Second Amendment



EXHIBIT 10.1

SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT


				
	
             THIS
SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this
“Amendment”) is made effective as of the 31st day of
December, 2005 by and between ATLANTIC AMERICAN CORPORATION, a Georgia
corporation (the “Borrower”) and WACHOVIA BANK, NATIONAL ASSOCIATION,
a national banking association (the “Bank”).



R E C I T A L S:


				
	
             The
Borrower and the Bank have entered into that certain Amended and Restated Credit
Agreement dated as of June 30, 2003, as amended by that certain First Amendment
to Amended and Restated Credit Agreement dated May 2, 2005 (as so amended, the
“Credit Agreement”). Capitalized terms used in this Amendment which
are not otherwise defined in this Amendment shall have the respective meanings
assigned to them in the Credit Agreement.
	

             The
Borrower and the Bank wish to amend the Credit Agreement in certain respects,
as hereinafter provided. 
	

             NOW,
THEREFORE, in consideration of the Recitals and the mutual promises contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower and the Bank,
intending to be legally bound hereby, agree as follows: 
	

             SECTION 1.    
Recitals.  The Recitals are incorporated herein by reference and shall be deemed to be a part of this Amendment.
	
             SECTION 2.    
Amendment to Term Loan Agreement.  The Credit Agreement is hereby amended as provided in this Section 2.
	 	
                  (a)       The  definition of  “Consolidated  Net Income” in the Credit  Agreement is hereby amended and restated in
         its entirety to read as follows:
	 	            "Consolidated
Net Income" means, for any period, the Net Income of the Borrower and its
Consolidated Subsidiaries determined on a consolidated basis, but excluding
(i) extraordinary gains, (ii) any equity interests of the Borrower or
any Subsidiary in the unremitted earnings of any Person that is not a Subsidiary
in excess of $500,000, determined on a consolidated basis, per annum, and (iii)
for the Fiscal Quarter ending December 31, 2005, non-cash charges reflecting the
GM Bond Impairment. 

	 	
                  (b)       The  definition  of  “Consolidated  Tangible  Net Worth” in the Credit  Agreement  is hereby  amended and
         restated in its entirety to read as follows:
	 	            
"Consolidated Tangible Net Worth" means, at any time, Stockholders’ Equity, less the
sum of the value, as set forth or reflected on the most recent consolidated
balance sheet of the Borrower and its Consolidated Subsidiaries, prepared in
accordance with GAAP, of 
























				
	 	            
 (A)      Any  change in equity  resulting  from any  write-up  of assets  subsequent  to
December 31, 2002 (other than the usual and customary valuation of the investment portfolio of
the Borrower or any Consolidated Subsidiary from time to time);

	 	            
 (B)      All assets  which  would be  treated as  intangible  assets for  balance  sheet
presentation purposes under GAAP, related to the compliance by the Borrower with the provisions
of Financial Accounting Statement Board Statement No. 141, all determined in accordance with
GAAP; provided, however, deferred acquisition costs, as determined in accordance with GAAP,
shall not be deducted from Stockholders Equity;

	 	            
 (C)      To the extent not included in (B) of this definition,  deferred expenses, other
than deferred acquisition costs, as determined in accordance with GAAP, provided, however, that
deferred expenses in an amount not to exceed $2,000,000 incurred as a result of financings of
Funded Debt, including, without limitation, the 2002 Trust Preferred Transaction and the 2003
Trust Preferred Transaction, shall be excluded from this definition; and provided further, that
prepaid expenses shall not constitute deferred expenses for the purposes of this definition; and

	 	            
 (D)      Other than in the ordinary  course of  business,  loans or advances to
stockholders, directors, officers or employees,

	
             
                  
provided, however, that Consolidated Tangible Net Worth shall, for each Fiscal Quarter
beginning with the Fiscal Quarter ending December 31, 2005 through and including
the Fiscal Quarter ending December 31, 2006, be increased by an amount equal to
the non-cash charges, net of tax, associated with the GM Bond Impairment.
	 	
                  (c)       The definition of “GM Bond Impairment” is hereby added to the Credit Agreement in its appropriate
         alphabetical location as follows:
	 	            “GM
Bond Impairment” means the write-down by the Borrower and its Consolidated
Subsidiaries of General Motors Corporation fixed maturity bond investments, as
identified on Schedule A attached hereto and made a part hereof by
reference, which such write-down occurred during the Fiscal Quarter ending
December 31, 2005.

	 	
                  (d)       Section 5.04 of the Credit  Agreement is hereby  amended and restated in its entirety to
         read as follows:
	 	            Section
5.04.     Ratio of Funded Debt to EBITDA. As of the end of each Fiscal
Quarter beginning with the Fiscal Quarter ending June 30, 2003, the ratio of
Funded Debt as of the end of such Fiscal Quarter to EBITDA for the period of 4
consecutive Fiscal Quarters then ended shall be less than (a) 3.10 to 1.0 for
each Fiscal Quarter ending on or before September 30, 2005, (b) 4.25 to 1.0 for
the Fiscal Quarter ending on December 31, 2005, and (c) 3.10 to 1.0 for each
Fiscal Quarter thereafter.











2


























				
	

             SECTION 3.    
Conditions to  Effectiveness.  The  effectiveness  of this  Amendment and the  obligations  of the Bank hereunder are
subject to the following conditions, unless the Bank waives such conditions:
	
             (a)    
    receipt by the Bank from the Borrower of a duly executed counterpart of this Amendment; and
	

             (b)    
    the fact that the  representations  and warranties of the Borrower  contained in Section 5 of this Amendment shall be
true on and as of the date hereof.
	

             SECTION 4.    
No Other Amendment.   Except for the amendments set forth above, the text of the Credit
Agreement shall remain unchanged and in full force and effect. This Amendment is
not intended to effect, nor shall it be construed as, a novation. The Credit
Agreement and this Amendment shall be construed together as a single agreement.
Nothing herein contained shall waive, annul, vary or affect any provision,
condition, covenant or agreement contained in the Credit Agreement, except as
amended hereby, nor affect or impair any rights, powers or remedies under the
Credit Agreement, as amended hereby. The Bank does hereby reserve all of its
rights and remedies against all parties who may be or may hereafter become
secondarily liable for the repayment of the Note executed by the Borrower. The
Borrower promises and agrees to perform all of the requirements, conditions,
agreements and obligations under the terms of the Credit Agreement, as
heretofore and hereby amended, and the Credit Agreement, as amended, is hereby
ratified and affirmed. The Borrower hereby expressly agrees that the Credit
Agreement, as amended, is in full force and effect.
	

             SECTION 5.    
Representations and Warranties of the Borrower.  The Borrower hereby
represents and warrants to the Bank as follows:
	
             (a)    
    No Default or Event of Default,  nor any act, event,  condition or circumstance  which with the passage of
time or the giving of notice,  or both,  would  constitute an Event of Default,  under the Credit  Agreement or any
other Loan Document has occurred and is continuing unwaived by the Bank on the date hereof;
	
             (b)    
    The Borrower has the  corporate  power and  authority to enter into this  Amendment and to do all acts and
things as are required or contemplated hereunder to be done, observed and performed by it;
	
             (c)    
    This  Amendment  has been duly  authorized,  validly  executed  and  delivered  by one or more  authorized
officers of the Borrower and each of this Amendment and the Credit  Agreement,  as amended hereby,  constitutes the
legal,  valid and  binding  obligation  of the  Borrower  enforceable  against  it in  accordance  with its  terms;
provided,  that the  enforceability  of each of this  Amendment and the Credit  Agreement,  as amended  hereby,  is
subject to general  principles of equity and to bankruptcy,  insolvency and similar laws affecting the  enforcement
of creditors' rights generally; and
	
             (d)    
    The  execution  and delivery of this  Amendment  and the  Borrower's  performance  hereunder and under the
Credit  Agreement,  as amended  hereby,  do not and will not require  the  consent or  approval  of any  regulatory
authority or  governmental  authority or agency having  jurisdiction  over the Borrower other than those which have
already been obtained or given,  nor be in  contravention  of or in conflict with the Articles of  Incorporation or
Bylaws of the  Borrower,  or the  provision  of any  statute,  or any  judgment,  order or  indenture,  instrument,
agreement or  undertaking,  to which the Borrower is a party or by which its assets or properties are or may become
bound.




3



























				
	
             SECTION 6.    
Counterparts.  This Amendment may be executed in multiple counterparts,
each of which shall be deemed to be an original and all of which, taken
together, shall constitute one and the same agreement. 
	
             SECTION 7.    
Governing Law.  This Amendment shall be construed in accordance with and governed by
the laws of the State of Georgia. This Amendment is intended to be effective as
an instrument executed under seal.
	
             SECTION 8.    
Effective Date.  This Amendment shall become effective as of the date first above
written upon receipt by the Bank from each of the parties hereto of a duly
executed signature page from a counterpart of this Amendment, signed by such
party.
	
             SECTION 9.    
Legal Fees and Expenses.  Borrower hereby agrees to pay the legal fees and expenses of
Bank’s counsel in connection with this Amendment.







[SIGNATURE PAGE FOLLOWS]




4



























             IN
WITNESS WHEREOF, the parties hereto have executed and delivered, or have caused
their respective duly authorized officers or representatives to execute and
deliver, this Amendment as of the day and year first above written.




	ATTEST:	ATLANTIC AMERICAN CORPORATION
	 
	/s/  
Janie L. Ryan          
                                    
                           	By:          
         /s/  John G. Sample, Jr.     
                   (SEAL)
	          
                    
Janie L. Ryan                       
        , Secretary	       Name:          
          John G. Sample, Jr.             
           
	          
     
        [CORPORATE SEAL]	
       Title:  Senior Vice President and Chief Financial Officer

	 
	 	4370 Peachtree Road, N.E.
Atlanta, Georgia 30319-3000

Attention:   John G. Sample, Jr.,
               
    Senior Vice President and
               
    Chief Financial Officer
Telecopy number: (404) 266-5702
Telephone number: (404) 266-5501
	 
	 	WACHOVIA BANK, NATIONAL
ASSOCIATION
	 
	 	By:
                     /s/  
Ron Edwards            (SEAL)
	 	     
Name:                      
Ron Edwards               
                

	 	     
Title:                      
Senior Vice President               
                

	 
	 	Lending Office
Wachovia Bank, National Association

171 17th Street, N.W.
Mail Code: GA 4568
Atlanta, Georgia 30363-1032
Attention: Ron Edwards
Telecopy number:  (404) 877-6641

Telephone number:  (404) 877-6635








 Signature Page of

                                                First Amendment to Credit Agreement

                                                              Page 1 of 1

























SCHEDULE A
GENERAL
MOTORS CORPORATION BOND IMPAIRMENT INVESTMENTS


	ASSOCIATION CASUALTY'S GENERAL MOTORS BOND HOLDINGS


	CUSIP #
 	Maturity
 
	370442-BS-3
370442-BB-0
370442-AR-6
370442-AU-9	7/15/2013
1/15/2011
9/1/2025
 4/15/2016


	AMERICAN SAFETY'S GENERAL MOTORS BOND HOLDINGS


	CUSIP #
 	Maturity
 
	370442-AR-6
370442-AU-9	9/1/2025
4/15/2016



		
	AMERICAN SOUTHERN'S GENERAL MOTORS BOND HOLDINGS


	CUSIP #
 	Maturity
 
	370442-AR-6
370442-AU-9
370442-BS-3
370442-BW-4	9/1/2025
4/15/2016
7/15/2013
7/15/2023



	BANKERS FIDELITY'S GENERAL MOTORS BOND HOLDINGS


	CUSIP #
 	Maturity
 
	370442-AR-6
370442-AU-9
370442-BS-3
370442-BW-4	9/1/2025
4/15/2016
7/15/2013
7/15/2023



	GEORGIA CASUALTY'S GENERAL MOTORS BOND HOLDINGS


	CUSIP #
 	Maturity
 
	370442-AR-6
370442-BB-0
370442-BS-3
	9/1/2025
1/15/2011
7/15/2013