EMPLOYMENT AGREEMENT

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

RECITALS:

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

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

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

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

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

| | 1. | Employment
| | -- | ----------

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

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

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

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

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

| | (a) | Salary.
 Executive shall receive an annual base salary of $250,000.  The base salary shall be
paid in accordance with the  Company's  normal  payroll  practices.  The  Executive's
 base salary  shall be reviewed at least  annually for  consideration  of appropriate
merit increases and, once established, the base salary shall not be decreased during the
Term.
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| | (b) | Other
 Incentive  Plans.  The Executive  shall  participate in all annual and long-term  bonus
or incentive  plans or arrangements in which  substantially  all other  executives of the
Company of a comparable  level are eligible to participate from time to time,  including,
 without limitation,  the Company's Cash Bonus Plan. The Executive's  incentive
 compensation  opportunities under such plans and arrangements shall be determined from
time to time by the Compensation Committee.
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| | (c) | Equity
 Incentives.  The  Executive  shall be given  consideration,  at least  annually,  for
the grant of options to purchase shares of the common stock of the Company.  In addition,
 the Executive shall be given  consideration  to receive awards under any stock option,
 stock purchase or equity-based  incentive  compensation plan or arrangement adopted by
the Company from time to time for which  executives of the Company of a comparable  level
are eligible to participate.  The  Executive's  awards under such plans and arrangements
may be determined from time to time by the Compensation Committee.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | (i) | long-term
 disability insurance coverage in an amount and on terms consistent with the coverage in
place for          other management personnel of the Company;
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| | (ii) | continued
 provision of life insurance  coverage in an amount and on terms  consistent  with the
coverage in          place for other management personnel of the Company; and
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| | (iii) | provision
of the pension benefits provided under the Company's Post-Retirement Benefits Plan.
| | ----- | ---------------------------------------------------------------------------------------------

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

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

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

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

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

| | 4. | Termination.
| | -- | ------------

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

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

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

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

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

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

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

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

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

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

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

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

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

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

| | 6. | Successors,
Binding Agreement.
| | -- | ------------------------------

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[SIGNATURES ON FOLLOWING PAGE]

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

| |  | VESTA INSURANCE GROUP, INCBy: /s/ Norman W. Gayle III
Norman W. Gayle IIIPresident & CEO
| |  | ------------------------------------------------------------------------------------------------------

| |  | EXECUTIVEBy: /s/ Hopson B. Nance
| |  | ----------------------------------------------