<DOCUMENT>
<TYPE>PRE 14A
<SEQUENCE>1
<FILENAME>proxy.txt
<DESCRIPTION>PROXY 2002
<TEXT>
AT-1175802v1
<table>
<caption>
<s>                         <c>
                            SCHEDULE 14A INFORMATION
 Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

</table>
Filed by the Registrant  [ X ]
Filed by a Party other than the Registrant  [    ]
<table>
<caption>
<s>      <c>
Check the appropriate box:
[ X ]    Preliminary Proxy Statement
[   ]  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[   ]  Definitive Proxy Statement
[   ]  Definitive Additional Materials
[   ]  Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
</table>
                          Atlantic American Corporation
                (Name of Registrant as Specified In Its charter)

________________________________________________________________________________
     (Name of Person(s) Filing Proxy Statement if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[ X ]   No fee required.
[   ]   Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

1)   Title of each class of securities to which transaction applies:

2)   Aggregate number of securities to which transaction applies:

3)   Per unit price or other underlying value of transaction  computed  pursuant
     to Exchange Act Rule 0-11  (set forth the amount on which the filing fee is
     calculated and state how it was determined.):

4)   Proposed maximum aggregate value of transaction:

5)       Total fee paid:


[   ] Fee paid previously with preliminary materials.

[   ] Check box if any part of the fee is offset as provided  by  Exchange  Act
     Rule  0-11(a)(2)  and identify the filing for which the  offsetting fee was
     paid  previously.  Identify the previous filing by  registration  statement
     number,  or the Form or  Schedule  and the date of its  filing.

         1)       Amount Previously Paid:

         2)       Form, Schedule or Registration Statement No.:

         3)       Filing Party:

         4)       Date Filed:









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



                    NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
                             TO BE HELD MAY 7, 2002






Notice is hereby  given that the  Annual  Meeting of  Shareholders  of  Atlantic
American  Corporation (the "Company") will be held at the offices of the Company
at 4370 Peachtree Road, N.E.,  Atlanta,  Georgia at 9:00 A.M.,  Eastern Standard
Time, on May 7, 2002, for the following purposes:

(1)  To elect eleven (11) directors of the Company for the ensuing year;

(2)  To amend the  Company's  Articles of  Incorporation  to increase  the total
     number of authorized shares of Common Stock from 30,000,000 to 50,000,000;

(3)  To approve the Atlantic American Corporation 2002 Incentive Plan; and

(4)  To transact such other  business as may properly come before the meeting or
     any adjournments thereof.

Only  shareholders of record at the close of business on March 19, 2002, will be
entitled  to  notice  of and to vote at the  meeting,  or any  postponements  or
adjournments thereof.

WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE COMPLETE,  SIGN,
DATE AND RETURN THE ENCLOSED  PROXY.  NO POSTAGE IS REQUIRED  WHEN MAILED IN THE
ENCLOSED ENVELOPE IN THE UNITED STATES.

                                        By Order of the Board of Directors





                                        Janie L. Ryan
                                        Corporate Secretary



April 1, 2002
Atlanta, Georgia




                                     Page 1





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


                                 PROXY STATEMENT
                     FOR THE ANNUAL MEETING OF SHAREHOLDERS
                             TO BE HELD MAY 7, 2002
                                 ---------------

GENERAL

This proxy statement is furnished in connection with the solicitation of proxies
by the Board of Directors of Atlantic  American  Corporation (the "Company") for
use at the Annual Meeting of Shareholders (the "Meeting") to be held at the time
and place and for the purposes  specified in the  accompanying  Notice of Annual
Meeting of Shareholders and at any postponements or adjournments  thereof.  When
the  enclosed  proxy is properly  executed  and  returned,  the shares  which it
represents  will be voted at the  Meeting in  accordance  with the  instructions
thereon. In the absence of any such instructions, the shares represented thereby
will be voted in favor of the  election of nominees for  directors  listed under
the  caption  "Election  of  Directors";   the  amendment  of  the  Articles  of
Incorporation  to increase the total number of shares of Common Stock authorized
to be issued from  30,000,000  to  50,000,000;  and the approval of the Atlantic
American Corporation 2002 Incentive Plan.  Management does not know of any other
business  to be brought  before the  Meeting  not  described  herein,  but it is
intended  that as to such other  business,  a vote may be cast  pursuant  to the
proxy in accordance with the judgment of the proxies appointed thereunder.  This
proxy  statement  and the  accompanying  form of proxy are first being mailed to
shareholders  of the  Company on or about  April 1, 2002.

Any  shareholder  who  executes  and  delivers a proxy may revoke it at any time
prior  to its  use by (i)  giving  written  notice  of  such  revocation  to the
Secretary  of the  Company  at  4370  Peachtree  Road,  N.E.,  Atlanta,  Georgia
30319-3000;  (ii)  executing and  delivering a proxy bearing a later date to the
Secretary  of the  Company  at  4370  Peachtree  Road,  N.E.,  Atlanta,  Georgia
30319-3000; or (iii) attending the Meeting and voting in person.

Only holders of record of issued and  outstanding  shares of $1.00 par value per
share  common  stock of the Company  ("Common  Stock") as of March 19, 2002 (the
"Record Date") will be entitled to notice of and to vote at the Meeting.  On the
Record Date,  there were  21,258,752  shares of Common Stock  outstanding.  Each
share of Common Stock is entitled to one vote.

ANNUAL REPORT

The Annual Report of the Company for the year ended December 31, 2001, including
financial statements, is being provided with this proxy statement. The Company's
Annual Report on Form 10-K,  filed with the Securities and Exchange  Commission,
provides certain additional  information.  Shareholders may obtain a copy of the
Form 10-K without charge upon written request addressed to: Corporate Secretary,
Atlantic  American  Corporation,  4370 Peachtree Road,  N.E.,  Atlanta,  Georgia
30319-3000.  If  the  person  requesting  a  copy  of  the  Form  10-K  is not a
shareholder of record, the request must include a representation that the person
is a beneficial owner of the Common Stock.

EXPENSES OF SOLICITATION

The  costs  of  soliciting  proxies  will be  borne  by the  Company.  Officers,
directors  and  employees  of the  Company  may  solicit  proxies by  telephone,
telegram or personal  interview.  No contract or arrangement exists for engaging
specially-paid  employees or solicitors in connection  with the  solicitation of
proxies for the  Meeting.  Arrangements  may be made with  brokerage  houses and
other  custodians,  nominees and fiduciaries to send proxies and proxy materials
to their  principals,  and the Company will reimburse them for their expenses in
so doing.

VOTE REQUIRED

A majority of the  outstanding  shares of Common Stock must be present in person
or by proxy at the  Meeting in order to have the quorum  necessary  to  transact
business.  Abstentions  and  broker  "non-votes"  will be  counted as present in
determining  whether the quorum requirement is satisfied.  Directors are elected
by the affirmative  vote of a plurality of the shares of Common Stock present in
person  or by proxy  and  actually  voting  at a  meeting  at which a quorum  is
present.  To approve the  amendment to the Company's  Articles of  Incorporation
that  will  increase  the  number of shares  of  Common  Stock  authorized  from
30,000,000  to  50,000,000,  the  affirmative  vote of a majority  of the shares
outstanding  as of the Record Date is  required.  In order for  shareholders  to
approve the other  matters  scheduled to be presented at the Meeting,  the votes
cast  favoring the proposal  must exceed the votes cast  opposing the  proposal.
Abstentions  and non-votes will have no effect on the voting with respect to any
proposal as to which there is an  abstention  or non-vote.  A "non-vote"  occurs
when a nominee  holding  shares for a  beneficial  owner  votes on one  proposal
pursuant to discretionary  authority or instructions  from the beneficial owner,
but does not vote on another  proposal  because  the  nominee  has not  received
instruction from the beneficial owner and does not have discretionary power.



                                     Page 2



1. ELECTION OF DIRECTORS

One of the purposes of the Meeting is to elect  eleven  directors to serve until
the next annual meeting of the shareholders and until their successors have been
elected and  qualified or until their  earlier  resignation  or removal.  In the
event any of the nominees  should be unavailable  to serve as a director,  which
contingency is not presently anticipated, proxies will be voted for the election
of such other persons as may be designated by the present Board of Directors.

Nominees for election to the Board of Directors are considered  and  recommended
by the Executive  Committee of the Board of Directors to the  shareholders.  The
Company has no  procedure  whereby  nominees  are  solicited  or  accepted  from
shareholders.

All of the  nominees  for  election  to the  Board of  Directors  are  currently
directors of the Company.

The following  information is set forth with respect to the eleven  nominees for
director to be elected at the Meeting:

  ------------------------ ----- -----------------------------------------------
  Name                     Age   Position with the Company
  ------------------------ ----- -----------------------------------------------
  J. Mack Robinson         78    Chairman of the Board
  Hilton H. Howell, Jr.    40    Director, President and Chief Executive Officer
  Edward E. Elson          68    Director
  Harold K. Fischer        69    Director
  Samuel E. Hudgins        73    Director
  D. Raymond Riddle        68    Director
  Harriett J. Robinson     71    Director
  Scott G. Thompson        57    Director
  Mark C. West             42    Director
  William H. Whaley, M.D.  62    Director
  Dom H. Wyant             75    Director
  ------------------------ ----- -----------------------------------------------

Mr.  Robinson  has served as Director  and  Chairman of the Board since 1974 and
served as President and Chief  Executive  Officer of the Company from  September
1988 to May 1995.  In  addition,  Mr.  Robinson  is also a Director  of Bull Run
Corporation and Gray Communications  Systems, Inc. Mr. Howell has been President
and Chief  Executive  Officer of the Company  since May 1995,  and prior thereto
served as Executive Vice President of the Company from October 1992 to May 1995.
He has been a Director of the Company  since  October  1992.  Mr.  Howell is the
son-in-law  of Mr.  and  Mrs.  Robinson.  He is  also a  Director  of  Bull  Run
Corporation and Gray Communications Systems, Inc.
Mr.  Elson is the  former  Ambassador  of the  United  States of  America to the
Kingdom of Denmark,  serving from 1993 through 1998. He has been director of the
Company  since October 1998,  and  previously  served as a director from 1986 to
1993.

Mr. Fischer is the retired President of Association  Casualty  Insurance Company
and  Association  Risk  Management  General  Agency,  Inc.,  subsidiaries of the
Company,  which he served from 1984 through June 2001. He has been a Director of
the Company since the Company acquired those two subsidiaries in July 1999.

Mr.  Hudgins  has been a managing  partner  of PILOT  PARTNERS  LLC  (management
consultants) since November 2000. Prior thereto he was an independent consultant
since  September 1997 and was a Principal in Percival,  Hudgins & Company,  LLC,
and investment  bank,  from April 1992 to September 1997. He has been a Director
of the Company  since 1986 and also serves as a Director of The  Wachovia  Funds
and The Wachovia Municipal Funds of Wachovia Corporation.

Mr.  Riddle is the  retired  Chairman  and Chief  Executive  Officer of National
Service Industries, Inc., a diversified holding company, a position he held from
September  1994 to February  1996, and prior thereto served as the President and
Chief Executive Officer of National Service Industries, Inc. since January 1993.
Prior thereto, he was President of Wachovia Bank of Georgia, N.A., the President
of Wachovia  Corporation  of Georgia and  Executive  Vice  President of Wachovia
Corporation.  He has been a Director of the Company since 1976,  and also serves
as a Director of AMC,  Inc.,  Atlanta Gas Light  Company,  Equifax Inc. and MARC
Life.

Mrs. Robinson,  the wife of J. Mack Robinson, has been a Director of the Company
since 1989. She is also a Director of Gray Communications Systems, Inc.

Mr.  Thompson has been the  President  and Chief  Financial  Officer of American
Southern Insurance Company, a subsidiary of the Company, since 1984. He has been
a Director of the Company since February 1996.

Mr.  West has  been the  Chairman  and  Chief  Executive  Officer  of The  Genoa
Companies since 1990. He has been a Director of the Company since July 1997.

Dr. Whaley has been a physician in private  practice for more than the past five
years. He has been a Director of the Company since July 1992.


                                     Page 3

<PAGE>


Mr. Wyant is a retired  partner of the law firm of Jones,  Day,  Reavis & Pogue,
which  serves as counsel to the  Company.  He served as a Partner with that firm
from 1989 through 1994,  and as Of Counsel from 1995 through 1997. He has been a
Director of the Company since 1985.

The  Board  of  Directors  recommends  a vote  FOR the  election  of each of the
nominees for Director.

Committees of The Board of Directors

The Board of  Directors  of the  Company  has  three  standing  committees:  the
Executive Committee,  the Stock Option and Compensation  Committee and the Audit
Committee.  The Company has no official nominating committee,  but the Company's
Executive  Committee  performs the functions  normally performed by a nominating
committee.  The  Executive  Committee is composed of Messrs.  Robinson,  Howell,
Hudgins  and  Whaley,  and its  function is to act in the place and stead of the
Board to the extent  permitted  by law on matters  which  require  Board  action
between  meetings of the Board of  Directors.  The  Executive  Committee  of the
Company met or acted by written consent six times during 2001.

The Stock  Option and  Compensation  Committee  is  composed  of Messrs.  Elson,
Riddle, West and Whaley. The Stock Option and Compensation  Committee's function
is to  establish  the number of stock  options to be granted to officers and key
employees and the annual  salaries and bonus amounts  payable to officers of the
Company.  The Stock Option and  Compensation  Committee  met or acted by written
consent two times during 2001.

The Audit Committee is composed of Messrs.  Elson,  Riddle, West, and Wyant. The
Audit Committee's  functions include reviewing and discussing with the Company's
independent  public  accountants  the  accountants'   reports  and  audits,  and
reporting the committee's  findings to the full Board.  The Audit Committee held
five meetings in 2001.

The Company's Audit Committee is composed of independent  directors,  as defined
under the rules of the  Nasdaq  Stock  Market,  and  information  regarding  the
functions performed by the Audit Committee and its membership during 2001 is set
forth  in the  "Report  of the  Audit  Committee,"  included  below.  The  Audit
Committee is governed by a written  charter adopted and approved by the Board of
Directors.

The Board of Directors met or acted by written  consent four times in 2001. Each
of the  directors  named above  attended at least 75% percent of the meetings of
the Board and its committees of which he or she was a member during 2001.

Report of the Audit Committee

[TO BE INCLUDED IN DEFINITIVE PROXY MATERIALS]


Compensation of Directors

The Company's  policy is to pay all Directors an annual  retainer fee of $6,000,
to pay fees to Directors at the rate of $1,000 for each Board  meeting  attended
and $500 for each committee  meeting  attended,  and to reimburse  Directors for
actual expenses  incurred in connection with attending  meetings of the Board of
Directors and  committees of the Board.  In addition,  pursuant to the Company's
1996 Director Stock Option Plan (the "Director Plan"), all Directors who are not
employees or officers of the Company or any of its  subsidiaries are entitled to
receive an initial  grant of options to purchase  5,000  shares of Common  Stock
upon first  becoming a Director and annual  grants of options to purchase  1,000
shares of  Common  Stock.  As  described  under  "Ratification  of the  Atlantic
American  Corporation  2002 Incentive Plan" below,  non-employee  Directors will
also be eligible to receive stock options and other equity awards under the 2002
Incentive Plan being presented for approval by the shareholders at the Meeting.




                                     Page 4

<PAGE>


                        SECURITY OWNERSHIP OF MANAGEMENT

The following  table sets forth Common Stock  ownership  information as of March
19,  2002 by: (i) each  person who is known to the  Company to own  beneficially
more than 5% of the outstanding shares of Common Stock of the Company, (ii) each
director,  (iii) each executive officer named in the Summary Compensation Table,
and (iv) all of the Company's directors and executive officers as a group.
<table>
<caption>
------------------------------------------------------------------------------------------------------------------
<s>                                                                            <c>                           <c>
                                                                            Amount and Nature
Name of Individual                                                           of Beneficial                Percent
or Identity of Group                                                          Ownership(1)                of Class
-------------------------------------------------------------------------------------------------------------------

J. Mack Robinson...................................................             13,844,072 (2)            64.76%
 4370 Peachtree Road, N.E.
 Atlanta, Georgia 30319
Harriett J. Robinson ..............................................              8,351,745(3)             39.27%
 3500 Tuxedo Road, N.W.
 Atlanta, Georgia 30305
Harold K. Fischer..................................................              1,334,320(4)              6.28%
 P.O. Box 9728
 Austin, TX 78766
Hilton H. Howell, Jr...............................................                478,731(5)              2.22%
Edward E. Elson....................................................                 10,000(6)                *
Samuel E. Hudgins..................................................                 10,000(7)                *
D. Raymond Riddle..................................................                117,950(8)                *
Scott G. Thompson..................................................                 58,500(9)                *
Mark C. West.......................................................                141,500(10)               *
William H. Whaley, M.D.............................................                 29,000(11)               *
Dom H. Wyant.......................................................                 10,000(7)                *
All Directors and Executive Officers as a Group (11 persons).......             16,034,673(12)            73.67%
------------------------------------------------------------------------------------------------------------------
*Represents less than 1% of class.
</table>
(1)  All such  shares  are owned  beneficially  and of record  unless  otherwise
     stated.
(2)  Includes 3,414,502 shares owned by Gulf Capital Services, Ltd., 4370
     Peachtree Road, N.E., Atlanta, Georgia 30319; 936,702 shares owned by Delta
     Life Insurance  Company;  and 294,000 shares owned by Delta Fire & Casualty
     Company;  all of which are companies  controlled by Mr.  Robinson;  100,000
     shares subject to presently  exercisable options held by Mr. Robinson;  and
     8,929 shares held pursuant to the Company's  401(k) Plan. Also includes all
     shares held by Mr. Robinson's wife (see note 3 below).
(3)  Harriett  J.  Robinson  is the wife of J. Mack  Robinson.  Includes
     7,955,248  shares of common stock held by Mrs.  Robinson as trustee for her
     children,  as to which she disclaims  beneficial  ownership.  Also includes
     10,000 shares  issuable upon exercise of options granted under the Director
     Plan  exercisable  within  60 days,  and 6,720  shares  held  jointly  with
     grandson. Does not include shares held by Mr. Robinson (see Note 2 above).
(4)  Includes 5,000 shares  issuable upon exercise of options  granted under the
     Director Plan, exercisable within 60 days.
(5)  Includes 250,000 shares subject to presently exercisable stock options held
     by Mr.  Howell;  18,986 shares held pursuant to the Company's  401(k) Plan;
     1,025  shares  owned  by his  wife,  38,000  shares  owned  by his  wife as
     custodian for their  children,  and 6,720 shares held in joint ownership by
     Mr.  Howell's son and Harriett J.  Robinson,  as to which he disclaims  any
     beneficial ownership.
(6)  Includes 8,000 shares  issuable upon exercise of options  granted under the
     Director  Plan,  exercisable  within 60 days.  (7) Includes  10,000  shares
     issuable  upon  exercise  of  options  granted  under  the  Director  Plan,
     exercisable  within 60 days.  (8)  Includes  10,000  shares  issuable  upon
     exercise of options granted under the Director Plan,  exercisable within 60
     days, and 600 shares held by Mr.  Riddle's  spouse as to which he disclaims
     any beneficial ownership.
(9)  Includes 58,500 shares subject to presently exercisable options.
(10) Includes 9,000 shares  issuable upon exercise of options  granted under the
     Director Plan,  exercisable  within 60 days.  Also includes  127,500 shares
     owned by Atlantis  Capital LLP, for which Mr. West is the  President of the
     General Partner. Also includes 5,000 shares owned by the George West Mental
     Health Foundation,  for which Mr. West is the President,  and for which Mr.
     West  disclaims  any  beneficial  ownership  of  the  shares  held  by  the
     foundation.
(11) Includes  10,000 shares issuable upon exercise of options granted under the
     Director  Plan  exercisable  within 60 days and 6,000  shares  owned by Dr.
     Whaley's spouse as custodian for his daughter.
(12) Includes  479,500 shares subject to presently  exercisable  options held by
     all directors and executive  officers as a group. Also includes shares held
     pursuant to the Company's 401(k) Plan described in notes 2 and 5 above.


                                     Page 5

<PAGE>


SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Under  the  securities  laws of the  United  States,  the  Company's  directors,
executive  officers,  and  any  persons  holding  more  than  ten  percent  of a
registered  class of the Company's  equity  securities are required to file with
the Securities and Exchange  Commission initial reports of ownership and reports
of changes of  ownership  of Common  Stock and other  equity  securities  of the
Company,  and to  furnish  the  Company  with  copies  of such  reports.  To the
Company's knowledge,  all of these filing requirements were satisfied during the
year ended December 31, 2001. In making this disclosure,  the Company has relied
on written  representations  of its  directors  and  officers  and copies of the
reports that have been filed with the Securities and Exchange Commission.

                             EXECUTIVE COMPENSATION

There  is  shown  below   information   concerning   the  annual  and  long-term
compensation  for services in all capacities to the Company for the fiscal years
ended  December 31, 2001,  2000 and 1999, of those  persons who were:  (i) chief
executive  officer,  (ii) the only other  executive  officer  of the  Company at
December  31,  2001,  whose  salary  and  bonus  exceeded  $100,000,  (iii)  one
additional  individual  who would have been included  under category (ii) above,
but for the fact that the individual was not serving as an executive  officer as
of December 31, 2001, referred to as the named executive officers:

                           Summary Compensation Table
<table>

<s>                                   <c>        <c>            <c>       <c>                 <c>
                                                                            Long-Term
                                                          Annual          Compensation
                                                       Compensation          Awards             All Other
 Name and                                              ------------          ------             ---------
Principal Position                    Year       Salary(s)      Bonus(s)  Options/SARs(#)     Compensation(s)
------------------                    ----       ---------      --------  ---------------     ---------------
Hilton H. Howell, Jr.                 2001        $312,500      $136,000      100,000            $15,250 (1)
President and CEO                     2000         296,667       126,000        -0-               15,000
                                      1999         280,000       105,000        -0-               14,050

J. Mack Robinson                      2001         140,000        49,000        -0-               15,250 (2)
Chairman of the Board                 2000         140,000        49,000        -0-               15,000
                                      1999         140,000        35,000      100,000             13,275

Robert A. Renaud (3)                  2001         152,891         -0-          -0-                5,250 (4)
Vice President and CFO
</table>
(1)  Consists of (i)  contributions  to Mr. Howell's account under the Company's
     401(k) Plan of $5,250 in 2001; and (ii) fees paid for serving as a director
     of the Company of $10,000 in 2001.
(2)  Consists of (i) contributions to Mr. Robinson's account under the Company's
     401(k) Plan of $5,250 in 2001; and (ii) fees paid for serving as a director
     of the Company of $10,000 in 2001.
(3)  Mr. Renaud was employed by the Company through  December 21, 2001.  Bonuses
     based on  performance  during  2001  were not  determined  until  after his
     resignation; therefore he received no bonus.
(4)  Consists of  contributions  to Mr.  Renaud's  account  under the  Company's
     401(k) Plan in 2001.


                                        Option/SAR Grants In Last Fiscal Year

The following table provides information related to options granted to the named
executive officers during fiscal year 2001.
<table>
<s>                       <c>                <c>              <c>           <c>             <c>             <c>
                                                                                            Potential Realizable Value
                                                                                              at Assumed Annual Rates
                            Individual                                                      of Stock Price Appreciation
                             Grants                                                               for Option Term(1)
                          ----------------------------------------------------------------------------------------------
                            Number of         Percent of
                           Securities           Total
                           Underlying        Options/SARs      Exercise
                          Options/SARs        Granted to       or Base
                           Granted (#)       Employees in       Price       Expiration
Name                           (2)           Fiscal Year        ($/Sh)         Date            5%($)          10%($)
----------------------    --------------    ---------------    ---------    ------------    ----------      ----------
Hilton H. Howell, Jr.        100,000            17.78%          $1.25       10/15/2011       $79,000        $200,000
J. Mack Robinson               -0-               -0-             -0-            N/A            -0-             -0-
Robert A. Renaud               -0-               -0-             -0-            N/A            -0-             -0-
</table>

(1)  The potential  realizable value portion of the foregoing table  illustrates
     value that might be realized upon exercise of the options immediately prior
     to the expiration of their term, assuming the specified compounded rates of
     appreciation  on the  Company's  Common Stock over the term of the options.
     The assumed annual rates of stock price  appreciation  are specified by the
     rules of the Securities and Exchange  Commission for illustrative  purposes
     only and are not intended as projections  of the future  performance of the
     Company's Common Stock.

                                     Page 6

<PAGE>


(2)  Options  became  exercisable  with  respect  to 50% of the  shares  covered
     thereby on October 15, 2001,  the date of grant;  options for an additional
     25% of the shares become  exercisable  on October 15, 2002; and options for
     the  remaining  25% become  exercisable  on October 15, 2003.  The exercise
     price was equal to the market  value of the stock at the close of  business
     on the date of grant.
<table>
<s>     <c>               <c>                <c>                   <c>                            <c>
                           Aggregated Option/SAR Exercises In Last Fiscal Year and FY-End Option/SAR Values

The  following  table  provides  information  related to the number and value of
options held by the named executive officers at fiscal year-end.
                                                                       Number of Securities
                                                                      Underlying Unexercised        Value of Unexercised
                               Shares                                     Options / SARs          In-the-Money Options / SARs
                            Acquired on                                    at Year-End (#)             at Year-End ($)(1)
          Name              Exercise (#)     Value Realized ($)     Exercisable / Unexercisable    Exercisable / Unexercisable
          ----              ------------     ------------------     ---------------------------    ---------------------------
Hilton H. Howell, Jr.           -0-                  -0-                250,000 / 50,000              $237,500 / $47,500
J. Mack Robinson                -0-                  -0-                100,000 / -0-                       $0 / $0
Robert A. Renaud                -0-                  -0-                          -0-                       $0 / $0

</table>
(1)  Value is calculated on the difference between the option exercise price and
     the closing price for the Company's  Common Stock as reported by the Nasdaq
     National  Market on December 31, 2001,  which was $2.20,  multiplied by the
     number of shares of Common Stock underlying the option.

                                PERFORMANCE GRAPH

The graph below  compares the  cumulative  total return to  shareholders  on the
Common Stock for the period from  December  31, 1996 through  December 31, 2001,
with (i) the Russell  2000 Index,  (ii) the Nasdaq  Insurance  Index and (iii) a
peer group of various insurance companies (the "Insurance Peer Group").


Assumes $100 invested at the close of trading 12/96 in Atlantic American
Corporation common stock, Russell 2000 Index, NASDAQ Insurance Index, and PEER
Group.
<table>
<s>                                    <c>             <c>             <c>             <c>             <c>             <c>
                                        1996            1997            1998            1999            2000            2001
                                        ----            ----            ----            ----            ----            ----
Atlantic American Corporation          100.00          165.30          159.16           75.51           64.56           71.02
Russell 2000 Index                     100.00          122.20          118.86          140.06          134.60          135.99
NASDAQ Insurance Index                 100.00          122.69          122.61          129.40          147.90          158.39
Peer Group                             100.00          126.85           82.59           56.97           55.74           33.00

</table>

Factual material is obtained from sources believed to be reliable, but the
publisher is not responsible for any errors or omissions contained herein.



Peer  Group:  American  Safety  Insurance  Company,   Donegal  Insurance  Group,
Gainesco,  Inc.,  Siebels-Bruce  Group,  Inc.,  Cotton  States  Life  Insurance,
National Securities Group,  Meadowbrook Insurance Group, Danielson Holding Group
and Highlands Insurance Company.  The Company believes that a comparison to this
peer group is more  meaningful  for  shareholders  than the other  broad  market
indexes presented above.




                                     Page 7

<PAGE>





EXECUTIVE COMPENSATION

 Report of the Stock Option and Compensation Committee on Executive Compensation

Compensation Philosophy

The Compensation  Committee  believes that  compensation of executives should be
designed to motivate  those persons to perform at their  potential over both the
short and the long term. The Compensation  Committee  believes that equity-based
incentives  can benefit the Company by  increasing  the  retention of executives
while   aligning  their   long-term   interests  with  those  of  the  Company's
shareholders. Compensation determinations are primarily based on the performance
of the Company and the individual  executive  officer during a particular  year,
and  expectations  and  objectives for  performance in the succeeding  year. The
Compensation  Committee also believes that compensation  packages for executives
must be  structured  to take  into  account  the  nature  and the  growth of the
Company's lines of business in appropriate circumstances.

Cash Compensation.  The compensation packages for the executive officers consist
of three components: base salaries, cash bonuses and equity incentives.

The Chairman of The Board annually reviews  executive  officer  compensation and
recommends  to the  Compensation  Committee  proposed  salaries  and bonuses for
himself and for each of the other executive officers.  Factors considered by the
Chairman and the Compensation Committee are based upon the growth of the Company
with regard to net income, total assets,  premiums and shareholders' equity. All
of these factors were considered in  establishing  salary levels for each of the
executive  officers,  as  were  their  individual  duties  and  the  growth  and
effectiveness of each in performing those duties.  In establishing  compensation
levels for the executive officers for 2001, the Compensation Committee sought to
structure compensation packages that were designed both to achieve the objective
of the Compensation  Committee's  compensation  philosophy and to be competitive
with those offered by similarly  situated  companies.  For 2001, the Chairman of
The Board  elected not to  recommend  an  increase  in his own  salary,  and the
Compensation  Committee  did  not  implement  an  increase  in his  salary.  The
Compensation  Committee  did  increase  the  base  salary  for the  other  named
executive  officers  for 2001,  having  taken  into  consideration  the  factors
identified  above.  Upon  the  Chairman  of  The  Board's  recommendation,   the
Compensation  Committee  awarded  cash  bonuses  to each of the named  executive
officers,  including  to the Chief  Executive  Officer as described  below.  The
bonuses are generally determined as a percentage of the executive officer's base
salary for the succeeding fiscal year. The bonuses,  which were actually paid in
the first quarter of 2002,  reflect an evaluation of the individual  performance
of the  officers,  as well as the  performance  of the Company as a whole during
2001.

Equity-Based Compensation. The Compensation Committee believes that equity-based
compensation  in the form of stock  options  or other  stock  awards  serves  to
motivate  executives to seek to improve the Company's  short-term  and long-term
prospects and to align the interests of the Company's  executives  with those of
the shareholders.  During 2001, the Compensation Committee granted stock options
at  prevailing  market  prices  on the  dates  of  grant.  The  factors  used in
determining the size of the individual  grant were the same as those  considered
with respect to cash  bonuses.  The grant vested with respect to one-half of the
shares purchasable thereunder on the date of grant with the remainder vesting in
equal  increments on each of the first and second  anniversaries  of the date of
grant.  The  vesting  schedule  is designed to  encourage  both  short-term  and
long-term performance.

Chief Executive Officer. Mr. Howell's compensation is generally evaluated on the
same basis as the Company's other executive officers.  The Committee approved an
increase of 5% in Mr.  Howell's  base salary for 2001,  and in 2002  awarded Mr.
Howell a cash bonus of $136,000 in recognition of his contributions during 2001.
In 2001, the  Compensation  Committee  granted stock options to purchase 100,000
shares to Mr. Howell at prevailing market prices.



                                                     Edward E. Elson
                                                     D. Raymond Riddle
                                                     Mark C. West
                                                     Dr. William Whaley


                                     Page 8

<PAGE>



        2. AMENDMENT TO ARTICLES OF INCORPORATION TO INCREASE AUTHORIZED
                             SHARES OF COMMON STOCK

The Board of Directors has adopted and recommends to the shareholders  that they
approve an amendment to the Articles of  Incorporation  of the Company that will
increase the total number of authorized  shares of Common Stock, par value $1.00
per share, from 30,000,000 shares to 50,000,000  shares.  The proposed amendment
would  delete the first  sentence  of  Article V of the  Company's  Articles  of
Incorporation  in its  entirety and  substitute  in lieu of such  paragraph  the
following:

"The  total  number of  shares  of  capital  stock of the  Corporation  shall be
54,000,000,  which shall consist of (a) 50,000,000 shares of common stock of the
par value of $1.00 per  share  ("Common  Stock"),  and (b)  4,000,000  shares of
Preferred Stock of par value of $1.00 per share  ("Preferred  Stock"),  of which
Preferred  Stock (i) 30,000  shares shall be designated as "Series A Convertible
Preferred Stock" having the powers, preferences and rights designated as part of
these  Restated  Articles  of  Incorporation,   (ii)  134,000  shares  shall  be
designated  as "Series B Preferred  Stock"  having the powers,  preferences  and
rights designated as part of these Restated Articles of Incorporation, and (iii)
100,000  shares shall be  designated  as "Series C Preferred  Stock"  having the
powers,  preferences and rights designated as part of these Restated Articles of
Incorporation."

The Board of Directors  believes that it is in the best interests of the Company
and its shareholders to increase the number of authorized shares of Common Stock
to insure a sufficient number of shares are available for future issuances.  The
Company  currently has 30,000,000  shares of Common Stock  authorized,  of which
approximately  21,400,000 are already issued and outstanding,  and an additional
6,300,000 are already  reserved for issuance  pursuant to existing  Stock Option
Plans,  the 401(k) Plan or upon  conversion of  outstanding  shares of preferred
stock. That leaves only 2,300,000 shares  authorized but unissued.  The Board of
Directors  anticipates that circumstances will arise during the normal course of
business  whereby the Company  will  desire to issue  shares of Common  Stock in
excess of the  currently  authorized  amount for various  business and financial
needs of the Company,  including, but not limited to, potential acquisitions and
financings.  The availability of additional  authorized but unissued shares will
provide the Company with  flexibility to issue Common Stock to meet those needs.
Further,  the Board of Directors  believes that the  availability  of additional
shares of common stock will enable us to attract and retain  talented  employees
through the ability to  continue  to grant  stock  options or other  stock-based
incentives in the future. The Board of Directors will determine  whether,  when,
and on what terms the  issuance of shares of Common  Stock may be  warranted  in
connection  with  any  of  the  foregoing  purposes.   The  Board  of  Directors
anticipates that increasing the authorized number of shares of Common Stock from
30,000,000  to  50,000,000   will  be  sufficient  to  satisfy  the   reasonably
foreseeable  needs of the  Company.  Other than the  2,000,000  shares of Common
Stock that will be reserved for issuance under the 2002 Incentive Plan,  subject
to  shareholder  approval of that plan,  the Company does not currently have any
specific plans or arrangements to issue additional shares of Common Stock.

The  amendment  will not affect the par value of the Common  Stock,  which would
remain $1.00 per share. The additional Common Stock to be authorized by adoption
of the amendment would have rights identical to the currently outstanding Common
Stock  of  the  Company.  If  the  proposed  amendment  is  approved,   existing
stockholders  will not have any rights to purchase  any newly  issued  shares in
order to  maintain  their  proportionate  ownership  interests.  Adoption of the
proposed  amendment and issuance of the Common Stock would not affect the rights
of the holders of currently outstanding Common Stock of the Company,  except for
effects  incidental  to  potential  increases  in the  number  of  shares of the
Company's  Common Stock that may be outstanding in the future,  such as dilution
of earnings per share and of prorata voting rights of current  holders of Common
Stock.  If the  amendment is approved at the meeting,  it will become  effective
upon filing of Articles of Amendment of the Company's  Articles of Incorporation
with the Georgia Secretary of State.

The  Board of  Directors  recommends  a vote  "FOR"  the  proposal  to amend the
Company's  Articles of  Incorporation to increase the total number of authorized
shares of Common Stock from 30,000,000 to 50,000,000.

    3. RATIFICATION OF THE ATLANTIC AMERICAN CORPORATION 2002 INCENTIVE PLAN

General

The Board of Directors (the "Board") adopted the Atlantic  American Company 2002
Incentive  Plan (the "Plan") on February  26,  2002,  subject to approval by the
Company's  shareholders  at the Meeting.  The Plan provides the Company with the
ability to offer a variety  of  compensatory  awards  designed  to  advance  the
interests and long-term  success of the Company by encouraging  stock  ownership
among key employees and, correspondingly,  increasing their personal involvement
with the future of the Company.  The Board  believes that  continuing to provide
officers  and key  employees  of the  Company  with the  ability  to  acquire  a
proprietary interest in the Company (i) is a significant value to the Company in
its efforts to recruit and retain  officers  and key  employees,  (ii)  instills
loyalty and (iii) encourages the generation of long-term value for the Company's
shareholders by aligning management and shareholder interests, and has therefore
concluded  that adoption of the Plan is in the best interests of the Company and
its shareholders.


                                     Page 9

<PAGE>


A summary of the material terms of the plan is set forth below. The full text of
the Plan is annexed to this Proxy  Statement  as Appendix  A, and the  following
summaries are qualified in their entirety by reference to Appendix A.

Summary of the Plan

Shares Available Under the Plan.  Subject to adjustment as provided in the Plan,
the number of shares of Common Stock that may be issued or transferred  (i) upon
the exercise of Option Rights or Appreciation  Rights, (ii) as Restricted Shares
and released from  substantial  risks of forfeiture  thereof,  (iii) as Deferred
Shares,  (iv) in payment of Performance  Shares or  Performance  Units that have
been  earned,  (v) as awards to  Non-Employee  Directors  or (vi) in  payment of
dividend  equivalents  paid with respect to awards made under the Plan shall not
exceed,  in the aggregate,  2,000,000  shares plus any shares relating to awards
that expire or are forfeited or cancelled. Such shares may be shares of original
issuance or treasury shares or a combination of the foregoing.  Upon the payment
of any Option  Price by the transfer to the Company of shares of Common Stock or
upon   satisfaction  of  any   withholding   amount  by  means  of  transfer  or
relinquishment  of shares of Common  Stock,  there  shall be deemed to have been
issued or  transferred  under  the Plan only the net  number of shares of Common
Stock actually issued or transferred by the Company.

The aggregate number of shares of Common Stock actually issued or transferred by
the Company upon the  exercise of  Incentive  Stock  Options  ("ISO")  shall not
exceed 2,000,000 shares.  Further, no participant shall be granted Option Rights
for more than 300,000 shares of Common Stock during any calendar  year,  subject
to adjustments as provided in the Plan. In no event shall any participant in any
calendar year receive more than 300,000 Appreciation Rights,  100,000 Restricted
Shares,  100,000  Deferred  Shares or receive an award of Performance  Shares or
Performance Units having an aggregate maximum value as of their respective Dates
of Grant in excess of $500,000, subject to adjustments as provided in the Plan.

Eligibility.  Officers and key employees of the Company and its subsidiaries may
be  selected  by the Board to  receive  benefits  under the Plan.  In  addition,
non-employee  directors of the Company will be eligible for discretionary grants
of Option Rights as described  below under the heading  "Awards to  Non-Employee
Directors."

Option  Rights.  Option  Rights may be granted  which  entitle  the  Optionee to
purchase shares of Common Stock at a price less than market value at the date of
grant, except that the option price per share for any ISO shall not be less than
100 percent of market  value per share.  The option price is payable (i) in cash
at the time of exercise;  (ii) by the transfer to the Company of  nonforfeitable
unrestricted  shares of Common Stock owned by the Optionee having a value at the
time of exercise  equal to the option  price;  (iii) by  surrender  of any other
award under the Plan having a value at the time of exercise  equal to the option
price; or (iv) a combination of such payment methods.  The Plan would permit the
exercise of Option Rights by means of the delivery of previously owned shares of
Common Stock in partial  satisfaction  of the exercise  price and the successive
re-delivery  of the  shares  so  obtained  to  satisfy  the  exercise  price  of
additional Option Rights until the grant has been fully exercised.

The Board has the  authority  to specify at the time  Option  Rights are granted
that shares of Common  Stock will not be accepted in payment of the option price
until they have been owned by the Optionee for a specified period;  however, the
Plan  does not  require  any such  holding  period  and would  permit  immediate
sequential exchanges of shares of Common Stock at the time of exercise of Option
Rights.  Any grant of an Option  Right may provide for  deferred  payment of the
option  price from the  proceeds of sale  through a broker of some or all of the
shares of Common Stock to which the exercise relates.

Any grant may  provide  for the  automatic  grant of  additional  Option  Rights
("Reload Option Rights") to an Optionee upon the exercise of Option Rights using
shares of Common Stock as payment.  Any Reload Option Rights may cover up to the
number of shares of Common Stock,  Deferred Shares, Option Rights or Performance
Shares  (or the  number of shares of Common  Stock  having a value  equal to the
value of any  Performance  Units)  surrendered  to the Company upon  exercise in
payment of the option price or to meet any withholding  obligations.  The Reload
Option  Rights  may have an option  price  that  represents  the same or greater
percentage of the current  market value per share at the time of exercise of the
Option  Rights that the option  price of the Option  Rights  represented  of the
market value per share at the time such Option Rights were granted. Depending on
the  limitations,  if any,  imposed  by the Board at the time of  grant,  Reload
Option Rights with such a discount feature would permit an Optionee, by delivery
of previously  owned shares of Common Stock upon successive  exercises of Reload
Option Rights, to reduce or eliminate the amounts payable upon original exercise
of the Option Rights.

The Board may,  at or after the date of grant of any Option  Rights  (other than
the grant of an ISO),  provide for the payment of  dividend  equivalents  to the
Optionee on a current,  deferred or  contingent  basis or may provide  that such
equivalents be credited against the option price.

No Option  Right may be  exercisable  more than 10 years from the date of grant.
Each grant must specify the period of continuous  employment with the Company or
any  subsidiary  that  is  necessary   before  the  Option  Rights  will  become
exercisable  and may provide for the earlier  exercise of such Option  Rights in
the  event  of a change  in  control  or other  similar  transaction  or  event.
Successive  grants may be made to the same Optionee whether or not Option Rights
previously  granted remain  unexercised.  Any grant of Option Rights may specify
Management  Objectives (as described below) that must be achieved as a condition
to exercise such rights. Option Rights must be evidenced by an Evidence of Award
containing the terms and provisions,  consistent with the Plan, as the Board may
approve.


                                    Page 10

<PAGE>


Appreciation  Rights.  Appreciation Rights provide Optionees with an alternative
means of realizing the benefits of Option  Rights.  An  Appreciation  Right is a
right, exercisable by surrender of the related Option Right, to receive from the
Company an amount equal to 100 percent,  or such lesser  percentage as the Board
may  determine,  of the spread between the option price and the current value of
the shares of Common Stock underlying the option. Any grant may specify that the
amount payable on exercise of an  Appreciation  Right may be paid by the Company
in cash,  in shares of Common  Stock,  or in any  combination  thereof,  and may
either  grant to the  Optionee  or retain in the Board the right to elect  among
those  alternatives.  Any grant may specify that such Appreciation  Right may be
exercised only in the event of a change in control or other similar  transaction
or event.  Any grant of Appreciation  Rights may specify  Management  Objectives
that must be achieved  as a condition  to  exercise  such  rights.  Appreciation
Rights  must be  evidenced  by an  Evidence  of Award  containing  the terms and
provisions, consistent with the Plan, as the Board may approve.

Restricted  Shares. A grant of Restricted Shares involves the immediate transfer
by the Company to a participant  of ownership of a specific  number of shares of
Common Stock in consideration of the performance of services. The participant is
entitled  immediately  to voting,  dividend and other  ownership  rights in such
shares.  The  transfer  may  be  made  without  additional  consideration  or in
consideration  of a payment by the participant  that is less than current market
value, as the Board may determine.

Restricted Shares must be subject to a "substantial  risk of forfeiture"  within
the meaning of Section 83 of the Code for a period of time to be  determined  by
the Board.  An example would be a provision that the Restricted  Shares would be
forfeited  if the  participant  ceased to serve the Company as an officer or key
employee  during  a  specified  period  of  years.  In order  to  enforce  these
forfeiture  provisions,   the  transferability  of  Restricted  Shares  will  be
prohibited or  restricted in a manner and to the extent  prescribed by the Board
for the period during which the forfeiture provisions are to continue. The Board
may provide for a shorter period during which the  forfeiture  provisions are to
apply in the  event of a change  in  control  of the  Company  or other  similar
transaction or event.

Any grant of  Restricted  Shares may specify  Management  Objectives  which,  if
achieved,  will result in termination or early  termination of the  restrictions
applicable  to such shares.  Any such grant must also specify in respect of such
specified Management  Objectives,  a minimum acceptable level of achievement and
must set forth a formula  for  determining  the number of  Restricted  Shares on
which  restrictions  will  terminate if  performance  is at or above the minimum
level,  but below  full  achievement  of the  specified  Management  Objectives.
Restricted Shares must be evidenced by an Evidence of Award containing the terms
and provisions, consistent with the Plan, as the Board may approve.

Deferred  Shares.  A grant of Deferred  Shares  constitutes  an agreement by the
Company to deliver  shares of Common Stock to the  participant  in the future in
consideration of the performance of services,  but subject to the fulfillment of
such conditions during the Deferral Period as the Board may specify.  During the
Deferral  Period,  the participant has no right to transfer any rights under his
or her award and no right to vote such  Shares,  but the Board may,  at or after
the date of grant,  authorize the payment of dividend equivalents on such Shares
on  either a current  or  deferred  or  contingent  basis,  either in cash or in
additional shares of Common Stock. Awards of Deferred Shares may be made without
additional  consideration  or in  consideration of a payment by such participant
that is less than the market value per share at the date of award.

Deferred Shares must be subject to a Deferral Period, as determined by the Board
at the date of the  award,  except  that the  Board  may  provide  for a shorter
Deferral Period in the event of a change in control or other similar transaction
or event.  Deferred Shares must be evidenced by an Evidence of Award  containing
the terms and provisions, consistent with the Plan, as the Board may approve.

Performance  Shares and Performance Units. A Performance Share is the equivalent
of one  Common  Share and a  Performance  Unit is the  equivalent  of  $1.00.  A
participant  may be granted  any  number of  Performance  Shares or  Performance
Units,  subject  to the  limitations  set  forth  under  Available  Shares.  The
participant  will be given one or more  Management  Objectives  to meet within a
specified period (the "Performance  Period").  The specified  Performance Period
shall be a period of time not less than one year, except in the case of a change
in  control  or other  similar  transaction  or  event,  if the  Board  shall so
determine. A minimum level of acceptable achievement will also be established by
the Board. If by the end of the Performance Period, the participant has achieved
the specified  Management  Objectives,  the  participant  will be deemed to have
fully earned the Performance Shares or Performance Units. If the participant has
not  achieved  the  Management  Objectives,  but has  attained or  exceeded  the
predetermined minimum level of acceptable  achievement,  the participant will be
deemed to have partly  earned the  Performance  Shares or  Performance  Units in
accordance with a predetermined  formula.  To the extent earned, the Performance
Shares or Performance  Units will be paid to the  participant at the time and in
the  manner  determined  by the Board in cash,  shares  of  Common  Stock or any
combination  thereof.  The  grant  may  provide  for  the  payment  of  dividend
equivalents thereon in cash or in shares of Common Stock on a current,  deferred
or contingent basis.  Performance Shares and Performance Units must be evidenced
by an Evidence of Award containing the terms and provisions, consistent with the
Plan, as the Board may approve.
<PAGE>
                                    Page 11


Management  Objectives.  The Plan requires that the Board establish  "Management
Objectives" for purposes of Performance  Shares and Performance  Units.  When so
determined by the Board, Option Rights,  Appreciation Rights,  Restricted Shares
and  dividend  credits  may  also  specify  Management  Objectives.   Management
Objectives  may be  described  in terms of  either  Company-wide  objectives  or
objectives that are related to the performance of the individual  participant or
subsidiary,  division, department or function within the Company or a subsidiary
in which the participant is employed.  Management  Objectives  applicable to any
award to a participant who is, or is determined by the Board likely to become, a
Covered  Employee,  shall be  limited  to  specified  levels of or growth in (i)
earnings;  (ii) earnings per share;  (iii) share price;  (iv) total  shareholder
return;  (v)  return on  invested  capital,  equity or  assets;  (vi)  operating
earnings; (vii) sales growth; and (viii) productivity improvement.  If the Board
determines  that a change in the business,  operations,  corporate  structure or
capital  structure  of the  Company,  or the  manner  in which it  conducts  its
business,  or other events or  circumstances  render the  Management  Objectives
unsuitable, the Board may in its discretion modify such Management Objectives or
the minimum  acceptable level of achievement,  in whole or in part, as the Board
deems appropriate and equitable,  except in the case of a Covered Employee where
such action would result in the loss of the otherwise  available exemption under
Section  162(m) of the Internal  Revenue Code.  In such case,  the Board may not
make any modification of the Management  Objectives or minimum  acceptable level
of achievement.

Awards to Non-Employee  Directors.  The Board may, in its discretion,  authorize
the granting to  Non-Employee  Directors of Option Rights and may also authorize
the grant or sale of Restricted Shares to Non-Employee  Directors.  Non-Employee
Directors are not eligible to receive any other awards under the Plan.

Each such Option Right will be fully exercisable commencing six months after the
date of grant so long as the  Optionee  has  continuously  remained  a  director
through  that  date.  Also,  any  Option  Right  will be  exercisable  upon  the
Optionee's  death or  disability.  Each such Option Right granted under the Plan
will  expire  five years from the date of the grant,  unless  subject to earlier
termination pursuant to the Plan.

In the event of the  termination  of  service  on the Board by the holder of any
such  Option  Rights,  other  than by reason of  disability  or death,  the then
outstanding  Option  Rights of such holder may be  exercised  only to the extent
that they were  exercisable on the date of such  termination  and will expire on
the  earlier  of  their  stated  termination  date  or  90  days  following  the
termination  of the  holder's  service  on the  Board.  In the event of death or
disability,  each of the then  outstanding  Option  Rights of such holder may be
exercised  until the  earlier of 1 year after  such death or  disability  or the
otherwise stated expiration date of the Option Rights.

If a Non-Employee  Director subsequently becomes an employee of the Company or a
subsidiary while remaining a member of the Board, any Option Rights held at that
time will not be affected.

Option  Rights may be exercised by a  Non-Employee  Director  only by payment in
full of the Option Price. Such payment may be in cash, in shares of Common Stock
previously  owned by the director for more than six months,  or a combination of
both.  Each grant may provide for the automatic grant of Reload Option Rights to
an Optionee upon the exercise of Option Rights  (including Reload Option Rights)
using shares of Common  Stock.  Reload Option Rights will cover up to the number
of shares of Common Stock  surrendered  to the Company upon any such exercise in
payment of the Option Price.  Reload Options may have an Option Price that is no
less than that which  represents  the same  percentage  of the market  value per
share at the time of  exercise of the Option  Rights  that the per share  Option
Price  represented  of the market value per share at the time the Option  Rights
being exercised were granted and will be on such other terms as may be specified
by the directors,  which may be the same or different from those of the original
Option Rights.

Each grant or sale of Restricted  Shares to Non-Employee  Directors will be upon
terms and conditions as described above.

Administration  and  Amendments.  The Plan is to be  administered  by the Board,
except that the Board has the authority under the Plan to delegate any or all of
its powers under the Plan to a committee (or subcommittee thereof) consisting of
not less than three Non-Employee  Directors within the meaning of Rule 16b-3 and
who are "outside directors" within the meaning of Section 162(m) of the Code.

The Board is authorized to interpret the Plan and related  agreements  and other
documents.  The Board may make awards to employees under any or a combination of
all of the various  categories of awards that are authorized  under the Plan, or
in its  discretion,  make no  awards.  The Board may amend the Plan from time to
time without  further  approval by the  shareholders of the Company except where
required by applicable law or the rules and regulations of a national securities
exchange. The Company reserves authority to offer similar or dissimilar benefits
in plans that do not require shareholder approval.

The Board may  provide  for  special  terms for awards to  participants  who are
foreign  nationals or who are employed by the Company or any of its subsidiaries
outside of the United  States of America as the Board may consider  necessary or
appropriate to accommodate differences in local law, tax policy or custom.
<PAGE>
                                    Page 12


Transferability. Except as otherwise determined by the Board, no Option Right or
Appreciation  Right or other derivative  security is transferable by an Optionee
except,  upon  death,  by will or the  laws of  descent  and  distribution.  If,
however, the Optionee is not a director or officer of the Company,  transfer may
be made to a fully revocable trust of which the Optionee is treated as the owner
for federal  income tax purposes.  Except as otherwise  determined by the Board,
Option Rights and  Appreciation  Rights are  exercisable  during the  Optionee's
lifetime only by him or her.  Notwithstanding  the above,  the Board may provide
for  transferability  of  awards  under  the Plan if such  provision  would  not
disqualify the exemption for other awards under Rule 16b-3 of the Exchange Act.

The Board may  specify  at the Date of Grant  that part or all of the  shares of
Common  Stock  that are (i) to be  issued or  transferred  by the  Company  upon
exercise  of Option  Rights or  Appreciation  Rights,  upon  termination  of the
Deferral Period applicable to Deferred Shares or upon payment under any grant of
Performance  Shares  or  Performance  Units  or (ii) no  longer  subject  to the
substantial  risk of  forfeiture  and  restrictions  on transfer  referred to in
Section 6 of the Plan, shall be subject to further restrictions on transfer.

Adjustments. The maximum number of shares that may be issued and delivered under
the  Plan,  the  number of shares  covered  by  outstanding  Option  Rights  and
Appreciation Rights, and the prices per share applicable thereto, are subject to
adjustment  in the  event of stock  dividends,  stock  splits,  combinations  of
shares, recapitalizations,  mergers, consolidations, spin-offs, reorganizations,
liquidations,  issuances of rights or warrants, and similar events. In the event
of any such transaction or event,  the Board, in its discretion,  may provide in
substitution  for any or all outstanding  awards under the Plan such alternative
consideration  as it,  in good  faith,  may  determine  to be  equitable  in the
circumstances and may require the surrender of all awards so replaced. The Board
may also make or provide for such adjustments in the numbers of shares specified
in Section 3 of the Plan as the Board may determine  appropriate  to reflect any
transaction or event described above.

Withholding  Taxes.  To the extent  that the  Company is  required  to  withhold
federal,  state,  local or foreign taxes in connection  with any payment made or
benefit  realized by a  participant  or other  person  under this Plan,  and the
amounts available to the Company for such withholding are insufficient,  it will
be a condition to the receipt of such payment or the realization of such benefit
that the participant or such other person make arrangements  satisfactory to the
Company for payment of the balance of such taxes required to be withheld,  which
arrangements  (in the discretion of the Board) may include  relinquishment  of a
portion of such benefit.  Participants  must also make such  arrangements as the
Company may require for the payment of any withholding tax obligations  that may
arise in connection with the disposition of shares acquired upon the exercise of
Option  Rights.  In no event,  however,  may the Company accept shares of Common
Stock for the  payment of taxes in excess of  required  tax  withholding  rates.
However,  in the discretion of the Board, a participant or such other person may
surrender shares of Common Stock owned for more than 6 months to satisfy any tax
obligations resulting from any such transaction.

Detrimental  Activity.  Any Evidence of Award may provide that if a participant,
either  during  employment  by the Company or a Subsidiary or within a specified
period  after  termination  of  such  employment,  engages  in  any  Detrimental
Activity,  and the Board so finds,  forthwith  upon notice of such finding,  the
participant must:

         (A) Return to the  Company,  in exchange  for payment by the Company of
         any amount  actually  paid therefor by the  participant,  all shares of
         shares of Common  Stock that the  participant  has not disposed of that
         were offered  pursuant to this Plan within a specified  period prior to
         the date of the commencement of such Detrimental Activity, and

         (B) With  respect to any shares of Common  Stock so  acquired  that the
         participant  has disposed of, pay to the Company in cash the difference
         between:

               (i)  Any  amount   actually  paid  therefor  by  the  participant
                    pursuant to this Plan, and

               (ii) The Market  Value per Share of the shares of Common Stock on
                    the date of such acquisition.

To the extent that such amounts are not paid to the Company, the Company may set
off the amounts so payable to it against any amounts that may be owing from time
to time by the Company or a  Subsidiary  to the  participant,  whether as wages,
deferred compensation or vacation pay or in the form of any other benefit or for
any other reason.

Governing Law. The Plan and all awards granted and actions taken thereunder will
be governed by the internal substantive laws of Georgia.

Plan  Benefits.  The benefits or amounts that may be awarded in the future under
the Plan are not  determinable,  nor are the benefits or amounts that would have
been received or allocated to  participants  for the fiscal year ended  December
31, 2001.

Federal Income Tax Consequences

The  following  is a  brief  summary  of  certain  of  the  Federal  income  tax
consequences of certain  transactions under the Plan based on Federal income tax
laws in effect on January 1, 2002.  This  summary is not intended to be complete
and does not describe state or local tax consequences.
<PAGE>
                                    Page 13


Tax Consequences to Participants

Non-qualified Stock Options. In general,  (i) no income will be recognized by an
Optionee at the time a non-qualified  Option Right is granted;  (ii) at the time
of exercise of a non-qualified Option Right,  ordinary income will be recognized
by the  Optionee in an amount equal to the  difference  between the option price
paid for the shares and the fair market value of the shares, if unrestricted, on
the date of exercise;  and (iii) at the time of sale of shares acquired pursuant
to the exercise of a non-qualified Option Right,  appreciation (or depreciation)
in value of the  shares  after the date of  exercise  will be  treated as either
short-term or long-term  capital gain (or loss) depending on how long the shares
have been held.

Incentive Stock Options.  No income  generally will be recognized by an Optionee
upon the grant or  exercise of an ISO.  The  exercise  of an ISO,  however,  may
result in  alternative  minimum  tax  liability.  If shares of Common  Stock are
issued  to  the  Optionee  pursuant  to  the  exercise  of  an  ISO,  and  if no
disqualifying  disposition  of such shares is made by such  Optionee  within two
years  after the date of grant or within  one year  after the  transfer  of such
shares to the Optionee,  then upon sale of such shares,  any amount  realized in
excess of the option price will be taxed to the Optionee as a long-term  capital
gain and any loss sustained will be a long-term capital loss.

If shares of Common Stock  acquired  upon the exercise of an ISO are disposed of
prior to the expiration of either holding period  described  above, the Optionee
generally will recognize ordinary income in the year of disposition in an amount
equal to the excess (if any) of the fair market value of such shares at the time
of exercise (or, if less, the amount  realized on the disposition of such shares
if a sale or exchange)  over the option price paid for such shares.  Any further
gain (or loss) realized by the participant generally will be taxed as short-term
or long-term capital gain (or loss) depending on the holding period.

Appreciation Rights. No income will be recognized by a participant in connection
with  the  grant  of an  Appreciation  Right.  When  the  Appreciation  Right is
exercised,  the  participant  normally  will be  required  to include as taxable
ordinary  income in the year of exercise  an amount  equal to the amount of cash
received  and the fair market value of any  unrestricted  shares of Common Stock
received on the exercise.

Restricted  Shares. The recipient of Restricted Shares generally will be subject
to tax at  ordinary  income  rates on the fair  market  value of the  Restricted
Shares  (reduced  by any  amount  paid by the  participant  for such  Restricted
Shares)  at such time as the  shares  are no longer  subject  to  forfeiture  or
restrictions   on   transfer   for   purposes   of   Section   83  of  the  Code
("Restrictions").  However, a recipient who so elects under Section 83(b) of the
Code  within 30 days of the date of  transfer  of the shares  will have  taxable
ordinary income on the date of transfer of the shares equal to the excess of the
fair market value of such shares (determined without regard to the Restrictions)
over the purchase price, if any, of such Restricted  Shares.  If a Section 83(b)
election has not been made,  any  dividends  received with respect to Restricted
Shares  that are  subject  to the  Restrictions  generally  will be  treated  as
compensation that is taxable as ordinary income to the participant.

Deferred  Shares.  No  income  generally  will be  recognized  upon the award of
Deferred  Shares.  The  recipient of a Deferred  Share award  generally  will be
subject to tax at ordinary income rates on the fair market value of unrestricted
shares of  Common  Stock on the date that such  shares  are  transferred  to the
participant  under the award (reduced by any amount paid by the  participant for
such Deferred Shares), and the capital gains/loss holding period for such shares
will also commence on such date.

Performance Shares and Performance Units. No income generally will be recognized
upon the grant of  Performance  Shares or  Performance  Units.  Upon  payment in
respect  of the  earn-out  of  Performance  Shares  or  Performance  Units,  the
recipient  generally will be required to include as taxable  ordinary  income in
the year of receipt an amount equal to the amount of cash  received and the fair
market value of any unrestricted shares of Common Stock received.

Tax Consequences to the Company or Subsidiary

To the extent that a participant recognizes ordinary income in the circumstances
described  above,  the Company or subsidiary for which the participant  performs
services generally will be entitled to a corresponding  deduction provided that,
among other things, the income meets the test of reasonableness,  is an ordinary
and necessary business expense,  is not an "excess parachute payment" within the
meaning  of  Section  280G of the Code and is not  disallowed  by the $1 million
limitation on certain executive compensation under Section 162(m) of the Code.

The Board of  Directors  recommends  a vote "FOR" the  approval of the  Atlantic
American Corporation 2002 Incentive Plan.
<PAGE>
                                    Page 14



                         INDEPENDENT PUBLIC ACCOUNTANTS

Arthur  Andersen LLP has audited the  financial  statements of the Company since
1974.  During  fiscal year 2001,  the Company  retained  Arthur  Andersen LLP to
provide services in the following categories and amounts:

Audit Fees

The  Company has paid or expects to pay Arthur  Andersen  LLP  $337,500,  in the
aggregate,  for professional services it rendered for the audit of the Company's
consolidated  financial  statements  for the fiscal year ended December 31, 2001
and the reviews of the interim financial  statements  included in our Forms 10-Q
filed during the fiscal year ended December 31, 2001.

Financial Information Systems Design and Implementation Fees

The Company has not paid Arthur  Andersen LLP for financial  information  design
and  implementation  fees  described  in  paragraph  (c)(4)(ii)  of Rule 2-01 of
Regulation  S-X, since it did not render any of those services for us during the
fiscal year ended December 31, 2001.

All Other Fees

The Company has paid Arthur Andersen LLP $124,000 (tax compliance and consulting
services),  in the  aggregate,  for all other  services it  rendered  during the
fiscal year ended December 31, 2001.

The Company's Audit Committee has considered  whether the provision of non-audit
services  by  Arthur  Andersen  LLP  is  compatible  with  maintaining   auditor
independence.

A  representative  from  Arthur  Andersen  LLP is  expected to be present at the
Meeting and will have the  opportunity  to make a statement if they desire to do
so and will be available to respond to appropriate questions.

The  Board  of  Directors  has not yet  made a final  determination  as to which
independent certified public accountants will audit the Company's books, records
and accounts for the year ending December 31, 2002, and, therefore, shareholders
are not  being  asked  to take any  action  with  respect  to the  selection  of
independent accountants for 2002.

                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Company  leases space for its  principal  offices,  as well as the principal
offices of certain of its  subsidiaries,  in an office building  located at 4370
Peachtree Road, N.E.,  Atlanta,  Georgia,  from Delta Life Insurance  Company, a
corporation  owned by Mr.  Robinson and members of his immediate  family,  under
leases  expiring May 31, 2002 and July 31,  2005.  Under the terms of the lease,
the Company occupies approximately 65,489 square feet of office space as well as
covered parking garage facilities at an annual rental of approximately $611,000,
plus a pro rata share of all real estate taxes, general maintenance, and service
expenses  and  insurance  costs with  respect to the office  building  and other
facilities.  The terms of the lease are believed by management of the Company to
be  comparable  to terms which could be obtained by the Company  from  unrelated
parties for comparable rental property.

Effective  December 31, 1995, an aggregate of $13.4 million in principal  amount
of 8% and 9 1/2% demand notes  issued by the Company  were  canceled in exchange
for the  issuance  by the  Company of an  aggregate  of 134,000  shares of a new
series of preferred stock (the "Series B Preferred  Stock"),  which has a stated
value of $100 per share and  accrues  interest at 9% per year.  At December  31,
2001,  the Company had  accrued but unpaid  dividends  on the Series B Preferred
Stock  totaling  $7,236,000.  All shares of Series B  Preferred  Stock are owned
directly or  indirectly  by affiliates  of Mr.  Robinson,  Mrs.  Robinson or Mr.
Howell.

Effective December 29, 2000, the Company issued an aggregate of 25,000 shares of
a new series of preferred  stock (the "Series C Preferred  Stock"),  which has a
stated value of $100 per share and accrues interest at 9% per year. During 2001,
an aggregate  of $225,000 in dividends  were paid to the holders of the Series C
Preferred  Stock.  At December  31,  2001,  the Company had no accrued or unpaid
dividends  on the Series C  Preferred  Stock.  All shares of Series C  Preferred
Stock are owned directly or indirectly by affiliates of Mr. Robinson.

In 1991,  certain of the Company's  subsidiaries  made loans to Leath Furniture,
LLC ("Leath"),  which at the time was a subsidiary of the Company.  In 1996, the
Company sold Leath to Gulf Capital Services, Ltd. ("Gulf Capital"). Gulf Capital
is a partnership in which Mr. Robinson is the general partner and certain of his
affiliates  are the  limited  partners.  The loans are secured by  mortgages  on
certain  properties  owned by  Leath.  The loans  had an  outstanding  principal
balance of $3.4 million at December 31, 2001, bear interest at 9 1/4% per annum,
are payable in monthly  installments,  and mature on  December  1, 2016.  During
2001, Leath made principal and interest  payments on such notes to the Company's
subsidiaries in the aggregate amount of $439,621.

The Company has entered into a consulting agreement with Dr. Whaley, pursuant to
which Dr. Whaley provides  certain medical  consulting and advisory  services to
the Company's  subsidiaries.  Pursuant to the  agreement,  Dr.  Whaley  receives
$10,000 per year for such services.
<PAGE>
                                    Page 15


                                 OTHER BUSINESS

Management  of the Company  knows of no other  matters  than those  stated above
which are to be brought before the Meeting.  However,  if any such other matters
should be presented  for  consideration  and voting,  it is the intention of the
persons  named in the  proxies  to vote  thereon in  accordance  with their best
judgment.

                              SHAREHOLDER PROPOSALS

Shareholder  proposals  to be  presented  at the  next  annual  meeting  must be
received  by the  Company  no  later  than  December  1,  2002,  in  order to be
considered  for inclusion in the proxy  statement for the 2003 annual meeting of
shareholders.  Any such proposal should be addressed to the Company's  president
and mailed to 4370  Peachtree  Road,  N.E.,  Atlanta,  Georgia  30319-3000.  Any
proposal  by a  shareholder  not  seeking to have its  proposal  included in the
Company's proxy  statement,  but seeking to have the proposal  considered at the
Company's 2003 annual meeting, should notify the Company in the manner set forth
above of its proposal by February 16, 2003. In accordance  with the rules of the
Securities and Exchange Commission, if the shareholder has not given such notice
to the Company by February  16, 2003,  the persons  appointed as proxies for the
2003  annual  meeting  may  exercise  discretionary  authority  to  vote  on any
shareholder  proposal  to be  presented  at the  2003  annual  meeting,  but not
included in the Company's proxy statement for such meeting.



<PAGE>
                                     A - 1







                                                                      APPENDIX A

                          ATLANTIC AMERICAN CORPORATION

                               2002 INCENTIVE PLAN

1.           Purpose. The purpose of the 2002 Incentive Plan (this "Plan") is to
     attract and retain  directors,  officers  and key  employees  for  Atlantic
     American  Corporation  (the  "Corporation")  and  its  Subsidiaries  and to
     provide to such persons incentives and rewards for superior performance.

2.           Definitions.  As used in this Plan,

     "Annual   Meeting"  means  the  annual  meeting  of   shareholders  of  the
Corporation.

     "Appreciation  Right" means a right  granted  pursuant to Section 5 of this
Plan.
     "Board" means the Board of Directors of the Corporation  and, to the extent
of any delegation by the Board to a committee (or subcommittee thereof) pursuant
to Section 16 of this Plan, such committee (or subcommittee thereof).

     "Code"  means the Internal  Revenue  Code of 1986,  as amended from time to
time.
     "Common Shares" means shares of common stock, $1.00 par value per share, of
the  Corporation or any security into which such Common Shares may be changed by
reason of any transaction or event of the type referred to in Section 11 of this
Plan.

     "Covered  Employee"  means a  Participant  who is, or is  determined by the
Board to be likely to become, a "covered employee" within the meaning of Section
162(m) of the Code (or any successor provision).

     "Date of Grant"  means the date  specified by the Board on which a grant of
Option Rights, Appreciation Rights, Performance Shares or Performance Units or a
grant or sale of  Restricted  Shares or Deferred  Shares shall become  effective
(which date shall not be earlier  than the date on which the Board takes  action
with respect thereto) and shall also include the date on which a grant of Option
Rights to a Non-Employee  Director  becomes  effective  pursuant to Section 9 of
this Plan.

     "Deferral Period" means the period of time during which Deferred Shares are
subject to deferral limitations under Section 7 of this Plan.

     "Deferred Shares" means an award made pursuant to Section 7 of this Plan of
the right to receive Common Shares at the end of a specified Deferral Period.

     "Designated Subsidiary" means a Subsidiary that is (i) not a corporation or
(ii) a  corporation  in  which at the time  the  Corporation  owns or  controls,
directly or indirectly,  less than 80 percent of the total combined voting power
represented by all classes of stock issued by such corporation.

     "Detrimental Activity" means:

 (i)      Engaging in any activity that competes,  directly or indirectly, as an
     employee,  principal,  agent,  or  consultant  for  another  entity  in any
     activity that competes with the Corporation in any actual,  researched,  or
     prospective  product,  service,  system, or business activity for which the
     Participant has had any direct or indirect  responsibility  during the last
     five years of his or her employment with the Corporation or Subsidiary,  in
     any territory in which the Corporation or a Subsidiary manufactures, sells,
     markets,  services, or installs such product,  service, system, or business
     activity.


                                     A - 2

<PAGE>


(ii)      Soliciting  any  employee  of  the  Corporation  or  a  Subsidiary  to
     terminate his or her employment with the Corporation or a Subsidiary.

(iii)     The disclosure  to anyone outside the Corporation or a Subsidiary,  or
     the use in other than the Corporation or a Subsidiary's business,  without
     prior written authorization from the Corporation,   of  any   confidential,
     proprietary  or  trade  secret  information  or  material  relating  to the
     business  of  the  Corporation  and  its  Subsidiaries,   acquired  by  the
     Participant  either during or after  employment with the Corporation or its
     Subsidiaries  or while acting as a consultant  for the  Corporation  or its
     Subsidiaries thereafter.

(iv)      The  failure  or  refusal to  disclose  promptly  and to assign to the
     Corporation upon request all right,  title and interest in any invention or
     idea,  patentable  or not,  made or  conceived  by the  Participant  during
     employment by the Corporation and any Subsidiary, relating in any manner to
     the actual or anticipated  business,  research or  development  work of the
     Corporation  or any  Subsidiary  or the  failure or refusal to do  anything
     reasonably  necessary to enable the Corporation or any Subsidiary to secure
     a patent where appropriate in the United States and in other countries.

(v)       Activity that results in Termination for Cause.

(vi)      Any other conduct or act  determined to be injurious,  detrimental  or
     prejudicial  to  any  significant   interest  of  the  Corporation  or  any
     Subsidiary unless the Participant acted in good faith and in a manner he or
     she  reasonably  believed to be in or not opposed to the best  interests of
     the Corporation.

                  "Evidence   of  Award"   means  an   agreement,   certificate,
resolution  or other  type of writing or other  evidence  approved  by the Board
which sets forth the terms and  conditions  of the Option  Rights,  Appreciation
Rights,  Performance Units,  Performance  Shares,  Restricted  Shares,  Deferred
Shares or other awards. An Evidence of Award may be in an electronic medium, may
be limited to a notation on the books and records of the  Corporation  and, with
the  approval  of the  Board,  need not be  signed  by a  representative  of the
Corporation or a Participant.

                  "Exchange Act" means the  Securities  Exchange Act of 1934, as
amended,  and the  rules and  regulations  thereunder,  as such  law,  rules and
regulations may be amended from time to time.

                  "Incentive   Stock  Options"  means  Option  Rights  that  are
intended to qualify as "incentive  stock  options" under Section 422 of the Code
or any successor provision.

                  "Management   Objectives"  means  the  measurable  performance
objective or objectives  established  pursuant to this Plan for Participants who
have received  grants of  Performance  Shares or  Performance  Units or, when so
determined by the Board, Option Rights,  Appreciation Rights,  Restricted Shares
and  dividend  credits  pursuant  to this  Plan.  Management  Objectives  may be
described in terms of Corporation-wide objectives or objectives that are related
to the performance of the individual Participant or of the Subsidiary, division,
department, region or function within the Corporation or Subsidiary in which the
Participant is employed.  The Management  Objectives may be made relative to the
performance of other corporations.  The Management  Objectives applicable to any
award to a Covered  Employee shall be based on specified  levels of or growth in
one or more of the following criteria:

                  1.       earnings;
                  2.       earnings per share (earnings per share will be
                           calculated without regard to any change in accounting
                           standards that may be required by the Financial
                           Accounting Standards Board  after the goal is
                           established);
                  3.       share price;
                  4.       total shareholder return;
                  5.       return on invested capital, equity, or assets;
                  6.       operating earnings;
                  7.       sales growth;
                  8.       productivity improvement;


                                     A - 3

<PAGE>


                  If the  Board  determines  that  a  change  in  the  business,
operations,  corporate structure or capital structure of the Corporation, or the
manner in which it  conducts  its  business,  or other  events or  circumstances
render the  Management  Objectives  unsuitable,  the Board may in its discretion
modify such  Management  Objectives or the related minimum  acceptable  level of
achievement,  in whole or in part, as the Board deems appropriate and equitable,
except in the case of a Covered  Employee  where such action would result in the
loss of the otherwise  available  exemption under Section 162(m) of the Code. In
such  case,  the  Board  shall  not  make  any  modification  of the  Management
Objectives or minimum acceptable level of achievement.

                  "Market Value per Share" means, as of any particular date, the
fair market value of the Common Shares as determined by the Board.

                  "Non-Employee  Director"  means a director of the  Corporation
who is not an employee of the Corporation or any Subsidiary.

                  "Optionee"  means the  optionee  named in an Evidence of Award
evidencing an outstanding Option Right.

                  "Option Price" means the purchase price payable on exercise of
an Option Right.

                  "Option Right" means the right to purchase  Common Shares upon
exercise of an option granted pursuant to Section 4 or Section 9 of this Plan.

                  "Participant"  means a person who is  selected by the Board to
receive benefits under this Plan and who is at the time an officer, or other key
employee of the Corporation or any one or more of its  Subsidiaries,  or who has
agreed to commence serving in any of such capacities  within 90 days of the Date
of Grant and shall also include each Non-Employee Director who receives an award
of Option Rights pursuant to Section 9 of this Plan; provided, however, that for
purposes of Sections 4, 5, 7 and 8 of this Plan,  Participant  shall not include
such Non-Employee Director.

                  "Performance  Period" means, in respect of a Performance Share
or Performance Unit, a period of time established  pursuant to Section 8 of this
Plan within which the Management  Objectives  relating to such Performance Share
or Performance Unit are to be achieved.

                  "Performance Share" means a bookkeeping entry that records the
equivalent of one Common Share awarded pursuant to Section 8 of this Plan.

                    "Performance Unit" means a bookkeeping entry that records a
unit equivalent to $1.00 awarded pursuant to Section 8 of this Plan.

                  "Reload Option Rights" means additional  Option Rights granted
automatically  to an Optionee  upon the  exercise of Option  Rights  pursuant to
Section 4(f) or Section 9(a)(viii) of this Plan.

                  "Restricted  Shares"  means  Common  Shares  granted  or  sold
pursuant  to  Section  6 or  Section  9 of this  Plan as to  which  neither  the
substantial  risk of forfeiture nor the prohibition on transfers  referred to in
such Section 6 has expired.

                  "Rule l6b-3" means Rule 16b-3 of the  Securities  and Exchange
Commission  (or any successor rule to the same effect) as in effect from time to
time.

                  "Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations thereunder, as such law, rules and regulations may
be amended from time to time.

                  "Spread" means the excess of the Market Value per Share of the
Common Shares on the date when an  Appreciation  Right is  exercised,  or on the
date when Option Rights are  surrendered in payment of the Option Price of other
Option Rights, over the Option Price provided for in the related Option Right.


                                     A - 4

<PAGE>



                  "Subsidiary" means a corporation,  company or other entity (i)
more than 50 percent of whose outstanding shares or securities (representing the
right to vote for the election of directors or other managing authority) are, or
(ii) which does not have outstanding shares or securities (as may be the case in
a partnership,  joint venture or unincorporated  association),  but more than 50
percent of whose  ownership  interest  representing  the right generally to make
decisions  for such  other  entity is, now or  hereafter,  owned or  controlled,
directly  or  indirectly,  by  the  Corporation  except  that  for  purposes  of
determining whether any person may be a Participant for purposes of any grant of
Incentive Stock Options, "Subsidiary" means any corporation in which at the time
the Corporation owns or controls,  directly or indirectly,  more than 50 percent
of the total combined voting power represented by all classes of stock issued by
such corporation.

                  "Termination for Cause" means a termination:

                    (i)  due to the  Participant's  willful and continuous gross
                         neglect  of his or her  duties  for  which he or she is
                         employed, or

                    (ii) due  to an  act  of  dishonesty  on  the  part  of  the
                         Participant constituting a felony resulting or intended
                         to result, direct or indirectly, in his or her gain for
                         personal  enrichment at the expense of the  Corporation
                         or a Subsidiary.

3.                Shares  Available  Under the Plan.

                  (a)   Subject to adjustment as provided in Section 11 of this
Plan, the number of Common Shares that may be issued or transferred (i) upon the
exercise of Option Rights or Appreciation Rights, (ii) as Restricted Shares and
released from substantial risks of forfeiture thereof, (iii) as Deferred Shares,
(iv) in payment of Performance Shares or Performance Units that have been
earned, (v) as awards to Non-Employee Directors or (vi) in payment of dividend
equivalents paid with respect to awards made under the Plan shall not exceed in
the aggregate 2,000,000 shares plus any shares relating to awards that expire or
are forfeited or cancelled. Such shares may be shares of original issuance or
treasury shares or a combination of the foregoing. Upon the payment of any
Option Price by the transfer to the Corporation of Common Shares or upon
satisfaction of any withholding amount by means of transfer or relinquishment of
Common Shares, there shall be deemed to have been issued or transferred under
this Plan only the net number of Common Shares actually issued or transferred by
the Corporation.

                  (b)  Notwithstanding  anything  in this  Section 3, or
elsewhere in this Plan, to the contrary,  the aggregate  number of Common Shares
actually issued or transferred by the Corporation upon the exercise of Incentive
Stock Options shall not exceed 2,000,000 shares.  Further,  no Participant shall
be granted Option Rights for more than 300,000 Common Shares during any calendar
year, subject to adjustments as provided in Section 11 of this Plan.


                  (c)  Upon payment in cash of the benefit provided by any award
granted under this Plan, any shares that were covered by that award shall again
be available for issue or transfer hereunder.

                  (d)  Notwithstanding any other provision of this Plan to
the  contrary,  in no event shall any  Participant  in any calendar year receive
more than 300,000  Appreciation  Rights,  subject to  adjustments as provided in
Section 11 of this plan.

                  (e)  Notwithstanding any other provision of this Plan to
the  contrary,  in no event shall any  Participant  in any calendar year receive
more than  100,000  Restricted  Shares or 100,000  Deferred  Shares,  subject to
adjustments as provided in Section 11 of this Plan.

                  (f)  Notwithstanding any other provision of this Plan to
the contrary,  in no event shall any Participant in any calendar year receive an
award of  Performance  Shares or Performance  Units having an aggregate  maximum
value as of their respective Dates of Grant in excess of $500,000.


                                     A - 5

<PAGE>

4.                      Option Rights. The Board may, from time to time and upon
     such  terms and conditions as it may determine, authorize the granting to
     Participants of options to purchase Common Shares. Each such grant may
     utilize any or all of the authorizations, and shall be subject to all of
     the requirements, contained in the following provisions:

                    (a)  Each grant shall specify the number of Common Shares to
                         which it pertains subject to the limitations set forth
                         in Section 3 of this plan.

                    (b)  Each grant shall specify an Option Price per share,
                         which may be less than the Market Value per Share on
                         the Date of Grant, except that the Option Price per
                         share for any Incentive Stock Option shall not be less
                         than 100 percent of the Market Value per Share on the
                         Date of Grant.

                    (c)  Each grant shall specify whether the Option Price shall
                         be payable (i) in cash or by check acceptable to the
                         Corporation, (ii) by the actual or constructive
                         transfer to the Corporation of nonforfeitable,
                         unrestricted Common Shares owned by the Optionee (or
                         other consideration authorized pursuant to subsection
                         (d) below) having a value at the time of exercise equal
                         to the total Option Price, or (iii) by a combination of
                         such methods of payment.

                    (d)  The Board may determine, at or after the Date of Grant,
                         that payment of the Option Price of any option (other
                         than an Incentive Stock Option) may also be made in
                         whole or in part in the form of Restricted Shares or
                         other Common Shares that are forfeitable or subject to
                         restrictions on transfer, Deferred Shares, Performance
                         Shares (based, in each case, on the Market Value per
                         Share on the date of exercise), other Option Rights
                         (based on the Spread on the date of exercise) or
                         Performance Units. Unless otherwise determined by the
                         Board at or after the Date of Grant, whenever any
                         Option Price is paid in whole or in part by means of
                         any of the forms of consideration specified in this
                         paragraph, the Common Shares received upon the exercise
                         of the Option Rights shall be subject to such risks of
                         forfeiture or restrictions on transfer as may
                         correspond to any that apply to the consideration
                         surrendered, but only to the extent of (i) the number
                         of shares or Performance Shares, (ii) the Spread of any
                         unexercisable portion of Option Rights, or (iii) the
                         stated value of Performance Units surrendered.

                    (e)  Any grant may provide for deferred payment of the
                         Option Price from the proceeds of sale through a bank
                         or broker on a date satisfactory to the Corporation of
                         some or all of the shares to which such exercise
                         relates.

                    (f)  Any grant may, at or after the Date of Grant, provide
                         for the automatic grant of Reload Option Rights to an
                         Optionee upon the exercise of Option Rights (including
                         Reload Option Rights) using Common Shares or other
                         consideration specified in paragraph (d) above. Reload
                         Option Rights shall cover up to the number of Common
                         Shares, Deferred Shares, Option Rights or Performance
                         Shares (or the number of Common Shares having a value
                         equal to the value of any Performance Units)
                         surrendered to the Corporation upon any such exercise
                         in payment of the Option Price or to meet any
                         withholding obligations. Reload Options may have an
                         Option Price that is no less than that which represents
                         the same percentage of the Market Value per Share at
                         the time of exercise of the Option Rights that the per
                         share Option Price represented of the Market Value per
                         Share at the time the Option Rights being exercised
                         were granted and shall be on such other terms as may be
                         specified by the Directors, which may be the same as or
                         different from those of the original Option Rights.

                    (g)  Successive grants may be made to the same Participant
                         whether or not any Option Rights previously granted to
                         such Participant remain unexercised.

                    (h)  Each grant shall specify the period or periods of
                         continuous service by the Optionee with the Corporation
                         or any Subsidiary which is necessary before the Option
                         Rights or installments thereof will become exercisable
                         and may provide for the earlier exercise of such Option
                         Rights in the event of a change in control or other
                         similar transaction or event.

                                     A - 6

<PAGE>

                    (i)  Any grant of Option Rights may specify Management
                         Objectives that must be achieved as a condition to the
                         exercise of such rights.

                    (j)  Option Rights granted under this Plan may be (i)
                         options, including, without limitation, Incentive Stock
                         Options, that are intended to qualify under particular
                         provisions of the Code, (ii) options that are not
                         intended so to qualify, or (iii) combinations of the
                         foregoing.

                    (k)  The Board may, at or after the Date of Grant of any
                         Option Rights (other than Incentive Stock Options),
                         provide for the payment of dividend equivalents to the
                         Optionee on either a current or deferred or contingent
                         basis or may provide that such equivalents shall be
                         credited against the Option Price.

                    (l)  The exercise of an Option Right shall result in the
                         cancellation on a share-for-share basis of any related
                         Appreciation Right authorized under Section 5 of this
                         Plan.

                    (m)  No Option Right shall be exercisable more than 10 years
                         from the Date of Grant.

                    (n)  Each grant of Option Rights shall be evidenced by an
                         Evidence of Award, which shall contain such terms and
                         provisions, consistent with this Plan, as the Board may
                         approve.

5.                Appreciation Rights. The Board may also authorize the granting
         to any  Optionee  of  Appreciation  Rights in respect of Option  Rights
         granted  hereunder at any time prior to the exercise or  termination of
         such related Option Rights;  provided,  however,  that an  Appreciation
         Right awarded in relation to an Incentive  Stock Option must be granted
         concurrently  with such Incentive Stock Option.  An Appreciation  Right
         shall be a right  of the  Optionee,  exercisable  by  surrender  of the
         related  Option  Right,  to  receive  from the  Corporation  an  amount
         determined  by the Board,  which shall be expressed as a percentage  of
         the Spread (not  exceeding  100 percent) at the time of exercise.  Each
         such grant may utilize any or all of the  authorizations,  and shall be
         subject  to  all  of  the  requirements,  contained  in  the  following
         provisions:

                    (a)  Any grant may specify that the amount payable on
                         exercise of an Appreciation Right may be paid by the
                         Corporation in cash, in Common Shares or in any
                         combination thereof and may either grant to the
                         Optionee or retain in the Board the right to elect
                         among those alternatives.

                    (b)  Any grant may specify that the amount payable on
                         exercise of an Appreciation Right may not exceed a
                         maximum specified by the Board at the Date of Grant.

                    (c)  Any grant may specify waiting periods before exercise
                         and permissible exercise dates or periods and shall
                         provide that no Appreciation Right may be exercised
                         except at a time when the related Option Right is also
                         exercisable and at a time when the Spread is positive.

                    (d)  Any grant may specify that such Appreciation Right may
                         be exercised only in the event of a Change in Control
                         or other similar transaction or event.

                    (e)  Each grant of Appreciation Rights shall be evidenced by
                         an Evidence of Award that shall describe such
                         Appreciation Rights, identify the related Option
                         Rights, state that such Appreciation Rights are subject
                         to all the terms and conditions of this Plan, and
                         contain such other terms and provisions, consistent
                         with this Plan, as the Board may approve.

                    (f)  Any grant of Appreciation Rights may specify Management
                         Objectives that must be achieved as a condition of the
                         exercise of such rights.


                                     A - 7

<PAGE>


6.                  Restricted Shares. The Board may also authorize the grant or
         sale to Participants of Restricted Shares. Each such grant or sale may
         utilize any or all of the authorizations, and shall be subject to all
         of the requirements, contained in the following provisions:

                    (a)  Each such grant or sale shall constitute an immediate
                         transfer of the ownership of Common Shares to the
                         Participant in consideration of the performance of
                         services, entitling such Participant to voting,
                         dividend and other ownership rights, but subject to the
                         substantial risk of forfeiture and restrictions on
                         transfer hereinafter referred to.

                    (b)  Each such grant or sale may be made without additional
                         consideration or in consideration of a payment by such
                         Participant that is less than Market Value per Share at
                         the Date of Grant.

                    (c)  Each such grant or sale shall provide that the
                         Restricted Shares covered by such grant or sale shall
                         be subject to a "substantial risk of forfeiture" within
                         the meaning of Section 83 of the Code for a period of
                         time to be determined by the Board on the Date of
                         Grant, and any grant or sale may provide for the
                         earlier termination of such period in the event of a
                         change in control of the Corporation or other similar
                         transactions or events.

                    (d)  Each such grant or sale shall provide that during the
                         period for which such substantial risk of forfeiture is
                         to continue, the transferability of the Restricted
                         Shares shall be prohibited or restricted in the manner
                         and to the extent prescribed by the Board at the Date
                         of Grant (which restrictions may include, without
                         limitation, rights of repurchase or first refusal in
                         the Corporation or provisions subjecting the Restricted
                         Shares to a continuing substantial risk of forfeiture
                         in the hands of any transferee).

                    (e)  Any grant of Restricted Shares may specify Management
                         Objectives which, if achieved, will result in
                         termination or early termination of the restrictions
                         applicable to such shares and each grant may specify in
                         respect of such specified Management Objectives, a
                         minimum acceptable level of achievement and shall set
                         forth a formula for determining the number of
                         Restricted Shares on which restrictions will terminate
                         if performance is at or above the minimum level, but
                         falls short of full achievement of the specified
                         Management Objectives.

                    (f)  Any such grant or sale of Restricted Shares may require
                         that any or all dividends or other distributions paid
                         thereon during the period of such restrictions be
                         automatically deferred and reinvested in additional
                         Restricted Shares, which may be Subject to the same
                         restrictions as the underlying award.

                    (g)  Each grant or sale of Restricted Shares shall be
                         evidenced by an Evidence of Award that shall contain
                         such terms and provisions, consistent with this Plan,
                         as the Board may approve. Unless otherwise directed by
                         the Board, all certificates representing Restricted
                         Shares shall be held in custody by the Corporation
                         until all restrictions thereon shall have lapsed,
                         together with a stock power executed by the Participant
                         in whose name such certificates are registered,
                         endorsed in blank and covering such Shares.

7.                  Deferred Shares.  The Board may also authorize the granting
         or sale of Deferred Shares to Participants.  Each such grant or sale
         may utilize any or all of the authorizations, and shall be subject to
         all of the requirements contained in the following provisions:

                    (a)  Each such grant or sale shall constitute the agreement
                         by the Corporation to deliver Common Shares to the
                         Participant in the future in consideration of the
                         performance of services, but subject to the fulfillment
                         of such conditions during the Deferral Period as the
                         Board may specify.

                                     A - 8

<PAGE>


                    (b)  Each such grant or sale may be made without additional
                         consideration or in consideration of a payment by such
                         Participant that is less than the Market Value per
                         Share at the Date of Grant.

                    (c)  Each such grant or sale shall be subject, except (if
                         the Board shall so determine) in the event of a change
                         in control or other similar transaction or event, to a
                         Deferral Period, as determined by the Board at the Date
                         of Grant.

                    (d)  During the Deferral Period, the Participant shall have
                         no right to transfer any rights under his or her award
                         and shall have no rights of ownership in the Deferred
                         Shares and shall have no right to vote them, but the
                         Board may, at or after the Date of Grant, authorize the
                         payment of dividend equivalents on such Shares on
                         either a current or deferred or contingent basis,
                         either in cash or in additional Common Shares.

                    (e)  Each grant or sale of Deferred Shares shall be
                         evidenced by an Evidence of Award containing such terms
                         and provisions, consistent with this Plan, as the Board
                         may approve.

8.                Performance  Shares and Performance  Units. The Board may also
         authorize the granting of Performance Shares and Performance Units that
         will become  payable to a  Participant  upon  achievement  of specified
         Management  Objectives.  Each such grant may  utilize any or all of the
         authorizations,  and  shall  be  subject  to all  of the  requirements,
         contained in the following provisions:

                    (a)  Each grant shall specify the number of Performance
                         Shares or Performance Units to which it pertains, which
                         number may be subject to adjustment to reflect changes
                         in compensation or other factors; provided, however,
                         that no such adjustment shall be made in the case of a
                         Covered Employee.

                    (b)  The Performance Period with respect to each Performance
                         Share or Performance Unit shall be such period of time
                         (not less than 1 year, except in the event of a change
                         in control or other similar transaction or event, if
                         the Board shall so determine) commencing with the Date
                         of Grant (as shall be determined by the Board at the
                         time of grant).

                    (c)  Any grant of Performance Shares or Performance Units
                         shall specify Management Objectives which, if achieved,
                         will result in payment or early payment of the award,
                         and each grant may specify in respect of such specified
                         Management Objectives a minimum acceptable level of
                         achievement and shall set forth a formula for
                         determining the number of Performance Shares or
                         Performance Units that will be earned if performance is
                         at or above the minimum level, but falls short of full
                         achievement of the specified Management Objectives. The
                         grant of Performance Shares or Performance Units shall
                         specify that, before the Performance Shares or
                         Performance Units shall be earned and paid, the Board
                         must certify that the Management Objectives have been
                         satisfied.

                    (d)  Each grant shall specify a minimum acceptable level of
                         achievement in respect of the specified Management
                         Objectives below which no payment will be made and
                         shall set forth a formula for determining the amount of
                         payment to be made if performance is at or above such
                         minimum but short of full achievement of the Management
                         Objectives.

                    (e)  Each grant shall specify the time and manner of payment
                         of Performance Shares or Performance Units which have
                         been earned. Any grant may specify that the amount
                         payable with respect thereto may be paid by the
                         Corporation in cash, in Common Shares or in any
                         combination thereof and may either grant to the
                         Participant or retain in the Board the right to elect
                         among those alternatives.

                                     A - 9

<PAGE>


                    (f) Any grant of Performance Shares may specify that the
                         amount payable with respect thereto may not exceed a
                         maximum specified by the Board at the Date of Grant.
                         Any grant of Performance Units may specify that the
                         amount payable or the number of Common Shares issued
                         with respect thereto may not exceed maximums specified
                         by the Board at the Date of Grant.

                    (g)  The Board may, at or after the Date of Grant of
                         Performance Shares, provide for the payment of dividend
                         equivalents to the holder thereof on either a current
                         or deferred or contingent basis, either in cash or in
                         additional Common Shares.

                    (h)  Each grant of Performance Shares or Performance Units
                         shall be evidenced by an Evidence of Award containing
                         such other terms and provisions, consistent with this
                         Plan, as the Board may approve.

9.                Awards to Non-Employee  Directors. The Board may, from time to
         time and upon such terms and conditions as it may determine,  authorize
         the granting to  Non-Employee  Directors of options to purchase  Common
         Shares and may also authorize the grant or sale of Restricted Shares to
         Non-Employee Directors

                    (a)  Each grant of Option Rights awarded pursuant to this
                         Section 9 shall be evidenced by an Evidence of Award in
                         such form as shall be approved by the Board, and shall
                         be subject to the following additional terms and
                         conditions:

          (i)  Each grant shall specify the number of Common Shares to which it
               pertains subject to the limitations set forth in Section 3 of
               this plan.

          (ii) Each grant shall specify an Option Price per share, which may not
               be less than the Market Value per Share on the Date of Grant.

          (iii)Each such Option Right shall be exercisable to the extent of 100%
               of the Common Shares subject thereto commencing six months after
               the Date of Grant, provided, that the Optionee has continuously
               remained as a director through such date, provided further,
               however, that any Option Right will be exercisable in full upon
               the Optionee's death or disability. Each such Option Right
               granted under the Plan shall expire 5 years from the Date of
               Grant and shall be subject to earlier termination as hereinafter
               provided.

          (iv) In the event of the termination of service on the Board by the
               holder of any such Option Rights, other than by reason of
               disability or death, the then outstanding Option Rights of such
               holder may be exercised only to the extent that they were
               exercisable on the date of such termination and shall expire 90
               days after such termination, or on their stated expiration date,
               whichever occurs first.

          (v)  In the event of the death or disability of the holder of any such
               Option Rights, each of the then outstanding Option Rights of such
               holder may be exercised at any time within one year after such
               death or disability, but in no event after the expiration date of
               the term of such Option Rights.

          (vi) If a Non-Employee Director subsequently becomes an employee of
               the Corporation or a Subsidiary while remaining a member of the
               Board, any Option Rights held under the Plan by such individual
               at the time of such commencement of employment shall not be
               affected thereby.

          (vii)Option Rights may be exercised by a Non-Employee Director only
               upon payment to the Corporation in full of the Option Price of
               the Common Shares to be delivered. Such payment shall be made in
               cash or in Common Shares previously owned by the optionee for
               more than six months, or in a combination of cash and such Common
               Shares.

         (viii)Each grant may provide for the automatic grant of Reload Option
               Rights to an Optionee upon the exercise of Option Rights
               (including Reload Option Rights) using Common Shares. Reload
               Option Rights shall cover up to the number of Common Shares
               surrendered to the Corporation upon any such exercise in payment
               of the Option Price. Reload Options may have an Option Price that
               is no less than that which represents the same percentage of the
               Market Value per Share at the time of exercise of the Option
               Rights that the per share Option Price represented of the Market
               Value per Share at the time the Option Rights being exercised
               were granted and shall be on such other terms as may be specified
               by the Directors, which may be the same as or different from
               those of the original Option Rights.

                                     A - 10

<PAGE>

               (b)  Each grant or sale of Restricted Shares pursuant to this
                    Section 9 shall be upon terms and conditions consistent with
                    Section 6 of this Plan.

10.               Transferability.

                  (a)  Except as  otherwise  determined  by the Board, no Option
Right, Appreciation Right or other derivative security granted under the Plan
shall be  transferable by an Optionee other than by will or the laws of  descent
and  distribution,  except to a fully revocable  trust of which  the  Optionee
is  treated  as the owner for federal  income tax  purposes.  Except as
otherwise  determined  by the Board,  Option  Rights and  Appreciation  Rights
shall be  exercisable during  the  Optionee's  lifetime  only  by him or her or
by his or her guardian or legal  representative. Notwithstanding the foregoing,
the Board  in its sole  discretion, may  provide  for  transferability  of
particular  awards under this Plan so long as such  provisions will not
disqualify the exemption for other awards under Rule 16b-3.

                  (b)  The Board may  specify  at the Date of Grant that
part or all of the Common Shares that are (i) to be issued or transferred by the
Corporation upon the exercise of Option Rights or Appreciation  Rights, upon the
termination of the Deferral Period applicable to Deferred Shares or upon payment
under any grant of  Performance  Shares or  Performance  Units or (ii) no longer
subject to the  substantial  risk of  forfeiture  and  restrictions  on transfer
referred to in Section 6 of this Plan, shall be subject to further  restrictions
on transfer.

11.               Adjustments. The Board may make or provide for such
         adjustments in the numbers of Common Shares covered by outstanding
         Option Rights, Appreciation Rights, Deferred Shares, and Performance
         Shares granted hereunder, in the prices per share applicable to such
         Option Rights and Appreciation Rights and in the kind of shares covered
         thereby, as the Board, in its sole discretion, exercised in good faith,
         may determine is equitably required to prevent dilution or enlargement
         of the rights of Participants or Optionees that otherwise would result
         from (a) any stock dividend, stock split, combination of shares,
         recapitalization or other change in the capital structure of the
         Corporation, or (b) any merger, consolidation, spin-off, split-off,
         spin-out, split-up, reorganization, partial or complete liquidation or
         other distribution of assets, issuance of rights or warrants to
         purchase securities, or (c) any other corporate transaction or event
         having an effect similar to any of the foregoing. Moreover, in the
         event of any such transaction or event, the Board, in its discretion,
         may provide in substitution for any or all outstanding awards under
         this Plan such alternative consideration as it, in good faith, may
         determine to be equitable in the circumstances and may require in
         connection therewith the surrender of all awards so replaced. The Board
         may also make or provide for such adjustments in the numbers of shares
         specified in Section 3 of this Plan and in the number of Option Rights
         to be granted automatically pursuant to Section 9 of this Plan as the
         Board in its sole discretion, exercised in good faith, may determine is
         appropriate to reflect any transaction or event described in this
         Section 11.

12.               Fractional Shares.  The Corporation shall not be required to
         issue any fractional Common Shares pursuant to this Plan.  The Board
         may provide for the elimination of fractions or for the settlement of
         fractions in cash.

13.               Withholding Taxes.  To the extent that the Corporation is
         required to withhold federal, state, local or foreign taxes in
         connection with any payment made or benefit realized by a Participant
         or other person under this Plan, and the amounts available to the
         Corporation for such withholding are insufficient, it shall be a


                                     A - 11

<PAGE>

         condition to the receipt of such payment or the realization of such
         benefit that the Participant or such other person make arrangements
         satisfactory to the Corporation for payment of the balance of such
         taxes required to be withheld, which arrangements (in the discretion
         of the Board) may include relinquishment of a portion of such benefit.
         Participants shall also make such arrangements as the Corporation may
         require for the payment of any withholding tax obligations that may
         arise in connection with the disposition of shares acquired upon the
         execution of Option Rights.  In no event, however, shall the
         Corporation accept Common Shares for payment of taxes in excess of
         required tax withholding rates, except that, in the discretion of the
         Committee, a Participant or such other person may surrender Common
         Shares owned for more than 6 months to satisfy any tax obligations
         resulting from any such transaction.

14.               Participation by Employees of Designated Subsidiaries.  As a
         condition to the effectiveness of any grant or award to be made
         hereunder to a Participant who is an employee of a Designated
         Subsidiary, whether or not such Participant is also employed by the
         Corporation or another Subsidiary, the Board may require such
         Designated Subsidiary to agree to transfer to such employee (when, as
         and if provided for under this Plan and any applicable agreement
         entered into with any such employee pursuant to this Plan) the Common
         Shares that would otherwise be delivered by the Corporation, upon
         receipt by such Designated Subsidiary of any consideration then
         otherwise payable by such Participant to the Corporation.  Any such
         award shall be evidenced by an agreement between the Participant and
         the Designated Subsidiary, in lieu of the Corporation, on terms
         consistent with this Plan and approved by the Board and such Designated
         Subsidiary.  All such Common Shares so delivered by or to a Designated
         Subsidiary shall be treated as if they had been delivered by or to the
         Corporation for purposes of Section 3 of this Plan, and all references
         to the Corporation in this Plan shall be deemed to refer to such
         Designated Subsidiary, except for purposes of the definition of "Board"
         and except in other cases where the context otherwise requires.

15.               Foreign Employees.  In order to facilitate the making of any
         grant or combination of grants under this Plan, the Board may provide
         for such special terms for awards to Participants who are foreign
         nationals or who are employed by the Corporation or any Subsidiary
         outside of the United States of America as the Board may consider
         necessary or appropriate to accommodate differences in local law, tax
         policy or custom. Moreover, the Board may approve such supplements to
         or amendments, restatements or alternative versions of this Plan as it
         may consider necessary or appropriate for such purposes, without
         thereby affecting the terms of this Plan as in effect for any other
         purpose, and the Secretary or other appropriate officer of the
         Corporation may certify any such document as having been approved and
         adopted in the same manner as this Plan.  No such special terms,
         supplements, amendments or restatements, however, shall include any
         provisions that are inconsistent with the terms of this Plan as then in
         effect unless this Plan could have been amended to eliminate such
         inconsistency without further approval by the shareholders of the
         Corporation.

16.               Administration of the Plan.

                  (a) This Plan shall be administered by the Board,  which may
from time to time  delegate all or any part of its  authority  under  this  Plan
to a  committee  of the  Board  (or subcommittee  thereof),  consisting of not
less than three Non-Employee Directors appointed by the Board of Directors,
each of whom shall be a "Non-Employee  Director"  within  the  meaning  of Rule
16b-3  and an "outside  director" within the meaning of Section 162(m) of the
Code. A majority of the committee (or subcommittee thereof) shall constitute a
quorum, and the action of the members of the committee (or subcommittee thereof)
present at any meeting at which a quorum is present,  or acts unanimously
approved in writing, shall be the acts of the committee (or subcommittee
thereof).

                  (b)  The interpretation and construction by the Board of
any  provision  of  this  Plan or of any  agreement,  notification  or  document
evidencing the grant of Option Rights,  Appreciation Rights,  Restricted Shares,
Deferred Shares,  Performance  Shares or Performance Units and any determination
by the Board  pursuant to any  provision of this Plan or of any such  agreement,
notification or document shall be final and  conclusive.  No member of the Board
shall be liable for any such action or determination made in good faith.

17.               Corporation's Rights Upon Occurrence of Detrimental Activity.

                  Any  Evidence  of Award  may  provide  that if a  Participant,
either  during  employment  by the  Corporation  or a  Subsidiary  or  within  a
specified  period  after  termination  of such  employment,  shall engage in any
Detrimental Activity, and the Board shall so find, forthwith upon notice of such
finding, the Participant shall:

                  (a)  Return to the  Corporation,  in exchange  for payment by
                       the  Corporation  of any  amount  actually paid therefor
                       by the  Participant,  all Common Shares that the


                                     A - 12

<PAGE>

                       Participant  has not  disposed of that were offered
                       pursuant  to this  Plan  within a  specified period prior
                       to the date of the  commencement of such Detrimental
                       Activity, and

                  (b)  With  respect to any Common  Shares so acquired that the
                       Participant  has  disposed  of,  pay to the Corporation
                       in cash the difference between:

         (i)                    Any amount actually paid therefor by the
                                Participant pursuant to this Plan, and

         (ii)                   The Market Value per Share of the Common Shares
                                on the date of such acquisition.

To the extent that such amounts are not paid to the Corporation, the Corporation
may set off the amounts so payable to it against  any amounts  that may be owing
from time to time by the Company or a Subsidiary to the Participant,  whether as
wages, deferred compensation or vacation pay or in the form of any other benefit
or for any other reason.

18.               Governing Law.  The Plan and all awards granted and actions
         taken thereunder shall be governed by and construed in accordance with
         the internal substantive laws of the State of Georgia.

19.               Amendments, Etc.

                  (a)        The Board may at any time and from time to time
amend the Plan in whole or in part;  provided,  however,  that any amendment
which must be approved by the shareholders of the Corporation in order to comply
with  applicable  law or the rules of any  national securities  exchange  upon
which the Common Shares are traded or quoted shall  not be  effective  unless
and  until  such  approval  has  been obtained.  Presentation  of the  Plan  or
any  amendment  thereof  for shareholder  approval shall not be construed to
limit the Corporation's authority to offer similar or dissimilar  benefits in
plans that do not  require shareholder approval.

                  (b)        The Board also may permit  Participants to elect to
defer the issuance of Common  Shares or the  settlement  of awards in cash under
the Plan pursuant to such rules,  procedures or programs as it may establish for
purposes of this Plan.  The Board also may  provide  that  deferred  settlements
include the payment or  crediting  of  dividend  equivalents  or interest on the
deferral amounts.

                  (c)        The Board may  condition  the grant of any award or
combination of awards authorized under this Plan on the surrender or deferral by
the  Participant  of his  or  her  right  to  receive  a  cash  bonus  or  other
compensation  otherwise  payable  by  the  Corporation  or a  Subsidiary  to the
Participant.

                  (d)        In case of  termination  of employment by reason of
death,  disability or normal or early retirement,  or in the case of hardship or
other  special  circumstances,  of a  Participant  who holds an Option  Right or
Appreciation Right not immediately exercisable in full, or any Restricted Shares
as to which the substantial risk of forfeiture or the prohibition or restriction
on transfer  has not lapsed,  or any  Deferred  Shares as to which the  Deferral
Period has not been completed,  or any Performance  Shares or Performance  Units
which have not been fully  earned,  or who holds  Common  Shares  subject to any
transfer  restriction  imposed  pursuant to Section 9(b) of this Plan, the Board
may, in its sole  discretion,  accelerate the time at which such Option Right or
Appreciation  Right may be exercised or the time at which such  substantial risk
of forfeiture or  prohibition  or restriction on transfer will lapse or the time
when such Deferral Period will end or the time at which such Performance  Shares
or  Performance  Units will be deemed to have been fully earned or the time when
such transfer  restriction  will terminate or may waive any other  limitation or
requirement under any such award.

                  (e)        This Plan shall not confer upon any Participant any
right with  respect to  continuance  of  employment  or other  service  with the
Corporation or any Subsidiary,  nor shall it interfere in any way with any right
the  Corporation  or any  Subsidiary  would  otherwise  have to  terminate  such
Participant's  employment or other service at any time. Prior to exercise of any
Option Right, and prior to exercise,  payment or delivery  pursuant to any other
award, the Participant may be required, at the Corporation's request, to certify
in a manner  reasonably  acceptable to the Corporation  that the Participant has
not  engaged  in, and has no present  intention  to engage in the future in, any
Detrimental Activity.


                                     A - 13

<PAGE>


                  (f)        To the extent that any provision of this Plan would
prevent  any Option  Right that was  intended to qualify as an  Incentive  Stock
Option  from  qualifying  as such,  that  provision  shall be null and void with
respect to such Option Right.  Such provision,  however,  shall remain in effect
for other Option Rights and there shall be no further effect on any provision of
this Plan.

20.               Termination.  No grant (other than an automatic grant of
         Reload Option  Rights)  shall be made under this Plan more than 10
         years after its adoption,  subject to approval of this Plan by the
         shareholders of the Corporation at the 2002 Annual Meeting of
         Shareholders.

<PAGE>


                                     PROXY

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

            Proxy Solicitation on Behalf of the Board of Directors of
                the Company for the Annual Meeting on May 7, 2002

       The  undersigned  hereby  appoints J. Mack Robinson and Hilton H. Howell,
       Jr., or any one of them, as proxies with full power of  substitution  and
       resubstitution, to vote on the undersigned's behalf at the Annual Meeting
       of the Shareholders of Atlantic American Corporation,  to be held at 9:00
       A.M., May 7, 2002, in the offices of the Company,  4370  Peachtree  Road,
       N.E., Atlanta,  Georgia and at all adjournments or postponements thereof,
       upon all business as may properly come before the meeting,  including the
       business described in the accompanying Notice of Annual Meeting and Proxy
       Statement, receipt of which is acknowledged.

       PROXIES  WILL BE VOTED IN  ACCORDANCE  WITH  ANY  INSTRUCTIONS  INDICATED
       BELOW. IF NO SPECIFICATION  IS MADE, THE SHARES  REPRESENTED BY THE PROXY
       WILL BE VOTED FOR ALL LISTED PROPOSALS. IN THEIR DISCRETION,  THE PROXIES
       ARE  AUTHORIZED  TO VOTE UPON SUCH OTHER  BUSINESS AS MAY  PROPERLY  COME
       BEFORE THE MEETING. THIS PROXY IS REVOCABLE AT ANY TIME PRIOR TO ITS USE.

     1.    Election Of Directors:

            NOMINEES:
 <table>
      <s>                       <c>                          <c>
     1.  J. Mack Robinson       5.  Samuel E. Hudgins         9.  Mark C. West
     2.  Hilton H. Howell, Jr.  6.  D. Raymond Riddle        10.  William H.Whaley, MD
     3.  Edward E. Elson        7.  Harriett J. Robinson     11.  Dom H. Wyant
     4.  Harold K. Fischer      8.  Scott G. Thompson

</table>
              FOR               WITHHOLD AUTHORITY
       ------            ------ for all nominees


     For, except vote withheld from the following nominee(s):


     ---------------------------------------------------------------------------

     2.   To approve an amendment to the Company's  Articles of Incorporation to
          increase  the total  number of  authorized  shares of common  stock to
          50,000,000.

                             FOR        AGAINST        ABSTAIN
                       ------     ------         ------

     3.   To approve the Atlantic American Corporation 2002 Incentive Plan.

                             FOR        AGAINST        ABSTAIN
                       ------     ------         ------



          Dated:                                                          , 2002
               -----------------------------------------------------------


                                                                       Signature
          -------------------------------------------------------------


                                                                       Signature
          -------------------------------------------------------------

          | Sign  exactly as your  name(s)  appears at left.  Give full title of
          executor,  administrator,  trustee, guardian, etc. Joint owners should
          each sign personally.
























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</DOCUMENT>
