX of its by-laws authorize Ambac to indemnify any person entitled to be indemnified under law. If the legal proceeding, however, is by or in the right of Ambac, the director or officer may not be indemnified in respect of any claim, issue or matter as to which he shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to Ambac unless a court determines otherwise.
In addition, Ambac maintains a directors’ and officers’ liability insurance policy.
Article VI of the amended and restated certificate of incorporation of Ambac provides that, to the fullest extent permitted by law, no director of Ambac will be personally liable for monetary damages to Ambac or its stockholders for any breach of fiduciary duty as a director.
Item 16. List of Exhibits.
| Item 16. | List of Exhibits. |
The Exhibitsexhibits to this registration statement are listed in the Exhibit Index to Exhibitsbeginning on page II-5.II-6.
| Item 17. | Undertakings. |
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) toTo file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i) toTo include any prospectus required by section 10(a)(3) of the Securities Act of 1933;
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(ii) toTo reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; notwithstandingstatement. Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20%20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;
(iii) toTo include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement, provided,statement;
Provided, however, that paragraphs 1(i)(a)(1)(i), (a)(1)(ii) and 1(ii)(a)(1)(iii) of this section do not apply if the registration statement is on Form S-3 or Form F-3 and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934, as amended, that are incorporated by reference in the registration statement;statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the registration statement.
(2) that,That, for purposesthe purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initialbona fide offering thereof;
thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:
(i) Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and
(ii) Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii) or (x) for the purpose of providing the information required by section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initialbona fide offering thereof.Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date.
(5) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless
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of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
(b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s annual report, pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934, as amended) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered herein,therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrantRegistrant pursuant to the foregoing provisions, set forth in Item 15, or otherwise, the registrantRegistrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrantRegistrant of expenses incurred or paid by a director, officer or controlling person of the registrantRegistrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrantthat Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on April 25, 2003.March 31, 2009.
AMBAC FINANCIAL GROUP, INC.
KNOWN ALL MEN BY THESE PRESENTS that each person whose signature to this registration statement appears below hereby constitutes and appoints each of Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities
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EXHIBIT INDEX
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