Exhibit 10.3
NON COMPETITION AGREEMENT
     THIS NON COMPETITION AGREEMENT (“Agreement”) is made and entered into as of
the 31st day of March, 2008, by and between Atlantic American Corporation, a
corporation organized and existing under the laws of the State of Georgia
(“Atlantic American”) and Columbia Mutual Insurance Company, a corporation
organized and existing under the laws of the State of Missouri (“Columbia”).
     Atlantic American and Columbia have entered into a Stock Purchase
Agreement, dated as of December 26, 2007 (the “SPA”). The SPA generally provides
for the purchase of all of the outstanding stock (the “Interests”) of Georgia
Casualty & Surety Company, a Georgia corporation, Association Casualty Insurance
Company, a Texas corporation, and Association Risk Management General Agency,
Inc., a Texas corporation, each a wholly-owned subsidiary of Atlantic American
(collectively, the “Subsidiaries”).
     In order to induce Columbia to enter into the SPA, the undersigned is
entering into this Agreement with Columbia to set forth certain terms and
conditions governing certain future actions to be taken by Atlantic American.
     NOW, THEREFORE, in consideration of the transactions contemplated by the
SPA and the mutual promises and covenants contained herein, the parties agree as
follows:
     1. (a) Atlantic American hereby acknowledges that it is familiar with the
Subsidiaries’ trade secrets and with other confidential information. Atlantic
American acknowledges and agrees that Columbia would be irreparably damaged if,
during the Non-Compete Period, Atlantic American or any of its affiliates were
to compete with Columbia or the Subsidiaries or otherwise engage in a business
similar to the business that is conducted by the Subsidiaries on the closing
date, as defined in Section 1.3 of the SPA (the “Closing Date”) and that such
competition by Atlantic American or any of its affiliates would result in a
significant loss of the goodwill of the Subsidiaries purchased by Columbia under
the SPA. Therefore, in further consideration of the Purchase Price (as such term
is defined in the SPA) to be paid to Atlantic American pursuant to the SPA for
the Interests and the goodwill of the Subsidiaries being sold by Atlantic
American, and for other good and valuable consideration, Atlantic American
agrees that from the Closing Date until the second anniversary of the Closing
Date (the “Non-Compete Period”) it shall not (and shall cause its affiliates not
to) directly or indirectly own any interest in, manage, control, participate in
(whether as a partner, agent, representative or otherwise), consult with, render
services for, or in any other manner engage in the Restricted Business anywhere
in the states of Alabama, Arizona, Arkansas, Florida, Georgia, Kentucky,
Louisiana, Mississippi, New Mexico, North Carolina, Oklahoma, South Carolina,
Tennessee and Texas; provided, that nothing herein shall prohibit Atlantic
American, or its affiliates from:

 

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     (i) marketing, selling or licensing business through its subsidiaries or
affiliates (a) American Southern Insurance Company and American Safety Insurance
Company, so long as such activities are limited to the underwriting of large
account business that are specially underwritten and specially reinsured and
(b) Delta Fire and Casualty Insurance Company, so long as such activities are
limited to the home service distribution of fire contents policies;
     (ii) acquiring or combining with a business (by merger or otherwise), a
component of which engages in the Restricted Business so long as the Restricted
Business component does not exceed 25% of the annual direct written premiums of
the acquired business as of the date of acquisition; provided, that Atlantic
American and its affiliates may also acquire or combine with a business where a
portion of such business engages in the Restricted Business if both:
     (1) the annual direct written premiums of such business engaging in the
Restricted Business does not exceed 35% of the annual direct written premiums of
the acquired business as of the date of acquisition; and
     (2) Atlantic American or its affiliates, as applicable, uses reasonable
efforts to divest the portion of such business engaging in the Restricted
Business within one (1) year after its acquisition; provided further, that
Atlantic American shall notify Columbia and give Columbia the opportunity to
participate in the bidding or other process for such divesture or sale during
such period on a basis substantially equal to the other interested parties and,
if Columbia offers an amount equal to or more than other interested parties,
will negotiate in good faith to sell such business to Columbia;
     (iii) being a passive owner of not more than 5% of the outstanding voting
stock of a corporation which is publicly traded and is engaged in any aspect of
the Restricted Business.
For purposes hereof, the term “Restricted Business” means the underwriting of
primary standard commercial property and casualty business.
     (b) Notwithstanding any implication to the contrary above, during the
Non-Compete Period, Atlantic American shall not, and shall cause its affiliates
not to, directly, or indirectly:
     (i) induce or attempt to induce any employee of the Subsidiaries to leave
the employ of the Subsidiaries, or in any way interfere with the relationship
between the Subsidiaries and any employee thereof; provided, that the term
“induce or attempt to induce” shall not include generalized, non-targeted
searches for employees through: (A) the publication of an advertisement or other
public announcement; or (B) the use of a recruiting or employment agency to
which the name of an individual employed by the Subsidiaries on the Closing Date
has not been provided; or
     (ii) call on, solicit or service any customer, licensee, licensor or other
business relation of the Subsidiaries in order to induce or attempt to induce
such person to cease doing business with the Subsidiaries, or in any way
adversely interfere with the

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relationship between any such customer, supplier, licensee, licensor or other
business relation and the Subsidiaries (including making any negative statements
or communications about the Subsidiaries).
     (c) If, at the time of enforcement of the covenants contained herein (the
“Restrictive Covenants”), a court shall hold that the duration, scope or area
restrictions stated herein are unreasonable under circumstances then existing,
the parties agree that the court shall be allowed and directed to revise the
restrictions contained herein to cover the maximum period, scope and area
permitted by law.
     (d) The obligations of Atlantic American shall terminate:
     (i) As to any transferee of Atlantic American or transferee of an affiliate
who purchases Atlantic American or a business or division of Atlantic American
or such affiliate, provided that none of Atlantic American or its affiliates
holds more than a 5% equity interest in such transferee; and/or
     (ii) In the event of a Change of Control. For purposes herein, a “Change of
Control” shall mean (i) the consummation of a stock purchase transaction
involving Atlantic American’s outstanding capital stock, a merger or
consolidation of Atlantic American with or into another entity, or any other
corporate reorganization involving Atlantic American, if, in any such case,
persons who were not stockholders of Atlantic American immediately prior to such
transaction, merger, consolidation or other reorganization own immediately after
such transaction, merger, consolidation or other reorganization more than 50% of
the voting power of the outstanding securities of each of (A) the continuing or
surviving entity and (B) any direct or indirect parent corporation of such
continuing or surviving entity or (ii) the sale, transfer or other disposition
of all or substantially all of Atlantic American’s consolidated assets.
     2. The undersigned acknowledges and agrees that Columbia could not be made
whole by monetary damages in the event of any default by the undersigned of the
terms and conditions set forth in this Agreement. It is accordingly agreed and
understood that Columbia, in addition to any other remedy which it may have at
law or in equity, shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and specifically to enforce the terms and provisions
hereof in any action instituted in any state or federal court having appropriate
jurisdiction located in Georgia or Texas.
     3. Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction. If any provision of this Agreement is
so broad as to be unenforceable, the provision shall be interpreted to be only
so broad as is enforceable.
     4. This Agreement may be executed in one or more identical counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument. Telecopy transmissions of signatures
shall be deemed to constitute originals.

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     IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the undersigned as of the day and year first above written.

                      ATLANTIC AMERICAN CORPORATION       COLUMBIA MUTUAL
INSURANCE COMPANY    
 
                   
 
  /s/ John G. Sample, Jr.           /s/ Gary W. Thompson                  
Name:
  John G. Sample, Jr.       Name:   Gary W. Thompson    
Title:
  Senior Vice President & CFO       Title:   Executive Vice President    
 
  (Please print or type)           (Please print or type)    

(Signature page to Non Competition Agreement)