Exhibit 10.1

AMENDED AND RESTATED
CREDIT AGREEMENT

BY AND AMONG

AS BORROWERS:

VESTA INSURANCE GROUP, INC.

AS LENDER AND SECURED PARTY:

FIRST COMMERCIAL BANK

$30,000,000 REVOLVING CREDIT FACILITY

DATED AS OF SEPTEMBER 30, 2004

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TABLE OF CONTENTS

ARTICLE I             DEFINITIONS   -1-     1.1       Defined Terms   -1-
    1.2       Accounting Terms   -11-     1.3       Other Terms; Construction  
-11-   ARTICLE II             AMOUNT AND TERMS OF THE LOANS   -12-     2.1      
Commitment; Loans   -12-     2.2       Borrowings   -12-     2.3       Note  
-13-     2.4       Security   -13-     2.5       Termination and Reduction of
Commitment   -13-     2.6       Mandatory and Voluntary Payments and Prepayments
  -14-     2.7       Interest   -14-     2.8       Method of Payments;
Computations   -15-     2.9       Recovery of Payments   -15-     2.10     Use
of Proceeds   -16-     2.11     Increased Costs; Change in Circumstances;
Illegality; etc.   -16-     2.12     Taxes   -17-     2.13     Non-Usage Fee  
-17-   ARTICLE III             CONDITIONS OF BORROWING   -18-     3.1      
Conditions to Effectiveness of this Agreement   -18-     3.2       Conditions to
All Loans   -20-   ARTICLE IV             REPRESENTATIONS AND WARRANTIES   -21-
    4.1       Corporate Organization and Power   -21-     4.2      
Authorization; Enforceability   -21-     4.3       No Violation   -21-     4.4  
    Governmental Authorization; Permits   -22-     4.5       Litigation   -22-
    4.6       Taxes   -22-     4.7       Subsidiaries   -23-     4.8       Full
Disclosure   -23-     4.9       Margin Regulations   -23-     4.10     No
Material Adverse Change   -23-

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    4.11     Financial Matters   -24-     4.12     Ownership of Properties  
-25-     4.13     ERISA   -25-     4.14     Environmental Matters   -25-
    4.15     Compliance With Laws   -26-     4.16     Regulated Industries  
-26-     4.17     Insurance   -26-   ARTICLE V             AFFIRMATIVE COVENANTS
  -26-     5.1       GAAP Financial Statements   -26-     5.2       Statutory
Financial Statements   -27-     5.3       Other Business and Financial
Information   -28-     5.4       Corporate Existence; Franchises; Maintenance of
Properties   -31-     5.5       Compliance with Laws   -31-     5.6      
Payment of Obligations   -31-     5.7       Insurance   -31-     5.8      
Maintenance of Books and Records; Inspection   -32-     5.9       Subsidiary
Dividends   -32-     5.10     Further Assurances   -32-     5.11     2002
Financial Statements   -32-   ARTICLE V             FINANCIAL COVENANTS   -32-
    6.1       Consolidated Net Income   -33-     6.2       Debt to Capital Ratio
  -33-     6.3       Credit Rating   -33-     6.4       Minimum GAAP Net Worth  
-33-     6.5       Interest Coverage Ratio   -33-     6.6       Risk-Based
Capital   -33-   ARTICLE VII             NEGATIVE COVENANTS   -33-     7.1      
Merger; Consolidation   -33-     7.2       Indebtedness   -33-     7.3  
    Liens   -34-     7.4       Disposition of Assets   -36-     7.5  
    Transactions with Affiliates   -37-     7.6       Lines of Business   -37-
    7.7       Fiscal Year   -38-     7.8       Accounting Changes   -38-
    7.9       Dividends   -38-

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ARTICLE VIII         EVENTS OF DEFAULT   -38-     8.1       Events of Default  
-38-     8.2       Remedies; Termination of Commitment, Acceleration, etc.  
-40-     8.3       Remedies; Set-Off   -41-   ARTICLE IX        
    MISCELLANEOUS   -41-     9.1       Fees and Expenses   -41-     9.2  
    Indemnification   -42-     9.3       Governing Law; Consent to Jurisdiction
  -42-     9.4       Arbitration; Preservation and Limitation of Remedies   -43-
    9.5       Notices   -43-     9.6       Amendments, Waivers, etc.   -44-
    9.7       Participations   -44-     9.8       No Waiver   -45-     9.9  
    Successors and Assigns   -45-     9.10     Survival   -45-     9.11  
  Severability   -46-     9.12     Construction   -46-     9.13  
  Confidentiality   -46-     9.14     Reliance by Lender   -46-     9.15    
Counterparts   -46-     9.16     Entire Agreement   -46-

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EXHIBITS

Exhibit A Form of Note   Exhibit B Form of Stock Pledge Agreement   Exhibit C
Form of Notice of Borrowing   Exhibit D-1 Form of Compliance Certificate (for
Section 5.1)   Exhibit D-2 Form of Compliance Certificate (for Section 5.2)  

SCHEDULES

Schedule 4.3 Subsidiaries Subject to Restrictions or Encumbrance   Schedule
4.4(a) Approval or Consent for Credit Agreement   Schedule 4.4(b) Governmental
Approvals, Etc.   Schedule 4.5 Litigation Against Borrower   Schedule 4.6 Taxes
  Schedule 4.7 Subsidiaries   Schedule 4.11(a) Financial Statements Exceptions  
Schedule 4.11(b) Exceptions Regarding Historical Statutory Statements   Section
4.15 Compliance with Law Exceptions   Schedule 7.3 Existing Liens   [others]

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CREDIT AGREEMENT

        THIS CREDIT AGREEMENT, dated as of the 30th day of September, 2004 (this
“Agreement”), is made by and between VESTA INSURANCE GROUP, INC., a Delaware
corporation with its principal offices in Birmingham, Alabama (the “Borrower”)
and FIRST COMMERCIAL BANK, an Alabama banking corporation (the “Lender”).

R E C I T A L S:

        The Borrower has requested that the Lender make available to the
Borrower a revolving credit facility of up to $30,000,000, the proceeds of which
are to be used for general corporate purposes, including ongoing working capital
for the Borrower, all on the terms and subject to the conditions hereinafter set
forth.

        Lender is willing to make the credit facility available to Borrower on
the security of the Collateral (as hereafter defined) for said purposes upon the
terms and subject to the conditions hereinafter set forth.

AGREEMENT

        NOW, THEREFORE, in consideration of the mutual provisions, covenants and
agreements herein contained, the parties DO HEREBY AGREE as follows:

ARTICLE

IDEFINITIONS

        1.1 Defined Terms. For purposes of this Agreement, in addition to the
terms defined elsewhere herein, the following terms shall have the meanings set
forth below (such meanings to be equally applicable to the singular and plural
forms thereof):

        “Account Designation Letter” shall mean a letter from Borrower to the
Lender, duly completed and signed by an Authorized Officer of Borrower and in
form and substance satisfactory to the Lender, listing any one or more accounts
to which Borrower may from time to time request the Lender to forward the
proceeds of any Loans made hereunder.

        “Actual/360 Basis” shall mean a method of computing interest or other
charges hereunder on the basis of an assumed year of 360 days for the actual
number of days elapsed, meaning that interest or other charges accrued for each
day will be computed by multiplying the rate applicable on that day by the
unpaid principal balance (or other relevant sum) on that day and dividing the
result by 360.

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        “Affiliate” shall mean, as to any Person, each other Person that
directly, or indirectly through one or more intermediaries, owns or controls, is
controlled by or under common control with, such Person or is a director or
officer of such Person. For purposes of this definition, with respect to any
Person “control” shall mean (i) the possession, direct or indirect, of the power
to direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise, or
(ii) the beneficial ownership of securities or other ownership interests of such
Person having 25% or more of the combined voting power of the then outstanding
securities or other ownership interests of such Person ordinarily (and apart
from rights accruing under special circumstances) having the right to vote in
the election of directors or other governing body of such Person.

        “Agreement” shall mean this Credit Agreement, as amended, modified or
supplemented from time to time.

        “Annual Statement” shall mean, with respect to any Insurance Subsidiary
for any fiscal year, the annual financial statements of such Insurance
Subsidiary as required to be filed with the Insurance Regulatory Authority of
its jurisdiction of domicile and in accordance with the laws of such
jurisdiction, together with all exhibits, schedules, certificates and actuarial
opinions required to be filed or delivered therewith.

        “Applicable Percentage” shall mean one-quarter of one percent (.25%).

        “Authorized Officer” shall mean any officer of the Borrower authorized
by resolution of the board of directors of the Borrower to take the action
specified herein with respect to such officer and whose signature and incumbency
shall have been certified to the Lender by the secretary or an assistant
secretary of the Borrower.

        “Bankruptcy Code” shall mean 11 U.S.C. §§ 101 et seq., as amended from
time to time, and any successor statute.

        “Base Rate” shall mean the rate announced from time to time by Lender as
its prime or base rate (which may not necessarily be its best lending rate).

        “Borrowing” shall mean the incurrence of a Loan by the Borrower on a
single date.

        “Borrowing Date” shall mean, with respect to any Borrowing, the date
upon which such Borrowing is made.

        “Business Day” shall mean any day other than a Saturday or Sunday, a
legal holiday or a day on which commercial banks in Birmingham, Alabama, are
required by law to be closed.

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        “Collateral” shall mean the 2,500,000 shares of Holdings pledged by
Borrower to Lender pursuant to the Pledge Agreement, plus any and all additional
collateral pledged by Borrower pursuant to the provisions of Section 2.5.

        “Commitment” shall have the meaning given to such term in Section 2.1.

        “Compliance Certificate” shall mean a fully completed and duly executed
certificate in the form of Exhibit D-l or D-2 in such form and detail as will
demonstrate compliance with the provisions of Article VI.

        “Consolidated Debt to Capital Ratio” shall mean a percentage in which
the numerator is the Indebtedness of Borrower and its Subsidiaries, as reflected
on Borrower’s consolidated GAAP balance sheet, and the denominator of which is
the sum of the total stockholder’s equity of Borrower and its Subsidiaries, as
reflected on Borrower’s consolidated GAAP balance sheet, plus the Indebtedness
of Borrower and its Subsidiaries as reflected on Borrower’s consolidated GAAP
balance sheet; provided, however, for purposes of “Consolidated Debt to Capital
Ratio”, Indebtedness shall not include indebtedness of Borrower or Subsidiaries
to the Federal Home Loan Bank.

        “Consolidated Group” shall mean the Borrower and all Subsidiaries whose
financial results are consolidated in Borrower’s consolidated Financial
Statements prepared in accordance with GAAP.

        “Consolidated Net Income from Continuing Operations” shall mean, for any
period, net income (or loss) from continuing operations for Borrower and its
Subsidiaries for such period, determined on a consolidated basis in accordance
with Generally Accepted Accounting Principles.

        “Consolidated Tax Allocation Agreement” shall mean that certain
Consolidated Tax Allocation Agreement dated June 28, 1995, among Borrower and
the Subsidiaries listed on Exhibit A thereto, without giving effect to any
amendments thereto after the date thereof.

        “Contingent Obligation” shall mean, with respect to any Person, any
direct or indirect liability of such Person with respect to any Indebtedness,
liability or other obligation (the “primary obligation”) of another Person (the
“primary obligor”), whether or not contingent, (i) to purchase, repurchase or
otherwise acquire such primary obligation or any property constituting direct or
indirect security therefor, (ii) to advance or provide funds (A) for the payment
or discharge of any such primary obligation or (B) to maintain working capital
or equity capital of the primary obligor or otherwise to maintain the net worth
or solvency or any balance sheet item, level of income or financial condition of
the primary obligor, (iii) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor in respect thereof to make payment of such
primary obligation or (iv) otherwise to assure or hold harmless the owner of any
such primary obligation against loss or failure or inability to perform in
respect thereof, provided, however, that, with respect to Borrower and its
Subsidiaries, the term Contingent Obligation shall not include (y) endorsements
for collection or deposit in the ordinary course of business or (z) obligations
entered into by an Insurance Subsidiary in the ordinary course of its business
under insurance policies or contracts issued by it or to which it is a party,
including reinsurance agreements (and security posted by any such Insurance
Subsidiary in the ordinary course of its business to secure obligations
thereunder).

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        “Covenant Compliance Worksheet” shall mean a fully completed worksheet
in the form of Attachment A to Exhibit D-l or Exhibit D-2, as applicable, in
such form and detail as will demonstrate compliance with the provisions of
Article VI.

        “Credit Documents” shall mean this Agreement, the Note, the Pledge
Agreement and all other agreements, instruments, documents and certificates now
or hereafter executed and delivered to the Lender by or on behalf of Borrower or
any of its Subsidiaries with respect to this Agreement and the transactions
contemplated hereby, in each case as amended, modified, supplemented or restated
from time to time.

        “Default” shall mean any event or condition that, with the passage of
time or giving of notice, or both, would constitute an Event of Default.

        “Dollars” or “$” shall mean dollars of the United States of America.

        “EBIT” shall mean, for any applicable period, the sum determined on a
consolidated basis, of (a) net income (or net loss), plus (b) interest expense,
plus (c) income tax expense determined in accordance with GAAP.

        “Effective Date” shall mean the date and year first above written.

        “ERISA” shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and any successor statute, and all rules and
regulations from time to time promulgated thereunder.

        “ERlSA Affiliate” shall mean any Person (including any trade or
business, whether or not incorporated) that would be deemed to be under “common
control” with, or a member of the same “controlled group” as, Borrower or any of
its Subsidiaries, within the meaning of Sections 414(b), (c), (m) or (o) of the
Internal Revenue Code or Section 4001 of ERISA.

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        “ERlSA Event” shall mean any of the following with respect to a Plan or
Multiemployer Plan, as applicable: (i) a Reportable Event with respect to a Plan
or a Multiemployer Plan, (ii) a complete or partial withdrawal by Borrower or
any ERISA Affiliate from a Multiemployer Plan that results in liability under
Section 4201 or 4204 of ERISA, or the receipt by Borrower or any ERISA Affiliate
of notice from a Multiemployer Plan that it is in reorganization or insolvency
pursuant to Section 4241 or 4245 of ERISA or that it intends to terminate or has
terminated under Section 4041A of ERISA, (iii) the distribution by Borrower or
any ERISA Affiliate under Section 4041 or 4041A of ERISA of a notice of intent
to terminate any Plan or the taking of any action to terminate any Plan, (iv)
the commencement of proceedings by the PBGC under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan, or the
receipt by Borrower or any ERISA Affiliate of a notice from any Multiemployer
Plan that such action has been taken by the PBGC with respect to such
Multiemployer Plan, (v) the institution of a proceeding by any fiduciary of any
Multiemployer Plan against Borrower or any ERISA Affiliate to enforce Section
515 of ERISA, which is not dismissed within thirty (30) days, (vi) the
imposition upon Borrower or any ERISA Affiliate of any liability under Title IV
of ERISA, other than for PBGC premiums due but not delinquent under Section 4007
of ERISA, or the imposition or threatened imposition of any Lien upon any assets
of Borrower or any ERISA Affiliate as a result of any alleged failure to comply
with the Internal Revenue Code or ERISA in respect of any Plan, (vii) the
engaging in or otherwise becoming liable for a nonexempt Prohibited Transaction
by Borrower or any ERISA Affiliate, (viii) a violation of the applicable
requirements of Section 404 or 405 of ERISA or the exclusive benefit rule under
Section 401(a) of the Internal Revenue Code by any fiduciary of any Plan for
which Borrower or any of its ERISA Affiliates may be directly or indirectly
liable or (ix) the adoption of an amendment to any Plan that, pursuant to
Section 401(a)(29) of the Internal Revenue Code or Section 307 of ERISA, would
result in the loss of tax-exempt status of the trust of which such Plan is a
part if Borrower or an ERISA Affiliate fails to timely provide security to such
Plan in accordance with the provisions of such sections.

        “Environmental Claims” shall mean any and all administrative, regulatory
or judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigations (other than internal reports prepared
by any Person in the ordinary course of its business and not in response to any
third party action or request of any kind) or proceedings relating in any way to
any Environmental Law or any permit issued, or any approval given, under any
such Environmental Law (collectively, “Claims”), including, without limitation,
(i) any and all Claims by Governmental Authorities for enforcement, cleanup,
removal, response, remedial or other actions or damages pursuant to any
applicable Environmental Law and (ii) any and all Claims by any third party
seeking damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Substances or arising from alleged
injury or threat of injury to human health or the environment:

        “Environmental Laws” shall mean any and all federal, state and local
laws, statutes, ordinances, rules, regulations, permits, licenses, approvals,
interpretations, rules of common law and orders of courts or Governmental
Authorities, relating to the protection of human health or occupational safety
or the environment, now or hereafter in effect and in each case as amended from
time to time, including, without limitation, requirements pertaining to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transportation, handling, reporting, licensing, permitting, investigation or
remediation of Hazardous Substances.

        “Event of Default” shall have the meaning given to such term in Section
8.1.

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        “Exchange Act” shall mean the Securities Exchange Act of 1934, as
amended from time to time, and any successor statute, and all rules and
regulations from time to time promulgated thereunder.

        “Federal Reserve Board” shall mean the Board of Governors of the Federal
Reserve System or any successor thereto.

        “Generally Accepted Accounting Principles” or “GAAP” shall mean
generally accepted accounting principles, as set forth in the statements,
opinions and pronouncements of the Accounting Principles Board, the American
Institute of Certified Public Accountants and the Financial Accounting Standards
Board (or, to the extent not so set forth in such statements, opinions and
pronouncements, as generally followed by entities similar in size to Borrower
and engaged in generally similar lines of business), consistently applied and
maintained and in conformity with those used in the preparation of the most
recent financial statements of the Borrower referred to in Section 4.11(a).

        “Governmental Authority” shall mean any nation or government, any state
or other political subdivision thereof and any central bank thereof, any
municipal, local, city or county government, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.

        “Hazardous Substances” shall mean any substances or materials (i) that
are or become defined as hazardous wastes, hazardous substances, pollutants,
contaminants or toxic substances under any Environmental Law, (ii) that are
defined by any Environmental Law as toxic, explosive, corrosive, ignitable,
infectious, radioactive, mutagenic or otherwise hazardous, (iii) the presence of
which require investigation or response under any Environmental Law, (iv) that
constitute a nuisance, trespass or health or safety hazard to Persons or
neighboring properties, (v) that consist of underground or aboveground storage
tanks, whether empty, filled or partially filled with any hazardous substance or
(vi) that contain, without limitation, asbestos, polychlorinated biphenyls, urea
formaldehyde foam insulation, petroleum hydrocarbons, petroleum derived
substances or wastes, crude oil, nuclear fuel, natural gas or synthetic gas.

        “Historical Statutory Statements” shall have the meaning given to such
term in Section 4.11(b).

        “Holdings” means Affirmative Insurance Holdings, Inc., a Delaware
corporation with its principal place of business in Dallas County, Texas.

        “Income Tax Benefits” shall mean an amount equal to 100% of the portion
of the federal or state income tax benefits received on a quarterly basis by
Borrower that, pursuant to the Consolidated Tax Allocation Agreement, may be
retained by Borrower and not paid over to any other member of the Consolidated
Group.

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        “Indebtedness” shall mean, with respect to any Person (without
duplication), (i) all indebtedness of such Person for borrowed money or in
respect of loans or advances, (ii) all obligations of such Person evidenced by
notes, bonds, debentures or similar instruments, (iii) all reimbursement
obligations of such Person with respect to surety bonds, letters of credit and
bankers’ acceptances (in each case, whether or not drawn or matured and in the
stated amount thereof) which are required to be reported as a liability under
GAAP or Statutory Accounting Principals, (iv) all obligations of such Person to
pay the deferred purchase price of property or services which are required to be
reported as a liability under GAAP or Statutory Accounting Principals, (v) all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person, (vi) all
obligations of such Person as lessee under leases that are or should be, in
accordance with Generally Accepted Accounting Principles, recorded as capital
leases, to the extent such obligations are required to be so recorded, (vii) all
obligations of such Person to purchase, redeem, retire, defease or otherwise
make any payment in respect of any capital stock or other equity securities
that, by their stated terms (or by the terms of any equity securities issuable
upon conversion thereof or in exchange therefor), or upon the occurrence of any
event, mature or are mandatorily redeemable, or are redeemable at the option of
the holder thereof, in whole or in part, at any time prior to the Maturity Date,
(viii) all Contingent Obligations of such Person and (ix) all indebtedness
referred to in clauses (i) through (viii) above secured by any Lien on any
property or asset owned or held by such Person regardless of whether the
indebtedness secured thereby shall have been assumed by such Person or is
nonrecourse to the credit of such Person, and with respect to Borrower and its
Subsidiaries shall include, without limitation (but without duplication), the
Junior Subordinated Debentures, the beneficial interests of the Trust in the
Junior Subordinated Debentures, and Borrower’s guarantee to the holders of the
Trust Securities of all of the Trust’s obligations under the Trust Securities.

        “Insurance Regulatory Authority” shall mean, with respect to any
Insurance Subsidiary, the insurance department or similar Governmental Authority
charged with regulating insurance companies or insurance holding companies, in
its state of domicile and, to the extent that it has regulatory authority over
such Insurance Subsidiary, in each other jurisdiction in which such Insurance
Subsidiary conducts business or is licensed to conduct business.

        “Insurance Subsidiary” shall mean any Subsidiary of Borrower the ability
of which to pay dividends is regulated by an Insurance Regulatory Authority or
that is otherwise required to be regulated thereby in accordance with the
applicable Requirements of Law of its state of domicile.

        “Interest Coverage Ratio” shall mean for Borrower and its Subsidiaries,
on a consolidated basis, the ratio of (a) EBIT to (b) net cash interest payable
on all Indebtedness (not including interest payments to Borrower or Affiliates
of Borrower).

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        “Internal Revenue Code” shall mean the Internal Revenue Code of 1986, as
amended from time to time, and any successor statute, and all rules and
regulations from time to time promulgated thereunder.

        “Junior Subordinated Debentures” shall mean Borrower’s 8.525% Junior
Subordinated Deferrable Interest Debentures due January 15, 2027, issued
pursuant to the Indenture, dated as of January 31, 1997, between Borrower and
The National Bank of North Carolina, as Debenture Trustee, as amended, modified
or supplemented from time to time.

        “Lender” shall mean First Commercial Bank and its successors and
assigns.

        “Licenses” shall have the meaning given to such term in Section 4.4(c).

        “Lien” shall mean any mortgage, pledge, hypothecation, assignment,
security interest, lien (statutory or otherwise), preference, priority, charge
or other encumbrance of any nature, whether voluntary or involuntary, including,
without limitation, the interest of any vendor or lessor under any conditional
sale agreement, title retention agreement, capital lease or any other lease or
arrangement having substantially the same effect as any of the foregoing.

        “Loans” shall have the meaning given to such term in Section 2.1.

        “Margin Stock” shall have the meaning given to such term in Regulation
U.

        “Material Adverse Change” shall mean a material adverse change in the
condition (financial or otherwise), operations, business, properties or
financial prospects of Borrower or Borrower and its Subsidiaries, taken as a
whole.

        “Material Adverse Effect” shall mean a material adverse effect upon (i)
the condition (financial or otherwise), operations, business, properties or
financial prospects of Borrower or Borrower and its Subsidiaries, taken as a
whole, (ii) the ability of the Borrower to perform its obligations under this
Agreement or any of the other Credit Documents or (iii) the legality, validity
or enforceability of this Agreement or any of the other Credit Documents or the
rights and remedies of the Lender hereunder and thereunder.

        “Maturity Date” shall mean, June 30, 2006. The Maturity Date shall
automatically extend for additional, consecutive one-year periods if Borrower
furnishes Lender written notice of its desire for such extension not less than
30 and not more than 60 days prior to the date that is one year prior to the
then applicable Maturity Date, unless on or before the date that is one year
prior to the then applicable Maturity Date Lender shall have given Borrower
written notice of its intention not to extend the Maturity Date. For example,
if, after Borrower has notified Lender of its desire for an extension, Lender
does not give Borrower written notice of Lender’s election to not extend the
Maturity Date on or before June 30, 2005, the Maturity Date shall be extended
until June 30, 2007.

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        “Moody’s” shall mean Moody’s Investors Service, Inc., its successors and
assigns.

        “Multiemployer Plan” shall mean any “multiemployer plan” within the
meaning of Section 4001(a)(3) of ERlSA to which the Borrower or any ERISA
Affiliate makes, is making or is obligated to make contributions or has made or
been obligated to make contributions.

        “NAIC” shall mean the National Association of Insurance Commissioners
and any successor thereto.

        “Non-Usage Fee” shall have the meaning given to such term in Section
2.13.

        “Note” shall mean the promissory note of the Borrower in substantially
the form of Exhibit A, together with any amendments, modifications and
supplements thereto, substitutions therefor and restatements thereof.

        “Notice of Borrowing” shall have the meaning given to such term in
Section 2.2(a).

        “Obligations” shall mean all principal of and interest (including, to
the greatest extent permitted by law, post-petition interest) on the Loans and
all fees, expenses, indemnities and other obligations owing, due or payable at
any time by the Borrower to the Lender or any other Person entitled thereto,
under this Agreement or any of the other Credit Documents.

        “PBGC” shall mean the Pension Benefit Guaranty Corporation and any
successor thereto.

        “Participant” shall have the meaning given to such term in Section
9.7(a).

        “Permitted Liens” shall have the meaning given to such term in Section
7.3.

        “Person” shall mean any corporation, association, joint venture,
partnership, limited liability company, organization, business, individual,
trust, government or agency or political subdivision thereof or any other legal
entity.

        “Plan” shall mean any “employee pension benefit plan” within the meaning
of Section 3(2) of ERISA that is subject to the provisions of Title IV of ERISA
(other than a Multiemployer Plan) and to which Borrower or any ERISA Affiliate
may have any liability.

        “Pledge Agreement” means that certain Stock Pledge Agreement from
Borrower in favor of Lender originally dated February 1, 2003, as amended on of
even date herewith by that certain Amended and Restated Pledge Agreement, in
substantially the form of Exhibit B, together with any further amendments,
modifications and supplements thereto, substitutions therefor and restatements
thereof.

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        “Prohibited Transaction” shall mean any transaction described in (i)
Section 406 of ERISA that is not exempt by reason of Section 408 of ERISA or by
reason of a Department of Labor prohibited transaction individual or class
exemption or (ii) Section 4975(c) of the Internal Revenue Code that is not
exempt by reason of Section 4975(c)(2) or 4975(d) of the Internal Revenue Code.

        “Quarterly Statement” shall mean, with respect to any Insurance
Subsidiary for any fiscal quarter, the quarterly financial statements of such
Insurance Subsidiary as required to be filed with the Insurance Regulatory
Authority of its jurisdiction of domicile, together with all exhibits,
schedules, certificates and actuarial opinions required to be filed or delivered
therewith.

        “Readily Marketable” shall mean cash or cash equivalent instruments or
other collateral having a readily available market value for which there is a
ready sale in the open market.

        “Regulations D, G, T, U and X” shall mean Regulations D, G, T, U and X,
respectively, of the Federal Reserve Board, and any successor regulations.

        “Reportable Event” shall mean (i) any “reportable event” within the
meaning of Section 4043(c) of ERISA for which the 30-day notice under Section
4043(a) of ERISA has not been waived by the PBGC (including any failure to meet
the minimum funding standard of, or timely make any required installment under,
Section 412 of the Internal Revenue Code or Section 302 of ERISA, regardless of
the issuance of any waivers in accordance with Section 412(d) of the Internal
Revenue Code), (ii) any such “reportable event” subject to advance notice to the
PBGC under Section 4043(b)(3) of ERISA, (iii) any application for a funding
waiver or an extension of any amortization period pursuant to Section 412 of the
Internal Revenue Code, and (iv) a cessation of operations described in Section
4062(e) of ERISA.

        “Requirement of Law” shall mean, with respect to any Person, the
charter, articles or certificate of organization or incorporation and bylaws or
other organizational or governing documents of such Person, and any statute,
law, treaty, rule, regulation, order, decree, writ, injunction or determination
of any arbitrator or court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to which
such Person or any of its property is subject or otherwise pertaining to any or
all of the transactions contemplated by this Agreement and the other Credit
Documents.

        “Significant Subsidiary” shall mean, at the relevant time of
determination, any Subsidiary of Borrower having (after the elimination of
intercompany accounts) (i) assets constituting at least 10% of the total assets
of Borrower and its Subsidiaries on a consolidated basis or (ii) revenues
constituting at least 10% of the total revenues of Borrower and its Subsidiaries
on a consolidated basis, in each case as determined as of the date of the
financial statements of Borrower and its Subsidiaries most recently delivered
under Section 5.1 prior to such time (or, with regard to determinations at any
time prior to the initial delivery of financial statements under Section 5.1, as
of the date of the most recent financial statements referred to in Section
4.11(a)).

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        “Standard & Poor’s” shall mean Standard & Poor’s Ratings Services, a
division of The McGraw-Hill Companies, its successors and assigns.

        “Statutory Accounting Principles” shall mean, with respect to any
Insurance Subsidiary, the statutory accounting practices prescribed or permitted
by the relevant Insurance Regulatory Authority of its state of domicile,
consistently applied and maintained and in conformity with those used in the
preparation of the most recent Historical Financial Statements.

        “Subsidiary” shall mean, with respect to any Person, any corporation or
other Person of which more than fifty percent (50%) of the outstanding capital
stock having ordinary voting power to elect a majority of the board of
directors, in the case of a corporation, or of the ownership or beneficial
interests, in the case of a Person not a corporation, is at the time, directly
or indirectly, owned or controlled by such Person and one or more of its other
Subsidiaries or a combination thereof (irrespective of whether, at the time,
securities of any other class or classes of any such corporation or other Person
shall or might have voting power by reason of the happening of any contingency).
When used without reference to a parent entity, the term “Subsidiary” shall be
deemed to refer to a Subsidiary of Borrower.

        “Termination Date” shall mean the Maturity Date or such earlier date of
termination of the Commitment pursuant to Section 2.5 or Section 8.2.

        “Transaction Expenses” shall mean all costs and expenses of, and fees
payable to, the Lender that are required to be reimbursed or paid by the
Borrower pursuant to Section 9.1 of the Credit Agreement.

        “Trust” shall mean Vesta Capital Trust I, a Delaware statutory business
trust.

        “Trust Securities” shall mean the 8.525% Capital Securities issued by
the Trust and representing preferred beneficial interests in the Trust.

        “Unfunded Pension Liability” shall mean, with respect to any Plan or
Multiemployer Plan, the excess of its benefit liabilities under Section
4001(a)(16) of ERISA over the current value of its assets, determined in
accordance with the applicable assumptions used for funding under Section 412 of
the Code for the applicable plan year.

        “Unutilized Commitment” shall mean, at any time, (i) the Commitment at
such time less (ii) the aggregate principal amount of Loans outstanding at such
time.

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        “VFIC” shall mean Vesta Fire Insurance Corporation, an Illinois
insurance corporation.

        “Vesta Margin Stock” shall mean shares of capital stock of Borrower that
are held by Borrower or any of its Subsidiaries and that constitute Margin
Stock.

        “Wholly Owned” shall mean, with respect to any Subsidiary of any Person,
that 100% of the outstanding capital stock or other ownership interests of such
Subsidiary is owned, directly or indirectly, by such Person.

        1.2  Accounting Terms. Except as specifically provided otherwise in this
Agreement, all accounting terms used herein that are not specifically defined
shall have the meanings customarily given them, and all financial computations
hereunder shall be made, in accordance with Generally Accepted Accounting
Principles (or, to the extent that such terms apply solely to any Insurance
Subsidiary or if otherwise expressly required, Statutory Accounting Principles).
Notwithstanding the foregoing, in the event that any changes in Generally
Accepted Accounting Principles or Statutory Accounting Principles after the date
hereof are required to be applied to the transactions described herein and would
affect the computation of the financial covenants contained in Sections 6.1
through 6.4, as applicable, such changes shall be followed only from and after
the date this Agreement shall have been amended to take into account any such
changes. References to amounts on particular exhibits, schedules, lines, pages
and columns of an Annual Statement or Quarterly Statement are based on the
format promulgated by the NAIC for the 2001 Annual Statements and Quarterly
Statements. In the event such format is changed in future years so that
different information is contained in such items or they no longer exist, or if
the Annual Statement or Quarterly Statement is replaced by the NAIC or by any
Insurance Regulatory Authority after the date hereof such that different forms
of financial statements are required to be furnished by the Insurance
Subsidiaries in lieu thereof, such references shall be to information consistent
with that reported in the referenced item in the 2001 Annual Statements or
Quarterly Statements, as the case may be.

        1.3  Other Terms; Construction. Unless otherwise specified or unless the
context otherwise requires, all references herein to sections, annexes,
schedules and exhibits are references to sections, annexes, schedules and
exhibits in and to this Agreement, and all terms defined in this Agreement shall
have the defined meanings when used in any other Credit Document or any
certificate or other document made or delivered pursuant hereto.

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ARTICLE II

AMOUNT AND TERMS OF THE LOANS

        2.1 Commitment; Loans. The Lender agrees, subject to and on the terms
and conditions of this Agreement, to make loans (each, a “Loan,” and
collectively, the “Loans”) to the Borrower, from time to time on any Business
Day during the period from and including the Effective Date to but not including
the Termination Date, in an aggregate principal amount at any time outstanding
not exceeding $30,000,000 (as such amount may be permanently reduced in
accordance with Section 2.5(b) the “Commitment”), provided that no Borrowing of
Loans shall be made if, immediately after giving effect thereto, the aggregate
principal amount of Loans outstanding at such time would exceed the lesser of
(a) the Commitment or (b) eighty percent (80%) of the market value of the
Collateral as determined by multiplying the number of shares of Holdings subject
to the Pledge by the average closing price of Holdings for the ten (10) trading
days preceding the date on which such determination is made, as reported by the
exchange on which Holdings is listed. Subject to and on the terms and conditions
of this Agreement, the Borrower may borrow, repay and re-borrow Loans.

        2.2 Borrowings.

                    (a) In order to make a Borrowing, Borrower will give the
Lender written notice not later than 10:00 a.m., Birmingham time, one (1)
Business Day prior to each Borrowing; provided, however, that a request for a
Borrowing to be made on the Effective Date may, at the discretion of the Lender,
be given later than the time specified therefor as set forth hereinabove. Each
such notice (each, a “Notice of Borrowing”) shall be irrevocable, shall be given
in the form of Exhibit C and shall specify (i) the aggregate principal amount of
the Loans to be made pursuant to such Borrowing, and (ii) the requested
Borrowing Date, which shall be a Business Day. Notwithstanding anything to the
contrary contained herein, the aggregate principal amount of each Borrowing
shall not be less than $1,000,000 or, if greater, an integral multiple of
$500,000 in excess thereof (or in any event, if less than or greater than
$1,000,000, in the amount of the Unutilized Commitment).

                    (b) Not later than noon, Birmingham time, on the requested
Borrowing Date, the Lender will make the requested amount available to the
Borrower subject to the provisions of subsection (a) hereof and Section 2.1.

                    (c) The Borrower hereby authorizes the Lender to disburse
the proceeds of each Borrowing in accordance with the terms of any written
instructions from any of the Authorized Officers of Borrower, provided that the
Lender shall not be obligated under any circumstances to forward amounts to any
account not listed in an Account Designation Letter. Borrower may at any time
deliver to the Lender an Account Designation Letter listing any additional
accounts or deleting any accounts listed in a previous Account Designation
Letter.

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        2.3 Note.

                    (a) The Loan shall be evidenced by a Note appropriately
completed in substantially the form of Exhibit A.

                    (b) The Note shall (i) be executed by the Borrower, (ii) be
payable to the order of the Lender, (iii) be dated as of the Effective Date,
(iv) be in a stated principal amount equal to the Commitment, (v) bear interest
in accordance with the provisions of Section 2.7, as the same may be applicable
to the Loans made by the Lender from time to time, and (vi) be entitled to all
of the benefits of this Agreement and the other Credit Documents and subject to
the provisions hereof and thereof.

                    (c) The Lender will record on its internal records the
amount of each Loan made by it and each payment received by it in respect
thereof and will, in the event of any transfer of the Note, either endorse on
the reverse side thereof or on a schedule attached thereto (or any continuation
thereof) the outstanding principal amount of the Loans evidenced thereby as of
the date of transfer or provide such information on a schedule to the documents
relating to such transfer; provided, however, that the failure of the Lender to
make any such recordation or provide any such information, or any error therein,
shall not affect the Borrower’s obligations under this Agreement or the Notes.

        2.4 Security. The Loans shall be secured by a pledge by Borrower of
2,500,000 shares of stock in Holdings owned by Borrower, pursuant to the Pledge
Agreement. At Lender’s request, Borrower will from time to time authorize any
and all financing statements, continuation statements and execute other
instruments and documents necessary to perfect Lender’s first priority security
interest in the Collateral.

        2.5 Termination and Reduction of Commitment.

                    (a) The Commitment shall be automatically and permanently
terminated on the Maturity Date unless sooner terminated pursuant to subsection
(b) below or Section 8.2.

                    (b) At any time and from time to time after the date hereof,
upon not less than five (5) Business Days’ prior written notice to the Lender,
the Borrower, without premium or penalty, may terminate in whole or reduce in
part the Unutilized Commitment, provided that any such partial reduction shall
be in an aggregate amount of not less than $1,000,000 or, if greater, an
integral multiple thereof. The amount of any termination or reduction made under
this subsection (b) may not thereafter be reinstated.

                    (c) If at any time the outstanding balance of the Loan
exceeds eighty percent (80%) of the market value of the Collateral (calculated
in the manner provided in Section 2.1 above), Borrower shall within five (5)
business days either (a) reduce the outstanding balance of the Loan to an amount
equal to or less than eighty percent (80%) of the market value of the Collateral
(calculated in the manner provided in Section 2.1 above) or (b) pledge to Lender
additional collateral (which collateral must be liquid marketable securities
satisfactory to Lender in its sole discretion), whose market value, when added
to the Collateral (whose value shall be calculated in the manner provided in
Section 2.1 above), exceeds one hundred and twenty-five percent (125%) of the
outstanding balance of the Loan.

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        2.6 Mandatory and Voluntary Payments and Prepayments.

                (a) Except to the extent due or made sooner pursuant to the
provisions of this Agreement, the Borrower will repay the aggregate outstanding
principal amount of the Loans in full on the Maturity Date.

                (b) In the event that, at any time, the aggregate principal
amount of Loans outstanding at such time shall exceed the Commitment at such
time (after giving effect to any concurrent termination or reduction thereof),
the Borrower will immediately prepay the outstanding principal amount of the
Loans in the amount of such excess.

                (c) At any time and from time to time, the Borrower shall have
the right to prepay the Loans, in whole or in part, without premium or penalty
(except for the Non-Usage Fee), upon written notice to the Lender given not
later than noon, Birmingham time, one (1) Business Day prior to each intended
prepayment of Loans, provided that each partial prepayment shall be in an
aggregate principal amount of not less than $1,000,000 or, if greater, an
integral multiple of $500,000 in excess thereof. Each such notice shall specify
the proposed date of such prepayment and the aggregate principal amount of the
Loan to be prepaid and shall be irrevocable and shall bind the Borrower to make
such prepayment on the terms specified therein. Amounts prepaid pursuant to this
subsection (c) may be reborrowed, subject to the terms and conditions of this
Agreement.

        2.7 Interest.

                (a) The Borrower will pay interest in respect of the unpaid
principal amount of each Loan, from the date of Borrowing thereof until such
principal amount shall be paid in full, at the Base Rate.

                (b) Any principal amounts of the Loans not paid when due and, to
the greatest extent permitted by law, all interest accrued on the Loans and all
other fees and amounts hereunder not paid within ten (10) days of its due date
(whether at maturity, pursuant to acceleration or otherwise), shall bear
interest at a rate per annum equal to the Base Rate plus 3% per annum and such
default interest shall be payable on demand. In addition, if payment of
principal or interest (other than payments due upon maturity) on the Loans is
not paid within five (5) days of when due, Borrower shall pay on demand a late
charge equal to five percent (5%) of the amount of the payment which is late,
subject to a minimum late charge of $25.00 and a maximum late charge of $999.00.
To the greatest extent permitted by law, interest shall continue to accrue after
the filing by or against the Borrower of any petition seeking any relief in
bankruptcy or under any law pertaining to insolvency or debtor relief.

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                    (c) Accrued (and theretofore unpaid) interest shall be
payable as follows:

          (i) in arrears on the fifth calendar day of each month commencing on
October 5, 2004; provided, that in the event the Loan is repaid or prepaid in
full and the Commitment has been terminated, then accrued interest in respect of
the Loan shall be payable together with such repayment or prepayment on the date
thereof; and

          (ii) at maturity (whether pursuant to acceleration or otherwise) and,
after maturity, on demand.

                    (d) Nothing contained in this Agreement or in any other
Credit Document shall be deemed to establish or require the payment of interest
to the Lender at a rate in excess of the maximum rate permitted by applicable
law. If the amount of interest payable on any interest payment date would exceed
the maximum amount permitted by applicable law to be charged by the Lender, the
amount of interest payable on such interest payment date shall be automatically
reduced to such maximum permissible amount. In the event of any such reduction
affecting the Lender, if from time to time thereafter the amount of interest
payable for the account of the Lender on any interest payment date would be less
than the maximum amount permitted by applicable law to be charged by the Lender,
then the amount of interest payable for its account on such subsequent interest
payment date shall be automatically increased to such maximum permissible
amount, provided that at no time shall the aggregate amount by which interest
paid for the account of the Lender has been increased pursuant to this sentence
exceed the aggregate amount by which interest paid for its account has
theretofore been reduced pursuant to the previous sentence.

        2.8 Method of Payments; Computations.

                    (a) All payments by the Borrower hereunder shall be made
without setoff, counterclaim or other defense, in Dollars and in immediately
available funds to the Lender at its office referred to in Section 9.5, prior to
11:00 a.m., Birmingham time, on the date payment is due. Any payment made as
required hereinabove, but after 11:00 a.m., Birmingham time, shall be deemed to
have been made on the next succeeding Business Day. If any payment falls due on
a day that is not a Business Day, then such due date shall be extended to the
next succeeding Business Day, and such extension of time shall then be included
in the computation of payment of interest, fees or other applicable amounts.

                    (b) The Lender may, but shall not be obligated to, debit the
amount of any such payment not made as and when required hereunder to any
ordinary deposit account of the Borrower with the Lender (with prompt notice to
the Lender and the Borrower); provided, however, that the failure to give such
notice shall not affect the validity of such debit by the Lender.

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                    (c) All computations of interest and fees hereunder shall be
made on an Actual/360 Basis.

        2.9 Recovery of Payments. The Borrower agrees that to the extent the
Borrower makes a payment or payments to or for the account of the Lender, which
payment or payments or any part thereof are subsequently invalidated, declared
to be fraudulent or preferential, set aside or required to be repaid to a
trustee, receiver or any other party under any bankruptcy, insolvency or similar
state or federal law, common law or equitable cause, then, to the extent of such
payment or repayment, the Obligation intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been received.

        2.10 Use of Proceeds. The proceeds of the Loans shall be used to provide
a source of capital for the Borrower’s or its Subsidiaries’ general corporate
purposes.

        2.11 Increased Costs; Change in Circumstances; Illegality; etc. (a) If,
at any time after the date hereof and from time to time, the introduction of or
any change in any applicable law, rule or regulation or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof, or compliance by the Lender with any
guideline or request from any such Governmental Authority (whether or not having
the force of law), shall (i) subject the Lender to any tax or other charge, or
change the basis of taxation of payments to the Lender, (ii) impose, modify or
deem applicable any reserve, special deposit or similar requirement against
assets of, deposits with or for the account of, or credit extended by, the
Lender, or (iii) impose on the Lender any other condition affecting its Loans,
and the result of any of the foregoing shall be to increase the cost to the
Lender of making or maintaining any Loans or to reduce the amount of any sum
received or receivable by the Lender hereunder, the Borrower will, promptly upon
demand therefor by the Lender, pay to the Lender such additional amounts,
excluding amounts in respect of income, franchise and excise taxes as shall
compensate the Lender for such increase in costs or reduction in return.

                    (b) If, at any time after the date hereof and from time to
time, the Lender shall have reasonably determined that the introduction of or
any change in any applicable law, rule or regulation regarding capital adequacy
or in the interpretation or administration thereof by any Governmental Authority
charged with the interpretation or administration thereof, or compliance by the
Lender with any guideline or request from any such Governmental Authority
(whether or not having the force of law), has or would have the effect, as a
consequence of the Lender’s Commitment or Loans hereunder, of reducing the rate
of return on the capital of the Lender or any Person controlling the Lender to a
level below that which the Lender or controlling Person could have achieved but
for such introduction, change or compliance (taking into account the Lender’s or
controlling Person’s policies with respect to capital adequacy), the Borrower
will, promptly upon demand therefor by the Lender therefor, pay to the Lender
such additional amounts, excluding amounts in respect of income, franchise and
excise taxes, as will compensate the Lender or controlling Person for such
reduction in return.

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                    (c) Determinations by the Lender for purposes of this
Section 2.11 of any increased costs, reduction in return, market contingencies,
illegality or any other matter shall, absent manifest error, be conclusive,
provided that such determinations are made in good faith. No failure by the
Lender at any time to demand payment of any amounts payable under this Section
2.11 shall constitute a waiver of its right to demand payment of any additional
amounts arising at any subsequent time. Nothing in this Section 2.11 shall
require or be construed to require the Borrower to pay any interest, fees, costs
or other amounts in excess of that permitted by applicable law.

        2.12 Taxes.

                    (a) Any and all payments by the Borrower hereunder or under
any Note shall be made, in accordance with the terms hereof and thereof, free
and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, other than net income, excise and franchise taxes imposed on
the Lender by the United States or by the jurisdiction under the laws of which
the Lender, as the case may be, is organized or in which its principal office is
located, or any political subdivision or taxing authority thereof (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as “Taxes”). If the Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under any Note to the Lender, (i) the sum payable shall be
increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
2.12), the Lender, as the case may be, receives an amount equal to the sum it
would have received had no such deductions been made, (ii) the Borrower will
make such deductions, (iii) the Borrower will pay the full amount deducted to
the relevant taxation authority or other authority in accordance with applicable
law and (iv) the Borrower will deliver to the Lender evidence of such payment.

                    (b) The Borrower will indemnify the Lender for the full
amount of Taxes (including, without limitation, any Taxes imposed by any
jurisdiction on amounts payable under this Section 2.12) paid by the Lender and
any liability (including penalties, interest and expenses) arising therefrom or
with respect thereto, whether or not such Taxes were correctly or legally
asserted. This indemnification shall be made within 30 days from the date the
Lender, makes written demand therefor.

                    (c) The Lender agrees that if it subsequently recovers, or
receives a permanent net tax benefit with respect to, any amount of Taxes (i)
previously paid by it and as to which it has been indemnified by or on behalf of
the Borrower or (ii) previously deducted by the Borrower (including, without
limitation, any Taxes deducted from any additional sums payable under clause (i)
of subsection (a) above), the Lender shall reimburse the Borrower to the extent
of the amount of any such recovery or permanent net tax benefit (but only to the
extent of indemnity payments made, or additional amounts paid, by or on behalf
of the Borrower under this Section 2.12 with respect to the Taxes giving rise to
such recovery or tax benefit); provided, however, that the Borrower, upon the
request of the Lender, agrees to repay to the Lender the amount paid over to the
Borrower (together with any penalties, interest or other charges), in the event
the Lender is required to repay such amount to the relevant taxing authority or
other Governmental Authority. The determination by the Lender of the amount of
any such recovery or permanent net tax benefit shall, in the absence of manifest
error, be conclusive and binding.

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        2.13 Non-Usage Fee. From and after the Effective Date until the
Termination Date (or such later date that the Loans are repaid), the Borrower
agrees to pay Lender a non-usage fee for each calendar quarter, prorated for
partial quarters, in an amount equal to the Applicable Percentage multiplied by
the average daily Unutilized Commitment (the “Non-Usage Fee”) multiplied by the
number of days in such quarter or portion thereof and divided by 360. The
Non-Usage Fee shall be payable quarterly in arrears on the last day of each
calendar quarter commencing with the period ending March 31, 2003, and shall be
prorated for partial calendar quarters.

ARTICLE III

CONDITIONS OF BORROWING

3.1 Conditions to Effectiveness of this Agreement. The effectiveness of this
Agreement is subject to the satisfaction of the following conditions precedent:

                    (a) The Lender shall have received the following, each dated
the Effective Date (unless otherwise specified):

          (i) the Note in the amount of the Commitment and duly completed and
executed by the Borrower;

          (ii) the Pledge Agreement executed by Borrower;

          (iii) payment of a one-time fee of one-eight of one percent (.125%) of
the Commitment;

          (iv) a certificate, signed by the chief executive officer or chief
financial officer of the Borrower, in form and substance satisfactory to the
Lender, certifying that (A) all representations and warranties of the Borrower
contained in this Agreement and the other Credit Documents are true and correct
as of the Effective Date, both immediately before and after giving effect to the
consummation of the transactions contemplated by this Agreement, the making of
any Loans hereunder on the Effective Date and the application of the proceeds
thereof, (B) no Default or Event of Default has occurred and is continuing, both
immediately before and after giving effect to the consummation of the
transactions contemplated by this Agreement, the making of any Loans hereunder
on the Effective Date and the application of the proceeds thereof, (C) there are
no insurance regulatory proceedings pending or, to such individual’s knowledge,
threatened against any of the Insurance Subsidiaries in any jurisdiction that,
if adversely determined, would be reasonably likely to have a Material Adverse
Effect, and (D) except as disclosed in such certificate, both immediately before
and after giving effect to the consummation of the transactions contemplated by
this Agreement, no Material Adverse Change has occurred since December 31, 2001,
and there exists no event, condition or state of facts that could reasonably be
expected to result in a Material Adverse Change;

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          (v) a certificate of the secretary or an assistant secretary of the
Borrower, in form and substance satisfactory to the Lender, certifying (A) to
the effect that attached thereto is a true and complete copy of the Borrower’s
certificate of incorporation, certified as of a recent date by the Secretary of
State of Delaware, and that the same has not been amended since the date of such
certification, and attaching such copy, (B) to the effect that attached thereto
is a true and complete copy of the Borrower’s bylaws, as then in effect and as
in effect at all times from the date on which the resolutions referred to in
clause (C) below were adopted to and including the date of such certificate, and
attaching such copy), and (D) that attached thereto is a true and complete copy
of resolutions adopted by the Borrower’s board of directors or a committee of
such board authorizing the execution, delivery and performance of this Agreement
and the other Credit Documents to which it is a party, and attaching such copy;
and

          (vi) a favorable opinion of an attorney or firm of attorneys duly
licensed to practice law in the jurisdiction the laws of which are applicable to
the legal matters in question and who is not an employee of the Borrower or an
Affiliate of the Borrower (unless otherwise agreed to by Lender) and addressed
to the Lender, and addressing such other matters as the Lender may reasonably
request.

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                    (b) The Lender shall have received (i) a certificate as of a
recent date of the good standing of the Borrower under the laws of the State of
Delaware, from the Secretary of State of Delaware, (ii) a certificate as of a
recent date of the qualification of the Borrower to conduct business as a
foreign corporation, from the Secretary of State of Alabama, and (iii) a
certificate as of a recent date of the good standing of the Borrower, from the
Department of Revenue of the State of Alabama.

                    (c) All legal matters, documentation and corporate or other
proceedings incident to the transactions contemplated hereby shall be reasonably
acceptable to the Lender; all approvals, permits and consents of any
Governmental Authorities (including, without limitation, all relevant Insurance
Regulatory Authorities) or other Persons required in connection with the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby shall have been obtained (without the
imposition of conditions that are not reasonably acceptable to the Lender), and
all related filings, if any, shall have been made, and all such approvals,
permits, consents and filings shall be in full force and effect and the Lender
shall have received such copies thereof as it shall have reasonably requested;
all applicable waiting periods shall have expired without any adverse action
being taken by any Governmental Authority having jurisdiction; and no action,
proceeding, investigation, regulation or legislation shall have been instituted,
threatened or proposed before, and no order, injunction or decree shall have
been entered by, any court or other Governmental Authority, in each case to
enjoin, restrain or prohibit, to obtain substantial damages in respect of, or
that is otherwise related to or arises out of, this Agreement or the
consummation of the transactions contemplated hereby, or that, in the reasonable
opinion of the Lender, would otherwise be reasonably likely to have a Material
Adverse Effect.

                    (d) Since December 31, 2003, both immediately before and
after giving effect to the consummation of the transactions contemplated by this
Agreement, there shall not have occurred any Material Adverse Change or any
event, condition or state of facts that could reasonably be expected to result
in a Material Adverse Change, except as disclosed in the certificate referenced
in subsection (a) above.

                    (e) The Borrower shall have paid all fees and expenses of
the Lender required hereunder or under any other Credit Document to be paid on
or prior to the Effective Date (including reasonable fees and expenses of the
Lender’s counsel) in connection with this Agreement and the transactions
contemplated hereby.

                    (f) Each of the representations and warranties contained in
Article IV and in the other Credit Documents shall be true and correct on and as
of the Effective Date with the same effect as if made on and as of such date
(except to the extent any such representation or warranty is expressly stated to
have been made as of a specific date, in which case such representation or
warranty shall be true and correct as of such date).

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                    (g) No Default or Event of Default shall have occurred and
be continuing.

                    (h) To the extent required under Ala. Code § 5-5A-22 (1996)
and regulations promulgated thereunder and 12 U.S.C. § 84 and regulations
promulgated thereunder as such relate to lending restrictions on loans to one
borrower, the Lender shall have received such appraisals or other documentation
as it shall deem necessary to (i) establish the Collateral as “Readily
Marketable” and (ii) establish a readily established market value in the
Collateral sufficient to satisfy the foregoing regulations.

                    (i) The Lender shall have received such other documents,
certificates, opinions and instruments as it shall have reasonably requested.

        3.2 Conditions to All Loans. The obligation of the Lender to make any
Loans hereunder is subject to the satisfaction of the following conditions
precedent on the relevant Borrowing Date:

                    (a) The Lender shall have received a Notice of Borrowing in
accordance with Section 2.2;

                    (b) Each of the representations and warranties contained in
Article IV and in the other Credit Documents shall be true and correct on and as
of the relevant Borrowing Date with the same effect as if made on and as of such
date, both immediately before and after giving effect to the Loans to be made on
such date (except to the extent any such representation or warranty is expressly
stated to have been made as of a specific date, in which case such
representation or warranty shall be true and correct as of such date); and

                    (c) No Default or Event of Default shall have occurred and
be continuing on such date, both immediately before and after giving effect to
the Loans to be made on such date.

        Each giving of a Notice of Borrowing, and the consummation of each
Borrowing, shall be deemed to constitute a representation by the Borrower that
the statements contained in subsections (b) and (c) above are true, both as of
the date of such notice or request and as of the relevant Borrowing Date.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

        To induce the Lender to enter into this Agreement and to induce the
Lender to extend the credit contemplated hereby, the Borrower represents and
warrants to the Lender as follows:

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        4.1 Corporate Organization and Power. Each of Borrower and its
Subsidiaries (i) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, (ii) has the
full corporate power and authority to execute, deliver and perform the Credit
Documents to which it is or will be a party, to own and hold its property and to
engage in its business as presently conducted, and (iii) is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
where the nature of its business or the ownership of its properties requires it
to be so qualified.

        4.2 Authorization; Enforceability The Borrower has taken all necessary
corporate action to execute, deliver and perform each of the Credit Documents to
which it is or will be a party, and has, or on the Effective Date (or any later
date of execution and delivery) will have, validly executed and delivered each
of the Credit Documents to which it is or will be a party. This Agreement
constitutes, and each of the other Credit Documents upon execution and delivery
by the Borrower will constitute, the legal, valid and binding obligation of the
Borrower, enforceable against it in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors’ rights generally or by
general equitable principles.

        4.3 No Violation. Except as set forth in Schedule 4.3 attached hereto,
the execution, delivery and performance by the Borrower of this Agreement and
each of the other Credit Documents, and compliance by it with the terms hereof
and thereof, do not and will not (i) violate any provision of its certificate of
incorporation or bylaws or contravene any other Requirement of Law applicable to
it, (ii) conflict with, result in a breach of or constitute (with notice, lapse
of time or both) a default under any material indenture, agreement or other
instrument to which it is a party, by which it or any of its properties is bound
or to which it is subject, or (iii) result in or require the creation or
imposition of any Lien upon any of its properties or assets. Except as set forth
on Schedule 4.3 attached hereto, no Subsidiary is subject to any restriction or
encumbrance on its ability to make dividend payments or other distributions in
respect of its capital stock, to make loans or advances to Borrower or any other
Subsidiary, or to transfer any of its assets or properties to Borrower or any
other Subsidiary, in each case other than such restrictions or encumbrances
existing under or by reason of the Credit Documents or applicable Requirements
of Law.

        4.4 Governmental Authorization; Permits

                    (a) Except as set forth on Schedule 4.4(a) attached hereto,
no consent, approval, authorization or other action by, notice to, or
registration or filing with, any Governmental Authority or other Person is or
will be required as a condition to or otherwise in connection with the due
execution, delivery and performance by Borrower of this Agreement or any of the
other Credit Documents or the legality, validity or enforceability hereof or
thereof.

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                    (b) Except as set forth in Schedule 4.4(b) attached hereto,
each of Borrower and its Subsidiaries has, and is in good standing with respect
to, all governmental approvals, licenses, permits and authorizations necessary
to conduct its business as presently conducted (collectively, the “Licenses”)
and to own or lease and operate its properties, except for those the failure to
obtain which would not be reasonably likely, individually or in the aggregate,
to have a Material Adverse Effect. To the knowledge of the Borrower, except as
set forth on Schedule 4.4(b), (i) no License is the subject of a proceeding for
suspension, revocation or limitation or any similar proceedings, (ii) there is
no sustainable basis for such a suspension, revocation or limitation, and (iii)
no such suspension, revocation or limitation is threatened by any relevant
Insurance Regulatory Authority, that, in each instance under (i), (ii) and (iii)
above, would be reasonably likely, individually or in the aggregate, to have a
Material Adverse Effect.

                    (c) Upon written request, Borrower will provide with respect
to each Insurance Subsidiary a list of all of the jurisdictions in which such
Insurance Subsidiary holds licenses (including, without limitation, licenses or
certificates of authority from relevant Insurance Regulatory Authorities),
permits or authorizations to transact insurance and reinsurance business
(collectively, the “Licenses”), indicating the line or lines of insurance in
which each such Insurance Subsidiary is permitted to be engaged with respect to
each License therein listed, and attaching copies of all Licenses in the States
of Florida, Hawaii, Illinois and Texas.

        4.5 Litigation. Except as set forth on Schedule 4.5, there are no
actions, investigations, suits or proceedings pending or, to the knowledge of
the Borrower, threatened, at law, in equity or in arbitration, before any court,
other Governmental Authority or other Person, (i) against or affecting Borrower,
any of its Subsidiaries or any of their respective properties that would, if
adversely determined, be reasonably likely to have a Material Adverse Effect, or
(ii) with respect to this Agreement or any of the other Credit Documents.

        4.6 Taxes. Except as set forth in Schedule 4.6 attached hereto, each of
Borrower and its Subsidiaries has timely filed all federal, state and local tax
returns and reports required to be filed by it and has paid all taxes,
assessments, fees and other charges levied upon it or upon its properties that
are shown thereon as due and payable, other than those that are being contested
in good faith and by proper proceedings and for which adequate reserves have
been established in accordance with Generally Accepted Accounting Principles.
Such returns accurately reflect in all material respects all liability for taxes
of Borrower and its Subsidiaries for the periods covered thereby. Except as set
forth in Schedule 4.6 attached hereto, there is no ongoing material audit or
examination or, to the knowledge of the Borrower, other investigation by any
Governmental Authority of the tax liability of Borrower or any of its
Subsidiaries, and there is no unresolved claim by any Governmental Authority
concerning or any material tax liability of Borrower or any of its Subsidiaries
for any period for which tax returns have been or were required to have been
filed, other than claims for which adequate reserves have been established in
accordance with Generally Accepted Accounting Principles. Except as set forth in
Schedule 4.6 attached hereto, neither Borrower nor any of its Subsidiaries has
waived or extended or has been requested to waive or extend the statute of
limitations relating to the payment of any material taxes.

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        4.7 Subsidiaries. Schedule 4.7 sets forth a list, as of the Effective
Date, of all of the Subsidiaries of Borrower and, as to each such Subsidiary,
the percentage ownership (direct and indirect) of Borrower in each class of its
capital stock and each direct owner thereof. All of the issued and outstanding
shares of capital stock of VFIC are directly owned and held by Borrower.

        4.8 Full Disclosure All factual information heretofore or
contemporaneously furnished to the Lender in writing by or on behalf of Borrower
or any of its Subsidiaries for purposes of or in connection with this Agreement
and the transactions contemplated hereby is, and all other such factual
information hereafter furnished to the Lender in writing by or on behalf of
Borrower or any of its Subsidiaries will be, true and accurate in all material
respects on the date as of which such information is dated or certified (or, if
such information has been amended or supplemented, on the date as of which any
such amendment or supplement is dated or certified) and not made materially
incomplete by omitting to state a material fact necessary to make the statements
contained therein, in light of the circumstances under which such information
was provided, not materially misleading.

        4.9 Margin Regulations. Neither Borrower nor any of its Subsidiaries is
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying Margin Stock. No
proceeds of the Loans will be used, directly or indirectly, to purchase or carry
any Margin Stock (except for purchases by Borrower of outstanding shares of its
capital stock made in compliance with the applicable provisions of Regulations
G, T, U and X), to extend credit for such purpose or for any other purpose that
would violate or be inconsistent with Regulations G, T, U or X or any provision
of the Exchange Act.

        4.10 No Material Adverse Change. Except as set forth in Borrower’s
filings with the Securities and Exchange Commission prior to the Effective Date
or otherwise set forth on Schedule 4.10 there has been no Material Adverse
Change since December 31, 2003, and except as disclosed to Lender in connection
with, and reflected in, the draft pro-forma Financial Statements for the
Borrower’s fiscal year ended December 31, 2002, there exists no event, condition
or state of facts that could reasonably be expected to result in a Material
Adverse Change.

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        4.11 Financial Matters

                    (a) Borrower has heretofore furnished to the Lender copies
of (i) the audited consolidated balance sheets of Borrower and its Subsidiaries
as of December 31, 2001, 2000, 1999, and 1998, and the related statements of
income, stockholders’ equity and cash flows for the fiscal years then ended,
together with the opinion thereon or PricewaterhouseCoopers. Except as set forth
in Schedule 4.11(a) attached hereto, such financial statements have been
prepared in accordance with Generally Accepted Accounting Principles and present
fairly the financial condition of Borrower and its Subsidiaries on a
consolidated basis as of the respective dates thereof and the consolidated
results of operations of Borrower and its Subsidiaries for the respective
periods then ended. Except as fully reflected in the most recent financial
statements referred to above and the notes thereto, there are no material
liabilities or obligations with respect to Borrower or any of its Subsidiaries
of any nature whatsoever (whether absolute, contingent or otherwise and whether
or not due).

                    (b) Borrower has heretofore furnished to the Lender copies
of the Annual Statements of each of the Insurance Subsidiaries as of December
31, 2003, 2002, and 2001, and for the fiscal years then ended, each as filed
with the relevant Insurance Regulatory Authority (collectively, the “Historical
Statutory Statements”). Except as set forth in Schedule 4.11(b) attached hereto,
the Historical Statutory Statements (including, without limitation, the
provisions made therein for investments and the valuation thereof, reserves,
policy and contract claims and statutory liabilities) have been prepared in
accordance with Statutory Accounting Principles (except as may be reflected in
the notes thereto and subject, with respect to the Quarterly Statements, to the
absence of notes required by Statutory Accounting Principles and to normal
year-end adjustments), were in compliance with applicable Requirements of Law
when filed and present fairly the financial condition of the respective
Insurance Subsidiaries covered thereby as of the respective dates thereof and
the results of operations, changes in capital and surplus and cash flow of the
respective Insurance Subsidiaries covered thereby for the respective periods
then ended. Except for liabilities and obligations disclosed or provided for in
the Historical Statutory Statements (including, without limitation, reserves,
policy and contract claims and statutory liabilities), no Insurance Subsidiary
had, as of the date of its respective Historical Statutory Statements, any
material liabilities or obligations of any nature whatsoever (whether absolute,
contingent or otherwise and whether or not due) that, in accordance with
Statutory Accounting Principles, would have been required to have been disclosed
or provided for in such Historical Statutory Statements. All books of account of
each Insurance Subsidiary fully and fairly disclose all of its material
transactions, properties, assets, investments, liabilities and obligations, are
in its possession and are true, correct and complete in all material respects.

                    (c) Each of Borrower and its Subsidiaries, after giving
effect to the consummation of the transactions contemplated hereby, (i) will
have capital sufficient to carry on its businesses as conducted and as proposed
to be conducted, (ii) will have assets with a fair saleable value, determined on
a going concern basis, (A) not less than the amount required to pay the probable
liability on its existing debts as they become absolute and matured and (B)
greater than the total amount of its liabilities (including identified
contingent liabilities, valued at the amount that can reasonably be expected to
become absolute and matured), and (iii) will not intend to, and will not believe
that it will, incur debts or liabilities beyond its ability to pay such debts
and liabilities as they mature.

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        4.12 Ownership of Properties. Each of Borrower and its Subsidiaries (i)
has good and marketable title to all real property owned by it, (ii) holds
interests as lessee under valid leases in full force and effect with respect to
all material leased real and personal property used in connection with its
business, and (iii) has good title to all of its other material properties and
assets reflected in the most recent financial statements referred to in Section
4.11(a) (except as sold or otherwise disposed of since the date thereof in the
ordinary course of business), in each case under (i), (ii) and (iii) above free
and clear of all Liens other than Permitted Liens.

        4.13 ERISA. Each Plan is and has been administered in compliance in all
material respects with all applicable Requirements of Law, including, without
limitation, the applicable provisions of ERISA and the Internal Revenue Code. No
ERISA Event has occurred and is continuing or, to the knowledge of the Borrower,
is reasonably expected to occur with respect to any Plan, in either case that
would be reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect. No Plan has any Unfunded Pension Liability, and neither Borrower
nor any ERISA Affiliate has engaged in a transaction that could be subject to
Section 4069 or 4212(c) of ERISA, in either instance where the same would be
reasonably likely, individually or in the aggregate, to have a Material Adverse
Effect. Neither Borrower nor any ERISA Affiliate is required to contribute to or
has, or has at any time had, any liability to a Multiemployer Plan.

        4.14 Environmental Matters.

                    (a) No Hazardous Substances are or have been generated,
used, located, released, treated, disposed of or stored by Borrower or any of
its Subsidiaries or, to the knowledge of the Borrower, by any other Person or
otherwise, in, on or under any portion of any real property, leased or owned, of
Borrower or any of its Subsidiaries, except in material compliance with all
applicable Environmental Laws, and no portion of any such real property or, to
the knowledge of the Borrower, any other real property at any time leased, owned
or operated by Borrower or any of its Subsidiaries, has been contaminated by any
Hazardous Substance; and no portion of any real property, leased or owned, of
Borrower or any of its Subsidiaries has been or, to the knowledge of the
Borrower, is presently the subject of an environmental audit, assessment or
remedial action.

                    (b) To the knowledge of the Borrower, (i) no portion of any
real property, leased or owned, of Borrower or any of its Subsidiaries has been
used as or for a mine, a landfill, a dump or other disposal facility, a gasoline
service station, or (other than for petroleum substances stored in the ordinary
course of business) a petroleum products storage facility, (ii) no portion of
such real property or any other real property at any time leased, owned or
operated by Borrower or any of its Subsidiaries has, pursuant to any
Environmental Law, been placed on the “National Priorities List” or “CERCLIS
List” (or any similar federal, state or local list) of sites subject to possible
environmental problems, and (iii) there are not and have never been any
underground storage tanks situated on any real property, leased or owned, by
Borrower or any of its Subsidiaries.

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                    (c) All activities and operations of Borrower and its
Subsidiaries are in compliance with the requirements of all applicable
Environmental Laws, except to the extent the failure so to comply, individually
or in the aggregate, would not be reasonably likely to have a Material Adverse
Effect. Neither Borrower nor any of its Subsidiaries is involved in any suit,
action or proceeding, or has received any notice, complaint or other request for
information from any Governmental Authority or other Person, with respect to any
actual or alleged Environmental Claims that, if adversely determined, would be
reasonably likely, individually or in the aggregate, to have a Material Adverse
Effect; and, to the knowledge of the Borrower, there are no threatened actions,
suits, proceedings or investigations with respect to any such Environmental
Claims, nor any basis therefor.

        4.15 Compliance With Laws Except as set forth in Schedule 4.15 attached
hereto and except for financial statements filed with the SEC for periods prior
to 2000 that were subsequently restated (and related auditors opinions,
disclosures and other filings made with other Governmental Authorities
concerning those financial statements), each of Borrower and its Subsidiaries
has timely filed all material reports, documents and other materials required to
be filed by it under all applicable Requirements of Law with any Governmental
Authority, has retained all material records and documents required to be
retained by it under all applicable Requirements of Law, and is otherwise in
compliance with all applicable Requirements of Law in respect of the conduct of
its business and the ownership and operation of its properties, except for such
Requirements of Law the failure to comply with which, individually or in the
aggregate, would not be reasonably likely to have a Material Adverse Effect.

        4.16 Regulated Industries. Neither Borrower nor any of its Subsidiaries
is (i) an “investment company,” a company “controlled” by an “investment
company, ” or an “investment advisor,” within the meaning of the Investment
Company Act of 1940, as amended, or (ii) a “holding company,” a “subsidiary
company” of a “holding company,” or an “affiliate” of a “holding company” or of
a “subsidiary company” of a “holding company,” within the meaning of the Public
Utility Holding Company Act of 1935, as amended.

        4.17 Insurance. The assets, properties and business of Borrower and its
Subsidiaries are insured against such hazards and liabilities, under such
coverages and in such amounts, as are customarily maintained by prudent
companies similarly situated and under policies issued by insurers of recognized
responsibility. No notice of any pending or threatened cancellation or material
premium increase has been received by the Borrower or any of its Subsidiaries
with respect to any such policies, and the Borrower and each of its Subsidiaries
are in substantial compliance with all conditions contained therein.

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ARTICLE V

AFFIRMATIVE COVENANTS

        The Borrower covenants and agrees that, until the termination of the
Commitment and the payment in full of all principal and interest with respect to
the Loans together with all other amounts then due and owing hereunder:

        5.1 GAAP Financial Statements. The Borrower will deliver to the Lender
upon Lender's request:

                    (a) As soon as available and in any event within sixty (60)
days after the end of each of the first three fiscal quarters of each fiscal
year, beginning with the fiscal quarter ended March 31, 2003, unaudited
consolidated and consolidating balance sheets of Borrower and its Subsidiaries
as of the end of such fiscal quarter and unaudited consolidated and
consolidating statements of income, stockholders’ equity and cash flows for
Borrower and its Subsidiaries for the fiscal quarter then ended and for that
portion of the fiscal year then ended, in each case setting forth comparative
consolidated figures as of the end of and for the corresponding period in the
preceding fiscal year, all prepared in accordance with Generally Accepted
Accounting Principles (subject to the absence of notes required by Generally
Accepted Accounting Principles and subject to normal year-end audit adjustments)
applied on a basis consistent with that of the preceding quarter or containing
disclosure of the effect on the financial condition or results of operations of
any change in the application of accounting principles and practices during such
quarter; and

                    (b) As soon as available and in any event within 120 days
after the end of each fiscal year, beginning with the fiscal year ended December
31, 2002, (i) an audited consolidated balance sheet of Borrower and its
Subsidiaries as of the end of such fiscal year and audited consolidated
statements of income, stockholders’ equity and cash flows for Borrower and its
Subsidiaries for the fiscal year then ended, including the applicable notes, in
each case setting forth comparative figures as of the end of and for the
preceding fiscal year, certified by the independent certified public accounting
firm regularly retained by Borrower or another independent certified public
accounting firm of recognized national standing reasonably acceptable to the
Lender, together with (y) a report thereon by such accountants that is not
qualified as to going concern or scope of audit and to the effect that such
financial statements present fairly the consolidated financial condition and
results of operations of Borrower and its Subsidiaries as of the dates and for
the periods indicated in accordance with generally accepted accounting
principles applied on a basis consistent with that of the preceding year or
containing disclosure of the effect on the financial position or results of
operations of any change in the application of accounting principles and
practices during such year, and (z) a report by such accountants to the effect
that, based on and in connection with their examination of the financial
statements of Borrower and its Subsidiaries, they obtained no knowledge of the
occurrence or existence of any Default or Event of Default relating to
accounting or financial reporting matters, or a statement specifying the nature
and period of existence of any such Default or Event of Default disclosed by
their audit; provided, however, that such accountants shall not be liable by
reason of the failure to obtain knowledge of any Default or Event of Default
that would not be disclosed or revealed in the course of their audit
examination, and (ii) an unaudited consolidating balance sheet of Borrower and
its Subsidiaries as of the end of such fiscal year and unaudited consolidating
statements of income, stockholders’ equity and cash flows for Borrower and its
Subsidiaries for the fiscal year then ended, all in reasonable detail.

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        5.2 Statutory Financial Statements. Borrower will deliver to the Lender
upon Lender's request:

                    (a) As soon as available and in any event within fifty (50)
days after the end of each of the first three fiscal quarters of each fiscal
year, beginning with the fiscal quarter ending March 31, 2005, a Quarterly
Statement of each Insurance Subsidiary as of the end of such fiscal quarter and
for that portion of the fiscal year then ended, in the form filed with the
relevant Insurance Regulatory Authority, prepared in accordance with Statutory
Accounting Principles applied on a basis consistent with that of the preceding
quarter or containing disclosure of the effect on the financial condition or
results of operations of any change in the application of accounting principles
and practices during such quarter; and

                    (b) As soon as available and in any event within sixty-five
(65) days after the end of each fiscal year, beginning with the fiscal year
ending December 31, 2003, an Annual Statement of each Insurance Subsidiary as of
the end of such fiscal year and for the fiscal year then ended, in the form
filed with the relevant Insurance Regulatory Authority, prepared in accordance
with Statutory Accounting Principles applied on a basis consistent with that of
the preceding year or containing disclosure of the effect on the financial
condition or results of operations of any change in the application of
accounting principles and practices during such year;

                    (c) As soon as available and in any event within 135 days
after the end of each fiscal year, beginning with the fiscal year ended December
31, 2003, an unaudited consolidated balance sheet of VFIC and its Insurance
Subsidiaries as of the end of such fiscal year and unaudited consolidated
statements of income, stockholders’ equity and cash flows for Borrower and its
Insurance Subsidiaries for the fiscal year then ended, in each case setting
forth comparative consolidated figures as of the end of and for the preceding
fiscal year, all prepared in accordance with Statutory Accounting Principles
applied on a basis consistent with that of the preceding year or containing
disclosure of the effect on the financial condition or results of operations of
any change in the application of accounting principles and practices during such
year; and

                    (d) As soon as available and in any event within 155 days
after the end of each fiscal year, beginning with the fiscal year ended December
31, 2003 (but only if and to the extent required by the applicable Insurance
Regulatory Authority with regard to any Insurance Subsidiary), a certification
by the independent certified public accounting firm referred to in Section 5.
l(b) as to the Annual Statement of each such Insurance Subsidiary as of the end
of such fiscal year and for the fiscal year then ended, together with a report
thereon by such accountants that is not qualified as to going concern or scope
of audit and to the effect that such financial statements present fairly the
consolidated financial condition and results of operations of such Insurance
Subsidiary as of the date and for the period indicated in accordance with
statutory accounting principles applied on a basis consistent with that of the
preceding year or containing disclosure of the effect on the financial position
or results of operations of any change in the application of accounting
principles and practices during such year.

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        5.3 Other Business and Financial Information. Borrower will deliver to
the Lender upon Lender’s request (except for the matters identified in 5.3 (a)
and 5.3 (d), which will be delivered in accordance with such provisions):

                    (a) Within sixty (60) days of the end of each calendar
quarter a Compliance Certificate in the form of Exhibit D-1 (in the case of the
financial statements described in Section 5.1) or Exhibit D-2 (in the case of
the financial statements described in Section 5.2) with respect to the period
covered by the financial statements then being delivered, executed by the chief
financial officer or controller of Borrower, together, in the case of the
financial statements described in Section 5.1, with a Covenant Compliance
Worksheet reflecting the computation of the financial covenants set forth in
Sections 6.1 (on an annual basis), 6.2, 6.4 and 6.5 as of the last day of the
period covered by such financial statements, and in the case of the financial
statements described in Section 5.2, with a Covenant Compliance Worksheet
reflecting the computation of the financial covenants set forth in Section 6.6
as of the last day of the period covered by such financial statements;

                    (b) Promptly upon filing with the relevant Insurance
Regulatory Authority and in any event within ninety (90) days after the end of
each fiscal year, beginning with the fiscal year ended December 31, 2003, a copy
of each Insurance Subsidiary’s “Statement of Actuarial Opinion” (or equivalent
information should the relevant Insurance Regulatory Authority not require such
a statement) as to the adequacy of such Insurance Subsidiary’s loss reserves for
such fiscal year, together with a copy of its management discussion and analysis
in connection therewith, each in the format prescribed by the applicable
insurance laws of such Insurance Subsidiary’s jurisdiction of domicile;

                    (c) Promptly upon the sending, filing or receipt thereof,
copies of (i) all financial statements, reports, notices and proxy statements
that Borrower or any of its Subsidiaries shall send or make available generally
to its shareholders, (ii) all reports (other than earnings press releases) on
Form 10-Q, Form 10-K or Form 8-K (or their successor forms) or registration
statements and prospectuses (other than on Form S-8 or its successor form) that
Borrower or any of its Subsidiaries shall render to or file with the Securities
and Exchange Commission, the National Association of Securities Dealers, Inc. or
any national securities exchange, (iii) all reports on Form A or Form B (or
their successor forms) that any Insurance Subsidiary shall file with any
Insurance Regulatory Authority, (iv) all significant reports on examination or
similar significant reports, financial examination reports or market conduct
examination reports by the NAIC or any Insurance Regulatory Authority or other
Governmental Authority with respect to any Insurance Subsidiary’s insurance
business, and (v) all significant filings made under applicable state insurance
holding company acts by Borrower or any of its Subsidiaries, including, without
limitation, filings seeking approval of transactions with Affiliates;

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                    (d) Promptly upon (and in any event within five (5) Business
Days after) obtaining knowledge thereof, written notice of any of the following:

          (i) the occurrence of any Default or Event of Default, together with a
written statement of the chief executive officer, chief financial officer or
controller of Borrower specifying the nature of such Default or Event of
Default, the period of existence thereof and the action that Borrower has taken
and proposes to take with respect thereto,

          (ii) the institution or written threatened institution of any action,
suit, investigation or proceeding against or affecting Borrower or any of its
Subsidiaries, including any such investigation or proceeding by any Insurance
Regulatory Authority or other Governmental Authority (other than routine
periodic inquiries, investigations or reviews), that would, if adversely
determined, be reasonably likely, individually or in the aggregate, to have a
Material Adverse Effect, and any material development in any litigation or other
proceeding previously reported pursuant to Section 4.5 or this Section
5.3(d)(ii);

          (iii) the receipt by Borrower or any of its Subsidiaries from any
Insurance Regulatory Authority or other Governmental Authority of (i) any
written notice asserting any failure by Borrower or any of its Subsidiaries to
be in compliance with applicable Requirements of Law or that threatens the
taking of any action against Borrower or such Subsidiary or sets forth
circumstances that, if taken or adversely determined, would be reasonably likely
to have a Material Adverse Effect, or (ii) any notice of any actual or
threatened suspension, limitation or revocation of, failure to renew, or
imposition of any restraining order, escrow or impoundment of funds in
connection with, any license, permit, accreditation or authorization of Borrower
or any of its Subsidiaries, where such action would be reasonably likely to have
a Material Adverse Effect; (iv) the occurrence of any ERISA Event, together with
(i) a written statement of the chief executive officer, chief financial officer
or vice president–finance of Borrower specifying the details of such ERISA Event
and the action that Borrower has taken and proposes to take with respect
thereto, (ii) a copy of any notice with respect to such ERISA Event that may be
required to be filed with the PBGC and (iii) a copy of any notice delivered by
the PBGC to Borrower or such ERISA Affiliate with respect to such ERISA Event:

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          (v) the occurrence of any decrease in (y) the rating given by either
Standard & Poor’s or Moody’s with respect to Borrower’s senior publicly traded
Indebtedness or (z) the rating given to any Insurance Subsidiary by A.M. Best &
Company; and

          (vi) any other matter or event that has, or would be reasonably likely
to have, a Material Adverse Effect, together with a written statement of the
chief executive officer, chief financial officer or vice president–finance of
Borrower setting forth the nature and period of existence thereof and the action
that Borrower has taken and proposes to take with respect thereto,

                    (e) Within five (5) Business Days after request therefor by
the Lender, if theretofore prepared and delivered to Borrower, or within ninety
(90) days after request therefor by the Lender from time to time (but not more
than once per year), if not theretofore prepared and delivered to Borrower, in
either case at Borrower’s expense, an actuarial review and valuation statement
of, and opinion as to the adequacy of, each Insurance Subsidiary’s loss and loss
adjustment expense reserve positions as of the end of such year with respect to
the insurance business then in force, and covering such other subjects as are
customary in actuarial reviews, prepared by PricewaterhouseCoopers or another
independent actuarial firm reasonably acceptable to the Lender, together with a
favorable review letter thereon by Borrower’s regularly retained independent
certified public accountants, all in form and substance satisfactory to the
Lender; and

                    (f) As promptly as reasonably possible, such other
information about the business, condition (financial or otherwise), operations
or properties of Borrower or any of its Subsidiaries as the Lender may from time
to time reasonably request.

        5.4 Corporate Existence; Franchises; Maintenance of Properties. Borrower
will, and will cause each of its Subsidiaries to, (i) maintain and preserve in
full force and effect its corporate existence, except as expressly permitted
otherwise by Section 7.1, (ii) obtain, maintain and preserve in full force and
effect all other rights, franchises, licenses, permits, certifications,
approvals and authorizations required by Governmental Authorities and necessary
to the ownership, occupation or use of its properties or the conduct of its
business, except to the extent the failure to do so would not be reasonably
likely to have a Material Adverse Effect, and (iii) keep all material properties
in good working order and condition (normal wear and tear excepted) and from
time to time make all necessary repairs to and renewals and replacements of such
properties, except to the extent that any of such properties are obsolete or are
being replaced.

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        5.5 Compliance with Laws. Borrower will, and will cause each of its
Subsidiaries to, comply in all respects with all Requirements of Law applicable
in respect of the conduct of its business and the ownership and operation of its
properties, except to the extent the failure so to comply would not be
reasonably likely to have a Material Adverse Effect.

        5.6 Payment of Obligations. Borrower will, and will cause each of its
Subsidiaries to, (i) pay all liabilities and obligations as and when due
(subject to any applicable subordination provisions), except to the extent
failure to do so would not be reasonably likely to have a Material Adverse
Effect, and (ii) pay and discharge all taxes, assessments and governmental
charges or levies imposed upon it, upon its income or profits or upon any of its
properties, prior to the date on which penalties would attach thereto, and all
lawful claims that, if unpaid, might become a Lien upon any of the properties of
Borrower or any of its Subsidiaries; provided, however, that neither Borrower
nor any of its Subsidiaries shall be required to pay any such tax, assessment,
charge, levy or claim that is being contested in good faith and by proper
proceedings and as to which Borrower or such Subsidiary is maintaining adequate
reserves with respect thereto in accordance with Generally Accepted Accounting
Principles.

        5.7 Insurance. Borrower will, and will cause each of its Subsidiaries
to, maintain with financially sound and reputable insurance companies insurance
with respect to its assets, properties and business, against such hazards and
liabilities, of such types and in such amounts, as is customarily maintained by
companies in the same or similar businesses similarly situated; provided that
Borrower and its Subsidiaries may self-insure against risks consistent with
customary industry practices for companies in the same or similar businesses, of
similar size and with similar risk parameters.

        5.8 Maintenance of Books and Records; Inspection. Borrower will, and
will cause each of its Subsidiaries to, (i) maintain adequate books, accounts
and records, in which full, true and correct entries shall be made of all
financial transactions in relation to its business and properties, and prepare
all financial statements required under this Agreement, in each case in
accordance with Generally Accepted Accounting Principles or Statutory Accounting
Principles, as applicable, and in compliance with the requirements of any
Governmental Authority having jurisdiction over it, and (ii) permit employees or
agents of the Lender to inspect its properties and examine or audit its books,
records, working papers and accounts and make copies and memoranda of them, and
to discuss its affairs, finances and accounts with its officers and employees
and, upon notice to Borrower, the independent public accountants of Borrower and
its Subsidiaries (and by this provision Borrower authorizes such accountants to
discuss the finances and affairs of the Borrower and its Subsidiaries), all at
such times and from time to time, upon reasonable notice and during business
hours, as may be reasonably requested.

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        5.9 Subsidiary Dividends. Subject to any approvals required by any
Governmental Authority, Borrower will take all action necessary to cause its
Subsidiaries to make such dividends, distributions or other payments to the
Borrower as shall be necessary for Borrower to make payments of the principal of
and interest on the Loans in accordance with the terms of this Agreement. In the
event the approval of any Governmental Authority or other Person is required in
order for any such Subsidiary to make any such dividends, distributions or other
payments to Borrower, or for Borrower to make any such principal or interest
payments, Borrower will forthwith exercise its best efforts and take all
reasonable actions permitted by law and necessary to obtain such approval.

        5.10 Further Assurances. Borrower will, and will cause each of its
Subsidiaries to, make, execute, endorse, acknowledge and deliver any amendments,
modifications or supplements hereto and restatements hereof and any other
agreements, instruments or documents, and take any and all such other actions,
as may from time to time be reasonably requested by the Lender to effect,
confirm or further assure or protect and preserve the interests, rights and
remedies of the Lender under this Agreement and the other Credit Documents.

ARTICLE VI

FINANCIAL COVENANTS

        The Borrower covenants and agrees that, until the termination of the
commitment and the payment in full of all principal and interest with respect to
the Loans together with all other amounts then due and owing hereunder:

        6.1 Consolidated Net Income from Continuing Operations. Borrower will
not permit Consolidated Net Income from Continuing Operations (excluding
realized gains and losses) for any calendar year to be less than $12,000,000,
except for the calendar year ending December 31, 2004, for which Consolidated
Net Income from Continuing Operations shall reflect a loss of no greater than
$20,000,000.

        6.2 Consolidated Debt to Capital Ratio. Beginning with the calendar year
ending December 31, 2005, Borrower and its Subsidiaries shall achieve and within
forty-five (45) days of the end of each calendar year provide evidence to Lender
of the achievement of a Consolidated Debt to Capital Ratio of not more than
sixty percent (60%).

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        6.3 Credit Rating. VFIC will at all times maintain a credit rating of
“B” or higher, as measured by A. M. Best & Company.

        6.4 Minimum Statutory Surplus as Regards Policyholders of VFIC. Borrower
will not permit VFIC’s statutory surplus as regards policyholders, as calculated
in accordance with Statutory Accounting Principles, to be less than (a) $145
million as calculated on December 31, 2004, and (b) $150 million as calculated
on December 31, 2005 and on each December 31 thereafter.

        6.5 Interest Coverage Ratio. Beginning with the calendar year ending
December 31, 2005, Borrower shall achieve and within ninety (90) days of the end
of each year provide evidence to the Lender of the achievement of an Interest
Coverage Ratio of not less than 1.5 to 1.0.

        6.6 Risk-Based Capital. Borrower will not permit “total adjusted
capital” (within the meaning of the Risk-Based Capital for Insurers Model Act as
promulgated by the NAIC as of the date hereof (the “Model Act”)) of VFIC as
measured on December 31, 2004 and each December 31 thereafter to be less than
150% of the applicable “Authorized Control Level” (within the meaning of the
Model Act) for VFIC at such time.

ARTICLE VII

NEGATIVE COVENANTS

        The Borrower covenants and agrees that, until the termination of the
Commitment and the payment in full of all principal and interest with respect to
the Loans together with all other amounts then due and owing hereunder:

        7.1 Merger; Consolidation. Borrower will not, and will not permit or
cause any of its Significant Subsidiaries to, liquidate, wind up or dissolve, or
enter into any consolidation, merger or other combination, or agree to do any of
the foregoing; provided, however, that Borrower or any Significant Subsidiary
may merge into or consolidate with any other Person so long as (i) the surviving
corporation is Borrower or a Wholly Owned Subsidiary (and in any event, if
Borrower is a party to such merger or consolidation, the surviving corporation
shall be Borrower) and (ii) immediately after giving effect thereto, no Default
or Event of Default would exist.

        7.2 Indebtedness. Borrower will not create, incur, assume or suffer to
exist, and will not permit or cause any of its Subsidiaries to create, incur, or
knowingly assume or suffer to exist, any Indebtedness that ranks senior or pari
passu (with respect to the Collateral) in any respect to the Indebtedness under
this Agreement (or any portion thereof) as to payment or performance or as to
dividends or distributions upon bankruptcy, insolvency, liquidation or
winding-up.

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        7.3 Liens. Borrower will not, and will not permit or cause any of its
Subsidiaries to, directly or indirectly, make, create, incur, assume or suffer
to exist, or enter into or suffer to exist any agreement or restriction that
prohibits or conditions the creation, incurrence or assumption of, any Lien upon
or with respect to any part of its property or assets, whether now owned or
hereafter acquired, or agree to do any of the foregoing, other than the
following (collectively, “Permitted Liens”):

          (i) Liens in favor of the Lender:

          (ii) Liens in existence on the Effective Date and set forth on
Schedule 7.3 and all renewals and replacements thereof;

          (iii) Liens imposed by law, such as Liens of carriers, warehousemen,
mechanics, materialmen and landlords, and other similar Liens incurred in the
ordinary course of business for sums not constituting borrowed money that are
not overdue for a period of more than thirty (30) days or that are being
contested in good faith by appropriate proceedings and for which adequate
reserves have been established in accordance with Generally Accepted Accounting
Principles;

          (iv) Liens (other than any Lien imposed by ERISA, the creation or
incurrence of which would result in an Event of Default under Section 8.1(i))
incurred in the ordinary course of business in connection with worker’s
compensation, unemployment insurance or other forms of governmental insurance or
benefits, or to secure the performance of letters of credit, bids, tenders,
statutory obligations, surety and appeal bonds, leases, government contracts and
other similar obligations (other than obligations for borrowed money) entered
into in the ordinary course of business to secure obligations of Insurance
Subsidiaries under insurance policies or contracts issued by Insurance
Subsidiaries as to which they are parties, including reinsurance agreements;

          (v) Liens for taxes, assessments or other governmental charges or
statutory obligations that are not delinquent or remain payable without any
penalty or that are being contested in good faith by appropriate proceedings and
for which adequate reserves have been established in accordance with Generally
Accepted Accounting Principles;

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          (vi) Liens in connection with pledges and deposits made pursuant to
statutory and regulatory requirements of Insurance Regulatory Authorities by an
Insurance Subsidiary in the ordinary course of its business, for the purpose of
securing regulatory capital or satisfying other financial responsibility
requirements;

          (vii) Liens upon cash, United States government and agency securities
and other investments of Borrower and its Subsidiaries, securing obligations
incurred in connection with reverse repurchase transactions, Federal Home Loan
Bank borrowings and other similar investment management transactions;

          (viii) Purchase money Liens upon real or personal property used by
Borrower or any of its Subsidiaries in the ordinary course of its business,
securing Indebtedness incurred solely to pay all or a portion of the purchase
price thereof (including in connection with capital leases, and including
mortgages or deeds of trust upon real property and improvements thereon),
provided that the aggregate principal amount at any time outstanding of all
Indebtedness secured by such Liens does not exceed an amount equal to 5% of the
value of the total assets of Borrower and its Subsidiaries at such time,
determined on a consolidated basis in accordance with Generally Accepted
Accounting Principles as of the date of the financial statements of Borrower and
its Subsidiaries most recently delivered under Section 5.1 prior to such time
(or, with regard to determinations at any time prior to the initial delivery of
financial statements under Section 5.1, as of the date of the most recent
financial statements referred to in Section 4.11(a)), and provided further that
any such Lien (i) shall attach to such property concurrently with or within ten
(10) days after the acquisition thereof by Borrower or such Subsidiary, (ii)
shall not exceed the lesser of (y) the fair market value of such property or (z)
the cost thereof to Borrower or such Subsidiary and (iii) shall not encumber any
other property of Borrower or any of its Subsidiaries;

          (ix) Liens on Vesta Margin Stock, to the extent the fair market value
thereof does not exceed 25% of the fair market value of the assets of Borrower
and its Subsidiaries (including Vesta Margin Stock);

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          (x) Any attachment or judgment Lien not constituting an Event of
Default under Section 8.1(h) that is being contested in good faith by
appropriate proceedings and for which adequate reserves have been established in
accordance with Generally Accepted Accounting Principles;

          (xi) With respect to any real property occupied by Borrower or any of
its Subsidiaries, all easements, rights of way, licenses and similar
encumbrances on title that do not materially impair the use of such property for
its intended purposes; and

          (xii) Liens in favor of the trustee or agent under any agreement or
indenture relating to Indebtedness of Borrower and its Subsidiaries permitted
under this Agreement, covering sums required to be deposited with such trustee
or agent thereunder.

        7.4 Disposition of Assets. Without obtaining the prior written consent
of the Lender, which consent shall not be unreasonably withheld, Borrower will
not, and will not permit or cause any of its Subsidiaries to, sell, assign,
lease, convey, transfer or otherwise dispose of (whether in one or a series of
transactions) all or any portion of its assets, business or properties, or enter
into any arrangement with any Person providing for the lease by Borrower or any
Subsidiary as lessee of any asset that has been sold or transferred by Borrower
or such Subsidiary to such Person, or agree to do any of the foregoing, except
for:

          (i) sales or pledges of investments by the Insurance Subsidiaries in
the ordinary course of business, including in connection with Federal Home Loan
Bank borrowings;

          (ii) the sale or exchange of used or obsolete equipment to the extent
(A) the proceeds of such sale are applied towards, or such equipment is
exchanged for, similar replacement equipment or (B) such equipment is no longer
necessary for the operations of Borrower or its applicable Subsidiary in the
ordinary course of business;

          (iii) the sale, lease or other disposition of assets by a Subsidiary
of Borrower to Borrower or to another Wholly Owned Subsidiary, to the extent
permitted by applicable Requirements of Law and each relevant Insurance
Regulatory Authority, provided that (A) immediately after giving effect thereto,
no Default or Event of Default would exist, (B) in no event shall Borrower
contribute, sell or otherwise transfer, or permit VFIC to issue or sell, any of
the capital stock of VFIC to any other Subsidiary, and (C) such sale or
disposition would not adversely affect the ability of any Insurance Subsidiary
party thereto to pay dividends or otherwise make distributions to its parent;

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          (iv) the sale or other disposition of any Vesta Margin Stock to the
extent the fair market value thereof is less than 25% of the fair market value
of the assets of Borrower and its Subsidiaries (including Vesta Margin Stock),
provided that fair value is received in exchange therefor;

          (v) the sale or disposition of assets outside the ordinary course of
business, provided that (A) the net proceeds from any such sale or disposition
do not exceed an amount equal to the least of the following: (1) 10% of the
total assets of Borrower and its Subsidiaries on a consolidated basis and (2)
10% of the total revenues of Borrower and its Subsidiaries on a consolidated
basis, in each case as determined as of the date of the financial statements of
Borrower and its Subsidiaries most recently delivered under Section 5.1 prior to
such time (or, with regard to determinations at any time prior to the initial
delivery of financial statements under Section 5.1, as of the date of the most
recent financial statements referred to in Section 4.11(a)), (B) immediately
after giving effect thereto, Borrower would be in compliance with the provisions
of Section 6.2, such compliance determined on a pro forma basis in accordance
with Generally Accepted Accounting Principles as if such sale or disposition had
been consummated on the last day of the then most recently ended fiscal quarter,
(C) immediately after giving effect thereto, no Default or Event of Default
would exist, and (D) in no event shall Borrower or any of its Subsidiaries sell
or otherwise dispose of any of the capital stock or other ownership interests of
VFIC or any other Significant Subsidiary; and

          (vi) the sale of immaterial amounts of assets in the ordinary course
of business provided that fair value is received in exchange therefor.

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        7.5 Transactions with Affiliates. Borrower will not, and will not permit
or cause any of its Subsidiaries to, enter into any transaction with any
officer, director, stockholder or other Affiliate of Borrower or any Subsidiary,
except in the ordinary course of its business and upon fair and reasonable terms
that are no less favorable to it than would obtain in a comparable arm’s length
transaction with a Person other than an Affiliate of Borrower or such
Subsidiary; provided, however, that nothing contained in this Section shall
prohibit:

          (i) transactions between and among Borrower and its Wholly Owned
Subsidiaries;

          (ii) transactions under incentive compensation plans, stock option
plans and other employee benefit plans, and loans and advances from Borrower or
any of its Subsidiaries to its officers, in each case that have been approved by
the board of directors of Borrower or any of its Subsidiaries; and

          (iii) the payment by Borrower of reasonable and customary fees to
members of its board of directors.

        7.6 Lines of Business Borrower will not, and will not permit or cause
any of its Subsidiaries to, engage to any substantial degree in any business
other than the lines of property and casualty insurance business and other
businesses engaged in by Borrower and its Subsidiaries on the date hereof or a
business reasonably related thereto.

        7.7 Fiscal Year. Borrower will not, and will not permit or cause any of
its Subsidiaries to, change the ending date of its fiscal year to a date other
than December 31 unless (i) Borrower shall have given the Lender written notice
of its intention to change such ending date at least sixty (60) days prior to
the effective date thereof and (ii) prior to such effective date this Agreement
shall have been amended to make any changes in the financial covenants and other
terms and conditions to the extent necessary, in the reasonable determination of
the Lender, to reflect the new fiscal year ending date.

        7.8 Accounting Changes Borrower will not, and will not permit or cause
any of its Subsidiaries to, make or permit any material change in its accounting
policies or reporting practices, except as may be required or permitted by
Generally Accepted Accounting Principles or Statutory Accounting Principles, as
applicable.

        7.9 Dividends Borrower will not pay any dividends on account of its
equity securities while a Default or an Event of Default has occurred and is
continuing both immediately before and after giving effect to the payment of
such dividends.

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ARTICLE VIII

EVENTS OF DEFAULT

        8.1 Events of Default. The occurrence of any one or more of the
following events shall constitute an "Event of Default”:

                    (a) The Borrower shall fail to pay (i) any principal payable
under the terms of the Note, or (ii) not later than five Business Days of the
date when due any interest or any fee or any other Obligation due under the Note
or this Agreement;

                    (b) The Borrower shall fail to observe, perform or comply
with any condition, covenant or agreement contained in any of Sections 2.5
(after giving effect to the five (5) business days contemplated in Section
2.5(c), to the extent applicable), 2.11, 5.3(d)(i) or 5.4(i), Article VI, or
Sections 7.1 through 7.4, inclusive, or Section 7.9;

                    (c) Borrower or any of its Subsidiaries shall fail to
observe, perform or comply with any condition, covenant or agreement contained
in this Agreement or any of the other Credit Documents other than those
enumerated in subsections (a) and (b) above, and such failure shall continue
unremedied for any grace period specifically applicable thereto or, if no such
grace period is applicable, for a period of thirty (30) days after Borrower
acquires knowledge thereof;

                    (d) Any material representation or warranty made or deemed
made by or on behalf of the Borrower or any of its Subsidiaries in this
Agreement, any of the other Credit Documents or in any certificate, instrument,
report or other document furnished in connection herewith or therewith or in
connection with the transactions contemplated hereby or thereby shall prove to
have been false or misleading in any material respect as of the time made,
deemed made or furnished;

                    (e) Borrower or any of its Subsidiaries shall (i) fail to
pay when due (whether by scheduled maturity, acceleration or otherwise and after
giving effect to any applicable grace period) any principal of or interest on
any Indebtedness (other than the Indebtedness incurred pursuant to this
Agreement) having an aggregate principal amount of at least $500,000; or (ii)
fail to observe, perform or comply with any condition, covenant or agreement
contained in any agreement or instrument evidencing or relating to any such
Indebtedness, or any other event shall occur or condition exist in respect
thereof, and the effect of such failure, event or condition is to cause, or
permit the holder or holders of such Indebtedness (or a trustee or agent on its
or their behalf) to cause (with the giving of notice, lapse of time, or both),
such Indebtedness to become due, or to be prepaid, redeemed, purchased or
defeased, prior to its stated maturity;

                    (f) Borrower or any of its Significant Subsidiaries shall
(i) file a voluntary petition or commence a voluntary case seeking liquidation,
winding-up, reorganization, dissolution, arrangement, readjustment of debts or
any other relief under the Bankruptcy Code or under any other applicable
bankruptcy, insolvency or similar law now or hereafter in effect, (ii) consent
to the institution of, or fail to controvert in a timely and appropriate manner,
any petition or case of the type described in subsection (g) below, (iii) apply
for or consent to the appointment of or taking possession by a custodian,
trustee, receiver or similar official for or of itself or all or a substantial
part of its properties or assets, (iv) fail generally, or admit in writing its
inability, to pay its debts generally as they become due, (v) make a general
assignment for the benefit of creditors or (vi) take any corporate action to
authorize or approve any of the foregoing;

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                    (g) Any involuntary petition or case shall be filed or
commenced against Borrower or any of its Significant Subsidiaries seeking
liquidation, winding-up, reorganization, dissolution, arrangement, readjustment
of debts, the appointment of a custodian, trustee, receiver or similar official
for it or all or a substantial part of its properties or any other relief under
the Bankruptcy Code or under any other applicable bankruptcy, insolvency or
similar law now or hereafter in effect, and such petition or case shall continue
undismissed and unstayed for a period of sixty (60) days; or an order, judgment
or decree approving or ordering any of the foregoing shall be entered in any
such proceeding;

                    (h) Any one or more money judgments, writs or warrants of
attachment, executions or similar processes involving an aggregate amount
(exclusive of amounts fully bonded or covered by insurance as to which the
surety or insurer, as the case may be, has acknowledged its liability in
writing) that would cause a Material Adverse Change shall be entered or filed
against Borrower or any of its Subsidiaries or any of their respective
properties, and (i) the same is not dismissed, stayed or discharged within sixty
(60) days or is not otherwise being appropriately contested in good faith and in
a manner reasonably satisfactory to the Lender, or (ii) the same is not
dismissed, stayed or discharged within five (5) days prior to any proposed sale
of assets of Borrower or any Subsidiary pursuant thereto, or (iii) any action
shall be legally taken by a judgment creditor to levy upon assets of Borrower or
any Subsidiary to enforce the same;

                    (i) Any ERISA Event shall occur or exist with respect to any
Plan or Multiemployer Plan and, as a result thereof, together with all other
ERISA Events then existing, there shall exist a reasonable likelihood of
liability to any one or more Plans or Multiemployer Plans or to the PBGC (or to
any combination thereof) in excess of $500,000 with respect to Borrower or any
ERISA Affiliate;

                    (j) Any Insurance Regulatory Authority or other Governmental
Authority having jurisdiction shall issue any order of conservation,
supervision, rehabilitation or liquidation or any other order of similar effect
in respect of any Insurance Subsidiary, and such action, individually or in the
aggregate, would be reasonably likely to have a Material Adverse Effect;

                    (k) Any one or more licenses, permits, accreditations or
authorizations of Borrower or any of its Subsidiaries shall be suspended,
limited or terminated or shall not be renewed, or any other action shall be
taken, by any Governmental Authority in response to any alleged failure by
Borrower or any of its Subsidiaries to be in compliance with applicable
Requirements of Law, and such action, individually or in the aggregate, would be
reasonably likely to have a Material Adverse Effect; or

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                    (l) Any of the following shall occur: (i) any Person or
group of Persons acting in concert as a partnership or other group shall, as a
result of a tender or exchange offer, open market purchases, privately
negotiated purchases or otherwise, have become, after the date hereof, the
“beneficial owner” (within the meaning of such term under Rule 13d-3 under the
Exchange Act) of securities of Borrower representing 30% or more of the combined
voting power of the then outstanding securities of Borrower ordinarily (and
apart from rights accruing under special circumstances) having the right to vote
on matters, other than the election of directors, submitted to holders of
Borrower’s common stock; (ii) the Board of Directors of Borrower shall cease to
consist of a majority of the individuals who constituted the Board of Directors
of Borrower as of the date hereof or who shall have become a member thereof
subsequent to the date hereof after having been nominated, or otherwise approved
in writing, by at least a majority of individuals who constituted the Board of
Directors of Borrower as of the date hereof (or their replacements approved as
herein required); or (iii) Borrower shall cease to own directly 100% of the
issued and outstanding capital stock of VFIC or its successor by merger or
consolidation as permitted hereunder (including, without limitation, as a result
of the contribution, sale or transfer by Borrower, or the issuance or sale by
VFIC, of any capital stock of VFIC to any one or more other Subsidiaries of
Borrower).

        8.2 Remedies; Termination of Commitment, Acceleration, etc. Upon and at
any time after the occurrence and during the continuance of any Event of
Default, the Lender may take any or all of the following actions at the same or
different times:

                    (a) Declare the Commitment to be terminated, whereupon the
same shall terminate provided that, upon the occurrence of an Event of Default
pursuant to Section 8.1(a), 8.1(b), 8.1 (c), 8.1 (g) or Section 8.1(h), the
Commitment shall automatically be terminated);

                    (b) Declare all or any part of the outstanding principal
amount of the Loans to be immediately due and payable, whereupon the principal
amount so declared to be immediately due and payable, together with all interest
accrued thereon and all other amounts payable under this Agreement, the Note and
the other Credit Documents, shall become immediately due and payable without
presentment, demand, protest, notice of intent to accelerate or other notice or
legal process of any kind, all of which are hereby knowingly and expressly
waived by the Borrower provided that, upon the occurrence of an Event of Default
pursuant to Section 8.1(c), 8.1(g) or Section 8.1(h), all of the outstanding
principal amount of the Loans and all other amounts described in this subsection
(b) shall automatically become immediately due and payable without presentment,
demand, protest, notice of intent to accelerate or other notice or legal process
of any kind, all of which are hereby knowingly and expressly waived by the
Borrower); and

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                    (c) Exercise all rights and remedies available to it under
this Agreement, the other Credit Documents and applicable law.

        8.3 Remedies; Set-Off. In addition to all other rights and remedies
available under the Credit Documents or applicable law or otherwise, upon and at
any time after the occurrence and during the continuance of any Event of
Default, the Lender may, and is hereby authorized by the Borrower, at any such
time and from time to time, to the fullest extent permitted by applicable law,
without presentment, demand, protest or other notice of any kind, all of which
are hereby knowingly and expressly waived by the Borrower, to set off and to
apply any and all deposits (general or special, time or demand, provisional or
final) and any other property at any time held (including at any branches or
agencies, wherever located), and any other indebtedness at any time owing, by
the Lender to or for the credit or the account of the Borrower against any or
all of the Obligations to the Lender now or hereafter existing, whether or not
such Obligations may be contingent or unmatured, the Borrower hereby granting to
each Lender a continuing security interest in and Lien upon all such deposits
and other property as security for such Obligations. The Lender agrees to notify
the Borrower promptly after any such set-off and application; provided, however,
that the failure to give such notice shall not affect the validity of such
set-off and application.

ARTICLE IX

MISCELLANEOUS

        9.1 Fees and Expenses. In addition to the fee set forth in Section
3.1(a)(iii), the Borrower agrees (i) whether or not the transactions
contemplated by this Agreement shall be consummated, to pay upon demand all
reasonable out-of-pocket costs and expenses of the Lender (including, without
limitation, the reasonable fees and expenses of counsel to the Lender) in
connection with the preparation, negotiation, execution and delivery of this
Agreement and the other Credit Documents, and any amendment, modification or
waiver hereof or thereof or consent with respect hereto or thereto, (ii) to pay
upon demand all reasonable out-of-pocket costs and expenses of the Lender
(including, without limitation, the reasonable fees and expenses of counsel to
the Lender) in connection with (A) any refinancing or restructuring of the
credit arrangement provided under this Agreement, whether in the nature of a
“work-out,” in any insolvency or bankruptcy proceeding or otherwise and whether
or not consummated, and (B) the enforcement, attempted enforcement or
preservation of any rights or remedies under this Agreement or any of the other
Credit Documents, whether in any action, suit or proceeding (including any
bankruptcy or insolvency proceeding) or otherwise, and (iii) to pay and hold
harmless the Lender from and against all liability for any intangibles,
documentary, stamp or other similar taxes, fees and excises, if any, including
any interest and penalties, and any finder’s or brokerage fees, commissions and
expenses (other than any fees, commissions or expenses of finders or brokers
engaged by the Lender), that may be payable in connection with the transactions
contemplated by this Agreement and the other Credit Documents.

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        9.2 Indemnification. The Borrower agrees, whether or not the
transactions contemplated by this Agreement shall be consummated, to indemnify
and hold harmless the Lender and each of their respective directors, officers,
employees, agents and Affiliates (each, an “Indemnified Person”) from and
against any and all claims, losses, damages, obligations, liabilities,
penalties, costs and expenses (including, without limitation, reasonable
attorneys’ fees and expenses) of any kind or nature whatsoever, whether direct,
indirect or consequential (collectively, “Indemnified Costs”), that may at any
time be imposed on, incurred by or asserted against any such Indemnified Person
as a result of, arising from or in any way relating to the preparation,
execution, performance or enforcement of this Agreement or any of the other
Credit Documents, any of the transactions contemplated herein or therein or any
transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of any Loans, or any action, suit or proceeding
(including any inquiry or investigation) by any Person, whether threatened or
initiated, related to any of the foregoing, and in any case whether or not such
Indemnified Person is a party to any such action, proceeding or suit or a
subject of any such inquiry or investigation; provided, however, that no
Indemnified Person shall have the right to be indemnified hereunder for any
Indemnified Costs to the extent resulting from the gross negligence or willful
misconduct of such Indemnified Person. All of the foregoing Indemnified Costs of
any Indemnified Person shall be paid or reimbursed by the Borrower, as and when
incurred and upon demand.

        9.3 Governing Law; Consent to Jurisdiction THIS AGREEMENT AND THE OTHER
CREDIT DOCUMENTS HAVE BEEN EXECUTED, DELIVERED AND ACCEPTED IN, AND SHALL BE
DEEMED TO HAVE BEEN MADE IN, ALABAMA AND SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ALABAMA (WITHOUT REGARD TO
THE CONFLICTS OF LAW PROVISIONS THEREOF). THE BORROWER HEREBY CONSENTS TO THE
NONEXCLUSIVE JURISDICTION OF ANY STATE COURT WITHIN JEFFERSON COUNTY, ALABAMA OR
ANY FEDERAL COURT LOCATED WITHIN THE NORTHERN DISTRICT OF THE STATE OF ALABAMA
FOR ANY PROCEEDING INSTITUTED HEREUNDER OR UNDER ANY OF THE OTHER CREDIT
DOCUMENTS, OR ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE
OTHER CREDIT DOCUMENTS, OR ANY PROCEEDING TO WHICH THE LENDER OR THE BORROWER IS
A PARTY, INCLUDING ANY ACTIONS BASED UPON, ARISING OUT OF, OR IN CONNECTION
WITH, ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER ORAL OR
WRITTEN) OR ACTIONS OF THE LENDER OR THE BORROWER. THE BORROWER IRREVOCABLY
AGREES TO BE BOUND (SUBJECT TO ANY AVAILABLE RIGHT OF APPEAL) BY ANY JUDGMENT
RENDERED OR RELIEF GRANTED THEREBY AND FURTHER WAIVES ANY OBJECTION THAT IT MAY
HAVE BASED ON LACK OF JURISDICTION OR IMPROPER VENUE OR FORUM NON CONVENIENS TO
THE CONDUCT OF ANY SUCH PROCEEDING. NOTHING IN THIS SECTION SHALL AFFECT THE
RIGHT OF ANY PARTY TO BRING ANY ACTION OR PROCEEDING AGAINST ANY OTHER PARTY IN
THE COURTS OF ANY OTHER JURISDICTION.

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        9.4 Arbitration; Preservation and Limitation of Remedies.

                    (a) Upon demand of any party hereto, whether made before or
after institution of any judicial proceeding, any dispute, claim or controversy
arising out of, connected with or relating to this Agreement or any other Credit
Document (“Disputes”) between the Borrower and the Lender, shall be resolved by
binding arbitration as provided herein. Institution of a judicial proceeding by
a party does not waive the right of that party to demand arbitration hereunder.
Disputes may include, without limitation, tort claims, counterclaims, claims
brought as class actions, claims arising from documents executed in the future,
or claims arising out of or connected with the transactions contemplated by this
Agreement and the other Credit Documents. Arbitration shall be conducted under
and governed by the Commercial Financial Disputes Arbitration Rules (the
“Arbitration Rules”) of the American Arbitration Association (the “AAA”), as in
effect from time to time, and Title 9 of the U.S. Code, as amended. All
arbitration hearings shall be conducted in Birmingham, Alabama. The expedited
procedures set forth in Rule 51 et seq. of the Arbitration Rules shall be
applicable to claims of less than $1,000,000. All applicable statutes of
limitation shall apply to any Dispute. A judgment upon the award may be entered
in any court having jurisdiction. The panel from which all arbitrators are
selected shall include only licensed attorneys. The single arbitrator selected
for expedited procedure shall be a retired judge from the highest court of
general jurisdiction, state or federal, of the state where the hearing will be
conducted.

                    (b) Notwithstanding the preceding binding arbitration
provisions, the parties hereto agree to preserve, without diminution, certain
remedies that any party hereto may employ or exercise freely, either alone, in
conjunction with or during a Dispute. Any party hereto shall have the right to
proceed in any court of proper jurisdiction or by self-help to exercise or
prosecute the following remedies, as applicable: (i) all rights of self-help,
including peaceful occupation of real property and collection of rents, set-off,
and peaceful possession of personal property; (ii) obtaining provisional or
ancillary remedies, including injunctive relief, sequestration, garnishment,
attachment, appointment of a receiver and filing an involuntary bankruptcy
proceeding; and (iii) when applicable, a judgment by confession of judgment.
Preservation of these remedies does not limit the power of an arbitrator to
grant similar remedies that may be requested by a party in a Dispute. The
parties hereto agree that no party shall have a remedy of punitive or exemplary
damages against any other party in any Dispute, and each party hereby waives any
right or claim to punitive or exemplary damages that it has now or that may
arise in the future in connection with any Dispute, whether such Dispute is
resolved by arbitration or judicially.

        9.5 Notices. All notices and other communications provided for hereunder
shall be in writing (including telegraphic, telex, facsimile transmission or
cable communication) and mailed, telegraphed, telexed, telecopied, cabled or
delivered to the party to be notified at the following addresses:

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                    (a) if to either Borrower, to Vesta Insurance Group, Inc.,
3760 River Run Drive, Birmingham, Alabama 35243, Attention: Norman W. Gayle,
III, Telecopy No. (205) 970-7007, with a copy to Vesta Insurance Group, Inc.,
3760 River Run Drive, Birmingham, Alabama 35243, Attention: Donald W. Thornton,
Telecopy No. (205) 970-7007;

                    (b) if to First Commercial Bank, 800 Shades Creek Parkway,
P. O. Box 11746, Birmingham, Alabama 35202-1746, Attention: James W. Brunstad,
Telecopy No. (205) 868-4898; and

or in each case, to such other address as any party may designate for itself by
like notice to all other parties hereto. All such notices and communications
shall be deemed to have been given (i) if mailed as provided above by any method
other than overnight delivery service, on the third Business Day after deposit
in the mails, (ii) if mailed by overnight delivery service, telegraphed,
telexed, telecopied or cabled, when delivered for overnight delivery, delivered
to the telegraph company, confirmed by telex answer back transmitted by
telecopier or delivered to the cable company, respectively, or (iii) if
delivered by hand, upon delivery; provided that notices and communications to
the Lender shall not be effective until received by the Lender.

        9.6 Amendments, Waivers, etc. No amendment, modification, waiver or
discharge of termination of, or consent to any departure by the Borrower from,
any provision of this Agreement or any other Credit Document, shall be effective
unless in a writing signed by the Lender and then the same shall be effective
only in the specific instance and for the specific purpose for which given.

        9.7 Participations.

                    (a) The Lender may, without the consent of the Borrower,
sell to one or more other Persons with its principal place of business in the
United States (each, a “Participant”) participations in any portion comprising
less than all of its rights and obligations under this Agreement (including,
without limitation, a portion of its Commitment, the outstanding Loans made by
it and the Note or Notes held by it); provided, however, that (i) the Lender’s
obligations under this Agreement shall remain unchanged and the Lender shall
remain solely responsible for the performance of such obligations, (ii) any such
participation shall be in an amount of not less than $1,000,000, but the Lender
shall not sell any participation that, when taken together with all other
participations, if any, sold by the Lender, covers all of the Lender’s rights
and obligations under this Agreement, (iii) the Borrower shall continue to deal
solely and directly with the Lender in connection with the Lender’s rights and
obligations under this Agreement, and the Lender shall not permit any
Participant to have any voting rights or any right to control the vote of the
Lender with respect to any amendment, modification, waiver, consent or other
action hereunder or under any other Credit Document (except as to actions that
would (A) reduce or forgive the principal amount of, or rate of interest on, any
Loan, or reduce or forgive any fees or other Obligations, (B) extend any date
(including the Maturity Date) fixed for the payment of any principal of or
interest on any Loan, any fees or any other Obligations, or (C) increase any
Commitment of the Lender), and (iv) no Participant shall have any rights under
this Agreement or any of the other Credit Documents, each Participant’s rights
against the granting Lender in respect of any participation to be those set
forth in the participation agreement, and all amounts payable by the Borrower
hereunder shall be determined as if the Lender had not granted such
participation.

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                    (b) Nothing in this Agreement shall be construed to prohibit
the Lender from pledging or assigning all or any portion of its rights and
interest hereunder or under any Note to any Federal Reserve Bank as security for
borrowings therefrom; provided, however, that no such pledge or assignment shall
release the Lender from any of its obligations hereunder.

                    (c) The Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section,
disclose to the Participant or proposed Participant any information relating to
Borrower and its Subsidiaries furnished to it by or on behalf of any other party
hereto, provided that such Participant or proposed Participant agrees in writing
to keep such information confidential to the same extent required of the Lender
under Section 9.13.

        9.8 No Waiver. The rights and remedies of the Lender expressly set forth
in this Agreement and the other Credit Documents are cumulative and in addition
to, and not exclusive of, all other rights and remedies available at law, in
equity or otherwise. No failure or delay on the part of the Lender in exercising
any right, power or privilege shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, power or privilege preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege or be construed to be a waiver of any Default or Event of Default. No
course of dealing between any of the Borrower and the Lender or its agents or
employees shall be effective to amend, modify or discharge any provision of this
Agreement or any other Credit Document or to constitute a waiver of any Default
or Event of Default. No notice to or demand upon the Borrower in any case shall
entitle the Borrower to any other or further notice or demand in similar or
other circumstances or constitute a waiver of the right of the Lender to
exercise any right or remedy or take any other or further action in any
circumstances without notice or demand.

        9.9 Successors and Assigns This Agreement shall be binding upon, inure
to the benefit of and be enforceable by the respective successors and assigns of
the parties hereto, and all references herein to any party shall be deemed to
include its successors and assigns; provided, however, that the Borrower shall
not sell, assign or transfer any of its rights, interests, duties or obligations
under this Agreement or any other Credit Document without the prior written
consent of the Lender.

        9.10 Survival. All representations, warranties and agreements made by or
on behalf of the Borrower or any of its Subsidiaries in this Agreement and in
the other Credit Documents shall survive the execution and delivery hereof or
thereof and the making and repayment of the Loans. In addition, notwithstanding
anything herein or under applicable law to the contrary, the provisions of this
Agreement and the other Credit Documents relating to indemnification or payment
of fees, costs and expenses shall survive the payment in full of the Loans, the
termination of the Commitment and any termination of this Agreement or any of
the other Credit Documents.

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        9.11 Severability. To the extent any provision of this Agreement is
prohibited by or invalid under the applicable law of any jurisdiction, such
provision shall be ineffective only to the extent of such prohibition or
invalidity and only in such jurisdiction, without prohibiting or invalidating
such provision in any other jurisdiction or the remaining provisions of this
Agreement in any jurisdiction.

        9.12 Construction. The headings of the various articles, sections and
subsections of this Agreement have been inserted for convenience only and shall
not in any way affect the meaning or construction of any of the provisions
hereof. Except as otherwise expressly provided herein and in the other Credit
Documents, in the event of any inconsistency or conflict between any provision
of this Agreement and any provision of any of the other Credit Documents, the
provision of this Agreement shall control.

        9.13 Confidentiality. The Lender agrees to keep confidential, pursuant
to its customary procedures for handling confidential information of a similar
nature and in accordance with safe and sound banking practices all nonpublic
information provided to it by or on behalf of Borrower or any of its
Subsidiaries in connection with this Agreement or any other Credit Document;
provided, however, that the Lender may disclose such information (i) to its
directors, employees and agents and to its auditors, counsel and other
professional advisors, (ii) at the demand or request of any bank regulatory
authority, court or other Governmental Authority having or asserting
jurisdiction over the Lender, as may be required pursuant to subpoena or other
legal process, or otherwise in order to comply with any applicable Requirement
of Law, (iii) in connection with any proceeding to enforce its rights hereunder
or under any other Credit Document or any other litigation or proceeding related
hereto or to which it is a party, (v) to the extent the same has become publicly
available other than as a result of a breach of this Agreement and (vi) pursuant
to and in accordance with the provisions of Section 9.7.

        9.14 Reliance by Lender. The Lender shall be entitled to rely, and shall
be fully protected in relying, upon any notice, statement, consent or other
communication (including, without limitation, any thereof by telephone,
telecopy, telex, telegram or cable) believed by it in good faith to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons.

        9.15 Counterparts This Agreement may be executed in any number of
counterparts and by different parties hereto on separate counterparts, each of
which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. This Agreement shall
become effective upon the execution of a counterpart hereof by each of the
parties hereto and receipt by the Lender and the Borrower of written or
telephonic notification of such execution and authorization of delivery thereof.

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        9.16 Entire Agreement. THIS AGREEMENT AND THE OTHER DOCUMENTS AND
INSTRUMENTS EXECUTED AND DELIVERED IN CONNECTION HEREWITH (A) EMBODY THE ENTIRE
AGREEMENT AND UNDERSTANDING BETWEEN THE PARTIES HERETO AND THERETO RELATING TO
THE SUBJECT MATTER HEREOF AND THEREOF, AND (B) MAY NOT BE AMENDED, SUPPLEMENTED,
CONTRADICTED OR OTHERWISE MODIFIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

[SIGNATURES ON FOLLOWING PAGE]

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        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first above written

BORROWER:

VESTA INSURANCE GROUP, INC.,
a Delaware corporation

By: /s/ John W. McCullough
————————————————
Its:V.P. - Associate General Counsel
————————————————

LENDER:

FIRST COMMERCIAL BANK,
an Alabama banking corporation

By: /s/ Jim Brunstad
————————————————
Its: Senior Vice President
————————————————

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EXHIBIT A
Credit Agreement
First Commercial Bank
Vesta Insurance Group, Inc.
September 30, 2004 / $30,000,000

AMENDED AND RESTATED NOTE

$30,000,000

September 30, 2004
Birmingham, Alabama

        FOR VALUE RECEIVED, VESTA INSURANCE GROUP, INC., a Delaware corporation
(the “Borrower”), hereby promises to pay to the order of FIRST COMMERCIAL BANK,
an Alabama banking corporation (the “Lender”), at the offices of First
Commercial Bank located at 800 Shades Creek Parkway, P. O. Box 11746,
Birmingham, Alabama 35202-1746 (or at such other place or places as the Lender
may designate), at the times and in the manner provided in the Amended and
Restated Credit Agreement, dated as of September 30, 2004 (as amended, modified
or supplemented from time to time, the “Credit Agreement”), among the Borrower
and the Lender, the principal sum of up to THIRTY MILLION DOLLARS ($30,000,000),
or such lesser amount as may constitute the unpaid principal amount of the Loans
made by the Lender, under the terms and conditions of this promissory note (this
“Note”) and the Credit Agreement. The defined terms in the Credit Agreement are
used herein with the same meaning. The Borrower also unconditionally promises to
pay interest on the aggregate unpaid principal amount of this Note at the rates
applicable thereto from time to time as provided in the Credit Agreement.

        All of the terms, conditions and covenants of the Credit Agreement are
expressly made a part of this Note by reference in the same manner and with the
same effect as if set forth herein at length, and any holder of this Note is
entitled to the benefits of and remedies provided in the Credit Agreement and
the other Credit Documents. Reference is made to the Credit Agreement for
provisions relating to the interest rate, maturity, payment, prepayment and
acceleration of this Note. The Note may be accelerated upon the occurrence of an
Event of Default.

        In the event of an acceleration of the maturity of this Note, this Note,
and all other indebtedness of the Borrower to the Lender under the Credit
Agreement, shall become immediately due and payable, without presentment,
demand, protest or notice of any kind, all of which are hereby waived by the
Borrower.

        In the event this Note is not paid when due at any stated or accelerated
maturity, the Borrower agrees to pay, in addition to the principal and interest,
all costs of collection, including reasonable attorneys’ fees.

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        All Persons bound on this obligation, whether primarily or secondarily
liable as principals, sureties, guarantors, endorsers or otherwise, hereby waive
to the full extent permitted by law the benefits of all provisions of law for
stay or delay of execution or sale of property or other satisfaction of judgment
against any of them on account of liability hereon until judgment is obtained
and execution issues against any other of them and returned satisfied or until
it can be shown that the maker or any other party hereto had no property
available for the satisfaction of the debt evidenced by this instrument, or
until any other proceedings can be had against any of them, also their right, if
any, to require the holder hereof, to hold as security for this Note any
collateral deposited by any of said Persons as security. Protest, notice of
protest, notice of dishonor, diligence or any other formality are hereby waived
by all parties bound hereon.

        This Note shall be governed by and construed in accordance with the
internal laws and judicial decisions of the State of Alabama. The Borrower
hereby submits to the nonexclusive jurisdiction and venue of the federal and
state courts located in Jefferson County, Alabama, although the Lender shall not
be limited to bringing an action in such courts.

[SIGNATURES ON FOLLOWING PAGE]

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        IN WITNESS WHEREOF, the Borrower has caused this Note to be executed
under seal by its duly authorized corporate officer as of the day and year first
above written.

VESTA INSURANCE GROUP, INC.,

By:
————————————————
Its:
————————————————

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EXHIBIT B

AMENDED AND RESTATED STOCK PLEDGE AGREEMENT

        THIS AMENDED AND RESTATED STOCK PLEDGE AGREEMENT (“Restated Agreement”)
made as of this 30th day of September, 2004, by VESTA INSURANCE GROUP, INC., a
Delaware corporation (“Pledgor”), in favor of FIRST COMMERCIAL BANK, an Alabama
state banking corporation (“Bank”).

R E C I T A L S:

        WHEREAS, on February 1, 2003, Pledgor pledged to Bank 358,375 shares of
common stock, $.01 par value per share, of Affirmative Insurance Holdings, Inc.
(“Holdings”) then held by Pledgor pursuant to a Pledge Agreement (the “Pledge
Agreement”), which provided that in the event of a stock dividend, there shall
be an appropriate adjustment in the number of shares made subject to the Pledge
Agreement;

        WHEREAS, on May 25, 2004, Holdings paid a stock dividend of 12.17 shares
of its common stock for each share of its common stock outstanding on that date,
bringing the total number of shares of Holdings common stock subject to the
Pledge Agreement to 4,719,798

        WHEREAS, in connection with that Amended and Restated Credit Agreement
of even date herewith (the “Credit Agreement”; all capitalized terms not
otherwise defined herein shall have the same meanings as set forth in the Credit
Agreement) under which the Bank has made available to Pledgor a $30,000,000
revolving credit facility (“Loan”), Bank has released 2,219,798 shares of
Holdings common stock from the Pledge Agreement pursuant to a Partial Release of
Lien of even date herewith.

        WHEREAS, Bank and Pledgor desire to restate their respective promises,
rights and obligations with respect to the 2,500,000 shares on Holdings common
stock that remain subject to the Pledge Agreement (together with all
certificates, options, rights or other distributions issued as an addition to,
in substitution or in exchange for, or on account of, any such shares, and all
proceeds of all of the foregoing, now or hereafter owned by the Pledgor, the
“Pledged Stock”).

        NOW, THEREFORE, in consideration of the foregoing premises, the mutual
promises hereinafter contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Pledgor, intending to
be legally bound hereby, agrees as follows:

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ARTICLE I

SECURITY; DIVIDENDS, REGISTRATION; DISPOSITION AND PROCEEDS

        Section 1.1. Grant of Security. As security for the prompt payment and
performance of the Obligations, the Pledgor hereby reaffirms its pledge to Bank
of the Pledged Stock and grants to Bank a lien on and security interest therein.

        Section 1.2. Realization Upon Default. Upon the occurrence of an Event
of Default, Bank may, without demand of performance or other demand,
advertisement, or notice of any kind (except the notice specified below of time
and place of public or private sale) to or upon the Pledgor or any other person
(all of which are, to the extent permitted by law, hereby expressly waived),
forthwith realize upon the Pledged Stock or any part thereof, and may forthwith
sell or otherwise dispose of and deliver the Pledged Stock, or any part thereof
or interest therein, in one or more parcels at public or private sale or sales,
at any exchange, broker’s board or at any of Bank’s offices or elsewhere, at
such prices and on such terms (including, but without limitation, a requirement
that any purchaser of all or any part of the Pledged Stock purchase the shares
constituting the Pledged Stock for investment and without any intention to make
a distribution thereof) as it may deem best, for cash or on credit, or for
future delivery without assumption of any credit risk, with the right to Bank or
any purchaser to purchase upon any such sale the whole or any part of the
Pledged Stock free of any right or equity of redemption in the Pledgor, which
right or equity is hereby expressly waived and released. Upon an Event of
Default and request by Bank, Pledgor agrees to cause Holdings to effect the
registration of the Pledged Stock for public sale under any and all applicable
securities laws.

        Section 1.3. Registration. Upon the sale or transfer of the Pledged
Stock described in Section 1.2, the Pledged Stock shall be registered in the
name of the transferee and Pledgor hereby covenants and agrees that, upon Bank’s
request, the Pledgor will effect such registration. Immediately and without
further notice, upon registration in accordance with this Section, the
transferee shall have, with respect to the Pledged Stock, the right to exercise
all voting rights (if any) as to all of the Pledged Stock, all other corporate
rights and all conversion, exchange, subscription or other rights, privileges or
options pertaining thereto as if it were the absolute owner thereof, including,
without limitation, the right to exchange any or all of the Pledged Stock upon
the merger, consolidation, reorganization, recapitalization or other
readjustment of the issuer thereof, or upon the exercise by such issuer of any
right, privilege, or option pertaining to any of the Pledged Stock, and, in
connection therewith, to deliver any of the Pledged Stock to any committee,
depository, transfer agent, registrar or other designated agency upon such terms
and conditions as it may determine, all without liability except to account for
property actually received by it; but Bank shall have no duty to exercise any of
the aforesaid rights, privileges or options and shall not be responsible for any
failure to do so or delay in so doing.

        Section 1.4. Voting Rights. Notwithstanding anything to the contrary
contained herein, and provided that no Event of Default exists and Pledgor has
received no notice from Bank of the occurrence of an event which, with the
expiration of any applicable cure period, would constitute an Event of Default
(other than events that have been cured), Pledgor shall retain the right to
receive normal cash dividend distributions, all voting rights, and all other
rights incident to ownership with respect to its Pledged Stock.

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        Section 1.5. Additional Security. In the event of a stock split, stock
dividend, or other issuance of shares by Holdings made on the basis of the
then-current ownership of Holdings stock, there shall be an appropriate
adjustment in the number of the Pledged Shares subject to this agreement.

        Section 1.6 Application of Proceeds Upon Default. The proceeds of any
such disposition or other action by Bank shall be applied as follows:

          (a) First, to the costs and expenses incurred in connection therewith
or incidental thereto or to the care or safekeeping of any of the Pledged Stock
or in any way relating to the rights of Bank hereunder, including broker’s fees
and reasonable attorneys’ fees and legal expenses;

          (b) Second, to the payment and performance of the Obligations, all in
such priority as Bank shall elect; and

          (c) Third, to the Pledgor, to the extent of any surplus proceeds.

        Section 1.7. Notice of Sale. Bank need not give more than ten (10) days’
notice of the time and place of any public sale or of the time after which a
private sale may take place, which notice the Pledgor hereby agrees shall be
reasonable.

        Section 1.8. Delivery of Stock. The Pledgor agrees to deliver to Bank,
simultaneously with the execution hereof, duly executed Stock Assignments and
Powers of Attorney (“Assignments”) for all shares of the Pledged Stock owned by
the Pledgor, together with such additional Assignments executed in blank as may
be requested from time to time by Bank.

ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PLEDGOR

        Section 2.1 Representations and Warranties of Pledgor. The Pledgor
represents and warrants that:

        (a) The Pledgor is a corporation duly incorporated, validly existing,
and in good standing under the laws of the jurisdiction of the incorporation;
has the corporate power and authority to own its assets and to transact its
business, and is duly qualified and in good standing under the laws of each
jurisdiction in which qualification is required.

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        (b) Pledgor is the legal and beneficial owner of all of the Pledged
Stock;

        (c) All of the shares of the Pledged Stock are owned by the Pledgor free
of any pledge, mortgage, hypothecation, lien, charge, encumbrance or security
interest in such shares or the proceeds thereof, except for the lien granted
hereunder;

        (d) Exhibit “A” hereto represents a true and correct reflection of the
Pledged Stock;

        (e) The Pledged Stock is not subject to any shareholder agreements,
voting agreements, buy-sell agreements, warrants, or options;

        (f) The execution and delivery of this Restated Agreement, and the
performance of its terms, will not result in any violation of any provision of,
or violate or constitute a default under the terms of, any agreement, indenture
or other instrument, license, judgment, decree, order, law, statute, ordinance
or other governmental rule or regulation, applicable to Pledgor or any property
of Pledgor; and

        (g) Upon delivery of the Pledged Stock to Bank or its agent, this
Restated Agreement shall create a valid lien upon and perfected security
interest in the Pledged Stock and the proceeds thereof, subject to no prior
security interest, lien, charge or encumbrance, or agreement purporting to grant
to any third party a security interest in the property or assets of the Pledgor
which would include the Pledged Stock.

        (h) No consent of any other person or entity and no authorization,
approval, or other action by, and no notice to or filing with, any governmental
authority or regulatory body is required; (a) for the perfection or maintenance
of the pledge, assignment, and security interest created hereby (including the
first priority nature of such pledge, assignment, and security interest); or
(b), except for any approvals required by the Illinois Department of Insurance,
for the exercise by the Bank of the voting or other rights provided for in this
Agreement or the remedies in respect of the Pledged Stock pursuant to this
Agreement.

        (i) There are no conditions precedent to the effectiveness of this
Agreement that have not been satisfied or waived.

        (j) Pledgor recognizes that Bank may be unable to effect a public sale
of all or a part of the Pledged Stock by reason of certain prohibitions
contained in the Securities Act of 1933, as amended, and applicable state
securities laws, but may be compelled to resort to one or more private sales to
a restricted group of purchasers who will be obliged to agree, among other
things, to acquire all or a part of the Pledged Stock for their own account, for
investment and not with a view to the distribution or resale thereof. Pledgor
acknowledges and agrees that any private sale so made may be at prices and on
other terms less favorable to the seller than if such Pledged Stock were sold at
public sale, and that Bank has no obligation to delay the sale of such Pledged
Stock for the period of time necessary to permit registration of such Pledged
Stock for public sale under any securities laws. If any consent, approval or
authorization of any federal, state, municipal or other governmental department,
agency or authority should be necessary to effectuate any sale or other
disposition of the Pledged Stock, or any partial sale or other disposition of
the Pledged Stock, Pledgor will execute all such applications and other
instruments as may be required in connection with securing any such consent,
approval or authorization, and will otherwise use its best efforts to secure the
same.

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ARTICLE III

COVENANTS OF PLEDGOR

        Section 3.1. Covenants of Pledgor. The Pledgor hereby covenants that,
until all of the Obligations have been paid and performed in full, it will not
sell, convey, or otherwise dispose of any of the Pledged Stock or any interest
therein or create, incur, or permit to exist any pledge, mortgage, lien, charge,
encumbrance or any security interest whatsoever in or with respect to any of the
Pledged Stock or the proceeds thereof, other than that created hereby. In
addition, Pledgor hereby covenants that, until all of the Obligations have been
paid and performed in full, it will not (and it will not permit any of the
affiliates that are also shareholders of Holdings), without the Bank’s prior
written consent, exercise its voting rights under the Pledged Stock to vote to
amend the Articles of Incorporation or Bylaws of Holdings in any manner which
would materially and adversely affect the rights associated with the Pledged
Stock, or to approve any merger or consolidation, or other corporate
reorganization of Holdings.

        Section 3.2. Defense of Claims. The Pledgor warrants, and will at the
Pledgor’s own expense, defend Bank’s right, title, special property and security
interest in and to the Pledged Stock against the claims of any person, firm,
corporation or other entity.

ARTICLE IV

MISCELLANEOUS

        Section 4.1. Notices Respecting Stock. The Pledgor will promptly deliver
to Bank all written notices, and will promptly give Bank written notice of any
other notices, received by it with respect to Pledged Stock, and Bank will
promptly give like notice to the Pledgor of any such notices received by Bank or
its nominee.

        Section 4.2. Further Assurances. The Pledgor shall at any time, and from
time to time, upon the written request of Bank, execute and deliver such further
documents and do such further acts and things as Bank may reasonably request to
effect the purposes of this Restated Agreement, including, without limitation,
delivering to Bank upon the occurrence of an Event of Default irrevocable
proxies with respect to the Pledged Stock in a form satisfactory to Bank. Until
receipt of such separate proxies, this Restated Agreement shall constitute the
Pledgor’s proxy to Bank or its nominee to vote all shares of Pledged Stock then
registered in the Pledgor’s name.

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        Section 4.3. Termination. Upon the payment and performance in full of
all Obligations and the payment and performance of all additional costs and
expenses of Bank as provided herein, this Restated Agreement shall terminate and
Bank shall deliver to the Pledgor, at the Pledgor’s expense, such of the Pledged
Stock in possession of Bank as shall not have been sold or otherwise applied
pursuant to this Restated Agreement.

        Section 4.4. No Duty of Bank. Beyond the exercise of reasonable care to
assure the safe custody of the Pledged Stock while held hereunder, Bank shall
have no duty or liability to preserve rights pertaining thereto and shall be
relieved of all responsibility for the Pledged Stock upon surrendering it or
tendering surrender of it to the Pledgor.

        Section 4.5. No Waivers. No course of dealing between the Pledgor and
Bank, nor any failure to exercise, nor any delay in exercising, any right, power
or privilege of Bank hereunder or otherwise shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, power or privilege
hereunder or thereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.

        Section 4.6. Cumulative Remedies. The rights and remedies provided
herein and in all other agreements, instruments, and documents delivered
pursuant hereto, are cumulative and are in addition to the and not exclusive of
any rights or remedies provided by law, including, but without limitation, the
rights and remedies of a secured party under the Uniform Commercial Code.

        Section 4.7. Severability. The provisions of this Restated Agreement are
severable, and if any clause or provision shall be held invalid or unenforceable
in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect only such clause or provision or part thereof in
such jurisdiction and shall not in any manner affect such clause or provision in
any other jurisdiction or any other clause or provision in this Restated
Agreement in any jurisdiction.

        Section 4.8. Notices Under Agreement. Any notice, demand or
correspondence required or permitted to be sent or delivered hereunder shall be
sent by hand delivery or registered or certified mail, return receipt requested,
and shall be deemed given (1) on the date of receipt, if hand-delivered, or (2)
2 days after being mailed by registered or certified mail, return receipt
requested, to the parties at the following addresses (or at such other address
for a party as shall be specified by a like notice):

  If to Pledgor:   Vesta Insurance Group, Inc.
3670 River Run Drive
Birmingham, Alabama 35243
ATTENTION: Norman W. Gayle, III  

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  If to Bank:   First Commercial Bank
800 Shades Creek Parkway
Birmingham, Alabama 35209
ATTENTION: James W. Brunstad  

        Section 4.9. Successors and Assigns. This Restated Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, personal representatives, successors and assigns.

        Section 4.10. Governing Law. This Restated Agreement shall be construed
in accordance with the substantive law of the United States and the State of
Alabama without regard to principles of conflicts of law, except to the extent
that the application of the law of another jurisdiction is required to give
effect to or to make enforceable any of the provisions hereof.

        IN WITNESS WHEREOF, Pledgor has caused this Restated Agreement to be
executed by its duly authorized officer as of the date first above written.

VESTA INSURANCE GROUP, INC.,
a Delaware corporation

By:
      ————————————————
Its:
      ————————————————

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EXHIBIT “A”

        Attached to and forming a part of that certain Amended and Restated
Stock Pledge Agreement dated as of September 30, 2004, by Vesta Insurance Group,
Inc., as Pledgor, to First Commercial Bank.

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Class   Cert. No.   No. of Shares   Issued To   Percentage of
Outstanding

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Common       2,500,000   Vesta Insurance Group, Inc.   __%

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EXHIBIT C
Credit Agreement
First Commercial Bank
Vesta Insurance Group, Inc.
September 30, 2004 / $30,000,000

NOTICE OF BORROWING

First Commercial Bank
800 Shades Creek Parkway
P.O. Box 11746
Birmingham, Alabama 35202-1746

Ladies and Gentlemen:

        The undersigned, Vesta Insurance Group, Inc. (the “Borrower”), refers to
the Amended and Restated Credit Agreement, dated as of September 30, 2004,
between the Borrower and you (the “Lender”) (as amended, modified or
supplemented from time to time, the “Credit Agreement”, the terms defined there
in being used herein as therein defined), and, pursuant to Section 2.2(a) of the
Credit Agreement, hereby gives you irrevocable notice that the Borrower requests
under the Credit Agreement, and to that end sets forth below the information
relating to such Borrowing (the “Proposed Borrowing”) as required by Section
2.2(a) of the Credit Agreement:

          The aggregate principal amount of the Proposed Borrowing is
$_______________.

          The Proposed Borrowing is requested to be made on ________________
(the “Borrowing Date”).

        The Borrower hereby certifies that the following statements are true on
and as of the date hereof and will be true on and as of the Borrowing Date:

          (A) Each of the representations and warranties contained in Article IV
of the Credit Agreement and in the other Credit Documents is and will be true
and correct on and as of each such date, with the same effect as if made on and
as of each such date, both immediately before and after giving effect to the
Proposed Borrowing and to the application of the proceeds therefrom (except to
the extent any such representation or warranty is expressly stated to have been
made as of a specific date, in which case such representation or warranty shall
be true and correct as of such date);

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          (B) No Default or Event of Default has occurred and is continuing or
would result from the Proposed Borrowing or from the application of the proceeds
therefrom; and

          (C) After giving effect to the Proposed Borrowing, the aggregate
principal amount of Loans outstanding will not exceed the Commitment.

Very Truly Yours,

VESTA INSURANCE GROUP, INC.,

By:
————————————————
Title:
————————————————

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EXHIBIT D-1
Credit Agreement
First Commercial Bank
Vesta Insurance Group, Inc.
September 30, 2004 / $30,000,000

FORM OF
COMPLIANCE CERTIFICATE

(GAAP Financial Statements)

        THIS CERTIFICATE is given pursuant to Section 5.3(a) of the Amended and
Restated Credit Agreement, dated as of September 30, 2004 (as amended, modified
or supplemented from time to time, the “Credit Agreement”, (the terms defined
therein being used herein as therein defined), between Vesta Insurance Group,
Inc. (the “Borrower”) and First Commercial Bank.

        The undersigned hereby certifies that:

        1. He is the duly elected [Chief Financial Officer] [Vice
President-Finance] [Treasurer] of the Borrower.(1)

        2. Enclosed with this Certificate are copies of the financial statements
of the Borrower and its Subsidiaries as of _______________, and for the
[_____-month period] [year] then ended, required to be delivered under Section
[5.1(a)] [5.1(b)] of the Credit Agreement. Such financial statements have been
prepared in accordance with Generally Accepted Accounting Principles [subject to
the absence of notes required by Generally Accepted Accounting principles and
subject to normal year-end audit adjustments](2) and fairly present the
financial condition of the Borrower and its Subsidiaries on a consolidated basis
as of the date indicated and the results of operation of the Borrower and its
Subsidiaries on a consolidated basis for the period covered thereby.

        3. The undersigned has reviewed the terms of the Credit Agreement and
has made, or caused to be made under the supervision of the undersigned, a
review in reasonable detail of the transactions and condition of the Borrower
and its Subsidiaries during the accounting period covered by such financial
statements.

        4. The examination described in paragraph 3 above did not disclose, and
the undersigned has no knowledge of the existence of, any Default or Event of
Default during or at the end of the accounting period covered by such financial
statements or as of the date of this Certificate. [, except as set forth below.

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

(1) Insert applicable bracketed language throughout the Certificate.

(2) Insert in the case of quarterly financial statements.

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        Describe here or in a separate attachment any exceptions to paragraph 4
above by listing, in reasonable detail, the nature of the Default or Event of
Default, the period during which it existed and the action that the Borrower has
taken or proposes to take with respect thereto.]

        5. Attached to this Certificate as Attachment A is a covenant compliance
worksheet reflecting the computation of the financial statements set forth in
Sections 6.1, 6.2, 6.4 and 6.5 of the Credit Agreement as of the last day of the
period covered by the financial statements enclosed herewith.

[SIGNATURES ON FOLLOWING PAGE]

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        IN WITNESS WHEREOF, the undersigned has executed and delivered this
Certificate as of the _______ day of _______________,

VESTA INSURANCE GROUP, INC.,

By:
————————————————
Name:
————————————————
Title:
————————————————

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EXHIBIT D-2
Credit Agreement
First Commercial Bank
Vesta Insurance Group, Inc.
September 30, 2004 / $30,000,000

FORM OF
COMPLIANCE CERTIFICATE

(Statutory Financial Statements)

        THIS CERTIFICATE is given pursuant to Section 5.3(a) of the Credit
Agreement, dated as of September 30, 2004 (as amended, modified or supplemented
from time to time, the “Credit Agreement”, the terms defined therein being used
herein as therein defined), between Vesta Insurance Group, Inc. (the “Borrower”)
and First Commercial Bank.

        The undersigned hereby certifies that:

        1. He is the duly elected [Chief Financial Officer] [Vice
President-Finance] [Treasurer] of the Borrower.(3)

        2. Enclosed with this Certificate are copies of the financial statements
of the Borrower and its Subsidiaries as of _______________, and for the
[_____-month period] [year] then ended, required to be delivered under Section
[5.2(a)] [5.2(b)] of the Credit Agreement. Such financial statements have been
prepared in accordance with Statutory Accounting Principles and fairly present
the financial condition of the Borrower and its Subsidiaries on a consolidated
basis as of the date indicated and the results of operation of the Borrower and
its Subsidiaries on a consolidated basis for the period covered thereby.

        3. Attached to this Certificate as Attachment A is a covenant compliance
worksheet reflecting the computation of the financial statements set forth in
Section 6.6 of the Credit Agreement as of the last day of the period covered by
the financial statements enclosed herewith.

[SIGNATURES ON FOLLOWING PAGE]

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(3) Insert applicable bracketed language throughout the Certificate.

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        IN WITNESS WHEREOF, the undersigned has executed and delivered this
Certificate as of the _______ day of _______________,

VESTA INSURANCE GROUP, INC.,

By:
————————————————
Name:
————————————————
Title:
————————————————

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