<PAGE>

                                                                     Exhibit 3.1

                              RESTATED AND AMENDED
                            ARTICLES OF INCORPORATION
                                       OF
                          ATLANTIC AMERICAN CORPORATION

                                   ARTICLE I.

The name of the corporation is Atlantic American Corporation.

                                  ARTICLE II.

The corporation is organized pursuant to the Business Corporation Code of the
State of Georgia.

                                  ARTICLE III.

The duration of the corporation shall be perpetual.

                                  ARTICLE IV.

The purposes for which the corporation are organized is as follows:

         (a) To generally engage in the business of buying, selling or otherwise
dealing in notes, accounts, bonds, debentures, securities, choses in action,
coupons and other negotiable instruments and evidences of debt, and any and all
other forms of real, personal or mixed property; to form, promote, subsidize and
assist companies, corporations, syndicates, joint ventures, partnerships and
business enterprises of all kinds; to guarantee, become surety upon or endorse
the contracts or obligations of any other corporation, individual or business
entity, whether purely accommodation or not, and whether the corporation has any
direct interest in the subject matter so guaranteed or endorsed; to lend the
capital of the corporation and such other funds as it may from time to time
lawfully acquire upon such security as may be agreed; and to generally carry on
and undertake any business undertaking, transaction or operation commonly
carried on in connection with the operation of a general business, industrial,
investment, and lending finance operation.

         (b) To purchase, acquire, hold, pledge, exchange and otherwise deal in,
either alone or in conjunction with others, stocks, bonds, debentures, rights,
warrants, and any other kinds or types of securities of any sort or kind of any
corporation, association, partnership, syndicate, entity, person or authority,
domestic or foreign; to create and issue, whether or not in connection with the
issue and sale of any shares of stock or other securities of the corporation,
rights or options, entitling the holder thereof to purchase shares of stock or
any other security of the corporation on such terms as may be provided, so long
as shares of stock with a par value to be received on the exercise of such
rights or options shall be paid for at a price at least equal to the par value
thereof.

         (c) To buy, own, hold, mortgage, lease, encumber, sell, exchange,
assign, transfer, acquire by gift, device or otherwise and otherwise to deal in
generally real, personal and intangible property of whatsoever kind or sort
wherever situated.

         (d) Generally to do any and all things necessary, convenient or
appropriate which are incidental or connected with any of the business
activities mentioned above.

                                   ARTICLE V.

The total number of shares of capital stock of the Corporation shall be
34,000,000, which shall consist of (a) 30,000,000 shares of common stock of the
par value of $1.00 per share ("Common Stock"), and (b) 4,000,000 shares of
Preferred Stock of the par value of $1.00 per share ("Preferred Stock"), of
which Preferred Stock (i) 30,000 shares shall be designated as "Series A
Convertible Preferred Stock" having the powers, preferences and rights
heretofore designated as part of these Restated Articles of Incorporation, (ii)
134,000 shares shall be designated as "Series B Preferred Stock" having the
powers, preferences and rights heretofore designated as part of these Restated
Articles of Incorporation, and (iii) 100,000 shares shall be designated as
"Series C Preferred Stock" having the powers, preferences and rights set forth
in the Statement of Relative Rights and Preferences of the Series C Preferred
Stock attached hereto as Exhibit A and made a part of the Corporation's Restated
Articles of Incorporation.


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         The following is a statement fixing certain of the designations and the
powers, voting powers, preferences and relative, participating, optional or
other rights of the Preferred Stock and the Common Stock of the corporation, and
the qualifications, limitations or restrictions thereof, and of the authority
with respect thereto expressly granted to the Board of Directors of the
corporation to fix any such provisions not fixed hereby:

                           A. Preferred Stock

         The Board of Directors is hereby expressly vested with the authority to
adopt a resolution or resolutions providing for the issue of authorized but
unissued shares of Preferred Stock, which shares may be issued from time to time
in one or more series and in such amounts as may be determined by the Board of
Directors in such resolution or resolutions. The powers, voting powers,
designations, preferences and relative, participating, optional, or other
special rights, if any, of each series of Preferred Stock and the
qualifications, limitations or restrictions, if any, of such preferences and/or
rights (collectively, the "Series Terms"), shall be such as are stated and
expressed in the resolution or resolutions providing the issue of such series of
Preferred Stock (the "Series Terms Resolution") adopted by the Board of
Directors. The powers of the Board of Directors with respect to the Series Terms
of a particular series (any of which powers may by resolution of the Board of
Directors be specifically delegated to one or more of its committees, except as
prohibited by law) shall be limited to determination of the following:

                  (1) The number of shares constituting that series and the
         distinctive designation of that series;

                  (2) The rate of dividend on the shares of the series, whether
         such dividends, if any, shall be cumulative, and, if so, the date or
         dates from which dividends payable on such shares shall accumulate, and
         the relative rights of priority, if any, of payment of dividends on
         shares of that series;

                  (3) Whether that series shall have voting rights, in addition
         to any voting rights provided by law, and, if so, the terms of such
         voting rights;

                  (4) Whether that series shall have conversion privileges with
         respect to shares of any other class or classes of stock or of any
         other series of any class of stock, and, if so, the terms and
         conditions of such conversion, including provision for adjustment of
         the conversion rate upon occurrence of such events as the Board of
         Directors shall determine;

                  (5) Whether the shares of that series shall be redeemable,
         and, if so, the terms and conditions of such redemption, including
         their relative rights of priority, if any, of redemption, the date or
         dates upon or after which they shall be redeemable, provisions
         regarding redemption notices, and the amount per share payable in case
         of redemption, which amount may vary under different conditions and at
         different redemption dates;

                  (6) Whether that series shall have a sinking fund for the
         redemption or purchase of shares of that series, and, if so, the terms
         and amount of such sinking fund; and

                  (7) The rights of the shares of that series in the event of
         voluntary or involuntary liquidation of the corporation, and the
         relative rights of priority, if any, of payment of shares of that
         series.

         Any of the Series Terms, including voting rights, of any series may be
dependent upon facts ascertainable outside the Articles of Incorporation and the
Series Terms Resolution, provided that the manner in which such facts shall
operate upon such Series Terms is clearly and expressly set forth in the
Articles of Incorporation or in the Series Terms Resolution.

                           B. Common Stock

                                    1. Dividends. Subject to the rights of the
                           holders of shares of any series of Preferred Stock
                           set forth in any Series Terms Resolution, the Board
                           of Directors may, in its discretion, out of funds
                           legally available for the payment of dividends and at
                           such times and in such manner as determined by the
                           Board of Directors, declare and pay dividends on the
                           Common Stock of the corporation.

                                    2. Liquidation. In the event of any
                           liquidation, dissolution or winding up of the
                           corporation, whether voluntary or involuntary, after
                           payment or provision for the payment of the debts and
                           other liabilities of the corporation and the payment
                           or setting aside for payment of any preferential
                           amount due to the holders of shares of any series of
                           Preferred Stock, the holders of Common Stock, subject
                           to the rights of the holders of any shares of any
                           class of stock or series ranking on a parity with the
                           Common Stock as to payments or distributions in such
                           event, shall be entitled to receive ratably any and
                           all assets of the corporation remaining to be paid or
                           distributed.


                                       2
<PAGE>

                                    3. Voting Rights. Subject to the rights of
                           the holders of shares of any series of Preferred
                           Stock set forth in any Series Terms Resolution, the
                           holders of the Common Stock of the corporation shall
                           be entitled at all meetings of stockholders to one
                           vote for each share of such stock held by them.

                  C. Retirement of Shares

         Unless otherwise provided in a Series Terms Resolution with respect to
a particular series of Preferred Stock, all shares of Preferred Stock redeemed
or acquired by the corporation (as a result of conversion or otherwise) shall be
retired and restored to the status of authorized but unissued shares.

                  D. No Preemptive Rights

         Unless otherwise provided with respect to a particular series of
Preferred Stock in a Series Terms Resolution, no holder of shares of capital
stock of the corporation shall have any preemptive or other right, except as
such rights are expressly provided by contract, to purchase or subscribe for or
receive any shares of any class, or series thereof, of capital stock of the
corporation, whether now or hereafter authorized, or any warrants, options,
bonds, debentures or other securities convertible into, exchangeable for or
carrying any right to purchase any shares of any class, or series thereof, of
capital stock of the corporation.

                                  ARTICLE VI.

         The principal office of the corporation shall be located in DeKalb
County, Georgia.

                                  ARTICLE VII.

         A director of the corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any appropriation, in violation
of his duties, of any business opportunity of the corporation, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) for the types of liability set forth in Section 14-2-154
of the Georgia Business Corporation Code, as amended, and its successor
provisions, or (iv) for any transaction from which the director derived an
improper personal benefit.

                                 ARTICLE VIII.

         All shares previously reacquired by the corporation pursuant to the
power of the corporation to purchase its own shares conferred generally by law
(and not heretofore cancelled by action of the Board of Directors or resold) and
all shares hereafter so reacquired shall become treasury shares of the
corporation, and shall remain such unless and until resold or cancelled by
action of the Board of Directors.


                                       3
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                                    EXHIBIT A

                       RELATIVE RIGHTS AND PREFERENCES OF
                   THE SERIES A CONVERTIBLE PREFERRED STOCK OF
                          ATLANTIC AMERICAN CORPORATION

         Pursuant to authority granted in the Articles of Incorporation, as
amended, of the Corporation, the Board of Directors of the Corporation has been
authorized to issue in series 4,000,000 shares of the Corporation's Preferred
Stock of the par value of $1.00 per share, and to designate by resolution the
relative rights and preferences of each series so established. By resolution of
the Board of Directors, the Corporation has established a series of such
Preferred Stock consisting of 30,000 shares and has designated said series as
the "Series A Convertible Preferred Stock."

         For the purposes of this statement, "Corporation" shall mean Atlantic
American Corporation, a Georgia corporation;

         "Board of Directors" shall mean the board of directors of the
Corporation;

         "Series A Preferred Stock" shall mean the 30,000 shares of Series A
Convertible Preferred Stock of the par value of $1.00 per share of the
Corporation;

         "Common Stock" shall mean the common stock of the par value of $1.00
per share of the Corporation; and

         "Original Issue Date" shall mean the date on which the first share of
Series A Preferred Stock was originally issued.

         The voting powers, preferences, and the relative, participating,
optional and other rights granted to and imposed upon the Series A Preferred
Stock are as follows:

         (a) Dividend Rights. From and after the issuance of the Series A
Preferred Stock, the holders of outstanding shares of the Series A Preferred
Stock shall be entitled to receive, and shall be paid, when and as declared by
the Board of Directors, out of funds legally available therefor, cumulative
dividends at the annual rate of Ten Dollars and Fifty Cents ($10.50) per share,
payable in arrears quarterly on March 15, June 15, September 15 and December 15
of each year, commencing March 15, 1988, to stockholders of record on a date not
more than twenty (20) days prior to the date on which such cash dividends are
payable, said dividends to commence accrual on the Original Issue Date. Such
dividends shall be prior and in preference to any declaration of payment of any
dividend on the Common Stock and any other class or series of capital stock
ranking junior to the Series A Preferred Stock in respect of dividends or
distributions upon liquidation. Such dividends shall be cumulative and shall
accrue whether or not declared by the Board of Directors. No cash dividends
shall be paid on the Common Stock or any other junior stock (except stock
dividends of Common Stock or any other junior stock), until all dividends
accrued on any outstanding shares of the Series A Preferred Stock and all other
series of preferred stock ranking on a parity with the Series A Preferred Stock,
whether or not declared, have been set apart and fully paid. No accumulation of
dividends on the Series A Preferred Stock shall bear interest.

         In the event cash dividends are not paid in full on all outstanding
shares of the Series A Preferred Stock and any other series of preferred stock
ranking on a parity with the Series A Preferred Stock, shares of the Series A
Preferred Stock and shares of such other series of preferred stock shall be
entitled to proportionate amounts of the funds available for their respective
dividend requirements based upon the payments required to be made on the Series
A Preferred Stock and each such other series of preferred stock then
outstanding.

         (b) Liquidation Rights. In the event of liquidation of the Corporation,
whether voluntary or involuntary, the holders of shares of the Series A
Preferred Stock will be entitled to receive, from the assets of the Corporation
available for distribution to stockholders, an amount equal to One Hundred
Dollars ($100.00) per share, plus all accrued but unpaid dividends on such
shares, whether or not declared, before any distribution shall be made or set
apart for holders of Common Stock or any other class or series of capital stock
ranking junior to the Series A Preferred Stock in respect of dividends or
distributions upon liquidation. The holders of Series A Preferred Stock shall be
entitled to no further participation in any remaining assets of the Corporation.
If, upon any liquidation of the Corporation, the assets of the Corporation, or
proceeds thereof, distributable among the holders of shares of the Series A
Preferred Stock and any other class or series of preferred stock ranking on a
parity with the Series A Preferred Stock shall be insufficient to pay in full
the preferential amount aforesaid, then such assets, or the proceeds thereof,
shall be distributed among such holders ratably in accordance with the
respective amounts that would be payable on such shares if all amounts payable
thereon were paid in full. Neither the consolidation or merger of the
Corporation with or into any other corporation or corporations, nor the sale or
lease of all or substantially all of the assets of the Corporation, shall
constitute a liquidation as used in this Section (b).

         (c) Voting Rights. Except as required by law or indicated below, the
holders of shares of the Series A Preferred Stock shall have no voting rights.


                                      A-1
<PAGE>

         Whenever dividends on the Series A Preferred Stock are in arrears in an
amount equal to or exceeding six (6) quarterly dividends, then during the period
commencing with such time and ending with the time when all arrears in dividends
on the Series A Preferred Stock have been paid and the full dividend on the
Series A Preferred Stock for the current quarterly dividend period has been paid
or declared and set aside for payment, the holders of the Series A Preferred
Stock, voting together as a class, shall be entitled to vote on all matters put
to a vote of the stockholders of the Corporation and shall otherwise have voting
rights and powers equal to the voting rights and powers of the Common Stock,
with each share of Series A Preferred Stock entitling the holder thereof to one
(1) vote.

         In addition to any other rights provided by law, so long as any shares
of the Series A Preferred Stock shall be outstanding, the Corporation shall not,
without first obtaining the affirmative vote or written consent of the holders
of not less than a majority of such outstanding shares of Series A Preferred
Stock, voting together as a class, amend or repeal any provision of, or add any
provision to, the Corporation's Articles of Incorporation or Bylaws, as amended,
or file any certificate of designations, preferences and rights of any series of
preferred stock, if such action would materially and adversely affect the
preferences, rights, privileges or powers of, or the restrictions provided for
the benefit of, the Series A Preferred Stock. Nothing herein shall be deemed to
restrict the Board of Directors from amending the terms hereof prior to the
issuance of any shares of the Series A Preferred Stock.

         (d) Conversion. The holders of the Series A Preferred Stock shall have
conversion rights as follows:

                  (1) Right to Convert.

                           (A) Each share of the Series A Preferred Stock shall
                  be convertible, at the option of the holder thereof, at any
                  time after the date of issuance of such share at the office of
                  the Corporation or any transfer agent for the Series A
                  Preferred Stock, into fully paid and nonassessable shares of
                  Common Stock at the initial conversion rate of Sixteen and Six
                  Hundred and Sixty-Seven One Thousandths (16.667) fully paid
                  and nonassessable shares of Common Stock for each share of
                  Series A Preferred Stock, subject, however, to the adjustments
                  described below. The number of shares of Common Stock into
                  which each share of Series A Preferred Stock may be converted
                  is hereinafter referred to as the "Conversion Rate."

                           (B) No fractional shares of Common Stock shall be
                  issued upon conversion of Series A Preferred Stock and if any
                  shares of Series A Preferred Stock surrendered by a holder, in
                  the aggregate, for conversion would otherwise result in a
                  fractional share of Common Stock, then such fractional share
                  shall be redeemed at the then effective Conversion Price (as
                  hereinafter defined) per share, payable as promptly as
                  possible when funds are legally available therefor.

                           (C) The right of conversion with respect to shares of
                  Series A Preferred Stock called for redemption shall terminate
                  at the close of business on the fifth business day preceding
                  the date fixed for redemption, or, if not a business day, the
                  next succeeding business day.

                  (2) Mechanics of Conversion. Before any holder of shares of
         Series A Preferred Stock shall be entitled to convert the same into
         shares of Common Stock, such holder shall surrender the certificate or
         certificates therefor, duly endorsed and accompanied by properly
         executed stock powers, at the office of the Corporation or of any
         transfer agent for the Series A Preferred Stock, shall give written
         notice to the Corporation at such office of the name or names in which
         such holder wishes the certificate or certificates for shares of Common
         Stock to be issued if different from the name in which the Series A
         Preferred Stock being surrendered is registered, as shown on the books
         and records of the Corporation, and shall pay any applicable transfer
         tax. Said conversion notice shall also contain such representations as
         may reasonably be required by the Corporation to the effect that the
         shares to be received upon conversion are not being acquired and will
         not be transferred in any way which might violate the then applicable
         securities laws. The Corporation shall, as soon as practicable
         thereafter, issue and deliver at such office to such holder of shares
         of the Series A Preferred Stock, or to the nominee or nominees of such
         holder, a certificate or certificates for the number of shares of
         Common Stock to which such holder shall be entitled as aforesaid. Such
         conversion shall be deemed to have been made immediately prior to the
         close of business on the date of such surrender of the shares of Series
         A Preferred Stock to be converted, and the person or persons entitled
         to receive the shares of Common Stock issuable upon such conversion
         shall be treated for all purposes as the record holder or holders of
         such shares of Common Stock as of such date. All certificates issued
         upon the exercise of the conversion shall contain a legend governing
         restrictions upon such shares imposed by applicable securities laws.

                  (3) Adjustment for Subdivisions or Combinations of Common
         Stock. In the event the Corporation at any time or from time to time
         after the Original Issue Date effects a subdivision or combination of
         its outstanding Common Stock into a greater or lesser number of shares
         without a proportionate and corresponding subdivision or combination of
         its outstanding Series A Preferred Stock, then and in each such event
         the Conversion Rate shall be increased or decreased proportionately.

                  (4) Adjustments for Dividends, Distributions and Common Stock.
         In the event the Corporation at any time or from time to time after the
         Original Issue Date shall make or issue, or fix a record date for the
         determination of holders of Common


                                      A-2
<PAGE>

         Stock entitled to receive a dividend or other distribution payable in
         additional shares of Common Stock or other securities or rights
         convertible into or entitling the holder thereof to receive additional
         shares of Common Stock (hereinafter referred to as "Common Stock
         Equivalents") without payment of any consideration by such holder of
         such Common Stock Equivalents for the additional shares of Common
         Stock, without a proportionate and corresponding dividend or other
         distribution to holders of Series A Preferred Stock, then and in each
         such event the maximum number of shares (as set forth in the instrument
         relating thereto without regard to any provisions contained therein for
         subsequent adjustment of such number) of Common Stock issuable in
         payment of such dividend or distribution or upon conversion or exercise
         of such Common Stock Equivalents shall be deemed, for purposes of this
         Subsection (d)(4), to be issued and outstanding as of the time of such
         issuance or, in the event such a record date shall have been fixed, as
         of the close of business on such record date. In each such event, the
         Conversion Rate shall be increased as of the time of such issuance or,
         in the event such a record date shall have been fixed, as of the close
         of business on such record date, by multiplying the Conversion Rate by
         a fraction,

                           (A) the numerator of which shall be the total number
                  of shares of Common Stock (x) issued and outstanding or deemed
                  pursuant to the terms hereof to be issued and outstanding (not
                  including any shares described in clause (y) immediately
                  below), immediately prior to the time of such issuance or the
                  close of business on such record date, plus (y) the number of
                  shares of Common Stock issuable in payment of such dividend or
                  distribution or upon conversion or exercise of such Common
                  Stock Equivalents; and

                           (B) the denominator of which shall be the total
                  number of shares of Common Stock issued and outstanding or
                  deemed to be issued and outstanding immediately prior to the
                  time of such issuance or the close of business on such record
                  date; and provided, however, (i) if such record date shall
                  have been fixed and such dividend is not fully paid or if such
                  distribution is not fully made on the date fixed therefor, the
                  Conversion Rate shall be recomputed accordingly as of the
                  close of business on such record date and thereafter the
                  Conversion Rate shall be adjusted pursuant to this Subsection
                  (d)(4) as of the time of actual payment of such dividends or
                  distributions; or (ii) if such Common Stock Equivalents
                  provide, with the passage of time or otherwise, for any
                  decrease or increase in the number of shares of Common Stock
                  issuable upon conversion or exercise thereof (or upon the
                  occurrence of a record date with respect thereto), the
                  Conversion Rate computed upon the original issue thereof (or
                  upon the occurrence of a record date with respect thereto),
                  and any subsequent adjustments based thereon, shall, upon any
                  such decrease or increase becoming effective, be recomputed to
                  reflect such decrease or increase insofar as it affects the
                  rights of conversion or exercise of the Common Stock
                  Equivalents then outstanding; or (iii) upon the expiration of
                  any rights of conversion or exercise under any unexercised
                  Common Stock Equivalents, the Conversion Rate computed upon
                  the original issue thereof (or upon the occurrence of a record
                  date with respect thereto), and any subsequent adjustments
                  based thereon, shall, upon such expiration, be recomputed as
                  if the only additional shares of Common Stock issued were the
                  shares of such stock, if any, actually issued upon the
                  conversion or exercise of such Common Stock Equivalents; or
                  (iv) in the event of issuance of Common Stock Equivalents
                  which expire by their terms not more than sixty (60) days
                  after the date of issuance thereof, no adjustments of the
                  Conversion Rate shall be made until the expiration or exercise
                  of all such Common Stock Equivalents, whereupon such
                  adjustment shall be made in the manner provided in this
                  Subsection (d)(4).

                  (5) Adjustment of Conversion Rate for Diluting Issues. The
         amount obtained by dividing One Hundred Dollars ($100.00) by the
         Conversion Rate shall be called the "Conversion Price." Except as
         otherwise provided in this Subsection (d)(5), in the event the
         Corporation after the Original Issue Date sells or issues any Common
         Stock or Common Stock Equivalents at a per share consideration (as
         defined below) less than the Conversion Price then in effect for the
         Series A Preferred Stock, then the Conversion Rate and the Conversion
         Price then in effect shall be adjusted as provided in paragraphs (A),
         (B) and (C) hereof. With respect to the sale or issuance of Common
         Stock Equivalents which are convertible into or exchangeable for Common
         Stock without further consideration, the per share consideration shall
         be determined by dividing the maximum number of shares (as set forth in
         the instrument relating thereto without regard to any provisions
         contained therein for subsequent adjustment of such number) of Common
         Stock issuable with respect to such Common Stock Equivalents into the
         aggregate consideration received by the Corporation upon the sale or
         issuance of such Common Stock Equivalents. With respect to the issuance
         of other Common Stock Equivalents, the per share consideration shall be
         determined by dividing the maximum number of shares (as set forth in
         the instrument relating thereto without regard to any provisions
         contained therein for subsequent adjustment of such number) of Common
         Stock issuable with respect to such Common Stock Equivalents into the
         aggregate consideration received by the Corporation upon the sale or
         issuance of such Common Stock Equivalents plus the total consideration
         receivable by the Corporation upon the conversion or exercise of such
         Common Stock Equivalents. The issuance of Common Stock or Common Stock
         Equivalents for no consideration or for less than $1.00 per share shall
         be deemed to be an issuance at a per share consideration of $1.00. In
         connection with the sale or issuance of Common Stock and/or Common
         Stock Equivalents for noncash consideration, the amount of
         consideration shall be determined by the Board of Directors. For the
         purposes of the foregoing, the per share consideration with respect to
         the sale or issuance of Common Stock or Common Stock Equivalents shall
         be the price per share received by the Corporation, prior to the
         payment of any expenses, commissions, discounts and other applicable
         costs.


                                      A-3
<PAGE>

         As used in this Subsection (d)(5), "Additional Shares of Common Stock"
shall mean either shares of Common Stock issued subsequent to the Original Issue
Date or, with respect to the issuance of Common Stock Equivalents subsequent to
the Original Issue Date, the maximum number of shares (as set forth in the
instrument relating thereto without regard to any provisions contained therein
for subsequent adjustment of such number) of Common Stock issuable in exchange
for, upon conversion of, or upon exercise of such Common Stock Equivalents.

                           (A) Upon each issuance of Common Stock for a per
                  share consideration less than the Conversion Price in effect
                  on the date of such issuance, the Conversion Rate of the
                  Series A Preferred Stock in effect on such date will be
                  adjusted by multiplying it by a fraction:

                                    (x) the numerator of which shall be the
                           number of shares of Common Stock outstanding
                           immediately prior to the issuance of such Additional
                           Shares of Common Stock, plus the number of such
                           Additional Shares of Common Stock so issued, and

                                    (y) the denominator of which shall be the
                           number of shares of Common Stock outstanding
                           immediately prior to the issuance of such Additional
                           Shares of Common Stock plus the number of shares of
                           Common Stock which the aggregate net consideration
                           received by the Corporation for the total number of
                           such Additional Shares of Common Stock so issued
                           would purchase at the Conversion Price then in
                           effect.

                           (B) Upon each issuance of Common Stock Equivalents,
                  exchangeable without further consideration into Common Stock,
                  for a per share consideration less than the Conversion Price
                  in effect on the date of such issuance, the Conversion Rate of
                  the Series A Preferred Stock in effect on such date will be
                  adjusted as in paragraph (A) of this Subsection (d)(5) on the
                  basis that the related Additional Shares of Common Stock are
                  to be treated as having been issued on the date of issuance of
                  the Common Stock Equivalents, and the aggregate consideration
                  received by the Corporation for such Common Stock Equivalents
                  shall be deemed to have been received for such Additional
                  Shares of Common Stock.

                           (C) Upon each issuance of Common Stock Equivalents
                  other than those described in paragraph (B) of this Subsection
                  (d)(5), for a per share consideration less than the Conversion
                  Price in effect on the date of such issuance, the Conversion
                  Rate of the Series A Preferred Stock in effect on such date
                  will be adjusted as in paragraph (A) of this Subsection (d)(5)
                  on the basis that the related Additional Shares of Common
                  Stock are to be treated as having been issued on the date of
                  issuance of such Common Stock Equivalents, and the aggregate
                  consideration received and receivable by the Corporation on
                  conversion or exercise of such Common Stock Equivalents shall
                  be deemed to have been received for such Additional Shares of
                  Common Stock.

                           (D) Once any Additional Shares of Common Stock have
                  been treated as having been issued for the purpose of this
                  Subsection (d)(5), they shall be treated as issued and
                  outstanding shares of Common Stock whenever any subsequent
                  calculations must be made pursuant hereto. On the expiration
                  of any options, warrants or rights to purchase Additional
                  Shares of Common Stock, the termination of any rights to
                  convert or exchange for Additional Shares of Common Stock, the
                  expiration of any options or rights related to such
                  convertible or exchangeable securities on account of which an
                  adjustment in the Conversion Rate has been made previously
                  pursuant to this Subsection (d)(5) or the expiration or
                  termination of any Common Stock Equivalents, then the
                  Conversion Rate shall forthwith be readjusted to such
                  Conversion Rate as would have obtained had the adjustment made
                  upon the issuance of such options, warrants, rights,
                  securities or options or rights related to such securities or
                  Common Stock Equivalents been made upon the basis of the
                  issuance of only the number of shares of Common Stock actually
                  issued upon the exercise of such options, warrants or rights,
                  upon the conversion or exchange of such securities or upon the
                  exercise of the options or rights related to such securities
                  or upon the exercise of the Common Stock Equivalents. Any
                  readjustment of the Conversion Rate shall also cause an
                  appropriate readjustment of the Conversion Price, calculated
                  by dividing the readjusted Conversion Rate into the initial
                  Conversion Price.

                           (E) The foregoing notwithstanding, no adjustment of
                  the Conversion Rate or Conversion Price shall be made as a
                  result of the issuance of the following, but such shares of
                  Common Stock shall be deemed to be outstanding upon issuance
                  for all other purposes hereof:

                                    (x) shares of Common Stock relating to (i)
                           outstanding options to purchase 229,125 shares of
                           Common Stock issuable to officers and employees of
                           the Corporation pursuant to employee stock option
                           plans or to members of the Board of Directors, and
                           (ii) 2,742,230 shares of Common Stock issuable upon
                           conversion of the Corporation's 8% Convertible
                           Subordinated Notes Due May 15, 1997 (all such numbers
                           to be appropriately adjusted in the event of any
                           recapitalization, reorganization, stock dividend,
                           stock split or similar event affecting the capital
                           stock of the Corporation);


                                      A-4
<PAGE>

                                    (y) any shares of Common Stock pursuant to
                           which the Conversion Rate and Conversion Price have
                           been adjusted under Subsection (3) or (4) of this
                           Section (d); or

                                    (z) any shares of Common Stock issued
                           pursuant to the exchange, conversion or exercise of
                           any Common Stock Equivalents which have previously
                           been incorporated into computations hereunder on the
                           date when such Common Stock Equivalents were issued.

                  (6) Reorganization, Merger, Consolidation or Sale of Assets.
         If at any time or from time to time there shall be a capital
         reorganization of the Common Stock (other than a subdivision,
         combination, reclassification or exchange of shares provided for
         elsewhere in this Section (d)) or a merger or consolidation of the
         Corporation with or into another corporation, or the sale of all or
         substantially all of the Corporation's properties and assets to any
         other person which is effected so that holders of Common Stock are
         entitled to receive (either directly or upon subsequent liquidation)
         stock, securities or assets with respect to or in exchange for Common
         Stock, then, as a part of such reorganization, merger, consolidation or
         sale, provision shall be made so that the holders of the Series A
         Preferred Stock shall thereafter be entitled to receive upon conversion
         of the Series A Preferred Stock the number of shares of stock,
         securities or assets of the Corporation, or of the successor
         corporation resulting from such merger or consolidation or sale, to
         which a holder of Common Stock deliverable upon conversion would have
         been entitled on such capital reorganization, merger, consolidation or
         sale. In any such case, appropriate adjustment shall be made in the
         application of the provisions of this Section (d) with respect to the
         rights of the holders of the Series A Preferred Stock after the
         reorganization, merger, consolidation or sale to the end that the
         provisions of this Section (d) (including adjustment of the Conversion
         Rate and Conversion Price then in effect and the number of shares
         purchasable upon conversion of the Series A Preferred Stock) shall be
         applicable after that event as nearly equivalent as may be practicable.

                  (7) No Adjustment. No adjustment to the Conversion Rate and
         Conversion Price shall be made if such adjustment would result in a
         change in the Conversion Price of less than one percent (l%). Any
         adjustment of less than one (1%) percent which is not made shall be
         carried forward and shall be made at the time of and together with any
         subsequent adjustment which, on a cumulative basis, amounts to an
         adjustment of one percent (1%) or more in the Conversion Price.

                  (8) Certificate as to Adjustments. Upon the occurrence of each
         adjustment or readjustment of the Conversion Rate pursuant to this
         Section (d), the Corporation at its expense shall promptly compute such
         adjustment or readjustment in accordance with the terms hereof and
         cause independent public accountants selected by the Corporation to
         verify such computation and prepare and furnish to each holder of
         Series A Preferred Stock a certificate setting forth such adjustment or
         readjustment and showing in detail the facts upon which such adjustment
         or readjustment is based. The Corporation shall, upon the written
         request at any time of any holder of Series A Preferred Stock, furnish
         or cause to be furnished to such holder a like certificate setting
         forth (i) such adjustments and readjustments, (ii) the Conversion Rate
         at that time in effect, and (iii) the number of shares of Common Stock
         and the amount, if any, of other property which at that time would be
         received upon the conversion of Series A Preferred Stock.

                  (9) Notices of Record Date. In the event of any taking by the
         Corporation of a record of the holders of any class of securities other
         than Series A Preferred Stock for the purpose of determining the
         holders thereof who are entitled to receive any dividend or other
         distribution, any Common Stock Equivalents or any right to subscribe
         for, purchase or otherwise acquire any shares of stock of any class or
         any other securities or property, or to receive any other right, the
         Corporation shall mail to each holder of Series A Preferred Stock at
         least twenty (20) days prior to the date specified therein, a notice
         specifying the date on which any such record is to be taken for the
         purpose of such dividend, distribution or rights, and the amount and
         character of such dividend, distribution or rights.

                  (10) Reservation of Stock Issuable Upon Conversion. The
         Corporation shall at all times reserve and keep available out of its
         authorized but unissued shares of Common Stock solely for the purpose
         of effecting the conversion of the shares of the Series A Preferred
         Stock such number of its shares of Common Stock as shall from time to
         time be sufficient to effect the conversion of all outstanding shares
         of the Series A Preferred Stock; and if at any time the number of
         authorized but unissued shares of Common Stock shall not be sufficient
         to effect the conversion of all then outstanding shares of the Series A
         Preferred Stock, the Corporation shall take such corporate action as
         may, in the opinion of its counsel, be necessary to increase its
         authorized but unissued shares of Common Stock to such number of shares
         as shall be sufficient for such purpose.

         (e) Redemption. The Series A Preferred Stock will not be redeemable,
either in whole or in part, prior to March 15, 1991 unless the closing price per
share of the Common Stock has been equal to or in excess of 150% of the then
effective Conversion Price for at least twenty (20) out of thirty (30)
consecutive trading days ending on the fifth day preceding the date notice of
redemption is given. Subject to such restriction, the Series A Preferred Stock
may be redeemed for cash at the option of the Corporation, either in whole or in
part, at any time or from time to time, if redeemed from the Original Issue Date
and before March 15, 1988, at One Hundred and Ten Dollars and Fifty Cents
($110.50) per share, and if redeemed during the twelve (12) month period
beginning on March 15 of the year specified below, at the following redemption
prices:


                                      A-5
<PAGE>
<TABLE>
<S>                            <C>                    <C>                                   <C>
1988...........................$110.50                1993..................................$104.66
1989...........................$109.33                1994..................................$103.50
1990...........................$108.17                1995..................................$102.33
1991...........................$107.00                1996..................................$101.16
1992...........................$105.83                1997 and thereafter...................$100.00
</TABLE>

plus, in each case, an amount equal to the amount of all dividends accrued but
unpaid (whether or not declared) to the date fixed for redemption.

         Unless full cumulative dividends on all outstanding shares of the
Series A Preferred Stock shall have been or contemporaneously are declared and
paid or set apart for payment for all past dividend periods, the Series A
Preferred Stock may not be redeemed unless all outstanding preferred stock is
redeemed, and neither the Corporation nor any subsidiary thereof may purchase
any preferred stock, including shares of the Series A Preferred Stock, and
neither the Corporation nor any subsidiary thereof may redeem or purchase any
class or series of capital stock ranking junior to the Series A Preferred Stock
in respect to dividends or distributions upon liquidation; provided, however,
that the Corporation may complete the purchase or redemption of shares of
preferred stock for which a purchase contract was entered into, or notice of
redemption of which was initially given, prior to such default in payment of
dividends.

         If less than all of the outstanding shares of Series A Preferred Stock
are to be redeemed, the shares to be redeemed shall be selected by the
Corporation from outstanding shares not previously called for redemption, pro
rata, by lot, or in such other equitable manner as the Board of Directors may
determine.

         Notice of any proposed redemption of Series A Preferred Stock shall be
given by the Corporation by mailing a copy of such notice at least thirty (30)
days but not more than sixty (60) days prior to the date fixed for such
redemption to each holder of record of the shares to be redeemed at such
holder's address appearing on the books of the Corporation. On and after the
date fixed for redemption dividends shall cease to accrue on the shares of
Series A Preferred Stock called for redemption, whether or not the certificates
for such shares are actually surrendered for redemption. All shares of Series A
Preferred Stock redeemed pursuant to this Section (e) shall be restored to the
status of authorized and unissued shares of preferred stock, undesignated as to
series.

         (f) Notices. Any notice required by the provisions hereof to be given
to the holders of shares of Series A Preferred Stock shall be deemed given if
deposited in the United States Postal Service, postage prepaid, and addressed to
each holder of record at his or her address appearing on the books of the
Corporation.


                                      A-6
<PAGE>

                                  STATEMENT OF
                       RELATIVE RIGHTS AND PREFERENCES OF
                         THE SERIES B PREFERRED STOCK OF
                          ATLANTIC AMERICAN CORPORATION

         Pursuant to authority granted in the Restated Articles of
Incorporation, as amended, of the Corporation, the Board of Directors of the
Corporation has been authorized to issue in series 4,000,000 shares of the
Corporation's Preferred Stock of the par value of $1.00 per share, and to
designate by resolution the relative rights and preferences of each series so
established. By resolution of the Board of Directors, the Corporation has
established a series of such Preferred Stock consisting of 134,000 shares and
has designated said series as the "Series B Preferred Stock."

         For the purposes of this statement, "Corporation" shall mean Atlantic
American Corporation, a Georgia corporation;

         "Board of Directors" shall mean the board of directors of the
Corporation;

         "Series B Preferred Stock" shall mean the 134,000 shares of Series B
Preferred Stock of the par value of $1.00 per share of the Corporation;

         "Common Stock" shall mean the common stock of the par value of $1.00
per share of the Corporation; and

         "Original Issue Date" shall mean the date on which the first share of
Series B Preferred Stock was deemed originally issued.

         The voting powers, preferences, and the relative, participating,
optional and other rights granted to and imposed upon the Series B Preferred
Stock are as follows:

         (a) Series B Stated Value. Each share of the Series B Preferred Stock
shall have a stated value of $100.00 (the "Series B Stated Value").

         (b) Dividend Rights. From and after the issuance of the Series B
Preferred Stock, the holders of outstanding shares of the Series B Preferred
Stock shall be entitled to receive, and shall be paid, when and as declared by
the Board of Directors, out of funds legally available therefor, cumulative
dividends on each share of Series B Preferred Stock at the annual rate of nine
percent (9%) of the Series B Stated Value, payable in arrears quarterly on March
15, June 15, September 15 and December 15 of each year, said dividends to
commence accrual on January 1, 1996. Such dividends shall be prior and in
preference to any declaration of payment of any dividend on the Common Stock and
any other class or series of capital stock ranking junior to the Series B
Preferred Stock in respect of dividends or distributions upon liquidation. Such
dividends shall be cumulative and shall accrue whether or not declared by the
Board of Directors. No cash dividends shall be paid on the Common Stock or any
other junior stock (except stock dividends of Common Stock or any other junior
stock), until all dividends accrued on any outstanding shares of the Series B
Preferred Stock and all other series of preferred stock ranking on a parity with
the Series B Preferred Stock, whether or not declared, have been set apart and
fully paid. No accumulation of dividends on the Series B Preferred Stock shall
bear interest.

         In the event cash dividends are not paid in full on all outstanding
shares of the Series B Preferred Stock and any other series of preferred stock
ranking on a parity with the Series B Preferred Stock, shares of the Series B
Preferred Stock and shares of such other series of preferred stock shall be
entitled to proportionate amounts of the funds available for their respective
dividend requirements based upon the payments required to be made on the Series
B Preferred Stock and each such other series of preferred stock then
outstanding.

         No dividends shall be paid on the Series B Preferred Stock, although
such dividends shall still accrue, if the payment of such dividends would cause
the Corporation to violate or constitute an occurrence of default under any
provision of, or result in acceleration of any obligation under any note, loan,
agreement, instrument or other arrangement to which the Corporation is bound.

         (c) Liquidation Rights. In the event of liquidation of the Corporation,
whether voluntary or involuntary, the holders of shares of the Series B
Preferred Stock will be entitled to receive, from the assets of the Corporation
available for distribution to stockholders, an amount equal to One Hundred
Dollars ($100.00) per share, plus all accrued but unpaid dividends on such
shares, whether or not declared, before any distribution shall be made or set
apart for holders of Common Stock or any other class or series of capital stock
ranking junior to the Series B Preferred Stock in respect of dividends or
distributions upon liquidation. The holders of Series B Preferred Stock shall be
entitled to no further participation in any remaining assets of the Corporation.
If, upon any liquidation of the Corporation, the assets of the Corporation, or
proceeds thereof, distributable among the holders of shares of the Series B
Preferred Stock and any other class or series of preferred stock ranking on a
parity with the Series B Preferred Stock shall be insufficient to pay in full
the preferential amount aforesaid, then such assets, or the proceeds thereof,
shall be distributed among such holders ratably in accordance with the
respective amounts that would be payable on such shares if all amounts payable
thereon were


                                      A-7
<PAGE>

paid in full. Neither the consolidation or merger of the Corporation with or
into any other corporation or corporations, nor the sale or lease of all or
substantially all of the assets of the Corporation, shall constitute a
liquidation as used in this Section (c).

         (d) Voting Rights. Except as required by law or indicated below, the
holders of shares of the Series B Preferred Stock shall have no voting rights.

         In addition to any other rights provided by law, so long as any shares
of the Series B Preferred Stock shall be outstanding, the Corporation shall not,
without first obtaining the affirmative vote or written consent of the holders
of not less than a majority of such outstanding shares of Series B Preferred
Stock, voting together as a class, amend or repeal any provision of, or add any
provision to, the Corporation's Articles of Incorporation or Bylaws, as amended,
or file any certificate of designations, preferences and rights of any series of
preferred stock, if such action would materially and adversely affect the
preferences, rights, privileges or powers of, or the restrictions provided for
the benefit of, the Series B Preferred Stock. Nothing herein shall be deemed to
restrict the Board of Directors from amending the terms hereof prior to the
issuance of any shares of the Series B Preferred Stock.

         (e) Conversion. Except as set forth in the following paragraph, shares
of the Series B Preferred Stock shall not be convertible into shares of Common
Stock.

         In the event that (i) J. Mack Robinson, his spouse, lineal descendants,
any trust created and existing solely for the benefit of any such person or
persons, or any corporation, partnership, limited liability company or any other
entity that controls, is controlled by or under common control with, or is in
any other way an affiliate of any of the foregoing (collectively, the
"Affiliates"), "beneficially own" (as determined in accordance with the
provisions of Rule 13d-3 under the Securities Exchange Act of 1934, as amended)
less than 50.1% of the Common Stock or (ii) the Corporation or the Affiliates
enter into a definitive agreement providing for the sale or transfer of all of
the outstanding shares of Common Stock to a third party that does not control,
is not controlled by or is not under common control with, or is not in any other
way an affiliate of, any of the Affiliates, or the merger of the Corporation
with another entity such that after giving effect to the merger, the Affiliates
will no longer "beneficially own" at least 50.1% of the voting equity of the
surviving corporation in the merger, then in each such event of the holders of
the Series B Preferred Stock shall have conversion rights as follows:

                  (1) Right to Convert.

                           (A) Each share of the Series B Preferred Stock shall
                  be convertible, at the option of the holder thereof, into
                  fully paid and nonassessable shares of Common Stock at the
                  initial conversion rate of twenty-five and six one-hundredths
                  (25.06) fully paid and nonassessable shares of Common Stock
                  for each share of Series B Preferred Stock, subject, however,
                  to the adjustments described below. The number of shares of
                  Common Stock into which each share of Series B Preferred Stock
                  may be converted is hereinafter referred to as the "Conversion
                  Rate."

                           (B) No fractional shares of Common Stock shall be
                  issued upon conversion of Series B Preferred Stock and if any
                  shares of Series B Preferred Stock surrendered by a holder, in
                  the aggregate, for conversion would otherwise result in a
                  fractional share of Common Stock, then such fractional share
                  shall be redeemed at the then effective Conversion Price (as
                  hereinafter defined) per share, payable as promptly as
                  possible when funds are legally available therefor.

                  (2) Mechanics of Conversion. Before any holder of shares of
         Series B Preferred Stock shall be entitled to convert the same into
         shares of Common Stock, such holder shall surrender the certificate or
         certificates therefor, duly endorsed and accompanied by properly
         executed stock powers, at the office of the Corporation or of any
         transfer agent for the Series B Preferred Stock, shall give written
         notice to the Corporation at such office of the name or names in which
         such holder wishes the certificate or certificates for shares of Common
         Stock to be issued if different from the name in which the Series B
         Preferred Stock being surrendered is registered, as shown on the books
         and records of the Corporation, and shall pay any applicable transfer
         tax. Said conversion notice shall also contain such representations as
         may reasonably be required by the Corporation to the effect that the
         shares to be received upon conversion are not being acquired and will
         not be transferred in any way which might violate the then applicable
         securities laws. The Corporation shall, as soon as practicable
         thereafter, issue and deliver at such office to such holder of shares
         of the Series B Preferred Stock, or to the nominee or nominees of such
         holder, a certificate or certificates for the number of shares of
         Common Stock to which such holder shall be entitled as aforesaid. Such
         conversion shall be deemed to have been made immediately prior to the
         close of business on the date of such surrender of the shares of Series
         B Preferred Stock to be converted, and the person or persons entitled
         to receive the shares of Common Stock issuable upon such conversion
         shall be treated for all purposes as the record holder or holders of
         such shares of Common Stock as of such date. All certificates issued
         upon the exercise of the conversion shall contain a legend governing
         restrictions upon such shares imposed by applicable securities laws.

                  (3) Adjustment for Subdivisions or Combinations of Common
         Stock. In the event the Corporation at any time or from time to time
         after the Original Issue Date effects a subdivision or combination of
         its outstanding Common Stock into a


                                      A-8
<PAGE>

         greater or lesser number of shares without a proportionate and
         corresponding subdivision or combination of its outstanding Series B
         Preferred Stock, then and in each such event the Conversion Rate shall
         be increased or decreased proportionately.

                  (4) Adjustments for Dividends, Distributions and Common Stock.
         In the event the Corporation at any time or from time to time after the
         Original Issue Date shall make or issue, or fix a record date for the
         determination of holders of Common Stock entitled to receive a dividend
         or other distribution payable in additional shares of Common Stock or
         other securities or rights convertible into or entitling the holder
         thereof to receive additional shares of Common Stock (hereinafter
         referred to as "Common Stock Equivalents") without payment of any
         consideration by such holder of such Common Stock Equivalents for the
         additional shares of Common Stock, without a proportionate and
         corresponding dividend or other distribution to holders of Series B
         Preferred Stock, then and in each such event the maximum number of
         shares (as set forth in the instrument relating thereto without regard
         to any provisions contained therein for subsequent adjustment of such
         number) of Common Stock issuable in payment of such dividend or
         distribution or upon conversion or exercise of such Common Stock
         Equivalents shall be deemed, for purposes of this Subsection (e)(4), to
         be issued and outstanding as of the time of such issuance or, in the
         event such a record date shall have been fixed, as of the close of
         business on such record date. In each such event, the Conversion Rate
         shall be increased as of the time of such issuance or, in the event
         such a record date shall have been fixed, as of the close of business
         on such record date, by multiplying the Conversion Rate by a fraction,

                           (A) the numerator of which shall be the total number
                  of shares of Common Stock (x) issued and outstanding or deemed
                  pursuant to the terms hereof to be issued and outstanding (not
                  including any shares described in clause (y) immediately
                  below), immediately prior to the time of such issuance or the
                  close of business on such record date, plus (y) the number of
                  shares of Common Stock issuable in payment of such dividend or
                  distribution or upon conversion or exercise of such Common
                  Stock Equivalents; and

                           (B) the denominator of which shall be the total
                  number of shares of Common Stock issued and outstanding or
                  deemed to be issued and outstanding immediately prior to the
                  time of such issuance or the close of business on such record
                  date; and

         provided, however, (i) if such record date shall have been fixed and
         such dividend is not fully paid or if such distribution is not fully
         made on the date fixed therefor, the Conversion Rate shall be
         recomputed accordingly as of the close of business on such record date
         and thereafter the Conversion Rate shall be adjusted pursuant to this
         Subsection (e)(4) as of the time of actual payment of such dividends or
         distributions; or (ii) if such Common Stock Equivalents provide, with
         the passage of time or otherwise, for any decrease or increase in the
         number of shares of Common Stock issuable upon conversion or exercise
         thereof (or upon the occurrence of a record date with respect thereto),
         the Conversion Rate computed upon the original issue thereof (or upon
         the occurrence of a record date with respect thereto), and any
         subsequent adjustments based thereon, shall, upon any such decrease or
         increase becoming effective, be recomputed to reflect such decrease or
         increase insofar as it affects the rights of conversion or exercise of
         the Common Stock Equivalents then outstanding; or (iii) upon the
         expiration of any rights of conversion or exercise under any
         unexercised Common Stock Equivalents, the Conversion Rate computed upon
         the original issue thereof (or upon the occurrence of a record date
         with respect thereto), and any subsequent adjustments based thereon,
         shall, upon such expiration, be recomputed as if the only additional
         shares of Common Stock issued were the shares of such stock, if any,
         actually issued upon the conversion or exercise of such Common Stock
         Equivalents; or (iv) in the event of issuance of Common Stock
         Equivalents which expire by their terms not more than sixty (60) days
         after the date of issuance thereof, no adjustments of the Conversion
         Rate shall be made until the expiration or exercise of all such Common
         Stock Equivalents, whereupon such adjustment shall be made in the
         manner provided in this Subsection (e)(4).

                  (5) Adjustment of Conversion Rate for Diluting Issues. The
         amount obtained by dividing One Hundred Dollars ($100.00) by the
         Conversion Rate shall be called the "Conversion Price." Except as
         otherwise provided in this Subsection (e)(5), in the event the
         Corporation after the Original Issue Date sells or issues any Common
         Stock or Common Stock Equivalents at a per share consideration (as
         defined below) less than the Conversion Price then in effect for the
         Series B Preferred Stock, then the Conversion Rate and the Conversion
         Price then in effect shall be adjusted as provided in paragraphs (A),
         (B) and (C) hereof. With respect to the sale or issuance of Common
         Stock Equivalents which are convertible into or exchangeable for Common
         Stock without further consideration, the per share consideration shall
         be determined by dividing the maximum number of shares (as set forth in
         the instrument relating thereto without regard to any provisions
         contained therein for subsequent adjustment of such number) of Common
         Stock issuable with respect to such Common Stock Equivalents into the
         aggregate consideration received by the Corporation upon the sale or
         issuance of such Common Stock Equivalents. With respect to the issuance
         of other Common Stock Equivalents, the per share consideration shall be
         determined by dividing the maximum number of shares (as set forth in
         the instrument relating thereto without regard to any provisions
         contained therein for subsequent adjustment of such number) of Common
         Stock issuable with respect to such Common Stock Equivalents into the
         aggregate consideration received by the Corporation upon the sale or
         issuance of such Common Stock Equivalents plus the total consideration
         receivable by the Corporation upon the conversion or exercise of such
         Common Stock Equivalents. The issuance of Common Stock or Common Stock
         Equivalents for no consideration or for less than $1.00 per share shall
         be deemed to be an issuance at a per share consideration of $1.00. In
         connection with the sale or issuance of Common Stock and/or Common
         Stock Equivalents for noncash consideration, the amount of
         consideration shall


                                      A-9
<PAGE>

         be determined by the Board of Directors. For the purposes of the
         foregoing, the per share consideration with respect to the sale or
         issuance of Common Stock or Common Stock Equivalents shall be the price
         per share received by the Corporation, prior to the payment of any
         expenses, commissions, discounts and other applicable costs.

                  As used in this Subsection (e)(5), "Additional Shares of
         Common Stock" shall mean either shares of Common Stock issued
         subsequent to the Original Issue Date or, with respect to the issuance
         of Common Stock Equivalents subsequent to the Original Issue Date, the
         maximum number of shares (as set forth in the instrument relating
         thereto without regard to any provisions contained therein for
         subsequent adjustment of such number) of Common Stock issuable in
         exchange for, upon conversion of, or upon exercise of such Common Stock
         Equivalents.

                           (A) Upon each issuance of Common Stock for a per
                  share consideration less than the Conversion Price in effect
                  on the date of such issuance, the Conversion Rate of the
                  Series B Preferred Stock in effect on such date will be
                  adjusted by multiplying it by a fraction:

                                    (x) the numerator of which shall be the
                           number of shares of Common Stock outstanding
                           immediately prior to the issuance of such Additional
                           Shares of Common Stock, plus the number of such
                           Additional Shares of Common Stock so issued, and

                                    (y) the denominator of which shall be the
                           number of shares of Common Stock outstanding
                           immediately prior to the issuance of such Additional
                           Shares of Common Stock plus the number of shares of
                           Common Stock which the aggregate net consideration
                           received by the Corporation for the total number of
                           such Additional Shares of Common Stock so issued
                           would purchase at the Conversion Price then in
                           effect.

                           (B) Upon each issuance of Common Stock Equivalents,
                  exchangeable without further consideration into Common Stock,
                  for a per share consideration less than the Conversion Price
                  in effect on the date of such issuance, the Conversion Rate of
                  the Series B Preferred Stock in effect on such date will be
                  adjusted as in paragraph (A) of this Subsection (e)(5) on the
                  basis that the related Additional Shares of Common Stock are
                  to be treated as having been issued on the date of issuance of
                  the Common Stock Equivalents, and the aggregate consideration
                  received by the Corporation for such Common Stock Equivalents
                  shall be deemed to have been received for such Additional
                  Shares of Common Stock.

                           (C) Upon each issuance of Common Stock Equivalents
                  other than those described in paragraph (B) of this Subsection
                  (e)(5), for a per share consideration less than the Conversion
                  Price in effect on the date of such issuance, the Conversion
                  Rate of the Series B Preferred Stock in effect on such date
                  will be adjusted as in paragraph (A) of this Subsection (e)(5)
                  on the basis that the related Additional Shares of Common
                  Stock are to be treated as having been issued on the date of
                  issuance of such Common Stock Equivalents, and the aggregate
                  consideration received and receivable by the Corporation on
                  conversion or exercise of such Common Stock Equivalents shall
                  be deemed to have been received for such Additional Shares of
                  Common Stock.

                           (D) Once any Additional Shares of Common Stock have
                  been treated as having been issued for the purpose of this
                  Subsection (e)(5), they shall be treated as issued and
                  outstanding shares of Common Stock whenever any subsequent
                  calculations must be made pursuant hereto. On the expiration
                  of any options, warrants or rights to purchase Additional
                  Shares of Common Stock, the termination of any rights to
                  convert or exchange for Additional Shares of Common Stock, the
                  expiration of any options or rights related to such
                  convertible or exchangeable securities on account of which an
                  adjustment in the Conversion Rate has been made previously
                  pursuant to this Subsection (e)(5) or the expiration or
                  termination of any Common Stock Equivalents, then the
                  Conversion Rate shall forthwith be readjusted to such
                  Conversion Rate as would have been obtained had the adjustment
                  made upon the issuance of such options, warrants, rights,
                  securities or options or rights related to such securities or
                  Common Stock Equivalents been made upon the basis of the
                  issuance of only the number of shares of Common Stock actually
                  issued upon the exercise of such options, warrants or rights,
                  upon the conversion or exchange of such securities or upon the
                  exercise of the options or rights related to such securities
                  or upon the exercise of the Common Stock Equivalents. Any
                  readjustment of the Conversion Rate shall also cause an
                  appropriate readjustment of the Conversion Price, calculated
                  by dividing the readjusted Conversion Rate into the initial
                  Conversion Price.

                           (E) The foregoing notwithstanding, no adjustment of
                  the Conversion Rate or Conversion Price shall be made as a
                  result of the issuance of the following, but such shares of
                  Common Stock shall be deemed to be outstanding upon issuance
                  for all other purposes hereof:

                                    (w) shares of Common Stock (i) issued or
                           issuable to employee benefit plans (including, but
                           not limited to, stock option plans, tax-qualified
                           employee retirement plans and current cash or stock
                           bonus awards) of the Corporation, or to employees or
                           beneficiaries pursuant to said plans whether
                           currently in


                                      A-10
<PAGE>

                           existence or hereafter adopted, and (ii) relating to
                           514,351 shares of Common Stock issuable upon
                           conversion of the Corporation's 8% Convertible
                           Subordinated Notes Due May 15, 1997 (such number to
                           be appropriately adjusted in the event of any
                           recapitalization, reorganization, stock dividend,
                           stock split or similar event affecting the capital
                           stock of the Corporation);

                                    (x) any shares of Common Stock pursuant to
                           which the Conversion Rate and Conversion Price have
                           been adjusted under Subsection (3) or (4) of this
                           Section (e);

                                    (y) any shares of Common Stock issued
                           pursuant to the exchange, conversion or exercise of
                           any Common Stock Equivalents which have previously
                           been incorporated into computations hereunder on the
                           date when such Common Stock Equivalents were issued;
                           or

                                    (z) Common Stock issued or issuable with
                           respect to which the holders of all the outstanding
                           Series B Preferred Stock have waived in writing the
                           right to any adjustment hereunder. In such event,
                           such waiver shall be binding on all subsequent
                           holders of Series B Preferred Stock.

                  (6) Reorganization, Merger, Consolidation or Sale of Assets.
         If at any time or from time to time there shall be a capital
         reorganization of the Common Stock (other than a subdivision,
         combination, reclassification or exchange of shares provided for
         elsewhere in this Section (e)) or a merger or consolidation of the
         Corporation with or into another corporation, or the sale of all or
         substantially all of the Corporation's properties and assets to any
         other person which is effected so that holders of Common Stock are
         entitled to receive (either directly or upon subsequent liquidation)
         stock, securities or assets with respect to or in exchange for Common
         Stock, then, as a part of such reorganization, merger, consolidation or
         sale, provision shall be made so that the holders of the Series B
         Preferred Stock shall thereafter be entitled to receive upon conversion
         of the Series B Preferred Stock the number of shares of stock,
         securities or assets of the Corporation, or of the successor
         corporation resulting from such merger or consolidation or sale, to
         which a holder of Common Stock deliverable upon conversion would have
         been entitled on such capital reorganization, merger, consolidation or
         sale. In any such case, appropriate adjustment shall be made in the
         application of the provisions of this Section (e) with respect to the
         rights of the holders of the Series B Preferred Stock after the
         reorganization, merger, consolidation or sale to the end that the
         provisions of this Section (e) (including adjustment of the Conversion
         Rate and Conversion Price then in effect and the number of shares
         purchasable upon conversion of the Series B Preferred Stock) shall be
         applicable after that event as nearly equivalent as may be practicable.

                  (7) No Adjustment. No adjustment to the Conversion Rate and
         Conversion Price shall be made if such adjustment would result in a
         change in the Conversion Price of less than one percent (l%). Any
         adjustment of less than one (1%) percent which is not made shall be
         carried forward and shall be made at the time of and together with any
         subsequent adjustment which, on a cumulative basis, amounts to an
         adjustment of one percent (1%) or more in the Conversion Price.

                  (8) Certificate as to Adjustments. Upon the occurrence of each
         adjustment or readjustment of the Conversion Rate pursuant to this
         Section (e), the Corporation at its expense shall promptly compute such
         adjustment or readjustment in accordance with the terms hereof and
         cause independent public accountants selected by the Corporation to
         verify such computation and prepare and furnish to each holder of
         Series B Preferred Stock a certificate setting forth such adjustment or
         readjustment and showing in detail the facts upon which such adjustment
         or readjustment is based. The Corporation shall, upon the written
         request at any time of any holder of Series B Preferred Stock, furnish
         or cause to be furnished to such holder a like certificate setting
         forth (i) such adjustments and readjustments, (ii) the Conversion Rate
         at that time in effect, and (iii) the number of shares of Common Stock
         and the amount, if any, of other property which at that time would be
         received upon the conversion of Series B Preferred Stock.

                  (9) Notices of Record Date. In the event of any taking by the
         Corporation of a record of the holders of any class of securities other
         than Series B Preferred Stock for the purpose of determining the
         holders thereof who are entitled to receive any dividend or other
         distribution, any Common Stock Equivalents or any right to subscribe
         for, purchase or otherwise acquire any shares of stock of any class or
         any other securities or property, or to receive any other right, the
         Corporation shall mail to each holder of Series B Preferred Stock at
         least twenty (20) days prior to the date specified therein, a notice
         specifying the date on which any such record is to be taken for the
         purpose of such dividend, distribution or rights, and the amount and
         character of such dividend, distribution or rights.

                  (10) Reservation of Stock Issuable Upon Conversion. The
         Corporation shall at all times reserve and keep available out of its
         authorized but unissued shares of Common Stock solely for the purpose
         of effecting the conversion of the shares of the Series B Preferred
         Stock such number of its shares of Common Stock as shall from time to
         time be sufficient to effect the conversion of all outstanding shares
         of the Series B Preferred Stock; and if at any time the number of
         authorized but unissued shares of Common Stock shall not be sufficient
         to effect the conversion of all then outstanding shares of the Series B


                                      A-11
<PAGE>

         Preferred Stock, the Corporation shall take such corporate action as
         may, in the opinion of its counsel, be necessary to increase its
         authorized but unissued shares of Common Stock to such number of shares
         as shall be sufficient for such purpose.

         (f) Redemption by Corporation. The Series B Preferred Stock may be
redeemed for cash solely at the option of the Corporation, either in whole or in
part, at any time or from time to time, at One Hundred Dollars ($100.00) per
share, plus an amount equal to the amount of all dividends accrued but unpaid
(whether or not declared) to the date fixed for redemption.

         Unless full cumulative dividends on all outstanding shares of the
Series B Preferred Stock shall have been or contemporaneously are declared and
paid or set apart for payment for all past dividend periods, the Series B
Preferred Stock may not be redeemed unless all outstanding preferred stock is
redeemed, and neither the Corporation nor any subsidiary thereof may purchase
any preferred stock, including shares of the Series B Preferred Stock, and
neither the Corporation nor any subsidiary thereof may redeem or purchase any
class or series of capital stock ranking junior to the Series B Preferred Stock
in respect to dividends or distributions upon liquidation; provided, however,
that the Corporation may complete the purchase or redemption of shares of
preferred stock for which a purchase contract was entered into, or notice of
redemption of which was initially given, prior to such default in payment of
dividends.

         If less than all of the outstanding shares of Series B Preferred Stock
are to be redeemed, the shares to be redeemed shall be selected by the
Corporation from outstanding shares not previously called for redemption, pro
rata, by lot, or in such other equitable manner as the Board of Directors may
determine.

         Notice of any proposed redemption of Series B Preferred Stock shall be
given by the Corporation by mailing a copy of such notice at least thirty (30)
days but not more than sixty (60) days prior to the date fixed for such
redemption to each holder of record of the shares to be redeemed at such
holder's address appearing on the books of the Corporation. On and after the
date fixed for redemption dividends shall cease to accrue on the shares of
Series B Preferred Stock called for redemption, whether or not the certificates
for such shares are actually surrendered for redemption. All shares of Series B
Preferred Stock redeemed pursuant to this Section (f) shall be restored to the
status of authorized and unissued shares of preferred stock, undesignated as to
series.

         (g) Notices. Any notice required by the provisions hereof to be given
to the holders of shares of Series B Preferred Stock shall be deemed given if
deposited in the United States Postal Service, postage prepaid, and addressed to
each holder of record at his or her address appearing on the books of the
Corporation.


                                      A-12
<PAGE>

                       RELATIVE RIGHTS AND PREFERENCES OF
                         THE SERIES C PREFERRED STOCK OF
                          ATLANTIC AMERICAN CORPORATION

         Pursuant to authority granted in the Restated Articles of
Incorporation, as amended, of the Corporation, the Board of Directors of the
Corporation has been authorized to issue in series 4,000,000 shares of the
Corporation's Preferred Stock of the par value of $1.00 per share, and to
designate by resolution the relative rights and preferences of each series so
established. By resolution of the Board of Directors, the Corporation has
established a series of such Preferred Stock consisting of 100,000 shares and
has designated said series as the "Series C Preferred Stock."

         For the purposes of this statement, "Corporation" shall mean Atlantic
American Corporation, a Georgia corporation;

         "Board of Directors" shall mean the board of directors of the
Corporation;

         "Series C Preferred Stock" shall mean the 100,000 shares of Series C
Preferred Stock of the par value of $1.00 per share of the Corporation;

         "Common Stock" shall mean the common stock of the par value of $1.00
per share of the Corporation; and

         "Original Issue Date" shall mean the date on which the first share of
Series C Preferred Stock was deemed originally issued.

         The voting powers, preferences, and the relative, participating,
optional and other rights granted to and imposed upon the Series C Preferred
Stock are as follows:

         (a) Series C Stated Value. Each share of the Series C Preferred Stock
shall have a stated value of $100.00 (the "Series C Stated Value").

         (b) Dividend Rights. From and after the issuance of the Series C
Preferred Stock, the holders of outstanding shares of the Series C Preferred
Stock shall be entitled to receive, and shall be paid, when and as declared by
the Board of Directors, out of funds legally available therefor, cumulative
dividends on each share of Series C Preferred Stock at the annual rate of nine
percent (9%) of the Series C Stated Value, payable in arrears quarterly on March
15, June 15, September 15 and December 15 of each year, said dividends to
commence on January 1, 2001. Such dividends shall be prior and in preference to
any declaration of payment of any dividend on the Common Stock and any other
class or series of capital stock ranking junior to the Series C Preferred Stock
in respect of dividends or distributions upon liquidation. Such dividends shall
be cumulative and shall accrue whether or not declared by the Board of
Directors. No cash dividends shall be paid on the Common Stock or any other
junior stock (except stock dividends of Common Stock or any other junior stock),
until all dividends accrued on any outstanding shares of the Series C Preferred
Stock and all other series of preferred stock ranking on a parity with the
Series C Preferred Stock, whether or not declared, have been set apart and fully
paid. No unpaid dividends on the Series C Preferred Stock shall bear interest.

                  In the event cash dividends are not paid in full on all
outstanding shares of the Series C Preferred Stock and any other series of
preferred stock ranking on a parity with the Series C Preferred Stock, shares of
the Series C Preferred Stock and shares of such other series of preferred stock
shall be entitled to proportionate amounts of the funds available for their
respective dividend requirements based upon the payments required to be made on
the Series C Preferred Stock and each such other series of preferred stock then
outstanding.

                  No dividends shall be paid on the Series C Preferred Stock,
although such dividends shall still accrue, if the payment of such dividends
would cause the Corporation to violate or constitute an occurrence of default
under any provision of, or result in acceleration of any obligation under any
note, loan, agreement, instrument or other arrangement to which the Corporation
is bound.

         (c) Liquidation Rights. In the event of liquidation of the Corporation,
whether voluntary or involuntary, the holders of shares of the Series C
Preferred Stock will be entitled to receive, from the assets of the Corporation
available for distribution to stockholders, an amount equal to One Hundred
Dollars ($100.00) per share, plus all accrued but unpaid dividends on such
shares, whether or not declared, before any distribution shall be made or set
apart for holders of Common Stock or any other class or series of capital stock
ranking junior to the Series C Preferred Stock in respect of dividends or
distributions upon liquidation. The holders of Series C Preferred Stock shall be
entitled to no further participation in any remaining assets of the Corporation.
If, upon any liquidation of the Corporation, the assets of the Corporation, or
proceeds thereof, distributable among the holders of shares of the Series C
Preferred Stock and any other class or series of preferred stock ranking on a
parity with the Series C Preferred Stock shall be insufficient to pay in full
the preferential amount aforesaid, then such assets, or the proceeds thereof,
shall be distributed among such holders ratably in accordance with the
respective amounts that would be payable on such shares if all amounts payable
thereon were


                                      A-13
<PAGE>

paid in full. Neither the consolidation or merger of the Corporation with or
into any other corporation or corporations, nor the sale or lease of all or
substantially all of the assets of the Corporation, shall constitute a
liquidation as used in this Section (c).

         (d) Voting Rights. Except as required by law or indicated below, the
holders of shares of the Series C Preferred Stock shall have no voting rights.

                  In addition to any other rights provided by law, so long as
any shares of the Series C Preferred Stock shall be outstanding, the Corporation
shall not, without first obtaining the affirmative vote or written consent of
the holders of not less than a majority of such outstanding shares of Series C
Preferred Stock, voting together as a class, amend or repeal any provision of,
or add any provision to, the Corporation's Articles of Incorporation or Bylaws,
as amended, or file any certificate of designations, preferences and rights of
any series of preferred stock, if such action would materially and adversely
affect the preferences, rights, privileges or powers of, or the restrictions
provided for the benefit of, the Series C Preferred Stock. Nothing herein shall
be deemed to restrict the Board of Directors from amending the terms hereof
prior to the issuance of any shares of the Series C Preferred Stock.

         (e) Conversion. Except as set forth in the following paragraph, shares
of the Series C Preferred Stock shall not be convertible into shares of Common
Stock.

                  In the event that (i) J. Mack Robinson, his spouse, lineal
descendants, any trust created and existing solely for the benefit of any such
person or persons, or any corporation, partnership, limited liability company or
any other entity that controls, is controlled by or under common control with,
or is in any other way an affiliate of any of the foregoing (collectively, the
"Affiliates"), "beneficially own" (as determined in accordance with the
provisions of Rule 13d-3 under the Securities Exchange Act of 1934, as amended)
less than 50.1% of the Common Stock or (ii) the Corporation or the Affiliates
enter into a definitive agreement providing for the sale or transfer of all of
the outstanding shares of Common Stock to a third party that does not control,
is not controlled by or is not under common control with, or is not in any other
way an affiliate of, any of the Affiliates, or the merger of the Corporation
with another entity such that after giving effect to the merger, the Affiliates
will no longer "beneficially own" at least 50.1% of the voting equity of the
surviving corporation in the merger, then in each such event of the holders of
the Series C Preferred Stock shall have conversion rights as follows:

                  (1) Right to Convert.

                           (A) Each share of the Series C Preferred Stock shall
                  be convertible, at the option of the holder thereof, into
                  fully paid and nonassessable shares of Common Stock at the
                  initial conversion rate of twenty-five and six one-hundredths
                  (25.06) fully paid and nonassessable shares of Common Stock
                  for each share of Series C Preferred Stock, subject, however,
                  to the adjustments described below. The number of shares of
                  Common Stock into which each share of Series C Preferred Stock
                  may be converted is hereinafter referred to as the "Conversion
                  Rate."

                           (B) No fractional shares of Common Stock shall be
                  issued upon conversion of Series C Preferred Stock and if any
                  shares of Series C Preferred Stock surrendered by a holder, in
                  the aggregate, for conversion would otherwise result in a
                  fractional share of Common Stock, then such fractional share
                  shall be redeemed at the then effective Conversion Price (as
                  hereinafter defined) per share, payable as promptly as
                  possible when funds are legally available therefor.

                  (2) Mechanics of Conversion. Before any holder of shares of
         Series C Preferred Stock shall be entitled to convert the same into
         shares of Common Stock, such holder shall surrender the certificate or
         certificates therefor, duly endorsed and accompanied by properly
         executed stock powers, at the office of the Corporation or of any
         transfer agent for the Series C Preferred Stock, shall give written
         notice to the Corporation at such office of the name or names in which
         such holder wishes the certificate or certificates for shares of Common
         Stock to be issued if different from the name in which the Series C
         Preferred Stock being surrendered is registered, as shown on the books
         and records of the Corporation, and shall pay any applicable transfer
         tax. Said conversion notice shall also contain such representations as
         may reasonably be required by the Corporation to the effect that the
         shares to be received upon conversion are not being acquired and will
         not be transferred in any way which might violate the then applicable
         securities laws. The Corporation shall, as soon as practicable
         thereafter, issue and deliver at such office to such holder of shares
         of the Series C Preferred Stock, or to the nominee or nominees of such
         holder, a certificate or certificates for the number of shares of
         Common Stock to which such holder shall be entitled as aforesaid. Such
         conversion shall be deemed to have been made immediately prior to the
         close of business on the date of such surrender of the shares of Series
         C Preferred Stock to be converted, and the person or persons entitled
         to receive the shares of Common Stock issuable upon such conversion
         shall be treated for all purposes as the record holder or holders of
         such shares of Common Stock as of such date. All certificates issued
         upon the exercise of the conversion shall contain a legend governing
         restrictions upon such shares imposed by applicable securities laws.

                  (3) Adjustment for Subdivisions or Combinations of Common
         Stock. In the event the Corporation at any time or from time to time
         after the Original Issue Date effects a subdivision or combination of
         its outstanding Common Stock into a


                                      A-14
<PAGE>

         greater or lesser number of shares without a proportionate and
         corresponding subdivision or combination of its outstanding Series C
         Preferred Stock, then and in each such event the Conversion Rate shall
         be increased or decreased proportionately.

                  (4) Adjustments for Dividends, Distributions and Common Stock.
         In the event the Corporation at any time or from time to time after the
         Original Issue Date shall make or issue, or fix a record date for the
         determination of holders of Common Stock entitled to receive a dividend
         or other distribution payable in additional shares of Common Stock or
         other securities or rights convertible into or entitling the holder
         thereof to receive additional shares of Common Stock (hereinafter
         referred to as "Common Stock Equivalents") without payment of any
         consideration by such holder of such Common Stock Equivalents for the
         additional shares of Common Stock, without a proportionate and
         corresponding dividend or other distribution to holders of Series C
         Preferred Stock, then and in each such event the maximum number of
         shares (as set forth in the instrument relating thereto without regard
         to any provisions contained therein for subsequent adjustment of such
         number) of Common Stock issuable in payment of such dividend or
         distribution or upon conversion or exercise of such Common Stock
         Equivalents shall be deemed, for purposes of this Subsection (e)(4), to
         be issued and outstanding as of the time of such issuance or, in the
         event such a record date shall have been fixed, as of the close of
         business on such record date. In each such event, the Conversion Rate
         shall be increased as of the time of such issuance or, in the event
         such a record date shall have been fixed, as of the close of business
         on such record date, by multiplying the Conversion Rate by a fraction,

                           (A) the numerator of which shall be the total number
                  of shares of Common Stock (x) issued and outstanding or deemed
                  pursuant to the terms hereof to be issued and outstanding (not
                  including any shares described in clause (y) immediately
                  below), immediately prior to the time of such issuance or the
                  close of business on such record date, plus (y) the number of
                  shares of Common Stock issuable in payment of such dividend or
                  distribution or upon conversion or exercise of such Common
                  Stock Equivalents; and

                           (B) the denominator of which shall be the total
                  number of shares of Common Stock issued and outstanding or
                  deemed to be issued and outstanding immediately prior to the
                  time of such issuance or the close of business on such record
                  date; and

         provided, however, (i) if such record date shall have been fixed and
         such dividend is not fully paid or if such distribution is not fully
         made on the date fixed therefor, the Conversion Rate shall be
         recomputed accordingly as of the close of business on such record date
         and thereafter the Conversion Rate shall be adjusted pursuant to this
         Subsection (e)(4) as of the time of actual payment of such dividends or
         distributions; or (ii) if such Common Stock Equivalents provide, with
         the passage of time or otherwise, for any decrease or increase in the
         number of shares of Common Stock issuable upon conversion or exercise
         thereof (or upon the occurrence of a record date with respect thereto),
         the Conversion Rate computed upon the original issue thereof (or upon
         the occurrence of a record date with respect thereto), and any
         subsequent adjustments based thereon, shall, upon any such decrease or
         increase becoming effective, be recomputed to reflect such decrease or
         increase insofar as it affects the rights of conversion or exercise of
         the Common Stock Equivalents then outstanding; or (iii) upon the
         expiration of any rights of conversion or exercise under any
         unexercised Common Stock Equivalents, the Conversion Rate computed upon
         the original issue thereof (or upon the occurrence of a record date
         with respect thereto), and any subsequent adjustments based thereon,
         shall, upon such expiration, be recomputed as if the only additional
         shares of Common Stock issued were the shares of such stock, if any,
         actually issued upon the conversion or exercise of such Common Stock
         Equivalents; or (iv) in the event of issuance of Common Stock
         Equivalents which expire by their terms not more than sixty (60) days
         after the date of issuance thereof, no adjustments of the Conversion
         Rate shall be made until the expiration or exercise of all such Common
         Stock Equivalents, whereupon such adjustment shall be made in the
         manner provided in this Subsection (e)(4).

                  (5) Adjustment of Conversion Rate for Diluting Issues. The
         amount obtained by dividing One Hundred Dollars ($100.00) by the
         Conversion Rate shall be called the "Conversion Price." Except as
         otherwise provided in this Subsection (e)(5), in the event the
         Corporation after the Original Issue Date sells or issues any Common
         Stock or Common Stock Equivalents at a per share consideration (as
         defined below) less than the Conversion Price then in effect for the
         Series C Preferred Stock, then the Conversion Rate and the Conversion
         Price then in effect shall be adjusted as provided in paragraphs (A),
         (B) and (C) hereof. With respect to the sale or issuance of Common
         Stock Equivalents which are convertible into or exchangeable for Common
         Stock without further consideration, the per share consideration shall
         be determined by dividing the maximum number of shares (as set forth in
         the instrument relating thereto without regard to any provisions
         contained therein for subsequent adjustment of such number) of Common
         Stock issuable with respect to such Common Stock Equivalents into the
         aggregate consideration received by the Corporation upon the sale or
         issuance of such Common Stock Equivalents. With respect to the issuance
         of other Common Stock Equivalents, the per share consideration shall be
         determined by dividing the maximum number of shares (as set forth in
         the instrument relating thereto without regard to any provisions
         contained therein for subsequent adjustment of such number) of Common
         Stock issuable with respect to such Common Stock Equivalents into the
         aggregate consideration received by the Corporation upon the sale or
         issuance of such Common Stock Equivalents plus the total consideration
         receivable by the Corporation upon the conversion or exercise of such
         Common Stock Equivalents. The issuance of Common Stock or Common Stock
         Equivalents for no consideration or for less than $1.00 per share shall
         be deemed to be an issuance at a per share consideration of $1.00. In
         connection with the sale or issuance of Common Stock and/or Common
         Stock Equivalents for noncash consideration, the amount of
         consideration shall


                                      A-15
<PAGE>

         be determined by the Board of Directors. For the purposes of the
         foregoing, the per share consideration with respect to the sale or
         issuance of Common Stock or Common Stock Equivalents shall be the price
         per share received by the Corporation, prior to the payment of any
         expenses, commissions, discounts and other applicable costs.

                  As used in this Subsection (e)(5), "Additional Shares of
         Common Stock" shall mean either shares of Common Stock issued
         subsequent to the Original Issue Date or, with respect to the issuance
         of Common Stock Equivalents subsequent to the Original Issue Date, the
         maximum number of shares (as set forth in the instrument relating
         thereto without regard to any provisions contained therein for
         subsequent adjustment of such number) of Common Stock issuable in
         exchange for, upon conversion of, or upon exercise of such Common Stock
         Equivalents.

                           (A) Upon each issuance of Common Stock for a per
                  share consideration less than the Conversion Price in effect
                  on the date of such issuance, the Conversion Rate of the
                  Series C Preferred Stock in effect on such date will be
                  adjusted by multiplying it by a fraction:

                                    (x) the numerator of which shall be the
                           number of shares of Common Stock outstanding
                           immediately prior to the issuance of such Additional
                           Shares of Common Stock, plus the number of such
                           Additional Shares of Common Stock so issued, and

                                    (y) the denominator of which shall be the
                           number of shares of Common Stock outstanding
                           immediately prior to the issuance of such Additional
                           Shares of Common Stock plus the number of shares of
                           Common Stock which the aggregate net consideration
                           received by the Corporation for the total number of
                           such Additional Shares of Common Stock so issued
                           would purchase at the Conversion Price then in
                           effect.

                           (B) Upon each issuance of Common Stock Equivalents,
                  exchangeable without further consideration into Common Stock,
                  for a per share consideration less than the Conversion Price
                  in effect on the date of such issuance, the Conversion Rate of
                  the Series C Preferred Stock in effect on such date will be
                  adjusted as in paragraph (A) of this Subsection (e)(5) on the
                  basis that the related Additional Shares of Common Stock are
                  to be treated as having been issued on the date of issuance of
                  the Common Stock Equivalents, and the aggregate consideration
                  received by the Corporation for such Common Stock Equivalents
                  shall be deemed to have been received for such Additional
                  Shares of Common Stock.

                           (C) Upon each issuance of Common Stock Equivalents
                  other than those described in paragraph (B) of this Subsection
                  (e)(5), for a per share consideration less than the Conversion
                  Price in effect on the date of such issuance, the Conversion
                  Rate of the Series C Preferred Stock in effect on such date
                  will be adjusted as in paragraph (A) of this Subsection (e)(5)
                  on the basis that the related Additional Shares of Common
                  Stock are to be treated as having been issued on the date of
                  issuance of such Common Stock Equivalents, and the aggregate
                  consideration received and receivable by the Corporation on
                  conversion or exercise of such Common Stock Equivalents shall
                  be deemed to have been received for such Additional Shares of
                  Common Stock.

                           (D) Once any Additional Shares of Common Stock have
                  been treated as having been issued for the purpose of this
                  Subsection (e)(5), they shall be treated as issued and
                  outstanding shares of Common Stock whenever any subsequent
                  calculations must be made pursuant hereto. On the expiration
                  of any options, warrants or rights to purchase Additional
                  Shares of Common Stock, the termination of any rights to
                  convert or exchange for Additional Shares of Common Stock, the
                  expiration of any options or rights related to such
                  convertible or exchangeable securities on account of which an
                  adjustment in the Conversion Rate has been made previously
                  pursuant to this Subsection (e)(5) or the expiration or
                  termination of any Common Stock Equivalents, then the
                  Conversion Rate shall forthwith be readjusted to such
                  Conversion Rate as would have been obtained had the adjustment
                  made upon the issuance of such options, warrants, rights,
                  securities or options or rights related to such securities or
                  Common Stock Equivalents been made upon the basis of the
                  issuance of only the number of shares of Common Stock actually
                  issued upon the exercise of such options, warrants or rights,
                  upon the conversion or exchange of such securities or upon the
                  exercise of the options or rights related to such securities
                  or upon the exercise of the Common Stock Equivalents. Any
                  readjustment of the Conversion Rate shall also cause an
                  appropriate readjustment of the Conversion Price, calculated
                  by dividing the readjusted Conversion Rate into the initial
                  Conversion Price.

                           (E) The foregoing notwithstanding, no adjustment of
                  the Conversion Rate or Conversion Price shall be made as a
                  result of the issuance of the following, but such shares of
                  Common Stock shall be deemed to be outstanding upon issuance
                  for all other purposes hereof:

                                    (w) shares of Common Stock (i) issued or
                           issuable to employee benefit plans (including, but
                           not limited to, stock option plans, tax-qualified
                           employee retirement plans and current cash or stock
                           bonus awards) of the Corporation, or to employees or
                           beneficiaries pursuant to said plans whether
                           currently in existence or hereafter adopted, and (ii)
                           issuable upon conversion of shares of the
                           Corporation's Series B Preferred Stock


                                      A-16
<PAGE>

                           (such number to be appropriately adjusted in the
                           event of any recapitalization, reorganization, stock
                           dividend, stock split or similar event affecting the
                           capital stock of the Corporation);

                                    (x) any shares of Common Stock pursuant to
                           which the Conversion Rate and Conversion Price have
                           been adjusted under Subsection (3) or (4) of this
                           Section (e);

                                    (y) any shares of Common Stock issued
                           pursuant to the exchange, conversion or exercise of
                           any Common Stock Equivalents which have previously
                           been incorporated into computations hereunder on the
                           date when such Common Stock Equivalents were issued;
                           or

                                    (z) Common Stock issued or issuable with
                           respect to which the holders of all the outstanding
                           Series C Preferred Stock have waived in writing the
                           right to any adjustment hereunder. In such event,
                           such waiver shall be binding on all subsequent
                           holders of Series C Preferred Stock.

                  (6) Reorganization, Merger, Consolidation or Sale of Assets.
         If at any time or from time to time there shall be a capital
         reorganization of the Common Stock (other than a subdivision,
         combination, reclassification or exchange of shares provided for
         elsewhere in this Section (e)) or a merger or consolidation of the
         Corporation with or into another corporation, or the sale of all or
         substantially all of the Corporation's properties and assets to any
         other person which is effected so that holders of Common Stock are
         entitled to receive (either directly or upon subsequent liquidation)
         stock, securities or assets with respect to or in exchange for Common
         Stock, then, as a part of such reorganization, merger, consolidation or
         sale, provision shall be made so that the holders of the Series C
         Preferred Stock shall thereafter be entitled to receive upon conversion
         of the Series C Preferred Stock the number of shares of stock,
         securities or assets of the Corporation, or of the successor
         corporation resulting from such merger or consolidation or sale, to
         which a holder of Common Stock deliverable upon conversion would have
         been entitled on such capital reorganization, merger, consolidation or
         sale. In any such case, appropriate adjustment shall be made in the
         application of the provisions of this Section (e) with respect to the
         rights of the holders of the Series C Preferred Stock after the
         reorganization, merger, consolidation or sale to the end that the
         provisions of this Section (e) (including adjustment of the Conversion
         Rate and Conversion Price then in effect and the number of shares
         purchasable upon conversion of the Series C Preferred Stock) shall be
         applicable after that event as nearly equivalent as may be practicable.

                  (7) No Adjustment. No adjustment to the Conversion Rate and
         Conversion Price shall be made if such adjustment would result in a
         change in the Conversion Price of less than one percent (l%). Any
         adjustment of less than one (1%) percent which is not made shall be
         carried forward and shall be made at the time of and together with any
         subsequent adjustment which, on a cumulative basis, amounts to an
         adjustment of one percent (1%) or more in the Conversion Price.

                  (8) Certificate as to Adjustments. Upon the occurrence of each
         adjustment or readjustment of the Conversion Rate pursuant to this
         Section (e), the Corporation at its expense shall promptly compute such
         adjustment or readjustment in accordance with the terms hereof and
         cause independent public accountants selected by the Corporation to
         verify such computation and prepare and furnish to each holder of
         Series C Preferred Stock a certificate setting forth such adjustment or
         readjustment and showing in detail the facts upon which such adjustment
         or readjustment is based. The Corporation shall, upon the written
         request at any time of any holder of Series C Preferred Stock, furnish
         or cause to be furnished to such holder a like certificate setting
         forth (i) such adjustments and readjustments, (ii) the Conversion Rate
         at that time in effect, and (iii) the number of shares of Common Stock
         and the amount, if any, of other property which at that time would be
         received upon the conversion of Series C Preferred Stock.

                  (9) Notices of Record Date. In the event of any taking by the
         Corporation of a record of the holders of any class of securities other
         than Series C Preferred Stock for the purpose of determining the
         holders thereof who are entitled to receive any dividend or other
         distribution, any Common Stock Equivalents or any right to subscribe
         for, purchase or otherwise acquire any shares of stock of any class or
         any other securities or property, or to receive any other right, the
         Corporation shall mail to each holder of Series C Preferred Stock at
         least twenty (20) days prior to the date specified therein, a notice
         specifying the date on which any such record is to be taken for the
         purpose of such dividend, distribution or rights, and the amount and
         character of such dividend, distribution or rights.

                  (10) Reservation of Stock Issuable Upon Conversion. The
         Corporation shall at all times reserve and keep available out of its
         authorized but unissued shares of Common Stock solely for the purpose
         of effecting the conversion of the shares of the Series C Preferred
         Stock such number of its shares of Common Stock as shall from time to
         time be sufficient to effect the conversion of all outstanding shares
         of the Series C Preferred Stock; and if at any time the number of
         authorized but unissued shares of Common Stock shall not be sufficient
         to effect the conversion of all then outstanding shares of the Series C
         Preferred Stock, the Corporation shall take such corporate action as
         may, in the opinion of its counsel, be necessary to increase its
         authorized but unissued shares of Common Stock to such number of shares
         as shall be sufficient for such purpose.


                                      A-17
<PAGE>

         (f) Redemption by Corporation. The Series C Preferred Stock may be
redeemed for cash solely at the option of the Corporation, either in whole or in
part, at any time or from time to time, at One Hundred Dollars ($100.00) per
share, plus an amount equal to the amount of all dividends accrued but unpaid
(whether or not declared) to the date fixed for redemption.

                  Unless full cumulative dividends on all outstanding shares of
the Series C Preferred Stock shall have been or contemporaneously are declared
and paid or set apart for payment for all past dividend periods, the Series C
Preferred Stock may not be redeemed unless all outstanding preferred stock is
redeemed, and neither the Corporation nor any subsidiary thereof may purchase
any preferred stock, including shares of the Series C Preferred Stock, and
neither the Corporation nor any subsidiary thereof may redeem or purchase any
class or series of capital stock ranking junior to the Series C Preferred Stock
in respect to dividends or distributions upon liquidation; provided, however,
that the Corporation may complete the purchase or redemption of shares of
preferred stock for which a purchase contract was entered into, or notice of
redemption of which was initially given, prior to such default in payment of
dividends.

                  If less than all of the outstanding shares of Series C
Preferred Stock are to be redeemed, the shares to be redeemed shall be selected
by the Corporation from outstanding shares not previously called for redemption,
pro rata, by lot, or in such other equitable manner as the Board of Directors
may determine.

                  Notice of any proposed redemption of Series C Preferred Stock
shall be given by the Corporation by mailing a copy of such notice at least
thirty (30) days but not more than sixty (60) days prior to the date fixed for
such redemption to each holder of record of the shares to be redeemed at such
holder's address appearing on the books of the Corporation. On and after the
date fixed for redemption dividends shall cease to accrue on the shares of
Series C Preferred Stock called for redemption, whether or not the certificates
for such shares are actually surrendered for redemption. All shares of Series C
Preferred Stock redeemed pursuant to this Section (f) shall be restored to the
status of authorized and unissued shares of preferred stock, undesignated as to
series.

         (g) Notices. Any notice required by the provisions hereof to be given
to the holders of shares of Series C Preferred Stock shall be deemed given if
deposited in the United States Postal Service, postage prepaid, and addressed to
each holder of record at his or her address appearing on the books of the
Corporation.


                                      A-18