<PAGE>

================================================================================
                                                                   EXHIBIT 10.25

                                CREDIT AGREEMENT

                                  by and among

                                 As Borrowers:

                          VESTA INSURANCE GROUP, INC.

                                      and

                            J.  GORDON GAINES, INC.

                                      and


                          As Lender and Secured Party:

                             FIRST COMMERCIAL BANK



                      $7,500,000 Revolving Credit Facility



                           Dated as of March 3, 2000



================================================================================


<PAGE>

                               TABLE OF CONTENTS

ARTICLE I

 DEFINITIONS........................................................  -1-
 1.1  Defined Terms.................................................  -1-
 1.2  Accounting Terms.............................................. -12-
 1.3  Other Terms; Construction..................................... -13-

ARTICLE 11

 AMOUNT AND TERMS OF THE LOANS...................................... -13-
 2.1  Commitment; Loans............................................. -13-
 2.2  Borrowings.................................................... -13-
 2.3  Note.......................................................... -14-
 2.4  Security...................................................... -14-
 2.5  Termination and Reduction of Commitment....................... -14-
 2.6  Mandatory and Voluntary Payments and Prepayments.............. -15-
 2.7  Interest...................................................... -15-
 2.8  Method of Payments; Computations.............................. -16-
 2.9  Recovery of Payments.......................................... -17-
2.10  Use of Proceeds............................................... -17-
2.11  Increased Costs; Change in Circumstances; Illegality; etc..... -17-
2.12  Taxes......................................................... -18-
2.13  Non-Usage Fee................................................. -19-

ARTICLE III

 CONDITIONS OF BORROWING............................................ -19-
 3.1  Conditions to Effectiveness of this Agreement................. -19-
 3.2  Conditions to All Loans....................................... -22-

ARTICLE IV

 REPRESENTATIONS AND WARRANTIES..................................... -23-
 4.1  Corporate Organization and Power.............................. -23-
 4.2  Authorization; Enforceability................................. -23-
 4.3  No Violation.................................................. -23-
 4.4  Governmental Authorization; Permits........................... -24-
 4.5  Litigation.................................................... -24-
 4.6  Taxes......................................................... -25-
 4.7  Subsidiaries.................................................. -25-



                                      (i)
<PAGE>

 4.8  Full Disclosure............................................... -25-
 4.9  Margin Regulations............................................ -25-
4.10  No Material Adverse Change.................................... -26-
4.11  Financial Matters............................................. -26-
4.12  Ownership of Properties....................................... -27-
4.13  ERISA......................................................... -27-
4.14  Environmental Matters......................................... -27-
4.15  Compliance With Laws.......................................... -28-
4.16  Regulated Industries.......................................... -28-
4.17  Insurance..................................................... -29-

ARTICLE V

 AFFIRMATIVE COVENANTS.............................................. -29-
 5.1  GAAP Financial Statements..................................... -29-
 5.2  Statutory Financial Statements................................ -30-
 5.3  Other Business and Financial Information...................... -31-
 5.4  Corporate Existence; Franchises; Maintenance of Properties.... -34-
 5.5  Compliance with Laws.......................................... -34-
 5.6  Payment of Obligations........................................ -34-
 5.7  Insurance..................................................... -34-
 5.8  Maintenance of Books and Records; Inspection.................. -35-
 5.9  Subsidiary Dividends.......................................... -35-
5.10  Further Assurances............................................ -35-

ARTICLE VI

 FINANCIAL COVENANTS................................................ -35-
 6.1  Statutory Consolidated Net Income............................. -35-
 6.2  Consolidated Net Income....................................... -36-
 6.3  Statutory Surplus............................................. -36-
 6.4  Risk-Based Capital............................................ -36-

ARTICLE VII

 NEGATIVE COVENANTS................................................. -37-
 7.1  Merger; Consolidation......................................... -37-
 7.2  Indebtedness.................................................. -37-
 7.3  Liens......................................................... -37-
 7.4  Disposition of Assets......................................... -40-
 7.5  Transactions with Affiliates.................................. -41-
 7.6  Lines of Business............................................. -41-
 7.7  Fiscal Year................................................... -41-


                                     (ii)
<PAGE>

 7.8  Accounting Changes............................................ -42-
 7.9  Dividends..................................................... -42-

ARTICLE VIII

 EVENTS OF DEFAULT.................................................. -42-
 8.1  Events of Default............................................. -42-
 8.2  Remedies; Termination of Commitment, Acceleration, etc........ -45-
 8.3  Remedies; Set-Off............................................. -45-

ARTICLE IX

 MISCELLANEOUS...................................................... -46-
 9.1  Fees and Expenses............................................. -46-
 9.2  Indemnification............................................... -46-
 9.3  Governing Law; Consent to Jurisdiction........................ -47-
 9.4  Arbitration; Preservation and Limitation of Remedies.......... -47-
 9.5  Notices....................................................... -48-
 9.6  Amendments, Waivers, etc...................................... -49-
 9.7  Participations................................................ -49-
 9.8  No Waiver..................................................... -50-
 9.9  Successors and Assigns........................................ -50-
9.10  Survival...................................................... -50-
9.11  Severability.................................................. -50-
9.12  Construction.................................................. -50-
9.13  Confidentiality............................................... -51-
9.14  Reliance by Lender............................................ -51-
9.15  Counterparts.................................................. -51-
9.16  Entire Agreement.............................................. -51-



                                     (iii)
<PAGE>

                                    EXHIBITS


Exhibit A           Form of Note
Exhibit B-1         Form of Assignment
Exhibit B-2         Form of Assignment of Dividends
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]



                                     (iv)
<PAGE>

                                CREDIT AGREEMENT

     THIS CREDIT AGREEMENT, dated as of the 3rd day of March, 2000 (this
"Agreement"), is made by and among VESTA INSURANCE GROUP, INC., a Delaware
corporation with its principal offices in Birmingham, Alabama ("Vesta"), and J.
GORDON GAINES, INC., a Delaware corporation with its principal offices in
______________________________ ("Gaines"; Vesta and Gaines may sometimes be
referred to singularly and collectively as "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 $7,500,000, 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 I

                                  DEFINITIONS

      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 Vesta to the Lender,
duly completed and signed by an Authorized Officer of Vesta and in form and
substance satisfactory to the Lender, listing any one or more accounts to which
Vesta may from time to time request the Lender to forward the proceeds of any
Loans made hereunder.

                                      -1-
<PAGE>

     "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.

     "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%).

     "Assignment" shall mean the Collateral Assignment of Certain Contract
Proceeds in the form attached hereto and marked Exhibit B-l, as amended and
                                                -----------
supplemented from time to time, to be executed by Gaines.

     "Assignment of Dividends" shall mean the Assignment of Dividends received
from  Gaines, in the form attached hereto as Exhibit B-2, as amended and
                                             -----------
supplemented from time to time, to be executed by Vesta.

     "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. (S)(S) 101 et seq., as amended from
time to time, and any successor statute.

                                      -2-
<PAGE>

     "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).

     "Birmingham Investment Group" shall mean that certain limited liability
company organized under the laws of Delaware under the name "Birmingham
Investment Group, L.L.C."

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

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

     "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.

     "Collateral" shall mean the assets of the Borrower, now owned or
hereinafter acquired, upon which a Lien or security interest is purported to be
created by the Assignment or the Assignment of Dividends.

     "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 Group" shall have the meaning given to such term in the
Consolidated Tax Allocation Agreement.

     "Consolidated Net Income" shall mean, for any period, net income (or loss)
for Vesta 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 Vesta 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

                                      -3-
<PAGE>

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 Vesta 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).

     "Contract" shall mean that certain Amended and Restated Management
Agreement, effective as of January 1, 1999, by and among Gaines and Vesta Fire
Insurance Corporation, Sheffield Insurance Corporation, and Vesta Insurance
Corporation (Alabama corporations), Vesta Lloyds Insurance Company, a Texas
Lloyds Company, The Hawaiian Insurance and Guaranty Company, Limited (a Hawaiian
corporation), The Shelby Insurance Company, Affirmative Insurance Company,
Insura Property and Casualty Insurance Company (Ohio corporations), and Shelby
Casualty Insurance Company (an Indiana corporation).

     "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 Assignment, the
Assignment of Dividends, the Unsecured Credit Facility, and all other
agreements, instruments, documents and certificates now or hereafter executed
and delivered to the Lender by or on behalf of Vesta 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.

     "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.

                                      -4-
<PAGE>

     "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, Vesta 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.

     "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 Vesta or any
ERISA Affiliate from a Multiemployer Plan that results in liability under
Section 4201 or 4204 of ERISA, or the receipt by Vesta 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 Vesta 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 Vesta 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 Vesta or any ERISA Affiliate to enforce Section 515 of ERISA, which
is not dismissed within thirty (30) days, (vi) the imposition upon Vesta 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 Vesta 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 Vesta 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 Vesta 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 Vesta 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:

                                      -5-
<PAGE>

     "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.

     "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" 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 Vesta 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.

                                      -6-
<PAGE>

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

     "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 Vesta
that, pursuant to the Consolidated Tax Allocation Agreement, may be retained by
Vesta and not paid over to any other member of the Consolidated Group.

     "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), (iv) all obligations of such Person to pay the deferred
purchase price of property or services, (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 Vesta 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 Vesta'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 Vesta 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.

                                      -7-
<PAGE>

     "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 Vesta's 8.525% Junior
Subordinated Deferrable Interest Debentures due January 15, 2027, issued
pursuant to the Indenture, dated as of January 31, 1997, between Vesta 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 Vesta or Vesta 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 Vesta or Vesta 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 January 31, 2002.

     "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.

                                      -8-
<PAGE>

     "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 therefore 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 Vesta or any ERISA Affiliate may
have any liability.

     "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.

                                      -9-
<PAGE>

     "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 Vesta having (after the elimination of intercompany accounts)
(i) assets constituting at least 10% of the total assets of Vesta and its
Subsidiaries on a consolidated basis, (ii) revenues constituting at least 10% of
the total revenues of Vesta and its Subsidiaries on a consolidated basis, or
(iii) net earnings constituting at least 10% of the total net earnings of Vesta
and its Subsidiaries on a consolidated basis, in each case as determined as of
the date of the financial statements of Vesta 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)).

     "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.

     "Statutory Consolidated Net Income" shall mean, for any period, net income
(or loss) for the VFIC and the other Insurance Subsidiaries for such period,
determined on a consolidated basis in accordance with Statutory Accounting
Principles.

                                      -10-
<PAGE>

     "Statutory Surplus" shall mean the total amount reported on line 27, page
3, column 1 of the Annual Statement, or an amount determined in a consistent
manner in accordance with Statutory Accounting Principles for any date other
than one as of which an Annual Statement is prepared. Notwithstanding the
foregoing, if the format of the Annual Statement is changed in future years so
that different information is contained in such line or such line no longer
exists, it is understood that the foregoing shall refer to information
consistent with that reported on the referenced line in the 1998 Annual
Statement.

     "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 Vesta.

     "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.

     "Unsecured Credit Facility" shall mean the Credit Agreement of even date
herewith between Vesta and Lender pursuant to which Lender has or shall make
available to Vesta an unsecured revolving credit facility up to $7,500,000.

     "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.

     "VFIC" shall mean Vesta Fire Insurance Corporation, an Alabama corporation.

                                      -11-
<PAGE>

     "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 1995 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 1995 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.


                                  ARTICLE 11

                         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 $7,500,000 (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 Commitment. Subject to
and on the terms and conditions of this Agreement, the Borrower may borrow,
repay and reborrow Loans.

                                      -12-
<PAGE>

      2.2 Borrowings.

          (a) In order to make a Borrowing, Vesta 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, if less, 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 Vesta, provided that the Lender shall not be
obligated under any circumstances to forward amounts to any account not listed
in an Account Designation Letter.  Vesta 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.

      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

                                      -13-
<PAGE>

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 an assignment by Gaines of
the proceeds under the Contract and the assignment of dividends and
distributions paid by Gaines to Vesta with respect to stock or any other
ownership interest in Gaines.  At Lender's request, each of Vesta and Gaines
will from time to time execute any and all financing statements, continuation
statements and 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 market value of the Collateral declines or the
Collateral is determined to be insufficient by a Governmental Authority having
jurisdiction over the Lender, the Commitment shall be reduced, or at the
Borrower's option, the Borrower may provide additional collateral, so that at
all times the Loans are secured to the extent required by Ala. Code (S) 5-5A-22
and regulations promulgated thereunder and 12 U.S.C. (S) 84 and regulations
promulgated thereunder as the same relate to lending restrictions on loans to
one borrower.

      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

                                      -14-
<PAGE>

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 five (5) 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 $500.00.
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.

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

               (i) in arrears on the last Business Day of each quarter of each
     calendar year; 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

                                      -15-
<PAGE>

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.

          (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 ongoing working capital for the Borrower.

      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

                                      -16-
<PAGE>

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.

          (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

                                      -17-
<PAGE>

(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.

      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, 2000, and shall be prorated
for partial calendar quarters.

                                      -18-
<PAGE>

                                  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 Assignment executed by Gaines;

               (iii) the Assignment of Dividends executed by Vesta;

               (iv)  payment of a one-time fee of three-eighths of one percent
          of the Commitment;

               (v)   a certificate, signed by the chief executive officer, vice
          president-finance or treasurer 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, 1998, and
          there exists no event, condition or state of facts that could
          reasonably be expected to result in a Material Adverse Change;

                                      -19-
<PAGE>

               (vi) 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
          (C) 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

               (vii) 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 and addressed
          to the Lender, and addressing such other matters as the Lender may
          reasonably request.

          (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

                                      -20-
<PAGE>

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, 1998, 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 disclose 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).

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

          (h) To the extent required under Ala. Code (S) 5-5A-22 (1996) and
regulations promulgated thereunder and 12 U.S.C. (S) 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

                                      -21-
<PAGE>

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:

      4.1 Corporate Organization and Power.  Each of Vesta 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

                                      -22-
<PAGE>

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 Vesta or any other Subsidiary,
or to transfer any of its assets or properties to Vesta 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 Vesta of this Agreement or any of the other Credit
Documents or the legality, validity or enforceability hereof or thereof.

          (b) Except as set forth in Schedule 4.4(b) attached hereto, each of
Vesta 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, Vesta 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 Alabama, Hawaii, Indiana, Ohio 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 Vesta,
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.

                                      -23-
<PAGE>

      4.6 Taxes.  Except as set forth in Schedule 4.6 attached hereto, each of
Vesta 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 Vesta 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 Vesta or any of its Subsidiaries,
and there is no unresolved claim by any Governmental Authority concerning or any
material tax liability of Vesta 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 Vesta 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.

      4.7 Subsidiaries.   Schedule 4.7 sets forth a list, as of the Effective
Date, of all of the Subsidiaries of Vesta and, as to each such Subsidiary, the
percentage ownership (direct and indirect) of Vesta 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 Vesta.

      4.8 Full Disclosure.   All factual information heretofore or
contemporaneously furnished to the Lender in writing by or on behalf of Vesta 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 Vesta 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 Vesta 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 Vesta 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 the Vesta's
filings with the Securities and Exchange Commission prior to the date of this
Agreement, there has been no Material

                                      -24-
<PAGE>

Adverse Change since December 31, 1998, and there exists no event, condition or
state of facts that could reasonably be expected to result in a Material Adverse
Change.

      4.11 Financial Matters.

           (a) Vesta has heretofore furnished to the Lender copies of (i) the
audited consolidated balance sheets of Vesta and its Subsidiaries as of December
31, 1998, 1997, and 1996, and the related statements of income, stockholders'
equity and cash flows for the fiscal years then ended, together with the opinion
of KPMG Peat Marwick thereon or PricewaterhouseCoopers, and (ii) the unaudited
consolidated balance sheet of the Borrower and its Subsidiaries as of September
30, 1999, and the related statements of income, stockholders' equity and cash
flows for the nine-month period then ended. Except as set forth in Schedule
4.11(a) attached hereto, such financial statements have been prepared in
accordance with Generally Accepted Accounting Principles (subject, with respect
to the unaudited financial statements, to the absence of notes required by
Generally Accepted Accounting Principles and to normal year-end audit
adjustments) and present fairly the financial condition of Vesta and its
Subsidiaries on a consolidated basis as of the respective dates thereof and the
consolidated results of operations of Vesta 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 Vesta or any of its
Subsidiaries of any nature whatsoever (whether absolute, contingent or otherwise
and whether or not due).

          (b) Vesta has heretofore furnished to the Lender copies of the Annual
Statements of each of the Insurance Subsidiaries as of December 31, 1998, 1997,
1996 and l995, 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.

                                      -25-
<PAGE>

          (c) Each of Vesta 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.

      4.12 Ownership of Properties.  Each of Vesta 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 Vesta 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 Vesta 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 Vesta 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
Vesta 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 Vesta or any of its Subsidiaries, has been contaminated by any
Hazardous Substance; and no portion of any real property, leased or owned, of
Vesta 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 Vesta or any of its Subsidiaries has been used as
or for a mine, a landfill, a dump or

                                      -26-
<PAGE>

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 Vesta 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 Vesta or any of its Subsidiaries.

          (c) All activities and operations of Vesta 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 Vesta 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, each of Vesta 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 Vesta 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 Vesta 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.

                                      -27-
<PAGE>

                                   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:

          (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, 2000, unaudited consolidated
and consolidating balance sheets of Vesta 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 Vesta 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, 1999,
(i) an audited consolidated balance sheet of Vesta and its Subsidiaries as of
the end of such fiscal year and audited consolidated statements of income,
stockholders' equity and cash flows for Vesta 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 Vesta 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 Vesta 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 Vesta 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

                                      -28-
<PAGE>

course of their audit examination, and (ii) an unaudited consolidating balance
sheet of Vesta and its Subsidiaries as of the end of such fiscal year and
unaudited consolidating statements of income, stockholders' equity and cash
flows for Vesta and its Subsidiaries for the fiscal year then ended, all in
reasonable detail.

      5.2 Statutory Financial Statements.  Vesta will deliver to the Lender:

          (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, 2000, 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, 1999, 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, 1999,
an unaudited consolidated balance sheet of Vesta and its Insurance Subsidiaries
as of the end of such fiscal year and unaudited consolidated statements of
income, stockholders' equity and cash flows for Vesta 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, 1999
(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

                                      -29-
<PAGE>

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.

      5.3 Other Business and Financial Information.  Vesta will deliver to the
Lender:

          (a) Concurrently with each delivery of the financial statements
described in Sections 5.1 and 5.2, 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, vice president-finance or
treasurer of Vesta, 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, 6.2 and 6.3 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 6.4 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, 1999, 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 Vesta
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 Vesta 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 Vesta or any of its Subsidiaries, including, without limitation, filings
seeking approval of transactions with Affiliates;

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

                                      -30-
<PAGE>

               (i) the occurrence of any Default or Event of Default, together
        with a written statement of the chief executive officer, chief financial
        officer or vice president-finance of Vesta specifying the nature of such
        Default or Event of Default, the period of existence thereof and the
        action that Vesta 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 Vesta 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 Vesta or any of its Subsidiaries from any
        Insurance Regulatory Authority or other Governmental Authority of (i)
        any written notice asserting any failure by Vesta or any of its
        Subsidiaries to be in compliance with applicable Requirements of Law or
        that threatens the taking of any action against Vesta 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 Vesta 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 Vesta specifying the details of
        such ERISA Event and the action that Vesta 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 Vesta or such ERISA
        Affiliate with respect to such ERISA Event:

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

                                      -31-
<PAGE>

               (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 Vesta setting forth the nature and period of
          existence thereof and the action that Vesta 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 Vesta, 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 Vesta, in either
case at Vesta'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 Vesta'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
Vesta or any of its Subsidiaries as the Lender may from time to time reasonably
request.

      5.4 Corporate Existence; Franchises; Maintenance of Properties.  Vesta
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.

      5.5 Compliance with Laws.  Vesta 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.  Vesta 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

                                      -32-
<PAGE>

attach thereto, and all lawful claims that, if unpaid, might become a Lien upon
any of the properties of Vesta or any of its Subsidiaries; provided, however,
that neither Vesta 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 Vesta or such Subsidiary is maintaining
adequate reserves with respect thereto in accordance with Generally Accepted
Accounting Principles.

      5.7 Insurance.  Vesta 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
Vesta 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.  Vesta 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 Vesta, the independent public accountants of Vesta and its
Subsidiaries (and by this provision Vesta 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.

      5.9 Subsidiary Dividends.  Vesta 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 Vesta 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 Vesta, or for Vesta to make any such principal or interest payments,
Vesta will forthwith exercise its best efforts and take all reasonable actions
permitted by law and necessary to obtain such approval.

      5.10 Further Assurances.  Vesta 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.

                                      -33-
<PAGE>

                                  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 Statutory Consolidated Net Income.  Vesta will not permit cumulative
Statutory Consolidated Net Income for any fiscal quarter then ending to be less
than the following amounts for the cumulative period corresponding thereto, with
dollars expressed in millions (calculated cumulatively for the period commencing
on October 1, 1999, and ending September 30, 2001, and for each four fiscal
quarter period ending thereafter):



         Fiscal        First   Second    Third   Fourth
          Year        Quarter  Quarter  Quarter  Quarter
         ------       -------  -------  -------  -------

          1999         $ N/A    $ N/A    $ N/A    $ 4.0
          2000          11.0     18.0     25.0     28.0
          2001          26.5     25.0     23.5     22.0


      6.2 Consolidated Net Income.  Vesta will not permit cumulative
Consolidated Net Income for any fiscal quarter then ending to be less than the
following amounts for the cumulative period corresponding thereto, with dollars
expressed in millions (calculated cumulatively for the period commencing on
October 1, l999, and ending on September 30, 2001, and for each four fiscal
quarter period ending thereafter):



         Fiscal        First   Second    Third   Fourth
          Year        Quarter  Quarter  Quarter  Quarter
         ------       -------  -------  -------  -------

          1999         $ N/A    $ N/A    $ N/A    $ 1.0
          2000           3.7      6.4      9.1     10.8
          2001          10.6     10.3     10.1      9.8


      6.3 Statutory Surplus.  Vesta will not permit Consolidated Statutory
Surplus for any fiscal quarter then ending to be less than the following amounts
for the period corresponding thereto, with dollars expressed in millions (it
being understood that any adjustments to Consolidated Statutory Surplus required
to be made by any Department of Insurance in an aggregate amount not in excess
of $25,000,000 shall not be taken into account in determining Vesta's compliance
with this section and that the amount by which any such adjustments for such
fiscal year exceed $25,000,000 shall be so taken into account):

                                      -34-
<PAGE>

        Fiscal          First   Second    Third   Fourth
         Year          Quarter  Quarter  Quarter  Quarter
        ------         -------  -------  -------  -------

         1999           $ N/A    $ N/A    $ N/A     $239
         2000             246      253      260      267
         2001             272      278      283      289


      6.4 Risk-Based Capital.  Vesta 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 at any
time from and after the Effective Date 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.  Vesta 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 Vesta or any Significant Subsidiary may merge
into or consolidate with any other Person so long as (i) the surviving
corporation is Vesta or a Wholly Owned Subsidiary (and in any event, if Vesta is
a party to such merger or consolidation, the surviving corporation shall be
Vesta) and (ii) immediately after giving effect thereto, no Default or Event of
Default would exist.

      7.2 Indebtedness.  Vesta 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.

      7.3 Liens.  Vesta 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"):

                                      -35-
<PAGE>

               (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;

               (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;

               (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 and United States government and agency
        securities of Vesta and its Subsidiaries, securing obligations incurred
        in connection with reverse repurchase transactions and other similar
        investment management transactions of such types and in such amounts as
        are customary for companies similar to Vesta in size and

                                      -36-
<PAGE>

        lines of business and that are entered into by Vesta and its
        Subsidiaries in the ordinary course of business;

               (viii) Purchase money Liens upon real or personal property used
        by Vesta 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 Vesta
        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 Vesta 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 Vesta or such Subsidiary, (ii) shall not exceed the lesser of (y) the
        fair market value of such property or (z) the cost thereof to Vesta or
        such Subsidiary and (iii) shall not encumber any other property of Vesta
        or any of its Subsidiaries;

               (ix) Liens on Vesta Margin Stock, to the extent the fair market
        value thereof exceeds 25% of the fair market value of the assets of
        Vesta and its Subsidiaries (including Vesta Margin Stock);

               (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 Vesta 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 Vesta and its

                                      -37-
<PAGE>

        Subsidiaries permitted under this Agreement, covering sums required to
        be deposited with such trustee or agent thereunder.

      7.4 Disposition of Assets.  Vesta 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 Vesta or any Subsidiary as lessee of any asset
that has been sold or transferred by Vesta or such Subsidiary to such Person, or
agree to do any of the foregoing, except for:

               (i) sales of Investments by the Insurance Subsidiaries in the
        ordinary course of business;

               (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 Vesta or its
        applicable Subsidiary in the ordinary course of business;

               (iii) the sale, lease or other disposition of assets by a
        Subsidiary of Vesta to Vesta 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 Vesta 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;

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

               (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 Vesta and its Subsidiaries on a
        consolidated basis, (2) 10% of the total revenues of Vesta and its
        Subsidiaries on a consolidated basis, and (3) 10% of the total net
        earnings of Vesta and its Subsidiaries on a consolidated basis, in each

                                      -38-
<PAGE>

        case as determined as of the date of the financial statements of Vesta
        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, Vesta 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 Vesta 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.

      7.5 Transactions with Affiliates.  Vesta 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 Vesta 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 Vesta or such Subsidiary;
provided, however, that nothing contained in this Section shall prohibit:

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

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

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

      7.6 Lines of Business.  Vesta 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 Vesta and its Subsidiaries on the date hereof or a business
reasonably related thereto.

      7.7 Fiscal Year.  Vesta 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) Vesta shall have given the Lender written notice of its
intention to change such ending date at least sixty (60) days

                                      -39-
<PAGE>

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.  Vesta 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.   Vesta 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.


                                 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) An "Event of Default" (as defined therein) shall occur under the
Unsecured Credit Facility;

          (c) The Borrower shall fail to observe, perform or comply with any
condition, covenant or agreement contained in any of Sections 2.11, 5.3(d)(i) or
5.4(i), Article VI, or Sections 7.1 through 7.4, inclusive, or Section 7.9;

          (d) Vesta 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 Vesta acquires knowledge thereof;

          (e) 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

                                      -40-
<PAGE>

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;

          (f) Vesta 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;

          (g) Vesta 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;

          (h) Any involuntary petition or case shall be filed or commenced
against Vesta 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;

          (i) 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) in excess of
$1,000,000 shall be entered or filed against Vesta 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 Vesta or any Subsidiary

                                      -41-
<PAGE>

pursuant thereto, or (iii) any action shall be legally taken by a judgment
creditor to levy upon assets of Vesta or any Subsidiary to enforce the same;

          (j) 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 Vesta or any ERISA
Affiliate;

          (k) 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;

          (l) Any one or more licenses, permits, accreditations or
authorizations of Vesta 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 Vesta 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;

          (m) Any of the following shall occur: (i) any Person or group of
Persons acting in concert as a partnership or other group (other than the
Birmingham Investment 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 Vesta representing 30%
or more of the combined voting power of the then outstanding securities of Vesta
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 Vesta's common stock; (ii) the Board of Directors of Vesta shall
cease to consist of a majority of the individuals who constituted the Board of
Directors of Vesta 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 Vesta as of the date hereof (or their replacements
approved as herein required); or (iii) Vesta 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 Vesta, or the issuance or sale by VFIC,
of any capital stock of VFIC to any one or more other Subsidiaries of Vesta); or

          (n) The Contract shall be terminated for any reason.

      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:

                                      -42-
<PAGE>

          (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 the Unsecured Credit Facility to be terminated and
exercise any and all remedies provided for thereunder.

          (c) 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

          (d) 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.

                                      -43-
<PAGE>

                                  ARTICLE IX

                                 MISCELLANEOUS

      9.1 Fees and Expenses.  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.

      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.

                                      -44-
<PAGE>

      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.

      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.

                                      -45-
<PAGE>

          (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:

          (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.

                                      -46-
<PAGE>

      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.

          (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 Vesta 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

                                      -47-
<PAGE>

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.

      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 Vesta 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

                                      -48-
<PAGE>

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.

      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]

                                      -49-
<PAGE>

     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:   _________________________________
                              Its:  _________________________________


                              J.  GORDON GAINES, INC.,
                              a Delaware corporation


                              By:   _________________________________
                              Its:  _________________________________



                              LENDER:

                              FIRST COMMERCIAL BANK,
                              an Alabama banking corporation


                              By:   _________________________________
                              Its:  _________________________________

                                      -50-