EMPLOYMENT AGREEMENT

      THIS EMPLOYMENT AGREEMENT (this "Agreement") is made by and between Vesta
Insurance Group, Inc. a Delaware corporation (the "Company"), and Hopson B.
Nance, an individual resident of Birmingham, Alabama (the "Executive"),
effective the 24th day of February, 2003 (the "Effective Date").

RECITALS:

  A. The Company is a holding company for a group of property and casualty
insurance subsidiaries which offer primary insurance primarily on personal
risks;

  B. The Executive serves as Senior Vice President and Chief Financial Officer
of the Company;

  C. The Company wishes to assure itself of the continued services of the
Executive so that it will have the continued benefit of his ability, experience
and services, and the Executive is willing to enter into an agreement to that
end, upon the terms and conditions hereinafter set forth; and

  D. Certain capitalized terms used in this Agreement shall have the meanings
given them in Section 16 hereof.

     NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the Company and the Executive hereby agree as follows:

  1. Employment

  (a) The Company hereby agrees to continue to employ the Executive as Senior
Vice President and Chief Financial Officer of the Company and any other position
agreed upon by the parties; and Executive hereby agrees to serve the Company in
the foregoing capacities, upon the terms and conditions set forth herein. The
Executive shall have such authority and responsibilities consistent with his
position that may be set forth in the Company's Bylaws or assigned by the Board
or the Chief Executive Officer of the Company from time to time.

  (b) The Executive agrees to devote his full business time and attention as is
reasonably necessary to the performance of his duties and responsibilities under
this Agreement; provided, however, that nothing in this Agreement shall preclude
the Executive from devoting reasonable periods required for (i) participating in
professional, educational, charitable, social or community activities, (ii)
serving as a director or member of an advisory committee of any corporation or
other entity that the Executive is serving on or any other corporation or entity
that is not in direct competition with the Company, or (iii) managing his
personal investments, provided that such activities do not materially interfere
with the Executive's regular performance of his duties and responsibilities
hereunder.

  (c) The Company, in its sole discretion, may require that the Executive be
designated an employee of one or more of the Company's subsidiaries or
affiliates for such purposes as payroll and benefits administration. The
employment of the Executive by any such subsidiary or affiliate to facilitate
the Company's internal administrative purposes shall be considered employment by
the Company within the meaning of this Agreement and shall not otherwise affect
any of the rights or responsibilities of the Company or the Executive hereunder.

  2. Term. Unless earlier terminated as provided herein, the Executive's
employment under this Agreement shall be for a term (the "Term") of two (2)
years from the Effective Date. The Term shall be automatically extended for an
additional year on each anniversary of the Effective Date, unless written notice
of non-extension is provided by either party to the other party at least 90 days
prior to such anniversary.

  3. Compensation and Benefits. In consideration of the services rendered by the
Executive during the Term, the Company shall pay or provide to the Executive the
amounts and benefits set forth below.

  (a) Salary. Executive shall receive an annual base salary of $250,000. The
base salary shall be paid in accordance with the Company's normal payroll
practices. The Executive's base salary shall be reviewed at least annually for
consideration of appropriate merit increases and, once established, the base
salary shall not be decreased during the Term.

  (b) Other Incentive Plans. The Executive shall participate in all annual and
long-term bonus or incentive plans or arrangements in which substantially all
other executives of the Company of a comparable level are eligible to
participate from time to time, including, without limitation, the Company's Cash
Bonus Plan. The Executive's incentive compensation opportunities under such
plans and arrangements shall be determined from time to time by the Compensation
Committee.

  (c) Equity Incentives. The Executive shall be given consideration, at least
annually, for the grant of options to purchase shares of the common stock of the
Company. In addition, the Executive shall be given consideration to receive
awards under any stock option, stock purchase or equity-based incentive
compensation plan or arrangement adopted by the Company from time to time for
which executives of the Company of a comparable level are eligible to
participate. The Executive's awards under such plans and arrangements may be
determined from time to time by the Compensation Committee.

  (d) Employee Benefits. The Executive shall be entitled to participate in
employee benefit plans, programs, practices or arrangements of the Company in
which substantially all other executives of the Company of a comparable level
are eligible to participate from time to time, including, without limitation,
any qualified or non-qualified pension, profit sharing and savings plans, any
death benefit and disability benefit plans, and any medical, dental, health and
welfare plans. Without limiting the generality of the foregoing, the Company
shall provide the Executive with the following:

  (i) long-term disability insurance coverage in an amount and on terms
consistent with the coverage in place for other management personnel of the
Company;

  (ii) continued provision of life insurance coverage in an amount and on terms
consistent with the coverage in place for other management personnel of the
Company; and

  (iii) provision of the pension benefits provided under the Company's
Post-Retirement Benefits Plan.

  (e) Fringe Benefits and Perquisites. The Executive shall be entitled to all
fringe benefits and perquisites which are generally made available to executives
of the Company of a comparable level from time to time. Without limiting the
generality of the foregoing, the Company shall provide the Executive with the
following:

  (i) provision of offices and secretarial staff;

  (ii) vacation in accordance with the Company's policy for other executives of
a comparable level;

  (iii) an automobile owned or leased by the Company of a make and model
appropriate for the Executive's position or, in lieu thereof, provision of a
non-accountable automobile allowance in an amount to be determined from time to
time by the Board or the Compensation Committee;

  (iv) reimbursement of dues for Vestavia Country Club and payment of dues for a
reasonable number of professional associations of which Executive is a member in
furtherance of his duties hereunder; and

  (v) reimbursement of all reasonable travel and other business expenses and
disbursements incurred by the Executive in the performance of his duties under
this Agreement, upon proper accounting in accordance with the Company's normal
practices and procedures for reimbursement of business expenses.

  4. Termination.

  (a) The Executive's employment under this Agreement may be terminated prior to
the end of the Term only as follows:

  (i) upon the resignation or death of the Executive;

  (ii) by the Company due to the Disability of the Executive upon delivery of a
Notice of Termination to the Executive;

  (iii) by the Company for Cause or without Cause, in either event upon delivery
of a Notice of Termination to the Executive; or

  (iv) by the Executive for Good Reason after any occurrence of a Change in
Control upon delivery of a Notice of Termination to the Company.

  (b) If the Executive's employment with the Company is terminated during the
Term (i) by reason of the Executive's resignation or death, or (ii) by the
Company for Disability or Cause, the Company shall pay to the Executive (or in
the case of his death, the Executive's estate) within thirty (30) days after the
Termination Date a lump sum cash payment equal to the Accrued Compensation and,
if such termination is other than as a result of Executive's resignation or by
the Company for Cause, the Pro Rata Bonus.

  (c) If the Executive's employment with the Company is terminated by the
Company without Cause or after a Change in Control by the Executive for Good
Reason, the Executive shall be entitled to the following:

  (i) the Company shall pay the Executive in cash within thirty (30) days of the
Termination Date an amount equal to all Accrued Compensation and the Pro Rata
Bonus;

  (ii) (A) at the end of each of the twenty-four (24) consecutive 30-day periods
following the Termination Date in the event that the Executive's employment is
terminated by the Company without Cause prior to a Change in Control or (B) at
the end of each of the thirty-six (36) consecutive 30-day periods following the
Termination Date in the event that the Executive's employment is terminated
after a Change in Control either by the Company without Cause or by the
Executive for Good Reason, the Company shall pay to the Executive in cash an
amount equal to one-twelfth of the sum of the Base Amount (including any
increases in base salary) plus the Bonus Amount (including any increases in
bonus amount) or, in the alternative, the Executive may elect to receive a lump
sum equal to the present value of the payments due under this paragraph (c)(ii),
to be payable within thirty (30) days of such election; provided, however, that
such lump sum amount shall be reduced to its net present value assuming an
interest rate equal to six percent (6%) and the applicable number of equal
monthly payments commencing on the Termination Date; and

  (iii) (A) for a period of twenty-four (24) months following the Termination
Date in the event that the Executive's employment is terminated by the Company
without Cause prior to a Change in Control, (B) for a period of thirty-six (36)
months following the Termination Date in the event that the Executive's
employment is terminated after a Change in Control either by the Company without
Cause or by the Executive for Good Reason or (C) for such longer period as any
plan, program, practice or policy may provide, the Company shall continue
benefits to the Executive and/or the Executive's family at least equal to those
which would have been provided to them in accordance with the Company's plans,
programs, practices and policies providing medical, dental, health, death and
disability benefits if the Executive's employment had not been terminated in
accordance with the most favorable plans, practices, programs or policies of the
Company and its affiliated companies as in effect and applicable generally to
other peer executives and their families during the 90-day period immediately
preceding the Executive's termination of employment; provided, however, that if
the Executive becomes reemployed with another employer and is eligible to
receive medical and other welfare benefits under another employer-provided plan,
the medical and other welfare benefits described herein shall be secondary to
those provided under such other plan during such applicable period of
eligibility.

  If, prior to a Change in Control, any event or condition described in Section
16(l) occurs or the Executive's employment is terminated by the Company without
Cause, and the Executive reasonably demonstrates that such event, condition or
termination occurred (A) at the request of a third party who has indicated an
intention or taken steps reasonably calculated to effect a Change in Control and
who effectuates a Change in Control, or (B) otherwise in connection with, or in
anticipation of, a Change in Control which actually occurs, then the occurrence
of such event or condition described in Section 16(l) shall constitute Good
Reason for purposes of this Agreement, and such event, condition or termination
shall be treated as occurring after the Change in Control for purposes of this
Section 4(c), notwithstanding that it occurred prior to the Change in Control.

  (iv) the restrictions on any incentive awards whether now in effect for, or
hereafter granted to, the Executive under any stock option plan or under any
other incentive plan, deferred compensation plan, agreement or arrangement of
the Company of any of its affiliates shall lapse and such incentive awards shall
become 100% accrued and vested, so that, for example, all stock options and
stock appreciation rights granted to the Executive shall be immediately
exercisable and shall be 100% vested, all restrictions on any restricted stock
held by the Executive shall lapse such that the Executive has full title to such
shares, and any deferred compensation payable under any plan, agreement or
arrangement shall accrue in total and be immediately due and payable in full.
The period in which Executive may exercise any option granted shall be the full
term of such option.

  (d) In the event that any payment or benefit (within the meaning of Section
28OG(b)(2) of the Internal Revenue Code of 1986, as amended (the "Code")) to the
Executive (or for his benefit) paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise in connection with, or
arising out of, his relationship with the Company or a change in ownership or
effective control of the Company or of a substantial portion of its assets (a
"Payment" or "Payments"), would be subject to the excise tax imposed by Section
4999 of the Code or any interest or penalties are incurred by the Executive with
respect to any such excise or other taxes (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax" and any other tax together with any such interest and penalties are
herein referred to as "Other Taxes"), then the Executive will be entitled to
receive an additional payment (a "Gross-Up Payment") in an amount such that
after payment by the Executive of all Excise Taxes and Other Taxes on the
Payments and All Excise Taxes or Other Taxes imposed upon the Gross-Up Payment,
the Executive shall retain that portion of the Gross-Up Payment equal to the
Excise Tax or Other Taxes imposed upon the Payments.

  5. Confidential Information. During the Term and at all times thereafter, the
Executive agrees that he will not divulge to anyone (other than the Company or
any persons employed or designated by the Company) any knowledge or information
of a confidential nature relating to the business of the Company or any of its
subsidiaries or affiliates, including, without limitation, all types of trade
secrets (unless readily ascertainable from public or published information or
trade sources) and confidential commercial information, and the Executive
further agrees not to disclose, publish or make use of any such knowledge or
information without the consent of the Company.

  6. Successors, Binding Agreement.

  (a) This Agreement shall be binding upon and shall inure to the benefit of the
Company (including each of its subsidiaries), its successors and assigns and any
person, firm, corporation or other entity which succeeds to all or substantially
all of the business, assets or property of the Company. The Company will require
any successor (whether direct or indirect, by purchase, merger, consolidation,
or otherwise) to all or substantially all of the business, assets or property of
the Company, to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place. As used in this Agreement, the "Company"
shall mean the Company as hereinbefore defined and any successor to its
business, assets or property as aforesaid which executes and delivers an
agreement provided for in this Section 6 or which otherwise becomes bound by all
the terms and provisions of this Agreement by operation of law.

  (b) This Agreement and all rights of the Executive hereunder shall inure to
the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive should die while any amounts are due and
payable to him hereunder, all such amounts, unless otherwise provided herein,
shall be paid to the Executive's designated beneficiary or, if there be no such
designated beneficiary, to the legal representatives of the Executive's estate.

  7. Fees and Expenses. To induce the Executive to execute this Agreement and to
provide the Executive with reasonable assurance that the purposes of this
Agreement will not be frustrated by the cost of its enforcement should the
Company fail to perform its obligations under this Agreement:

  (a) In the event that the Executive's employment is terminated by the Company
prior to a Change in Control either for Cause or without Cause, the Company
shall reimburse the Executive for any reasonable attorneys' fees, expenses and
court costs incurred by the Executive as a result of any litigation by the
Executive regarding the validity, enforceability or interpretation of any
provision of this Agreement (including as a result of any litigation by the
Executive regarding the benefits payable to the Executive pursuant to this
Agreement); provided, however, that such reimbursement shall only be payable by
the Company (i) after the Executive prevails on substantially all issues
involved in such litigation and (ii) upon receipt of proof of such expenses.

  (b) In the event that the Executive's employment is terminated after a Change
in Control either by the Company either for Cause or without Cause or by the
Executive for Good Reason, the Company shall reimburse the Executive for any
reasonable attorneys' fees, expenses and court costs incurred by the Executive
as a result of any litigation by the Executive regarding the validity,
enforceability or interpretation of any provision of this Agreement (including
as a result of any litigation by the Executive regarding the benefits payable to
the Executive pursuant to this Agreement) upon receipt of proof of such expenses
regardless of which party, if any, prevails in the contest.

  8. Notice. All notices and other communications provided for in this Agreement
(including the Notice of Termination) shall be in writing and shall be deemed to
have been duly given upon personal delivery or receipt when sent by certified
mail, return receipt requested, postage prepaid, or by a nationally recognized
overnight courier service that provides written proof of delivery, and shall be
addressed as follows (or to such other address as either party shall have
furnished to the other in writing in accordance herewith):

If to the Executive: Hopson B. Nance 3049 South Cove Drive Vestavia Hills,
Alabama 35216

If to the Company: Vesta Insurance Group, Inc. 3760 River Run Drive Birmingham,
Alabama 35243 Attention: Chief Executive Officer Copy to: General Counsel

  9. Settlement of Claims. The Company's obligation to make the payments
provided for in this Agreement and to otherwise perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Company may have against the Executive or others. The Company may, however,
withhold from any benefits payable under this Agreement all federal, state, city
or other taxes as shall be required pursuant to any law or governmental
regulation or ruling.

  10. Modification and Waiver. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and the Company. No waiver by any party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time.

  11. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Alabama without giving
effect to the conflict of laws principles thereof.

  12. Severability. The provisions of this Agreement shall be deemed severable,
and the invalidity or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereof.

  13. Entire Agreement. This Agreement constitutes the entire agreement between
the parties hereto and supersedes all prior agreement, if any, understandings
and arrangements, oral or written, between the parties hereto with respect to
the subject matter hereof.

  14. Headings. The headings of Sections herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.

  15. Counterparts. This Agreement may be executed in one or more counterparts,
each shall be deemed an original but all of which together shall constitute one
and the same instrument.

  16. Definitions. For purposes of this Agreement, the following terms shall
have the following meanings:

  (a) "Accrued Compensation" shall mean an amount which shall include all
amounts earned or accrued through the Termination Date but not paid as of the
Termination Date, including without limitation, (i) base salary, (ii) deferred
compensation accumulated under any plan, arrangement or agreement, (iii)
reimbursement for reasonable and necessary expenses incurred by the Executive on
behalf of the Company prior to Termination Date, and (iv) bonuses and incentive
cash compensation (other than the Pro Rata Bonus).

  (b) "Base Amount" shall mean the greater of the Executive's annual base salary
(i) at the rate in effect on the Termination Date or (ii) the highest rate in
effect at any time during the 90-day period prior to a Change in Control, and
shall include all amounts of his base salary that are deferred under any plans,
arrangements or agreements of the Company or any of its affiliates.

  (c) "Board" shall mean the Board of Directors of the Company.

  (d) "Bonus Amount" shall mean the greater of (i) the most recent annual cash
bonus paid or payable to the Executive, or, if greater, the annual cash bonus
paid or payable for the year ended prior to the fiscal year during which a
Change in Control occurred, or (ii) the average of the annual cash bonuses paid
or payable during the three full fiscal years ended prior to the Termination
Date, or, if greater, the three full fiscal years prior to a Change in Control
(or, in each case, such lesser period for which annual bonuses were paid or
payable to the Executive).

  (e) The "Cash Bonus Plan" shall mean the J. Gordon Gaines, Inc. Cash Bonus
Plan, as amended from time to time, or any successor plan thereto.

  (f) "Cause" shall mean (i) a willful and material violation of applicable laws
and regulations, (ii) a willful and material act of dishonesty, theft, fraud or
embezzlement, (iii) commission of a felony or a crime involving moral turpitude,
(iv) substantial dependence or addiction to alcohol or any drug, (v) conduct
disloyal to the Company or its subsidiaries, or (vi) willful dereliction of
duties or disregard of lawful instructions or directions of the Board or
officers of the Company or its subsidiaries relating to a material matter;
provided, however, that such conduct shall not constitute Cause unless (A) there
shall have been delivered to the Executive a written notice setting forth with
specificity the reasons that the Board believes the Executive's conduct meets
the criteria set forth in this Section 16(f), (B) the Executive shall have been
provided the opportunity to be heard in person by the Board (with the assistance
of the Executive's counsel if the Executive so desires), and (C) after such
hearing, the termination is evidenced by a resolution adopted by two-thirds of
the members of the Board.

  (g) A "Change in Control" shall mean the happening during the Term of any of
the following:

  (i) when any "person" as such term is used in Section 13(d) and 14(d) of the
Exchange Act (other than the Company or any Company employee benefit plan,
including its trustees) is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly of securities of the
Company representing twenty percent (20%) or more of the combined voting power
of the Company's then outstanding securities;

  (ii) the occurrence of any transaction or event relating to the Company
required to be described pursuant to the requirements of Item 6(e) of Schedule
14A of Regulation 14A under the Exchange Act;

  (iii) when, during any period of two (2) consecutive years during the Term,
the individuals who, at the beginning of such period, constitute the Board
cease, for any reason other than death, to constitute at least a majority
thereof, unless each director who was not a director at the beginning of such
period was elected by, or on the recommendation of, at least two-thirds (2/3) of
the directors at the beginning of such period; or

  (iv) the occurrence of a transaction requiring stockholder approval for the
acquisition of the Company by an entity other than the Company through purchase
of assets, or by merger, or otherwise.

  (h) "Compensation Committee" shall mean the Compensation Committee of the
Board.

  (i) "Disability" shall mean the inability of the Executive to perform his
duties to the Company on account of physical or mental illness for a period of
six consecutive full months, or for a period of eight full months during any
12-month period. The Executive's employment shall terminate in such a case on
the last day of the applicable period; provided, however, in no event shall the
Executive be terminated by reason of Disability unless (i) the Executive is
eligible for the long-term disability benefits set forth in Section 3(d)(i)
hereof and (ii) the Executive receives written notice from the Company, at least
30 days in advance of such termination, stating its intention to terminate the
Executive for reason of Disability and setting forth in reasonable detail the
facts and circumstances claimed to provide a basis for such termination.

  (j) "Effective Date" shall mean the day and year first above written.

  (k) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.

  (l) "Good Reason" shall mean (i) within one year following a Change in
Control, the delivery by the Company of written notice of non-extension of the
terms of this Agreement under Section 2 of this Agreement. (ii) the occurrence
at any time within two (2) years following a Change in Control of any of the
events or conditions described in subsections (i) through (viii) hereof:

  (i) (A) a change in the Executive's status, office, title, position or
responsibilities (including reporting responsibilities) which, in the
Executive's reasonable judgment, represents an adverse change from his status,
office, title, position or responsibilities as in effect at any time within 90
days preceding the date of a Change in Control or at any time thereafter; (B)
the assignment to the Executive of any duties or responsibilities which, in the
Executive's reasonable judgment, are inconsistent with his status, office,
title, position or responsibilities as in effect at any time within 90 days
preceding the date of a Change in Control or at any time thereafter; (C) any
removal of the Executive from, or failure to reappoint or reelect him to, any
such status, office, title, position or responsibility; or (D) any other change
in condition or circumstances that in the Executive's reasonable judgment makes
it materially more difficult for the Executive to carry out the duties and
responsibilities of his office that existed at any time within 90 days preceding
the date of a Change in Control or at any time thereafter;

  (ii) a reduction in the Executive's base salary or any failure to pay the
Executive any compensation or benefits to which he is entitled within five days
of the date due;

  (iii) the Company's requiring the Executive to be based at any place outside a
30-mile radius from the executive offices occupied by the Executive immediately
prior to a Change in Control, except for reasonably required travel on the
Company's business which is not materially greater than such travel requirements
prior to the Change in Control;

  (iv) the failure by the Company to (A) continue in effect (without reduction
in benefit level and/or reward opportunities) any material compensation or
employee benefit plan in which the Executive was participating at any time
within ninety (90) days preceding the date of a Change in Control or at any time
thereafter, unless such plan is replaced with a plan that provides substantially
equivalent compensation or benefits to the Executive or (B) provide the
Executive with compensation and benefits, in the aggregate, at least equal (in
terms of benefit levels and/or reward opportunities) to those provided for under
each other employee benefit plan, program and practice in which the Executive
was participating at any time within 90 days preceding the date of a Change in
Control or at any time thereafter;

  (v) the insolvency of the Company, or the filing by any person or entity,
including the Company or any of its subsidiaries, of a petition for bankruptcy
of the Company, or other relief under any other moratorium or similar law, which
petition is not dismissed within 60 days;

  (vi) any material breach by the Company of this Agreement;

  (vii) any purported termination of the Executive's employment for Cause by the
Company which does not comply with the terms of this Agreement; or

  (viii) the failure of the Company to comply with and satisfy its obligations
under Section 6(a) hereof.

     The Executive's right to terminate his employment for Good Reason shall not
be affected by his incapacity due to physical or mental illness.

  (m) "Notice of Termination" shall mean a written notice of termination from
the Company or the Executive which specifies an effective date of termination,
indicates the specific termination provision in this Agreement relied upon.

  (n) The "Post-Retirement Benefits Plan" shall mean the Post-Retirement
Benefits Plan of the Company, if any, as amended from time to time, or any
successor plan thereto.

  (o) "Pro Rata Bonus" shall mean an amount equal to the Bonus Amount multiplied
by a fraction the numerator of which is the number of days in the applicable
year through the Termination Date and the denominator of which is 365.

  (p) "Termination Date" shall mean, in the case of the Executive's death, his
date of death, and in all other cases, the date specified in the Notice of
Termination.

[SIGNATURES ON FOLLOWING PAGE]

     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its officer thereunto duly authorized, and the Executive has signed this
Agreement, effective as of the date first above written.

VESTA INSURANCE GROUP, INC

By: /s/ Norman W. Gayle III
——————————————
Norman W. Gayle III
President & CEO

EXECUTIVE

By: /s/ Hopson B. Nance
——————————————