Document:

<PAGE>

                                                                    EXHIBIT 10.1

                                PROMISSORY NOTE
                                ---------------

$32,200,000.00                                                 January 26, 2001
                                                            Birmingham, Alabama

          FOR VALUE RECEIVED, the undersigned VESTA INSURANCE GROUP, INC., a
Delaware corporation ("Vesta"), hereby promises to pay to the order of
BIRMINGHAM INVESTMENT GROUP, LLC, a Delaware limited liability company ("BIG"),
at its office at 17 North 20th  Street, Birmingham, Alabama 35203, or at such
other place as BIG may direct, in lawful money of the United States of America,
the principal amount of THIRTY-TWO MILLION TWO HUNDRED THOUSAND AND NO/100
DOLLARS ($32,200,000.00), or so much thereof as may be advanced hereunder, with
interest at the rate and calculated in the manner described herein.  Payment of
principal and interest shall be in accordance with the following provisions:

          1.  Payment.  Vesta promises to pay the principal amount and all
              -------
accrued and unpaid interest on this Note in full on May 26, 2001 (the "Maturity
Date").

          2.  Interest.    Interest shall accrue on the outstanding principal
              --------
balance hereunder at an applicable rate of nine percent (9%) per annum, and
shall be payable at the Maturity Date.  Interest on all principal amounts
outstanding from time to time hereunder shall be calculated on the basis of a
360-day year applied to the actual number of days upon which principal is
outstanding, by multiplying the product of the principal amount and the
applicable rate set forth herein by the actual number of days elapsed, and
dividing by 360.  In no event shall the rate of interest calculated hereunder
exceed the maximum rate allowed by law.  Any principal amount outstanding
hereunder after the Maturity Date shall continue to bear interest at an
applicable rate equal to nine percent (9%), calculated in the manner set forth
herein.

          3.  Security.  The indebtedness evidenced hereby is secured by
              --------
5,000,000 shares of Vesta's $.01 par value, Common Stock (the "Common Stock")
which number of shares may be reduced as described in the Pledge Agreement
entered into by and among Vesta and BIG on January 26, 2001 (the "Pledge
Agreement").

          4.  Default.  Upon default in the payment of the principal of or
              -------
interest on this Note when the same becomes due and payable, or at any time
thereafter during the continuance of any such event, BIG may, with or without
notice to Vesta, declare this Note to be forthwith due and payable, whereupon
this Note and the indebtedness evidenced hereby shall forthwith be due and
payable, both as to principal and interest, without presentment, demand,
protest, or other notice of any kind, all of which are hereby expressly waived,
anything contained herein or in any other instrument executed in connection with
or securing this Note to the contrary notwithstanding.

          5.  Waivers.  Vesta and any endorser or guarantor of this Note hereby
              -------
waive demand, presentment for payment, notice of dishonor, protest, and notice
of protest and diligence in collection or bringing suit and agree that the
holder hereof may accept partial payment, or release or exchange security or
collateral, without discharging or releasing any unreleased collateral or the
obligations evidenced hereby.  Vesta and each such endorser and guarantor
further waive any and all rights of exemption, both as to personal and real
property, under the Constitution or laws of the United States, the State of
Delaware or any other state.

          6.  Attorney Fees.  Vesta and each endorser or guarantor of this Note
              -------------
agree to pay reasonable attorneys' fees and costs incurred by BIG in collecting
or attempting to collect this Note, whether by suit or otherwise.

          7.  Prepayment.  Vesta may prepay this Note, in whole or in part,
              ----------
without penalty.  Any prepayment shall be applied first to accrued interest, and
then to principal.

          8.  Applicable Law; Parties; Under Seal.  This Note shall be governed
              -----------------------------------
by the laws of the State of Delaware.  It is intended, and Vesta and BIG
specifically agree, that the laws of the State of Delaware governing interest
shall apply to this Note and to this transaction.  As used herein, the terms
"Vesta", "BIG" and "holder" shall

                                      II-5
<PAGE>

be deemed to include their respective successors, legal representatives, heirs
and assigns, whether by voluntary action of the parties or by operation of law.
This Note is given under the seal of all parties hereto, and it is intended that
this Note is and shall constitute and have the effect of a sealed instrument
according to law. This Note may not be modified except by written agreement
signed by Vesta and the holder hereof, or by their respective successors or
assigns.

          IN WITNESS WHEREOF, Vesta has executed, sealed and delivered this Note
in Birmingham, Alabama, as of the date first set forth above.

                                         VESTA INSURANCE GROUP, INC.

                                         By: /s/ Norman W. Gale III
                                             ----------------------------
                                         Its:  President

STATE OF ALABAMA    )

COUNTY OF JEFFERSON      )

     I, the undersigned, Notary Public in and for said County in said State,
hereby certify that Norman W. Gayle III, whose name as President of Vesta
Insurance Group, Inc., a corporation, is signed to the foregoing instrument and
who is known to me, acknowledged before me on this day that, being informed of
the contents of the instrument, (s)he, as such officer and with full authority,
executed the same voluntarily for and as the act of said corporation.

     Given under my hand this the 26th day of January, 2001.

                                         /s/ Anne-Marie Ellis Myers
                                         ------------------------------
                                         Notary Public
[NOTARIAL SEAL]                          My commission expires:

                                      II-6<PAGE>

                                                                    EXHIBIT 10.2

                                PLEDGE AGREEMENT

     THIS PLEDGE AGREEMENT ("Pledge Agreement") is made by VESTA INSURANCE
GROUP, INC., a Delaware corporation ("Vesta"), in favor of BIRMINGHAM INVESTMENT
GROUP, LLC, a Delaware limited liability company ("BIG").

     WHEREAS, Vesta has concurrently herewith executed a Promissory Note (the
"Note") in favor of BIG in the amount of Thirty-Two Million Two Hundred Thousand
Dollars ($32,200,000.00) in partial payment of the purchase price of Five
Million (5,000,000) shares of Vesta's Common Stock; and

     WHEREAS, BIG is willing to accept the Note from Vesta, but only upon the
condition, among others, that Vesta shall have executed and delivered to BIG
this Pledge Agreement and the Pledged Collateral (as defined below):

     NOW, THEREFORE, in consideration of the foregoing recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, and intending to be legally bound, Vesta hereby agrees as follows:

     1.   As security for the full payment and performance when due of all
indebtedness of Vesta to BIG created under the Note, Vesta hereby grants to BIG
a first priority security interest in Five Million (5,000,000) shares of Vesta's
$.01 par value Common Stock (the "Pledged Collateral"), and all dividends, cash,
instruments, and other property or proceeds from time to time received,
receivable, or otherwise distributed in respect of or in exchange for any or all
of the Pledged Collateral.

     2.   In the event of the nonpayment of any indebtedness when due, BIG may
then, or at any time thereafter, at its election, apply, set off, collect or
sell in one or more sales, or take such steps as may be necessary to liquidate
and reduce to cash in the hands of BIG in whole or in part, with or without any
previous demands or demand of performance or notice or advertisement, the whole
or any part of the Pledged Collateral in such order as BIG may elect.

     3.   The proceeds of the sale of any of the Pledged Collateral and all sums
received or collected by BIG from or on account of such Pledged Collateral shall
be applied by BIG to the payment of the indebtedness or any part hereof, all in
such order and manner as BIG in its discretion may determine.  BIG shall then
pay any balance to Vesta.

     4.   BIG agrees that so long as no default exists under the Note or
hereunder, the Pledged Shares shall, upon the request of Vesta, be released from
pledge as the indebtedness is paid.  Such releases shall be at the rate of one
share for each Six and 44/100 Dollars ($6.44) of principal amount of
indebtedness paid.

     5.   BIG may at any time deliver the Pledged Collateral or any part thereof
to Vesta and the receipt of Vesta shall be a complete and full acquittance for
the Pledged Collateral so delivered, and BIG shall thereafter be discharged from
any liability or responsibility therefor.

     6.   This Pledge Agreement shall be governed by, and construed in
accordance with the laws of the State of Delaware.

     Dated as of January 26, 2001.

                                         VESTA INSURANCE GROUP, INC.

                                         /s/ James E. Tait
                                         -----------------------
                                         Its: Chairman

                                      II-7<PAGE>

                                                                    EXHIBIT 10.3

                          VESTA INSURANCE GROUP, INC.
                                 P.O. Box 43360
                              3760 River Run Drive
                           Birmingham, Alabama 35243

                                January 26, 2001

Birmingham Investment Group, Inc.
17 North 20th Street
Birmingham, Alabama 35203

Ladies and Gentlemen:

     This letter agreement relates to the Pledge Agreement by Vesta Insurance
Group, Inc., a Delaware corporation ("Vesta") to Birmingham Investment Group,
LLC, a Delaware limited liability company ("BIG") dated as of January 26, 2001
(the "Pledge Agreement").  Pursuant to the terms of the Pledge Agreement, Vesta
has pledged Five Million (5,000,000) shares of Vesta's Common Stock (the
"Pledged Shares") as security for full payment of all indebtedness to BIG
created under the Promissory Note executed by Vesta in favor of BIG in the
principal amount of Thirty-Two Million Two Hundred and No/100 Dollars
($32,200,000.00) dated as of January 26, 2001 (the "Note").  The Pledged Shares
have been placed in a treasury account designated the "Vesta Insurance Group,
Inc. Common Stock Collateral Account" (the "Collateral Account").

     If Vesta desires to sell any Pledged Shares held in the Collateral Account,
Vesta will notify BIG within a reasonable period of time prior to such sale and,
upon such notice, BIG shall release such Pledged Shares from the Pledge
Agreement and Vesta shall be permitted to freely transfer such Pledged Shares.
Furthermore, BIG shall take all actions and execute all documents necessary to
permit Vesta to transfer such Pledged Shares from the Collateral Account.
Within five (5) business days following the transfer of such Pledged Shares from
the Collateral Account, Vesta shall deliver to BIG a principal payment under the
Note in the amount of Six and 44/100 Dollars ($6.44) multiplied by the number of
Pledged Shares transferred from the Collateral Account.

     Please indicate your agreement to the foregoing by signing below and
returning a copy of this letter to us.

                                    Sincerely,

                                    /s/ Donald W. Thornton
                                    --------------------------
                                    Senior Vice President

Accepted and Agreed to this 26th day of
January, 2001

Birmingham Investment Group, LLC

/s/ Hampton McFadden
-------------------------
Hampton McFadden
Authorized Person

                                      II-8

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00020-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00020-of-00352.parquet"}], [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00020-of-00352.parquet"}]]