Second Amendment



EXHIBIT 10.1

SECOND AMENDMENT TO

CREDIT AGREEMENT


				
	
             THIS
SECOND AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is made as of
the 28th day of October, 2008, between ATLANTIC AMERICAN CORPORATION, a Georgia
corporation (the “Borrower”) and WACHOVIA BANK, NATIONAL ASSOCIATION
(the “Bank”). 



Recitals:


				
	
             The
Borrower and the Bank have entered into that certain Credit Agreement dated as
of December 22, 2006 as amended by that certain First Amendment to Credit
Agreement and Pledge Agreement dated March 28, 2008 (as so amended the
“Credit Agreement”). The Borrower and the Bank desire (a) to
provide for an acknowledgement and consent to a certain redemption of
Borrower’s Series B Preferred Stock and the payment of a dividend in
connection therewith, and (b) to amend the Credit Agreement in respect
thereof, 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.    
Definitions.  Capitalized  terms used herein which are not  otherwise  defined  herein shall have
the respective meanings assigned to them in the Credit Agreement.
	
             SECTION 3.    
Acknowledgement and Consent.
	 	
                  (a)       The Borrower has requested  that the Bank consent to, and subject to the  conditions  stated  herein,  the
         Bank does hereby consent to, the  Borrower's  intention to (a) redeem all shares of its Series B Preferred
         Stock (the  "Planned  Redemption")  at par value for an amount  not to exceed  $13,400,000  (the  "Planned
         Redemption  Limit") and pay a dividend in connection  therewith (the "Planned  Dividend") in an amount not
         to exceed  $1,675,000  (the "Planned  Dividend  Limit").  Pursuant to Section 5.12 of the  Agreement,  the
         Borrower is  currently  prohibited  from  making a  redemption  of the nature of the  Planned  Redemption.
         Pursuant to 5.06 of the Agreement,  the Borrower is currently  prohibited from making a Restricted Payment
         of the nature of the Planned Dividend.

	 	
                  (b)       The Bank  expressly  reserves all of its rights and remedies with respect to any present or future Default
         arising under the Credit Agreement.

	

             SECTION 4.    
Amendments to Credit Agreement.  The Credit Agreement is amended as set forth in this
Section 4. 






































				
	 	
                  (a)        New Definitions.   Article  I of the  Credit  Agreement  is  hereby  amended  to  add  the  following  new
definitions in alpha order:

	 	
             Planned
Dividend” has the meaning ascribed to such term in the second Amendment to
Credit Agreement between the Borrower and the Bank dated as of October 28, 2008
(the “Second Amendment”). 
	 	
             
"Planned Dividend Limit" has the meaning ascribed to such term in the Second Amendment.
	 	
             
"Planned Redemption" has the meaning ascribed to such term in the Second Amendment.
	 	
             
"Planned Redemption Limit” has the meaning ascribed to such term in the Second
Amendment. 
	 	
                  (b)       Amendment to Section  5.06.   Section 5.06 of the Credit  Agreement is hereby  amended and restated in its
entirety to read as follows:

	 	
                              Section
5.06 Restricted Payments    The Borrower will not declare or make any
Restricted Payment during any Fiscal Year; provided that: (1) the Borrower may
redeem shares of the Borrower’s capital stock for the purpose of satisfying
the Borrower’s obligations under its 401K plan and stock options provided
by the Borrower to its executive officers, in the ordinary course of business
and consistent with practices existing on the Closing Date; (2) the total
number of shares of the Borrower’s capital stock redeemed pursuant to the
preceding subsection (1) shall not exceed five hundred thousand in the aggregate
in any Fiscal Year; and (3) the aggregate amount expended by the Borrower in
connection with the redemptions made pursuant to the preceding subsection (1)
shall not exceed $2,000,000 in the aggregate in any Fiscal Year; and provided
further that the Borrower may make Restricted Payments on or in connection with
the Series D Preferred Stock, so long as, (a) the dividend rate payable on such
Series D Preferred Stock shall not exceed seven and one quarter of one percent
(7.25%) per annum, (b) the redemption value of the Series D Preferred Stock
shall not be greater than $1,000,000 per Fiscal Year, and (c) no Event of
Default shall be in existence or shall result from the making of such Restricted
Payment; provided that the making of the Planned Dividend in an amount
not to exceed the Planned Dividend Limit shall not be prohibited by this
Section. 

	 	
                  (c)       Amendment to Section  5.12.   Section  5.12 of the Credit  Agreement  hereby  amended and  restated in its
entirety to read as follows:






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                              Section
5.12 Dissolution.    Neither the Borrower nor any of its Subsidiaries shall
suffer or permit dissolution or liquidation either in whole or in part or redeem
or retire any shares of its own stock or that of any Subsidiary, except through
corporate reorganization to the extent permitted by Section 5.13 or as
permitted in Section 5.11; provided that the making of the Planned
Redemption in an amount not to exceed the Planned Redemption Limit shall not be
prohibited by this Section.

	

             SECTION 5.    
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 instrument
and any reference to the “Agreement” or any other defined term for the
Credit Agreement in the Credit Agreement, the Loan Documents or any certificate,
instrument or other document delivered pursuant thereto shall mean the Credit
Agreement as amended hereby and as it may be amended, supplemented or otherwise
modified hereafter. Nothing herein contained shall waive, annul, vary or affect
any provision, condition, covenant or agreement contained in the Credit
Agreement, except as herein amended, or any of the other Loan Documents nor
affect nor impair any rights, powers or remedies under the Credit Agreement, as
hereby amended or any of the other Loan Documents. 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 Obligations. The Borrower
promises and agrees to perform all of the requirements, conditions, agreements
and obligations under the terms of the Credit Agreement, as hereby amended, and
the other Loan Documents. The Credit Agreement, as amended, and the other Loan
Documents are hereby ratified and affirmed. The Borrower hereby expressly agrees
that the Credit Agreement, as amended, and the other Loan Documents are in full
force and effect. 
	

             SECTION 6.    
Representations and Warranties.  The Borrower hereby represents and
warrants in favor of the Bank as follows: 
	 	
                  (a)      The  representations  and warranties of the Borrower  contained in Article IV of the Credit  Agreement are
         true  in all  material  respects  on and as of the  date  hereof  (except  to the  extent  they  are  made
         specifically  with  reference to some other date, in which case they are true and correct as of such other
         date);

	 	
                  (b)      After giving  effect to this  Amendment,  no Default or Event of Default under the Credit  Agreement,  the
         Pledge Agreement or any other Loan Document has occurred and is continuing on the date hereof;

	 	
                  (c)      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;

	 	
                  (d)      This  Amendment  has been duly  authorized,  validly  executed  and  delivered  by one or more  authorized
         officers of the  Borrower,  and this  Amendment,  the Credit  Agreement and Pledge  Agreement,  as amended
         hereby,  constitute the legal,  valid and binding  obligations of the Borrower  enforceable  against it in
         accordance with their terms; and













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                  (e)      Neither the execution and delivery of this Amendment,  the Borrower's  performance hereunder and under the
         Credit Agreement,  as amended hereby,  the making of the Planned  Dividend,  nor the making of the Planned
         Redemption  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 will the aforesaid  actions 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.

	

             SECTION 7.    
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  7 of this
         Amendment shall be true on and as of the date hereof.

	

             SECTION 8.    
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 9.    
Governing Law.  This Amendment shall be construed in accordance with and governed by
the laws of the State of Georgia.
	

             SECTION 10.    
Attorney's Fees and Expenses.  The Borrower hereby agrees that all
attorney’s fees and expenses incurred by the Bank in connection with the
preparation, negotiation and execution of this Amendment shall be payable by the
Borrower. 




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             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/  John G. Sample, Jr.
  
                           	By:          
         /s/  John G. Sample, Jr.     
                   (SEAL)
	          
                    
John G. Sample, Jr.                       
        , Acting Secretary	       Name:          
          John G. Sample, Jr.             
           
	          
     
        [CORPORATE SEAL]	
       Title:  Senior Vice President and Chief Financial Officer

	 
	 	WACHOVIA BANK, NATIONAL
ASSOCIATION
	 
	 	By:
                     /s/  
Ron Edwards            (SEAL)
	 	     
Name:                      
Ron Edwards               
                

	 	     
Title:          
SVP/Commerical Risk Management         

	 








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Second Amendment to Credit Agreement