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Ace Limited 1999 Replacement Stock Plan

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Sectors: Insurance
Effective Date: January 01, 1999
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ACE LIMITED
1999 REPLACEMENT STOCK PLAN


ARTICLE 1
GENERAL
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1.1 Purpose. The ACE Limited 1999 Replacement Stock Plan (the "Plan") has been established by ACE Limited (the "Company") for the purpose of (i) amending, restating, combining into a single plan, and continuing the Capital Re Corporation Director's Stock Option Plan, the Capital Re Corporation 1992 Stock Option Plan, the Capital Re Corporation 1997 Employee Stock Option Plan and the Capital Re Corporation Performance Share Plan, as in effect immediately prior to the Transaction Date (as described below) (collectively, the "CapRe Plans"); (ii) permitting the grant of Awards to selected individuals in connection with the closing of the transaction (the "Transaction") pursuant to and as of the date (the "Transaction Date") contemplated by the Amended and Restated Agreement and Plan of Merger among the Capital Re Corporation ("CapRe"), the Company and CapRe Acquisition Corporation, dated as of October 26, 1999 (the "Merger Agreement"), including the granting of Replacement Awards in satisfaction of the Company's obligations under Section 6.12 of the Merger Agreement; and (iii) permitting the granting of compensation that is based on the Company's ordinary shares of stock.


1.2 Participation. Subject to the terms and conditions of the Plan, the Committee shall determine and designate, from time to time, from among the Eligible Individuals, those persons who will be granted one or more Awards (including, without limitation, Replacement Awards described in Section 2) under the Plan, and thereby become "Participants" in the Plan. In the discretion of the Committee, a Participant may be granted any Award permitted under the provisions of the Plan, and more than one Award may be granted to a Participant. Awards may be granted as alternatives to or replacement of awards granted or outstanding under the Plan, or any other plan or arrangement of the Company or a Subsidiary (including a plan or arrangement of a business or entity, all or a portion of which is acquired by the Company or a Subsidiary).


1.3 Operation, Administration, and Definitions. The operation and administration of the Plan, including the Awards made under the Plan, shall be subject to the provisions of Section 5 (relating to operation and administration). Capitalized terms in the Plan (excluding any exhibits to the Plan) shall be defined as set forth in the Plan (without regard to such exhibits).


ARTICLE 2
REPLACEMENT AWARDS
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The Committee may grant awards under this Plan in replacement of awards granted prior to Transaction Date under any of the CapRe Plans (the "Replacement Awards"). To the extent provided by the Committee, or required by the terms of the Merger Agreement, the Replacement Awards shall be subject to the applicable terms of the CapRe Plans.


SECTION 3
OPTIONS AND SARS
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3.1 Definitions.


(a) The grant of an "Option" entitles the Participant to purchase shares of
Stock at an Exercise Price established by the Committee. Any Option granted
under this Section 3 shall be a non-qualified option (an "NQO"), as
determined in the discretion of the Committee. An "NQO" is an Option that
is not intended to be an "incentive stock option" as that term is described
in section 422(b) of the Code.


(b) A stock appreciation right (an "SAR") entitles the Participant to receive,
in cash or Stock (as determined in accordance with subsection 4.5), value
equal to (or otherwise based on) the excess of: (a) the Fair Market Value
of a specified number of shares of Stock at the time of exercise; over (b)
an Exercise Price established by the Committee.


3.2 Exercise Price. The "Exercise Price" of each Option and SAR granted under this Section 3 shall be established by the Committee or shall be determined by a method established by the Committee at the time the Option or SAR is granted; except that the Exercise Price shall not be less than 100% of the Fair Market Value of a share of Stock on the date of grant (or, if greater, the par value of a share of Stock).


3.3 Exercise. An Option and an SAR shall be exercisable in accordance with such terms and conditions and during such periods as may be established by the Committee.


3.4 Payment of Option Exercise Price. The payment of the Exercise Price of an Option granted under this Section 3 shall be subject to the following:


(a) Subject to the following provisions of this subsection 3.4, the full
Exercise Price for shares of Stock purchased upon the exercise of any
Option shall be paid at the time of such exercise (except that, in the case
of an exercise arrangement approved by the Committee and described in
paragraph 3.4(c), payment may be made as soon as practicable after the
exercise).


(b) The Exercise Price shall be payable in cash or by tendering, by either
actual delivery of shares or by attestation, shares of Stock acceptable to
the Committee, and valued at Fair Market Value as of the day of exercise,
or in any combination thereof, as determined by the Committee.


(c) The Committee may permit a Participant to elect to pay the Exercise Price
upon the exercise of an Option by irrevocably authorizing a third party to
sell shares of Stock (or a sufficient portion of the shares) acquired upon
exercise of the Option and remit to the Company a sufficient portion of the
sale proceeds to pay the entire Exercise Price and any tax withholding
resulting from such exercise.


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3.5 Settlement of Award. Shares of Stock delivered pursuant to the exercise of an Option or SAR shall be subject to such conditions, restrictions and contingencies as the Committee may establish in the applicable Award Agreement. Settlement of SARs may be made in shares of Stock (valued at their Fair Market Value at the time of exercise), in cash, or in a combination thereof, as determined in the discretion of the Committee. The Committee, in its discretion, may impose such conditions, restrictions and contingencies with respect to shares of Stock acquired pursuant to the exercise of an Option or an SAR as the Committee determines to be desirable.


SECTION 4
OTHER STOCK AWARDS
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4.1 Definitions.


(a) A "Stock Unit" Award is the grant of a right to receive shares of Stock in
the future.


(b) A "Performance Share" Award is a grant of a right to receive shares of
Stock or Stock Units which is contingent on the achievement of performance
or other objectives during a specified period.


(c) A "Performance Unit" Award is a grant of a right to receive a designated
dollar value amount of Stock which is contingent on the achievement of
performance or other objectives during a specified period.


(d) A "Restricted Stock" Award is a grant of shares of Stock, and a "Restricted
Stock Unit" Award is the grant of a right to receive shares of Stock in the
future, with such shares of Stock or right to future delivery of such
shares of Stock subject to a risk of forfeiture or other restrictions that
will lapse upon the achievement of one or more goals relating to completion
of service by the Participant, or achievement of performance or other
objectives, as determined by the Committee.


4.2 Restrictions on Awards. Each Stock Unit Award, Restricted Stock Award, Restricted Stock Unit Award, Performance Share Award and Performance Unit Award shall be subject to such conditions, restrictions and contingencies as the Committee shall determine.


SECTION 5
OPERATION AND ADMINISTRATION
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5.1 Effective Date. This amendment and restatement is effective as of the Closing Date as that term is used in the Merger Agreement (the "Effective Date"). The Plan shall be unlimited in duration and, in the event of Plan termination, shall remain in effect as long as any Awards under it are outstanding; provided, however, that no Awards may be granted under the Plan after the ten-year anniversary of the Effective Date.


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5.2 Shares Subject to Plan. The shares of Stock for which Awards may be granted under the Plan shall be subject to the following:


(a) The shares of Stock with respect to which Awards may be made under the Plan
shall be currently authorized but unissued shares, or shares purchased in
the open market by a direct or indirect wholly-owned subsidiary of the
Company (as determined by the Chairman or any Executive Vice President of
the Company). The Company may contribute to the subsidiary an amount
sufficient to accomplish the purchase in the open market of the shares of
Stock to be so acquired (as determined by the Chairman or any Executive
Vice President of the Company).


(b) Subject to this subsection 5.2, the number of shares of Stock available for
Awards under the Plan shall be equal to the number of ACE Limited ordinary
shares into which the total number of Available Capital Re Corporation
Shares would be converted pursuant to the terms of the Merger Agreement if
the number of Available Capital Re Corporation Shares were outstanding
immediately prior to Transaction Date. For purposes of this paragraph (b),
the number of "Available Capital Re Corporation Shares" shall be equal to
the aggregate number of shares of Cap Re Corporation stock available for
awards under the Cap Re Plans immediately prior to the Transaction Date
plus the number of shares of Cap Re Corporation stock under all awards
under the Cap Re Plans that were canceled as of that date.


(c
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