SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT

     Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934



       Date of Report (Date of earliest event reported) January 12, 1996
                              (December 31, 1995)



                          ATLANTIC AMERICAN CORPORATION
                          -----------------------------
             (Exact name of registrant as specified in its charter)




       Georgia                       0-3722               58-1027114
       -------                       ------               ----------
(State or other jurisdiction of (Commission File (I.R.S. Employer Identification
  incorporation or organization)     Number)               Number)


                4370 PEACHTREE ROAD, N.E., ATLANTA, GEORGIA 30319
                -------------------------------------------------
               (Address of principal executive offices) (Zip Code)


        Registrant's telephone number, including area code (404) 266-5500
                                 --------------


                                      None
                                      ----
        (Former name, former address and former fiscal year, if changed
                               since last report)





Item 2.    Acquisition or Disposition of Assets.
           -------------------------------------

      On December  31,  1995,  pursuant  to an  agreement  (the "Stock  Purchase
Agreement"),  Atlantic American Corporation (the "Company"), acquired all of the
shares of  capital  stock of  American  Southern  Insurance  Company  ("American
Southern") from Fuqua  Enterprises,  Inc. (the "Seller") for a purchase price of
$34,000,000.  As a result of the transaction,  American Southern became a wholly
owned  subsidiary  of the  Company.  The  assets of  American  Southern  include
investments, receivables, cash and other assets. The Company intends to continue
to use these assets for the purpose of selling insurance. The purchase price was
paid in the form of a cash payment of  approximately  $22,642,000  (representing
the proceeds of a loan from Wachovia Bank of Georgia,  N.A.) and the issuance of
a  Promissory  Note to the seller for  approximately  $11,358,000.  No  material
relationship  exists between the Seller or its  shareholders  and the Company or
any of its  affiliates,  directors  or  officers  or any  associate  of any such
director or officer.

Item 5.    Other Events.
           -------------

      On January 5, 1996,  Atlantic American  Corporation  entered into a Merger
Agreement  pursuant to which it will acquire all of the remaining  publicly-held
shares of its  subsidiary,  Bankers  Fidelity Life Insurance  Company.  Atlantic
American  currently owns 93% of the outstanding stock of Bankers  Fidelity.  The
transaction will be completed through the merger of a newly formed  wholly-owned
subsidiary of Atlantic  American into Bankers  Fidelity,  with Bankers  Fidelity
being the surviving  corporation in the merger.  As a result of the merger,  the
public  shareholders  of Bankers  Fidelity  will receive  $6.25 in cash for each
share  of  common  stock,   for  an  aggregate  of   approximately   $1,264,000.
Consummation  of the  transaction  is subject  to  approval  at a  shareholders'
meeting and receipt of any necessary regulatory approvals.

Item 7.    Financial Statements and Exhibits.
           ----------------------------------

   (a)     Financial Statements of Business Acquired:  to be filed
           by amendment as soon as practicable; but, not later than 
           March 12, 1996.

   (b)     Pro Forma Financial Information:  to be filed by amendment
           as soon as practicable; but, not later than March 12, 1996.

   (c)     Exhibits.
           ---------

           (2.1) Stock Purchase Agreement by and between Atlantic
                 American Corporation and Fuqua Enterprises , Inc., 
                 dated as of October 16, 1995.

          (99.1) Credit Agreement, dated as of December 29, 1995,
                 between Atlantic American Corporation and Wachovia 
                 Bank of Georgia, N.A.

          (99.2) Press Release dated January 2, 1996.

          (99.3) Press Release dated January 9, 1996.








                                -1-







                                   SIGNATURES
                                   ----------

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                                    ATLANTIC AMERICAN CORPORATION
                                    -----------------------------
                                             (Registrant)




Date:  January 12, 1996                   By:     /s/                      
                                             ---------------------------------
                                          John W. Hancock
                                          Senior Vice President-Treasurer
                                          (Principal Financial Officer)



                                          By:    /s/                           
                                             ---------------------------------
                                          John C. Hall, Jr.
                                          Controller
                                          (Principal Accounting Officer)



























                                -2-




    Index to Exhibits
    

     Exhibit  2.1  Stock Purchase Agreement by and between Atlantic
                   American Corporation and Fuqua Enterprises , Inc., 
                   dated as of October 16, 1995.

     Exhibit 99.1  Credit Agreement, dated as of December 29, 1995,
                   between Atlantic American Corporation and Wachovia 
                   Bank of Georgia, N.A.

     Exhibit 99.2  Press Release dated January 2, 1996.

     Exhibit 99.3  Press Release dated January 9, 1996.





                                                                     EXHIBIT 2.1














                            STOCK PURCHASE AGREEMENT


                                 by and between


                          ATLANTIC AMERICAN CORPORATION

                                       and


                             FUQUA ENTERPRISES, INC.





                          Dated as of October 16, 1995










                                TABLE OF CONTENTS


ARTICLE 1   CERTAIN DEFINITIONS...................................1

      1.01  Agreement.............................................1
      1.02  American Safety.......................................1
      1.03  Applicable Law........................................1
      1.04  Automated Systems.....................................1
      1.05  Automobile Safety.....................................1
      1.06  Closing...............................................2
      1.07  Code..................................................2
      1.08  Companies.............................................2
      1.09  ERISA.................................................2
      1.10  Fed...................................................2
      1.11  GAAP..................................................2
      1.12  Georgia Insurance Code................................2
      1.13  Florida Tax Litigation................................2
      1.14  Governmental Authority................................2
      1.15  Hart-Scott Act........................................2
      1.16  InterRedec............................................2
      1.17  InterRedec Escrow.....................................2
      1.18  InterRedec Note.......................................2
      1.19  InterRedec Pledge.....................................2
      1.20  Knowledge.............................................2
      1.21  Material Adverse Effect...............................3
      1.22  1933 Act..............................................3
      1.23  1934 Act..............................................3
      1.24  Person................................................3
      1.25  Pledged Shares........................................3
      1.26  Premier...............................................3
      1.27  Prime Rate............................................3
      1.28  Purchaser Disclosure Memorandum.......................3
      1.29  Related Party.........................................3
      1.30  SAP...................................................3
      1.31  SEC...................................................3
      1.32  Seller Disclosure Memorandum..........................4
      1.33  Shares................................................4
      1.34  Stockholders' Equity..................................4
      1.35  Stock Purchase Agreement..............................4
      1.36  Subsidiaries..........................................4
      1.37  Tax Allocation Agreement..............................4
      1.38  Tax Returns...........................................4
      1.39  Taxes.................................................4

                                      -i-


ARTICLE 2  STOCK PURCHASE AND CLOSING.............................4

      2.01  Purchase and Sale of the Shares.......................4
      2.02  Consideration.........................................4
      2.03  Payment of Purchase Price.............................4
      2.04  Post-Closing Adjustment...............................5
      2.05  Closing...............................................6
      2.06  Deliveries and Proceedings at the Closing.............6

ARTICLE 3   REPRESENTATIONS AND WARRANTIES OF SELLER..............6

      3.01  Organization and Good Standing of Seller; Power and
            Authority.............................................6
      3.02  Organization and Good Standing of American Southern;
            Power and Authority...................................6
      3.03  Capitalization and Ownership..........................7
      3.04  Subsidiaries..........................................7
      3.05  Qualification.........................................7
      3.06  No Violation of Applicable Laws or Agreements.........7
      3.07  SEC Filings and Financial Statements..................8
      3.08  Absence of Certain Changes............................9
      3.09  Reserves..............................................10
      3.10  Tax Matters...........................................10
      3.11  Pending Litigation or Proceedings.....................11
      3.12  Compliance With Applicable Laws.......................11
      3.13  Consents and Approvals................................12
      3.14  Legal Investments.....................................12
      3.15  Investment Assets Custody.............................12
      3.16  Insurance Issued......................................12
      3.17  Insurance Agents......................................12
      3.18  Title to Assets; Material Contracts...................12
      3.19  Employee Benefit Plans................................13
      3.20  Compensation Arrangements; Bank Accounts; Officers
            and Directors.........................................15
      3.21  Transactions With Related Parties.....................15
      3.22  Labor Relations.......................................15
      3.23  Brokerage.............................................16
      3.24  Insurance.............................................16

ARTICLE 4   REPRESENTATIONS AND WARRANTIES OF PURCHASER...........16

      4.01  Purchaser's Organization and Good Standing; Power and
            Authority.............................................16
      4.02  No Violation of Applicable Laws or Agreements.........16
      4.03  Pending Litigation or Proceedings.....................17

                                      -ii-


      4.04  Brokerage.............................................17
      4.05  Investment Intent; Ability to Bear Risk...............17
      4.06  SEC Filings and Financial Statements..................17
      4.07  Absence of Certain Changes............................18
      4.08  Consents and Approvals................................18

ARTICLE 5   CERTAIN ADDITIONAL COVENANTS AND AGREEMENTS...........18

      5.01  Operation of Business Pending Closing.................18
      5.02  Access to Information.................................19
      5.03  Supplements to Disclosure Memoranda...................19
      5.04  Certain Tax Matters...................................20
      5.05  Regulatory Approvals and Consents.....................24
      5.06  Best Efforts..........................................25
      5.07  Exclusive Dealings....................................25
      5.08  Expenses..............................................25
      5.09  Resignations..........................................25
      5.10  Maintenance of Records................................26
      5.11  Proposals.............................................26
      5.12  Press Releases........................................26
      5.13  GAAP Financial Statements.............................26

ARTICLE 6   CONDITIONS TO CLOSING.................................26

      6.01  Conditions to Obligations of Purchaser................26
      6.02  Conditions to Obligations of Seller...................27

ARTICLE 7   INDEMNIFICATION.......................................28

      7.01  Indemnification by Seller.............................28
      7.02  Indemnification by Purchaser..........................29
      7.03  Indemnification Procedures............................30
      7.04  Sole Remedy...........................................31

ARTICLE 8   TERMINATION...........................................32

      8.01  When Agreement May be Terminated......................32
      8.02  Final Termination.....................................32
      8.03  Effect of Termination.................................32

ARTICLE 9   ARBITRATION...........................................32

      9.01  Agreement to Arbitrate................................32
      9.02  Initiating Arbitration................................32
      9.03  Effect................................................33
      9.04  Costs.................................................33

                                     -iii-


ARTICLE 10  MISCELLANEOUS.........................................33

      10.01 Nature and Survival of Representations................33
      10.02 Amendment.............................................34
      10.03 Waiver................................................34
      10.04 Governing Law.........................................34
      10.05 Notices...............................................34
      10.06 Invalid Provision.....................................35
      10.07 Subsequent SEC Filings................................35
      10.08 Assignment............................................35
      10.09 Binding Effect........................................35
      10.10 Further Assurances....................................35
      10.11 Headings..............................................35
      10.12 Person and Gender.....................................36
      10.13 Entire Agreement......................................36
      10.14 Interpretations.......................................36
      10.15 Execution in Counterparts.............................36

                                      -iv-




THIS STOCK PURCHASE  AGREEMENT (this "Agreement") is made as of October 16, 1995
by  and  between   ATLANTIC   AMERICAN   CORPORATION,   a  Georgia   corporation
("Purchaser"),  and FUQUA ENTERPRISES,  INC. (formerly known as Vista Resources,
Inc.), a Delaware corporation ("Seller").



                                    RECITALS

      WHEREAS,  Seller owns 100% of the issued and outstanding  capital stock of
American  Southern   Insurance  Company,   a  Georgia   corporation   ("American
Southern"); and

      WHEREAS,  Seller  desires to sell to Purchaser,  and Purchaser  desires to
purchase,  all of the capital stock of American Southern, in accordance with the
terms and conditions of this Agreement;

      NOW, THEREFORE,  in consideration of the mutual promises contained herein,
and other good and valuable consideration,  the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:


                                    ARTICLE 1
                               CERTAIN DEFINITIONS

      As used herein, the following terms have the following respective meanings
(such meanings to be equally applicable to both the singular and plural forms of
the terms defined):

      1.01  "Agreement"  Agreement means this Stock  Purchase  Agreement and the
Exhibit hereto,  as the same may be supplemented,  modified or amended from time
to time.

      1.02 "American  Safety" American  Safety means  American Safety Insurance
Company,  a Georgia  corporation  and  wholly  owned  subsidiary  of  American
Southern.

      1.03  "Applicable  Law" Applicable Law means all applicable  provisions of
constitutions, statutes, laws, rules, regulations and orders of all Governmental
Authorities.

      1.04 "Automated  Systems"  Automated Systems means  Automated Systems of
Georgia,  Inc., a Georgia  corporation and wholly owned subsidiary of American
Southern.

      1.05  "Automobile   Safety" Automobile  Safety  means  Automobile   Safety
Management, Inc., a Delaware corporation and wholly owned subsidiary of American
Southern.



                                      -1-


      1.06"Closing" Closing means the consummation of the transactions described
in  this  Agreement,   and  "Closing  Date"  means  the  date  upon  which  such
consummation occurs.

      1.07 "Code" Code means the Internal  Revenue Code of 1986, as amended, and
the rules and regulations promulgated thereunder.

      1.08 "Companies" Companies  means American Southern collectively with the
Subsidiaries.

      1.09  "ERISA" ERISA  means the Employee Retirement  Income Security Act of
1974, as in effect from time to time.

      1.10 "Fed" Fed means the Board of Governors of the Federal  Reserve System
and the  Federal  Reserve  Bank of New York  acting as  bailee  for the Board of
Governors.

      1.11 "GAAP" GAAP means generally accepted accounting principles.

      1.12 "Georgia Insurance Code" Georgia Insurance Code means Title 33 of the
Official Code of Georgia Annotated and all regulations promulgated thereunder.

      1.13 "Florida Tax Litigation" Florida Tax Litigation means the premium tax
litigation with respect to the period from 1985 through 1990 involving  American
Southern  and the  State  of  Florida  Department  of  Revenue  currently  being
litigated  in the  District  Court of Appeals,  1st  District of Florida  (Civil
Action No. 95-2588).

      1.14  "Governmental  Authority" Governmental  Authority means any federal,
state,   county,   local,  foreign  or  other  governmental  or  public  agency,
instrumentality, commission, authority, board or body.

      1.15 "Hart-Scott Act" Hart-Scott Act means the Hart-Scott-Rodino Antitrust
Improvements  Act  of  1976,  as  amended,   and  all  regulations   promulgated
thereunder.

      1.16  "InterRedec" InterRedec means InterRedec Southern Company, Inc., a
Delaware corporation.

      1.17  "InterRedec  Escrow" InterRedec Escrow  means  that  certain  Escrow
Agreement dated as of October 11, 1991 by and among Seller, InterRedec and First
Union National Bank of Georgia.

      1.18  "InterRedec  Note" InterRedec Note means that certain  Nonnegotiable
Note dated October 11, 1991 made by Seller, payable to InterRedec.

      1.19  "InterRedec  Pledge" InterRedec Pledge means that certain Pledge and
Security Agreement dated October 11, 1991 by and between Seller and InterRedec.

      1.20  "Knowledge" Knowledge (i) with respect to Seller,  means those facts
known, or which should have been known with reasonable diligence,  by any of the
officers or directors  of the  Companies;  and (ii) with  respect to  Purchaser,


                                      -2-


means  those  facts  known,  or which  should  have been known  with  reasonable
diligence, by any of the officers or directors of Purchaser.

      1.21  "Material  Adverse  Effect" Material Adverse Effect means a material
adverse effect to the property,  results of operations or financial condition of
(a) American  Southern and the Subsidiaries  taken as a whole, or (b) Purchaser,
as shall be  applicable  in the  context  in which  the term is used;  provided,
however,  that a Material  Adverse  Effect  shall not  include the effect of any
matter which has or may have an  industry-wide  effect,  or any general economic
conditions.

      1.22 "1933 Act" 1933 Act means the Securities Act of 1933, as amended.

      1.23 "1934  Act" 1934 Act means the  Securities  Exchange Act of 1934, as
amended.

      1.24  "Person" Person  means  an  individual,  corporation,   partnership,
association, trust or unincorporated organization, or a government or any agency
or political subdivision thereof.

      1.25 "Pledged Shares" Pledged  Shares means the 149,998 shares of American
Southern common stock pledged to InterRedec by Seller pursuant to the InterRedec
Pledge.

      1.26 "Premier" Premier means Premier Adjusting and Claims Service, Inc., a
Georgia corporation and wholly owned subsidiary of American Southern.

      1.27  "Prime  Rate" Prime Rate  means the prime rate as  published  in the
"Money Rates" column of The Wall Street Journal,  Eastern Edition;  in the event
that more than one such rate is reported, the Prime Rate shall equal the average
of such rates.

      1.28  "Purchaser Disclosure  Memorandum" Purchaser  Disclosure  Memorandum
means  the  written  information  entitled  "Purchaser  Disclosure   Memorandum"
delivered to Seller prior to the date of this Agreement describing in reasonable
detail the matters  contained  therein and, with respect to each disclosure made
therein,  specifically  referencing  each Section of this Agreement  under which
such disclosure is being made. Information disclosed with respect to one Section
shall be deemed to be  disclosed  for purposes of all other  Sections,  provided
that the  relevance  to the  Section  from  which any such  matter is omitted is
apparent from the disclosure with respect to the Section in which such matter is
included.

      1.29 "Related  Party" Related Party means  Seller;  any of the officers or
directors of any of the Companies;  any affiliate of Seller,  any Company or any
of their  respective  officers or directors;  or any business or entity in which
Seller,  any  Company,  or any  affiliate  of any such  person has any direct or
material indirect interest.

      1.30 "SAP" SAP means the statutory accounting practices as  prescribed  or
permitted by the Georgia Insurance Department.

      1.31 "SEC" SEC means the Securities and Exchange Commission.



                                      -3-


      1.32 "Seller Disclosure Memorandum" Seller Disclosure Memorandum means the
written  information  entitled  "Seller  Disclosure   Memorandum"  delivered  to
Purchaser  prior to the date of this Agreement  describing in reasonable  detail
the matters contained therein and, with respect to each disclosure made therein,
specifically  referencing  each  Section  of this  Agreement  under  which  such
disclosure  is being made.  Information  disclosed  with  respect to one Section
shall be deemed to be  disclosed  for purposes of all other  Sections,  provided
that the  relevance  to the  Section  from  which any such  matter is omitted is
apparent from the disclosure with respect to the Section in which such matter is
included.

      1.33  "Shares" Shares means 100% of the issued and  outstanding  shares of
capital stock of American Southern.

      1.34 "Stockholders'Equity" Stockholders' Equity means total assets minus 
total liabilities of American Southern on a consolidated SAP basis.

      1.35 "Stock Purchase Agreement" Stock Purchase Agreement means that 
certain Stock Purchase Agreement dated as of September 17, 1991, among Seller, 
Concorde Finance & Investment, Inc., InterRedec, Inc., InterRedec and American
Southern.

      1.36   "Subsidiaries" Subsidiaries   means  American  Safety,   Automated
Systems, Automobile Safety and Premier.

      1.37 "Tax Allocation  Agreement" Tax Allocation Agreement means the tax 
allocation  agreement dated as of October 11, 1991 between Seller and American
Southern.

      1.38 "Tax  Returns" Tax Returns  means all returns or  reports,  including
accompanying schedules, with respect to Taxes.

      1.39  "Taxes" Taxes means all federal,  state,  local and foreign  income,
premium, payroll,  withholding,  excise, sales, use, real and personal property,
use and  occupation,  mercantile,  capital  stock,  franchise  and other  taxes,
including interest and penalties thereon and all estimated taxes.


                                    ARTICLE 2
                           STOCK PURCHASE AND CLOSING


      2.01 Purchase and Sale of the  Shares. Upon and subject to the terms and
conditions of this Agreement, Seller shall sell, and Purchaser shall purchase,
the Shares.

      2.02  Consideration.  The aggregate  consideration  (the "Purchase Price")
to be paid by Purchaser to Seller for the Shares shall be $34,000,000,
subject to adjustment as described in Section 2.04.

      2.03 Payment of Purchase Price. Purchaser shall pay the Purchase Price as
follows:



                                      -4-


      (a) at Closing, Purchaser shall execute and deliver to Seller a promissory
note (the "Purchaser Note") in substantially the form attached hereto as Exhibit
2.03 in a  principal  amount  equal to the total  amount of the  principal  plus
accrued interest (as determined pursuant to Section 2(c) of the InterRedec Note)
owed by Seller under the InterRedec Note as of the Closing Date; and

      (b) at  Closing,  Purchaser  shall pay to  Seller  in cash the  difference
between  $34,000,000 and the principal amount of the Purchaser Note, by means of
a wire  transfer of  immediately  available  funds (U.S.  Dollars) to an account
designated by Seller.


      2.04  Post-Closing Adjustment.

      (a) As soon as practicable, but in any event within thirty (30) days after
Closing,  Purchaser  shall,  under  the  direction  and  supervision  of  Roy S.
Thompson, Jr., Scott G. Thompson and Calvin L. Wall, or any of them, prepare and
deliver to Seller a balance  sheet of American  Southern as of the Closing  Date
(the  "Closing  Balance  Sheet"),  prepared  in  accordance  with SAP  reporting
practices  consistently  applied  (but  subject  to the  provisions  of  Section
5.04(i)). Without limiting the generality of the foregoing sentence, the parties
expressly  agree that the  Closing  Balance  Sheet  shall  include  amounts  for
insurance  liability reserves calculated in a manner and using methodologies and
assumptions  consistent  in all respects with  American  Southern's  practice of
calculating  such reserves during the 24-month period  immediately  prior to the
Closing Date.

      (b) Seller  shall have  fifteen  (15) days  after  receipt of the  Closing
Balance  Sheet in which to review such Closing  Balance  Sheet,  and during such
15-day period,  Purchaser shall make available to Seller and its representatives
all  information  regarding  preparation of the Closing  Balance Sheet as may be
reasonably  requested by Seller,  including,  without limitation,  access to all
employees,  books,  records and work papers. If within such 15-day period Seller
does not provide  Purchaser  with written notice of any objection to the Closing
Balance Sheet,  the Closing Balance Sheet shall be deemed accepted by, and final
and binding upon,  both parties.  If Seller does provide  Purchaser with written
notice of any  objection  within such 15-day  period,  then the parties shall in
good faith  attempt to  resolve  such  dispute  within  fifteen  (15) days after
Purchaser's  receipt of Seller's  objection  notice.  If such dispute  cannot be
resolved by the  parties,  the dispute  shall be  submitted  to  arbitration  in
accordance  with the  provisions  of  Article  9 hereof,  except  that the third
arbitrator  selected  from a AAA list (as  described in Section 9.02) must be an
independent certified public accountant knowledgeable about SAP.

      (c) Once the Closing  Balance  Sheet has been deemed  final and binding on
the parties, whether by failure of Seller to object, agreement of the parties or
arbitration,  within five (5)  business  days  thereafter,  Seller  shall pay to
Purchaser  in  immediately  available  funds the  amount,  if any,  by which the
Stockholders'  Equity  reflected  on the  Closing  Balance  Sheet  is less  than


                                      -5-


$26,800,000,  plus  interest  thereon at the Prime Rate in effect on the Closing
Date for the period of the Closing  Date  through  the date of payment.  If such
Stockholders'  Equity as reflected on the Closing  Balance  Sheet is equal to or
greater  than  $26,800,000,  neither  party  shall owe the other any  additional
amounts.

      (d) Notwithstanding anything to the contrary contained herein, the parties
agree  that  all  payables  of any  of the  Companies  to  Seller  or any of its
affiliates  shall be accrued on the Closing Balance Sheet and paid at Closing or
paid prior to Closing (in which case the  Companies  shall  furnish  Seller with
satisfactory evidence of such payment).

      2.05  Closing.  Closing shall be effective as of the close of business on
the last day of the month in which all of the conditions set forth in Article 6
are satisfied or waived, and Closing shall take place at such time and place as
the parties may agree.

      2.06 Deliveries and Proceedings at the Closing. At the Closing, the
parties shall execute and deliver each agreement and instrument required or
contemplated by this Agreement to be so executed and delivered and not
theretofore executed and delivered. In addition, at the Closing, i) Purchaser
shall deliver to Seller the Purchase Price, and (ii) Seller shall deliver to
Purchaser the certificate or certificates evidencing the Shares, duly endorsed
in blank for transfer or accompanied by duly executed irrevocable stock powers
in blank, free and clear of all liens, encumbrances, pledges, options, voting
agreements, contractual rights or other claims whatsoever. All actions taken
at the Closing shall be deemed to occur simultaneously.


                                    ARTICLE 3
                    REPRESENTATIONS AND WARRANTIES OF SELLER

      Seller hereby  represents  and warrants to Purchaser as of the date hereof
as follows:

      3.01    Organization   and   Good   Standing   of   Seller;    Power   and
Authority. Seller is a corporation duly organized, validly existing and in good
standing under the laws of Delaware. Seller has the requisite corporate power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of, and the
performance by Seller of its obligations under, this Agreement have been duly
and validly authorized by all necessary corporate action on the part of Seller.
No other corporate or shareholder proceedings on the part of Seller is necessary
to approve this Agreement or to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by Seller and
constitutes Seller's valid and binding obligations, enforceable against Seller
in accordance with its terms.

      3.02  Organization  and Good  Standing  of  American  Southern;  Power and
Authority. American Southern is a corporation duly organized, validly existing
and in good standing under the laws of Georgia. American Southern has all
requisite corporate power and authority to own or lease its properties and


                                      -6-


assets as now owned or leased. The copies of American Southern's articles of
incorporation and bylaws, as amended to date, which have been delivered to
Purchaser, are correct and complete and are in full force and effect.

      3.03 Capitalization and Ownership. American Southern's  authorized capital
stock consists solely of 300,000 shares of common stock, par value $10 per
share, 300,000 of which are currently issued and outstanding and none of which
are held in its treasury. All of such outstanding shares of American Southern
have been duly authorized, validly issued and are fully paid and nonassessable.
Such issued and outstanding shares constitute the Shares, all of which are owned
beneficially and of record by Seller, free and clear of any liens, encumbrances,
pledges, options, voting agreements, contractual rights or other claims
whatsoever, other than the security interest created pursuant to the InterRedec
Pledge. As of the Closing, the Shares will be solely owned, beneficially and of
record, free and clear of all liens, encumbrances, pledges, options, voting
agreements, contractual rights or other claims whatsoever. There are no
outstanding options, warrants, preemptive rights, agreements, calls,
commitments or demands of any character relating to the capital stock of
American Southern and no securities convertible into or exchangeable for any of
such capital stock.

      3.04  Subsidiaries.  American Southern owns, free and clear of all  liens
and encumbrances whatsoever, 100% of the issued and outstanding capital stock of
each Subsidiary. All of such outstanding shares of the Subsidiaries have
been duly authorized, validly issued and are fully paid and nonassessable. There
are no outstanding options, warrants, rights, agreements, calls, commitments or
demands of any character relating to the capital stock of any Subsidiary and no
securities convertible into or exchangeable for any of such capital stock.
Section 3.04 of the Seller Disclosure Memorandum accurately sets forth the
number of shares, classes and par values of the authorized and issued shares of
the Subsidiaries. American Southern does not, directly or indirectly, own any
stock of, or any other interest in, any Person other than the Subsidiaries,
except that American Southern may own interests held for investment purposes
not exceeding 10% of any such single Person. Each Subsidiary is a corporation
duly organized, validly existing and in good standing under the laws of its
incorporation, and each Subsidiary has all requisite corporate power and
authority to own or lease its properties and assets as now owned or leased. The
copies of the articles of incorporation and bylaws of each Subsidiary, as
amended to date, which have been delivered to Purchaser, are correct and
complete and are in full force and effect.

      3.05  Qualification. Each of the Companies is duly qualified or licensed 
to do business and is in good standing as a foreign corporation in each
jurisdiction in which such qualification or licensing is necessary under
Applicable Law, except where the failure to be so duly qualified or licensed or
in good standing would not have a Material Adverse Effect.

      3.06 No  Violation  of  Applicable  Laws or  Agreements. The execution and
delivery of this Agreement by Seller do not, and the consummation of the


                                      -7-


transactions contemplated by this Agreement and the compliance with the terms,
conditions and provisions of this Agreement by Seller, will not (a) violate or
conflict with any provision of Seller's or the Companies' articles of
incorporation or bylaws; (b) except as set forth in Section 3.06 of the Seller
Disclosure Memorandum, violate, conflict with or result in the breach or
termination of, or otherwise give any contracting party (which has not
consented to such execution, delivery and consummation) the right to change
the terms of, or to terminate or accelerate the maturity of, or constitute a
default under the terms of, any indenture, mortgage, loan or credit agreement
or any other material agreement or instrument to which any of Seller or the
Companies is a party or by which any of them or any of their assets may be bound
or affected, or any Applicable Law; (c) result in the creation or imposition of
any lien, charge or encumbrance of any nature whatsoever upon any of the
Companies' assets or give to others any interests or rights therein; other than
any such conflicts, breaches, terminations, accelerations, defaults or
violations that would not, individually or in the aggregate, have a Material
Adverse Effect.

      3.07  SEC Filings and  Financial  Statements.

      (a) Seller has  heretofore  delivered to Purchaser  copies of Seller's (i)
Annual  Report on Form 10-K for the fiscal year ended  December 31,  1994,  (ii)
Quarterly  Report on Form 10-Q for the fiscal  quarter ended June 30, 1995,  and
(iii) all other reports,  registration  statements and other  documents filed by
Seller  with the SEC since  December  31,  1994  (collectively,  the "Seller SEC
Filings").  Since  December  31,  1994,  Seller  has timely  filed all  reports,
registration  statements and other  documents  required to be filed with the SEC
under the rules and  regulations of the SEC, and all such reports,  registration
statements  and other  documents have complied in all material  respects,  as of
their respective  filing dates and effective dates, as the case may be, with all
applicable  requirements of the 1933 Act or the 1934 Act. As of their respective
filing and effective  dates,  none of such reports,  registration  statements or
other documents  contained any untrue statement of a material fact or omitted to
state a material  fact  required to be stated  therein or  necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.

      (b) Seller has delivered,  or prior to Closing will deliver,  to Purchaser
complete and correct copies of the following financial statements:

            (i)...the  Annual  Statements  of  each  of  American  Southern  and
American Safety filed with the Georgia Insurance Department for the years ending
December  31, 1992,  1993 and 1994,  together  with the  exhibits and  schedules
thereto (collectively the "Annual Statements");

            (ii)..the  Quarterly  Statements  of each of American  Southern  and
American  Safety filed with the Georgia  Insurance  Department  for the quarters
ending  March  31,  1995 and June  30,  1995,  together  with the  exhibits  and
schedules thereto (collectively, the "Quarterly Statements");



                                      -8-


            (iii).the  audited  balance  sheets (on a SAP basis),  statements of
income,  statements  of changes in capital and surplus,  and  statements of cash
flows of American  Southern on an  unconsolidated  basis as of and for the years
ended December 31, 1992, 1993 and 1994 (such financial statements, including all
notes and  schedules  thereto and the  independent  auditors'  report of Ernst &
Young LLP thereon,  being the  "Audited  Statements")  (the balance  sheet as of
December 31, 1994  included in the Audited  Statements  is referred to herein as
the "1994 Balance Sheet"); and

            (iv)..the  unaudited  balance  sheet (on a SAP  basis)  of  American
Southern on a  consolidated  basis  (consolidating  American  Southern  with the
Subsidiaries) as of June 30, 1995 (the "Balance Sheet Date"),  and the unaudited
statement  of  income  of  American  Southern  on a  consolidated  basis for the
six-month  period ending on the Balance Sheet Date  (collectively,  the "Interim
Unaudited Statements").

      The statutory financial statements contained in the Annual Statements (and
with  respect  to  clause  (ii)  below,  other  items  contained  in the  Annual
Statements) and the Audited Statements (i) have been prepared in conformity with
SAP using  comparable  estimates and assumptions  applied on a consistent  basis
with the  December  31, 1994  financial  statements,  except that the  financial
statements contained in the Quarterly  Statements are unaudited,  (ii) are true,
correct  and  complete  and in  accordance  with the books and  records  of each
Company,  respectively,  and (iii) present fully and fairly, on a SAP basis, the
financial  condition,  assets and  liabilities of each of American  Southern and
American Safety,  as the case may be, as of the respective dates thereof and the
results of operations and cash flows for the respective periods  indicated.  The
financial   statements   contained  in  the  Quarterly  Statements  include  all
adjustments  necessary for a fair presentation of the financial position of each
Company,  respectively, and the results of its operations for the interim period
presented,  subject to normal recurring year-end adjustments and the omission of
footnote  disclosures.  The Interim  Unaudited  Statements have been prepared in
accordance with SAP applied on a consistent basis throughout the period involved
and  present  fairly the  financial  condition,  assets and  liabilities  of the
Companies as of the  respective  dates thereof and the results of operations for
the period indicated,  subject to normal recurring year-end  adjustments and the
omission of footnote disclosures.

      (c) Seller has delivered to Purchaser  complete and correct  copies of the
Insurance  Holding Company System  Registration  Statement on Form B as filed by
American  Southern on behalf of itself and  American  Safety for the years ended
December 31, 1992, 1993 and 1994. Such Forms B, as well as the Annual Statements
and the Quarterly Statements,  when filed complied in all material respects with
the Georgia Insurance Code.

      3.08  Absence of Certain  Changes. Except as disclosed in Section 3.08 of 
the Seller Disclosure Memorandum, since the Balance Sheet Date (i) there has
been no occurrence having, or which would reasonably be expected to result in, a
Material Adverse Effect upon the Companies, and (ii)none of the Companies has


                                      -9-


taken any action that would be prohibited under Section 5.01 after the date
of this Agreement. Since the Balance Sheet Date, the business of the Companies
has been conducted only in the ordinary and usual course consistent with past
practice, except with respect to the transactions contemplated in this
Agreement.

      3.09 Reserves. All losses and loss adjustment expenses established and 
reflected in the 1994 Balance Sheet in respect of the Companies' insurance
policies was determined in accordance with generally accepted actuarial
standards, was based on actuarial estimates and assumptions that were reasonable
and appropriate to the relevant insurance policies and were recorded in
compliance with the applicable requirements of the Georgia Insurance Code.

      3.10 Tax  Matters. Except as set forth in Section 3.10 of the Seller 
Disclosure Memorandum:

      (a) None of the Companies  (i) is, or since  Seller's  acquisition  of the
Shares has been,  a member of an  affiliated  group of  corporations  within the
meaning of Section 1504 of the Code filing a consolidated or combined Tax Return
other than (A) the  affiliated  group of which Seller is the common  parent (the
"Seller Group") with respect to federal Tax Returns, and (B) an affiliated group
or  groups  consisting  solely  of  American  Southern  and  one or  more of the
Subsidiaries with respect to state Tax Returns (a "Subsidiary  Group");  or (ii)
has any  liability  for Taxes of any Person other than the members of the Seller
or Subsidiary Group.

      (b) Each Seller  Group and  Subsidiary  Group has (i) timely filed all Tax
Returns required to be filed by it; (ii) paid all Taxes shown to have become due
pursuant to such filed Tax  Returns;  and (iii) paid all other Taxes for which a
notice of assessment or demand for payment has been  received,  except where the
failure to file such Tax  Returns  or pay such  Taxes  would not have a Material
Adverse  Effect.  All Tax Returns of each Seller Group and Subsidiary  Group (i)
have been prepared in accordance  with all Applicable  Laws, and (ii) accurately
reflect  the  taxable  income (or other  measure of tax) of the  corporation  or
corporations  filing the same,  except  where the failure to do so has not had a
Material Adverse Effect on the Companies. All Taxes of the Companies for periods
after December 31, 1994 have been paid or are adequately reserved against on the
GAAP and SAP  books of the  Companies.  The  Companies  have  timely  filed  all
information  returns or reports,  including  Forms 1099, that are required to be
filed and have accurately  reported all  information  required to be included on
such  returns  or  reports.  True  copies of federal  income tax  returns of the
Companies included in the consolidated Tax Returns for the Seller Group for each
of the fiscal years ended December 31, 1992 through  December 31, 1994 have been
made  available  to  Purchaser.  True  copies of the state  Tax  Returns  of the
Companies  filed  most  recently  in each  state,  respectively,  in  which  the
Companies have filed Tax Returns have been delivered to Purchaser.

      (c) There are no proposed  assessments of Taxes against the Companies,  no
proposed  adjustments  to any Tax Return  pending  against the Seller Group with


                                      -10-


respect to the Companies'  operations or assets, and no proposed  adjustments to
the manner in which any Tax of the Seller  Group is  determined  with respect to
the  Companies'  operations  or  assets.  No  claim  has  been  made by a taxing
authority in a jurisdiction where the Companies do not file Tax Returns that any
of the Companies is or may be subject to taxation by that jurisdiction.

      (d) Since Seller's  acquisition  of the Shares,  none of the Companies has
(i) filed any consent  agreement under Section 341(f) of the Code, (ii) executed
or been the subject of a waiver or consent  extending  any statute of limitation
for any Tax liability that remains outstanding, (iii) joined in or been required
to join in filing a consolidated or combined federal,  state or local Tax Return
with any  corporation  other than a current or former member of the Seller Group
or Subsidiary  Group,  (iv) been the subject of a ruling of the Internal Revenue
Service or any state or local revenue authority that has continuing  application
to the  Companies,  (v) been the subject of a closing  agreement with any taxing
authority that has continuing  effect,  or (vi) granted a power of attorney with
respect to any Tax matters that has continuing  effect.  During the  immediately
preceding  three  years,  none of the  Companies  has  agreed  to make nor is it
required  to make any  adjustment  under  Section 481 of the Code by reason of a
change in accounting method or otherwise.

      (e)   Seller is not a "foreign  person"  within  the  meaning of Section
1445 of the Code.

      (f) Seller has no Knowledge of any matter  involving Taxes with respect to
the Seller Group that would make the  Companies  subject to joint and  severable
liability of Seller and is reasonably  likely to have a Material  Adverse Effect
on the Companies.


      3.11 Pending Litigation or  Proceedings. Except for  claims  under  
insurance contracts against the Companies in the ordinary course of business,
or as set forth in Section 3.11 of the Seller Disclosure Memorandum, there
are no claims, suits, actions, proceedings, arbitrations or investigations
pending, or to the Knowledge of Seller threatened, against or otherwise
relating to or involving any of the Companies or any of their properties, the
outcome of which would reasonably be expected to have a Material Adverse Effect
or to affect the ability of Seller to consummate the transactions contemplated
by this Agreement. Except as set forth in Section 3.11 of the Seller Disclosure
Memorandum, with respect to American Southern and American Safety (i) no
investigation or examination by any insurance regulatory authority is pending,
and (ii) no such investigation or examination has occurred since the date upon
which Seller acquired the Shares. Section 3.11 of the Seller Disclosure
Memorandum describes each instance in which either American Southern or American
Safety has been the subject of a fine or penalty by an insurance regulatory
authority since the date upon which Seller acquired the Shares.

      3.12 Compliance With Applicable  Laws. None of the  Companies  is in 
violation of any Applicable Law, except for possible violations that would


                                      -11-


not, individually or in the aggregate, have or be reasonably likely to have
a Material Adverse Effect. Each of the Companies holds all licenses, permits,
registrations and other authorizations required to conduct its business, and
all such licenses, permits, registrations and other authorizations are valid
and in full force and effect, except for those the absence of which are not
reasonably likely to have a Material Adverse Effect. Each of the Companies
is in compliance with all such licenses, permits, registrations and
authorizations, except for possible failures to be so in compliance which are
not reasonably likely to have a Material Adverse Effect.

      3.13 Consents and  Approvals. Except as set forth in Section 3.13 of the 
Seller Disclosure Memorandum, except as required under the Hart-Scott Act, and
except for the approval of the Georgia Insurance Department, the execution,
delivery and performance of this Agreement by Seller and the consummation of
the transactions contemplated hereby do not require any consent, approval or
authorization of, or registration or filing with, any Person or Governmental
Authority.

      3.14  Legal  Investments. The  bonds,  stocks and other investments  owned
beneficially or of record by the Companies are permissible investments for them
under the Georgia Insurance Code.

      3.15 Investment Assets  Custody. Section 3.15 of the Seller  Disclosure  
Memorandum contains a complete and correct list of all custodians and
depositories for investment assets of any of the Companies, and lists the
persons having signatory authority or access thereto on behalf of any of the
Companies.

      3.16  Insurance Issued.  All insurance policies and contracts  issued by
American Southern or American Safety now in force (other than policies and
contracts issued under applicable surplus lines laws) are on forms and at rates
approved by the insurance regulatory authority of the state or jurisdiction
where issued or have been filed with and not objected to by such authority
within the period provided for objection.

      3.17  Insurance Agents. Section 3.17 of the Seller Disclosure  Memorandum 
contains a complete and correct list of all insurance agencies and agents
authorized to write insurance on behalf of American Southern or American Safety
as of the date shown on such list. To the Knowledge of Seller, all such
agencies and agents are duly licensed with the insurance regulatory
authority of the state or jurisdiction in which such agency or agent writes
insurance on behalf of American Southern or American Safety.

      3.18  Title to Assets;  Material  Contracts.

      (a) Each of the Companies has (i) good and marketable  title, or valid and
binding  leasehold  rights  in the  case of  leased  property,  to all  material
personal  property  owned or leased by it, and (ii) valid and binding  leasehold
rights  to all  real  property  leased  by  it,  free  and  clear  of any  lien,
encumbrance,  mortgage,  pledge,  charge or security interest whatsoever,  other


                                      -12-


than those that would not,  individually  or in the  aggregate,  have a Material
Adverse Effect. None of the Companies owns any real property. Section 3.18(a) of
the Seller  Disclosure  Memorandum  contains a complete and accurate list of all
real property  leased by any of the Companies,  including the date of expiration
of each such lease.  All material items of personal  property owned or leased by
the  Companies  are in good  condition  and  repair,  reasonable  wear  and tear
excepted, and are usable in the ordinary course of business consistent with past
practices.  All of the  assets  that are being  used on a  regular  basis in the
business are being conveyed to Purchaser.

      (b)  Section  3.18(b)  of the  Seller  Disclosure  Memorandum  contains  a
complete and correct list of (i) all  reinsurance  agreements;  (ii) all loan or
credit  agreements,  mortgages,  indentures,  or other  agreements  for borrowed
money; (iii) all employment or compensation agreements with officers, directors,
employees,  agents (other than insurance  agents),  consultants  and independent
contractors;   and  (iv)  all  other  contracts,  leases,  agreements  or  legal
commitments of any kind, oral or written, formal or informal,  pursuant to which
any of the Companies  owes more than $50,000 per calendar  year (the  agreements
described  in (i)-(iv) and those that cannot be  terminated  upon 30 days notice
without payment or penalty are collectively the "Material Contracts"). Except as
described  in Section  3.18 of the Seller  Disclosure  Memorandum,  all Material
Contracts are in full force and effect,  and none of the Companies is in default
under,  nor has any event  occurred  which with the passage of time or giving of
notice or both would result in any of the Companies being in default under,  any
of the terms thereof.

      3.19  Employee Benefit Plans.

      (a) The only employee pension benefit plans (as defined in Section 3(2) of
ERISA),  welfare  benefit  plans (as defined in Section  3(1) of ERISA),  bonus,
stock purchase, stock ownership, stock option, deferred compensation,  incentive
or other  compensation  plan or  arrangement,  and other employee fringe benefit
plans  presently  maintained by, or contributed to by the Companies or by Seller
for the benefit of any current or former  employee  of the  Companies  are those
listed  in  Section  3.19 of the  Seller  Disclosure  Memorandum  (the  "Benefit
Plans").  None of the Benefit Plans are provided by Seller;  all of such Benefit
Plans are provided by American Southern.

      (b) American  Southern and each of the Benefit Plans, are in compliance in
all  material  respects  with  the  applicable  provisions  of ERISA  and  those
provisions of the Code applicable to the Benefit Plans.

      (c) All  contributions  to, and payments from, the Benefit Plans which may
have been  required to be made in  accordance  with the Benefit  Plans and, when
applicable,  Section  302 of ERISA or  Section  412 of the  Code,  have,  in all
material respects, been timely made.

      (d) There are (i) no pending  investigations by any Governmental Authority
involving  the Benefit  Plans,  (ii) no  termination  proceedings  involving the


                                      -13-


Benefit  Plans,  (iii) to Seller's  Knowledge,  no threatened or pending  claims
(except for claims for benefits  payable in the normal  operation of the Benefit
Plans), suits or proceedings against any Benefit Plan or asserting any rights or
claims to benefits  under any Benefit Plan which could give rise to any material
liability  and (iv) no facts which could give rise to any material  liability in
the event of such investigation, claim, suit or proceeding.

      (e) Neither the Benefit Plans,  American  Southern nor any employee of the
foregoing,  nor, to Seller's Knowledge,  any trusts created  thereunder,  or any
trustee,  administrator or other fiduciary thereof, has engaged in a "prohibited
transaction" (as such term is defined in Section 4975 of the Code or Section 406
of ERISA) which could  subject the Companies to the tax or penalty on prohibited
transactions imposed by such Section 4975 or the sanctions imposed under Title I
of ERISA.  Neither the Benefit Plans nor any such trust has been  terminated nor
to Seller's  Knowledge  have there been any  "reportable  events" (as defined in
Section  4043 of ERISA and the  regulations  thereunder)  with respect to either
thereof.

      (f) No Benefit Plan subject to Title IV of ERISA has incurred any material
liability to the Pension Benefit Guaranty Corporation other than for the payment
of  premiums,  all of which have been paid when due. No Benefit Plan has applied
for or received a waiver of the minimum funding standards imposed by Section 412
of the Code.

      (g) At no time for which any relevant statute of limitations  remains open
have (a) American  Southern,  (b) any employer  that is,  together with American
Southern,  treated as a "single employer" under Section 414(b), 414(c) or 414(m)
of the Code (an  "Affiliate"),  or (c) any  employer  that was at any time after
September 2, 1984,  an Affiliate  of American  Southern (a "Former  Affiliate"),
incurred any  liability  which could subject  Purchaser or American  Southern to
liability under Section 4062, 4063 or 4064 of ERISA.

      (h) At no time for which any relevant statute of limitations  remains open
have  American  Southern or any Affiliate or Former  Affiliate  been required to
contribute  to, or  incurred  any  withdrawal  liability  within the  meaning of
Section 4201 of ERISA, to any multiemployer  pension plan, within the meaning of
Section 3(37) of ERISA,  which  liability has not been fully paid as of the date
hereof.

      (i)  American  Southern has  complied in all  material  respects  with the
notice and continuation  coverage  requirements of Section 4980B of the Code and
the  regulations  thereunder  with  respect to each Benefit Plan that is, or was
during  any  taxable  year  of  American  Southern  for  which  the  statute  of
limitations  on the  assessment of federal income taxes remains open, by consent
or  otherwise,  a group health plan within the meaning of Section  5000(b)(1) of
the Code.

      (j) American  Southern has not  incurred and is not  reasonably  likely to
incur any liability that is or could reasonably be expected to become a material
liability  of American  Southern  with respect to any plan or  arrangement  that


                                      -14-


would be included  within the definition of "Benefit Plan" hereunder but for the
fact  that such  plan or  arrangement  was  terminated  before  the date of this
Agreement.

      (k) No payment which is or may be made by American  Southern,  or from any
Benefit Plan, to any employee,  former  employee,  director or agent of American
Southern  under the terms of any Benefit  Plan,  either alone or in  conjunction
with any other payment,  will or could be  characterized  as an excess parachute
payment under Section 28OG of the Code.

      3.20  Compensation   Arrangements;   Bank   Accounts;   Officers   and
Directors. Section 3.20 of the Seller Disclosure Memorandum sets forth the
following information:

      (a)  the  name  and  current  annual  salary,   including  any  bonus,  if
applicable, of each of the present officers and employees of the Companies whose
current  annual  salary,  including any promised or customary  bonus,  equals or
exceeds  $100,000,  together  with a  statement  of the full  amount of all cash
remuneration  paid by the  Companies  to each such person and to any director of
the Companies, during the twelve-month period ending on August 31, 1995;

      (b) the name of each bank in which any of the  Companies has an account or
safe deposit box, the identifying numbers thereof,  and the names of all persons
authorized to draw thereon or to have access thereto; and

      (c) the  name  and  title  of each  director  and  officer  of each of the
Companies and of each trustee,  fiduciary or plan  administrator of each Benefit
Plan.

      3.21  Transactions  With  Related  Parties. Except as disclosed in Section
3.21 of the Seller Disclosure Memorandum, no Related Party:

      (a)   has borrowed  money or loaned money to any of the Companies  which
will not be repaid on or before Closing;

      (b)   has any  contractual  or other claim against any of the Companies;
or

      (c) had,  since  January 1, 1993,  any  interest in any property or assets
used by the Companies in its business.

      3.22 Labor  Relations. Except as disclosed in Section 3.22 of the Seller 
Disclosure Memorandum, (a) no employee of any of the Companies is represented
by any union or other labor organization; (b) there is no unfair labor
practice complaint against any of the Companies pending or overtly
threatened before the National Labor Relations Board; and (c) there is no labor
strike, dispute, slow down or stoppage actually pending or, to the Knowledge of
Seller, threatened against or involving any of the Companies.



                                      -15-


      3.23  Brokerage.  None of  Seller or the  Companies  has made any
agreement or taken any other action which might cause anyone to become entitled
to a broker's fee or commission as a result of the transactions contemplated
hereby.

      3.24 Insurance. All of the Companies' properties and assets of an
insurable nature and of a character usually insured by companies of similar size
and in similar businesses are insured by the Companies in such amounts and
against such losses, casualties or risks as is (a) usual in such companies and
for such properties, assets and businesses, or (b) required by any Applicable
Law. Section 3.24 of the Seller Disclosure Memorandum contains a complete and
accurate list of all insurance policies held or owned by the Companies relating
to their business now in force. All such policies are in full force and effect.


                                    ARTICLE 4
                   REPRESENTATIONS AND WARRANTIES OF PURCHASER

      Purchaser  hereby  represents and warrants to Seller as of the date hereof
as follows:

      4.01   Purchaser's    Organization   and   Good   Standing;    Power   and
Authority. Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of Georgia. Purchaser has the requisite
corporate power and authority to execute and deliver this Agreement and
to consummate the transactions contemplated hereby. The execution and
delivery of, and the performance by Purchaser of its obligations under, this
Agreement have been duly and validly authorized by all necessary corporate
action on the part of Purchaser. No other corporate or shareholder
proceedings on the part of Purchaser are necessary to approve this
Agreement or to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by Purchaser and
constitutes Purchaser's valid and binding obligation, enforceable against
Purchaser in accordance with its terms.

      4.02 No  Violation  of  Applicable  Laws or  Agreements. The execution and
delivery of this Agreement do not, and the consummation of the transactions
contemplated by this Agreement and the compliance with the terms, conditions
and provisions of this Agreement by Purchaser, will not (a) violate or conflict
with any provision of Purchaser's articles of incorporation or bylaws; (b)except
as set forth in Section 4.02 of the Purchaser Disclosure Memorandum, violate,
conflict with or result in the breach or termination of, or otherwise give any
contracting party (which has not consented to such execution, delivery and
consummation) the right to change the terms of, or to terminate or accelerate
the maturity of, or constitute a default under the terms of, any indenture,
mortgage, loan or credit agreement or any other material agreement or instrument
to which Purchaser is a party or by which any of its assets may be bound or
affected, or any Applicable Law; (c) result in the creation or imposition of any
lien, charge or encumbrance of any nature whatsoever upon any of Purchaser's
assets or give to others any interests or rights therein; other than any
such conflicts, breaches, terminations, accelerations, defaults or violations


                                      -16-


that would not, individually or in the aggregate, have a Material Adverse
Effect.

      4.03 Pending Litigation or  Proceedings. Except as set forth in  Section
4.03 of the Purchaser Disclosure Memorandum, there are no claims, suits,
actions, proceedings, arbitrations or investigations pending or, to the
Knowledge of Purchaser, threatened, against or otherwise relating to or
involving Purchaser or any of its properties, the outcome of which would
reasonably be expected to have a Material Adverse Effect or to affect the
ability of Purchaser to consummate the transactions contemplated by this
Agreement.

      4.04 Brokerage. Purchaser has not made any agreement or taken any other 
action which might cause anyone to become entitled to a broker's fee or
commission as a result of the transactions contemplated hereby.

      4.05 Investment Intent; Ability to Bear Risk.  Purchaser is acquiring the
Shares for investment for its own account and not with a view to, or for offer
or sale in connection with, ny public distribution thereof. Purchaser has not
been and is not involved with any Person concerning an Alternative Transaction
(as such term is defined in Section 5.07). Purchaser is familiar with the
property and casualty insurance business, and has the requisite knowledge and
experience to evaluate the merits and risks of its acquisition of the Shares.

      4.06  SEC Filings and  Financial  Statements.

      (a) Purchaser has heretofore delivered to Seller copies of Purchaser's (i)
Annual  Report on Form 10-K for the fiscal year ended  December 31,  1994,  (ii)
1994 Annual Report to Shareholders,  (iii) Quarterly Report on Form 10-Q for the
fiscal  quarter ended June 30, 1995,  and (iv) all other  reports,  registration
statements  and other  documents  filed by Purchaser with the SEC since December
31, 1994 (collectively,  the "Purchaser SEC Filings").  Since December 31, 1994,
Purchaser  has  timely  filed all  reports,  registration  statements  and other
documents  required to be filed with the SEC under the rules and  regulations of
the SEC, and all such reports,  registration statements and other documents have
complied in all  material  respects,  as of their  respective  filing  dates and
effective  dates,  as the case may be, with all applicable  requirements  of the
1933 Act or the 1934 Act. As of their  respective  filing and  effective  dates,
none of such reports,  registration  statements or other documents contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated  therein or necessary in order to make the statements  therein,  in
light of the circumstances under which they were made, not misleading.

      (b) The audited  consolidated  financial  statements and unaudited interim
consolidated  financial  statements of Purchaser  contained or  incorporated  by
reference in the Purchaser  SEC Filings have been  prepared in  conformity  with
GAAP,  and,  together with the notes thereto,  present  fairly the  consolidated


                                      -17-


financial  position of Purchaser and its subsidiaries at the dates shown and the
consolidated  results of their operations,  changes in stockholders'  equity and
cash flows for the  periods  then  ended.  The  unaudited  interim  consolidated
financial statements as of, and for, the period ending June 30, 1995 include all
adjustments  necessary  for a fair  presentation  of the  financial  position of
Purchaser and its subsidiaries  and the results of their  respective  operations
for the  interim  periods  presented,  subject  to  normal,  recurring  year-end
adjustments and the omission of footnote disclosures.

      4.07  Absence of Certain  Changes.  Except as disclosed  in  Section  4.07
of the Purchaser Disclosure Memorandum or as specifically disclosed in the
Purchaser SEC Filings, since June 30, 1995 (i)there has been no occurrence
having, or which would reasonably be expected to result in, a Material Adverse
Effect upon Purchaser. Since June 30, 1995, the business of Purchaser has been
conducted only in the ordinary and usual course consistent with past practice,
except with respect to transactions contemplated in this Agreement.

      4.08 Consents and  Approvals. Except as set forth in Section 4.08 of the
Purchaser Disclosure Memorandum, except as required under the Hart-Scott Act,
and except for the approval of the Georgia Insurance Department, the
execution, delivery and performance of this Agreement by Purchaser and the
consummation of the transactions contemplated hereby do not require any consent,
approval or authorization of, or registration or filing with, any Person or
Governmental Authority.


                                    ARTICLE 5
                   CERTAIN ADDITIONAL COVENANTS AND AGREEMENTS

      5.01 Operation of Business Pending  Closing.  Prior to the Closing  Date,
except with the prior consent of Purchaser and except as necessary to effect
the transactions contemplated in this Agreement, (a) Seller shall cause the
Companies to conduct their business in the usual and ordinary course as
currently being conducted, and (b) without limiting the generality of the
foregoing clause (a), Seller shall cause each of the Companies not to do any
of the following:

            (i)...amend its  articles of  incorporation  or bylaws,  or merge,
consolidate, liquidate or dissolve;

            (ii)..issue  any  capital  stock,  any  securities   convertible  or
exchangeable into capital stock, or any options, warrants or rights with respect
to capital stock, or split, subdivide or reclassify its capital stock;

            (iii).declare or pay any dividend or make any other  distribution on
its  capital  stock  other  than cash  dividends  on the Shares in an amount not
exceeding $300,000 per month;



                                      -18-


            (iv)..increase the compensation or benefits of officers or employees
of the Companies or pay any bonuses  except for normal and  customary  increases
made or bonuses paid or accrued in accordance with past practices;

            (v)...except in the ordinary course of business, create or incur any
lien, encumbrance,  mortgage,  pledge, charge or security interest whatsoever on
any of its  properties;  or,  except for the issuance of insurance  contracts or
policies  and the  settlement  of  insurance  claims in the  ordinary  course of
business,  incur or assume any  guaranty  or other  liability  to  discharge  an
obligation of another, or incur or assume any obligations for money borrowed, or
cancel or discount any material debt owed to it;

            (vi)..enter into or terminate any Material Contract;

            (vii).make any  expenditure  for fixed assets in excess of $25,000
for any single item or $100,000 in the aggregate;

            (viii)      do or fail to do  anything  that  will  cause a breach
of, or default under, any Material Contract; or

            (ix)..make  any  change  of a  material  nature  in  the  Companies'
accounting procedures, methods, policies or practices or the manner in which the
Companies maintain their records.

      5.02 Access to  Information. Between the date hereof and the Closing Date,
Seller shall give, and shall cause the Companies to give, to Purchaser and its
authorized representatives, during normal business hours, access to all of the
Companies' properties, contracts, books and records, and Seller shall furnish,
and shall cause the Companies to furnish, to Purchaser and its authorized
representatives such additional financial, legal and other information with
respect to the Companies that Purchaser may reasonably request. Purchaser shall
use such information solely for the purpose of conducting business, legal
and financial reviews of the Companies and for such other purposes as may
be related to this Agreement. Purchaser shall maintain the confidentiality
of all such information (other than information that is in the public domain or
otherwise ascertainable from public or outside sources) except to the extent
that disclosure is required by judicial process or governmental regulatory
authorities, in which case Purchaser shall give Seller prompt notice in order
that Seller may seek to obtain a protective order.

      5.03  Supplements  to  Disclosure  Memoranda. At any time and from time to
time between the date hereof and the date that is two business days prior to the
Closing Date, Seller and Purchaser shall have the right and the continuing
obligation to supplement their respective Disclosure Memoranda with respect
to any matter arising or coming to the Knowledge of Seller or Purchaser
after the date hereof that, if existing, occurring or known at such date,
would have been required to be set forth or described in such Disclosure
Memorandum. A party receiving a supplemented Disclosure Memorandum within 10
days prior to the anticipated Closing Date may unilaterally extend the time of
the Closing up to 10 days from the receipt of the supplement for the sole


                                      -19-


purpose of reviewing the supplemental Disclosure Memorandum. If, in the
recipient party's reasonable determination, any such supplements provided by
the other party reveal any Material Adverse Effect or any condition or event
that would be reasonably likely to result in a Material Adverse Effect, the
recipient party may terminate this Agreement.

      5.04  Certain Tax Matters.

      (a) Except as  otherwise  provided in this Section  5.04,  all tax sharing
agreements,  arrangements,  policies and guidelines, formal or informal, express
or implied,  that may exist between the Companies and Seller or their affiliates
and all obligations  thereunder  shall terminate as of the Closing Date, and the
Companies  shall have no  liability  thereunder  for any and all  amounts due in
respect  to  periods  prior  to the  Closing  Date.  Notwithstanding  any  other
provision  of this  Agreement,  Seller  and the  Companies  may make  reasonable
payments pursuant to such tax sharing agreements and understandings prior to the
Closing Date in amounts consistent with past practices and procedures under such
tax sharing  agreements and the Tax Allocation  Agreement shall remain in effect
until any  overpayments  or  underpayments  are adjusted in accordance with past
practices and procedures.

      (b) The Companies  shall continue to be included,  up to and including the
Closing Date, in the Seller Group's  consolidated  federal income Tax Return and
any required  state or local  consolidated  or combined  income Tax Returns that
include any of the Companies (all such Tax Returns  including taxable periods of
the Companies  ending on or before the Closing Date are hereinafter  referred to
as "Pre-Closing Consolidated Returns").

            Seller  shall timely  (which shall not preclude  obtaining or filing
normal or  customary  extensions)  prepare and file (or cause to be prepared and
filed) all Pre-Closing  Consolidated  Returns and all other Tax Returns required
to be filed on or before the Closing  Date with  respect to the  Companies  (the
"Seller Group Returns"). Seller shall timely pay (or cause to be paid) all Taxes
shown as due and payable on the Seller Group Returns ("Seller's Taxes").

            Purchaser and Seller agree that if the Companies are permitted under
any  Applicable  Law  relating to state or local income tax to treat the Closing
Date as the last day of a taxable period,  Purchaser and Seller shall treat (and
cause their respective  affiliates to treat) the Closing Date as the last day of
a taxable  period,  and any Tax Return for such a period  shall be  considered a
Seller Group Return for purposes hereof.

      (c) Purchaser  shall timely (which shall not preclude  obtaining or filing
normal or customary  extensions) prepare and file (or cause to be filed) all Tax
Returns required by Applicable Law for the Companies that are not required to be
prepared  and  filed  by  Seller  pursuant  to  Section  5.04(b)   ("Purchaser's
Returns").  Any Purchaser's  Return including a period prior to the Closing Date


                                      -20-


shall be prepared in a manner  consistent with prior practice and copies of such
Purchaser's Returns shall be delivered to Seller. Purchaser shall timely pay (or
cause to be paid) all Taxes shown as due and payable on the Purchaser's  Returns
("Purchaser's Taxes").

      (d) After the Closing  Date,  Seller shall  submit to Purchaser  blank Tax
Return workpaper packages reasonably  necessary for Seller to prepare any Seller
Group  Returns.  Purchaser  shall cause the Companies to prepare  completely and
accurately  all  information  that  Seller  shall  reasonably  request  in  such
workpaper  packages and shall submit to Seller such packages within the later of
90 days  after  Purchaser's  receipt  thereof  or 60 days after the close of the
taxable period to which a workpaper package relates.  Each party shall cooperate
with the other in connection with any tax filing, investigation,  audit or other
proceeding.  Purchaser  and Seller and their  subsidiaries  shall  preserve  all
information,  returns,  books, records and documents relating to any liabilities
for Taxes with respect to a taxable  period until the later of the expiration of
all applicable  statutes of limitation and extensions thereof, or the conclusion
of all litigation with respect to Taxes for such period.

      (e) After the Closing  Date,  Seller  shall  indemnify  and hold  harmless
Purchaser  from and against any Tax  liability  with respect to (i) any Seller's
Taxes; (ii) the Florida Tax Litigation;  and (iii) any increase in Tax liability
resulting from the Companies being severally  liable for any Taxes of the Seller
Group or any other consolidated group of which any of the Companies was a member
prior to the Closing Date pursuant to Treasury  Regulations  Section 1.1502-6 or
any analogous  state or local tax  provision;  provided that Seller's  liability
under clause (ii) shall be subject to the  limitation  of paragraph  7.01(c) and
shall be treated, solely for purposes of such subparagraph, as Damages and Costs
and, provided,  further,  that Seller shall have no indemnification  obligations
with respect to amounts that have been accrued in the Audited Statements and the
Interim  Unaudited  Statements  (as such terms are  defined  in Section  3.07(b)
hereof) and any regularly prepared financial  statements for a period after June
30, 1995.  Subject to the provisions of the third paragraph of Section  5.04(f),
Seller  shall pay such amounts as they are  obligated to pay to Purchaser  under
the  preceding  sentence  within 15 days  after  payment of any  applicable  Tax
liability by Purchaser  or the  Companies  and, to the extent not paid by Seller
within such 15-day period,  shall  thereafter  include  interest  thereon at the
Prime Rate (reported as of the last day of such 15-day period).

            After the Closing Date,  Purchaser and the Companies shall indemnify
and hold harmless  Seller and its affiliates  from and against any Tax liability
with respect to  Purchaser's  Taxes that are  allocable to or  apportioned  to a
period after the Closing Date.  Purchaser  shall pay such amounts within 15 days
after payment of any such Tax liability by Seller or any of their affiliates and
to the extent not paid by Purchaser  within such 15-day period shall  thereafter
include  interest thereon at the Prime Rate (reported as of the last day of such
15-day period).

      (f) In the event that Purchaser or any of the Companies  receives  notice,
whether  orally or in writing,  of any  pending or  threatened  federal,  state,
local,  municipal  or foreign tax  examinations,  claims  settlements,  proposed


                                      -21-


adjustments,  assessments or  reassessments  or related  matters with respect to
Taxes  that  could  affect the Seller  Group,  or if Seller  receives  notice of
matters that could affect Purchaser or the Companies, the party receiving notice
shall notify in writing the  potentially  affected party within 10 days thereof.
The failure of any party to give the notice required by this paragraph shall not
impair that party's  rights under this  Agreement  except to the extent that the
other parties demonstrate that they have been damaged thereby.

      Subject to Section  5.04(g),  each of Seller and Purchaser (as applicable,
the  "Controlling  Party")  shall  have  the  right  to  control  any  audit  or
examination  by any taxing  authority,  initiate any claim for refund,  file any
amended  return,  contest,  resolve,  settle and defend against any  assessment,
notice of deficiency or other adjustment or proposed  adjustment  relating to or
with  respect to those Tax  Returns  that each is  required  to prepare and file
pursuant to Sections 5.04(b) and (c);  provided that, in the event that any such
adjustment  could have an adverse effect on the Tax liability of the other party
(or affect the Purchaser by having an adverse effect on the Tax liability of the
Companies,  or affect Seller by having an adverse effect on the Tax liability of
the Seller Group) (the "Affected  Party"),  the Controlling Party (i) shall give
the Affected Party written notice of any such adjustment,  (ii) shall permit the
Affected Party to participate in the proceeding to the extent the adjustment may
adversely  affect the Tax  liability of the  Affected  Party and (iii) shall not
settle or otherwise compromise such proceeding without the prior written consent
of the Affected  Party,  which  consent  shall not be  unreasonably  withheld or
delayed.  Except as  specified  in Section  5.04(g) or the  following  sentence,
Seller and  Purchaser  shall each be  entitled to retain for its own account any
refunds of Taxes  attributable  to those Tax  Returns  that each is  required to
prepare and file pursuant to Sections 5.04(b) and (c) and shall pay to the other
the amount of any refund to which the other is entitled within 15 days after the
receipt of such refund  and,  to the extent not paid within such 15-day  period,
shall thereafter include interest at the Prime Rate (reported as of the last day
of such 15-day period).  In the case of Purchaser,  a refund attributable to any
Purchaser's Return including a period prior to the Closing Date shall be divided
between  Purchaser  and Seller by  recomputing  the portion of Tax as readjusted
that is allocable to a period prior to the Closing Date.

      Notwithstanding  the  foregoing,  but subject to Section  5.04(g),  Seller
shall  have the  exclusive  right to  direct  and to  control  the  Florida  Tax
Litigation  and to initiate  any claim for refund,  file any amended  return and
contest, resolve, settle and defend against such litigation. Purchaser shall use
its best efforts to assist Seller in connection with the Florida Tax Litigation,
including,  without limitation,  providing Seller access to information relating
to  the  Florida  Tax  Litigation  that  is in  Purchaser's  or  the  Companies'
possession and making  available the officers and employees of Purchaser and the
Companies to provide  assistance and information in connection  therewith and to
continue  to have the  Companies  participate  as  litigants  in the Florida Tax
Litigation.

      (g) To the extent permitted under  applicable law,  neither  Purchaser nor
the Companies shall carry back any tax attribute  ("Purchaser Tax Attribute") to
a  period  ending  on  or  before  the  Closing  Date  ("Pre-Closing   Period").


                                      -22-


Notwithstanding  anything to the contrary contained in this Section 5.04(g),  if
the failure to carry back a Purchaser  Tax  Attribute is not permitted by law or
would be unreasonably  burdensome to Purchaser,  Purchaser may request Seller to
waive the restrictions  imposed by this Section 5.04(g),  and Seller shall agree
to such request unless  Seller's  obligations  hereunder  would be  unreasonably
burdensome to Seller.  If Seller agrees to such request,  and Purchaser  carries
back a Purchaser Tax Attribute to a Pre-Closing  Period,  Seller shall  promptly
file (or  cause to be filed) a claim  for  refund  and shall pay (or cause to be
paid) to Purchaser the full amount of any  resulting Tax Benefit  within 30 days
of the date such Tax  Benefit is  realized,  but only to the extent  that Seller
would not otherwise  have been entitled to utilize such Tax  Attribute.  The Tax
Benefit shall be recomputed  and any payment made in excess of the  redetermined
Tax Benefit  shall be  refunded  if and to the extent  that Seller  subsequently
realizes tax  attributes  that could have been utilized but for the carryback of
Purchaser Tax Attributes  pursuant to this Section 5.04(g).  Such  recomputation
shall assume that the tax  attributes of Seller were utilized first and that the
Purchaser  Tax  Attributes  carried  back by  Purchaser  were then  utilized  in
accordance with Applicable Law. For purposes hereof, "Tax Benefit" shall mean

            (i)...in the case of any Tax Return,  the sum of the amount by which
the Tax liability is reduced (or the Tax refund is increased)  plus any interest
(net of Taxes, if any,  thereon) relating to such Tax liability (or Tax refund),
and in the case of a consolidated  federal income Tax Return or  unconsolidated,
combined,  unitary or similar state,  local or other Tax return,  the sum of the
amount by which the Tax liability of the  affiliated  group of  corporations  is
reduced (or Tax refund is increased)  plus any interest  (net of Taxes,  if any,
thereon) from such government or jurisdiction  relating to such Tax liability or
Tax refund;

            (ii)..a Tax Benefit shall be deemed to have been realized (A) at the
time any  refund of Taxes is  received,  (B) at the time any  refund of Taxes is
applied against other Taxes due (which, in the case of refunds so applied in the
course of an audit or other proceeding,  shall be the date on which the audit or
other  proceeding  is  finalized)  or (C) at the time a  liability  for Taxes is
otherwise reduced (which, in each case, shall be 2 1/2 months after the close of
the year in which such liability for Taxes arose); and

            (iii).where a party has other losses, deductions, credits or similar
items available to it, losses, deductions,  credits or items for which the other
party would be entitled to a payment  under this  Agreement  shall be treated as
the last items utilized to produce a Tax Benefit.

      (h)  Purchaser  and Seller agree that any  indemnification  payments  made
pursuant to this  Section 5.04 or Article 7 shall be treated for tax purposes as
an adjustment to the Purchase Price unless otherwise required by Applicable Law.

      (i)  Notwithstanding  SAP accrual  requirements,  in preparing the Closing
Balance Sheet, an accrual of liability for Taxes(to the extent not paid prior to
Closing),  will be included in such Closing Balance Sheet and shall only reflect


                                      -23-


(as a liability  for amounts  unpaid net of amounts  prepaid) the portion of the
Companies'  Taxes  allocable to the period up to and  including the Closing Date
("the Companies'  Accrued Taxes").  Such allocable portion shall, in the case of
Taxes  that are based on  income  or gross  receipts,  be  determined  as if the
Closing Date were the last day of any applicable taxable period and, in the case
of other Taxes, be apportioned  ratably on a daily basis. Except as specified in
the preceding  sentence or the Tax  Allocation  Agreement,  the Closing  Balance
Sheet  specifically  shall not reflect a liability for Taxes allocable to Seller
Group Returns, which Taxes are solely the responsibility of Seller.

      (j) Seller agrees that upon  Purchaser's  request it shall file, or caused
to be filed,  all documents  reasonably  necessary for the making of an election
under Section 338(h)(10) of the Code (or, at Purchaser's  request, any analogous
provision of any state or local tax law) and in such case shall file or cause to
be filed all tax returns  consistent  with such  election or  elections.  Seller
agrees to provide Purchaser with all relevant  information to analyze the impact
of a Section 338(h)(10) election. In the event Purchaser determines to make such
an election, Purchaser shall provide to Seller in writing a determination of the
allocation of the Purchase Price among the assets of the Companies. Seller shall
accept any such reasonable  allocation by Purchaser,  and Seller,  Purchaser and
the  Companies  shall  file all Tax  Returns  in a manner  consistent  with such
allocation.

      5.05  Regulatory  Approvals  and  Consents.

      (a) As soon as  practicable,  but in any event  within 30 days,  after the
date hereof:

            (i)...Each of Purchaser  and Seller will make all necessary  filings
under the Hart-Scott Act. Each party shall pay the expenses of preparing its own
filing, and Purchaser shall pay the $45,000 filing fee.

            (ii)..Purchaser shall file with the Georgia Insurance Department all
Form(s) A required  to request  such  Department's  approval  of the  changes in
control of American  Southern and  American  Safety that will be effected by the
transfer of the Shares. Seller shall cause the Companies to cooperate reasonably
with Purchaser in preparing the Form(s) A. Not less than 10 days prior to making
such filing,  Purchaser shall deliver a copy of the filing materials to American
Southern, and American Southern shall be entitled to provide comments thereon to
Purchaser  within 5 days  after  receipt.  Seller  shall,  and  shall  cause the
Companies to, support such filing by Purchaser, so long as it is consistent with
this Agreement,  and Purchaser shall use its best efforts to obtain the approval
of the Georgia  Insurance  Department for the changes in control.  All costs and
fees of making such filings shall be paid by Purchaser.

      (b) Seller and Purchaser  shall promptly advise the other of all oral, and
promptly  provide  each  other  with  copies  of  all  written,  communications,


                                      -24-


requests,  inquiries  or other  notifications  received  from  any  Governmental
Authorities with respect to the transactions contemplated hereby.

      (c) Seller shall take all  reasonable  action  required to obtain prior to
Closing all consents with respect to the material  agreements  listed in Section
5.05(c) of the Seller Disclosure Memorandum.  To the extent any such consent has
not been  obtained,  Seller  shall  continue  its efforts to obtain such consent
after the Closing. In order, however, that the full value of every such material
agreement may be realized by Purchaser,  at Purchaser's  request,  direction and
expense,  Seller shall take all such action as shall be reasonably  necessary or
appropriate (i) in order to preserve for the benefit of Purchaser the rights and
obligations  of  Seller  under  such  agreements,  and  (ii) to  facilitate  the
collection  of any monies due and  payable,  or to become  due and  payable,  to
Seller  pursuant  to such  agreements,  and Seller  shall  remit such  monies to
Purchaser  within five business days of collection.  Purchaser shall be entitled
to the  benefits  accruing  after the Closing Date of any such  agreements,  and
Purchaser,  at its expense,  shall perform all of Seller's obligations due to be
performed under any such agreements to the extent (i) Purchaser can perform such
obligations  without violating the terms of such agreements,  and (ii) Purchaser
is being provided the benefits of such agreements.

      (d)  Purchaser  shall take all  reasonable  action  required to obtain all
consents and approvals  listed in Section  5.05(d) of the  Purchaser  Disclosure
Memorandum.

5.06 Best Efforts. Each of the parties hereto agrees to use its best
efforts to take, or to cause to be taken, all reasonable actions and to do, or
to cause to be done, all reasonable things necessary, proper or advisable under
Applicable Laws to consummate the transactions contemplated by this
Agreement. None of the parties hereto will intentionally take or intentionally
permit to be taken any action that would be in breach of the terms or provisions
of this Agreement or that would cause any of the representations contained
herein to be or become untrue.

      5.07 Exclusive Dealings. Unless and until this Agreement is terminated  
prior to Closing pursuant to Article 8, neither of the Seller nor any of
Seller's affiliates, officers, directors, agents or advisers shall, directly
or indirectly, solicit, encourage or initiate any discussions or negotiations
with, provide any information to, or otherwise cooperate in any other way with
any Person (other than Purchaser) concerning any direct or indirect
purchase of the Shares or of any substantial amount of the assets or properties
of the Companies (an "Alternative Transaction").

      5.08  Expenses.  Whether or not the  Closing  occurs, except as otherwise
stated herein, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party
incurring such expense.

      5.09  Resignations. At Closing,  Seller will deliver written resignations
of the Companies' directors.



                                      -25-


      5.10 Maintenance of Records. For a period of 7 years after Closing, or for
any longer period (i) as may be required by any federal, state, local or
foreign Governmental Authority, (ii) as may be reasonably necessary in
respect of the prosecution or defense of any suit, action, litigation or
administrative, arbitration or other proceeding or investigation that is pending
or threatened at the time of any notice to Purchaser while such records are
still maintained, or (iii) that is equivalent to the period established by
any applicable statute of limitations (or any extension or waiver thereof) with
respect to matters pertaining to Taxes, Purchaser shall maintain and shall allow
Seller, during normal business hours, through its employees and representatives,
the right, at Seller's expense, to examine and make copies of, the books and
records of the Companies pertaining to the Companies' business prior to the
Closing Date, for any reasonable business purpose.

      5.11  Proposals.  Purchaser  shall promptly notify Seller of any inquiries
or proposals by any Person concerning an Alternative Transaction.

      5.12  Press  Releases.  Except as  otherwise required  by Applicable  Law,
Purchaser and Seller shall consult with each other in advance concerning any
proposed press release or public announcement pertaining to the transactions
contemplated by this Agreement, and no such release or announcement shall be
made unless both parties have agreed as to the timing, manner and content
thereof in their reasonable judgment.

      5.13 GAAP Financial Statements.  Promptly following the Closing, Purchaser
shall cause the Companies to prepare and deliver to Seller GAAP financial
statements of the Companies from January 1, 1995 through the Closing Date.


                                    ARTICLE 6
                              CONDITIONS TO CLOSING

      6.01 Conditions to Obligations of  Purchaser. The obligations of Purchaser
to proceed with the Closing under this Agreement are subject to the fulfillment
prior to or at Closing of the following conditions (any one or more of which
may be waived in whole or in part by Purchaser at Purchaser's option):

      (a)  The  representations  and  warranties  of  Seller  contained  in this
Agreement  shall be true and correct in all  material  respects on and as of the
time of Closing,  with the same force and effect as though such  representations
and  warranties  had been  made on,  as of and with  reference  to such time and
Purchaser  shall  have  received  a  certificate  to such  effect  signed  by an
authorized officer of Seller.

      (b) Seller  shall  have  performed  in all  material  respects  all of the
covenants  and  complied in all  material  respects  with all of the  provisions
required by this  Agreement to be performed or complied  with by it on or before
the Closing,  and Purchaser  shall have  received a  certificate  to such effect
signed by an authorized officer of Seller.



                                      -26-


      (c) The  applicable  waiting  period  under  the  Hart-Scott  Act (and any
extension thereof) shall have expired or been terminated.

      (d) The Georgia  Insurance  Department  shall have approved the changes in
control of American Southern and American Safety effected by the transfer of the
Shares.

      (e) Seller shall have  obtained a release from the  InterRedec  Pledge and
the InterRedec Escrow of all of the shares subject to the InterRedec Pledge.

      (f) No order of any  court or  administrative  agency  shall be in  effect
which enjoins or prohibits the transactions  contemplated  hereby or which would
limit or materially  adversely  affect  Purchaser's  ownership or control of the
Companies  or the  business  of the  Companies,  and  there  shall not have been
threatened,  nor shall there be pending,  any action or  proceeding by or before
any Governmental Authority (i) challenging any of the transactions  contemplated
by this Agreement or seeking  monetary  relief by reason of the  consummation of
such  transactions  or (ii) which  might have a Material  Adverse  Effect on the
future conduct of the business of the Companies.

      (g) There shall not have occurred any Material Adverse Effect with respect
to the Companies, or any condition or event which is reasonably likely to result
in a Material Adverse Effect, subsequent to June 30, 1995.

      6.02  Conditions to  Obligations  of  Seller. The  obligations  of Seller
to proceed with the Closing under this Agreement are subject to the
fulfillment prior to or at Closing of the following conditions (any one or more
of which may be waived in whole or in part by Seller at Seller's option):

      (a) The  representations  and  warranties  of Purchaser  contained in this
Agreement  shall be true and correct in all  material  respects on and as of the
time of Closing,  with the same force and effect as though such  representations
and  warranties  had been made on, as of and with  reference  to such time,  and
Seller shall have received a certificate  to such effect signed by an authorized
officer of Purchaser.

      (b)  Purchaser  shall have  performed in all material  respects all of the
covenants  and  complied in all  material  respects  with all of the  provisions
required by this  Agreement to be performed or complied  with by it on or before
the Closing,  and Seller shall have received a certificate to such effect signed
by an authorized officer of Purchaser.

      (c) The  applicable  waiting  period  under  the  Hart-Scott  Act (and any
extension thereof) shall have expired or been terminated.

      (d) All consents  listed on Schedule  5.05(d) shall have been obtained and
the Georgia  Insurance  Department shall have approved the changes in control of
American Southern and American Safety effected by the transfer of the Shares.



                                      -27-


      (e) Seller shall have  obtained a release from the  InterRedec  Pledge and
the InterRedec Escrow of all of the Shares subject to such InterRedec Pledge.

      (f) No order of any  court or  administrative  agency  shall be in  effect
which enjoins or prohibits the transactions contemplated hereby, and there shall
not have been threatened,  nor shall there be pending,  any action or proceeding
by or before any Governmental  Authority (i) challenging any of the transactions
contemplated  by this  Agreement  or  seeking  monetary  relief by reason of the
consummation of such  transactions  or (ii) which might have a Material  Adverse
Effect on the future conduct of the business of the Companies.

      (g) No Material Adverse Effect. There shall not have occurred any Material
Adverse  Effect with respect to  Purchaser,  or any  condition or event which is
reasonably likely to result in a Material Adverse Effect, subsequent to June 30,
1995.


                                    ARTICLE 7
                                 INDEMNIFICATION

      7.01  Indemnification by Seller.

      (a) Seller hereby agrees to indemnify and hold harmless  Purchaser and the
Companies from and against (i) any loss, liability, claim, obligation, damage or
deficiency (any "Damage") of or to Purchaser or any of the Companies (other than
any relating to Taxes,  for which  indemnification  provisions  are set forth in
Section 5.04(e)) arising out of or resulting from any misrepresentation,  breach
of warranty or nonfulfillment of any covenant or agreement on the part of Seller
contained in this Agreement or in any statement or  certificate  furnished or to
be furnished to Purchaser pursuant hereto or in connection with the transactions
contemplated  hereby,  and (ii)  any  actions,  judgments,  costs  and  expenses
(including  reasonable  attorneys'  fees  and all  other  expenses  incurred  in
investigating, preparing or defending any litigation or proceeding, commenced or
threatened) (any "Costs") incident to any of the foregoing or the enforcement of
this Section 7.01.

      (b) No  action  or  claim  for  Damages  resulting  from  breaches  of the
representations and warranties of Seller or pursuant to Section 5.04(e) shall be
brought or made after the third  anniversary  of the Closing  Date,  except that
such time  limitation  shall not apply to (i) any breach of the  representations
contained  in Sections  3.03 or 3.04 or (ii) any claims which exist prior to the
third  anniversary  of the  Closing  Date,  and which have been the subject of a
written  notice  from  Purchaser  to Seller  prior to such  date,  which  notice
specified in reasonable detail the nature of the claim.

      (c) Seller shall be liable to Purchaser  only to the extent the cumulative
total of Damages and Costs under this Section 7.01 and Section  5.04(e)  exceeds
$200,000  (at which time  rights to  indemnification  may be  asserted  for such
$200,000  amount and amounts in excess  thereof) and in no event shall Seller be


                                      -28-


liable under this Section 7.01 for any amount in excess of $5,000,000; provided,
however,  no limitation of liability  provided in this paragraph (c) shall apply
to any  Damage or Cost  arising  out of or  resulting  from  common law fraud in
connection with the transactions contemplated by this Agreement.

      (d) Any  indemnification  payment by Seller under this Agreement  shall be
reduced  by the amount of any  Purchaser's  Tax  Effect.  For  purposes  hereof,
"Purchaser's  Tax  Effect"  shall  mean an  amount  equal to the  amount  of the
federal, state, local or foreign tax savings attributable to Purchaser's payment
of any Damage or Cost for which it receives  an  indemnification  payment  under
this Section 7.01 or under  Section  5.04(e)  (after taking into account the tax
effect, if any, of receipt of any  indemnification  payment).  To the extent the
parties  cannot  agree  whether  any tax  benefit  exists or on the  appropriate
treatment of any tax benefit,  such disagreement  shall be resolved by either an
accounting firm or a law firm with a nationally recognized tax practice selected
jointly by  Purchaser  and Seller.  If such  parties  cannot  agree on a firm as
specified  in the prior  sentence,  the firm  shall be  selected  jointly by the
independent auditors of such parties.

      7.02  Indemnification by Purchaser.

      (a) Purchaser hereby agrees to indemnify and hold harmless Seller from and
against  (i)  any  Damage   (other  than  any  relating  to  Taxes,   for  which
indemnification  provisions are set forth in Section  5.04(e)) arising out of or
resulting from any  misrepresentation,  breach of warranty or  nonfulfillment of
any covenant or agreement on the part of Purchaser  contained in this Agreement,
or in any  statement  or  certificate  furnished or to be furnished to Seller in
connection  with the  transactions  contemplated  hereby,  and  (ii)  any  Costs
incident to any of the foregoing or the enforcement of this Section.

      (b) No  action  or  claim  for  Damages  resulting  from  breaches  of the
representations  and warranties of Purchaser  shall be brought or made after the
third  anniversary of the Closing Date,  except that such time limitation  shall
not  apply to any  claims  which  exist  prior to the third  anniversary  of the
Closing Date and which have been the subject of a written  notice from Seller to
Purchaser prior to such date,  which notice  specified in reasonable  detail the
nature of the claim.

      (c) Purchaser  shall be liable to Seller only to the extent the cumulative
total of Damages and Costs under this Section 7.02 and Section  5.04(e)  exceeds
$200,000  (at which time  rights to  indemnification  may be  asserted  for such
$200,000  amount and amounts in excess  thereof) and in no event shall Purchaser
be liable  under  this  Section  7.02 for any  amount  in excess of  $5,000,000;
provided,  however,  no limitation of liability  provided in this  paragraph (c)
shall apply to any Damage or Cost  arising out of or  resulting  from common law
fraud in connection with the transactions  contemplated by this Agreement or the
failure of Purchaser to make  payments  under the  Purchaser  Note in accordance
with the terms thereof.



                                      -29-


      (d) Any indemnification payment by Purchaser under this Agreement shall be
reduced by the amount of any Seller's Tax Effect. For purposes hereof, "Seller's
Tax  Effect"  shall mean an amount  equal to the amount of the  federal,  state,
local or foreign tax savings  attributable to Seller's  payment of any Damage or
Cost for which it receives an indemnification payment under this Section 7.02 or
under  Section  5.04(e)  (after  taking into account the tax effect,  if any, of
receipt of any indemnification  payment). To the extent the parties cannot agree
whether  any tax  benefit  exists  or on the  appropriate  treatment  of any tax
benefit,  such disagreement  shall be resolved by either an accounting firm or a
law firm with a nationally recognized tax practice selected jointly by Purchaser
and Seller.  If such  parties  cannot  agree on a firm as specified in the prior
sentence, the firm shall be selected jointly by the independent auditors of such
parties.

      7.03  Indemnification Procedures.

      (a) If a claim is made,  or any suit or  action  is  commenced  for  which
defense or indemnity is claimed to be due under Section  5.04(e),  7.01 or 7.02,
or if knowledge is received of any other state of facts which, if not corrected,
may give rise to a right of defense or  indemnification  under Section  5.04(e),
7.01 or 7.02, the party seeking defense or indemnity ("Indemnified Party") shall
give  written  notice  to the party  claimed  to be  liable  on the  defense  or
indemnity obligation ("Indemnifying Party") as soon as practicable after, but in
no event (i) more than 10 days following notice to the Indemnified  Party of any
claim,  suit or action for which  defense or indemnity  will be sought,  or (ii)
more than 30 days following the Indemnified Party's knowledge of any other state
of facts which may give rise to a right to defense or  indemnity  under  Section
5.04(e),  7.01 or 7.02.  A failure to give  prompt  notice  shall not relieve an
Indemnifying  Party of its  obligation  to  defend or  indemnify,  except to the
extent the  Indemnifying  Party is prejudiced by such failure.  The  Indemnified
Party  shall  make  available  to the  Indemnifying  Party and its  counsel  and
accountants  at  reasonable  times and for  reasonable  periods,  during  normal
business hours,  all books and records of the Indemnified  Party relating to the
matter for which defense or indemnity has been claimed, and each party hereunder
will render to the other such assistance as the other may reasonably  require in
order to assure prompt and adequate  defense of any suit, claim or proceeding to
which this Section 7.03 applies.

      (b) If defense or  indemnification is sought with respect to a claim, suit
or other proceeding  against the Indemnified Party, the Indemnifying Party shall
have the right to  defend,  compromise  and settle the matter in the name of the
Indemnified Party to the extent that the Indemnifying Party may be liable to the
Indemnified Party under Section 5.04(e), 7.01 or 7.02 hereof; provided, however,
that the  Indemnifying  Party shall not  compromise  or settle a suit,  claim or
proceeding unless it assumes the obligation to indemnify for all losses relating
thereto.  The Indemnifying  Party shall notify the Indemnified Party promptly if
the Indemnifying  Party elects to assume the defense of any such claim,  suit or
action.  In assuming the defense of a matter hereunder,  the Indemnifying  Party
shall have the right to select counsel, provided that the Indemnified Party does
not object to such  counsel in a  reasonable  exercise  of its  discretion.  The
Indemnified  Party  shall  have the  right to  employ  its own  counsel  who may


                                      -30-


associate  with the  counsel  designated  by the  Indemnifying  Party  (upon the
Indemnifying  Party's assumption of the defense of the matter), but the fees and
expenses of such counsel shall be at the Indemnified Party's expense.

      (c) The Indemnified Party may at any time notify the Indemnifying Party of
its  intention to settle or  compromise  any claim,  suit or action  against the
Indemnified  Party in respect of which  indemnification  payments  may be sought
from the Indemnifying  Party hereunder,  but shall not settle nor compromise any
matter for which  indemnification  may be sought,  notwithstanding  this Section
7.03(c),  in excess of $1,000  without  the consent of the  Indemnifying  Party,
which shall not be  unreasonably  withheld.  Any settlement or compromise of any
claim,  suit or action in accordance with the preceding  sentence,  or any final
judgment  or decree  entered on or in,  any  claim,  suit or action in which the
Indemnifying Party did not assume the defense in accordance  herewith,  shall be
deemed to have been consented to by, and shall be binding upon, the Indemnifying
Party as fully as if the Indemnifying  Party had assumed the defense thereof and
a final  judgment  or decree had been  entered  in such suit or action,  or with
regard to such claim,  by a court of  competent  jurisdiction  for the amount of
such settlement, compromise, judgment or decree.

      (d) The Indemnifying  Party shall be subrogated to any claims or rights of
the  Indemnified  Party as against any other  persons with respect to any amount
paid by the  Indemnifying  Party under this Article 7 or under Section  5.04(e).
The  Indemnified  Party shall  cooperate  with the  Indemnifying  Party,  at the
Indemnifying  Party's expense, in the assertion by the Indemnifying Party of any
such claim against other persons.

      7.04  Sole Remedy.

      (a) Purchaser's sole and exclusive remedy for any breach of this Agreement
by Seller shall be the  provisions in Sections  5.04(e) and 7.01,  and Purchaser
hereby waives any and all other remedies which may be available at law or equity
for any breach or alleged breach of this Agreement.

      (b) Seller's sole and exclusive remedy for any breach of this Agreement by
Purchaser  shall be the  provisions  in Sections  5.04(e)  and 7.02,  and Seller
hereby waives any and all other remedies which may be available at law or equity
for any breach or alleged breach of this Agreement.

      (c)  Notwithstanding  anything to the contrary  contained  herein,  if the
Closing occurs no claim for indemnification may be asserted under this Agreement
or any document  delivered  in  connection  herewith  with respect to any matter
discovered or known to the party otherwise  entitled to seek  indemnification on
or before the Closing Date.



                                      -31-


                                    ARTICLE 8
                                   TERMINATION

      8.01  When  Agreement May  be Terminated. This Agreement may be terminated
prior to Closing:

      (a)   By mutual written consent of Purchaser and Seller;

      (b) By Seller in the event that it has not  obtained a letter of credit to
be used as substitute  collateral  under the  InterRedec  Pledge by December 31,
1995 for the reasons described in the second sentence of Section 5.13(b); or

      (c)   In accordance with Section 5.03.

      8.02 Final Termination. This Agreement will terminate on January 31, 1996 
if the Closing has not yet occurred.

      8.03  Effect  of   Termination.  In  the  event  of termination of this
Agreement by either Seller or Purchaser, as provided above, this Agreement shall
forthwith terminate and there shall be no liability on the part of any party or
any party's officers or directors, except for liabilities arising from a breach
of this Agreement prior to such termination; provided, however, that the
obligations of the parties set forth in Article 7 shall survive such
termination.


                                    ARTICLE 9
                                   ARBITRATION

      9.01 Agreement to  Arbitrate. Except as set forth in Sections 7.01(d) and
7.02(d), any claim, controversy or dispute arising out of or relating to this
Agreement, on which an amicable understanding cannot be reached, to the maximum
extent allowed by applicable law and irrespective of the type of relief sought,
shall be submitted to and resolved by arbitration, and such arbitration shall
be the sole remedy for such matter. Such arbitration shall be heard and
conducted in Atlanta, Georgia and shall be conducted expeditiously and
confidentially in accordance with the Commercial Arbitration Rules of the
American Arbitration Association ("AAA"), as such rules shall be in effect on
the date of delivery of demand for arbitration, with the exception that the
arbitrators may not award any punitive or exemplary damages or any damages
other than compensatory, and except as such rules may be otherwise
inconsistent with the express provisions of this Article 9.

      9.02   Initiating  Arbitration.   To initiate arbitration,  a party  shall
notify the other party in writing of its desire to arbitrate, stating the nature
of its dispute and the remedy sought. The receiving party shall acknowledge
receipt of the notice in writing within 5 days, and thereafter the parties
shall attempt in good faith to resolve the dispute within 15 days. If the


                                      -32-


dispute cannot be resolved within such 15-day period, any party may file a
written demand for arbitration by filing a written notice with the AAA and
with the other party, complying with the AAA's prescribed procedures for
such notices. Within 15 days of delivery of such demand for arbitration,
each party shall appoint one arbitrator, and the arbitrators so selected
shall, within 15 days of their appointment, appoint an additional arbitrator.
In the event that the arbitrators selected by the parties are unable to agree
upon the selection of the additional arbitrator after reasonable efforts
within such 15-day period, a list of 7 qualified and available persons
shall be requested from the AAA. The parties shall take turns striking one
person each from the list with the last remaining person being the additional
selected arbitrator. Once selected, the arbitration panel shall meet as
expeditiously as possible, select a chairman, schedule the arbitration
hearing, and notify the parties in writing of the date, time and place of the
hearing. With respect to any arbitration pursuant to Section 2.04, the
provisions of Section 2.04 shall apply where inconsistent with this Article 9.
 
       9.03 Effect. All conclusions of law reached by the arbitrators shall
be made in accordance with the internal laws of the State of Georgia without
regard for its conflict of laws doctrine. Any award rendered by the arbitrators
shall be accompanied by a written opinion setting forth the findings of fact and
conclusions of law relied upon in reaching their decision. The award rendered by
the arbitrators shall be final, binding and non-appealable, and judgment upon
such award may be entered by any court having jurisdiction thereof. The parties
agree that the existence, conduct and content of any such arbitration shall be
kept confidential and no party shall disclose to any person any information
about such arbitration, except as may be required by law or for financial
reporting purposes in each party's financial statements.

       9.04 Costs. Each party shall pay the fees of its own arbitrator,
attorneys, expenses of witnesses and all other expenses in connection with the
presentation of such party's case. The remaining costs of the arbitration,
including, without limitation, fees of the additional arbitrator, costs of
records or transcripts and administrative fees, shall be paid as designated by
the arbitrators.


                                   ARTICLE 10
                                  MISCELLANEOUS

      10.01  Nature and  Survival  of  Representations.  The  representations,
warranties, covenants and agreements of Purchaser and Seller contained in this
Agreement shall survive the Closing and shall not merge in the performance of
any obligation by any party hereto. Seller acknowledges and agrees that prior to
Closing, Purchaser intends to perform such investigation of the Companies as it
deems necessary or appropriate; however, no investigation by Purchaser will
diminish or obviate any of the representations, warranties, covenants or
agreements made or to be performed by Seller pursuant to this Agreement, or
Purchaser's right to rely upon such representations, warranties, covenants and
agreements.



                                      -33-


      10.02  Amendment.  This  Agreement may not be amended or modified without
the prior written consent of all parties.

      10.03  Waiver.  Failure to insist upon strict compliance with any of the 
terms or conditions of this Agreement at any one time shall not be deemed a
waiver of such term or condition at any other time; nor shall any waiver or
relinquishment of any right or power granted herein at any time be deemed a
waiver or relinquishment of the same or any other right or power at any other
time.

      10.04 Governing  Law.  Notwithstanding  the place where this Agreement  
may be executed by any of the parties, the parties expressly agree that this
Agreement shall in all respects be governed by, and construed in
accordance with, the laws of the State of Georgia, without regard for its
conflict of laws doctrine.

      10.05  Notices.  Any  notice  or  other  communication  to be given
hereunder shall be in writing and shall be deemed sufficient when (i) mailed by
United States certified mail, return receipt requested, (ii) mailed by overnight
express mail, (iii) sent by facsimile or telecopy machine, followed by
confirmation mailed by first-class mail or overnight express mail, or (iv)
delivered in person, at the address set forth below, or such other address as a
party may provide to the other in accordance with the procedure for notices set
forth in this Section:

            If to Purchaser:

            Atlantic American Corporation
            4370 Peachtree Road, N.E.
            Atlanta, Georgia  30319-3000
            Attention:  Hilton H. Howell, Jr.
            Telephone:  404-266-5505
            Telecopy:  404-231-2123

            with a copy (which shall not constitute notice) to:

            Heyman & Sizemore
            2300 Cain Tower
            229 Peachtree Street, N.E.
            Atlanta, Georgia  30303-1608
            Attention:  Neal H. Ray
            Telephone:  404-521-2268
            Telecopy:  404-521-2838




                                      -34-


            If to Seller:

            Fuqua Enterprises, Inc.
            One Atlantic Center, Suite 5000
            1201 West Peachtree Street
            Atlanta, Georgia  30309-3400
            Attention:  John J. Huntz, Jr.
            Telephone:  404-815-2000
            Telecopy:  404-815-4529

            with a copy (which shall not constitute notice) to:

            Alston & Bird
            One Atlantic Center
            1201 West Peachtree Street
            Atlanta, Georgia  30309-3424
            Attention:  Bryan E. Davis
            Telephone:  404-881-7000
            Telecopy:  404-881-7777

      10.06  Invalid  Provision.  If  any  provision  of this Agreement shall be
determined by arbitrators (acting in accordance with Article 9) to be invalid or
unenforceable, this Agreement shall be deemed amended to delete such provision
and the remainder of this Agreement shall be enforceable by its terms.

      10.07  Subsequent  SEC Filings.  After the Closing,  the parties  agree to
furnish information to each other (on a GAAP and SAP basis) so that each party
may prepare any filings required to be made with the SEC or any other
Governmental Authorities. The parties shall each be responsible for their own
costs and expenses (including, without limitation professional fees and
expenses) incurred in preparing such filings.

      10.08   Assignment.  This Agreement may not  be  assigned  or delegated by
any party without the prior written consent of all other parties.

      10.09 Binding  Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective permitted successors and
assigns.

      10.10 Further  Assurances. Each party agrees to execute and deliver all 
such further instruments and do all such further acts as may be reasonably
necessary or appropriate to effectuate this Agreement.

      10.11 Headings.  Headings and captions contained in this Agreement are 
inserted only as a matter of convenience and for reference and in no way
define, limit, extend or prescribe the scope of this Agreement or the intent of
any provision.



                                      -35-


      10.12  Person and  Gender. The  masculine  gender  shall include the  
feminine  and neuter  genders and the  singular  shall  include the plural.

      10.13 Entire Agreement. This Agreement, together with the Seller 
Disclosure Memorandum, Purchaser Disclosure Memorandum and the Exhibit
referenced herein, constitute the entire agreement of the parties with respect
to matters set forth in this Agreement and supersede any prior understanding or
agreement, oral or written, with respect to such matters.

      10.14  Interpretations.  Neither  this  Agreement  nor  any uncertainty or
ambiguity herein shall be construed or resolved against any party hereto,
whether under any rule of construction or otherwise. No party shall be
considered the draftsman. On the contrary, this Agreement has been reviewed,
negotiated and accepted by all parties and shall be construed and interpreted
according to the ordinary meaning of the words used so as to fairly accomplish
the purposes and intentions of all parties hereto.

      10.15 Execution in  Counterparts. This Agreement may be  executed  in any
number of counterparts, each of which shall be an original, and all such
counterparts shall constitute one and the same Agreement, binding on all the
parties notwithstanding that all the parties are not signatories to the
same counterpart.


                            [Signatures on Next Page]


                                      -36-




      IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.


                                    ATLANTIC AMERICAN CORPORATION


                                    By:                                   
                                       ----------------------------------
Attest:                             Name:  Hilton H. Howell, Jr.
                                    Title: President
- ----------------------------
Secretary                              



                                    FUQUA ENTERPRISES, INC.


                                    By:
                                       ----------------------------------      
Attest:                             Name:  Lawrence P. Klamon
                                    Title: President and Chief Executive Officer
- -----------------------------
Secretary

                                      -37-


                                                                    EXHIBIT 99.1
       


                  


                         CREDIT AGREEMENT

                            dated as of

                         December 29, 1995

                              between

                   ATLANTIC AMERICAN CORPORATION

                                and

                  WACHOVIA BANK OF GEORGIA, N.A.


A#0004945.01






                         TABLE OF CONTENTS

                         CREDIT AGREEMENT


                             ARTICLE I

                            DEFINITIONS

SECTION 1.01.  Definitions........................................1
               -----------
SECTION 1.02.  Accounting Terms and Determinations...............12
               -----------------------------------
SECTION 1.03.  Use of Defined Terms..............................13
               --------------------
SECTION 1.04.  Terminology.......................................13
               -----------
SECTION 1.05.  References........................................13
               ----------

                            ARTICLE II

                            THE CREDITS

SECTION 2.01.  Commitments to Make Loans.........................13
               -------------------------
SECTION 2.02.  Method of Borrowing Tranche B Loan................13
               ----------------------------------
SECTION 2.03.  Notes.............................................14
               -----
SECTION 2.04.  Repayment of the Loans............................14
               ----------------------
SECTION 2.05.  Interest Rates....................................15
               --------------
SECTION 2.06.  Fees..............................................15
               ----
SECTION 2.07.  Optional Prepayments..............................16
               --------------------
SECTION 2.08.  General Provisions as to Payments.................16
               ---------------------------------
SECTION 2.09.  Computation of Interest...........................17
               -----------------------

                            ARTICLE III

                     CONDITIONS TO BORROWINGS

SECTION 3.01.  Conditions to Funding on Closing Date.............17
               -------------------------------------
SECTION 3.02.  Other Conditions to Funding Tranche B Loan........18
               ------------------------------------------
               
                            ARTICLE IV

                  REPRESENTATIONS AND WARRANTIES

SECTION 4.01.  Corporate Existence and Power.....................19
               -----------------------------
SECTION 4.02.  Corporate and Governmental Authorization; No 
               Contravention.....................................19
               -------------
SECTION 4.03.  Binding Effect....................................19
               --------------
SECTION 4.04.  Financial Information.............................19
               ---------------------
SECTION 4.05.  Litigation........................................20
               ----------
SECTION 4.06.  Compliance with ERISA.............................20
               ---------------------

A#0004945.01





SECTION 4.07.  Taxes.............................................20
               -----                                                  
SECTION 4.08.  Subsidiaries......................................20
               ------------
SECTION 4.09.  Not an Investment Company.........................21
               -------------------------
SECTION 4.10   Public Utility Holding Company Act................21
               ----------------------------------
SECTION 4.11.  Ownership of Property; Liens......................21
               ----------------------------
SECTION 4.12.  No Default........................................21
               ----------
SECTION 4.13.  Full Disclosure...................................21
               ---------------
SECTION 4.14.  Environmental  Matters............................21
               ----------------------
SECTION 4.15.  Compliance with Laws..............................22
               --------------------
SECTION 4.16.  Capital Stock.....................................22
               -------------
SECTION 4.17.  Margin Stock......................................22
               ------------
SECTION 4.18.  Insolvency........................................22
               ----------
SECTION 4.19.  Shareholder Debt..................................22
               ----------------

                             ARTICLE V

                             COVENANTS
SECTION 5.01.  Information.......................................23
               -----------
SECTION 5.02.  Inspection of Property, Books and Records.........24
               -----------------------------------------
SECTION 5.03.  Ratio of Funded Debt to Consolidated Total 
               Capitalization....................................25
               --------------
SECTION 5.04.  Restricted Payments...............................25
               -------------------
SECTION 5.05.  Ratio of Cash Flow to Debt Service................25
               ----------------------------------
SECTION 5.06.  Capital Expenditures..............................25
               --------------------
SECTION 5.07.  Loans or Advances.................................25
               -----------------
SECTION 5.08.  Investments.......................................26
               -----------
SECTION 5.09.  Negative Pledge...................................26
               ---------------
SECTION 5.10.  Maintenance of Existence..........................26
               ------------------------
SECTION 5.11.  Dissolution.......................................26
               -----------
SECTION 5.12.  Consolidations, Mergers and Sales of Assets.......26
               -------------------------------------------
SECTION 5.13.  Use of Proceeds...................................27
               ---------------
SECTION 5.14.  Compliance with Laws; Payment of Taxes............27
               --------------------------------------
SECTION 5.15.  Insurance.........................................27
               ---------
SECTION 5.16.  Change in Fiscal Year.............................27
               ---------------------
SECTION 5.17.  Maintenance of Property...........................27
               -----------------------
SECTION 5.18.  Environmental Notices.............................28
               ---------------------
SECTION 5.19.  Environmental Matters.............................28
               ---------------------
SECTION 5.20.  Environmental Release.............................28
               ---------------------
SECTION 5.21   Additional Covenants, Etc.........................28
               -------------------------
SECTION 5.22.  Transactions with Affiliates......................29
               ----------------------------
SECTION 5.23.  Modification of Shareholder Debt..................29
               --------------------------------
SECTION 5.24.  Maintenance of Authorized Control Level Risk-Based
               Capital...........................................29
               -------
SECTION 5.25.  Maintenance of Statutory Surplus..................29
               --------------------------------
SECTION 5.26.  Limitation on Debt................................29
               ------------------
SECTION 5.27.  Minimum Investment in NAIC Rated Bonds;  Maximum 
               Investment in Investment Properties...............30
               -----------------------------------
SECTION 5.28.  Debt Conversion Documents.........................30
               -------------------------


A#0004945.01





                            ARTICLE VI

                             DEFAULTS

SECTION 6.01.  Events of Default.................................30
               -----------------

                            ARTICLE VII

                           MISCELLANEOUS

SECTION 7.01.  Notices...........................................33
               -------
SECTION 7.02.  No Waivers........................................34
               ----------
SECTION 7.03.  Expenses; Documentary Taxes; Indemnification; 
               Increased Cost and Reduced Return.................34
               ---------------------------------
SECTION 7.04.  CONSEQUENTIAL DAMAGES.............................35
               ---------------------
SECTION 7.05.  Setoffs...........................................35
               -------
SECTION 7.06.  Amendments and Waivers............................35
               ----------------------
SECTION 7.07.  Successors and Assigns............................35
               ----------------------
SECTION 7.08.  Confidentiality...................................37
               ---------------
SECTION 7.09.  Survival of Certain Obligations...................37
               -------------------------------
SECTION 7.10.  Georgia Law.......................................37
               -----------
SECTION 7.11.  Severability......................................37
               ------------
SECTION 7.12.  Interest..........................................37
               --------
SECTION 7.13.  Interpretation....................................38
               --------------
SECTION 7.14.  Consent to Jurisdiction...........................38
               -----------------------
SECTION 7.15.  Counterparts......................................38
               ------------


A#0004945.01





                         CREDIT AGREEMENT


           AGREEMENT  dated as of December  29, 1995 between  ATLANTIC  AMERICAN
CORPORATION and WACHOVIA BANK OF GEORGIA, N.A.

           The parties hereto agree as follows:

                             ARTICLE I

                            DEFINITIONS

           SECTION 1.01. Definitions.  The terms as defined in this Section 1.01
shall,  for all purposes of this  Agreement and any amendment  hereto (except as
herein otherwise  expressly provided or unless the context otherwise  requires),
have the meanings set forth herein:

           "Affiliate" of any Person means (i) any other Person which  directly,
or indirectly through one or more intermediaries, controls such Person, (ii) any
other Person which directly,  or indirectly through one or more  intermediaries,
is controlled by or is under common control with such Person, or (iii) any other
Person of which such Person  owns,  directly or  indirectly,  20% or more of the
common stock or equivalent equity interests.  As used herein, the term "control"
means  possession,  directly or indirectly,  of the power to direct or cause the
direction  of the  management  or  policies  of a Person,  whether  through  the
ownership of voting securities, by contract or otherwise.

           "Aggregate Value of NAIC Rated Bonds" shall mean the aggregate value,
without duplication, of all bonds rated "2" or better by NAIC, owned by American
Southern  Insurance  Company  and held as  investments,  as  shown  on  American
Southern Insurance  Company's books and records as determined in accordance with
GAAP.

           "Aggregate  Value  of Total  Investments"  shall  mean the  aggregate
value,  without  duplication,   of  all  bonds,   redeemable  preferred  stocks,
non-redeemable  preferred stocks, common stocks, mortgage loans, loans to policy
holders,  other  long  term  investments,   short  term  investments  and  other
properties of American Southern Insurance Company held for investment  purposes,
as shown on  American  Southern  Insurance  Company's  books and  records and as
determined in accordance with GAAP.

           "Agreement" means this Credit Agreement, together with all amendments
and supplements hereto.

           "Annual  Statement" means, with respect to any Insurance  Subsidiary,
the annual report,  statement or other filing made by such Insurance  Subsidiary
with the insurance  department or other  governmental  authority of the state in
which such  Insurance  Subsidiary  is formed or  incorporated  which  regulates,
supervises or otherwise has jurisdiction over such Insurance Subsidiary,  all in
accordance with statutory accounting principles.

           "Assignee" has the meaning set forth in Section 7.07(c).

A#0004945.01
                                 1





           "Assignment  and  Acceptance"  means  an  Assignment  and  Acceptance
executed in  accordance  with  Section  7.07(c) in the form  attached  hereto as
Exhibit G.

           "Authorized  Control Level Risk-Based Capital" means, at any time and
as to  any  Insurance  Subsidiary,  the  amount  of  "Authorized  Control  Level
Risk-Based  Capital"  as set  forth  or  reflected  on the  most  recent  Annual
Statement  or  Quarterly  Statement of such  Insurance  Subsidiary,  prepared in
accordance with statutory accounting principles.

           "Authority"  means  any  governmental  authority,   central  bank  or
comparable  agency  charged with the  interpretation  or  administration  of any
applicable law, rule or regulation, or any change in any existing or future law,
rule or regulation.

           "Bank"  means  Wachovia  Bank of Georgia,  N.A.,  a national  banking
association, and its successors and assigns.

           "Base Rate" means for any day, the rate per annum equal to the higher
as of such day of (i) the Prime Rate, and (ii) one-half of one percent above the
Federal Funds Rate for such day. For purposes of  determining  the Base Rate for
any day, changes in the Prime Rate and the Federal Funds Rate shall be effective
on the date of each such change.

           "Book Value" means with respect to any asset, the cost of such asset,
minus  accumulated  depreciation or  amortization,  if any, with respect to such
asset.

           "Borrower"   means   Atlantic   American   Corporation,   a   Georgia
corporation, and its successors and permitted assigns.

           "Business  Day" means any day except a Saturday,  Sunday or other day
on which commercial banks in Georgia are authorized or required by law to close.

           "Capital  Expenditures"  means for any period the sum of all  capital
expenditures  incurred  during such period by the Borrower and its  Consolidated
Subsidiaries, as determined in accordance with GAAP.

           "Capital Stock" means any redeemable or  nonredeemable  capital stock
of the Borrower or any Consolidated Subsidiary (to the extent issued to a Person
other than the Borrower), whether common or preferred.

           "Cash Flow" means, for any period, the sum of (i) EBIT, plus (ii) the
aggregate  of the changes in  depreciation  and  deferred  taxes,  net  premiums
receivable,  defined policy acquisition costs,  unpaid losses and adjustments to
premium reserves, all as determined in accordance with GAAP; provided,  however,
for purposes of Section 5.05,  there shall be deducted from the  calculation  of
"Cash  Flow"  for the  Borrower's  Fiscal  Quarter  ending  June 30,  1997,  the
principal  amount  paid by the  Borrower  on May 15,  1997 with  respect  to the
Convertible Subordinated Notes.

           "CERCLA" means the Comprehensive Environmental Response Compensation 
and Liability Act, 42 U.S.C. ss.9601 et seq. and its implementing regulations
and amendments.

A#0004945.01
                                 2





           "CERCLIS" means the Comprehensive Environmental Response Compensation
and Liability Information System established pursuant to CERCLA.

           "Closing Certificate" has the meaning set forth in Section 3.01(d).

           "Closing Date" means December 29, 1995.

           "Code" means the Internal  Revenue Code of 1986,  as amended,  or any
successor  Federal tax code.  Any  reference to any  provision of the Code shall
also be  deemed to be a  reference  to any  successor  provision  or  provisions
thereof.

           "Commitment"  means  the  Tranche  A  Commitment  or  the  Tranche  B
Commitment, or both, as the context shall require.

           "Compliance Certificate" has the meaning set forth in Section5.01(c).

           "Consolidated  Interest  Expense"  for  any  period  means  interest,
whether  expensed or capitalized,  in respect of Debt of the Borrower and any of
its Consolidated Subsidiaries outstanding during such period.

           "Consolidated  Net Income" means,  for any period,  the Net Income of
the Borrower and its  Consolidated  Subsidiaries  determined  on a  consolidated
basis,  but excluding (i)  extraordinary  gains and (ii) any equity interests of
the Borrower or any Subsidiary in the unremitted  earnings of any Person that is
not a Subsidiary.

           "Consolidated  Subsidiary"  means at any  date  with  respect  to any
Person, any Subsidiary or other entity the accounts of which, in accordance with
GAAP,  would be  consolidated  with  those of such  Person  in its  consolidated
financial  statements  as of such  date;  provided,  that for  purposes  of this
Agreement,  American Southern  Insurance  Company and its Subsidiaries  shall be
deemed to be "Consolidated Subsidiaries" of the Borrower as of the Closing Date.

           "Consolidated  Tangible Net Worth" means, at any time,  Stockholders'
Equity,  less the sum of the value, as set forth or reflected on the most recent
consolidated  balance sheet of the Borrower and its  Consolidated  Subsidiaries,
prepared in accordance with GAAP, of

                (A) Any surplus resulting from any write-up of assets subsequent
to September 30, 1995;

                (B) All assets which would be treated as  intangible  assets for
balance sheet  presentation  purposes under GAAP,  including without  limitation
goodwill  (whether  representing  the  excess of cost over book  value of assets
acquired,  or  otherwise),   trademarks,  tradenames,  copyrights,  patents  and
technologies,  and  unamortized  debt discount and expense;  provided,  however,
deferred  acquisition costs, as determined in accordance with GAAP, shall not be
deducted from Stockholders Equity;


A#0004945.01
                                 3





                (C) To the extent not  included in (B) of this  definition,  any
amount at which shares of capital  stock of the  Borrower  appear as an asset on
the balance sheet of the Borrower and its Consolidated Subsidiaries;

                (D) To the  extent  not  included  in  (B) of  this  definition,
deferred  expenses,  other than  deferred  acquisition  costs,  as determined in
accordance with GAAP; and

                (E) Loans or advances to  stockholders,  directors,  officers or
employees.

           "Consolidated  Total Assets" means,  at any time, the total assets of
the Borrower and its  Consolidated  Subsidiaries,  determined on a  consolidated
basis, as set forth or reflected on the most recent  consolidated  balance sheet
of the Borrower and its Consolidated  Subsidiaries,  prepared in accordance with
GAAP.

           "Consolidated  Total  Capitalization"  means, at any time, the sum of
(i) Consolidated Tangible Net Worth, and (ii) Funded Debt.

           "Controlled  Group"  means  all  members  of a  controlled  group  of
corporations and all trades or businesses  (whether or not  incorporated)  under
common  control  which,  together  with the  Borrower,  are  treated as a single
employer under Section 414 of the Code.

           "Convertible  Subordinated  Notes"  means those  certain  convertible
subordinated  notes dated May 15, 1987,  made by the  Borrower in the  aggregate
principal amount of $5,627,000 due May 15, 1997.

           "Debt" of any Person means at any date, without duplication,  (i) all
obligations  of such Person for borrowed  money,  (ii) all  obligations  of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services,  except  trade  accounts  payable  arising in the  ordinary  course of
business,  (iv) all  obligations of such Person as lessee under capital  leases,
(v) all  obligations  of such Person to  reimburse  any bank or other  Person in
respect of amounts  payable  under a banker's  acceptance,  (vi) all  Redeemable
Preferred  Stock of such  Person  (in the event such  Person is a  corporation),
(vii) all  obligations  (absolute or contingent) of such Person to reimburse any
bank or other  Person in  respect  of  amounts  paid under a letter of credit or
similar instrument,  (viii) all Debt of others secured by a Lien on any asset of
such Person,  whether or not such Debt is assumed by such  Person,  and (ix) all
Debt of others Guaranteed by such Person.

           "Debt  Conversion"  means the  conversion  of  Shareholder  Debt into
preferred stock or other equity  interests in the Borrower  pursuant to the Debt
Conversion Documents.

           "Debt Conversion  Documents" means documentation  satisfactory to the
Bank in its sole  discretion  pursuant to which the Borrower and certain holders
of the  Shareholder  Debt agree to convert  an amount  equal to or greater  than
$13,400,000  of the  Shareholder  Debt  into  preferred  stock or  other  equity
interests in the Borrower on or before the 90th day after the Closing Date,  all
in accordance with the Debt Conversion Memorandum.


A#0004945.01
                                 4





           "Debt Conversion  Memorandum" means a Memorandum  executed by certain
holders  of  the  Shareholder  Debt  and  the  Borrower,  in  form  and  content
satisfactory to the Bank in its sole discretion  setting forth the primary terms
pursuant to which the Borrower and certain holders of the Shareholder Debt agree
to convert an amount equal to or greater  than  $13,400,000  of the  Shareholder
Debt into preferred stock or other equity interests in the Borrower on or before
the 90th day after the Closing Date.

           "Debt Service"  means,  for any period,  the sum of (i)  Consolidated
Interest  Expense for such  period,  and (ii)  regularly  scheduled  payments of
principal  due and  payable  during  such  period  with  respect  to Debt of the
Borrower and its Consolidated  Subsidiaries,  provided however that: (1) so long
as the Tranche B Loan is held by the Bank,  all  regularly  scheduled  principal
payments  due and payable  with respect to the Tranche B Loan during such period
shall be excluded from the calculation of Debt Service;  and (2) for purposes of
Section 5.05, there shall be deducted from the calculation of "Debt Service" for
the Borrower's Fiscal Quarter ending June 30, 1997, the principal amount paid by
the Borrower on May 15, 1997 with respect to the Convertible Subordinated Notes.

           "Default" means any condition or event which  constitutes an Event of
Default  or which  with the  giving of  notice  or lapse of time or both  would,
unless cured or waived in writing, become an Event of Default.

           "Default  Rate"  means,  on any day, the sum of 3% plus the Base Rate
for such day.

           "Depreciation"  means  for any  period  the  sum of all  depreciation
expenses of the Borrower and its Consolidated  Subsidiaries for such period,  as
determined in accordance with GAAP.

           "Dividends"  means for any  period the sum of all  dividends  paid or
declared  during  such  period in respect of any  Capital  Stock and  Redeemable
Preferred  Stock (other than dividends paid or payable in the form of additional
Capital Stock).

           "Dollars" or "$" means dollars in lawful currency of the United 
States of America.

           "EBIT" for any period means the sum of (i)  Consolidated  Net Income,
(ii) taxes on income and (iii)  Consolidated  Interest  Expense,  all determined
with respect to the Borrower and its Consolidated Subsidiaries on a consolidated
basis for such period and in accordance with GAAP.

           "Environmental Authority" means any foreign, federal, state, local or
regional  government  that exercises any form of jurisdiction or authority under
any Environmental Requirement.

           "Environmental  Authorizations" means all licenses,  permits, orders,
approvals,  notices,  registrations or other legal  prerequisites for conducting
the business of the  Borrower or any  Subsidiary  required by any  Environmental
Requirement.


A#0004945.01
                                 5





           "Environmental Judgments and Orders" means all judgments,  decrees or
orders   arising  from  or  in  any  way  associated   with  any   Environmental
Requirements,  whether or not entered upon consent or written agreements with an
Environmental  Authority or other entity  arising from or in any way  associated
with any Environmental  Requirement,  whether or not incorporated in a judgment,
decree or order.

           "Environmental  Laws"  means any and all  federal,  state,  local and
foreign statutes,  laws,  regulations,  ordinances,  rules,  judgments,  orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or other
governmental   restrictions   relating  to  the  environment  or  to  emissions,
discharges  or releases of  pollutants,  contaminants,  petroleum  or  petroleum
products,  chemicals or industrial, toxic or hazardous substances or wastes into
the  environment,  including,  without  limitation,  ambient air, surface water,
groundwater  or land,  or  otherwise  relating to the  manufacture,  processing,
distribution,  use,  treatment,  storage,  disposal,  transport  or  handling of
pollutants,   contaminants,   petroleum  or  petroleum  products,  chemicals  or
industrial,  toxic or  hazardous  substances  or wastes or the clean-up or other
remediation thereof.

           "Environmental  Liabilities" means any liabilities,  whether accrued,
contingent  or  otherwise,  arising  from  and in any way  associated  with  any
Environmental Requirements.

           "Environmental Notices" means notice from any Environmental Authority
or by any other person or entity, of possible or alleged  noncompliance  with or
liability under any Environmental Requirement,  including without limitation any
complaints,  citations,  demands or requests from any Environmental Authority or
from  any  other  person  or  entity  for  correction  of any  violation  of any
Environmental  Requirement or any investigations concerning any violation of any
Environmental Requirement.

           "Environmental  Proceedings"  means any  judicial  or  administrative
proceedings  arising  from  or in any  way  associated  with  any  Environmental
Requirement.

           "Environmental Releases" means releases as defined in CERCLA or under
any applicable state or local environmental law or regulation.

           "Environmental  Requirements" means any legal requirement relating to
health, safety or the environment and applicable to the Borrower, any Subsidiary
or the  Properties,  including  but not  limited to any such  requirement  under
CERCLA or similar  state  legislation  and all  federal,  state and local  laws,
ordinances, regulations, orders, writs, decrees and common law.

           "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, or any successor  law. Any reference to any provision
of ERISA shall also be deemed to be a reference  to any  successor  provision or
provisions thereof.

           "Event of Default" has the meaning set forth in Section 6.01.

           "Fair Market Value" means, with respect to any asset, the greater of:
(i) the Gross Proceeds received by the Borrower or any Subsidiary in connection 
with the sale, transfer or other disposition  by the  Borrower  or such  

A#0004945.01
                                 6





Subsidiary (as the case may be) of such asset, or (ii) the Book Value of such 
asset.

           "Federal Funds Rate" means,  for any day, the rate per annum (rounded
upward,  if necessary,  to the next higher  1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal  Reserve  System  arranged  by Federal  funds  brokers  on such day,  as
published  by the  Federal  Reserve  Bank of New York on the  Business  Day next
succeeding  such day,  provided that (i) if the day for which such rate is to be
determined  is not a Business  Day, the Federal Funds Rate for such day shall be
such  rate  on  such  transactions  on the  next  preceding  Business  Day as so
published on the next  succeeding  Business Day, and (ii) if such rate is not so
published  for any day, the Federal Funds Rate for such day shall be the average
rate charged to the Bank on such day on such  transactions  as determined by the
Bank.

           "Financing"  shall mean (i) any transaction or series of transactions
for the  incurrence  by the Borrower of any Debt or for the  establishment  of a
commitment to make advances which would  constitute Debt of the Borrower,  which
Debt is not by its terms  subordinate  and junior to other Debt of the Borrower,
(ii) an obligation  incurred in a transaction or series of transactions in which
assets of the Borrower are sold and leased back,  or (iii) a sale of accounts or
other  receivables  or any  interest  therein,  other than a sale or transfer of
accounts or receivables  attendant to a sale permitted hereunder of an operating
division.

           "Fiscal Quarter" means any fiscal quarter of the Borrower.

           "Fiscal Year" means any fiscal year of the Borrower.

           "Forfeiture Proceeding" means any action, proceeding or investigation
affecting the Borrower or any of its Subsidiaries before any court, governmental
department,  commission,  board, bureau, agency or instrumentality,  domestic or
foreign,  if such action,  proceeding or  investigation  could result in (i) the
seizure or forfeiture of any of their assets,  revenues or share capital,  which
when the Fair Market Value of such assets,  revenues or share capital subject to
such seizure or  forfeiture  when  aggregated  with the Fair Market Value of all
other assets,  revenues and share  capital of the Borrower and its  Subsidiaries
seized or forfeited since the Closing Date exceeds $100,000,  or (ii) a Material
Adverse Effect.

           "Funded Debt" means, at any date, the total Debt of the Borrower and
its Subsidiaries.

           "GAAP" means generally  accepted  accounting  principles applied on a
basis  consistent  with those which,  in accordance with Section 1.02, are to be
used in making the calculations for purposes of determining  compliance with the
terms of this Agreement.

           "Gross  Proceeds" means any and all cash, plus the face amount of any
and all notes, bonds, debentures, instruments and evidences of indebtedness, and
the value of any other  property,  of whatever  kind or nature,  received by the
Borrower  or any  Subsidiary  in  connection  with the sale,  transfer  or other
disposition  by the Borrower or such  Subsidiary  (as the case may be) of any of
its assets.

A#0004945.01
                                 7





           "Guarantee"  by  any  Person  means  any  obligation,  contingent  or
otherwise,  of such Person directly or indirectly guaranteeing any Debt or other
obligation  of any other  Person and,  without  limiting the  generality  of the
foregoing, any obligation,  direct or indirect, contingent or otherwise, of such
Person  (i) to  secure,  purchase  or pay (or  advance  or supply  funds for the
purchase or payment of) such Debt or other obligation (whether arising by virtue
of  partnership  arrangements,  by agreement to keep-well,  to purchase  assets,
goods,  securities or services,  to provide collateral security, to take-or-pay,
or to maintain financial statement conditions or otherwise) or (ii) entered into
for the  purpose of  assuring  in any other  manner the  obligee of such Debt or
other  obligation of the payment thereof or to protect such obligee against loss
in respect thereof (in whole or in part), provided that the term Guarantee shall
not include  endorsements  for  collection or deposit in the ordinary  course of
business. The term "Guarantee" used as a verb has a corresponding meaning.

           "Hazardous  Materials"  includes,  without  limitation,  (a) solid or
hazardous  waste,  as defined in the Resource  Conservation  and Recovery Act of
1980, 42 U.S.C. ss.6901 et seq. and its implementing regulations and amendments,
or in any  applicable  state  or local  law or  regulation,  (b) any  "hazardous
substance",  "pollutant"  or  "contaminant",  as defined  in  CERCLA,  or in any
applicable  state  or  local  law or  regulation,  (c)  gasoline,  or any  other
petroleum  product or by-product,  including crude oil or any fraction  thereof,
(d) toxic substances, as defined in the Toxic Substances Control Act of 1976, or
in any  applicable  state  or  local  law or  regulation  and (e)  insecticides,
fungicides, or rodenticides,  as defined in the Federal Insecticide,  Fungicide,
and  Rodenticide  Act of  1975,  or in any  applicable  state  or  local  law or
regulation,  as each such Act, statute or regulation may be amended from time to
time.

           "Insurance  Subsidiaries"  means those  Persons set forth on Schedule
4.08A attached hereto, together with their respective successors,  and any other
Subsidiary  which at any time after the Closing Date is engaged  principally  in
the property and casualty insurance business,  the accident and health insurance
business or the life insurance business or any combination thereof.

           "Investment" means any investment in any Person,  whether by means of
purchase or acquisition  of  obligations  or securities of such Person,  capital
contribution  to such Person,  loan or advance to such Person,  making of a time
deposit with such Person,  Guarantee or  assumption  of any  obligation  of such
Person or otherwise.

           "Investment  Properties" for any period means all real property owned
by the Borrower and its Consolidated  Subsidiaries during the applicable period;
provided,  however,  the definition of Investment  Properties  shall exclude any
real property if: (i) at least fifty percent (50%) of the net leasable area with
respect  to  such  real  property  is  occupied  by  the  Borrower   and/or  its
Subsidiaries; and (ii) the primary use of such real property is the operation of
the Borrower's and/or Subsidiaries' respective businesses.

           "Lending  Office"  means,  as to the Bank,  its office located at its
address set forth on the signature  pages hereof (or identified on the signature
pages  hereof  as its  Lending  Office)  or such  other  office  as the Bank may
hereafter designate as its Lending Office by notice to the Borrower.

           "Lien" means, with respect to any asset, any mortgage, deed to secure
debt, deed of trust, lien, pledge,  charge,  security interest,  security title,
preferential arrangement which has the

A#0004945.01
                                 8





practical effect of constituting a security  interest or encumbrance,  servitude
or  encumbrance of any kind in respect of such asset to secure or assure payment
of a Debt or a  Guarantee,  whether by  consensual  agreement or by operation of
statute or other law, or by any agreement,  contingent or otherwise,  to provide
any of the foregoing.  For the purposes of this  Agreement,  the Borrower or any
Subsidiary  shall be deemed  to own  subject  to a Lien any  asset  which it has
acquired  or holds  subject  to the  interest  of a vendor or  lessor  under any
conditional  sale agreement,  capital lease or other title  retention  agreement
relating to such asset.

           "Loan"  means the Tranche A Loan or the Tranche B Loan,  or both,  as
the context shall require.

           "Loan  Documents"  means  this  Agreement,   the  Notes,  the  Pledge
Agreement, the Subordination Agreement, any other document evidencing,  relating
to or securing the Loans,  and any other  document or instrument  delivered from
time to time in connection with this Agreement,  the Notes or the Loans, as such
documents and instruments may be amended or supplemented from time to time.

           "Margin  Stock" means "margin stock" as defined in Regulation G, T, U
or X of the Board of Governors of the Federal Reserve System,  as in effect from
time to time,  together  with all official  rulings and  interpretations  issued
thereunder.

           "Material  Adverse  Effect"  means,  with respect to any event,  act,
condition or occurrence of whatever nature (including any adverse  determination
in any litigation,  arbitration,  or governmental  investigation or proceeding),
whether  singly or in conjunction  with any other event or events,  act or acts,
condition or conditions,  occurrence or occurrences,  whether or not related,  a
material  adverse  change in, or a material  adverse effect upon, any of (a) the
financial  condition,  operations,  business,  properties  or  prospects  of the
Borrower and its Consolidated  Subsidiaries taken as a whole, (b) the rights and
remedies of the Bank under the Loan Documents, or the ability of the Borrower to
perform its  obligations  under the Loan  Documents  to which it is a party,  as
applicable,  or (c)  the  legality,  validity  or  enforceability  of  any  Loan
Document.

           "Multiemployer Plan" shall have the meaning set forth in Section 4001
(a)(3) of ERISA.

           "NAIC" means the National Association of Insurance Commissioners.

           "Net  Income"  means,  as applied to any Person for any  period,  the
aggregate amount of net income of such Person,  after taxes, for such period, as
determined in accordance with GAAP.

           "Note"  means the Tranche A Note or the Tranche B Note,  or either or
both of them, as the context shall require.

           "Notice of Borrowing" has the meaning set forth in Section 2.02.

           "Officer's Certificate" has the meaning set forth in Section 3.01(e).


A#0004945.01
                                 9





           "Participant" has the meaning set forth in Section 7.07(b).

           "PBGC" means the Pension Benefit  Guaranty  Corporation or any entity
succeeding to any or all of its functions under ERISA.

           "Person" means an individual, a corporation, a partnership (including
without limitation, a joint venture), an unincorporated  association, a trust or
any other entity or organization, including, but not limited to, a government or
political subdivision or an agency or instrumentality thereof.

           "Plan"  means at any time an employee  pension  benefit plan which is
covered by Title IV of ERISA or subject to the minimum  funding  standards under
Section  412 of the  Code  and is  either  (i)  maintained  by a  member  of the
Controlled  Group for  employees of any member of the  Controlled  Group or (ii)
maintained  pursuant  to  a  collective   bargaining   agreement  or  any  other
arrangement under which more than one employer makes  contributions and to which
a member of the  Controlled  Group is then making or accruing an  obligation  to
make contributions or has within the preceding 5 plan years made contributions.

           "Pledge  Agreement"  means the Pledge Agreement of even date herewith
executed  by the  Borrower  for the  benefit  of the  Bank,  as the  same may be
amended,  modified  or  supplemented  from time to time;  pursuant  to which the
Borrower has pledged to the Bank the stock or other equity interests it holds in
its Subsidiaries  (excluding the shares of stock of Leath  Furniture,  Inc., but
including without  limitation the shares of stock of American Southern Insurance
Company,  Atlantic  American Life Insurance  Company,  Georgia Casualty & Surety
Company and Bankers Fidelity Life Insurance  Company),  and agrees to pledge any
stock or equity  interests  it obtains in the future  with  respect to  existing
Subsidiaries  or  Persons  which  become  Subsidiaries,  as more fully set forth
therein.

           "Prime Rate" refers to that interest rate so  denominated  and set by
the Bank from time to time as an interest rate basis for  borrowings.  The Prime
Rate is but one of several  interest rate bases used by the Bank. The Bank lends
at interest rates above and below the Prime Rate.

           "Properties" means all real property owned,  leased or otherwise used
or occupied by the Borrower or any Subsidiary, wherever located.

           "Quarterly   Statement"   means,   with  respect  to  any   Insurance
Subsidiary,  the  quarterly  report,  statement  or  other  filing  made by such
Insurance  Subsidiary  with  the  insurance  department  or  other  governmental
authority  of the  state  in  which  such  Insurance  Subsidiary  is  formed  or
incorporated which regulates, supervises or otherwise has jurisdiction over such
Insurance Subsidiary, all in accordance with statutory accounting principles.

           "Redeemable  Preferred Stock" of any Person means any preferred stock
issued by such  Person  which is at any time prior to the later of the Tranche A
Maturity Date or the Tranche B Maturity Date either (i)  mandatorily  redeemable
(by sinking fund or similar  payments or  otherwise)  or (ii)  redeemable at the
option of the holder thereof.


A#0004945.01
                                10





           "Restricted  Payment" means (i) any dividend or other distribution on
any shares of the Borrower's  capital stock (except  dividends payable solely in
shares of its  capital  stock) or (ii) any  payment on account of the  purchase,
redemption,  retirement  or  acquisition  of (a) any  shares  of the  Borrower's
capital stock (except  shares  acquired upon the  conversion  thereof into other
shares  of its  capital  stock) or (b) any  option,  warrant  or other  right to
acquire shares of the Borrower's capital stock.

           "Risk-Based  Capital"  means,  at any  time  and  for  any  Insurance
Subsidiary,  the amount of "Risk-Based Capital" as set forth or reflected on the
most  recent  Annual   Statement  or  Quarterly   Statement  of  such  Insurance
Subsidiary, prepared in accordance with statutory accounting principles.

           "Shareholder  Debt"  means any Debt of the  Borrower  held by J. Mack
Robinson,  his family or any Person owned or controlled,  directly or indirectly
by J. Mack  Robinson or his family.  For purposes of this  definition,  "family"
shall  mean any  lineal  descendant  of J. Mack  Robinson  and their  respective
spouses.

           "Statutory Surplus" means, at any time for any Insurance  Subsidiary,
the "Statutory  Surplus" of such Insurance  Subsidiary as set forth or reflected
on the most recent  Annual  Statement or Quarterly  Statement of such  Insurance
Subsidiary, prepared in accordance with statutory accounting principles.

           "Stockholders'  Equity" means, at any time, the shareholders'  equity
of the Borrower and its Consolidated Subsidiaries,  as set forth or reflected on
the most recent consolidated  balance sheet of the Borrower and its Consolidated
Subsidiaries  prepared in accordance  with GAAP,  but  excluding any  Redeemable
Preferred  Stock  of the  Borrower  or any  of  its  Consolidated  Subsidiaries.
Shareholders'  equity generally would include, but not be limited to (i) the par
or stated value of all outstanding  Capital Stock,  (ii) capital surplus,  (iii)
retained earnings, and (iv) various deductions such as (A) purchases of treasury
stock,  (B) valuation  allowances,  (C)  receivables  due from an employee stock
ownership  plan, (D) employee  stock  ownership  plan debt  guarantees,  and (E)
translation adjustments for foreign currency transactions.

           "Subordination  Agreement" means the Subordination  Agreement of even
date  herewith,  duly  executed by the holders of the  Shareholder  Debt and the
Borrower  for the benefit of the Bank,  as the same may be amended,  modified or
supplemented from time to time.

           "Subsidiary"  means as to any Person, any corporation or other entity
of which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons  performing  similar
functions are at the time directly or indirectly owned by such Person; provided,
that, for purposes of this Agreement,  American  Southern  Insurance Company and
its Subsidiaries  shall be deemed to be "Subsidiaries" of the Borrower as of the
Closing Date.

           "Taxes" has the meaning set forth in Section 2.08(c).


A#0004945.01
                                11





           "Third  Parties" means all lessees,  sublessees,  licensees and other
users of the Properties, excluding those users of the Properties in the ordinary
course of the Borrower's business and on a temporary basis.

           "Tranche A Commitment" means $22,641,627.11.

           "Tranche B Commitment" means $11,352,168.00.

           "Tranche A Loan" means the  outstanding  principal  amount  under the
Tranche A Commitment.

           "Tranche B Loan"  means the  outstanding  principal  amount  under an
advance made pursuant to the Tranche B Commitment.

           "Tranche A Maturity Date" means December 31, 2000.

           "Tranche B Maturity  Date" means December 31, 1997, or if the term of
the Tranche B Loan is extended as contemplated in Section  2.04(b),  the date as
so  extended,  provided  however,  that in no event shall the Tranche B Maturity
Date be extended past the Tranche A Maturity Date.

           "Tranche  A  Note"  means  a   promissory   note  of  the   Borrower,
substantially in the form of Exhibit A hereto, evidencing the obligations of the
Borrower to repay the Tranche A Loan.

           "Tranche  B  Note"  means  a   promissory   note  of  the   Borrower,
substantially in the form of Exhibit B hereto, evidencing the obligations of the
Borrower to repay the Tranche B Loan.

           "Transferee" has the meaning set forth in Section 7.07(d).

           "Wholly Owned  Subsidiary"  means any Subsidiary all of the shares of
capital  stock  or  other  ownership   interests  of  which  (except  directors'
qualifying shares) are at the time directly or indirectly owned by the Borrower.

           SECTION 1.02.  Accounting Terms and Determinations.  Unless otherwise
specified  herein,  all terms of an  accounting  character  used herein shall be
interpreted,  all  accounting  determinations  hereunder  shall be made, and all
financial  statements  required to be delivered  hereunder  shall be prepared in
accordance  with (a) in the case of the Borrower and each Subsidiary that is not
an Insurance Subsidiary, GAAP, applied on a basis consistent (except for changes
concurred  in by the  Borrower's  independent  public  accountants  or otherwise
required  by a  change  in  GAAP)  with the  most  recent  audited  consolidated
financial statements of the Borrower and its Consolidated Subsidiaries delivered
to the  Bank,  unless  with  respect  to any  such  change  concurred  in by the
Borrower's  independent  public  accountants or required by GAAP, in determining
compliance with any of the provisions of this Agreement or any of the other Loan
Documents:  (i) the Borrower shall have objected to determining  such compliance
on such basis at the time of delivery of such financial statements,  or (ii) the
Bank  shall so  object in  writing  within 30 days  after the  delivery  of such
financial statements,  in either of which events such calculations shall be made
on a basis consistent with those used in the preparation of the latest financial
statements as to which such

A#0004945.01
                                12





objection  shall not have been made  (which,  if objection is made in respect of
the first financial  statements  delivered under Section 5.01 hereof, shall mean
the financial  statements  referred to in Section 4.04),  and (b) in the case of
any Insurance Subsidiary, statutory accounting principles as in effect from time
to time, applied on a consistent basis.

           SECTION  1.03.  Use of  Defined  Terms.  All  terms  defined  in this
Agreement  shall  have the same  meanings  when  used in any of the  other  Loan
Documents,  unless  otherwise  defined  therein  or  unless  the  context  shall
otherwise require.

           SECTION  1.04.  Terminology.  All  personal  pronouns  used  in  this
Agreement,  whether  used in the  masculine,  feminine or neuter  gender,  shall
include all other genders;  the singular shall include the plural and the plural
shall  include the singular.  Titles of Articles and Sections in this  Agreement
are for  convenience  only, and neither limit nor amplify the provisions of this
Agreement.

           SECTION 1.05.  References.  Unless otherwise indicated, references in
this Agreement to "Articles", "Exhibits", "Schedules", and "Sections" are 
references to articles, exhibits,schedules and sections hereof.

                            ARTICLE II

                            THE CREDITS

           SECTION 2.01.  Commitments to Make Loans. (a) The Bank hereby agrees,
on the terms and conditions set forth herein,  to make the Tranche A Loan to the
Borrower on the Closing  Date in the amount of the  Tranche A  Commitment.  Upon
funding the Tranche A Loan,  the Tranche A Commitment  shall  terminate  and the
Bank shall have no obligation to make further advances thereunder.

           (b) The Bank hereby  agrees,  on the terms and  conditions  set forth
herein, to make the Tranche B Loan to the Borrower on the Closing Date or within
1 year thereafter upon receipt of a Notice of Borrowing from the Borrower, in an
amount equal to the lesser of (i) the Tranche B  Commitment,  or (ii) so much of
the  Tranche  B  Commitment  as is  required  to repay the  indebtedness  of the
Borrower to Fuqua Enterprises, Inc. in its entirety (the proceeds of which will,
in turn, be used by Fuqua  Enterprises,  Inc. to repay any and all indebtedness,
liabilities and obligations of Fuqua  Enterprises,  Inc. to INTERREDIC).  If the
Borrower  fails to deliver a Notice of Borrowing  requesting  that the Tranche B
Loan be made on the Closing  Date or within 1 year after the Closing  Date,  the
Tranche B Commitment  shall  terminate  and the Bank shall have no obligation to
make an advance  thereunder.  Upon  funding of the  Tranche B Loan (in an amount
equal to or less than the Tranche B Commitment),  the Tranche B Commitment shall
terminate  and the  Bank  shall  have no  obligation  to make  further  advances
thereunder.

           SECTION 2.02.  Method of Borrowing Tranche B Loan. The Borrower shall
give the Bank  notice in the form  attached  hereto as  Exhibit H (a  "Notice of
Borrowing") prior to 11:00 A.M. (Atlanta,  Georgia time) at least 1 Business Day
before the date on which the Borrower wishes

A#0004945.01
                                13





the Tranche B Loan to be made,  specifying the principal  amount of and the date
on which such Tranche B Loan shall be made, which date shall be a Business Day.

           SECTION 2.03.  Notes.  (a) The Tranche A Loan shall be evidenced by a
Tranche A Note  payable to the order of the Bank for the  account of its Lending
Office in an amount  equal to the  original  principal  amount of the  Tranche A
Commitment and the Tranche B Loan shall be evidenced by a Tranche B Note payable
to the  order of the Bank for the  account  of its  Lending  Office in an amount
equal to the original principal amount of the Tranche B Commitment.

           (b) The Bank shall  record,  and prior to any  transfer  of its Notes
shall endorse on the schedule  forming a part thereof  appropriate  notations to
evidence,  the date,  amount and  maturity of each Loan made by it, the date and
amount of each payment of principal  made by the Borrower  with respect  thereto
and such  schedule  shall  constitute  rebuttable  presumptive  evidence  of the
principal amount owing and unpaid on the Bank's Notes; provided that the failure
of the Bank to make, or any error in making, any such recordation or endorsement
shall not affect the obligation of the Borrower  hereunder or under the Notes or
the  ability  of the Bank to assign its  Notes.  The Bank is hereby  irrevocably
authorized  by the  Borrower so to endorse its Notes and to attach to and make a
part of any Note a continuation of any such schedule as and when required.

           SECTION 2.04.  Repayment of the Loans.  Unless due sooner pursuant to
the  provisions  of Article 6, the aggregate  principal  amount of the Tranche A
Loan shall be due and  payable  and shall be repaid by the  Borrower in eighteen
(18) installments  (including the amount payable on the Tranche A Maturity Date)
in the amounts, and on the dates, set forth below:

           Payment Date             Amount of Installment

           June 30, 1996                  $1,000,000
           December 31, 1996              $1,000,000
           March 31, 1997                 $1,000,000
           June 30, 1997                  $1,000,000
           September 30, 1997             $1,000,000
           December 31, 1997              $1,000,000
           March 31, 1998                 $1,000,000
           June 30, 1998                  $1,000,000
           September 30, 1998             $1,000,000
           December 31, 1998              $1,000,000
           March 31, 1999                 $1,000,000
           June 30, 1999                  $1,000,000
           September 30, 1999             $1,000,000
           December 31, 1999              $1,000,000
           March 31, 2000                 $1,000,000
           June 30, 2000                  $1,000,000
           September 30, 2000             $1,000,000



A#0004945.01
                                14





           The entire unpaid  principal of, and all accrued and unpaid  interest
on the Tranche A Loan,  if not sooner paid,  shall be due and payable in full on
the Tranche A Maturity Date.

           (b) Unless due sooner  pursuant to the  provisions  of Article 6, the
entire unpaid principal of, and all accrued and unpaid interest on the Tranche B
Loan shall be due and  payable  on the  Tranche B  Maturity  Date.  On the first
anniversary  of the Closing  Date,  the Bank shall have the option  (without any
obligation  whatsoever  so to do) of extending the Tranche B Maturity Date for a
period of one calendar  month.  If the Bank  exercises  its option to extend the
Tranche B Maturity  Date,  the  Tranche B  Maturity  Date  shall  thereafter  be
automatically  extended for successive  additional periods of one calendar month
each until the earlier of (i) the date of the thirteenth month  corresponding to
and  following  the date on which the Bank  notifies the Borrower  that the Bank
wishes to terminate  the  extension of the Tranche B Maturity  Date; or (ii) the
Tranche A Maturity Date. The Bank may determine to extend the Tranche B Maturity
Date in its sole  discretion  and no course of  dealing  or other  circumstances
shall require the Bank to extend the Tranche B Maturity Date.

           SECTION  2.05.  Interest  Rates.  (a) The  Tranche A Loan  shall bear
interest on the outstanding principal amount thereof, for each day from the date
such  Tranche A Loan is made until it becomes  due, at a rate per annum equal to
the Base Rate for such day.  Such  interest  shall be payable in arrears on each
March 31, June 30,  September 30 and December 31. Any overdue  principal of and,
to the extent  permitted by applicable  law,  overdue  interest on the Tranche A
Loan shall bear interest,  payable on demand,  for each day until paid at a rate
per annum equal to the Default Rate.

           (b)  The  Tranche  B Loan  shall  bear  interest  on the  outstanding
principal amount thereof, for each day from the date such Tranche B Loan is made
until it becomes  due, at a rate per annum equal to the sum of the Base Rate for
such  day  plus  .50%;  provided  however,  that  if  the  Borrower  repays  the
outstanding  principal  balance of the  Tranche A Loan in an amount  equal to or
greater than  $4,000,000 on or before January 31, 1997, the Tranche B Loan shall
bear interest on the outstanding  principal  amount  thereof,  for each day from
February  1, 1997 until it becomes  due,  at a rate per annum  equal to the Base
Rate for such day. Such  interest  shall be payable in arrears on each March 31,
June 30,  September  30, and December  31. Any overdue  principal of and, to the
extent permitted by applicable law, overdue interest on the Tranche B Loan shall
bear  interest,  payable on demand,  for each day until paid at a rate per annum
equal to the Default Rate.

           (c) The Bank shall  determine  the interest  rate  applicable  to the
Loans  hereunder.  The Bank shall give prompt notice to the Borrower by telecopy
of each rate of interest so determined,  and its determination  thereof shall be
conclusive in the absence of manifest error.

           (d) After the occurrence and during the continuance of a Default, the
principal  amount of the Loans (and, to the extent  permitted by applicable law,
all accrued interest thereon) may, at the election of the Bank, bear interest at
the Default Rate.

           SECTION 2.06.  Fees.  On the Closing Date, the Borrower shall pay to 
the Bank a commitment fee equal to $75,000.00.


A#0004945.01
                                15





           SECTION 2.07. Optional Prepayments. The Borrower may, upon at least 1
Business  Day's  notice to the Bank,  prepay the Loans in whole at any time,  or
from time to time in part in amounts  aggregating at least  $500,000,  by paying
the principal amount to be prepaid together with accrued interest thereon to the
date of  prepayment.  Prepayments  made on or before  January  31, 1997 shall be
applied first to  installments  due (including the final  installment due on the
Tranche A Maturity  Date) with  respect to the  Tranche A Loan,  in the  inverse
order of their  maturity,  and then,  to the extent  necessary  to the Tranche B
Loan.  Prepayments  made on or after  February 1, 1997 shall be applied first to
installments due (including the final  installment due on the Tranche A Maturity
Date) with respect to the Tranche A Loan,  in the order of their  maturity,  and
then, to the extent necessary to the Tranche B Loan.

           SECTION 2.08.  General  Provisions  as to Payments.  (a) The Borrower
shall make each payment of  principal  of, and interest on, the Bank's Loans and
of fees hereunder, not later than 11:00 A.M. (Atlanta, Georgia time) on the date
when due, in Federal or other  funds  immediately  available  at the place where
payment is due,  to the Bank at its  address  set forth on the  signature  pages
hereof.

           (b) Whenever  any payment of principal  of, or interest on, the Loans
or of fees  shall be due on a day  which  is not a  Business  Day,  the date for
payment  thereof shall be extended to the next  succeeding  Business Day. If the
date for any payment of principal is extended by operation of law or  otherwise,
interest thereon shall be payable for such extended time.

           (c) All  payments  of  principal,  interest  and fees  and all  other
amounts to be made by the Borrower  pursuant to this  Agreement  with respect to
any Loan or fee relating  thereto shall be paid without  deduction for, and free
from, any tax,  imposts,  levies,  duties,  deductions,  or  withholdings of any
nature now or at anytime hereafter  imposed by any governmental  authority or by
any taxing authority thereof or therein excluding in the case of the Bank, taxes
imposed on or measured by its net income,  and franchise taxes imposed on it, by
the jurisdiction  under the laws of which the Bank is organized or any political
subdivision  thereof and, in the case of the Bank,  taxes imposed on its income,
and franchise taxes imposed on it, by the jurisdiction of the Bank's  applicable
Lending  Office or any  political  subdivision  thereof  (all such  non-excluded
taxes, imposts,  levies, duties,  deductions or withholdings of any nature being
"Taxes").  In the event that the Borrower is required by applicable  law to make
any such  withholding  or  deduction of Taxes with respect to any Loan or fee or
other  amount,  the  Borrower  shall pay such  deduction or  withholding  to the
applicable  taxing  authority,  shall promptly furnish to the Bank in respect of
which such  deduction or  withholding  is made all receipts and other  documents
evidencing such payment and shall pay to the Bank  additional  amounts as may be
necessary  in order that the  amount  received  by the Bank  after the  required
withholding or other payment shall equal the amount the Bank would have received
had no such  withholding  or other  payment  been  made.  If no  withholding  or
deduction of Taxes are payable in respect of any Loan or fee  relating  thereto,
the Borrower shall furnish the Bank, at the Bank's request,  a certificate  from
each  applicable  taxing  authority or an opinion of counsel  acceptable  to the
Bank,  in either case stating that such  payments are exempt from or not subject
to  withholding  or  deduction of Taxes.  If the Borrower  fails to provide such
original  or  certified  copy  of a  receipt  evidencing  payment  of  Taxes  or
certificate(s) or opinion of counsel of exemption, the Borrower hereby agrees to
compensate the Bank for, and indemnify it with respect to, the tax  consequences
of the Borrower's failure to provide evidence of tax payments or tax exemption.

A#0004945.01
                                16





           In the event  the Bank  receives  a refund  of any Taxes  paid by the
Borrower  pursuant to this Section  2.08, it will pay to the Borrower the amount
of such refund promptly upon receipt thereof; provided,  however, it at any time
thereafter  it is required to return such refund,  the Borrower  shall  promptly
repay to it the amount of such refund.

           Without  prejudice  to the  survival  of any other  agreement  of the
Borrower hereunder,  the agreements and obligations of the Borrower contained in
this Section 2.08 shall be applicable with respect to any Participant,  Assignee
or other Transferee,  and any calculations required by such provisions (i) shall
be made based upon the  circumstances  of such  Participant,  Assignee  or other
Transferee,  and (ii)  constitute a continuing  agreement  and shall survive the
termination  of this  Agreement and the payment in full or  cancellation  of the
Notes.

           SECTION 2.09. Computation of Interest. Interest on the Loans shall be
computed  on the basis of a year of 360 days and paid for the  actual  number of
days elapsed (including the first day but excluding the last day).


                            ARTICLE III

                     CONDITIONS TO BORROWINGS

           SECTION 3.01.  Conditions to Funding on Closing Date.  The obligation
of the Bank to make the  Tranche A Loan on the  Closing  Date is  subject to the
following  conditions  and the obligation of the Bank to make the Tranche B Loan
is subject to the  satisfaction  of the conditions set forth in Section 3.02 and
the following conditions:

           (a)  receipt by the Bank from the Borrower of  a duly executed
      counterpart of this Agreement signed by the Borrower;

           (b) receipt by the Bank of a duly executed  Tranche A Note and a duly
      executed  Tranche B Note for the  account of the Bank  complying  with the
      provisions of Section 2.03;

           (c) receipt by the Bank of an opinion  (together with any opinions of
      local  counsel  relied on therein)  of Heyman & Sizemore,  counsel for the
      Borrower,  dated  as of the  Closing  Date,  substantially  in the form of
      Exhibit C hereto and  covering  such  additional  matters  relating to the
      transactions contemplated hereby as the Bank may reasonably request;

           (d) receipt by the Bank of a certificate (the "Closing Certificate"),
      dated the  Closing  Date,  substantially  in the form of Exhibit D hereto,
      signed by a principal  financial  officer of the  Borrower,  to the effect
      that (i) no Default has occurred and is continuing on the Closing Date and
      (ii) the  representations  and  warranties  of the  Borrower  contained in
      Article IV are true on and as of the Closing Date;

           (e)  receipt  by the  Bank  of  all  documents  which  the  Bank  may
      reasonably  request  relating  to  the  existence  of  the  Borrower,  the
      corporate authority for and the validity of this Agreement, the Notes, and
      any other matters relevant hereto, all in form and substance

A#0004945.01
                                17





      satisfactory to the Bank,  including  without  limitation a certificate of
      incumbency from the Borrower (the "Officer's Certificate"),  signed by the
      Secretary or an Assistant  Secretary of the Borrower  substantially in the
      form of Exhibit E hereto,  certifying as to the names, true signatures and
      incumbency  of the  officer or  officers  of the  Borrower  authorized  to
      execute  and  deliver  the Loan  Documents  to  which  it is a party,  and
      certified copies of the following items with respect to the Borrower:  (i)
      Certificate  of  Incorporation,  (ii) Bylaws,  (iii) a certificate  of the
      Secretary of State of the state of  organization of the Borrower as to the
      good standing of the Borrower as a corporation organized under the laws of
      such state,  and (iv) the action  taken by the Boards of  Directors of the
      Borrower authorizing the Borrower's execution, delivery and performance of
      the Loan Documents to which it is a party;

           (f)  receipt by the Bank of the Pledge  Agreement  and UCC  Financing
      Statements  in form  and  substance  satisfactory  to the Bank in its sole
      discretion,  duly executed by the  Borrower,  granting to the Bank a first
      priority  security interest in the stock or other equity interests held by
      the Borrower in all Subsidiaries of the Borrower  (excluding the shares of
      stock of Leath Furniture,  Inc.), and receipt of any stock certificates or
      evidence  of the  registration  of the  Bank's  security  interest  in the
      corporate  records  of such  Subsidiaries  all as  required  by the Pledge
      Agreement;

           (g) receipt by the Bank of the  Subordination  Agreement  in form and
      substance  satisfactory to the Bank in its sole discretion,  duly executed
      by each of the parties thereto;

           (h) receipt by the Bank of the Debt Conversion Memorandum in form and
      substance satisfactory to the Bank in its sole discretion;

           (i)  receipt  by  the  Bank  from  each  Insurance  Subsidiary  of  a
      certificate signed by the Chief Actuary or Chief Financial Officer of such
      Insurance  Subsidiary  to the effect that the  reserves of such  Insurance
      Subsidiary  are adequate  under  statutory  accounting  principles and the
      applicable  laws of the  state  under  the  laws of which  such  Insurance
      Subsidiary was organized or incorporated as of December 31, 1994; and

           (j) such other items as the Bank or its counsel may reasonably 
      request.

           SECTION  3.02.  Other  Conditions  to  Funding  Tranche  B Loan.  The
obligation of the Bank to make the Tranche B Loan is subject to the satisfaction
of the following additional conditions:

           (a)  receipt by the Bank of Notice of Borrowing as required by 
      Section 2.02;

           (b) the fact that,  immediately  before and after the  funding of the
      Tranche B Loan, no Default shall have occurred and be continuing; and

           (c) the fact that the  representations and warranties of the Borrower
      contained in Article IV of this  Agreement  shall be true on and as of the
      date of funding of the Tranche B Loan.



A#0004945.01
                                18





The  funding of the  Tranche B Loan shall be deemed to be a  representation  and
warranty  by the  Borrower  on the  date of such  funding  as to the  truth  and
accuracy of the facts specified in clauses (b) and (c) of this Section.

                            ARTICLE IV

                  REPRESENTATIONS AND WARRANTIES

           The Borrower represents and warrants that:

           SECTION  4.01.  Corporate  Existence  and Power.  The  Borrower  is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, is duly qualified to transact business
in every jurisdiction  where, by the nature of its business,  such qualification
is  necessary,  and has all  corporate  powers  and all  governmental  licenses,
authorizations,  consents and approvals required to carry on its business as now
conducted.

           SECTION  4.02.   Corporate   and   Governmental   Authorization;   No
Contravention.  The execution,  delivery and performance by the Borrower of this
Agreement,  the Notes and the other Loan Documents (i) are within the Borrower's
corporate  powers,  (ii) have been duly  authorized by all  necessary  corporate
action,  (iii)  require  no action by or in  respect  of,  or filing  with,  any
governmental body, agency or official,  except that the Borrower's execution and
delivery of the Pledge Agreement requires the approval of the Georgia Department
of  Insurance  which  approval has been  obtained,  (iv) do not  contravene,  or
constitute a default under,  any provision of applicable law or regulation or of
the certificate of incorporation or by-laws of the Borrower or of any agreement,
judgment,  injunction,  order,  decree  or  other  instrument  binding  upon the
Borrower or any of its  Subsidiaries,  and (v) do not result in the  creation or
imposition of any Lien on any asset of the Borrower or any of its Subsidiaries.

           SECTION 4.03. Binding Effect. This Agreement  constitutes a valid and
binding agreement of the Borrower  enforceable in accordance with its terms, and
the  Notes  and the  other  Loan  Documents,  when  executed  and  delivered  in
accordance with this Agreement, will constitute valid and binding obligations of
the Borrower  enforceable in accordance with their  respective  terms,  provided
that the  enforceability  hereof and  thereof is subject in each case to general
principles of equity and to  bankruptcy,  insolvency  and similar laws affecting
the enforcement of creditors' rights generally.

           SECTION 4.04.  Financial  Information.  (a) The consolidated  balance
sheet of the Borrower and its Consolidated  Subsidiaries as of December 31, 1994
and the related consolidated statements of income, shareholders' equity and cash
flows for the Fiscal  Year then ended,  reported on by Ernst & Young,  copies of
which have been delivered to the Bank, and the unaudited  consolidated financial
statements  of the Borrower for the interim  period  ended  September  30, 1995,
copies of which have been delivered to the Bank,  fairly present,  in conformity
with  GAAP,  the  consolidated  financial  position  of  the  Borrower  and  its
Consolidated  Subsidiaries  as of such dates and their  consolidated  results of
operations and cash flows for such periods stated.


A#0004945.01
                                19





           (b) The  consolidated  balance sheet of American  Southern  Insurance
Company  and its  Consolidated  Subsidiaries  as of  December  31,  1994 and the
related consolidated  statements of income,  shareholders' equity and cash flows
for the fiscal year of American Southern  Insurance Company and its Consolidated
Subsidiaries then ended, reported on by Ernst & Young, copies of which have been
delivered to the Bank, and the unaudited  consolidated  financial  statements of
American Southern  Insurance Company for the interim period ending September 30,
1995,  copies of which  have been  delivered  to the Bank,  fairly  present,  in
conformity with GAAP, the consolidated  financial  position of American Southern
Insurance  Company and its Consolidated  Subsidiaries as of such dates and their
consolidated results of operations and cash flows for such periods stated.

           (c) The Annual Statements of the Insurance Subsidiaries together with
supplemental schedules thereto, dated as of December 31, 1994, and the Quarterly
Statements of the Insurance  Subsidiaries  together with supplemental  schedules
thereto,  dated as of September 30, 1995, copies of which have been delivered to
the Bank,  fairly  present the respective  financial  positions of the Insurance
Subsidiaries as of such dates.

           (d) Since September 30, 1995 there has been no event, act,  condition
or occurrence having a Material Adverse Effect.

           SECTION  4.05.  Litigation.  There is no action,  suit or  proceeding
pending,  or to the knowledge of the Borrower  threatened,  against or affecting
the Borrower or any of its  Subsidiaries  before any court or  arbitrator or any
governmental body, agency or official which could have a Material Adverse Effect
or which in any manner draws into question the validity or enforceability of, or
could impair the ability of the Borrower to perform its obligations  under, this
Agreement, the Notes or any of the other Loan Documents.

           SECTION 4.06. Compliance with ERISA. (a) The Borrower and each member
of the  Controlled  Group have  fulfilled  their  obligations  under the minimum
funding  standards  of ERISA and the Code with  respect  to each Plan and are in
compliance in all material respects with the presently applicable  provisions of
ERISA and the Code,  and have not incurred  any  liability to the PBGC or a Plan
under Title IV of ERISA.

           (b) Neither the Borrower nor any member of the Controlled Group is or
ever has been obligated to contribute to any Multiemployer Plan.

           SECTION 4.07. Taxes.  There have been filed on behalf of the Borrower
and its Subsidiaries all Federal, state and local income,  excise,  property and
other  tax  returns  which  are  required  to be filed by them and all taxes due
pursuant to such returns or pursuant to any assessment  received by or on behalf
of the Borrower or any  Subsidiary  have been paid.  The  charges,  accruals and
reserves on the books of the Borrower and its  Subsidiaries  in respect of taxes
or other  governmental  charges are, in the opinion of the  Borrower,  adequate.
United States income tax returns of the Borrower and its Subsidiaries  have been
examined and closed through the Fiscal Year ended December 31, 1983.

           SECTION 4.08.  Subsidiaries.  
          (a)  Each of the Borrower's Subsidiaries is a corporation duly 
organized, validly existing and in good standing under the laws of its 

A#0004945.01
                                20





jurisdiction of incorporation, is duly qualified  to transact  business in every
jurisdiction where, by the nature of its business,  such qualification is 
necessary, and has all corporate powers and all governmental licenses, 
uthorizations, consents and approvals required to carry on its business as now 
conducted.

           (b)  The  Borrower  has  no  Insurance   Subsidiaries   except  those
Subsidiaries  listed on Schedule  4.08A,  which  accurately sets forth each such
Insurance Subsidiary's complete name and jurisdiction of incorporation.

           (c) Schedule  4.08B  accurately  sets forth the complete name of each
Subsidiary of the Borrower which is not an Insurance Subsidiary,  as well as its
jurisdiction of incorporation.

           SECTION 4.09.  Not an Investment Company.  Neither the Borrower nor 
any of its Subsidiaries is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.

           SECTION 4.10 Public Utility Holding Company Act. Neither the Borrower
nor any of its Subsidiaries is a "holding company", or a "subsidiary company" of
a  "holding  company",  or  an  "affiliate"  of  a  "holding  company"  or  of a
"subsidiary  company" of a "holding  company",  as such terms are defined in the
Public Utility Holding Company Act of 1935, as amended.

           SECTION 4.11.  Ownership of Property; Liens.  Each of the Borrower 
and its Consolidated Subsidiaries has title to its properties sufficient for the
conduct of its  business,  and none of such  property  is subject to any Lien  
except as permitted in Section 5.09.

           SECTION  4.12.  No  Default.  Neither  the  Borrower  nor  any of its
Consolidated  Subsidiaries is in default under or with respect to any agreement,
instrument  or  undertaking  to which it is a party or by which it or any of its
property  is bound  which  could have or cause a  Material  Adverse  Effect.  No
Default or Event of Default has occurred and is continuing.

           SECTION 4.13. Full Disclosure.  All information  heretofore furnished
by the Borrower to the Bank for purposes of or in connection with this Agreement
or any transaction  contemplated  hereby is, and all such information  hereafter
furnished by the  Borrower to the Bank will be,  true,  accurate and complete in
every material respect or based on reasonable  estimates on the date as of which
such information is stated or certified.  The Borrower has disclosed to the Bank
in  writing  any and all facts  which  could  have or cause a  Material  Adverse
Effect.

           SECTION 4.14. Environmental Matters. (a) Neither the Borrower nor any
Subsidiary is subject to any Environmental Liability which could have or cause a
Material  Adverse  Effect and neither the Borrower nor any  Subsidiary  has been
designated  as a potentially  responsible  party under CERCLA or under any state
statute  similar to CERCLA.  None of the Properties  has been  identified on any
current or proposed (i) National  Priorities List under 40 C.F.R.  ss. 300, (ii)
CERCLIS list or (iii) any list arising from a state statute similar to CERCLA.

           (b) No  Hazardous  Materials  have been or are being used,  produced,
manufactured,  processed,  treated,  recycled,  generated,  stored, disposed of,
managed  or  otherwise  handled  at, or shipped  or  transported  to or from the
Properties or are otherwise present at, on, in or

A#0004945.01
                                21





under the  Properties,  or, to the best of the knowledge of the Borrower,  at or
from any adjacent  site or facility,  except for  Hazardous  Materials,  such as
cleaning solvents, pesticides and other materials used, produced,  manufactured,
processed,  treated,  recycled,  generated,  stored, disposed of, and managed or
otherwise  handled in minimal  amounts in the  ordinary  course of  business  in
compliance with all applicable Environmental Requirements.

           (c) The Borrower,  and each of its Subsidiaries  and Affiliates,  has
procured  all  Environmental  Authorizations  necessary  for the  conduct of its
business, and is in compliance with all Environmental Requirements in connection
with  the  operation  of the  Properties  and the  Borrower's,  and  each of its
Subsidiary's and Affiliate's, respective businesses.

           SECTION 4.15.  Compliance with Laws. The Borrower and each Subsidiary
is in compliance with all applicable laws,  including,  without limitation,  all
Environmental  Laws, except where any failure to comply with any such laws would
not, alone or in the aggregate, have a Material Adverse Effect.

           SECTION 4.16.  Capital Stock. All Capital Stock,  debentures,  bonds,
notes and all other  securities of the Borrower and its  Subsidiaries  presently
issued and  outstanding  are validly and properly  issued in accordance with all
applicable  laws,  including,  but not  limited  to,  the "Blue Sky" laws of all
applicable states and the federal  securities laws. The issued shares of Capital
Stock of the Borrower's Wholly Owned Subsidiaries are owned by the Borrower free
and clear of any Lien or adverse claim. At least a majority of the issued shares
of capital stock of each of the Borrower's other Subsidiaries (other than Wholly
Owned  Subsidiaries)  is owned  by the  Borrower  free and  clear of any Lien or
adverse claim.

           SECTION  4.17.  Margin  Stock.  Neither the  Borrower  nor any of its
Subsidiaries is engaged principally,  or as one of its important activities,  in
the  business of  purchasing  or carrying any Margin  Stock,  and no part of the
proceeds of any Loan will be used to  purchase  or carry any Margin  Stock or to
extend  credit to others for the purpose of  purchasing  or carrying  any Margin
Stock, or be used for any purpose which violates, or which is inconsistent with,
the provisions of Regulation X.

           SECTION  4.18.  Insolvency.  After giving effect to the execution and
delivery of the Loan Documents and the making of the Loans under this Agreement,
the Borrower will not be "insolvent," within the meaning of such term as used in
O.C.G.A.  ss.  18-2-22 or as defined in ss. 101 of Title 11 of the United States
Code  or  Section  2 of the  Uniform  Fraudulent  Transfer  Act,  or  any  other
applicable state law pertaining to fraudulent transfers,  as each may be amended
from time to time, or be unable to pay its debts  generally as such debts become
due,  or have an  unreasonably  small  capital  to  engage  in any  business  or
transaction, whether current or contemplated.

           SECTION 4.19. Shareholder Debt.  The amount, maturity, amortization 
schedule, interest rate and holder of all Shareholder Debt is accurately set 
forth on Schedule 4.19.



A#0004945.01
                                22





                             ARTICLE V

                             COVENANTS

           The  Borrower  agrees  that,  so long as the Bank has any  Commitment
hereunder or any amount payable under any Note remains unpaid:

           SECTION 5.01.  Information.  The Borrower will deliver to the Bank:

           (a) (i) as soon as  available  and in any event  within 90 days after
      the end of each Fiscal Year, a consolidated  balance sheet of the Borrower
      and its  Consolidated  Subsidiaries  as of the end of such Fiscal Year and
      the related  consolidated  statements of income,  shareholders' equity and
      cash flows for such Fiscal Year, setting forth in each case in comparative
      form the figures for the previous  fiscal year,  all  certified by Ernst &
      Young or other  independent  public  accountants of nationally  recognized
      standing,   with  such   certification   to  be  free  of  exceptions  and
      qualifications  not  acceptable to the Bank, and (ii) as soon as available
      and in any event  within 60 days after the end of each fiscal year of each
      Insurance  Subsidiary,  a copy  of  the  Annual  Statement  of  each  such
      Insurance Subsidiary, together with all supplemental schedules thereto, as
      of the end of such Fiscal Year, all prepared in accordance  with statutory
      accounting principles;

           (b) (i) as soon as  available  and in any event  within 45 days after
      the end of each of the first 3 Fiscal  Quarters  of each  Fiscal  Year,  a
      consolidated   balance   sheet  of  the  Borrower  and  its   Consolidated
      Subsidiaries  as of  the  end of  such  Fiscal  Quarter  and  the  related
      statement of income and  statement  of cash flows for such Fiscal  Quarter
      and for the  portion  of the Fiscal  Year ended at the end of such  Fiscal
      Quarter,  setting forth in each case in  comparative  form the figures for
      the  corresponding  Fiscal  Quarter and the  corresponding  portion of the
      previous   Fiscal  Year,  all  certified   (subject  to  normal   year-end
      adjustments) as to fairness of  presentation,  GAAP and consistency by the
      chief financial  officer or the chief accounting  officer of the Borrower,
      and (ii) as soon as  available  and in any event  within 45 days after the
      end of  each  fiscal  quarter  of  each  fiscal  year  of  each  Insurance
      Subsidiary,  a copy of the  Quarterly  Statement  of each  such  Insurance
      Subsidiary,  together with all supplement schedules thereto, as of the end
      of  such  fiscal  quarter,  all  prepared  in  accordance  with  statutory
      accounting principles;

           (c)  simultaneously  with  the  delivery  of  each  set of  financial
      statements  referred  to in  clauses  (a) and (b)  above,  a  certificate,
      substantially  in the form of Exhibit F (a "Compliance  Certificate"),  of
      the  chief  financial  officer  or the  chief  accounting  officer  of the
      Borrower (i) setting forth in reasonable detail the calculations  required
      to establish  whether the Borrower was in compliance with the requirements
      of Sections 5.03 through 5.07, inclusive, 5.09, 5.24, 5.25 and 5.27 on the
      date of such  financial  statements  and (ii) stating  whether any Default
      exists on the date of such  certificate  and, if any Default  then exists,
      setting  forth the details  thereof and the action  which the  Borrower is
      taking or proposes to take with respect thereto;

           (d) simultaneously  with the delivery of each set of annual financial
      statements  referred to in clause (a) above,  a  statement  of the firm of
      independent public accountants

A#0004945.01
                                23





      which  reported on such  statements to the effect that nothing has come to
      their  attention to cause them to believe that any Default  existed on the
      date of such financial statements;

           (e) within 5 Domestic  Business Days after the Borrower becomes aware
      of the  occurrence of any Default,  a certificate  of the chief  financial
      officer or the chief accounting  officer of the Borrower setting forth the
      details thereof and the action which the Borrower is taking or proposes to
      take with respect thereto;

           (f)  promptly  upon the mailing  thereof to the  shareholders  of the
      Borrower generally, copies of all financial statements,  reports and proxy
      statements so mailed;

           (g)  promptly  upon the filing  thereof,  copies of all  registration
      statements   (other  than  the  exhibits   thereto  and  any  registration
      statements on Form S-8 or its equivalent) and annual, quarterly or monthly
      reports  which the  Borrower  shall  have filed  with the  Securities  and
      Exchange Commission;

           (h) if and when the  Borrower or any member of the  Controlled  Group
      (i) gives or is  required  to give  notice to the PBGC of any  "reportable
      event"  (as  defined in Section  4043 of ERISA)  with  respect to any Plan
      which might constitute  grounds for a termination of such Plan under Title
      IV of ERISA, or knows that the plan administrator of any Plan has given or
      is  required to give notice of any such  reportable  event,  a copy of the
      notice of such reportable event given or required to be given to the PBGC;
      (ii) receives  notice of complete or partial  withdrawal  liability  under
      Title IV of ERISA, a copy of such notice;  or (iii)  receives  notice from
      the PBGC under  Title IV of ERISA of an intent to  terminate  or appoint a
      trustee to administer any Plan, a copy of such notice;

           (i) promptly  after the Borrower knows of the  commencement  thereof,
      notice of any litigation,  dispute or proceeding involving a claim against
      the  Borrower  and/or any  Subsidiary  for  $100,000  or more in excess of
      amounts covered in full by applicable insurance;

           (j) promptly after the Borrower knows of the commencement or threat 
      thereof, notice of any Forfeiture Proceeding;

           (k) as soon as available, a copy of any and all reports, conclusions,
      recommendations, observations, summaries and written materials prepared by
      or for the Georgia  Department of Insurance in  connection  with the audit
      and review of the Borrower and its Subsidiaries  scheduled to be conducted
      by the Georgia  Department of Insurance  during the First Quarter of 1996;
      and

           (l) from  time to time  such  additional  information  regarding  the
      financial position or business of the Borrower and its Subsidiaries as the
      Bank may reasonably request.

           SECTION 5.02. Inspection of Property, Books and Records. The Borrower
will (i) keep,  and will cause each  Subsidiary to keep,  proper books of record
and account in which full, true and correct entries in conformity with GAAP (or,
in the case of Insurance Subsidiaries, statutory

A#0004945.01
                                24





accounting  principles)  shall  be  made of all  dealings  and  transactions  in
relation to its business and  activities;  and (ii) permit,  and will cause each
Subsidiary to permit, representatives of the Bank at the Bank's expense prior to
the  occurrence of an Event of Default and at the  Borrower's  expense after the
occurrence  of an Event of Default to visit and inspect any of their  respective
properties, to examine and make abstracts from any of their respective books and
records and to discuss  their  respective  affairs,  finances and accounts  with
their respective  officers,  employees and independent public  accountants.  The
Borrower agrees to cooperate and assist in such visits and inspections,  in each
case at such reasonable times and as often as may reasonably be desired.

           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 date of
the Debt Conversion to and including December 31, 1996, 65%; (ii) for the period
from and including January 1, 1997 to and including  December 31, 1997, 55%; and
(iii) for any period on or after January 1, 1998, 45%.

           SECTION 5.04.  Restricted Payments.  The Borrower will not declare or
make any  Restricted  Payment  during any Fiscal Year;  provided  that:  (1) the
Borrower may redeem  shares of the  Borrower's  capital stock for the purpose of
satisfying  the  Borrower's  obligations  under its 401K plan and stock  options
provided by the Borrower to its executive  officers,  in the ordinary  course of
business and consistently  with practices  existing on the Closing Date; (2) the
total number of shares of the Borrower's  capital stock redeemed pursuant to the
preceding subsection (1) shall not exceed five hundred thousand in the aggregate
in any Fiscal Year;  and (3) the  aggregate  amount  expended by the Borrower in
connection  with the redemptions  made pursuant to the preceding  subsection (1)
shall not exceed $1,000,000 in the aggregate in any Fiscal Year.

           SECTION 5.05. Ratio of Cash Flow to Debt Service.  At the end of each
Fiscal Quarter, the ratio of Cash Flow for the Applicable Period to Debt Service
for the  Applicable  Period,  shall not have been less than (i) for each  Fiscal
Quarter  commencing with the first Fiscal Quarter ending after the date on which
the Debt Conversion is effective and each subsequent Fiscal Quarter ending prior
to or on December 31, 1996,  1.0 to 1.0; (ii) for each Fiscal  Quarter ending on
or after  January 1, 1997 and prior to or on December  31,  1997,  1.05 to 1.00;
(iii) for each Fiscal Quarter ending on or after January 1, 1998 and prior to or
on December 31, 1998,  1.10 to 1.00;  and (iv) for each Fiscal Quarter ending on
or  after  January  1,  1999,  1.15 to  1.00.  As used  in  this  Section  5.05,
"Applicable  Period"  means:  (i) for  calculations  made with respect to Fiscal
Quarters  ending  prior to or on December  31, 1996,  the period  commencing  on
January 1, 1996 and ending on the last day of such Fiscal Quarter;  and (ii) for
calculations  made with respect to Fiscal  Quarters  ending  after  December 31,
1996, the immediately  preceding 12 months ending on the last day of such Fiscal
Quarter.

           SECTION 5.06.  Capital  Expenditures.  Capital  Expenditures will not
exceed in the  aggregate in any Fiscal Year the sum of  $5,000,000.00;  provided
that after giving effect to the incurrence of any Capital Expenditures permitted
by this Section, no Default shall have occurred and be continuing.

           SECTION 5.07. Loans or Advances.  Neither the Borrower nor any of its
Subsidiaries shall make loans or advances to any Person except: (i) advances
made to insurance

A#0004945.01
                                25





agents of the Borrower's Subsidiaries, with respect to such agent's commissions,
made in the ordinary course of business and consistently with practices existing
on the Closing Date; and (ii) deposits required by government agencies or public
utilities;  provided  that  after  giving  effect to the  making  of any  loans,
advances or deposits permitted by clause (i) or (ii) of this Section, no Default
shall have occurred and be continuing.

           SECTION  5.08.  Investments.  Neither  the  Borrower  nor  any of its
Subsidiaries shall make Investments in any Person except as permitted by Section
5.07 and except  Investments  in (i)  direct  obligations  of the United  States
Government  maturing within one year,  (ii)  certificates of deposit issued by a
commercial bank whose credit is satisfactory to the Bank, (iii) commercial paper
rated A-1 or the equivalent  thereof by Standard & Poor's  Corporation or P-1 or
the equivalent  thereof by Moody's  Investors  Service,  Inc. and in either case
maturing within 6 months after the date of acquisition  and/or (iv) tender bonds
the payment of the  principal of and  interest on which is fully  supported by a
letter of credit issued by a United States bank whose long-term  certificates of
deposit  are rated at least AA or the  equivalent  thereof by  Standard & Poor's
Corporation and Aa or the equivalent thereof by Moody's Investors Service, Inc.;
provided, however, that this Section 5.08 shall not prohibit Investments made in
the  ordinary  course of business  involving  the  investment  portfolio  of any
Insurance Subsidiary.

           SECTION  5.09.   Negative  Pledge.   Neither  the  Borrower  nor  any
Consolidated  Subsidiary will create,  assume or suffer to exist any Lien on any
asset now owned or hereafter acquired by it, except any Lien on Margin Stock.

           SECTION 5.10. Maintenance of Existence. The Borrower shall, and shall
cause each  Subsidiary to (a) maintain its corporate  existence and carry on its
business in substantially  the same manner and in substantially  the same fields
as such business is now carried on and maintained;  and (b) preserve,  renew and
keep in full force and effect  their  respective  rights,  privileges,  licenses
(including, without limitation,  insurance licenses) and franchises necessary or
desirable in the normal conduct of business.

           SECTION  5.11.  Dissolution.  Neither  the  Borrower  nor  any of its
Subsidiaries  shall suffer or permit  dissolution or liquidation either in whole
or in part or  redeem  or  retire  any  shares  of its own  stock or that of any
Subsidiary,  except through corporate  reorganization to the extent permitted by
Section 5.12.

           SECTION 5.12.  Consolidations, Mergers and Sales of Assets.  (a) The
Borrower will not, nor will it permit any Subsidiary to, consolidate or merge 
with or into any other Person, provided that:

           (i) the Borrower may merge with another Person if (i) such Person was
organized  under the laws of the United  States of America or one of its states,
(ii) the Borrower is the corporation surviving such merger and (iii) immediately
after  giving  effect to such  merger,  no Default  shall have  occurred  and be
continuing; and

           (ii) Subsidiaries of the Borrower may merge with one another.


A#0004945.01
                                26





           (b) The  Borrower  will not, and will not permit any  Subsidiary  to,
sell, lease,  transfer, or otherwise dispose of in any one transaction or series
of  transactions  (excluding  sales  in  the  ordinary  course  of  business  of
investment securities that are part of a Subsidiary's  investment portfolio) any
assets,  if the Book Value of such assets when aggregated with the Book Value of
all assets sold, leased,  transferred or otherwise disposed of after the Closing
Date  exceeds  10%  of  Consolidated  Total  Assets  of  the  Borrower  and  its
Consolidated  Subsidiaries as of the last day of the Fiscal Quarter  immediately
preceding the date of such sale, lease,  transfer or other  disposition  without
the prior written  consent of the Bank (which consent shall not be  unreasonably
withheld).

           SECTION 5.13. Use of Proceeds.  (a) No portion of the proceeds of the
Loans will be used by the Borrower or any Subsidiary (i) in connection  with any
tender  offer for,  or other  acquisition  of (except  as  permitted  in Section
5.13(b)),  stock of any corporation with a view toward obtaining control of such
other  corporation,  (ii)  directly  or  indirectly,  for the  purpose,  whether
immediate,  incidental or ultimate,  of purchasing or carrying any Margin Stock,
or (iii) for any purpose in violation of any applicable law or regulation.

           (b) The  proceeds  of the  Tranche  A Loan  shall be used  solely  to
acquire American Southern Insurance Company.  The proceeds of the Tranche B Loan
shall be used solely to repay, in its entirety, all indebtedness of the Borrower
to Fuqua Enterprises,  Inc. (the proceeds of such payment will, in turn, be used
by Fuqua  Enterprises,  Inc. to repay any and all indebtedness,  liabilities and
obligations of Fuqua Enterprises, Inc. to INTERREDIC).

           SECTION 5.14.  Compliance with Laws;  Payment of Taxes.  The Borrower
will, and will cause each of its  Subsidiaries and each member of the Controlled
Group to,  comply with  applicable  laws  (including  but not limited to ERISA),
regulations and similar requirements of governmental  authorities (including but
not limited to PBGC),  except where the  necessity of such  compliance  is being
contested in good faith through appropriate  proceedings diligently pursued. The
Borrower will, and will cause each of its Subsidiaries to, pay promptly when due
all taxes,  assessments,  governmental charges, claims for labor, supplies, rent
and other obligations which, if unpaid, might become a lien against the property
of the Borrower or any Subsidiary,  except  liabilities  being contested in good
faith by  appropriate  proceedings  diligently  pursued  and against  which,  if
requested  by the Bank,  the Borrower  shall have set up reserves in  accordance
with GAAP.

           SECTION 5.15. Insurance.  The Borrower will maintain,  and will cause
each of its  Subsidiaries to maintain  (either in the name of the Borrower or in
such  Subsidiary's  own name),  with financially  sound and reputable  insurance
companies, insurance on all its Property in at least such amounts and against at
least such risks as are  usually  insured  against in the same  general  area by
companies of established repute engaged in the same or similar business.

           SECTION 5.16.  Change in Fiscal Year.  The Borrower will not change 
its Fiscal Year without the consent of the Bank.

           SECTION 5.17.  Maintenance of Property. The Borrower shall, and shall
cause each  Subsidiary  to,  maintain all of its  properties  and assets in good
condition, repair and working order, ordinary wear and tear excepted.


A#0004945.01
                                27





           SECTION 5.18.  Environmental  Notices.  The Borrower shall furnish to
the Bank  prompt  written  notice  of all  Environmental  Liabilities,  pending,
threatened or  anticipated  Environmental  Proceedings,  Environmental  Notices,
Environmental Judgments and Orders, and Environmental Releases at, on, in, under
or in any way affecting the Properties or any adjacent property,  and all facts,
events, or conditions that could lead to any of the foregoing.

           SECTION   5.19.   Environmental   Matters.   The   Borrower  and  its
Subsidiaries  will not,  and will not permit any Third Party to,  use,  produce,
manufacture, process, treat, recycle, generate, store, dispose of, manage at, or
otherwise  handle or ship or transport to or from the  Properties  any Hazardous
Materials except for Hazardous  Materials such as cleaning solvents,  pesticides
and other similar materials used, produced,  manufactured,  processed,  treated,
recycled,  generated,  stored, disposed, managed or otherwise handled in minimal
amounts in the ordinary  course of business in  compliance  with all  applicable
Environmental Requirements.

           SECTION 5.20.  Environmental  Release.  The Borrower agrees that upon
the  occurrence of an  Environmental  Release at or on any of the  Properties it
will act  immediately  to  investigate  the extent  of, and to take  appropriate
remedial action to eliminate, such Environmental Release, whether or not ordered
or otherwise directed to do so by any Environmental Authority.

           SECTION 5.21 Additional Covenants, Etc. In the event that at any time
this  Agreement is in effect or any Note remains unpaid the Borrower shall enter
into any agreement, guarantee, indenture or other instrument governing, relating
to, providing for commitments to advance,  guaranteeing,  providing for security
interests  or liens to secure,  or  otherwise  affording  any credit  support or
credit  enhancement  for,  any  Financing  or to amend any terms and  conditions
applicable to any  Financing,  which  agreement,  guarantee,  indenture or other
instrument includes covenants, warranties,  representations,  defaults or events
of default  (or any other type of  restriction  which  would have the  practical
effect of any of the  foregoing,  including,  without  limitation,  any "put" or
mandatory  prepayment of such debt) or other terms or conditions or provides for
security  interests,  liens or guarantees,  credit support or credit enhancement
(whether  provided by the Borrower or any other Person) not substantially as, or
in addition to those,  provided in this Agreement or any other Loan Document, or
more  favorable  to the  lender  or other  counterparty  thereunder  than  those
provided  in this  Agreement  or any other Loan  Document,  the  Borrower  shall
promptly  so notify the Bank.  Thereupon,  if the Bank shall  request by written
notice to the Borrower,  the Borrower and the Bank shall enter into an amendment
to this  Agreement  and if requested by the Bank,  the Borrower  shall cause any
Person providing such other guarantees,  credit support or credit enhancement to
deliver such documentation as the Bank may reasonably request, all providing for
substantially the same such covenants, warranties, representations,  defaults or
events of default, security interests, liens or other guarantees, credit support
or credit enhancement (in which the Bank shall participate on a pari passu basis
with such other  lender),  or other terms or conditions as those provided for in
such agreement, guarantee, indenture or other instrument, to the extent required
and as may be selected by the Bank,  such amendment and other  documentation  to
remain in effect,  unless  otherwise  specified in writing by the Bank,  for the
entire  duration  of the  stated  term to  maturity  of such  Financing  (to and
including the date to which the same may be extended at the Borrower's  option),
notwithstanding  that such Financing might be earlier  terminated by prepayment,
refinancing,  acceleration  or otherwise,  provided that if any such  agreement,
guarantee,  indenture  or  other  instrument  shall be  modified,  supplemented,
amended or restated so as to modify, amend or eliminate

A#0004945.01
                                28





from such agreement, guarantee, indenture or other instrument any such covenant,
warranty, representation,  default or event of default, security interest, lien,
or other credit support or enhancement or other term or condition so made a part
of this  Agreement,  then unless  required by the Bank pursuant to this Section,
such modification, supplement or amendment shall not operate to modify, amend or
eliminate such covenant, warranty, representation,  default or event of default,
security interest,  lien or other credit support or enhancement or other term or
condition as so made a part of this Agreement.

           SECTION 5.22. Transactions with Affiliates.  Neither the Borrower nor
any of its Subsidiaries shall enter into, or be a party to, any transaction with
any  Affiliate of the Borrower or such  Subsidiary  (which  Affiliate is not the
Borrower or a Subsidiary), except as permitted by law and in the ordinary course
of business and pursuant to  reasonable  terms which are fully  disclosed to the
Bank, and are no less favorable to the Borrower or such Subsidiary than would be
obtained in a comparable arm's length  transaction with a Person which is not an
Affiliate.

           SECTION 5.23.  Modification of Shareholder Debt. The Borrower will 
not amend or modify the scheduled maturity, pricing or amortization of the 
Shareholder Debt.

           SECTION  5.24.  Maintenance  of Authorized  Control Level  Risk-Based
Capital.  The Borrower shall maintain,  or cause to be maintained,  at all times
the Authorized Control Level Risk-Based Capital for each Insurance Subsidiary in
an  amount  equal  to or  greater  than  400% of the  Authorized  Control  Level
Risk-Based Capital for such Insurance Subsidiary.

           SECTION 5.25.  Maintenance of Statutory  Surplus.  The Borrower shall
maintain or cause to be maintained at all times the Statutory Surplus of each of
its Insurance  Subsidiaries in an amount equal to or greater than the sum of (i)
the  Statutory   Surplus  required  under  applicable  law  for  such  Insurance
Subsidiary, plus (ii) $1,000,000.

           SECTION 5.26.  Limitation on Debt.  The Borrower shall not, nor shall
it permit any Subsidiary  to,  create,  incur or permit to exist at any time any
Debt (other than Debt arising  under this  Agreement)  without the prior written
consent of the Bank, except:

           (a) Debt in  existence  on the  Closing  Date  and more  particularly
described on Schedule  5.26  attached  hereto,  together  with any  extension or
renewal of such Debt, if the payment terms and interest  applicable to such Debt
as  extended  or  renewed  are at least as  favorable  to the  Borrower  or such
Subsidiary,  as the  case  may  be,  as the  payment  terms  and  interest  rate
applicable to such Debt on the date of extension or renewal thereof;

           (b) Trade indebtedness incurred in the ordinary course of business;

           (c)  The  Borrower  may  enter  into  a  transaction   or  series  of
transactions  pursuant  to which the  Borrower  sells and leases  back  computer
equipment  provided  that the total  aggregate  Debt incurred by the Borrower in
such transaction or transactions shall not exceed $2,000,000; and

           (d) Leath Furniture, Inc. may incur Debt provided that: (1) the 
aggregate outstanding principal amount of such Debt permitted under this Section
5.26(d) shall not at any time exceed

A#0004945.01
                                29





$5,000,000; (2) the proceeds of such Debt shall be used by Leath Furniture, Inc.
to finance  capital  expenditures  of Leath  Furniture,  Inc.; and (3) such Debt
shall be subordinated pursuant to a subordination  agreement in form and content
satisfactory  to the Bank  providing that the holder of such Debt shall not ask,
demand,  sue for,  set off,  accept or receive any payment of all or any part of
such Debt after the occurrence of a Default or Event of Default hereunder.

           SECTION  5.27.  Minimum  Investment  in  NAIC  Rated  Bonds;  Maximum
Investment  in  Investment  Properties.  The Borrower  will not permit  American
Southern  Insurance  Company at any time to permit:  (i) the Aggregate  Value of
NAIC  Rated  Bonds  to be  less  than  70%  of  the  Aggregate  Value  of  Total
Investments;  or (ii) the aggregate value of Investment  Properties to exceed 5%
of the Aggregate Value of Total Investments.

           SECTION 5.28. Debt Conversion  Documents.  No less than 30 days prior
to the Debt  Conversion,  the Borrower  shall  deliver to the Bank  complete and
accurate copies of the Debt Conversion Documents.


                            ARTICLE VI

                             DEFAULTS

           SECTION 6.01.  Events of Default.  If one or more of the following 
events ("Events of Default") shall have occurred and be continuing:

           (a) the Borrower shall fail to pay when due any principal of any Loan
      or shall fail to pay any  interest on any Loan within five  Business  Days
      after such  interest  shall  become  due,  or shall fail to pay any fee or
      other amount payable hereunder within five Business Days after such fee or
      other amount becomes due; or

           (b) the  Borrower  shall  fail to observe  or  perform  any  covenant
      contained in Sections  5.02(ii),  5.03 to 5.13,  inclusive,  Section 5.16,
      Section 5.21 or Sections 5.24 to 5.28, inclusive; or

           (c) the  Borrower  shall fail to observe or perform  any  covenant or
      agreement  contained or incorporated by reference in this Agreement (other
      than those  covered by clause (a) or (b) above or clause (n) or (o) below)
      for  thirty  days  after  the  earlier  of (i) the  first day on which the
      Borrower has knowledge of such failure or (ii) written  notice thereof has
      been given to the Borrower by the Bank; or

           (d) any representation,  warranty, certification or statement made or
      deemed  made by the  Borrower  in Article IV of this  Agreement,  the Loan
      Documents or in any  certificate,  financial  statement or other  document
      delivered pursuant to this Agreement shall prove to have been incorrect or
      misleading in any material respect when made (or deemed made); or


A#0004945.01
                                30





           (e) the Borrower or any Subsidiary  shall fail to make any payment in
      respect of Debt  outstanding in an aggregate  amount equal to or in excess
      of  $1,000,000  (other than the Notes)  when due or within any  applicable
      grace period; or

           (f)  any  event  or  condition  shall  occur  which  results  in  the
      acceleration  of the maturity of Debt  outstanding in an aggregate  amount
      equal to or in excess of $1,000,000  of the Borrower or any  Subsidiary or
      the mandatory  prepayment or purchase of such Debt by the Borrower (or its
      designee) or such  Subsidiary  (or its  designee)  prior to the  scheduled
      maturity  thereof,  or enables (or,  with the giving of notice or lapse of
      time or both,  would enable) the holders of such Debt or any Person acting
      on such holders' behalf to accelerate the maturity  thereof or require the
      mandatory  prepayment or purchase thereof prior to the scheduled  maturity
      thereof, without regard to whether such holders or other Person shall have
      exercised or waived their right to do so; or

           (g) the Borrower or any Subsidiary shall commence a voluntary case or
      other proceeding seeking liquidation,  reorganization or other relief with
      respect to itself or its debts under any  bankruptcy,  insolvency or other
      similar law now or  hereafter  in effect or seeking the  appointment  of a
      trustee, receiver,  liquidator,  custodian or other similar official of it
      or any  substantial  part of its  property,  or shall  consent to any such
      relief or to the appointment of or taking  possession by any such official
      in an involuntary case or other proceeding  commenced against it, or shall
      make a general  assignment  for the  benefit of  creditors,  or shall fail
      generally,  or shall admit in writing its  inability,  to pay its debts as
      they become due, or shall take any  corporate  action to authorize  any of
      the foregoing; or

           (h) an  involuntary  case or  other  proceeding  shall  be  commenced
      against the Borrower or any Subsidiary seeking liquidation, reorganization
      or other  relief  with  respect to it or its debts  under any  bankruptcy,
      insolvency  or other similar law now or hereafter in effect or seeking the
      appointment of a trustee, receiver, liquidator, custodian or other similar
      official  of  it or  any  substantial  part  of  its  property,  and  such
      involuntary case or other proceeding shall remain undismissed and unstayed
      for a period of 60 days;  or an order for relief shall be entered  against
      the Borrower or any Subsidiary under the federal bankruptcy laws as now or
      hereafter in effect; or

           (i) the Borrower or any member of the Controlled  Group shall fail to
      pay when due any material  amount which it shall have become liable to pay
      to the PBGC or to a Plan under  Title IV of ERISA;  or notice of intent to
      terminate  a Plan or Plans  shall be filed  under Title IV of ERISA by the
      Borrower,  any member of the Controlled  Group, any plan  administrator or
      any combination of the foregoing;  or the PBGC shall institute proceedings
      under Title IV of ERISA to terminate or to cause a trustee to be appointed
      to administer  any such Plan or Plans or a proceeding  shall be instituted
      by a  fiduciary  of any  such  Plan or  Plans to  enforce  Section  515 or
      4219(c)(5)  of ERISA and such  proceeding  shall  not have been  dismissed
      within 30 days  thereafter;  or a condition shall exist by reason of which
      the PBGC would be entitled to obtain a decree  adjudicating  that any such
      Plan or Plans must be  terminated;  or the Borrower or any other member of
      the  Controlled  Group shall enter into,  contribute  or be  obligated  to
      contribute to,  terminate or incur any  withdrawal  liability with respect
      to, a Multiemployer Plan; or

A#0004945.01
                                31





           (j) one or more  judgments  or orders for the  payment of money in an
      aggregate  amount in excess of  $500,000  shall be  rendered  against  the
      Borrower or any  Subsidiary  and such  judgment  or order  shall  continue
      unsatisfied and unstayed for a period of 30 days; or

           (k) a federal  tax lien shall be filed  against  the  Borrower  under
      Section 6323 of the Code or a lien of the PBGC shall be filed  against the
      Borrower or any Subsidiary  under Section 4068 of ERISA and in either case
      such lien shall remain undischarged for a period of 25 days after the date
      of filing; or

           (l) (i) any Person or two or more  Persons  acting in  concert  shall
      have acquired  beneficial  ownership  (within the meaning of Rule 13d-3 of
      the Securities and Exchange  Commission under the Securities  Exchange Act
      of 1934) of 20% or more of the  outstanding  shares of the voting stock of
      the Borrower;  or (ii) as of any date a majority of the Board of Directors
      of the Borrower  consists of individuals who were not either (A) directors
      of the Borrower as of the  corresponding  date of the previous  year,  (B)
      selected or nominated to become directors by the Board of Directors of the
      Borrower of which a majority consisted of individuals  described in clause
      (A), or (C)  selected or  nominated  to become  directors  by the Board of
      Directors  of the Borrower of which a majority  consisted  of  individuals
      described in clause (A) and individuals described in clause (B); or

           (m) the  occurrence  of any event,  act or  condition  which the Bank
      determines  either  does or has a  reasonable  probability  of  causing  a
      Material Adverse Effect; or

           (n) any party  thereto  shall fail to  observe or perform  any of its
      obligation under the Subordination  Agreement, the Subordination Agreement
      shall cease to be in full force and effect,  or any party  thereto (or any
      Person acting on their  behalf)  shall deny or disaffirm  its  obligations
      under the Subordination Agreement; or

           (o) the  Borrower  shall fail to observe  or perform  any  obligation
      under  the  Pledge  Agreement  or the  Bank  shall  cease  to have a first
      priority  perfected security interest in the Collateral (as defined in the
      Pledge Agreement); or

           (p) the Debt  Conversion  does not occur  upon  terms and  conditions
      satisfactory  to the Bank in its sole  discretion  on or before  that date
      which is 90 days after the Closing Date; or

           (q) Atlantic  American Life  Insurance  Company,  Georgia  Casualty &
      Surety Company or Bankers  Fidelity Life  Insurance  Company shall fail to
      maintain  an AM Best  rating  of  "B-" or  better,  or  American  Southern
      Insurance Company or any Subsidiary of American Southern Insurance Company
      shall fail to maintain an AM Best rating of "A-" or better; or

           (r) the Borrower  shall at any time or times and for any reason cease
      to own (either directly or indirectly  through a Wholly Owned  Subsidiary)
      at least 80% of the Capital Stock and other ownership interests of each of
      American  Southern  Insurance  Company,  Atlantic  American Life Insurance
      Company,  Georgia  Casualty & Surety  Company  and Bankers  Fidelity  Life
      Insurance Company; or

A#0004945.01
                                32





           (s) J. Mack Robinson shall cease to be the Chairman of the Board of 
      Directors of the Borrower, or Hilton H. Howell, Jr. shall cease to be the 
      Chief Executive Officer and President of the Borrower, or if any two of 
      the following individuals shall cease to hold the following positions with
      American Southern Insurance Company:  Roy Steele Thompson, Jr.(Chairman of
      the Board), Calvin Lee Wall (Vice Chairman and Chief Executive Officer),
      or Scott Gallatin Thompson (President); or

           (t) either (i) any Forfeiture Proceeding shall have been commenced or
      the Borrower shall have given the Bank written notice of the  commencement
      or threatened  commencement  of any  Forfeiture  Proceeding as provided in
      Section 5.01(j); or (ii) the Bank has a good faith basis to believe that a
      Forfeiture Proceeding has been threatened or commenced; or

           (u) the Borrower has not fully consummated the acquisition of 100% of
      the issued and outstanding  capital stock of American  Southern  Insurance
      Company on or before January 1, 1996;

then,  and in every  such  event,  the  Bank may (i)  terminate  the  Tranche  B
Commitment  (if the  Tranche  B Loan  has  not yet  been  funded)  and it  shall
thereupon  terminate,  and (ii) by  notice  to the  Borrower  declare  the Notes
(together with accrued interest thereon) and all other amounts payable hereunder
and under the other  Loan  Documents  to be,  and the Notes  (together  will all
accrued interest  thereon) and all other amounts payable hereunder and under the
other Loan Documents shall thereupon become, immediately due and payable without
presentment,  demand,  protest  or other  notice of any  kind,  all of which are
hereby waived by the Borrower;  provided that if any Event of Default  specified
in  clause  (g) or  (h)  above  occurs  with  respect  to  the  Borrower  or any
Subsidiary, without any notice to the Borrower or any other act by the Bank, the
Tranche  B  Commitment  (if the  Tranche B Loan has not yet been  funded)  shall
thereupon  automatically terminate and the Notes (together with accrued interest
thereon)  and all other  amounts  payable  hereunder  and  under the other  Loan
Documents  shall  automatically  become  immediately  due  and  payable  without
presentment,  demand,  protest  or other  notice of any  kind,  all of which are
hereby waived by the Borrower.  Notwithstanding  the  foregoing,  the Bank shall
have available to it all other remedies at law or equity.



                           ARTICLE VIII

                           MISCELLANEOUS

           SECTION 7.01. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including facsimile  transmission or
similar  writing)  and shall be given to such party at its  address or  telecopy
number set forth on the signature pages hereof or such other address or telecopy
number as such party may  hereafter  specify  for the  purpose by notice to each
other party. Each such notice, request or other communication shall be effective
(i) if given by  telecopier,  when such telecopy is  transmitted to the telecopy
number  specified in this  Section and the  telecopy  machine used by the sender
provides a written  confirmation  that such telecopy has been so  transmitted or
receipt of such telecopy  transmission is otherwise confirmed,  (ii) if given by
mail,  72 hours after such  communication  is  deposited in the mails with first
class postage prepaid,

A#0004945.01
                                33





addressed as aforesaid, and (iii) if given by any other means, when delivered at
the address  specified in this Section;  provided that notices to the Bank under
Article II shall not be effective until received.

           SECTION  7.02.  No  Waivers.  No  failure  or  delay  by the  Bank in
exercising  any right,  power or privilege  hereunder or under any Note or other
Loan Document  shall operate as a waiver thereof nor shall any single or partial
exercise  thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.  The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by law.

           SECTION 7.03. Expenses; Documentary Taxes; Indemnification; Increased
Cost and  Reduced  Return.  (a) The  Borrower  shall  pay (i) all  out-of-pocket
expenses of the Bank,  including fees and disbursements of counsel for the Bank,
in  connection  with  the  preparation  of this  Agreement  and the  other  Loan
Documents, any waiver or consent hereunder or thereunder or any amendment hereof
or thereof or any Default or alleged Default hereunder or thereunder and (ii) if
a Default occurs,  all out-of-pocket  expenses  incurred by the Bank,  including
fees  and  disbursements  of  counsel,  in  connection  with  such  Default  and
collection and other  enforcement  proceedings  resulting  therefrom,  including
out-of-pocket  expenses  incurred in enforcing this Agreement and the other Loan
Documents.

           (b) The Borrower shall indemnify the Bank against any transfer taxes,
documentary taxes, assessments or charges made by any Authority by reason of the
execution and delivery of this Agreement or the other Loan Documents.

           (c) The Borrower shall indemnify the Bank and each Affiliate  thereof
and their respective  directors,  officers,  employees and agents from, and hold
each of them  harmless  against,  any and all  losses,  liabilities,  claims  or
damages  to which  any of them  may  become  subject,  insofar  as such  losses,
liabilities,  claims  or  damages  arise  out of or  result  from any  actual or
proposed use by the  Borrower of the proceeds of any  extension of credit by the
Bank  hereunder  or breach by the  Borrower of this  Agreement or any other Loan
Document or from investigation,  litigation (including,  without limitation, any
actions  taken by the Bank to enforce  this  Agreement  or any of the other Loan
Documents) or other proceeding  (including,  without limitation,  any threatened
investigation or proceeding)  relating to the foregoing,  and the Borrower shall
reimburse the Bank, and each Affiliate  thereof and their respective  directors,
officers, employees and agents, upon demand for any expenses (including, without
limitation,  legal fees) incurred in connection with any such  investigation  or
proceeding;  but  excluding  any such losses,  liabilities,  claims,  damages or
expenses incurred by reason of the gross negligence or willful misconduct of the
Person to be indemnified.

           (d) If the Bank shall have  determined that after the date hereof the
adoption of any applicable law, rule or regulation  regarding  capital adequacy,
or any change in any existing or future law, rule or  regulation,  or any change
in the interpretation or administration  thereof,  or compliance by the Bank (or
its Lending  Office) with any request or directive  regarding  capital  adequacy
(whether or not having the force of law) of any Authority, has or would have the
effect of reducing the rate of return on the Bank's  capital as a consequence of
its  obligations  hereunder  to a level  below  that  which the Bank  could have
achieved but for such adoption,  change or compliance (taking into consideration
the Bank's policies with respect to capital adequacy) by an amount deemed by the
Bank to be material,  then from time to time, within 15 days after demand by the
Bank, the Borrower shall pay to

A#0004945.01
                                34





the Bank such additional  amount or amounts as will compensate the Bank for such
reduction.  The Bank will promptly  notify the Borrower of any event of which it
has knowledge,  occurring after the date hereof,  which will entitle the Bank to
compensation  pursuant to this paragraph and will designate a different  Lending
Office if such  designation  will  avoid the need for,  or reduce the amount of,
such  compensation  and will not, in the  judgement  of the Bank,  be  otherwise
disadvantageous  to the Bank. A certificate  of the Bank  claiming  compensation
under this  paragraph and setting forth the  additional  amount or amounts to be
paid to it hereunder  shall be conclusive in the absence of manifest  error.  In
determining  such  amount,  the  Bank  may  use  any  reasonable  averaging  and
attribution  methods. The provisions of this Section 7.03(d) shall be applicable
with  respect  to  any  Participant,  Assignee  or  other  Transferee,  and  any
calculations   required  by  such  provisions  shall  be  made  based  upon  the
circumstances of such Participant, Assignee or other Transferee.

           SECTION  7.04.   CONSEQUENTIAL   DAMAGES.   THE  BANK  SHALL  NOT  BE
RESPONSIBLE  OR LIABLE TO THE  BORROWER  OR ANY OTHER  PERSON OR ENTITY  FOR ANY
PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF
THIS  AGREEMENT,   THE  OTHER  LOAN  DOCUMENTS,   OR  ANY  OF  THE  TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.

           SECTION 7.05. Setoffs. (a) The Borrower hereby grants to the Bank, as
security for the full and punctual payment and performance of the obligations of
the Borrower under this Agreement, a continuing lien on and security interest in
all deposits and other sums  credited by or due from the Bank to the Borrower or
subject to  withdrawal by the  Borrower;  and  regardless of the adequacy of any
collateral or other means of obtaining  repayment of such obligations,  the Bank
may at any time  upon or after  the  occurrence  of any  Event of  Default,  and
without notice to the Borrower,  set off the whole or any portion or portions of
any or all such deposits and other sums against such obligations, whether or not
any other Person or Persons could also withdraw money therefrom.

           (b) The Borrower agrees,  to the fullest extent it may effectively do
so under  applicable  law,  that any  holder  of a  participation  in a Note may
exercise rights of set-off or counterclaim and other rights with respect to such
participation  as  fully  as if such  holder  of a  participation  were a direct
creditor of the Borrower in the amount of such participation.

           SECTION  7.06.   Amendments  and  Waivers.   Any  provision  of  this
Agreement,  the Notes or any other Loan  Documents  may be amended or waived if,
but only if,  such  amendment  or  waiver  is in  writing  and is  signed by the
Borrower and the Bank.

           SECTION  7.07.  Successors  and Assigns.  (a) The  provisions of this
Agreement  shall be binding upon and inure to the benefit of the parties  hereto
and their respective successors and assigns;  provided that the Borrower may not
assign or otherwise transfer any of its rights under this Agreement.

           (b) The  Bank  may at any time  sell to one or more  Persons  (each a
"Participant")  participating  interests in any Loan owing to the Bank, any Note
held by the Bank,  any  Commitment  hereunder or any other  interest of the Bank
hereunder. In the event of the sale by the Bank of a participating interest to a
Participant, the Bank's obligations under this Agreement shall remain unchanged,
the Bank shall remain solely responsible for the performance  thereof,  the Bank
shall

A#0004945.01
                                35





remain the holder of any such Note for all purposes  under this  Agreement,  and
the  Borrower  shall  continue  to deal  solely  and  directly  with the Bank in
connection  with the Bank's rights and obligations  under this Agreement.  In no
event shall the Bank be  obligated  to the  Participant  to take or refrain from
taking  any  action  hereunder  except  that the Bank may agree that it will not
(except as provided below), without the consent of the Participant, agree to (i)
the change of any date fixed for the payment of  principal of or interest on the
related Loan or Loans, (ii) the change of the amount of any principal,  interest
or fees due on any date  fixed  for the  payment  thereof  with  respect  to the
related Loan or Loans,  (iii) the change of the principal of the related Loan or
Loans,  (iv) any change in the rate at which either  interest is payable thereon
or (if the  Participant  is  entitled  to any part  thereof)  commitment  fee is
payable  hereunder from the rate at which the Participant is entitled to receive
interest  or   commitment   fee  (as  the  case  may  be)  in  respect  of  such
participation, (v) the release or substitution of all or any substantial part of
the collateral  (if any) held as security for the Loans,  or (vi) the release of
any  guaranty  given to  support  payment  of the  Loans.  If the  Bank  sells a
participating  interest in any Loan,  Note,  Commitment or other  interest under
this Agreement,  it shall within 10 Domestic Business Days of such sale, provide
the Borrower with written  notification  stating that such sale has occurred and
identifying the Participant and the interest purchased by such Participant.

           (c) The Bank may at any time assign to one or more banks or financial
institutions  (each an "Assignee")  all, or a proportionate  part of all, of its
rights  and  obligations  under  this  Agreement,  the Notes and the other  Loan
Documents,  and such  Assignee  shall  assume all such  rights and  obligations,
pursuant to an Assignment and Acceptance in the form attached  hereto as Exhibit
G,  executed by such Assignee and the Bank (and, in the case of an Assignee that
is not an Affiliate of the Bank, by the Borrower); provided that (i) no interest
may be sold by the Bank pursuant to this paragraph (c) unless the Assignee shall
agree to assume ratably  equivalent  portions of the transferor Bank's Tranche A
Loan and Tranche B Loan (or, if the Tranche B Loan has not yet been funded,  the
Tranche B Commitment),  (ii) the amount of the Loans (or Tranche B Commitment if
the  Tranche  B Loan  has not yet  been  funded)  of the  Bank  subject  to such
assignment  (determined  as of the effective  date of the  assignment)  shall be
equal to or  greater  than  $1,000,000,  and (iii)  unless a Default  shall have
occurred and be continuing),  no interest may be sold by a Bank pursuant to this
paragraph  (c) to any Assignee that is not then an Affiliate of the Bank without
the consent of the Borrower,  which consent shall not be unreasonably  withheld.
Upon (A) execution of the Assignment  and Acceptance by the Bank,  such Assignee
and (if  applicable)  the  Borrower,  (B)  delivery of an  executed  copy of the
Assignment and  Acceptance to the Borrower,  (C) payment by such Assignee to the
Bank of an amount equal to the purchase  price agreed  between the Bank and such
Assignee,  such Assignee  shall for all purposes be the party to this  Agreement
and shall  have pro rata share of all the  rights  and  obligations  of the Bank
under this  Agreement to the same extent as if it were an original  party hereto
with  Commitments as set forth in such  instrument of  assumption,  and the Bank
shall be released from its obligations  hereunder to a corresponding extent, and
no further  consent or action by the  Borrower or the Banks  shall be  required.
Upon the consummation of any transfer to an Assignee  pursuant to this paragraph
(c), the Bank and the Borrower shall make  appropriate  arrangements so that, if
required, a new Note is issued to each of such Assignee and the Bank.

           (d)  Subject  to  the   provisions  of  Section  7.08,  the  Borrower
authorizes the Bank to disclose to any Participant, Assignee or other transferee
(each a "Transferee")  and any prospective  Transferee any and all financial and
other information in the Bank's possession concerning the

A#0004945.01
                                36





Borrower which has been  delivered to the Bank by the Borrower  pursuant to this
Agreement or which has been  delivered to the Bank by the Borrower in connection
with the Bank's credit evaluation prior to entering into this Agreement.

           (e) Anything in this  Section  7.07 to the contrary  notwithstanding,
the  Bank  may  assign  and  pledge  all or any  portion  of  the  Loans  and/or
obligations  owing  to it to any  Federal  Reserve  Bank  or the  United  States
Treasury  as  collateral  security  pursuant  to  Regulation  A of the  Board of
Governors of the Federal  Reserve System and Operating  Circular  issued by such
Federal  Reserve  Bank,  provided  that any payment in respect of such  assigned
Loans and/or  obligations  made by the Borrower to the assigning and/or pledging
Bank in accordance with the terms of this Agreement shall satisfy the Borrower's
obligations  hereunder in respect of such assigned  Loans and/or  obligations to
the extent of such  payment.  No such  assignment  shall  release the  assigning
and/or pledging Bank from its obligations hereunder.

           SECTION 7.08.  Confidentiality.  The Bank agrees to exercise its best
efforts to keep any  information  delivered or made available by the Borrower to
it which is clearly indicated to be confidential information,  confidential from
anyone  other than  persons  employed  or  retained  by such Bank who are or are
expected  to  become   engaged  in   evaluating,   approving,   structuring   or
administering the Loans;  provided,  however,  that nothing herein shall prevent
the Bank from  disclosing  such  information  (i) upon the order of any court or
administrative  agency, (ii) upon the request or demand of any regulatory agency
or authority  having  jurisdiction  over the Bank, (iii) which has been publicly
disclosed,  (iv) to the  extent  reasonably  required  in  connection  with  any
litigation to which the Bank or its respective Affiliates may be a party, (v) to
the extent  reasonably  required in  connection  with the exercise of any remedy
hereunder,  (vi) to the Bank's legal counsel and independent  auditors and (vii)
to any actual or proposed  Participant,  Assignee or other  Transferee of all or
part of its  rights  hereunder  which has  agreed in  writing to be bound by the
provisions of this Section 7.08.

           SECTION 7.09. Survival of Certain  Obligations.  Section 7.03 and the
obligations of the Borrower thereunder,  shall survive, and shall continue to be
enforceable   notwithstanding,   the  termination  of  this  Agreement  and  the
Commitments  and the  payment in full of the  principal  of and  interest on all
Loans.

           SECTION 7.10.  Georgia Law.  This Agreement and each Note shall be 
construed in accordance with and governed by the law of the State of Georgia.

           SECTION 7.11. Severability. In case any one or more of the provisions
contained in this Agreement, the Notes or any of the other Loan Documents should
be invalid, illegal or unenforceable in any respect, the validity,  legality and
enforceability  of the remaining  provisions  contained herein and therein shall
not in any way be  affected  or  impaired  thereby  and shall be enforced to the
greatest extent permitted by law.

           SECTION 7.12. Interest.  In no event shall the amount of interest due
or payable  hereunder  or under the Notes  exceed the  maximum  rate of interest
allowed by  applicable  law, and in the event any such payment is  inadvertently
made to the Bank by the  Borrower or  inadvertently  received by the Bank,  then
such excess sum shall be credited as a payment of principal, unless the

A#0004945.01
                                37





Borrower shall notify the Bank in writing that it elects to have such excess sum
returned  forthwith.  It is the express  intent hereof that the Borrower not pay
and the Bank not  receive,  directly  or  indirectly  in any manner  whatsoever,
interest  in excess of that  which may  legally  be paid by the  Borrower  under
applicable law.

           SECTION 7.13.  Interpretation.  No provision of this Agreement or any
of the other Loan  Documents  shall be construed  against or  interpreted to the
disadvantage of any party hereto by any court or other  governmental or judicial
authority by reason of such party having or being deemed to have  structured  or
dictated such provision.

           SECTION 7.14.  Consent to  Jurisdiction.  The Borrower (a) submits to
personal jurisdiction in the State of Georgia, the courts thereof and the United
States District Courts sitting  therein,  for the enforcement of this Agreement,
the Notes and the other Loan  Documents,  (b) waives any and all personal rights
under the law of any  jurisdiction  to object on any basis  (including,  without
limitation, inconvenience of forum) to jurisdiction or venue within the State of
Georgia for the purpose of  litigation to enforce this  Agreement,  the Notes or
the other Loan  Documents,  and (c) agrees  that  service of process may be made
upon it in the manner prescribed in Section 7.01 for the giving of notice to the
Borrower.  Nothing  herein  contained,  however,  shall  prevent  the Bank  from
bringing any action or  exercising  any rights  against any security and against
the  Borrower  personally,  and against any assets of the  Borrower,  within any
other state or jurisdiction.

           SECTION  7.15.  Counterparts.  This  Agreement  may be  signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument.

A#0004945.01
                                38





           IN WITNESS WHEREOF,  the parties hereto have caused this Agreement to
be duly executed,  under seal, by their respective authorized officers as of the
day and year first above written.

                          ATLANTIC AMERICAN CORPORATION
ATTEST:

__________________________By: ___________________________(SEAL)
________, Secretary       Title:
                          4370 Peachtree Street, N.E.
[CORPORATE SEAL]          Atlanta, Georgia  30319-3000
                          Attention:  Hilton H. Howell, Jr.,
                                     President and Chief Executive Officer
                          Telecopy number:  (404) 231-2123
                          Telephone number:  (404) 266-5505


                          WACHOVIA BANK OF GEORGIA, N.A.


                          By: ___________________________(SEAL)
                          Title:


                          Lending Office
                          Wachovia Bank of Georgia, N.A.
                          191 Peachtree Street, N.E.
                          Atlanta, Georgia  30303-1757
                          Attention:  Southeast Corporate (MC 3940)
                          Telecopy number:  (404) 332-5016
                          Telephone number:  (404) 332-1371


A#0004945.01
                                39


                                                                    EXHIBIT 99.2








NEWS RELEASE                   For further information contact:
For Immediate Release               John W. Hancock
                               Senior Vice President and Treasurer
                               Atlantic American Corporation
                               (404) 266-5500

                  ATLANTIC AMERICAN CLOSES ON ACQUISITION OF
                       AMERICAN SOUTHERN INSURANCE COMPANY

ATLANTA,  January 2, 1996 -- Atlantic American  Corporation  (NASDAQ-AAME) today
announced  as of December  31, 1995,  it closed on the  acquisition  of American
Southern Insurance Company from Fuqua Enterprises, Inc.

Hilton Howell, Atlantic American's President and CEO, said: "We are very pleased
to have closed the acquisition of American Southern Insurance Company. It is one
of the most successful  property and casualty insurance companies in the country
and will add  significantly  to the financial  strength and  flexibility  of our
insurance operations."

On a pro forma basis compared with year-end 1994, this acquisition will increase
Atlantic  American's  consolidated  assets from $205.0 million to  approximately
$300.0 million,  will double the insurance  division's net premiums written from
$42.8 million to approximately  $86.0 million,  and will increase the division's
statutory capital and surplus from $29.5 million to approximately $63.5 million.

Atlantic American is a diversified holding company involved in the life, health,
property  and  casualty   insurance  and  retail   furniture   industries.   Its
subsidiaries include Atlantic American Life Insurance Company,  Bankers Fidelity
Life Insurance  Company,  Georgia Casualty & Surety Company,  American  Southern
Insurance  Company,  American Safety Insurance Company,  Leath Furniture,  Inc.,
Modernage Furniture, Inc. and Jefferson Home Furniture Company.




                                                                    EXHIBIT 99.3






NEWS RELEASE                   For further information contact:
For Immediate Release               John W. Hancock
                               Senior Vice President and Treasurer
                               Atlantic American Corporation
                               (404) 266-5500


ATLANTA,  January 9, 1996 --  Atlantic  American  Corporation  (NASDAQ-NNM:AAME)
today announced that it had entered into a merger agreement pursuant to which it
will  acquire  all of the  remaining  publicly-held  shares  of its  subsidiary,
Bankers Fidelity Life Insurance Company. Atlantic American currently owns 93% of
the outstanding  stock of Bankers  Fidelity.  The transaction  will be completed
through  the  merger  of a newly  formed  wholly-owned  subsidiary  of  Atlantic
American  into Bankers  Fidelity,  with  Bankers  Fidelity  being the  surviving
corporation in the merger. As a result of the merger, the public shareholders of
Bankers  Fidelity will receive $6.25 in cash for each share of common stock, for
an aggregate of approximately $1,264,000.

Commenting on the announcement, Hilton Howell, Atlantic American's President and
CEO,  said:  "We   appreciate  the   participation   and  loyalty  of  the  many
long-standing  shareholders of Bankers Fidelity and believe that the transaction
will permit  those  shareholders  to maximize the value of their  investment  in
Bankers Fidelity."

Atlantic  American  expects to  complete  the  transaction  by the end of March,
following  approval  at a  shareholders  meeting  and  receipt of any  necessary
regulatory approvals.

Bankers  Fidelity  offers  Medicare  supplement  and other  accident  and health
insurance,  as well as life insurance,  through a network of approximately 1,300
independent agents in 22 states.

Atlantic American is a diversified holding company involved in the life, health,
property  and  casualty   insurance  and  retail   furniture   industries.   Its
subsidiaries include Atlantic American Life Insurance Company,  Bankers Fidelity
Life Insurance  Company,  Georgia Casualty & Surety Company,  American  Southern
Insurance  Company,  American Safety Insurance Company,  Leath Furniture,  Inc.,
Modernage Furniture, Inc. and Jefferson Home Furniture Company, Inc.