Document:

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                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as
of the 1st day of January, 1998, between TED A. MURPHY, ("Executive"), and
COMMUNITY BANK OF GEORGIA, a state-chartered Georgia banking institution whose
principal place of business is located at 3333 Lawrenceville Highway, Tucker,
Georgia, ("Employer").

                                    RECITALS

         WHEREAS, the Board of Directors of the Employer recognizing the
experience and knowledge of the Executive in the banking industry, determines
that it is in the best interests of the Employer to arrange terms of employment
for Executive so as to induce Executive to remain in his capacity with the
Employer for the term as set forth in this Employment Agreement (the
"Agreement"); and

         WHEREAS, Executive is willing to provide services to Employer in
accordance with the terms and conditions hereinafter set forth.

         THEREFORE, in the consideration of the mutual promises and agreements
in these premises and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties, it is agreed as
follows:

SECTION 1.        EMPLOYMENT

         a. Employer employs Executive on the terms and conditions hereafter
stated as Employer's President and Chief Executive Officer to perform such
services and duties as the Board of Directors may, from time to time, designate
during the term hereof. Executive will also serve as President and Chief
Executive Officer of Georgia Bancshares, Inc., ("Bancshares") Tucker, Georgia,
the Employer's parent bank holding company. Subject to the terms and conditions
hereof, Executive will perform such duties and exercise such authority as are
customarily performed and exercised by persons holding such office, subject to
the direction of the Board of Directors.

         b. Executive accepts such employment and shall devote his full time,
attention, and best efforts to the diligent performance of his duties herein
specified.

SECTION 2.        TERM OF EMPLOYMENT.

         a. Executive's employment under this Agreement shall commence
immediately on January 1, 1998. Such employment shall continue for a period of
thirty-six full calendar months commencing January 1, 1998.

<PAGE>

         b. Executive's employment pursuant to this Agreement shall be
terminated by the first to occur of any of the following:

                  i) The death of the Executive;

                  ii) The Complete Disability of Executive. "Complete
Disability" as used herein shall mean the inability of Executive, due to
illness, accident, or any other physical or mental incapacity, to completely
fulfill his obligations hereunder for an aggregate of ninety (90) days within
any period of 180 consecutive days during the term hereof;

                  iii) The discharge of Executive by Employer for cause.

                           (1) "Cause" as used herein shall mean: dishonesty;
theft; conviction of a crime (other than minor traffic violations) which is
either a felony or a misdemeanor involving moral turpitude; unethical business
conduct; gross or repeated negligence in carrying out Executive's duties. In all
instances other than dishonesty, theft or conviction of a crime, written notice
of said activity, negligence or violation shall be provided by Employer to
Executive along with a reasonable period of time, which shall be not less than
ninety (90) days, in which to correct the deficiency.

                           (2) Discharge for "Cause" shall require a two-thirds
majority vote of the entire Board of Directors of Employer excluding the
Executive from voting on the discharge.

                  (iv) Sixty (60) days after Executive has given written notice
to Employer of his intent to terminate his employment hereunder.

         c. Termination of Executive's employment shall constitute his
resignation as an employee, director and executive officer of Employer (and as a
director and executive officer of Bancshares) effective upon acceptance by
Employer of that tender.

SECTION 3.        COMPENSATION.

For all services which Executive may render to Employer during the term hereof
Employer shall pay to Executive, subject to such deductions as may be required
by law, according to the schedule set out below:

         a. Annual Base Salary. From January 1, 1998, through December 31, 1998,
Executive shall receive a salary payable based on an annual rate of $138,400,
payable in equal monthly installments. The annual base salary for the calendar
year 1999 will be increased by five percent (5%) to $145,320, payable in equal
monthly installments. The annual base salary for the calendar year 2000 will be
increased by five percent (5%) to $152,586, payable in equal monthly
installments.

                                       -2-

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         b. Performance Bonus. In addition to the Executive's annual base
salary, the Employer shall pay to Executive a performance bonus.

         The right to receive an annual performance bonus is based upon meeting
or exceeding established goals with respect to (i) return on average assets
("ROAA"), (ii) return on average equity ("ROE"), and (iii) average past due
loans. No performance bonus shall be earned in any year in which the Bank's
composite C-A-M-E-L-S rating is less than "2".

         Three levels of bonus are available hereunder. A Level I bonus is equal
to 10% of annual base salary, a Level II bonus is equal to 15% of annual base
salary and a Level III bonus is equal to 20% of annual base salary. In order to
receive a Level I bonus, the Executive must achieve either (i) at least 2 of the
Level I performance goals, or (ii) at least 1 of the Level I performance goals
AND 1 of the Level II or Level III performance goals. In order to receive Level
II bonus, the employee must achieve either (i) at least 2 of the Level II
performance goals, or (ii) at least 1 of the Level II performance goals AND 1 of
the Level III performance goals. In order to receive a Level III bonus, the
Executive must achieve at least 2 of the Level III performance goals.
Operation of the performance bonus criteria is as follows:

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
BONUS                    ROAA                              ROE                              AVG. PAST
LEVEL                                                                                       DUE LOANS
---------------------------------------------------------------------------------------------------------------
<S>                      <C>                               <C>                              <C>
Level I                  1%                                10%                              2%
                         but less than                     but less than                    but more than
                         1.25%                             12%                              1.5%
----------------------------------------------------------------------------------------------------------------
Level II                 1.25%                             12%                              1.5%
                         but less than                     but less than                    but more than
                         1.5%                              15%                              1.25%
----------------------------------------------------------------------------------------------------------------
Level III                1.5% or greater                   15% or greater                   1.25% or less
----------------------------------------------------------------------------------------------------------------
</TABLE>

         c. Election to Defer Performance Bonus. Prior to the end of any contact
year, Executive shall be permitted to make an election to defer receipt of all
or a portion of any annual performance based bonus that otherwise becomes
payable for such year. The election to defer receipt of any such performance
bonus shall be made in writing on a Deferred Compensation Election Form
(Attachment "A") provided by the Employer. Any such election shall be subject to
the provisions of the Executive's Deferred Compensation Election Form.

         d. Severance Compensation. If the Executive's employment is terminated
during the term of this Agreement for reasons other than those stated in
paragraphs 2(b)(iii) or (iv), Employer shall pay Executive as Severance
Compensation, without set off, reduction, or diminution for other compensation

                                       -3-

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which Executive may receive from sources other than Employer, a sum equal to the
gross monthly compensation which would then be payable to Executive under the
terms and conditions of this Agreement without reduction for taxes except as
required by law and payable for twenty-four (24) consecutive months or the
remainder of the term of this Agreement whichever is greater ("Severance
Compensation"). Said Severance Compensation shall be payable on the first day of
each month following Executive's termination of employment. Notwithstanding the
foregoing, if mutually agreed between Employer and Executive, the Severance
Compensation may be paid in one lump sum or other equal payments. Employer shall
maintain Executive's full medical and disability benefits for Executive and his
family at no expense to Executive for twenty-four months subsequent to said
termination or the remainder of the term of this Agreement whichever is greater.
Thereafter, Executive shall be eligible to secure such medical and dental
benefits as may be available pursuant to the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA") at Executive's expense.

SECTION 4.        OTHER BENEFITS

During the term of Executive's employment hereinafter, on and after the
effective dates, as noted, Employer shall furnish to Executive the following
benefits.

         a. A group health and hospitalization insurance policy covering the
Executive and immediate family.

         b. A monthly car allowance covering depreciation, insurance and all
operating costs in an amount of $1,000 per month.

         c. In lieu of the foregoing car allowance, the Employer and Executive
may mutually agree that Executive will be provided use of an automobile owned or
leased by Employer with reimbursement to Executive for all out of pocket
expenses incurred by Executive for the use and upkeep of said automobile,
including taxes, if any, which may become due and payable by Executive based
upon such arrangement.

         d. All expenses for attendance of the Executive and his spouse at the
annual convention of the Community Banker's Association of Georgia and the
Georgia Banker's Association.

         e. Initiation fees, membership fees and monthly dining room charges at
a golf, dining or country club of Executive's choosing in an aggregate annual
amount not to exceed $7,500.

         f. All reasonable expenses shall be reimbursed on a monthly basis,
however these expenses are subject to review and approval of the Chairman of the
Employer's Board of Directors or the Vice Chairman.

                                       -4-

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         g. A fully paid vacation of twenty (20) working days per year for the
duration and any continuance of this contract. Time for such vacation/vacations
shall be determined solely by the Executive provided Executive shall give the
Chairman of Employer's Board of Directors or the Vice Chairman, reasonable prior
notice of the Executive's scheduled vacation days.

         h. An Executive Assistance Program ("EAP") for Executive and immediate
family to help resolve the problems which may include, but are not limited to,
stress, marital, family, child rearing, drugs, alcohol, prescription drugs,
legal, financial, health or any other problems that may be of concern. Referral
by EAP to an outside agency may involve additional charges which may be covered
in part by the Employer's health plans.

SECTION 5.        POST TERMINATION COVENANTS.

         a. Executive hereby expressly covenants and agrees that during the term
of his employment whether or not pursuant to this Agreement and for a period of
twelve (12) months following the termination of his employment with Employer, if
said termination is pursuant to Section 2(b)(iv), Executive shall not engage in
rendering or providing executive managerial services as chief executive officer
or serve as chief executive officer of or to any National Bank or State Bank
Institution located within an area of ten (10) miles of Community Bank of
Georgia's main office or its branches without the express permission of the
Employer. This covenant shall not be effective against Executive in the event of
termination of Executive for any other reason, actual, or constructive as
provided herein below.

SECTION 6.        CHANGE IN CONTROL.

So long as this Agreement is in effect, in the event of a Change in Control (as
that term is defined below) of Employer and/or Bancshares, if the duties of
Executive are changed (as defined below) within two (2) years after such Change
in Control, and the Executive so notifies Employer in writing within six (6)
months thereof, such change in duties shall constitute a termination of
Executive's employment hereunder by Employer for reasons other than those stated
in paragraphs 2(b)(iii) and (iv). In that event, Executive shall be entitled to
receive all of the Severance Compensation due and payable to Executive under
Section 3(d) of this Agreement without set off, reduction, or diminution for
other compensation which Executive may receive from sources other than Employer.

         a. "Change in Duties" shall mean any one or more of the following:

                  i) a significant change in the nature or scope of the
Executive's authorities (including a change in title) or duties from those
applicable to him immediately prior to the date on which a Change of Control
occurs;

                                       -5-

<PAGE>

                  ii) a reduction in the Executive's Annual Base Salary from
that provided for under this Agreement;

                  iii) any diminution in the Executive's eligibility to
participate or level of participation in bonus, stock option and other
compensation plans which provide opportunities to receive compensation, from the
greater of:

                  -the opportunities provided by the Bank for executives with
                  comparable duties; or

                  -the opportunities under any such plans under which he was
                  participating immediately prior to the date on which a Change
                  of Control occurs including as set forth in Section 3(b) of
                  this Agreement.

                  iv) a diminution in Executive benefits (including but not
limited to medical, dental, life insurance and long-term disability plans) and
perquisites applicable to Executive, from the greater of:

                  -the Executive benefits and perquisites provided by the Bank
                  to executives with comparable duties; or

                  -the Executive benefits and perquisites to which he was
                  entitled immediately prior to the date on which a Change in
                  Control occurs.

                  v) a change in the location of the Executive's principal place
of employment by the Bank (more than 50 miles from the location where he was
principally employed immediately prior to the date on which a Change of Control
occurs) to which Executive has not agreed;

         b. A "Change of Control" shall be deemed to have occurred if:

                  i) any person, including a "group" as determined in accordance
with Section 13(d)(3) of the Securities Exchange Act of 1934 (the "Exchange
Act") (other than Bancshares, or any Executive benefit plan, as defined in
ERISA, of any of the foregoing) is or becomes the beneficial owner, directly or
indirectly, of securities of Bancshares representing 25% or more of the combined
voting power of Bancshares's then outstanding securities;

                  ii) as a result of, or in connection with, any tender offer or
exchange offer, merger or other business combination, sale of assets or
contested election, or any combination of the foregoing transactions (a
"Transaction"), the persons who were directors of the Bank and Bancshares before
the Transaction shall cease to constitute a majority of the Board of Directors
of the Bank or Bancshares or any successor to the Bank or Bancshares;

                                       -6-

<PAGE>

                  iii) the Bank or Bancshares is merged or consolidated with
another corporation and as a result of the merger or consolidation less than 51%
of the outstanding voting securities of the surviving or resulting corporation
shall then be owned in the aggregate by the former, shareholders of Bancshares,
other than (x) affiliates within the meaning of the Exchange Act or (y) any
party to the merger or consolidation;

                  iv) a tender offer or exchange offer is made and consummated
for the ownership of securities of Bancshares representing 50% or more of the
combined voting power of Bancshares's then outstanding voting securities; or

                  v) the Bank transfers substantially all of its assets to
another corporation which is not a wholly-owned subsidiary of Bancshares.

SECTION 7.        CONFLICTS OF INTEREST.

Executive shall not, while employed by Employer, accept employment with any
other individual, corporation, partnership. governmental authority or other
entity, or engage in any other venture for profit which the Employer's Board of
Directors may consider by majority vote of all of the directors then serving
with Executive abstaining to be in conflict with the Employer's best interest or
to be in competition with the performance of his duties hereunder. This
restriction does not preclude Executive from owning or being involved in real
estate or other investments, so long as such does not create a conflict of
interest on the part of the Executive as to his duties and obligations to
Employer as set forth herein. In addition, the Executive may be a Board member
of companies not in competition with the Employer. Notwithstanding the
foregoing, Executive may not be involved in any of these activities without
first making a full disclosure to the Employer of the details of each proposed
endeavor.

SECTION 8.        WAIVER OF PROVISIONS.

Failure by any of the parties hereto to insist, in one or more instances, on
performance by the other in strict accordance with the terms and conditions of
this Agreement shall not be deemed a waiver or relinquishment of any right
granted hereunder or of the obligation of future performance of any such term or
condition or any other term or condition of this Agreement, unless such waiver
is contained in a writing signed by or on behalf of all the parties.

SECTION 9.        GOVERNING LAW.

This Agreement shall be governed by and construed and enforced in accordance
with the laws of the State of Georgia. If for any reason any provision of this
Agreement shall be held by a court of competent jurisdiction to be void or
unenforceable, the same shall not affect the remaining provisions hereof.

                                       -7-

<PAGE>

SECTION 10.  MODIFICATION AND AMENDMENT.

This Agreement contains the sole and entire agreement among the parties hereto
and supersedes all prior discussions and agreements among the parties, and any
such prior agreements shall, from and after the date hereof, be null and void;
except, nothing herein shall cause the Agreement by and between Executive and
Employer dated as of September 13, 1994, to terminate other than upon its
Initial Termination Date of December 31, 1997. This Agreement shall not be
modified or amended except by an instrument in writing signed by or on behalf of
all parties hereto.

SECTION 11.  NOTICE AND MAILING THEREOF.

Whenever in this Agreement notice is required to be given to either of the
parties hereto, such notice shall be effective only if delivered to the parties
as follows by hand delivery or first class United States Mail:

                  If to Employer:            Chairman of the Board
                                             Community Bank of Georgia
                                             3333 Lawrenceville Highway
                                             Tucker, Georgia  30084

                  If to Executive:           Ted A. Murphy
                                             1761 East Gate Drive
                                             Stone Mountain, Georgia  30087

SECTION 12.  RECITALS, COUNTERPARTS AND HEADINGS.

The Recitals appearing above are incorporated into this Agreement as fully and
completely as if set forth expressly herein and are an integral part of this
Agreement. This Agreement may be executed simultaneously in any number of
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument. The headings set out herein are for
convenience of reference and shall not be deemed a part of this Agreement.

SECTION 13.  SUCCESSORS.

This Agreement shall inure to the benefit of and be binding upon the Employer,
its successors and assigns and upon the Executive, and his heirs and personal
representatives. Neither this Agreement nor performance hereunder may be
assigned by Executive.

                                       -8-

<PAGE>

         IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the day and year first above written.

EXECUTIVE:                                      EMPLOYER:

/s/ TED A. MURPHY
------------------------------------            COMMUNITY BANK OF GEORGIA
Ted A. Murphy

                                                By:/s/ EUGENE L. ARGO
                                                  --------------------------
                                                Chairman of Board of Directors

                                                ATTEST:

                                                /s/ JAMES L. ARMSTRONG
                                                -----------------------------
                                                Chairman, Compensation Committee

                                       -9-INDEMNIFICATION AGREEMENT

     This  Indemnification  Agreement (this "Agreement"),  dated as of April 29,
1999 by and among NYMAGIC,  Inc., a New York  corporation with an address at 330
Madison  Avenue,  New York,  New York  10017  (the  "Company"),  and each of the
persons  identified on Schedule 1 to this Agreement  (each an  "Indemnitee"  and
collectively the "Indemnitees").

                                    Recitals

     A. The New York  Business  Corporation  Law, as amended (as so amended from
time to time,  the "BCL"),  permits the Company to indemnify  the  directors and
officers of the Company.

     B. The By-laws of the Company (the "By-laws") provide that the Company will
indemnify to the fullest extent then  permissible  under the BCL each person who
shall serve at any time as a director or officer of the Company.

     C. The  Indemnitees  serve or have served as directors of the Company or as
directors and officers of the Company and in such capacity or capacities perform
or have performed a valuable service for the Company.

     D. The Board of Directors of the Company has approved and adopted corporate
resolutions  pursuant  to Section 721 of the BCL (the  "Corporate  Resolutions")
providing that the Company will  indemnify the  Indemnitees as set forth in this
Agreement.

     E. The  Company  has  entered  into  this  Agreement  and has  assumed  the
obligations imposed on the Company hereby in order to more specifically  provide
for  the   indemnification   contemplated  by  the  By-laws  and  the  Corporate
Resolutions  to each  of the  Indemnitees  for  his  service  as a  director  or
executive  officer of the Company  and/or to induce each of the  Indemnitees  to
serve or to continue to serve as a director of the Company or as a director  and
officer of the Company.

     Accordingly, the Company and each Indemnitee agrees as follows:

     1. Authorization for Indemnification of Indemnitees.

     (a) General.  The Company shall  indemnify each  Indemnitee  whenever he is
made,  or  threatened  to be made,  a party to an  action,  suit or  proceeding,
including, without limitation, one by or in the right of the Company or by or in
the right of any other corporation of any type or kind,  domestic or foreign, or
any  partnership,   joint  venture,   trust,  employee  benefit  plan  or  other
enterprise,  which such Indemnitee  served in any capacity at the request of the
Company,  to  procure  a  judgment  in  its  favor,  whether  civil,   criminal,
administrative or investigative,  by reason of the fact that he, his testator or
intestate,  was a  director  or  officer of the  Company,  or served  such other
corporation,  partnership,  joint venture, trust, employee benefit plan or other
enterprise in any

<PAGE>

capacity,  against judgments,  fines,  amounts paid in settlement and reasonable
expenses,  including  attorneys'  fees,  actually and necessarily  incurred as a
result of such action, suit or proceeding,  or any appeal therein,  provided the
Indemnitee  acted, in good faith, for a purpose which he reasonably  believed to
be in, or, in the case of service for any other  corporation or any partnership,
joint venture, trust, employee benefit plan or other enterprise, not opposed to,
the best interests of the Company and, in criminal actions and  proceedings,  in
addition,  had no  reasonable  cause to believe  that his conduct was  unlawful.
Nothing  contained in this Agreement shall affect any rights to  indemnification
which any Indemnitee may otherwise be entitled to by law or otherwise.

     (b)  No  Presumption.   The  termination  of  any  such  civil,   criminal,
administrative  or  investigative   action,  suit  or  proceeding  by  judgment,
settlement,  conviction or upon a plea of nolo  contendere,  or its  equivalent,
shall not in itself create a  presumption  that any  Indemnitee  did not act, in
good faith, for a purpose which he reasonably believed to be in, or, in the case
of service for any other corporation or any partnership,  joint venture,  trust,
employee benefit plan or other enterprise, not opposed to, the best interests of
the Company  and,  in criminal  actions and  proceedings,  in  addition,  had no
reasonable cause to believe that his conduct was unlawful.

     (c) Benefit Plan Matters. For purposes of this Agreement, the Company shall
be deemed to have  requested  an  Indemnitee  to serve an employee  benefit plan
where the  performance  by such  Indemnitee  of his duties to the  Company  also
imposes duties on, or otherwise involves services by, the Indemnitee to the plan
or  participants  or  beneficiaries  of the plan.  Excise  taxes  assessed on an
Indemnitee  with respect to an employee  benefit plan pursuant to applicable law
shall be  considered  fines for  purposes  of this  Agreement.  Action  taken or
omitted  by an  Indemnitee  with  respect  to an  employee  benefit  plan in the
performance of such Indemnitee's duties for a purpose reasonably believed by the
Indemnitee to be in the interests of such  participants and beneficiaries of the
plan  shall be  deemed  to be for a  purpose  which is not  opposed  to the best
interests of the Company.

     (d) Entitlement to Indemnification.  An Indemnitee who has been successful,
on the merits or otherwise, in the defense of a civil, criminal,  administrative
or investigative  action, suit or proceeding for which indemnification is sought
under this Agreement shall be entitled to indemnification as herein provided. An
Indemnitee  who has not been  successful,  on the  merits or  otherwise,  in the
defense of such a civil, criminal,  administrative or investigative action, suit
or proceeding shall nevertheless be entitled to indemnification  hereunder,  and
such  indemnification  is hereby  authorized,  unless a judgment  or other final
adjudication adverse to such Indemnitee establishes that his acts were committed
in bad faith or were the result of active  and  deliberate  dishonesty  and were
material to the cause of action so adjudicated  or that he personally  gained in
fact a financial profit or other advantage to which he was not legally entitled.

     (e)  Advancement  of Expenses.  Expenses  (including,  without  limitation,
attorneys' fees and expenses  actually and necessarily  incurred in defending an
actual or threatened action,  suit or proceeding shall be paid by the Company in
advance of the final  disposition  of such action,  suit or proceeding as herein
provided.

                                       2
<PAGE>

     2. Additional Indemnification.  It is the intention of the Company that the
Indemnitees  be  indemnified  hereunder  to the  greatest  extent  permitted  or
authorized  under  applicable  law.  If and to the  extent  that  (a) the BCL is
amended hereafter to require or permit  indemnification,  expense advancement or
exculpation that is or may be more favorable to the Indemnitees than the maximum
permissible  indemnification,  expense advancement and exculpation now permitted
thereunder and provided in this Agreement,  or (b) the Company reincorporates in
or merges, consolidates or combines into or with any other corporation or entity
by virtue of which  transaction  the Company is not the surviving,  resulting or
acquiring  corporation and the surviving,  resulting or acquiring corporation is
incorporated in a different  jurisdiction which at such time requires or permits
indemnification,  expense  advancement  or  exculpation  that  is or may be more
favorable  to the  Indemnitees  than the  maximum  permissible  indemnification,
expense  advancement and exculpation now permitted under the BCL and provided in
this  Agreement,  then  pursuant  to this  Agreement  the  Indemnitees  shall be
entitled to, and this Agreement shall be deemed to be amended to provide for the
Indemnitees'  contractual entitlement to,  indemnification,  expense advancement
and  exculpation  to the maximum  extent that may be permitted or required under
such  applicable  law at the  time of any  initial  or  subsequent  request  for
indemnity  hereunder,  whether or not the  Company  has  adopted  any Charter or
By-law  provisions  adopting,  effecting or implementing any provisions  thereof
which are permissive and not mandatory in nature. Nothing contained herein shall
be deemed to detract from, diminish, impair, limit or adversely affect any right
which the Indemnitees may have under this Agreement,  and to the extent that any
terms,   conditions  or  provisions  of  this  Agreement   (including,   without
limitation,  those in Section 1 hereof) are more  favorable  to the  Indemnitees
than the maximum  indemnification,  expense  advancement  and  exculpation  then
permitted or required under such applicable law, then such terms, conditions and
provisions of this Agreement  shall be preserved and  integrated  with such more
favorable  terms from  then-applicable  law and shall  continue  to apply to the
Indemnitees'  rights by  virtue of this  Agreement.  The same  expansion  of the
Indemnitees' rights and deemed inclusion herein and integration  herewith of any
terms,  conditions or provisions more favorable to the  Indemnitees  shall occur
upon  and  with  respect  to  any  amendment  of  the  provisions   relating  to
indemnification,   expense   advancement   and   exculpation  in  the  Company's
Certificate of Incorporation (the "Charter") or By-laws and any provision by the
Company to any other  officer or director of the Company of any other  different
form of indemnification contract or agreement.

     3. Establishment of Escrow; Procedures.

     (a) Establishment of Segregated Escrow Account. In order to provide for the
prompt  payment of expenses  and  indemnifiable  amounts  payable by the Company
under this  Agreement,  the Company shall establish and maintain for a period of
not less than three years from the date hereof, a segregated escrow account (the
"Escrow  Account") in The Bank of New York (the  "Escrow  Agent") in the initial
amount of $750,000  (such amount,  together with interest  thereon,  the "Escrow
Funds").  The  fees  and  expenses  of the  Escrow  Agent  shall be borne by the
Company. The Escrow Funds shall be used for no purpose other than advancement of
expenses and payment of indemnifiable  amounts hereunder and any amount required
to be repaid by the Indemnitees as herein

                                       3
<PAGE>

provided shall be considered  Escrow Funds to the extent  originally paid out of
the Escrow Account and shall be promptly  redeposited in the Escrow Account. The
obligation of the Company to establish  the Escrow  Account and to make payments
of Escrow Funds as herein provided shall be in addition to and not in limitation
of any other  obligation  of or on behalf of the Company or any third party with
respect to the payment of indemnifiable  amounts,  including without limitation,
payment of claims  under any policy of insurance  maintained  by the Company for
the benefit of its directors and officers, and the indemnification obligation of
the Company shall not be limited to the amount of the Escrow Funds.

     (b) Indemnification  Procedures. For purposes of requesting indemnification
under Section 1(d) hereof,  an Indemnitee shall submit to the Escrow Agent, with
a  copy  to  the  Company,  a  sworn  statement  of  claim  for  indemnification
substantially in the form of Exhibit A hereto (the "Indemnification  Statement")
to the effect that he is entitled to indemnification hereunder. The Escrow Agent
(or, in the event that all of the Escrow  Funds have been  previously  paid out,
the Company) shall pay all amounts due to such Indemnitee promptly following the
submission of an Indemnification  Statement unless, in the case of an Indemnitee
who has not been successful,  on the merits or otherwise,  in the defense of the
action, suit or proceeding underlying the Indemnification  Statement, a judgment
or other final  adjudication  adverse to such Indemnitee  establishes that he is
not entitled to be indemnified by the Company under this Agreement or otherwise.

     (c)  Expense  Advancement  Procedures.   For  purposes  of  requesting  the
advancement of expenses  pursuant to Section 1(e) hereof, an Indemnitee shall be
required  to submit to the Escrow  Agent,  with a copy to the  Company,  a sworn
statement of request for  advancement of expenses  substantially  in the form of
Exhibit B hereto (the "Undertaking"), to the effect that (i) he has actually and
necessarily incurred expenses (including,  without limitation,  attorneys' fees)
in defending an action or threatened action, suit or proceeding to which he is a
party or is  threatened  to be made a party by reason of the fact that he was or
is a director  or officer of the Company  and (ii) he  undertakes  to repay such
amount  if it shall  be  determined  ultimately  that he is not  entitled  to be
indemnified.  The Escrow  Agent (or,  in the event that all of the Escrow  Funds
have been  previously  paid out,  the Company)  shall  promptly pay the expenses
described in the  Undertaking.  No security shall be required in connection with
any Undertaking, and any Undertaking shall be accepted without reference to such
Indemnitee's ability to make repayment.

     (d) Selection of Counsel. In the event the Company shall be obligated under
this  Section 4 to pay any amount in respect of any action,  suit or  proceeding
against any  Indemnitee,  the Company shall be entitled to assume the defense of
such  proceeding,  with counsel  reasonably  acceptable  to and approved by such
Indemnitee,  upon the  delivery  to the  Indemnitee  of  written  notice  of the
Company's  election to do so. It is understood and agreed that counsel  selected
by the Company's insurer shall be acceptable to the Indemnitees.  After delivery
of such notice, approval of such counsel by the Indemnitees and the retention of
such counsel by the Company,  the Company will not be liable to the  Indemnitees
under this Agreement for any fees of separate counsel  subsequently  incurred by
the Indemnitees with respect to the same action, suit or proceeding;

                                       4
<PAGE>

provided,  however,  that if (i) the employment of counsel by any Indemnitee has
been  previously  authorized by the Company,  (ii) counsel for any Indemnitee or
Indemnitees with the same interests shall have reasonably concluded, and advised
the  Company  in  writing  of such  counsel's  conclusion,  that  there may be a
conflict of interest  between the Company and such  Indemnitee or Indemnitees in
the conduct of any such defense,  or (iii) the Company shall not, in fact,  have
employed counsel to assume the defense of such proceeding,  then such Indemnitee
or  Indemnitees  may select and employ  their own  counsel to direct the defense
thereof and the fees and expenses of such counsel  shall be paid by the Company;
provided,  however,  that Company shall be liable to the Indemnitees  under this
Agreement for the fees of only one separate counsel incurred by Indemnitees with
the  same   interests   with  respect  to  such  action,   suit  or  proceeding.
Notwithstanding  any  assumption  of the  defense  of any such  action,  suit or
proceeding  and  employment  of counsel with  respect  thereto by the Company in
accordance with the foregoing,  the  Indemnitees  shall have the right to employ
their own separate counsel to participate in any such action, suit or proceeding
at the Indemnitees'  expense.  The Company shall not settle any action,  suit or
proceeding  without the prior written consent of any Indemnitee  unless, as part
of such settlement,  such Indemnitee  receives a full and unconditional  release
reasonably  satisfactory  to the  Indemnitee.  No  Indemnitee  shall  settle any
action,  suit or  proceeding  without the prior  written  consent of the Company
unless,   as  part  of  such  settlement,   the  Company  receives  a  full  and
unconditional release reasonably satisfactory to the Company.

     4.  Corporate  Approval.   The  Company  represents  and  warrants  to  the
Indemnitees that: (i) the Company has all requisite power and authority to enter
into  this  Agreement  and to  perform  its  obligations  hereunder;  (ii)  this
Agreement and the performance of all of the Company's obligations hereunder have
been approved by all corporate  action required on the part of the Company under
the  Charter,  the  By-laws  or  applicable  law or  contract;  and  (iii)  this
Agreement,  when  executed,  will  constitute  the  valid  and  legally  binding
obligation of the Company,  enforceable  against the Company in accordance  with
its terms, subject to any applicable bankruptcy law and equitable limitations.

     5. Fees and Expenses of  Enforcement.  It is the intent of the Company that
the  Indemnitees  not be  required  to incur the  expenses  associated  with the
enforcement  of their rights under this  Agreement by  litigation or other legal
action because the cost and expense thereof would substantially detract from the
benefits intended to be extended to the Indemnitees hereunder.  Accordingly,  if
it should  reasonably  appear to the Indemnitees  that the Company has failed to
comply with any of its obligations under this Agreement or in the event that the
Company or any other person takes any action to declare this  Agreement  void or
unenforceable,  or institutes any action, suit or proceeding designed (or having
the effect of being  designed) to deny, or to recover from, the  Indemnitees the
benefits  intended  to be  provided to the  Indemnitees  hereunder,  the Company
irrevocably  authorizes the  Indemnitees  from time to time to retain counsel of
his choice,  at the expense of the Company,  to  represent  the  Indemnitees  in
connection  with the  initiation  or defense of any  litigation  or other  legal
action, whether by or against the Company or any director, officer,  stockholder
or other person affiliated with the Company, in any jurisdiction.  Regardless of
the outcome thereof, the Company shall pay and be solely responsible for any and
all expenses,

                                       5
<PAGE>

including,  without  limitation,  attorney's  fees and  expenses,  actually  and
reasonably  incurred by the Indemnitees (i) as a result of the Company's failure
to perform  this  Agreement or any  provision  hereof or (ii) as a result of the
Company  or any  person  contesting  the  validity  or  enforceability  of  this
Agreement or any provision hereof as aforesaid.

     6.  Reorganizations.  In the event that the Company  shall be a constituent
corporation   (including  any   constituent  of  a  constituent)  in  a  merger,
reorganization,  consolidation, combination or similar transaction, the Company,
if it shall not be the surviving,  resulting or acquiring  corporation  therein,
shall  require as a condition  thereto the  surviving,  resulting  or  acquiring
corporation  to  expressly  assume  and  adopt  this  Agreement  and to agree to
indemnify the Indemnitees to the full extent provided in this Agreement.

     7. Nonexclusivity, Survival and Subrogation.

     (a) Nonexclusivity. The right to indemnification provided by this Agreement
shall not be  exclusive  of any other  rights  to which the  Indemnitees  may be
entitled under the Charter, the By-laws,  the BCL, any other statute,  insurance
policy, agreement, vote of shareholders or of directors or otherwise.

     (b) Survival.  The  provisions of this  Agreement  shall survive the death,
disability,  or incapacity of any of the  Indemnitees or the  termination of any
Indemnitee's service as an director or officer of the Company and shall inure to
the  benefit  of,  and  be   enforceable   by,  heirs,   executors,   guardians,
administrators or assigns of each Indemnitee.

     (c)  Subrogation.  In the event of any  payment by the  Company  under this
Agreement,  the Company shall be subrogated to the extent  thereof to all rights
of recovery  previously vested in the Indemnitees,  who shall cooperate with the
Company,  at the Company's expense, in executing all such instruments and taking
all such  other  actions as shall be  reasonably  necessary  for the  Company to
enforce such right or as the Company may reasonably request.

     8.  Governing  Law.  This  Agreement  shall be governed by and construed in
accordance with the laws of the State of New York,  without giving effect to the
principles of conflict of laws thereof.

     9. Miscellaneous.

     (a) This Agreement contains the entire agreement of the parties relating to
the subject matter hereof.

     (b) Any  provision of this  Agreement may be amended or waived only if such
amendment or waiver is in writing and signed,  in the case of an  amendment,  by
the parties  hereto or, in the case of a waiver,  by the party  against whom the
waiver is to be effective.  No failure or delay by any party in  exercising  any
right, power or privilege hereunder shall operate as a waiver

                                       6
<PAGE>

hereof nor shall any single or partial  exercise  thereof  preclude any other or
future exercise thereof or the exercise of any other right, power or privilege.

     (c) If any provision of this Agreement or the  application of any provision
hereof to any person or circumstance is held invalid, unenforceable or otherwise
illegal,  the remainder of this Agreement and the  application of such provision
to other persons or  circumstances  shall not be affected,  and the provision so
held to be invalid,  unenforceable or otherwise illegal shall be reformed to the
extent  (and only to the extent)  necessary  to make it  enforceable,  valid and
legal.

     (d)  Nothing  contained  in this  Agreement  is  intended  to create in the
Indemnitees  any separate or  independent  right to continued  employment by, or
service with, the Company.

     (e)  This  Agreement  may  be  executed  in  counterparts,   but  all  such
counterparts taken together shall constitute one and the same Agreement.

     (f) The descriptive headings of this Agreement are inserted for convenience
only  and do not  constitute  a part of  this  Agreement.  The  use of the  word
"including" in this Agreement shall be by way of example rather than limitation.
The use of the word "or" in this Agreement is intended to be conjunctive  rather
than disjunctive.

                                       7
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first above written.

                                           NYMAGIC, INC.

                                           By:___________________
                                              Name:
                                              Title:

                  [SIGNATURE PAGE TO INDEMNIFICATION AGREEMENT]

<PAGE>

     The undersigned, desiring to become a party to that certain Indemnification
Agreement  dated as of April 29, 1999,  among NYMAGIC,  INC. (the "Company") and
the persons identified therein as Indemnitees (the "Agreement"), by execution of
this  Counterpart  Signature Page hereby agrees to and accepts the terms of such
Agreement and hereby authorizes the Company to attach this Counterpart Signature
Page to the Agreement.

                                        INDEMNITEE:

                                        -----------------------
                                        Print Name:

            [COUNTERPART SIGNATURE PAGE TO INDEMNIFICATION AGREEMENT]

<PAGE>

                                                                      EXHIBIT A

                            Indemnification Statement

STATE OF                            )
                                    ) ss.
COUNTY OF                           )

     I,___________________  , being  first  duly  sworn,  do depose and state as
follows:

     1.  This   Indemnification   Statement   is   submitted   pursuant  to  the
Indemnification  Agreement,  dated as of April 29, 1999, among NYMAGIC,  Inc., a
New York corporation (the "Company"),  certain other persons and the undersigned
and the related Escrow Agreement dated June 4, 1999, between the Company and The
Bank of New York, as Escrow Agent.

     2. I am requesting  indemnification  against expenses  (including,  without
limitation,  attorneys' fees and expenses), costs, judgments, damages, fines and
amounts paid in settlement, all of which (collectively, "Liabilities") have been
actually  and  necessarily  incurred  by me in  connection  with  an  actual  or
threatened  action,  suit or  proceeding  to  which  I was or am a  party  or am
threatened  to be made a party by reason of the fact that I am or was a director
or officer of the Company.

     3.  With  respect  to all  matters  related  to any  such  action,  suit or
proceeding,  I am entitled to be indemnified as herein contemplated  pursuant to
the aforesaid Indemnification Agreement or otherwise.

     4.  Without  limiting  any  other  rights  which I have or may  have,  I am
requesting  indemnification  against  Liabilities  which have  arisen out of the
following matter:

                                          ---------------------------------
                                          Name of Indemnitee

Subscribed  and sworn to before me, a Notary  Public in and for said  County and
State, this _____ day of _____________, 199 /200_.

[Seal]

My commission expires the ______ day of _____________, 19    .

<PAGE>

                                                                      EXHIBIT B

                                   Undertaking

STATE OF                            )
                                    )ss.
COUNTY OF                           )

     I,  __________________,  being  first  duly  sworn,  do depose and state as
follows:

     1. This Undertaking is submitted pursuant to the Indemnification Agreement,
dated as of April 29, 1999,  among NYMAGIC,  Inc., a New York  corporation  (the
"Company"),  certain other persons and the  undersigned  and the related  Escrow
Agreement  dated June 4, 1999,  between the Company and The Bank of New York, as
Escrow Agent.

     2. I am requesting  advancement  of certain  expenses  (including,  without
limitation,  attorneys' fees and expenses) which I have actually and necessarily
incurred in defending an actual or  threatened  action,  suit or  proceeding  to
which I am or was a party or am  threatened  to be made a party by reason of the
fact that I was or am a director or officer of the Company.

     3. I hereby  undertake  to repay this  advancement  of expenses if it shall
ultimately be determined that I am not entitled to be indemnified by the Company
under the aforesaid Indemnification Agreement or otherwise.

     4. The  expenses  for which  advance is  requested  are,  in  general,  all
expenses related to the following matter:

                                            ---------------------------------
                                            Name of Indemnitee

Subscribed  and sworn to before me, a Notary  Public in and for said  County and
State, this _____ day of ______________, 199_ /200_.

[Seal]

My commission expires the ____ day of ________, 199_/200_.

<PAGE>

                                                                    Schedule 1

                                  NYMAGIC, INC

                       Names and Addresses of Indemnitees

Thomas J. Condon            [ADDRESSES OMITTED]

Jean H. Goulding

John Kean, Jr.

William R. Scarbrough

Michael Shaffet

Richard T. Soper

William Thorne

Sergio B. Tobia

Louise B. Tollefson

Charles Mitchell

James A. Lambert

John N. Blackman

Mark W. Blackman

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