FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is made the
24th day of March, 2000, between ATLANTIC AMERICAN CORPORATION, a Georgia
corporation (the "Borrower") and WACHOVIA BANK, N.A (the "Bank").
Background:
----------
The Borrower and the Bank have entered into a Credit Agreement dated as
of July 1, 1999 (the "Credit Agreement"). The Borrower and the Bank wish to
amend the Credit Agreement in certain respects, as hereinafter provided.
NOW, THEREFORE, the Borrower and the Bank agree as follows:
SECTION 1. Definitions. Capitalized terms used herein which
are not otherwise defined herein shall have the
respective meanings assigned to them in the Credit
Agreement.
SECTION 2. The Credit Agreement is amended as set forth in this
Section 2.
2.1. Amendment to Section 1.01. Section 1.01 of the Credit
-------------------------- Agreement is hereby amended by
inserting a new definition to
read as follows:
"Effective Date" means March 24, 2000.
2.2. Amendment to Section 2.05. Section 2.05(a) of the Credit
------------------------- Agreement is hereby amended and
restated in its entirety to
read as follows:
(a)"Applicable Margin" shall be determined quarterly based
upon the ratio of Funded Debt to EBITDA (calculated as of the
last day of each Fiscal Quarter), as follows:
Ratio of Funded Debt to EBITDA Base Rate Loans Euro-Dollar Loans
------------------------------ --------------- -----------------
Greater than or equal to 5.5 to 1.0 0% 3.75%
Greater than or equal to 5.0 to 1.0
but less than 5.5 to 1.0 0% 3.25%
Greater than or equal to 4.5 to 1.0
but less than 5.0 to 1.0 0% 2.75%
Greater than or equal to 4.0 to 1.0
but less than 4.5 to 1.0 0% 2.50%
Greater than or equal to 3.5 to 1.0
but less than 4.0 to 1.0 0% 2.25%
Greater than or equal to 3.0 to 1.0
but less than 3.5 to 1.0 0% 2.00%
Less than 3.0 to 1.0 0% 1.75%
The Applicable Margin shall be determined effective as of the date
(herein, the "Rate Determination Date") which is 60 days after the last
day of the Fiscal Quarter as of the end of which the foregoing ratio is
being determined, based on the quarterly financial statements of the
Borrower for such Fiscal Quarter, and the Applicable Margin so
determined shall remain effective from such Rate Determination Date
until the date which is 60 days after the last day of the Fiscal
Quarter in which such Rate Determination Date falls (which latter date
shall be a new Rate Determination Date); provided that (i) for the
period from and including the Effective Date to but excluding the
Rate Determination Date next following the Effective Date, the
Applicable Margin shall be 0% for Base Rate Loans and 3.25% for Euro-
Dollar Loans (ii) in the case of any Applicable Margin determined for
the fourth and final Fiscal Quarter of a Fiscal Year, the Rate
Determination Date shall be the date which is 120 days after the
last day of such final Fiscal Quarter and such Applicable Margin shall
be determined based upon the annual audited financial statements of
the Borrower for the Fiscal Year ended on the last day of such final
Fiscal Quarter, and (iii) if on any Rate Determination Date the
Borrower shall have failed to deliver to the Banks the financial
statements required to be delivered pursuant to Section 5.01(a) or
Section 5.01(b) with respect to the Fiscal Year or Fiscal Quarter, as
the case may be, most recently ended prior to such Rate Determination
Date, then for the period beginning on such Rate Determination Date and
ending on the immediately succeeding Rate Determination Date, the
Applicable Margin shall be determined as if the ratio of Funded Debt
to EBITDA was more than 5.5 to 1.0 at all times during such period.
Any change in the Applicable Margin on any Rate Determination Date
shall result in a corresponding change, effective on and as of such
Rate Determination Date, in the interest rate applicable to each
Loan outstanding on such Rate Determination Date, provided that
no Applicable Margin shall be decreased pursuant to this Section
2.05 if a Default is in existence on the Rate Determination Date.
2.3. Amendment to Section 5.03. Section 5.03 of the Credit Agreement
------------------------------- is hereby amended and restated in its
entirety to read as follows:
SECTION 5.03. Ratio of Funded Debt to Consolidated Total
Capitalization. The ratio of Funded Debt to Consolidated Total
Capitalization will not at any time exceed (i) for the period from and
including the Effective Date to and including December 31, 2000, 50%
and (ii) for any period on or after January 1, 2001, 40%.
2.4. Amendment to Section 5.05. Section 5.05 of the Credit Agreement
--------------------------------- is hereby amended and restated in its
entirety to read as follows:
SECTION 5.05. Ratio of Funded Debt to EBITDA. As of the end of
each Fiscal Quarter, the ratio of Funded Debt as of the end of such
Fiscal Quarter to EBITDA for the period of 4 consecutive Fiscal
Quarters then ended shall be less than (a) 5.85 to 1.0 for each Fiscal
Quarter ending on or before March 31, 2000, (b) 5.10 to 1.0 for each
Fiscal Quarter ending after March 31, 2000, and on or before June 30,
2000, (c) 4.35 to 1.0 for each Fiscal Quarter ending after June 30,
2000, and on or before December 31, 2000, (d) 3.50 to 1.0 for each
Fiscal Quarter ending after December 31, 2000, and on or before
September 30, 2001, and (c) 3.00 to 1.0 for each Fiscal Quarter
thereafter.
2.5. Amendment to Section 5.06. Section 5.06 of the Credit Agreement
--------------------------------- is hereby amended and restated in its
entirety to read as follows:
SECTION 5.06. Ratio of EBITDA to Consolidated Interest
Expense. At the end of each Fiscal Quarter, the ratio of EBITDA for the
period of 4 consecutive Fiscal Quarters then ended to Consolidated
Interest Expense for the period of 4 consecutive Fiscal Quarters then
ended shall be greater than (a) 2.5 to 1.0 for each Fiscal Quarter
ending on or before June 30, 2000, (b) 3.0 to 1.0 for each Fiscal
Quarter ending on or before June 30, 2001 and (c) 3.5 to 1.0 for each
Fiscal Quarter thereafter.
SECTION 3. No Other Amendment. Except for the amendment set forth
above, the text of the Credit Agreement shall remain unchanged and in full force
and effect. This Amendment is not intended to effect, nor shall it be construed
as, a novation. The Credit Agreement and this Amendment shall be construed
together as a single instrument and any reference to the "Agreement" or any
other defined term for the Credit Agreement in the Credit Agreement, the Loan
Documents or any certificate, instrument or other document delivered pursuant
thereto shall mean the Credit Agreement as amended hereby and as it may be
amended, supplemented or otherwise modified hereafter. Nothing herein contained
shall waive, annul, vary or affect any provision, condition, covenant or
agreement contained in the Credit Agreement, except as herein amended, or any of
the other Loan Documents nor affect nor impair any rights, powers or remedies
under the Credit Agreement, as hereby amended or any of the other Loan
Documents. The Bank does hereby reserve all of its rights and remedies against
all parties who may be or may hereafter become secondarily liable for the
repayment of the Notes. The Borrower promises and agrees to perform all of the
requirements, conditions, agreements and obligations under the terms of the
Credit Agreement, as heretofore and hereby amended, and the other Loan
Documents, the Credit Agreement, as amended, and the other Loan Documents being
hereby ratified and affirmed. The Borrower hereby expressly agrees that the
Credit Agreement, as amended, and the other Loan Documents are in full force and
effect.
SECTION 4. Representations and Warranties. The Borrower hereby
---------------------------------------- represents and warrants in
favor of the Bank as follows:
(a) The representations and warranties of the Borrower
contained in Article IV of the Credit Agreement are true on
and as of the date hereof;
(b) No Default or Event of Default under the Credit Agreement has
occurred and is continuing on the date hereof;
(c) The Borrower has the corporate power and authority to enter into
this Amendment and to do all acts and things as are required or contemplated
hereunder to be done, observed and performed by it;
(d) This Amendment has been duly authorized, validly executed and
delivered by one or more authorized officers of the Borrower, and this Amendment
and the Credit Agreement, as amended hereby constitutes the legal, valid and
binding obligation of the Borrower enforceable against it in accordance with its
terms; and
(e) The execution and delivery of this Amendment and the Borrower's
performance hereunder and under the Credit Agreement as amended hereby do not
and will not require the consent or approval of any regulatory authority or
governmental authority or agency having jurisdiction over the Borrower other
than those which have already been obtained or given, nor be in contravention of
or in conflict with the Articles of Incorporation or Bylaws of the Borrower, or
the provision of any statute, or any judgment, order or indenture, instrument,
agreement or undertaking, to which the Borrower is a party or by which its
assets or properties are or may become bound.
SECTION 5. Counterparts. This Amendment may be executed in multiple
------------ counterparts, each of which shall be deemed
to be an original and all of which, taken
together, shall constitute one and the same
agreement.
SECTION 6. Governing Law. This Amendment shall be construed in
-------------- accordance with and governed by the laws
of the State of Georgia.
SECTION 7. Amendment Fee. On the Effective Date, the Borrower shall
-------------- pay to the Bank an amendment fee equal to
the product of the Commitment (irrespective
of usage) as of such date multiplied by
0.25%.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed under seal by their respective authorized officers as of the day
and year first above written.
Attest: ATLANTIC AMERICAN CORPORATION
_______________________________ By:________________________________(SEAL)
Its:__________________________ Its: __________________________________
[CORPORATE SEAL]
WACHOVIA BANK, N.A.
By:__________________________________
Title:________________________________