Exhibit 1.2
AMBAC FINANCIAL GROUP, INC.
(a Delaware corporation)
Senior Debt Securities
TERMS AGREEMENT
| To: | Ambac Financial Group, Inc. |
One State Street Plaza
New York, New York 10004
Ladies and Gentlemen:
We understand that Ambac Financial Group, Inc., a Delaware corporation (the “Company”), proposes to issue and sell $200,000,000 aggregate principal amount of its Senior Debt Securities (such securities being hereinafter referred to as the “Underwritten Securities”). Subject to the terms and conditions set forth or incorporated by reference herein, the underwriters named below (the “Underwriters”) offer to purchase, severally and not jointly, the principal amount of Underwritten Securities set forth opposite their names below at the purchase price set forth below.
1
Underwriter | Principal Amount of Underwritten Securities | ||
Goldman, Sachs & Co. | $ | 27,487,500 | |
Merrill Lynch, Pierce, Fenner & Smith Incorporated |
| 27,487,500 | |
Morgan Stanley & Co. Incorporated |
| 27,375,000 | |
Salomon Smith Barney Inc. |
| 27,375,000 | |
UBS Warburg LLC |
| 27,375,000 | |
Banc of America Securities LLC |
| 15,000,000 | |
Credit Suisse First Boston LLC |
| 15,000,000 | |
Lehman Brothers Inc. |
| 15,000,000 | |
A.G. Edwards & Sons, Inc. |
| 850,000 | |
Barclays Capital Inc. |
| 850,000 | |
Bear, Stearns & Co. Inc. |
| 850,000 | |
BNY Capital Markets, Inc. |
| 850,000 | |
Charles Schwab & Co., Inc. |
| 850,000 | |
CIBC World Markets Corp. |
| 850,000 | |
Deutsche Bank Securities Inc. |
| 850,000 | |
Fleet Securities, Inc. |
| 850,000 | |
Legg Mason Wood Walker, Incorporated |
| 850,000 | |
Prudential Securities Incorporated |
| 850,000 | |
RBC Dain Rauscher Inc. |
| 850,000 | |
Scotia Capital (USA) Inc. |
| 850,000 | |
U.S. Bancorp Piper Jaffray Inc. |
| 850,000 | |
Wells Fargo Investment Services, LLC |
| 850,000 | |
Advest, Inc. |
| 500,000 | |
Fahnestock & Co. Inc. |
| 500,000 | |
H&R Block Financial Advisors, Inc. |
| 500,000 | |
J.J.B. Hillard, W.L. Lyons, Inc. |
| 500,000 | |
Janney Montgomery Scott LLC |
| 500,000 | |
McDonald Investments Inc. |
| 500,000 | |
Morgan Keegan & Company, Inc. |
| 500,000 | |
Ramirez & Co., Inc. |
| 500,000 | |
Raymond James & Associates, Inc. |
| 500,000 | |
Robert W. Baird & Co. Incorporated |
| 500,000 | |
SWS Securities, Inc. |
| 500,000 | |
TD Securities (USA) Inc. |
| 500,000 | |
Total | $ | 200,000,000 | |
2
The Underwritten Securities shall have the following terms:
Title: | 5.95% Debenture Due February 28, 2103 | |
Rank: | Unsecured senior indebtedness | |
Ratings: | “Aa2” by Moody’s Investors Service, Inc. | |
Aggregate principal amount: | $200,000,000 | |
Denominations: | $25 and integral multiples in excess thereof | |
Currency of payment: | United States dollars | |
Interest rate or formula: | 5.95% per annum, payable quarterly in arrears | |
Interest payment dates: | March 31, June 30, September 30 and December 31 of each year, commencing March 31, 2003 | |
Regular record dates: | March 15, June 15, September 15 and December 15, next preceding the relevant Interest Payment Date | |
Stated maturity date: | February 28, 2103 | |
Redemption provisions: | The Notes are redeemable at the option of the Company in whole at any time or in part from time to time commencing February 28, 2008, upon not less than 30 calendar days and not more than 60 calendar days prior written notice at a price of 100% of the principal amount to be redeemed, plus unpaid interest accrued to the redemption date. | |
Optional Redemption Upon Tax Event: | | |
Sinking fund requirements: | The debentures will not have the benefit of, or be subject to, any sinking fund. | |
Listing requirements: | Application will be made to list the debentures on the New York Stock Exchange. |
3
Fixed or Variable Price Offering: Fixed Price Offering | ||
If Fixed Price Offering, initial public offering price: 100% of the principal amount, plus accrued interest, if any, from February 28, 2003. | ||
Purchase price: | 96.85% of the principal amount. | |
Form: | Book-entry | |
Other terms and conditions: | N/A | |
Closing date and location: | February 28, 2003 at Sidley Austin Brown & Wood LLP, 787 Seventh Avenue, New York, New York 10019. | |
Co-Managers: | Goldman, Sachs & Co. and Merrill Lynch, Pierce, Fenner & Smith Incorporated. | |
Notices: Notices to the Underwriters shall be directed to the Representative(s) c/o Goldman, Sachs & Co., 85 Broad Street, New York, New York 10004 Attention: and Merrill Lynch, Pierce, Fenner & Smith Incorporated, 4 World Financial Center, New York, New York 10080 Attention: .
All of the provisions contained in the Company’s Underwriting Agreement, dated February 25, 2003, (the “Underwriting Agreement”) are hereby incorporated by reference in their entirety herein and shall be deemed to be a part of this Terms Agreement to the same extent as if such provisions had been set forth in full herein. Terms defined in the Underwriting Agreement are used herein as therein defined.
This Agreement shall be governed by the laws of the State of New York applicable to agreements made and to be performed wholly within such State.
If the foregoing is in accordance with your understanding of the agreement among the Underwriters and the Company, please sign and return to the undersigned a counterpart hereof, whereupon this instrument, along with all counterparts and together with the Underwriting Agreement, shall be a binding agreement among the Underwriters named herein and the Company in accordance with its terms and the terms of the Underwriting Agreement.
4
Very truly yours,
GOLDMAN, SACHS & CO. | ||
By: | ||
(Goldman, Sachs & Co.) | ||
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED | ||
By: | ||
Authorized Signatory | ||
Acting on behalf of themselves and as Representatives of the other named Underwriters. | ||
Accepted:
AMBAC FINANCIAL GROUP, INC.
By | ||
Name: Title: |
5
