<PAGE>

                                                                    Exhibit 10.6
                                                                    ------------

                                                                     [Unsecured]
                      AMENDED AND RESTATED CREDIT AGREEMENT

                                 by and between

                                  As Borrower:

                           VESTA INSURANCE GROUP, INC.

                                       and

                                   As Lender:

                              FIRST COMMERCIAL BANK

                      $15,000,000 Revolving Credit Facility

                             Dated as of May 1, 2001

<PAGE>

                                TABLE OF CONTENTS

ARTICLE I

     DEFINITIONS       -1-
     1.1      Defined Terms.    -1-
     1.2      Accounting Terms. -11-
     1.3      Other Terms; Construction.-12-

ARTICLE 11

     AMOUNT AND TERMS OF THE LOANS      -12-
     2.1      Commitment; Loans.        -12-
     2.2      Borrowings.       -12-
     2.3      Note.    -13-
     2.4      [Intentionally Omitted]   -13-
     2.5      Termination and Reduction of Commitment.    -13-
     2.6      Mandatory and Voluntary Payments and Prepayments.    -14-
     2.7      Interest.         -14-
     2.8      Method of Payments; Computations.  -15-
     2.9      Recovery of Payments.     -15-
     2.10     Use of Proceeds.  -16-
     2.11     Increased Costs; Change in Circumstances; Illegality; etc.    -16-
     2.12     Taxes.   -17-
     2.13     Non-Usage Fee.    -18-

ARTICLE III

     CONDITIONS OF BORROWING    -18-
     3.1      Conditions to Effectiveness of this Agreement.       -18-
     3.2      Conditions to All Loans.  -20-

ARTICLE IV

     REPRESENTATIONS AND WARRANTIES     -21-
     4.1      Corporate Organization and Power.  -21-
     4.2      Authorization; Enforceability.     -21-
     4.3      No Violation.     -21-
     4.4      Governmental Authorization; Permits.        -22-
     4.5      Litigation.       -22-
     4.6      Taxes.   -22-
     4.7      Subsidiaries.     -23-
     4.8      Full Disclosure.          -23-

<PAGE>


     4.9      Margin Regulations.       -23-
     4.10     No Material Adverse Change.        -23-
     4.11     Financial Matters.        -24-
     4.12     Ownership of Properties.  -25-
     4.13     ERISA.   -25-
     4.14     Environmental Matters.    -25-
     4.15     Compliance With Laws.     -26-
     4.16     Regulated Industries.     -26-
     4.17     Insurance.        -26-

ARTICLE V

     AFFIRMATIVE COVENANTS      -27-
     5.1      GAAP Financial Statements.         -27-
     5.2      Statutory Financial Statements.    -28-
     5.3      Other Business and Financial Information.   -29-
     5.4      Corporate Existence; Franchises; Maintenance of Properties.   -31-
     5.5      Compliance with Laws.     -31-
     5.6      Payment of Obligations .  -32-
     5.7      Insurance.        -32-
     5.8      Maintenance of Books and Records; Inspection.        -32-
     5.9      Subsidiary Dividends.     -32-
     5.10     Further Assurances.       -33-

ARTICLE VI

     FINANCIAL COVENANTS
              -33-
     6.1      Statutory Consolidated Net Income. -33-
     6.2      Consolidated Net Income.  -33-
     6.3      Statutory Surplus.        -34-
     6.4      Risk-Based Capital.       -34-

ARTICLE VII

     NEGATIVE COVENANTS         -34-
     7.1      Merger; Consolidation.    -34-
     7.2      Indebtedness.     -34-
     7.3      Liens.   -35-
     7.4      Disposition of Assets.    -37-
     7.5      Transactions with Affiliates.      -38-
     7.6      Lines of Business.        -39-
     7.7      Fiscal Year.      -39-
     7.8      Accounting Changes.       -39-
     7.9      Dividends.        -39-


<PAGE>

ARTICLE VIII

     EVENTS OF DEFAULT -39-
     8.1      Events of Default.        -39-
     8.2      Remedies; Termination of Commitment, Acceleration, etc.       -42-
     8.3      Remedies; Set-Off.        -42-

ARTICLE IX

     MISCELLANEOUS     -43-
     9.1      Fees and Expenses.        -43-
     9.2      Indemnification.          -43-
     9.3      Governing Law; Consent to Jurisdiction.     -44-
     9.4      Arbitration; Preservation and Limitation of Remedies.         -44-
     9.5      Notices.          -45-
     9.6      Amendments, Waivers, etc.          -46-
     9.7      Participations.   -46-
     9.8      No Waiver.        -47-
     9.9      Successors and Assigns.   -47-
     9.10     Survival.         -47-
     9.11     Severability.     -47-
     9.12     Construction.     -47-
     9.13     Confidentiality.          -48-
     9.14     Reliance by Lender.       -48-
     9.15     Counterparts.     -48-
     9.16     Entire Agreement.         -48-


<PAGE>

                               EXHIBITS

Exhibit A             Form of Note
Exhibit B             Form of Notice of Borrowing
Exhibit C-1           Form of Compliance Certificate (for Section 5.1)
Exhibit C-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]

<PAGE>

                      AMENDED AND RESTATED CREDIT AGREEMENT

     THIS AMENDED AND RESTATED CREDIT AGREEMENT, dated as of the 1st day of May,
2001 (this "Agreement"), is made by and among VESTA INSURANCE GROUP, INC., a
Delaware corporation with its principal offices in Birmingham, Alabama (the
"Borrower") and FIRST COMMERCIAL BANK, an Alabama banking corporation (the
"Lender").

RECITALS:
     The Borrower has requested that the Lender make available to the Borrower a
revolving credit facility of up to $15,000,000, the proceeds of which are to be
used for general corporate purposes, including ongoing working capital for the
Borrower, all on the terms and subject to the conditions hereinafter set forth.

     Lender is willing to make the credit facility available to Borrower for
said purposes upon the terms and subject to the conditions hereinafter set
forth.

     This Agreement amends and restates in its entirety that certain Credit
Agreement dated as of March 3, 2000.

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

     "Actual/360 Basis" shall mean a method of computing interest or other
charges hereunder on the basis of an assumed year of 360 days for the actual
number of days elapsed, meaning that interest or other charges accrued for each
day will be computed by multiplying the

<PAGE>


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%).

     "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.Sections 101 et seq., as amended from
time to time, and any successor statute.

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

     "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."

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

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

<PAGE>

     "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.

     "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 Borrower and its Subsidiaries for such period, determined on a consolidated
basis in accordance with Generally Accepted Accounting Principles.

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

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

<PAGE>

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

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

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

     "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.

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

     "ERISA Event" shall mean any of the following with respect to a Plan or
Multiemployer Plan, as applicable: (i) a Reportable Event with respect to a Plan
or a Multiemployer Plan, (ii) a complete or partial withdrawal by Borrower or
any ERISA Affiliate from a Multiemployer Plan that results in liability under
Section 4201 or 4204 of ERISA, or the receipt by Borrower or any ERISA Affiliate
of notice from a Multiemployer Plan that it is in reorganization or insolvency
pursuant to Section 4241 or 4245 of ERISA or that it intends to terminate or has
terminated under Section 4041A of ERISA, (iii) the distribution by Borrower or
any ERISA Affiliate under Section 4041 or 4041A of ERISA of a notice of intent
to terminate any Plan or the taking of any action to terminate any Plan, (iv)
the commencement of proceedings by the PBGC under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan, or the
receipt by Borrower or any ERISA Affiliate of a notice from any Multiemployer
Plan that such action has been taken by the PBGC with respect to such
Multiemployer Plan, (v) the institution of a proceeding by any fiduciary of any
Multiemployer Plan against Borrower or any ERISA Affiliate to enforce Section
515 of ERISA, which is not dismissed within thirty (30) days, (vi) the
imposition upon Borrower or any ERISA Affiliate of any liability under Title IV
of ERISA, other than for PBGC premiums due but not delinquent under Section 4007
of ERISA, or the imposition or threatened imposition of any Lien upon any assets
of Borrower or any ERISA Affiliate as a result of any alleged failure to comply
with the Internal Revenue Code or ERISA in

<PAGE>

respect of any Plan, (vii) the engaging in or otherwise becoming liable for a
nonexempt Prohibited Transaction by Borrower or any ERISA Affiliate, (viii) a
violation of the applicable requirements of Section 404 or 405 of ERISA or the
exclusive benefit rule under Section 401(a) of the Internal Revenue Code by any
fiduciary of any Plan for which Borrower or any of its ERISA Affiliates may be
directly or indirectly liable or (ix) the adoption of an amendment to any Plan
that, pursuant to Section 401(a)(29) of the Internal Revenue Code or Section 307
of ERISA, would result in the loss of tax-exempt status of the trust of which
such Plan is a part if Borrower or an ERISA Affiliate fails to timely provide
security to such Plan in accordance with the provisions of such sections.

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

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

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

     "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.

     "Floating Rate" shall mean the Base Rate plus one quarter of one percent
(.25%).

     "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

<PAGE>

Financial Accounting Standards Board (or, to the extent not so set forth in such
statements, opinions and pronouncements, as generally followed by entities
similar in size to Borrower and engaged in generally similar lines of business),
consistently applied and maintained and in conformity with those used in the
preparation of the most recent financial statements of the Borrower referred to
in Section 4.11(a).

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

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

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

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

     "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

<PAGE>

therefor), or upon the occurrence of any event, mature or are mandatorily
redeemable, or are redeemable at the option of the holder thereof, in whole or
in part, at any time prior to the Maturity Date, (viii) all Contingent
Obligations of such Person and (ix) all indebtedness referred to in clauses (i)
through (viii) above secured by any Lien on any property or asset owned or held
by such Person regardless of whether the indebtedness secured thereby shall have
been assumed by such Person or is nonrecourse to the credit of such Person, and
with respect to Borrower and its Subsidiaries shall include, without limitation
(but without duplication), the Junior Subordinated Debentures, the beneficial
interests of the Trust in the Junior Subordinated Debentures, and Borrower's
guarantee to the holders of the Trust Securities of all of the Trust's
obligations under the Trust Securities.
     "Insurance Regulatory Authority" shall mean, with respect to any Insurance
Subsidiary, the insurance department or similar Governmental Authority charged
with regulating insurance companies or insurance holding companies, in its state
of domicile and, to the extent that it has regulatory authority over such
Insurance Subsidiary, in each other jurisdiction in which such Insurance
Subsidiary conducts business or is licensed to conduct business.

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

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

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

     "Lender" shall mean First Commercial Bank and its successors and assigns.

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

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

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

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

<PAGE>

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

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

     "Maturity Date" shall mean April 30, 2003.
     "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 ERISA to which the Borrower or any ERISA Affiliate
makes, is making or is obligated to make contributions or has made or been
obligated to make contributions.

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

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

     "Note" shall mean the promissory note of the Borrower in substantially the
form of Exhibit A, together with any amendments, modifications and supplements
        ---------
thereto, substitutions 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.

<PAGE>

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

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

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

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

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

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

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

     "Secured Credit Facility" shall mean the Credit Agreement of even date
herewith among Borrower, J. Gordon Gaines, Inc., and Lender pursuant to which
Lender has or shall make available to Borrower a secured revolving credit
facility up to $15,000,000.

<PAGE>

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

     "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; provided, however, for purposes of Article VI below, the following
items shall be added back to net income: (a) all management fees paid to J.
Gordon Gaines, Inc., by VFIC and the other Insurance Subsidiaries under 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) and (b) net income of American Founders Financial Corporation,
attributable to Borrower's ownership therein.

     "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

<PAGE>

ownership or beneficial interests, in the case of a Person not a corporation, is
at the time, directly or indirectly, owned or controlled by such Person and one
or more of its other Subsidiaries or a combination thereof (irrespective of
whether, at the time, securities of any other class or classes of any such
corporation or other Person shall or might have voting power by reason of the
happening of any contingency). When used without reference to a parent entity,
the term "Subsidiary" shall be deemed to refer to a Subsidiary of Borrower.

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

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

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

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

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

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

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

     "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,

<PAGE>

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 $15,000,000 (as such amount may be permanently reduced in accordance
with Section 2.5(b) the "Commitment"), provided that no Borrowing of Loans shall
be made if, immediately after giving effect thereto, the aggregate principal
amount of Loans outstanding at such time would exceed the Commitment. Subject to
and on the terms and conditions of this Agreement, the Borrower may borrow,
repay and reborrow Loans.

     2.2 Borrowings.

          (a) In order to make a Borrowing, Borrower will give the Lender
written notice not later than 10:00 a.m., Birmingham time, one (1) Business Day
prior to each Borrowing; provided, however, that a request for a Borrowing to be
made on the Effective Date may, at the discretion of the Lender, be given later
than the time specified therefor as set forth hereinabove. Each such notice
(each, a "Notice of Borrowing") shall be irrevocable, shall be given in the form
of Exhibit B 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).

<PAGE>

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

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

     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, it being expressly understood that the Note is
unsecured.

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

     2.4 [Intentionally Omitted]

     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,

<PAGE>

an integral multiple thereof. The amount of any termination or reduction made
under this subsection (b) may not thereafter be reinstated.

     2.6 Mandatory and Voluntary Payments and Prepayments.

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

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

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

     2.7 Interest.

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

<PAGE>

               (i) in arrears on the fifth calendar day of each month commencing
          on June 5, 2001; provided, that in the event the Loan is repaid or
          prepaid in full and the Commitment has been terminated, then accrued
          interest in respect of the Loan shall be payable together with such
          repayment or prepayment on the date thereof; and

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

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

     2.8 Method of Payments; Computations.

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

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

<PAGE>

          (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 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.

<PAGE>

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

     2.12 Taxes.

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

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

          (c) The Lender agrees that if it subsequently recovers, or receives a
permanent net tax benefit with respect to, any amount of Taxes (i) previously
paid by it and as to which it has been indemnified by or on behalf of the
Borrower or (ii) previously deducted by the Borrower (including, without
limitation, any Taxes deducted from any additional sums payable under clause (i)
of subsection (a) above), the Lender shall reimburse the Borrower to the extent
of the amount of any such recovery or permanent net tax benefit (but only to the
extent of indemnity payments made, or additional amounts paid, by or on behalf
of the Borrower under this Section 2.12 with respect to the Taxes giving rise to
such recovery or tax benefit); provided, however, that the Borrower, upon the
request of the Lender, agrees to repay to the Lender the

<PAGE>

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 June 30, 2001, and shall be prorated for partial calendar
quarters.

                                   ARTICLE III

                            CONDITIONS OF BORROWING

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

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

               (i) the Note in the amount of the Commitment and duly
          completed and executed by the Borrower;
               (ii) payment of a one-time fee of three-eighths of one percent of
          the Commitment;

               (iii) 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

<PAGE>

          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, 2000, and
          there exists no event, condition or state of facts that
          could reasonably be expected to result in a Material Adverse
          Change;

               (iv) 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

               (v) 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.

<PAGE>

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

          (d) Since December 31, 2000, 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) 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:

<PAGE>

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

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

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

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

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

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

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

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

<PAGE>

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

     4.4 Governmental Authorization; Permits.

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

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

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

<PAGE>

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

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

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

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

     4.9 Margin Regulations. Neither Borrower nor any of its Subsidiaries is
engaged principally, or as one of its important activities, in the business of
extending credit for the

<PAGE>

purpose of purchasing or carrying Margin Stock. No proceeds of the Loans will be
used, directly or indirectly, to purchase or carry any Margin Stock (except for
purchases by Borrower of outstanding shares of its capital stock made in
compliance with the applicable provisions of Regulations G, T, U and X), to
extend credit for such purpose or for any other purpose that would violate or be
inconsistent with Regulations G, T, U or X or any provision of the Exchange Act.

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

          (b) Borrower has heretofore furnished to the Lender copies of the
Annual Statements of each of the Insurance Subsidiaries as of December 31, 2000,
1999 and l998, 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

<PAGE>

statutory liabilities), no Insurance Subsidiary had, as of the date of its
respective Historical Statutory Statements, any material liabilities or
obligations of any nature whatsoever (whether absolute, contingent or otherwise
and whether or not due) that, in accordance with Statutory Accounting
Principles, would have been required to have been disclosed or provided for in
such Historical Statutory Statements. All books of account of each Insurance
Subsidiary fully and fairly disclose all of its material transactions,
properties, assets, investments, liabilities and obligations, are in its
possession and are true, correct and complete in all material respects.

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

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

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

<PAGE>

     4.14 Environmental Matters.

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

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

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

     4.15 Compliance With Laws. Except as set forth in Schedule 4.15 attached
hereto, each of Borrower and its Subsidiaries has timely filed all material
reports, documents and other materials required to be filed by it under all
applicable Requirements of Law with any Governmental Authority, has retained all
material records and documents required to be retained by it under all
applicable Requirements of Law, and is otherwise in compliance with all
applicable Requirements of Law in respect of the conduct of its business and the
ownership and operation of its properties, except for such Requirements of Law
the failure to comply with which, individually or in the aggregate, would not be
reasonably likely to have a Material Adverse Effect.

<PAGE>

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

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

<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 June 30, 2001, unaudited consolidate87d
and consolidating balance sheets of Borrower and its Subsidiaries as of the end
of such fiscal quarter and unaudited consolidated and consolidating statements
of income, stockholders' equity and cash flows for Borrower and its Subsidiaries
for the fiscal quarter then ended and for that portion of the fiscal year then
ended, in each case setting forth comparative consolidated figures as of the end
of and for the corresponding period in the preceding fiscal year, all prepared
in accordance with Generally Accepted Accounting Principles (subject to the
absence of notes required by Generally Accepted Accounting Principles and
subject to normal year-end audit adjustments) applied on a basis consistent with
that of the preceding quarter or containing disclosure of the effect on the
financial condition or results of operations of any change in the application of
accounting principles and practices during such quarter; and

          (b) As soon as available and in any event within 120 days after the
end of each fiscal year, beginning with the fiscal year ended December 31, 2001,
(i) an audited consolidated balance sheet of Borrower and its Subsidiaries as of
the end of such fiscal year and audited consolidated statements of income,
stockholders' equity and cash flows for Borrower and its Subsidiaries for the
fiscal year then ended, including the applicable notes, in each case setting
forth comparative figures as of the end of and for the preceding fiscal year,
certified by the independent certified public accounting firm regularly retained
by Borrower or another independent certified public accounting firm of
recognized national standing reasonably acceptable to the Lender, together with
(y) a report thereon by such accountants that is not qualified as to going
concern or scope of audit and to the effect that such financial statements
present fairly the consolidated financial condition and results of operations of
Borrower and its Subsidiaries as of the dates and for the periods indicated in
accordance with generally accepted accounting principles applied on a basis
consistent with that of the preceding year or containing disclosure of the
effect on the financial position or results of operations of any change in the
application of accounting principles and practices during such year, and (z) a
report by such accountants to the effect that, based on and in connection with
their examination of the financial statements of Borrower and its Subsidiaries,
they obtained no knowledge of the occurrence or existence of any Default or
Event of Default relating to accounting or financial reporting matters, or a
statement specifying the nature and period of existence of any such Default or
Event of Default disclosed by their audit; provided, however, that such
accountants shall not be liable by reason of the failure to obtain knowledge of
any Default or Event of Default that would not be

<PAGE>

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

     5.2 Statutory Financial Statements. Borrower 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 June 30, 2001, 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, 2001, 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, 2001,
an unaudited consolidated balance sheet of Borrower and its Insurance
Subsidiaries as of the end of such fiscal year and unaudited consolidated
statements of income, stockholders' equity and cash flows for Borrower and its
Insurance Subsidiaries for the fiscal year then ended, in each case setting
forth comparative consolidated figures as of the end of and for the preceding
fiscal year, all prepared in accordance with Statutory Accounting Principles
applied on a basis consistent with that of the preceding year or containing
disclosure of the effect on the financial condition or results of operations of
any change in the application of accounting principles and practices during such
year; and

          (d) As soon as available and in any event within 155 days after the
end of each fiscal year, beginning with the fiscal year ended December 31, 2001
(but only if and to the extent required by the applicable Insurance Regulatory
Authority with regard to any Insurance Subsidiary), a certification by the
independent certified public accounting firm referred to in Section 5. l(b) as
to the Annual Statement of each such Insurance Subsidiary as of the end of such
fiscal year and for the fiscal year then ended, together with a report thereon
by such accountants that is not qualified as to going concern or scope of audit
and to the effect that such financial statements present fairly the consolidated
financial condition and results of operations of such Insurance Subsidiary as of
the date and for the period indicated in accordance with statutory accounting
principles applied on a basis consistent with that of the preceding year or

<PAGE>

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. Borrower 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 C-1 (in the case of the financial statements described in Section 5.1)
-----------
or Exhibit C-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 Borrower, together, in the case of the financial statements
described in Section 5.1, with a Covenant Compliance Worksheet reflecting the
computation of the financial covenants set forth in Sections 6.1, 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, 2001, a copy of each
Insurance Subsidiary's "Statement of Actuarial Opinion" (or equivalent
information should the relevant Insurance Regulatory Authority not require such
a statement) as to the adequacy of such Insurance Subsidiary's loss reserves for
such fiscal year, together with a copy of its management discussion and analysis
in connection therewith, each in the format prescribed by the applicable
insurance laws of such Insurance Subsidiary's jurisdiction of domicile;

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

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

                    (i) the occurrence of any Default or Event of
               Default, together with a written statement of the chief
               executive officer,

<PAGE>

               chief financial officer or vice president-finance of
               Borrower specifying the nature of such Default or Event
               of Default, the period of existence thereof and the
               action that Borrower has taken and proposes to take
               with respect thereto,

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

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

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

                    (v) any other matter or event that has, or would
               be reasonably likely to have, a Material Adverse
               Effect, together with

<PAGE>

               a written statement of the chief executive officer,
               chief financial officer or vice president-finance of
               Borrower setting forth the nature and period of
               existence thereof and the action that Borrower has
               taken and proposes to take with respect thereto,

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

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

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

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

     5.6 Payment of Obligations. Borrower will, and will cause each of its
Subsidiaries to, (i) pay all liabilities and obligations as and when due
(subject to any applicable subordination provisions), except to the extent
failure to do so would not be reasonably likely to have a Material Adverse
Effect, and (ii) pay and discharge all taxes, assessments and governmental
charges or levies imposed upon it, upon its income or profits or upon any of its
properties, prior to the date on which penalties would attach thereto, and all
lawful claims that, if unpaid, might become a Lien upon any of the properties of
Borrower or any of its Subsidiaries; provided, however, that neither Borrower
nor any of its Subsidiaries shall be required to pay any such tax,

<PAGE>

assessment, charge, levy or claim that is being contested in good faith and by
proper proceedings and as to which Borrower or such Subsidiary is maintaining
adequate reserves with respect thereto in accordance with Generally Accepted
Accounting Principles.
     5.7 Insurance. Borrower will, and will cause each of its Subsidiaries to,
maintain with financially sound and reputable insurance companies insurance with
respect to its assets, properties and business, against such hazards and
liabilities, of such types and in such amounts, as is customarily maintained by
companies in the same or similar businesses similarly situated; provided that
Borrower and its Subsidiaries may self-insure against risks consistent with
customary industry practices for companies in the same or similar businesses, of
similar size and with similar risk parameters.

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

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

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

<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. Borrower 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 April 1, 2001, and ending April 30, 2003, and for each four fiscal quarter
period ending thereafter):

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

  2001      $1        $3        $7        $12
  2002      $13       $15       $15       $16
  2003      $18       $20       N/A       N/A

     6.2 Consolidated Net Income. Borrower 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 June
30, 2001, and ending March 31, 2003, and for each four fiscal quarter period
ending thereafter):

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

2001       $2        $6        $10       $14
2002       $14       $14       $16       $20
2003       $22       $24       N/A       N/A

     6.3 Statutory Surplus. Borrower 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 Borrower'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):

Fiscal    First    Second    Third     Fourth

<PAGE>

Year     Quarter   Quarter   Quarter   Quarter
------   -------   -------   -------   -------
2001      $ 276     $ 278     $ 282     $ 287
2002      $ 289     $ 293     $ 297     $ 303
2003      $ 307     $ 313       N/A       N/A

     6.4 Risk-Based Capital. Borrower will not permit "total adjusted capital"
(within the meaning of the Risk-Based Capital for Insurers Model Act as
promulgated by the NAIC as of the date hereof (the "Model Act")) of VFIC 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. Borrower will not, and will not permit or cause
any of its Significant Subsidiaries to, liquidate, wind up or dissolve, or enter
into any consolidation, merger or other combination, or agree to do any of the
foregoing; provided, however, that Borrower or any Significant Subsidiary may
merge into or consolidate with any other Person so long as (i) the surviving
corporation is Borrower or a Wholly Owned Subsidiary (and in any event, if
Borrower is a party to such merger or consolidation, the surviving corporation
shall be Borrower) and (ii) immediately after giving effect thereto, no Default
or Event of Default would exist.

     7.2 Indebtedness. Except for the Secured Credit Facility, Borrower will not
create, incur, assume or suffer to exist, and will not permit or cause any of
its Subsidiaries to create, incur, or knowingly assume or suffer to exist, any
Indebtedness that ranks senior, other than Indebtedness secured by a Permitted
Lien, 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. Borrower will not, and will not permit or cause any of its
Subsidiaries to, directly or indirectly, make, create, incur, assume or suffer
to exist, or enter into or suffer to exist any agreement or restriction that
prohibits or conditions the creation, incurrence or assumption of, any Lien upon
or with respect to any part of its property or assets, whether now owned or
hereafter acquired, or agree to do any of the foregoing, other than the
following (collectively, "Permitted Liens"):

               (i) Liens in favor of the Lender:

<PAGE>

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

               (viii) Purchase money Liens upon real or personal
          property used by Borrower or any of its Subsidiaries in the
          ordinary course of its business, securing Indebtedness
          incurred solely to pay all or a portion of the purchase
          price thereof

<PAGE>

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

               (ix) Liens on Borrower Margin Stock, to the extent the
          fair market value thereof exceeds 25% of the fair market
          value of the assets of Borrower and its Subsidiaries
          (including Borrower 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
          Borrower or any of its Subsidiaries, all easements, rights
          of way, licenses and similar encumbrances on title that do
          not materially impair the use of such property for its
          intended purposes; and

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

     7.4 Disposition of Assets. Borrower will not, and will not permit or cause
any of its Subsidiaries to, sell, assign, lease, convey, transfer or otherwise
dispose of (whether in one or a series of transactions) all or any portion of
its assets, business or properties, or enter into any arrangement with any
Person providing for the lease by Borrower or any Subsidiary as lessee of

<PAGE>

any asset that has been sold or transferred by Borrower or such Subsidiary to
such Person, or agree to do any of the foregoing, except for:

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

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

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

               (iv) the sale or other disposition of any Borrower
          Margin Stock to the extent the fair market value thereof
          exceeds 25% of the fair market value of the assets of
          Borrower and its Subsidiaries (including Borrower 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 Borrower and its Subsidiaries on a
          consolidated basis, (2) 10% of the total revenues of
          Borrower and its Subsidiaries on a consolidated basis, and
          (3) 10% of the total net earnings of Borrower and its
          Subsidiaries on a consolidated basis, in each case as
          determined as of the date of the financial statements of
          Borrower and its Subsidiaries most recently delivered under
          Section 5.1 prior to such time (or, with regard to
          determinations at any time prior to the initial delivery of
          financial statements under Section 5.1, as of the date of
          the most recent financial statements referred to in Section
          4.11(a)), (B) immediately after giving effect thereto,
          Borrower would be in

<PAGE>

          compliance with the provisions of Section 6.2, such
          compliance determined on a pro forma basis in accordance
          with Generally Accepted Accounting Principles as if such
          sale or disposition had been consummated on the last day of
          the then most recently ended fiscal quarter, (C) immediately
          after giving effect thereto, no Default or Event of Default
          would exist, and (D) in no event shall Borrower or any of
          its Subsidiaries sell or otherwise dispose of any of the
          capital stock or other ownership interests of VFIC or any
          other Significant Subsidiary.

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

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

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

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

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

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

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

<PAGE>

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

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

          (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 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) Borrower or any of its Subsidiaries shall (i) fail to pay when due
(whether by scheduled maturity, acceleration or otherwise and after giving
effect to any applicable grace period) any principal of or interest on any
Indebtedness (other than the Indebtedness incurred pursuant to this Agreement)
having an aggregate principal amount of at least $500,000; or (ii) fail to
observe, perform or comply with any condition, covenant or agreement contained
in any agreement or instrument evidencing or relating to any such Indebtedness,
or any other event shall occur or condition exist in respect thereof, and the
effect of such failure, event or condition is to

<PAGE>

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

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

          (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 Borrower or any of its Subsidiaries
or any of their respective properties, and (i) the same is not dismissed, stayed
or discharged within sixty (60) days or is not otherwise being appropriately
contested in good faith and in a manner reasonably satisfactory to the Lender,
or (ii) the same is not dismissed, stayed or discharged within five (5) days
prior to any proposed sale of assets of Borrower or any Subsidiary pursuant
thereto, or (iii) any action shall be legally taken by a judgment creditor to
levy upon assets of Borrower or any Subsidiary to enforce the same;

          (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 Borrower 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;

<PAGE>

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

          (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 Borrower representing
30% or more of the combined voting power of the then outstanding securities of
Borrower ordinarily (and apart from rights accruing under special circumstances)
having the right to vote on matters, other than the election of directors,
submitted to holders of Borrower's common stock; (ii) the Board of Directors of
Borrower shall cease to consist of a majority of the individuals who constituted
the Board of Directors of Borrower as of the date hereof or who shall have
become a member thereof subsequent to the date hereof after having been
nominated, or otherwise approved in writing, by at least a majority of
individuals who constituted the Board of Directors of Borrower as of the date
hereof (or their replacements approved as herein required); or (iii) Borrower
shall cease to own directly 100% of the issued and outstanding capital stock of
VFIC or its successor by merger or consolidation as permitted hereunder
(including, without limitation, as a result of the contribution, sale or
transfer by Borrower, or the issuance or sale by VFIC, of any capital stock of
VFIC to any one or more other Subsidiaries of Borrower); or

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

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

          (b) Declare the Secured 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

<PAGE>

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.

<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.

     9.3 Governing Law; Consent to Jurisdiction. THIS AGREEMENT AND THE OTHER
CREDIT DOCUMENTS HAVE BEEN EXECUTED, DELIVERED AND

<PAGE>

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.

          (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

<PAGE>

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.

<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 Borrower and
its Subsidiaries furnished to it by or on behalf of any other party hereto,
provided that such Participant or proposed Participant agrees in writing to keep
such information confidential to the same extent required of the Lender under
Section 9.13.

     9.8 No Waiver. The rights and remedies of the Lender expressly set forth in
this Agreement and the other Credit Documents are cumulative and in addition to,
and not exclusive of, all other rights and remedies available at law, in equity
or otherwise. No failure or delay on the part of the Lender in exercising any
right, power or privilege shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, power or privilege preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege or be construed to be a waiver of any Default or Event of Default. No
course of dealing between any of the Borrower and the Lender or its agents or
employees shall be effective to amend, modify or discharge any provision of this
Agreement or any other Credit Document or to constitute a

<PAGE>

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 Borrower or any of its
Subsidiaries in connection with this Agreement or any other Credit Document;
provided, however, that the Lender may disclose such information (i) to its
directors, employees and agents and to its auditors, counsel and other
professional advisors, (ii) at the demand or request of any bank regulatory
authority, court or other Governmental Authority having or asserting
jurisdiction over the Lender, as may be required pursuant to subpoena or other
legal process, or otherwise in order to comply with any applicable Requirement
of Law, (iii) in connection with any proceeding to enforce its rights hereunder
or under any other Credit Document or any other litigation or proceeding related
hereto or to which it is a party, (v) to the

<PAGE>

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]

<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:  /s/ W. Perry Cronin
                                                -------------------------
                                           Its: Chief Financial Officer
                                                -------------------------


                                           LENDER:


                                           FIRST COMMERCIAL BANK,
                                           an Alabama banking corporation


                                           By:  /s/ James Brunstad
                                                -------------------------
                                           Its: Senior Vice President
                                                -------------------------