Exhibit 10.1

CREDIT AGREEMENT

Dated as of

May 8, 2009

between

STATE AUTOMOBILE MUTUAL INSURANCE COMPANY, as Borrower

and

STATE AUTO PROPERTY & CASUALTY INSURANCE COMPANY, as Lender

CREDIT AGREEMENT

This CREDIT AGREEMENT (“ this Agreement”) is made and entered into as of May 8, 2009 (the “ Effective Date ”), between STATE AUTOMOBILE MUTUAL INSURANCE COMPANY, an Ohio mutual insurance company (the “ Borrower ”) and STATE AUTO PROPERTY & CASUALTY INSURANCE COMPANY, an Iowa corporation (the “ Lender ”).

Recitals

A. The Borrower desires to borrow funds under this Agreement for general corporate purposes, including liquidity and working capital.

B. The Lender is a wholly owned subsidiary of State Auto Financial Corporation, an Ohio corporation, which is a majority-owned subsidiary of the Borrower.

C. It is in the best interest of the Lender that the Borrower obtain a loan on the terms and conditions hereinafter set forth.

D. The Lender is willing to make loans under the terms and conditions set forth in this Agreement.

Agreement

NOW, THEREFORE, the parties hereto agree as follows:

ARTICLE 1

DEFINITIONS

Section 1.01. Defined Terms . As used in this Agreement, the following terms have the meanings specified below:

“ Applicable Insurance Regulatory Authority ” means, when used with respect to the Borrower or any SAM Insurance Subsidiary, the insurance department or similar administrative authority or agency located in the state in which the Borrower or such SAM Insurance Subsidiary is domiciled.

“ Available Debt Capacity ” means, for any year, the dollar amount equal to (a) the Statutory Surplus of the Borrower as set forth on the Borrower’s Statutory Statement as of the end of the immediately preceding calendar year (“ Annual Statutory Surplus ”) subtracted from (b) the quotient of (i) the Annual Statutory Surplus divided by (ii) 0.65. Available Debt Capacity may also be expressed by the following formula:

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“ Best ” means A.M. Best & Co. and its successors and assigns or, if it shall be dissolved or shall no longer assign ratings to insurance companies, then any other nationally recognized insurance statistical rating agency designated by the Lender.

“ Board of Directors ” means, the Board of Directors of the Borrower or any committee thereof duly authorized to act on behalf of such Board of Directors.

“ Borrower ” means State Automobile Mutual Insurance Company, an Ohio mutual insurance company, and its successors.

“ Business Day ” means any day that is not a Saturday, Sunday or other day on which commercial banks in Columbus, Ohio are authorized or required by law to remain closed.

“ Change in Control ” means the occurrence of any of the following:

(a) the Borrower affiliates with or is merged with or into or consolidated with a third party and as a result, a majority of the Board of Directors of the Borrower or its successor is comprised of other than Continuing Directors; or

(b) the Borrower completes a conversion to a stock insurance company and as a result of which a majority of the Board of Directors of the Borrower or its successor is comprised of other than Continuing Directors.

“ Continuing Director ” means a director of the Borrower who was either:

(a) first elected or appointed as a director on or prior to the Effective Date; or

(b) subsequent to the Effective Date was elected or appointed as a director of the Borrower if such director was nominated by the Nominating and Governance Committee of the Borrower or appointed by at least two-thirds of the total number of the then Continuing Directors of the Borrower.

“ Debt ” of any Person means, without duplication:

(a) all obligations of such Person for borrowed money or with respect to deposits or advances of any kind (other than unspent cash deposits held in escrow by or in favor of such Person, or in a segregated deposit account controlled by such Person, in each case in the ordinary course of business to secure the performance obligations of, or damages owing from, one or more third parties),

(b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments,

(c) all obligations of such Person on which interest charges are customarily paid (other than obligations where interest is levied only on late or past due amounts),

(d) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person,

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(e) all obligations of such Person in respect of the deferred purchase price of property or services (excluding current accounts payable incurred in the ordinary course of business),

(f) all Debt of others secured by (or for which the holder of such Debt has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Debt secured thereby has been assumed,

(g) all Guarantees by such Person of Debt of others,

(h) all Lease Obligations of such Person,

(i) all unpaid obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty (other than cash collateralized letters of credit to secure the performance of workers’ compensation, unemployment insurance, other social security laws or regulations, bids, trade contracts, leases, environmental and other statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in each case, obtained in the ordinary course of business),

(j) all capital stock of such Person which is required to be redeemed or is redeemable at the option of the holder if certain events or conditions occur or exist or otherwise, and

(k) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances.

The Debt of any Person shall include the Debt of any other entity (including any partnership in which such Person is a general partner) to the extent that such Person is liable therefor pursuant to law or judicial holding as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent that contractual provisions binding on the holder of such Debt provide that such Person is not liable therefor; provided that Debt of the Borrower shall not include (i) Lease Obligations which are subject to pooling under the Pooling Agreement or allocation under the Management Agreement, or (ii) obligations of the Borrower with respect to Surplus Notes having a maturity date later than the Maturity Date.

“ Default ” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.

“ Dollars ” or “ $ ” refers to lawful money of the United States.

“ Environmental Laws ” means all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by any Governmental Authority, relating in any way to the environment, the preservation or reclamation of natural resources, the management, release or threatened release of any Hazardous Material or the effects of the environment on health and safety.

“ Events of Default ” has the meaning specified in Article 7.

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“ Federal Reserve Board ” means the Board of Governors of the Federal Reserve System of the United States.

“ Financial Officer ” means the chief financial officer, treasurer, any assistant treasurer, the controller or any assistant controller of the Borrower.

“ Financing Transaction ” means the execution, delivery and performance by the Borrower of the Loan Documents to which it is to be a party, and the borrowing of the Term Loan.

“ Governmental Authority ” means the government of the United States or any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

“ Guarantee ” by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Debt or other debt-like obligations of any other Person (the “ primary obligor ”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt or other obligation or to purchase (or advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Debt or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Debt or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Debt or other obligation; provided that the term “Guarantee” shall not include endorsements for collection or deposit in the ordinary course of business.

“ Hedging Agreement ” means any interest rate protection agreement, foreign currency exchange agreement, commodity price protection agreement or other interest rate, currency exchange rate or commodity price hedging arrangement.

“ Interest Payment Date ” means the first day of each May and November of each calendar year, beginning on November 1, 2009, and the Maturity Date.

“ Internal Revenue Code ” means the Internal Revenue Code of 1986, as amended from time to time.

“ Lease Obligations ” of any Person means obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof.

“ Lender ” means State Auto Property & Casualty Insurance Company, an Iowa corporation.

“ Lien ” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset, (b) the interest of a

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vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities.

“ Loan Documents ” means this Agreement, the Term Loan Note and any other documents hereinafter entered into with respect to the Term Loan.

“ Management Agreement ” means the Management and Operations Agreement, Amended and Restated as of January 1, 2005, as heretofore or hereafter amended, among the Borrower, STFC, Lender, and other subsidiaries and affiliates of the Borrower and STFC.

“ Material Adverse Effect ” means a material adverse effect on (a) the business, operations, properties, assets, financial condition, prospects, contingent liabilities or material agreements of the Borrower and the SAM Subsidiaries taken, as a whole, (b) the ability of the Borrower to perform any of its obligations under any Loan Document or (c) the rights of or benefits available to the Lender under, or the validity or enforceability of, any Loan Document.

“ Material Debt ” means Debt (other than obligations in respect of the Term Loan evidenced by this Credit Agreement and the term loan evidenced by the Other Credit Agreement) or obligations in respect of one or more Hedging Agreements, of any one or more of the Borrower and the SAM Subsidiaries in an aggregate principal amount exceeding $25,000,000. For purposes of determining Material Debt, the “principal amount” of the obligations of the Borrower or any SAM Subsidiary in respect of any Hedging Agreement at any time will be the maximum aggregate amount (after giving effect to any netting agreements) that the Borrower or such SAM Subsidiary would be required to pay if such Hedging Agreement were terminated at such time.

“ Maturity Date ” means May 8, 2019 or such earlier date as a result of an acceleration of the maturity of the Term Loan Note as provided in this Agreement or such later date as the Lender may hereafter agree in its sole discretion.

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

“ Other Credit Agreement ” means the Credit Agreement, to be entered into after the Effective Date, between the Borrower and Milbank Insurance Company, a South Dakota corporation, in the principal amount of Twenty Million Dollars ($20,000,000).

“ Other Taxes ” means any and all present or future recording, stamp, documentary, excise, transfer, sales, property or similar taxes, charges or levies arising from any payment made under any Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Loan Document.

“ Person ” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

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“ Pooling Agreement ” means the Reinsurance Pooling Agreement, Amended and Restated as of January 1, 2008, as heretofore or hereafter amended, among the Borrower, Lender, and other subsidiaries and affiliates of the Borrower and STFC.

“ Regulation U ” means Federal Reserve Board Regulation U as in effect from time to time.

“ Regulation X ” means Federal Reserve Board Regulation X as in effect from time to time.

“ SAM Insurance Subsidiary ” means a Person listed on Exhibit B hereto.

“ SAM Subsidiary ” means each SAM Insurance Subsidiary and each other Person listed on Exhibit C hereto.

“ SAP ” means, with respect to the Borrower or any SAM Insurance Subsidiary, the accounting procedures and practices prescribed or permitted by the Applicable Insurance Regulatory Authority.

“ Senior Debt ” means Debt of the Borrower that is secured by a Lien and/or that is otherwise senior in priority of payment to the Term Loan.

“ Statutory Statement ” means, as to the Borrower or any SAM Insurance Subsidiary, a statement of the condition and affairs of the Borrower or such SAM Insurance Subsidiary, prepared in accordance with statutory accounting practices required or permitted by the Applicable Insurance Regulatory Authority, and filed with the Applicable Insurance Regulatory Authority.

“ Statutory Surplus ” means, as at any date for the Borrower or any SAM Insurance Subsidiary, the aggregate amount of surplus as regards policyholders (determined without duplication in accordance with SAP) of the Borrower or such SAM Insurance Subsidiary, as set forth on page 3, line 35, of the most recent Statutory Statement of the Borrower or such SAM Insurance Subsidiary (or equivalent page, line, or statement, to the extent that any thereof is modified or replaced).

“ STFC ” means State Auto Financial Corporation, an Ohio corporation, and a majority-owned subsidiary of the Borrower.

“ Surplus Notes ” means notes, debentures, bonds or other evidence of Debt issued by the Borrower: (a) pursuant to Section 3901.72 of the Revised Code of Ohio in effect on the Effective Date and any regulations applicable thereto, the advancement and repayment of which are subject to the approval of the superintendent of insurance of the State of Ohio, and which (i) may be repaid only out of the surplus earnings of the Borrower and (ii) except as ordered by the superintendent of insurance of the State of Ohio, no part of the principal or interest thereof shall be repaid until the surplus of the Borrower remaining after such repayment is equal in amount to the principal of the money so advanced; or (b) pursuant to any amendments to Section 3901.72 of the Revised Code of Ohio from time to time after the Effective Date and any regulations applicable thereto, provided that the conditions for the advancement and repayment of such notes, debentures, bonds or other evidence of Debt under this clause (b) are substantially similar to those set forth in clause (a) of this definition.

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“ Taxes ” means any and all present or future taxes, levies, imposts, duties, deductions, charges for withholdings imposed by any Governmental Authority.

“ Term Loan ” shall have the meaning assigned to such term in Section 2.01 hereof.

“ Term Loan Note ” means the promissory note, dated as of the Effective Date, in the form attached hereto as Exhibit A, by the Borrower to the order of the Lender evidencing the Borrower’s obligations to repay the Term Loan on the terms and conditions stated herein.

“ Total Capitalization ” means, as of any date, the aggregate of, without duplication, (a) Debt of the Borrower, of the type described in any or all of clauses (a), (b), (c), (d), (e) and (h) of the definition of “Debt”, to the extent applicable to the Borrower, as reflected on its most recent Statutory Statement and (b) the Statutory Surplus of the Borrower, as reflected on its most recent Statutory Statement.

“ United States ” means the United States of America.

(b) Section 1.02. Accounting Terms. Except as otherwise expressly provided herein, all accounting terms used herein shall be interpreted, and all financial information and reports as to financial matters required to be delivered hereunder shall be prepared, in accordance with SAP.

ARTICLE 2

THE TERM LOAN

Section 2.01 Term Loan . Subject to the terms and conditions set forth herein, the Lender agrees to make a term loan to the Borrower in the aggregate principal amount of Fifty Million Dollars ($50,000,000) (the “ Term Loan ”).

Section 2.02. Payment at Maturity; Evidence of Debt. The Borrower unconditionally promises to pay to the Lender on the Maturity Date, the then unpaid principal amount of the Term Loan together with any accrued but unpaid interest.

Section 2.03. Optional Prepayments. The Borrower will have the right at any time to prepay the Term Loan in whole or in part without penalty or premium.

Section 2.04. Interest. (a) The Term Loan shall bear interest at the rate per annum of seven percent (7%).

(b) Notwithstanding the foregoing, if any principal of or interest on the Term Loan is not paid when due, whether on an Interest Payment Date (in the case of a payment of interest), at stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to two percent (2%) plus the rate that otherwise would be applicable to the Term Loan.

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(c) Interest accrued on the Term Loan shall be payable in arrears on each Interest Payment Date for such Loan and upon the Maturity Date; provided that interest accrued pursuant to Section 2.04(b) shall be payable on demand.

(d) All interest hereunder will be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case will be payable for the actual number of days elapsed (including the first day but excluding the last day).

ARTICLE 3

REPRESENTATIONS AND WARRANTIES

The Borrower represents and warrants to the Lender that as of the Effective Date:

Section 3.01. Organization; Powers. The Borrower and each of the SAM Subsidiaries is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, has all requisite power and authority to carry on its business as now conducted and, except where failures to do so, in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required.

Section 3.02. Authorization; Enforceability. The Financing Transaction to be entered into by the Borrower is within its corporate powers and has been duly authorized by all necessary corporate action. This Agreement has been duly executed and delivered by the Borrower and constitutes, and each other Loan Document to which the Borrower is to be a party, when executed and delivered by the Borrower, will constitute, a legal, valid and binding obligation of the Borrower, in each case enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

Section 3.03. Governmental Approvals; No Conflicts. The Financing Transaction and the use of the proceeds thereof (a) do not require any consent or approval of, registration or filing with, or other action by, any Governmental Authority, except such as have been obtained or made and are in full force and effect, (b) will not violate any applicable law or regulation or the charter, articles of incorporation, code of regulations, by-laws, or other organizational documents of the Borrower or any order of any Governmental Authority, (c) will not violate or result in a default under any indenture, agreement or other instrument binding upon the Borrower or any of its properties, or give rise to a right thereunder to require the Borrower to make any payment, where such default or payment reasonably can be expected to have a Material Adverse Effect and (d) will not result in the creation or imposition of any Lien on any property of the Borrower.

Section 3.04. Financial Statements; No Material Adverse Change. (a) The Borrower has heretofore furnished to the Lender a draft Statutory Statement of the Borrower as of March 31, 2009. Such Statutory Statement presents fairly, in all material respects, the financial position of the Borrower in accordance with SAP. None of the Borrower or any of the SAM Subsidiaries has on the date hereof any material contingent liabilities, material liabilities for taxes, material unusual forward or long-term commitments or material unrealized or anticipated losses from any unfavorable commitments, except as referred to or reflected or provided for in said balance sheets as at said dates.

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(b) Since March 31, 2009, there has been no material adverse change in the business, operations, properties, assets, financial condition, prospects, contingent liabilities or material agreements of the Borrower and the SAM Subsidiaries, taken as a whole.

(c) The Borrower has heretofore furnished to the Lender a draft Statutory Statement of each SAM Insurance Subsidiary for the period ended March 31, 2009. All such Statutory Statements present fairly in all material respects the financial condition of each SAM Insurance Subsidiary as at, and the results of operations for, the period ended March 31, 2009, in accordance with statutory account practices prescribed or permitted by the Applicable Insurance Regulatory Authority.

Section 3.05. Insurance Licenses. Schedule T to the most recent annual Statutory Statement of the Borrower and each SAM Insurance Subsidiary lists, as of the Effective Date, all of the jurisdictions in which the Borrower or such SAM Insurance Subsidiary holds active licenses (including, without limitation, licenses or certificates of authority from Applicable Insurance Regulatory Authorities), permits or authorizations to transact insurance and reinsurance business or to act as an insurance agent or broker (collectively, the “ Licenses ”). The Borrower and each SAM Insurance Subsidiary is in compliance in all material respects with each License held by it. No License (to the extent material) is the subject of a proceeding for suspension or revocation or any similar proceedings, there is no sustainable basis for such a suspension or revocation, and to the knowledge of the Borrower no such suspension or revocation has been threatened by any Applicable Insurance Regulatory Authority except in any such case where such proceedings would not have a Material Adverse Effect.

Section 3.06. Litigation. There is no action, suit, arbitration proceeding or other proceeding, inquiry or investigation, at law or in equity, before or by any arbitrator or Governmental Authority pending against the Borrower or any SAM Subsidiary or of which the Borrower or any SAM Subsidiary has otherwise received notice or which, to the knowledge of the Borrower, is threatened against the Borrower or any SAM Subsidiary (i) as to which, but after giving effect to any applicable insurance claim reserve, there is a reasonable possibility of an unfavorable decision, ruling or finding which would reasonably be expected to result in a Material Adverse Effect or (ii) that involves any of the Loan Documents or the Financing Transaction or the use of the proceeds thereof.

Section 3.07. Compliance with Laws and Agreements. (a) The Borrower is in compliance with all laws, regulations and orders of any Governmental Authority applicable to it or its property (including (i) all Environmental Laws, (ii) applicable laws, regulations and orders dealing with intellectual property, and (iii) the Fair Labor Standards Act and other applicable law dealing with such matters) and all indentures, agreements and other instruments binding on it or its property, except where failures to do so, in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.

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(b) The Borrower is and will remain in compliance with all laws and regulations applicable to it, except where the failure to comply therewith would not (either individually or in the aggregate) have a Material Adverse Effect.

Section 3.08. Investment Company Status. The Borrower is not an “investment company” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

Section 3.09. Taxes. The Borrower and the SAM Subsidiaries have filed all Federal income tax returns and all other material tax returns that are required to be filed by them and have paid all taxes due pursuant to such returns or pursuant to any assessment received by the Borrower or any of the SAM Subsidiaries in all material respects. The charges, accruals and reserves on the books of the Borrower and the SAM Subsidiaries in respect of taxes and other governmental charges are, in the opinion of the Borrower, adequate in all material respects. The Borrower has not given or been requested to give a waiver of the statute of limitations relating to the payment of any Federal, state, local and foreign taxes or other impositions.

Section 3.10. Material Agreements and Liens.

(a) Part A of Schedule 3.10 is a complete and correct list of each credit agreement, loan agreement, indenture, purchase agreement, guarantee, letter of credit or other arrangement providing for or otherwise relating to any Debt or any extension of credit (or commitment for any extension of credit) to, or Guarantee by, the Borrower or any of the SAM Subsidiaries, outstanding on the date hereof the aggregate principal or face amount of which equals or exceeds (or may equal or exceed) $5,000,000, and the aggregate principal or face amount outstanding or that may become outstanding under each such arrangement is correctly described in Part A of said Schedule 3.10.

(b) Part B of Schedule 3.10 is a complete and correct list of each Lien securing Debt of any Person outstanding on the date hereof the aggregate principal or face amount of which equals or exceeds (or may equal or exceed) $5,000,000 and covering any Property of the Borrower or any of the SAM Subsidiaries, and the aggregate Debt secured (or that may be secured) by each such Lien and the Property covered by each such Lien is correctly described in Part B of said Schedule 3.10.

Section 3.11. Capitalization. The Borrower is a mutual insurance company, the members of which are its policyholders.

Section 3.12. Regulation U. Neither the Borrower nor any of the SAM Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U).

Section 3.13. Disclosure. The Borrower has disclosed to the Lender all agreements, instruments and corporate or other restrictions to which it is subject, and all other matters known to it, that, individually or in the aggregate, would reasonably be expected to result in a Material Adverse Effect. All of the reports, financial statements, certificates and other written information (other than projected financial information) that have been made available by or on behalf of the Borrower to the Lender in connection with the negotiation of this Agreement or any other Loan Document or delivered hereunder or thereunder, are complete and correct in all material respects

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and do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein not materially misleading in light of the circumstances under which such statements are made; provided that, with respect to projected financial information, the Borrower represents only that such information was prepared in good faith based on assumptions believed to be reasonable at the time.

Section 3.14. Solvency. Immediately after the Financing Transaction to occur on the Effective Date is consummated and after giving effect to the application of the proceeds of the Term Loan, (a) the fair value of the assets of the Borrower, at a fair valuation, will exceed its debts and liabilities, subordinated, contingent or otherwise; and (b) the Borrower will be able to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured.

ARTICLE 4

CONDITIONS PRECEDENT

Section 4.01. Conditions Precedent. The obligations of the Lender to make the Term Loan hereunder shall not become effective until the date on which each of the following conditions is satisfied:

(a) The Lender shall have received counterparts of this Agreement signed by the Borrower.

(b) The Lender shall have received the Term Loan Note and such other Loan Documents as the Lender may require, executed by the Borrower.

(c) The Lender shall have received such documents as the Lender or its counsel may reasonably request relating to the organization, existence and good standing of the Borrower and the SAM Subsidiaries, the authorization for and validity of the Financing Transaction and any other legal matters relating to the Borrower, the SAM Subsidiaries, the Loan Documents or the Financing Transaction, all in form and substance satisfactory to the Lender and its counsel.

(d) All consents and approvals required to be obtained from any Governmental Authority or the Person in connection with the Financing Transaction shall have been obtained and be in full force and effect, except where failure to obtain such approval or consent would not have a Material Adverse Effect.

(e) The Lender shall have received from the Borrower such other documents as the Lender may reasonably have requested.

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ARTICLE 5

AFFIRMATIVE COVENANTS

Until all principal of and interest on the Term Loan and all other amounts payable hereunder have been paid in full, the Borrower covenants and agrees with the Lender that:

Section 5.01. Financial and Other Information. The Borrower shall furnish to the Investment Committee of the Lender (a) such information regarding the Term Loan in such format and at such times as such Investment Committee currently receives information regarding investments of the Lender and (b) promptly following any request therefor, such other information regarding the operations, business affairs and financial condition of the Borrower and the SAM Subsidiaries as relates to compliance with the terms of any Loan Document, as the Investment Committee of the Lender may reasonably request.

Section 5.02. Notice of Material Events. The Borrower shall furnish to the Investment Committee of the Lender prompt written notice of the following:

(a) the occurrence of any Default;

(b) the filing or commencement of any action, suit or proceeding by or before any arbitrator or Governmental Authority Applicable or Insurance Regulatory Authority against or affecting the Borrower or any SAM Subsidiary that, if adversely determined, could reasonably be expected to result in a Material Adverse Effect on the Borrower and the SAM Subsidiaries, taken as a whole, or the filing of any other legal or arbitral proceedings, and any material development in respect of such legal or other proceedings, affecting the Borrower or any of the SAM Subsidiaries, except proceedings that, if adversely determined, would not (either individually or in the aggregate) have a Material Adverse Effect;

(c) the occurrence of any negative change in the Best financial strength rating of the Borrower;

(d) promptly after the Borrower receives the results of a triennial examination by the NAIC of the financial condition and operations of the Borrower, a copy thereof;

(e) promptly following the delivery or receipt by the Borrower of any correspondence, notice or report to or from any Applicable Insurance Regulatory Authority that relates, to any material extent, to the financial viability of the Borrower, a copy thereof;

(f) within five Business Days after receipt, notice from any Applicable Insurance Regulatory Authority of any threatened or actual proceeding for suspension or revocation of any License of the Borrower or any similar proceeding with respect to any such License; and

(g) any other development that results in, or would reasonably be expected to result in, a Material Adverse Effect.

Each notice delivered under this Section shall be accompanied by a statement of a Financial Officer or other executive officer of the Borrower setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.

Section 5.03. Existence; Conduct of Business . The Borrower shall, and shall cause each of the SAM Subsidiaries to, do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence and the rights, licenses, permits, privileges, franchises, patents, copyrights, trademarks and trade names material to the conduct of its business.

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Section 5.04. Payment of Obligations . The Borrower shall, and shall cause each of the SAM Subsidiaries to, pay all of its Material Debt and other material obligations, including Tax liabilities, before the same shall become delinquent or in default, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings, (b) the Borrower or such SAM Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with applicable accounting practices, (c) such contest effectively suspends collection of the contested obligation and the enforcement of any Lien securing such obligation and (d) the failure to make payment pending such contest would not reasonably be expected to result in a Material Adverse Effect.

Section 5.05. Insurance . The Borrower shall keep itself and all of it insurable properties, and shall cause each SAM Subsidiary to keep itself and all of its insurable properties, insured at all times to such extent, by such insurers, and against such hazards and liabilities as is customarily carried by prudent businesses of like size and enterprise; and promptly upon the Lender’s written request upon and during the continuance of an Event of Default, the Borrower shall furnish to the Lender such information about any such insurance as the Lender may from time to time reasonably request; provided that, the Borrower and the SAM Subsidiaries may self-insure against such hazards and risks, and in such amounts as is customary for corporations of a similar size and in similar lines of business.

Section 5.06. Risk-Based Capital Ratio. In the event that any Applicable Insurance Regulatory Authority shall at any time promulgate any risk-based capital ratio requirements or guidelines, the Borrower shall, and shall cause each SAM Insurance Subsidiary to, comply with the minimum requirements or guidelines applicable to it as established by such Applicable Insurance Regulatory Authority.

Section 5.07. Proper Records. The Borrower shall, and shall cause each of the SAM Subsidiaries to, keep proper books of record and account in which complete and correct entries, in all material respects, are made of all transactions relating to its business and activities.

Section 5.08. Compliance with Laws. The Borrower shall, and shall cause each of the SAM Subsidiaries to, comply with all laws, rules, regulations and orders of any Governmental Authority (including all Environmental Laws and the rules and regulations thereunder) applicable to it or its property, other than such laws, rules or regulations (a) the validity or applicability of which the Borrower or any SAM Subsidiary is contesting in good faith by appropriate proceedings or (b) the failure to comply with which cannot reasonably be expected to result in a Material Adverse Effect. The Borrower shall deliver to the Lender any certification or other evidence reasonably requested from time to time by any Lender in its reasonable discretion, confirming the Borrower’s compliance with this Section 5.08.

Section 5.09. Use of Proceeds. The proceeds of the Term Loans will be used only to finance the general corporate purposes of the Borrower (including, without limitation, liquidity, acquisitions and working capital needs of the Borrower and the SAM Subsidiaries). No part of the proceeds of the Term Loan will be used, directly or indirectly, for any purpose that entails a violation of any of the regulations of the Federal Reserve Board, including Regulations U and X.

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ARTICLE 6

NEGATIVE COVENANTS

Until all principal of and interest on the Term Loan and all other amounts payable hereunder have been paid in full, the Borrower covenants and agrees with the Lender that:

Section 6.01. Senior Debt . The Borrower shall not permit the principal amount of Senior Debt at any time to exceed 50% of Available Debt Capacity; provided, however, that any particular issuance of Senior Debt that, at the time of issuance, was permitted Senior Debt in compliance with this covenant shall continue to be permitted Senior Debt, notwithstanding any subsequent change in Available Debt Capacity.

Section 6.02. Ratio of Debt to Capital . The Borrower shall not at any time permit the ratio of Borrower’s Debt (of the type described in any or all of clauses (a), (b), (c), (d), (e) and (h) of the definition of “Debt” to the extent applicable to Borrower) to Borrower’s Total Capitalization to be greater than 0.35 to 1.0.

Section 6.03. Liens . The Borrower shall not create or permit to exist any Lien on any property now owned or hereafter acquired by it, securing obligations, other than Senior Debt, that in the aggregate do not exceed the principal amount of $25,000,000.00.

Section 6.04. Detrimental Action . The Borrower shall not, nor shall it permit any of the SAM Subsidiaries to, take any action that would have a Material Adverse Effect on the ability of the Borrower to perform its obligations under this Agreement or to timely pay the obligations evidenced by the Term Loan Note.

ARTICLE 7

EVENTS OF DEFAULT

If any of the following events ( “ Events of Default ” ) shall occur:

(a) the Borrower shall fail to pay any principal of the Term Loan on the Maturity Date;

(b) the Borrower shall fail to pay when due any interest on the Term Loan payable under any Loan Document, and such failure shall continue unremedied for a period of five (5) Business Days;

(c) any representation, warranty or certification made or deemed made by or on behalf of the Borrower in or in connection with any Loan Document or any amendment or modification thereof or waiver thereunder, or in any report, certificate, financial statement or other document furnished pursuant to or in connection with any Loan Document or any amendment or modification thereof or waiver thereunder, shall prove to have been incorrect in any material respect when made or deemed made;

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(d) the Borrower shall fail to observe or perform any covenant or agreement contained in Section 5.01, Section 5.02, Section 5.03, Section 5.04, Section 5.07, Section 5.08 or Section 5.09 or in Article 6;

(e) the Borrower shall fail to observe or perform any provision of any Loan Document (other than those failures covered by clauses (a), (b), (c) and (d) of this Article 7) and such failure shall continue for 15 days after the earlier of notice of such failure to the Borrower from the Lender or knowledge of such failure by an officer of the Borrower;

(f) (i) an “Event of Default” (as defined in the Other Credit Agreement) occurs under the Other Credit Agreement, or (ii) any event or condition occurs that results in the creditor(s) accelerating the payment of any Material Debt before its scheduled maturity;

(g) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect of the Borrower or any of the SAM Subsidiaries or its debts, or of a substantial part of its assets, under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any of the SAM Subsidiaries or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for 30 days or an order or decree approving or ordering any of the foregoing shall be entered;

(h) the Borrower or any of the SAM Subsidiaries shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (g) above, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for any the Borrower or any of the SAM Subsidiaries or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing; provided, however, that a voluntary liquidation of any SAM Insurance Subsidiary shall not be an Event of Default if such liquidation does not have a Material Adverse Effect.

(i) the Borrower or any of the SAM Subsidiaries shall become unable, admit in writing its inability or fail generally to pay its debts as they become due;

(j) one or more judgments for the payment of money, not covered by insurance, in an aggregate amount exceeding, after giving effect to any insurance, an amount equal to or greater than $25,000,000.00 shall be rendered against the Borrower or any SAM Subsidiary, other than judgment(s) subject to pooling under the Pooling Agreement or allocation under the Management Agreement, and shall remain undischarged for a period of 30 consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon any asset of the Borrower to enforce any such judgment;

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(k) any material provision of any Loan Document after delivery thereof shall for any reason cease to be valid and binding on or enforceable against the Borrower, or the Borrower shall so state in writing;

(l) the adoption of a plan relating to the liquidation or dissolution of the Borrower;

(m) the sale of all or substantially all the assets of the Borrower to another Person; or

(n) a Change in Control shall occur;

then, and in every such event (except an event with respect to the Borrower described in clause (g) or (h) above), and at any time thereafter during the continuance of such event, the Lender may, by notice to the Borrower, take the following action: declare the Term Loan then outstanding to be due and payable, and thereupon the principal of the Term Loan, together with accrued interest thereon, shall become due and payable immediately, without presentment, demand, protest or other notice of any kind, all of which are waived by the Borrower; and in the case of any event with respect to the Borrower described in clause (g) or (h) above, the Lender may, in its sole discretion, declare the principal amount of the Term Loan then outstanding, together with accrued interest thereon, immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are waived by the Borrower.

ARTICLE 8

MISCELLANEOUS

Section 8.01. Notices. Except in the case of notices and other communications expressly permitted to be given by telephone, all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy, as follows:

(a) if to the Borrower, to it at 518 East Broad Street, Columbus, Ohio 43215, Attention of General Counsel (Facsimile No/ (614) 719-0740); and

(b) if to the Lender, to Chairperson of the Investment Committee of the Lender (Facsimile No. (614) 246-2551), or such other facsimile number as the Chairperson of the Investment Committee of the Lender shall give notice of to the Borrower from time to time).

Either party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the Lender and the Borrower. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement will be deemed to have been given on the date of receipt.

Section 8.02. Waivers; Amendments. (a) No failure or delay by the Lender in exercising any right or power hereunder or under any other Loan Document shall operate as a waiver thereof,

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nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Lender under the Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of any Loan Document or consent to any departure by the Borrower therefrom shall in any event be effective unless the same shall be permitted by subsection (b) of this Section, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given; and provided, further, that no waiver, amendment, or modification of any Loan Document shall be made without the prior approval of the Commissioner of the Iowa Division of Insurance (the “ Commissioner ”). Without limiting the generality of the foregoing, the making of a Loan shall not be construed as a waiver of any Default, regardless of whether the Lender had notice or knowledge of such Default at the time.

(b) No Loan Document or provision thereof may be waived, amended or modified except by an agreement or agreements in writing entered into by the Borrower and the Lender.

Section 8.03. Expenses; Indemnity; Damage Waiver.

(a) The Borrower shall indemnify the Lender against and from any and all losses, claims, damages, liabilities and related expenses, including the fees, charges and disbursements of counsel for the Lender, incurred by the Lender in enforcing the Borrower’s obligations under this Agreement or the Term Loan Note.

(b) To the extent permitted by applicable law, the Borrower shall not assert, and it hereby waives, any claim against the Lender, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby, the Financing Transaction, the Term Loan or the use of the proceeds thereof.

Section 8.04. Successors and Assigns. The provisions of this Agreement shall be binding on and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void), and neither the Borrower nor the Lender may assign or otherwise transfer any of their respective rights or obligations hereunder without the prior approval of the Commissioner. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (except the parties hereto and their respective successors and assigns permitted hereby) any legal or equitable right, remedy or claim under or by reason of this Agreement.

Section 8.05. Survival . All covenants, agreements, representations and warranties made by the Borrower in the Loan Documents and in other instruments delivered in connection with or pursuant to the Loan Documents shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of the Loan Documents and the making of the Term Loan, regardless of any investigation made by and such other party or on its behalf and

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notwithstanding that the Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as any principal of or accrued interest on the Term Loan is outstanding and unpaid.

Section 8.06. Counterparts, Integration; Effectiveness. The Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and the other Loan Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.

Section 8.07. Severability. If any provision of any Loan Document is invalid, illegal or unenforceable in any jurisdiction then, to the fullest extent permitted by law, (i) such provision shall, as to such jurisdiction, be ineffective to the extent (but only to the extent) of such invalidity, illegality or unenforceability, (ii) the other provisions of the Loan Documents shall remain in full force and effect in such jurisdiction and shall be liberally construed in favor of the Lender in order to carry out the intentions of the parties thereto as nearly as may be possible and (iii) the invalidity, illegality or unenforceability of any such provision in any jurisdiction shall not affect the validity, legality or enforceability of such provision in any other jurisdiction.

Section 8.08. Governing Law; Jurisdiction; Consent to Service of Process. This Agreement shall be construed in accordance with and governed by the law of the State of Ohio.

Section 8.09. Headings. Article and Section headings herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

[The remainder of this page is left blank intentionally. Signatures are on the next page.]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the Effective Date.

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Exhibit A

Form of Term Loan Note

TERM LOAN NOTE

For value received, State Automobile Mutual Insurance Company, an Ohio mutual insurance company and its successors (“Borrower”), promises to pay on or before the principal due date (as described below) to the order of State Auto Property & Casualty Insurance Company (“Lender”) the principal sum of Fifty Million Dollars ($50,000,000.00), together with interest from the date hereof on the unpaid principal balance from time to time outstanding, as described below.

Reference is made to that certain Credit Agreement, dated as of May 8, 2009, between Borrower and Lender (as amended, amended restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), the terms of which are hereby incorporated herein by reference. Capitalized terms used herein and not otherwise defined shall have the meanings given to them in the Credit Agreement.

Pursuant to the terms of the Credit Agreement, the principal amount of this Note shall be due and payable on the Maturity Date.

The Term Loan evidenced by this Note shall bear interest from the date hereof at the rate per annum set forth in the Credit Agreement and shall be due and payable on each Interest Payment Date. Interest shall be computed as set forth in the Credit Agreement.

All payments received under the terms of this Note will be applied by Lender first to interest due and payable and second to principal due and payable. Borrower may prepay the obligations evidenced by this Note in whole or in part at any time without penalty or premium.

Principal, interest and other sums payable in accordance with this Note shall be payable in lawful money of the United States of America at such address of which Lender may from time to time give written notice to Borrower.

If any principal of or interest on the obligations evidenced by this Note is not paid when due, whether on an Interest Payment Date (in the case of a payment of interest), at stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to two percent (2%) plus the rate that otherwise would be applicable to the obligations evidenced by this Note.

No delay or failure on the part of Lender to exercise any of its rights hereunder shall be deemed a waiver of such rights or of any other rights of Lender nor shall any delay, omission or waiver on any one occasion be deemed a bar to or a waiver of such rights or any other right on any future occasion.

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Borrower and all other persons now or hereafter liable, primarily or secondarily, for the payment of the indebtedness evidenced hereby or any part thereof, waive presentment for payment, demand, notice of dishonor, protest and notice of protest, and all notices of every kind and assent to all extension(s) or postponement(s) of the time of payment or any other indulgences by Lender to any substitutions, exchanges, or releases of any security for this Note, and to additions or releases of any other parties or persons primarily or secondarily liable hereon.

Upon any transfer of this Note by Lender or by any subsequent transferee, the transferee shall thereupon become vested with all rights, benefits and privileges of Lender under this Note and by law provided, and the term “Lender” shall mean such subsequent transferee or transferee(s).

If any provision hereof is or becomes invalid or unenforceable under any law of mandatory application, it is the intent of Borrower, Lender, and all parties primarily or secondarily liable hereunder, that such provision will be deemed severed and omitted herefrom, the remaining portions hereof to remain in full force and effect as written.

This Agreement shall be construed in accordance with and governed by the law of the State of Ohio. Each party hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in any Loan Document shall affect any right that Lender may otherwise have to bring any action or proceeding relating to this Note against the Borrower or its properties in the courts of any jurisdiction.

IN WITNESS WHEREOF, the undersigned has executed this Note on the day and year first above written at Columbus, Ohio.

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Exhibit 10.2

INDEMNIFICATION AGREEMENT

This Indemnification Agreement (this “ Agreement ”) is made as of November 14, 2008, between State Auto Financial Corporation, an Ohio corporation (“ State Auto ”), and Robert P. Restrepo, Jr. (the “ Director ”).

Background Information

A. The Director is a member of State Auto’s Board of Directors (the “ Board ”) and, in that capacity, is performing valuable services for State Auto.

B. The Code of Regulations of State Auto, as amended and in effect on the date hereof (the “ Regulations ”), provides for indemnification of directors of State Auto in accordance with Chapter 1701, General Corporation Law, of the Ohio Revised Code (the “ OCL ”). In addition, the OCL expressly provides that it is not the exclusive source for indemnification rights and that individual contracts of indemnification may be entered into between an Ohio corporation and its directors.

C. The Board has evaluated the sufficiency of liability insurance and the statutory indemnification provided by the OCL as to their adequacy to protect directors against the various legal risks and potential liabilities associated with their serving as directors of State Auto, and the Board has concluded that such insurance and statutory indemnification may not be adequate protection to directors.

D. In order to induce and encourage highly experienced and capable persons to serve as members of the Board, the Board has determined, after due consideration of the terms of this Agreement and the various other options available to State Auto, that this Agreement is not only reasonable and prudent, but is necessary to promote and ensure the best interests of State Auto.

E. The Board has further determined that its prior form of indemnification agreement with its directors should be replaced with a new form of indemnification agreement.

Statement of Agreement

The parties acknowledge the accuracy of the foregoing Background Information and hereby agree as follows:

§1. Agreement to Serve . The Director agrees to continue to serve as a director of State Auto, faithfully and to the best of the Director’s ability, so long as elected or appointed and qualified in accordance with the applicable provisions of the Regulations.

§2. Indemnification .

(a) Indemnification of Director . State Auto shall indemnify the Director to the maximum extent permitted by the OCL in effect on the date of this Agreement, and as the OCL may be hereafter amended from time to time (but, in the case of any such amendment, only to the extent the amendment permits State Auto to provide broader indemnification rights and protection than the OCL permitted State Auto to provide before the amendment), by reason of the Director serving as a Corporate Fiduciary (as defined in Section 19 ).

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(b) Indemnification for Expenses When Wholly or Partly Successful . To the extent that the Director is, by reason of the Director serving as a Corporate Fiduciary, a party to and is successful, on the merits or otherwise, in any Proceeding (as defined in Section 19 ), State Auto shall indemnify the Director to the maximum extent permitted by the OCL in effect on the date of this Agreement, and as the OCL may be hereafter amended from time to time (but, in the case of any such amendment, only to the extent the amendment permits State Auto to provide broader indemnification rights and protection than the OCL permitted State Auto to provide before the amendment), against all Expenses (as defined in Section 19 ) actually and reasonably incurred by the Director or on the Director’s behalf in connection with such Proceeding. If the Director is not wholly successful in such Proceeding, but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, then State Auto shall indemnify the Director against all Expenses actually and reasonably incurred by the Director or on the Director’s behalf in connection with each successfully resolved claim, issue or matter. For purposes of this section and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

(c) Indemnification for Expenses of a Witness . To the extent that the Director is, by reason of the Director serving as a Corporate Fiduciary, a witness in any Proceeding to which the Director is not a party, the Director shall be indemnified against all Expenses actually and reasonably incurred by the Director or on the Director’s behalf in connection with such Proceeding.

§3. Additional Indemnification . In addition to the indemnification provided for in Section 2 of this Agreement, State Auto shall indemnify the Director against all Expenses, judgments, penalties, fines, excise taxes and amounts paid in settlement actually and reasonably incurred by the Director or on the Director’s behalf if, by reason of the Director serving as a Corporate Fiduciary, the Director is, or is threatened to be made, a party to or participant in any Proceeding (including a Proceeding by or in the right of State Auto).

Notwithstanding the foregoing, State Auto shall not be obligated under this Agreement to provide indemnification to the Director in the following situations:

(a) In connection with any Proceeding in which a court of competent jurisdiction determines, in a final adjudication from which there is no further right of appeal, that the Director’s actions were knowingly fraudulent, deliberately dishonest or willfully wrongful;

(b) In connection with any Proceeding in which a court of competent jurisdiction determines, in a final adjudication from which there is no further right of appeal, that indemnification under the specific circumstances would be unlawful;

(c) In connection with any Proceeding in which the only liability asserted against the Director is pursuant to section 1701.95 of the OCL;

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(d) To the extent payment has actually been made to or on behalf of the Director under any insurance policy or other indemnity provision, except with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision;

(e) In connection with an accounting of profits made from the purchase and sale (or sale and purchase) by the Director of securities of State Auto within the meaning of Section 16(b) of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), or similar provisions of state statutory law or common law;

(f) With respect to any conduct of the Director that does not directly relate to the Director’s services as a Corporate Fiduciary; or

(g) In connection with any Proceeding (or any part of any Proceeding) initiated by the Director, including any Proceeding (or any part of any Proceeding) initiated by the Director against State Auto or other Corporate Fiduciaries, unless:

(i) The Proceeding is brought by the Director to enforce any of the Director’s rights under this Agreement or to collect money due under this Agreement;

(ii) The Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation; or

(iii) State Auto provides the indemnification, in its sole discretion, pursuant to the powers vested in State Auto under applicable law.

As applicable, any determination shall be made under the procedures, and subject to the presumptions, set forth in Sections 6 and 7 of this Agreement.

§4. Contribution .

(a) If in connection with an Indemnifiable Event (as defined in Section 19 ) State Auto is jointly liable with the Director (or would be if joined in the applicable Proceeding), State Auto shall pay the entire amount of such Indemnifiable Event without requiring the Director to contribute to such payment, and State Auto waives and relinquishes any right of contribution it may have against the Director. State Auto shall not enter into any settlement of any Proceeding in which State Auto is jointly liable with the Director (or would be if joined in such Proceeding) unless such settlement provides for a full and final release of all claims asserted against the Director.

(b) Without diminishing or impairing the obligations of State Auto set forth in the preceding subsection, if, for any reason, the Director shall be required to pay any amount in connection with an Indemnifiable Event in which State Auto is jointly liable with the Director (or would be if joined in the applicable Proceeding), State Auto shall contribute to such payment an amount equal to the relative benefits received by State Auto and all Corporate Fiduciaries, other than the Director, who are jointly liable with the Director (or would be if joined in the applicable Proceeding), on the one hand, and the

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Director, on the other hand, from the transaction from which such Indemnifiable Event arose; provided, however, that the proportion determined on the basis of relative benefit may, to the extent necessary to conform to law, be further adjusted by reference to the relative fault of State Auto and all Corporate Fiduciaries, other than the Director, who are jointly liable with the Director (or would be if joined in the applicable Proceeding), on the one hand, and the Director, on the other hand, in connection with the events that resulted in the Indemnifiable Event, as well as any other equitable considerations which the law may require to be considered. The relative fault of State Auto and all Corporate Fiduciaries, other than the Director, who are jointly liable with the Director (or would be if joined in the applicable Proceeding), on the one hand, and the Director, on the other hand, shall be determined by reference to, among other things, the degree to which their actions were motivated by intent to gain personal profit or advantage, the degree to which their liability is primary or secondary and the degree to which their conduct is active or passive.

(c) State Auto agrees to fully indemnify and hold the Director harmless from any claims of contribution which may be brought by Corporate Fiduciaries, other than the Director, who may be jointly liable with the Director in connection with an Indemnifiable Event.

(d) To the maximum extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to the Director for any reason whatsoever, State Auto, in lieu of indemnifying the Director, shall contribute to the amount incurred by the Director in connection with the Indemnifiable Event, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect:

(i) The relative benefits received by State Auto and the Director as a result of the event(s) or transaction(s) giving rise to the Indemnifiable Event; and

(ii) The relative fault of State Auto, the Director and other Corporate Fiduciaries in connection with such event(s) or transaction(s).

§5. Advancement of Expenses . State Auto shall advance all Expenses incurred by or on behalf of the Director in connection with any Proceeding within 30 days after the receipt by State Auto of an indemnification statement and undertaking from the Director substantially in the form attached hereto as Exhibit A (the “ Indemnification Statement and Undertaking ”) requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding.

Any advances of Expenses made pursuant to this section shall be unsecured and interest free.

If the Director is subsequently required to repay the amount of any advancement of Expenses to State Auto, then any amounts payable by the Director to State Auto may be offset by any obligations due to the Director from State Auto, so that only net amounts shall be required to be transferred between the parties.

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§6. Procedures and Presumptions for Determination of Entitlement to Indemnification . Subject to the terms and conditions of this Agreement, it is the intent of this Agreement to secure for the Director rights of indemnity that are as favorable as may be permitted under the OCL and public policy of the State of Ohio. Accordingly, the parties agree that the following procedures and presumptions shall apply in the event of any question as to whether the Director is entitled to indemnification under this Agreement:

(a) If the Director desires to request indemnification pursuant to this Agreement, then the Director shall submit to the secretary of State Auto an Indemnification Statement and Undertaking, along with all documents and information as are reasonably available to the Director and are reasonably necessary to determine whether and to what extent the Director is entitled to indemnification. The secretary of State Auto shall, promptly upon receipt of such Indemnification Statement and Undertaking, advise the Board in writing that the Director has requested indemnification pursuant to this Agreement.

(b) A determination as to the Director’s entitlement to indemnification under this Agreement shall be made in the specific case by one of the following four methods, which shall be at the election of the Board:

(i) By a majority vote of a quorum consisting of the Disinterested Directors (as defined in Section 19 );

(ii) If the quorum described in Section 6(b)(i) is not obtainable or if a majority vote of the Disinterested Directors so directs, by Independent Counsel (as defined in Section 19 ) in a written opinion to the Board, a copy of which shall be delivered to the Director;

(iii) By the shareholders of State Auto; or

(iv) By the Court of Common Pleas (as defined in Section 18(a) ).

(c) If the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 6(b) of this Agreement, the Independent Counsel shall be selected as provided in this subsection. The Independent Counsel shall be selected by the Board, and the secretary of State Auto shall promptly give written notice of such selection to the Director. The Director may, within ten days after such written notice of selection shall have been given, deliver to State Auto, as the case may be, a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “ Independent Counsel ” as defined in Section 19 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected shall act as Independent Counsel. If a written objection is made and substantiated by the Board, the Independent Counsel selected may not serve as Independent Counsel unless and until such objection is withdrawn or the Court of Common Pleas has determined that such objection is without merit. State Auto shall pay any and all reasonable fees and Expenses of Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to Section 6(b) of this Agreement,

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and State Auto shall pay all reasonable fees and Expenses incident to the procedures of this subsection, regardless of the manner in which such Independent Counsel was selected or appointed.

(d) In making a determination with respect to entitlement to indemnification under this Agreement, the person or persons or entity making such determination shall presume that the Director is entitled to indemnification under this Agreement. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence. Neither the failure of State Auto to have made a determination prior to the commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because the Director has met the applicable standard of conduct, nor an actual determination by State Auto that the Director has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the Director has not met the applicable standard of conduct.

(e) The Director shall be deemed to have acted in good faith if the Director’s action is based on the records or books of account of the Enterprise (as defined in Section 19 of this Agreement), including financial statements, or on information supplied to the Director by the officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Enterprise. In addition, the knowledge and/or actions, or failure to act, of any Corporate Fiduciary other than the Director shall not be imputed to the Director for purposes of determining the right to indemnification under this Agreement. Whether or not the foregoing provisions of this subsection are satisfied, it shall in any event be presumed that the Director has at all times acted in good faith and in a manner the Director reasonably believed to be in or not opposed to the best interests of State Auto. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.

(f) The determination of the Director’s entitlement to indemnification must be made by the person, persons or entity empowered or selected under Section 6 to make such determination not later than 60 days after the final disposition of the Proceeding, whether by judgment, order, settlement, dismissal, arbitration award, conviction, acceptance of a plea of nolo contendere or its equivalent. If a determination is not made within such period, the requisite determination of entitlement to indemnification shall be deemed to have been made and the Director shall be entitled to such indemnification absent (i) a misstatement by the Director of a material fact, or an omission of a material fact necessary to make the Director’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law; provided, however, that such 60-day period may be extended for a reasonable time, not to exceed an additional 30 days, if the person, persons or entity making such determination with respect to entitlement to indemnification in good faith requires such additional time to obtain or evaluate documentation and/or information relating to making such determination; and provided, further, that the foregoing provisions of this subsection shall not apply if the determination of entitlement to indemnification is to be made by the shareholders pursuant to Section 6(b) of this Agreement and within 120 days after the final disposition of the Proceeding a meeting of State Auto shareholders is held for the purpose of making such determination and such determination is made at such meeting.

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(g) The Director shall cooperate with the person, persons or entity making such determination with respect to the Director’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to the Director and reasonably necessary to such determination. Any Independent Counsel, member of the Board or shareholder of State Auto shall act reasonably and in good faith in making a determination regarding the Director’s entitlement to indemnification under this Agreement. Any Expenses incurred by the Director in so cooperating with the person, persons or entity making such determination shall be borne by State Auto (irrespective of the determination as to the Director’s entitlement to indemnification) and State Auto indemnifies and agrees to hold the Director harmless from any such costs.

(h) State Auto acknowledges that a settlement or other disposition short of final judgment may be successful if it permits a party to avoid expense, delay, distraction, disruption and uncertainty. In the event that any Proceeding to which the Director is a party is resolved in any manner other than by adverse judgment against the Director (including, without limitation, settlement of such Proceeding with or without payment of money or other consideration) it shall be presumed that the Director has been successful on the merits or otherwise in such Proceeding. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.

(i) The termination of any Proceeding or of any claim, issue or matter in any Proceeding, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of the Director to indemnification or create a presumption that the Director did not act in good faith and in a manner which the Director reasonably believed to be in or not opposed to the best interests of State Auto or, with respect to any criminal Proceeding, that the Director had reasonable cause to believe that the Director’s conduct was unlawful.

§7. Remedies of the Director .

(a) In the event that (i) a determination is made pursuant to Section 6 of this Agreement that the Director is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 5 of this Agreement, or (iii) payment of indemnification is not made within 30 days after a determination has been made that the Director is entitled to indemnification or such determination is deemed to have been made pursuant to Section 6 of this Agreement, the Director shall be entitled to an adjudication in the Court of Common Pleas of the Director’s entitlement to such indemnification or payment of Expenses or indemnification. The Director shall commence such proceeding seeking an adjudication within 180 days following the date on which the Director first has the right to commence such proceeding pursuant to this subsection. State Auto shall not oppose the Director’s right to seek any such adjudication.

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(b) In the event that a determination shall have been made pursuant to Section 6(b) of this Agreement that the Director is not entitled to indemnification, any judicial proceeding commenced pursuant to this section shall be conducted in all respects as a de novo trial on the merits, and the Director shall not be prejudiced by reason of any adverse determination under Section 6(b) .

(c) If a determination shall have been made pursuant to Section 6(b) of this Agreement that the Director is entitled to indemnification, State Auto shall be bound by such determination in any judicial proceeding commenced pursuant to this section, absent:

(i) A misstatement by the Director of a material fact, or an omission of a material fact necessary to make the Director’s misstatement not materially misleading in connection with the application for indemnification; or

(ii) A prohibition of such indemnification under applicable law.

(d) In the event that the Director, pursuant to this section, seeks a judicial adjudication of the Director’s rights under, or to recover damages for breach of, this Agreement, or to collect money due under this Agreement, or to recover under any directors’ and officers’ liability insurance policies maintained by State Auto, State Auto shall pay on the Director’s behalf, in advance, any and all Expenses actually and reasonably incurred by the Director in such judicial adjudication, regardless of whether the Director ultimately is determined to be entitled to such indemnification, recovery of damages, collection of money or recovery of insurance proceeds, unless it is determined in such judicial adjudication that each of the material assertions made by the Director as a basis for such action were not made in good faith or were frivolous.

(e) State Auto shall be precluded from asserting in any judicial proceeding commenced pursuant to this section that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court that State Auto is bound by all the provisions of this Agreement.

§8. Notice by Director . The Director shall promptly notify State Auto in writing on being served with any summons, citation, subpoena, complaint, indictment, information, or other document relating to any matter that may be subject to indemnification under this Agreement, whether civil, criminal, administrative, or investigative; but the omission to so notify State Auto will not relieve State Auto from any liability that it may have to the Director if such omission does not prejudice State Auto’s rights, but if such omission does prejudice State Auto’s rights, it will relieve State Auto from liability only to the extent of such prejudice; nor will the omission relieve State Auto from any liability that it may have to the Director otherwise than under this Agreement. With respect to any Proceeding of which the Director notifies State Auto:

(a) State Auto will be entitled to participate in such Proceeding at its own expense.

(b) Except as otherwise provided below, to the extent that it may wish, State Auto jointly with any other indemnifying party similarly notified will be entitled to assume the defense of the Proceeding, with counsel reasonably satisfactory to the Director. After

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notice from State Auto to the Director of its election so to assume the defense, State Auto will not be liable to the Director under this Agreement for any Expenses subsequently incurred by the Director in connection with the defense other than reasonable costs of investigation or as otherwise provided below. The Director will have the right to employ the Director’s own counsel in such Proceeding, but the fees and Expenses of such counsel will be at the expense of the Director unless: (i) the employment of counsel by the Director has been authorized by State Auto; (ii) the Director has reasonably concluded that there may be a conflict of interest between State Auto and the Director in the conduct of the defense of such Proceeding or that counsel may not be adequately representing director; or (iii) State Auto has not in fact employed counsel to assume the defense of such Proceeding, in each case of which the Expenses of counsel employed by the Director will be at the expense of State Auto. State Auto is not entitled to assume the defense of any Proceeding as to which the Director has made the conclusion provided in (ii) above has occurred.

(c) State Auto shall not settle any action or claim in any manner that would impose any penalty or limitation on the Director without the Director’s written consent.

(d) Director shall not make any admission or effect any settlement with respect to a Proceeding without State Auto’s written consent unless the Director shall have determined to undertake the Director’s own defense in such matter and has waived the benefits of this Agreement in writing delivered to State Auto. State Auto is not liable to indemnify the Director under this Agreement for any amounts paid in settlement of any action or claim effected without its written consent.

(e) Neither the Director nor State Auto shall unreasonably withhold consent to any proposed settlement. The Director and State Auto shall cooperate to the extent reasonably possible with each other and with State Auto’s insurers, in attempts to defend or settle such Proceeding.

§9. Non-Exclusivity; Insurance; Subrogation .

(a) Non-Exclusive Right . The rights of indemnification as provided by this Agreement shall not be deemed exclusive of any other rights to which the Director may at any time be entitled under applicable law, the articles of incorporation of State Auto, the Regulations, any agreement, a vote of shareholders, a resolution of directors or otherwise. No amendment, alteration or repeal of this Agreement or of any provision of this Agreement shall limit or restrict any right of the Director under this Agreement in respect of any action taken or omitted by the Director prior to such amendment, alteration or repeal. To the extent that a change in the OCL, whether by statute or judicial decision, permits greater indemnification than would be afforded currently under the Regulations and this Agreement, it is the intent of the parties to this Agreement that the Director shall enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy conferred in this Agreement is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.

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(b) D&O Insurance . State Auto shall use its best efforts to maintain an insurance policy or policies providing liability insurance for directors which is at least as favorable to the Director as the policy in effect on the date of this Agreement and for so long as the Director’s services are covered pursuant to this Agreement, provided and to the extent that such insurance is available on a reasonable commercial basis. However, the Director shall continue to be entitled to the indemnification rights provided pursuant to this Agreement regardless of whether liability or other insurance coverage is at any time obtained or retained by State Auto. Any payments in fact made to the Director under an insurance policy obtained or retained by State Auto shall reduce the obligation of State Auto to make payments under this Agreement by the amount of the payments made under any such insurance policy. In the event that insurance becomes unavailable in the amount or scope of coverage of the policy in effect on the date of this Agreement on a reasonable commercial basis and State Auto foregoes maintenance of all or a portion of such insurance coverage, State Auto shall stand as a self-insurer with respect to the coverage, or portion of such coverage, not retained, and shall indemnify the Director against any loss arising out of the reduction or cancellation of such insurance coverage.

(c) Subrogation . In the event of any payment under this Agreement, State Auto shall be subrogated to the extent of such payment to all of the rights of recovery of the Director, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable State Auto to bring suit to enforce such rights.

(d) Offset of Insurance Proceeds . State Auto shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable under this Agreement if and to the extent that the Director has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

(e) Offset for Other Payments . State Auto’s obligation to indemnify or advance Expenses under this Agreement to the Director who is or was serving at the request of State Auto as a Corporate Fiduciary of another Enterprise shall be reduced by any amount the Director has actually received as indemnification or advancement of Expenses from such other Enterprise.

(f) Changes in Code of Regulations . No provision of the Regulations as hereafter amended shall limit or restrict any right of the Director under this Agreement for indemnification or advancement of expenses for any action taken or omitted by the Director in the Director’s role as Corporate Fiduciary prior to such amendment, alteration or repeal whether or not (i) the acts or omissions giving rise to the action, suit or proceeding for which the Director seeks indemnification were known to State Auto at the time of any such amendment (ii) the Director is or is not a Corporate Fiduciary at the time of such amendment, or (iii) the acts or omissions giving rise to the action, suit or proceeding for which the Director seeks indemnification were known to State Auto at the time the Director ceased to be a Corporate Fiduciary.

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§10. Duration of Agreement . All obligations of State Auto contained in this Agreement shall apply retroactively beginning to the date the Director began serving as a Corporate Fiduciary and shall continue during the period that the Director serves as a Corporate Fiduciary and for so long thereafter as the Director may be subject to any possible claim or any threatened, pending or completed Proceeding as a result, directly or indirectly, of the Director serving as a Corporate Fiduciary. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties to this Agreement and their respective successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of State Auto), assigns, spouses, heirs, executors and personal and legal representatives.

§11. Enforcement .

(a) State Auto expressly confirms and agrees that it has entered into this Agreement and assumes the obligations imposed on it by this Agreement in order to induce the Director to serve as a director of State Auto, and State Auto acknowledges that the Director is relying upon this Agreement in serving as a director of State Auto.

(b) This Agreement constitutes the entire agreement between the parties to this Agreement with respect to the subject matter of this Agreement and supersedes all prior agreements and understandings, oral, written and implied, between the parties with respect to the subject matter of this Agreement.

§12. Severability . The invalidity of unenforceability of any provision of this Agreement shall in no way affect the validity or enforceability of any other provision. Without limiting the generality of the foregoing, this Agreement is intended to confer upon the Director indemnification rights to the fullest extent permitted by the OCL. In the event any provision of this Agreement conflicts with any applicable law, such provision shall be deemed modified, consistent with the aforementioned intent, to the extent necessary to resolve such conflict.

§13. Modification and Waiver . No supplement, modification, termination or amendment of this Agreement shall be binding unless executed in writing by both of the parties to this Agreement. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions (whether or not similar) of this Agreement nor shall such waiver constitute a continuing waiver.

§14. Notice By the Director . The Director agrees promptly to notify State Auto in writing upon being served with or otherwise receiving any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification under this Agreement. The failure to so notify State Auto shall not relieve State Auto of any obligation which it may have to the Director under this Agreement or otherwise unless and only to the extent that such failure or delay materially prejudices State Auto.

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§15. Notices . All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, and if not so confirmed, then on the next business day, (c) five days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (e) one day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent:

To the Director at the address set forth below the Director’s signature to this Agreement.

To State Auto at:

State Auto Insurance Companies

518 East Broad Street

Columbus, Ohio 43215

Attention: Chief Executive Officer

Facsimile: (614) 464-4911

with a copy to:

State Auto Insurance Companies

518 East Broad Street

Columbus, Ohio 43215

Attention: General Counsel

Facsimile: (614) 719-0173

Or to such other address as may have been furnished to the Director by State Auto or to State Auto by the Director, as the case may be.

§16. Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same Agreement. This Agreement may also be executed and delivered by facsimile signature and in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

§17. Headings . The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction of this Agreement.

§18. Governing Law and Consent to Jurisdiction . This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Ohio, without regard to its conflict of laws rules. State Auto and the Director irrevocably and unconditionally:

(a) Agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the Court of Common Pleas of Franklin County, State of Ohio (the “ Court of Common Pleas ”), and not in any other state or federal court in the United States of America or any court in any other country;

(b) Consent to submit to the exclusive jurisdiction of the Court of Common Pleas for purposes of any action or proceeding arising out of or in connection with this Agreement;

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(c) Waive any objection to the laying of venue of any such action or proceeding in the Court of Common Pleas; and

(d) Waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Court of Common Pleas has been brought in an improper or inconvenient forum.

§19. Definitions . For purposes of this Agreement:

(a) “ Corporate Fiduciary ” means the status of a person as a current or former director, officer, employee or agent of State Auto or as a current or former director, trustee, officer, employee, member, manager or agent of any other Enterprise that such person is or was serving at the request of State Auto.

(b) “ Disinterested Director ” means a director of State Auto who is not and was not a party to the Proceeding in respect of which indemnification is sought by the Director.

(c) “ Enterprise ” shall mean any corporation (for profit or nonprofit), limited liability company, partnership, joint venture, association, joint-stock company, trust, employee benefit plan or unincorporated organization, including without limitation State Auto, State Automobile Mutual Insurance Company and their respective subsidiaries and affiliates.

(d) “ Expenses ” shall include all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, participating, or being or preparing to be a witness in a Proceeding. Expenses also shall include Expenses incurred in connection with any appeal resulting from any Proceeding, including without limitation the premium, security for, and other costs relating to any cost bond, supersede as bond, or other appeal bond or its equivalent. Expenses, however, shall not include amounts paid in settlement by the Director or the amount of judgments, penalties, fines, or excise taxes against the Director.

(e) “ Indemnifiable Event ” means any event, circumstance or situation, including any Proceeding, in which indemnification is or may be available to the Director under the provisions of Sections 2 or 3 of this Agreement.

(f) “ Independent Counsel ” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent or perform services for:

(i) State Auto or the Director in any matter material to either such party, or

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(ii) Any other party to the Proceeding giving rise to a claim for indemnification hereunder.

Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either State Auto or the Director in an action to determine the Director’s rights under this Agreement.

(g) “ Proceeding ” includes any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought by or in the right of State Auto or otherwise and whether civil, criminal, administrative or investigative, in which the Director was, is or will be involved as a party or otherwise, by reason of the fact that the Director is or was serving as a Corporate Fiduciary, by reason of any conduct of the Director while serving as a Corporate Fiduciary; in each case whether or not the Director is serving as a Corporate Fiduciary at the time any liability or expense is incurred for which indemnification can be provided under this Agreement.

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Exhibit 10.3

OFFICER INDEMNIFICATION AGREEMENT

This Officer Indemnification Agreement (this “ Agreement ”) is made as of May 8, 2009, between State Auto Financial Corporation, an Ohio corporation (“ State Auto ”), and Steven E. English (the “ Executive Officer ”).

Background Information

A. The Executive Officer is a member of State Auto’s senior management and, in that capacity, is performing valuable services for State Auto.

B. The Code of Regulations of State Auto, as amended and in effect on the date hereof (the “ Regulations ”), provides for indemnification of officers of State Auto in accordance with Chapter 1701, General Corporation Law, of the Ohio Revised Code (the “ OCL ”). In addition, the OCL expressly provides that it is not the exclusive source for indemnification rights and that individual contracts of indemnification may be entered into between an Ohio corporation and its officers.

C. The State Auto Board of Directors (the “ Board ”) has evaluated the sufficiency of liability insurance and the statutory indemnification provided by the OCL as to their adequacy to protect certain executive officers against the various legal risks and potential liabilities associated with the performance of their duties on behalf of State Auto, and the Board has concluded that such insurance and statutory indemnification may not be adequate protection to such officers.

D. The Board has determined, after due consideration of the terms of this Agreement and the various other options available to State Auto, that this Agreement is reasonable and prudent and in the best interests of State Auto.

Statement of Agreement

The parties acknowledge the accuracy of the foregoing Background Information and hereby agree as follows:

§1. Agreement to Serve . The Executive Officer agrees to continue to serve as an officer of State Auto, faithfully and to the best of the Executive Officer’s ability, so long as elected or appointed as an officer of State Auto by the Board.

§2. Indemnification .

(a) Indemnification of Executive Officer . State Auto shall indemnify the Executive Officer to the maximum extent permitted by the OCL in effect on the date of this Agreement, and as the OCL may be hereafter amended from time to time (but, in the case of any such amendment, only to the extent the amendment permits State Auto to provide broader indemnification rights and protection than the OCL permitted State Auto to provide before the amendment), by reason of the Executive Officer serving as a Corporate Fiduciary (as defined in Section 19 ).

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(b) Indemnification for Expenses When Wholly or Partly Successful . To the extent that the Executive Officer is, by reason of the Executive Officer serving as a Corporate Fiduciary, a party to and is successful, on the merits or otherwise, in any Proceeding (as defined in Section 19 ), State Auto shall indemnify the Executive Officer to the maximum extent permitted by the OCL in effect on the date of this Agreement, and as the OCL may be hereafter amended from time to time (but, in the case of any such amendment, only to the extent the amendment permits State Auto to provide broader indemnification rights and protection than the OCL permitted State Auto to provide before the amendment), against all Expenses (as defined in Section 19 ) actually and reasonably incurred by the Executive Officer or on the Executive Officer’s behalf in connection with such Proceeding. If the Executive Officer is not wholly successful in such Proceeding, but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, then State Auto shall indemnify the Executive Officer against all Expenses actually and reasonably incurred by the Executive Officer or on the Executive Officer’s behalf in connection with each successfully resolved claim, issue or matter. For purposes of this section and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

(c) Indemnification for Expenses of a Witness . To the extent that the Executive Officer is, by reason of the Executive Officer serving as a Corporate Fiduciary, a witness in any Proceeding to which the Executive Officer is not a party, the Executive Officer shall be indemnified against all Expenses actually and reasonably incurred by the Executive Officer or on the Executive Officer’s behalf in connection with such Proceeding.

§3. Additional Indemnification . In addition to the indemnification provided for in Section 2 of this Agreement, State Auto shall indemnify the Executive Officer against all Expenses, judgments, penalties, fines, excise taxes and amounts paid in settlement actually and reasonably incurred by the Executive Officer or on the Executive Officer’s behalf if, by reason of the Executive Officer serving as a Corporate Fiduciary, the Executive Officer is, or is threatened to be made, a party to or participant in any Proceeding (including a Proceeding by or in the right of State Auto).

Notwithstanding the foregoing, State Auto shall not be obligated under this Agreement to provide indemnification to the Executive Officer in the following situations:

(a) In connection with any Proceeding in which a court of competent jurisdiction determines, in a final adjudication from which there is no further right of appeal, that the Executive Officer’s actions were knowingly fraudulent, deliberately dishonest or willfully wrongful;

(b) In connection with any Proceeding in which a court of competent jurisdiction determines, in a final adjudication from which there is no further right of appeal, that indemnification under the specific circumstances would be unlawful;

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(c) In connection with any Proceeding in which the only liability asserted against the Executive Officer is pursuant to section 1701.95 of the OCL;

(d) To the extent payment has actually been made to or on behalf of the Executive Officer under any insurance policy or other indemnity provision, except with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision;

(e) In connection with an accounting of profits made from the purchase and sale (or sale and purchase) by the Executive Officer of securities of State Auto within the meaning of Section 16(b) of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), or similar provisions of state statutory law or common law;

(f) With respect to any conduct of the Executive Officer that does not directly relate to the Executive Officer’s services as a Corporate Fiduciary; or

(g) In connection with any Proceeding (or any part of any Proceeding) initiated by the Executive Officer, including any Proceeding (or any part of any Proceeding) initiated by the Executive Officer against State Auto or other Corporate Fiduciaries, unless:

(i) The Proceeding is brought by the Executive Officer to enforce any of the Executive Officer’s rights under this Agreement or to collect money due under this Agreement;

(ii) The Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation; or

(iii) State Auto provides the indemnification, in its sole discretion, pursuant to the powers vested in State Auto under applicable law.

As applicable, any determination shall be made under the procedures, and subject to the presumptions, set forth in Sections 6 and 7 of this Agreement.

§4. Contribution .

(a) If in connection with an Indemnifiable Event (as defined in Section 19 ) State Auto is jointly liable with the Executive Officer (or would be if joined in the applicable Proceeding), State Auto shall pay the entire amount of such Indemnifiable Event without requiring the Executive Officer to contribute to such payment, and State Auto waives and relinquishes any right of contribution it may have against the Executive Officer. State Auto shall not enter into any settlement of any Proceeding in which State Auto is jointly liable with the Executive Officer (or would be if joined in such Proceeding) unless such settlement provides for a full and final release of all claims asserted against the Executive Officer.

(b) Without diminishing or impairing the obligations of State Auto set forth in the preceding subsection, if, for any reason, the Executive Officer shall be required to pay any amount in connection with an Indemnifiable Event in which State Auto is jointly liable

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with the Executive Officer (or would be if joined in the applicable Proceeding), State Auto shall contribute to such payment an amount equal to the relative benefits received by State Auto and all Corporate Fiduciaries, other than the Executive Officer, who are jointly liable with the Executive Officer (or would be if joined in the applicable Proceeding), on the one hand, and the Executive Officer, on the other hand, from the transaction from which such Indemnifiable Event arose; provided, however, that the proportion determined on the basis of relative benefit may, to the extent necessary to conform to law, be further adjusted by reference to the relative fault of State Auto and all Corporate Fiduciaries, other than the Executive Officer, who are jointly liable with the Executive Officer (or would be if joined in the applicable Proceeding), on the one hand, and the Executive Officer, on the other hand, in connection with the events that resulted in the Indemnifiable Event, as well as any other equitable considerations which the law may require to be considered. The relative fault of State Auto and all Corporate Fiduciaries, other than the Executive Officer, who are jointly liable with the Executive Officer (or would be if joined in the applicable Proceeding), on the one hand, and the Executive Officer, on the other hand, shall be determined by reference to, among other things, the degree to which their actions were motivated by intent to gain personal profit or advantage, the degree to which their liability is primary or secondary and the degree to which their conduct is active or passive.

(c) State Auto agrees to fully indemnify and hold the Executive Officer harmless from any claims of contribution which may be brought by Corporate Fiduciaries, other than the Executive Officer, who may be jointly liable with the Executive Officer in connection with an Indemnifiable Event.

(d) To the maximum extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to the Executive Officer for any reason whatsoever, State Auto, in lieu of indemnifying the Executive Officer, shall contribute to the amount incurred by the Executive Officer in connection with the Indemnifiable Event, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect:

(i) The relative benefits received by State Auto and the Executive Officer as a result of the event(s) or transaction(s) giving rise to the Indemnifiable Event; and

(ii) The relative fault of State Auto, the Executive Officer and other Corporate Fiduciaries in connection with such event(s) or transaction(s).

§5. Advancement of Expenses . State Auto shall advance all Expenses incurred by or on behalf of the Executive Officer in connection with any Proceeding within 30 days after the receipt by State Auto of an indemnification statement and undertaking from the Executive Officer substantially in the form attached hereto as Exhibit A (the “ Indemnification Statement and Undertaking ”) requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding.

Any advances of Expenses made pursuant to this section shall be unsecured and interest free.

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If the Executive Officer is subsequently required to repay the amount of any advancement of Expenses to State Auto, then any amounts payable by the Executive Officer to State Auto may be offset by any obligations due to the Executive Officer from State Auto, so that only net amounts shall be required to be transferred between the parties.

§6. Procedures and Presumptions for Determination of Entitlement to Indemnification . Subject to the terms and conditions of this Agreement, it is the intent of this Agreement to secure for the Executive Officer rights of indemnity that are as favorable as may be permitted under the OCL and public policy of the State of Ohio. Accordingly, the parties agree that the following procedures and presumptions shall apply in the event of any question as to whether the Executive Officer is entitled to indemnification under this Agreement:

(a) If the Executive Officer desires to request indemnification pursuant to this Agreement, then the Executive Officer shall submit to the secretary of State Auto an Indemnification Statement and Undertaking, along with all documents and information as are reasonably available to the Executive Officer and are reasonably necessary to determine whether and to what extent the Executive Officer is entitled to indemnification. The secretary of State Auto shall, promptly upon receipt of such Indemnification Statement and Undertaking, advise the Board in writing that the Executive Officer has requested indemnification pursuant to this Agreement.

(b) A determination as to the Executive Officer’s entitlement to indemnification under this Agreement shall be made in the specific case by one of the following four methods, which shall be at the election of the Board:

(i) By a majority vote of a quorum consisting of the Disinterested Directors (as defined in Section 19 );

(ii) If the quorum described in Section 6(b)(i) is not obtainable or if a majority vote of the Disinterested Directors so directs, by Independent Counsel (as defined in Section 19 ) in a written opinion to the Board, a copy of which shall be delivered to the Executive Officer;

(iii) By the shareholders of State Auto; or

(iv) By the Court of Common Pleas (as defined in Section 18(a) ).

(c) If the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 6(b) of this Agreement, the Independent Counsel shall be selected as provided in this subsection. The Independent Counsel shall be selected by the Board, and the secretary of State Auto shall promptly give written notice of such selection to the Executive Officer. The Executive Officer may, within ten days after such written notice of selection shall have been given, deliver to State Auto, as the case may be, a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “ Independent Counsel ” as defined in Section 19 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected shall act as Independent Counsel. If a

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written objection is made and substantiated by the Board, the Independent Counsel selected may not serve as Independent Counsel unless and until such objection is withdrawn or the Court of Common Pleas has determined that such objection is without merit. State Auto shall pay any and all reasonable fees and Expenses of Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to Section 6(b) of this Agreement, and State Auto shall pay all reasonable fees and Expenses incident to the procedures of this subsection, regardless of the manner in which such Independent Counsel was selected or appointed.

(d) In making a determination with respect to entitlement to indemnification under this Agreement, the person or persons or entity making such determination shall presume that the Executive Officer is entitled to indemnification under this Agreement. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence. Neither the failure of State Auto to have made a determination prior to the commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because the Executive Officer has met the applicable standard of conduct, nor an actual determination by State Auto that the Executive Officer has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the Executive Officer has not met the applicable standard of conduct.

(e) The Executive Officer shall be deemed to have acted in good faith if the Executive Officer’s action is based on the records or books of account of the Enterprise (as defined in Section 19 of this Agreement), including financial statements, or on information supplied to the Executive Officer by other officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Enterprise. In addition, the knowledge and/or actions, or failure to act, of any Corporate Fiduciary other than the Executive Officer shall not be imputed to the Executive Officer for purposes of determining the right to indemnification under this Agreement. Whether or not the foregoing provisions of this subsection are satisfied, it shall in any event be presumed that the Executive Officer has at all times acted in good faith and in a manner the Executive Officer reasonably believed to be in or not opposed to the best interests of State Auto. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.

(f) The determination of the Executive Officer’s entitlement to indemnification must be made by the person, persons or entity empowered or selected under Section 6 to make such determination not later than 60 days after the final disposition of the Proceeding, whether by judgment, order, settlement, dismissal, arbitration award, conviction, acceptance of a plea of nolo contendere or its equivalent. If a determination is not made within such period, the requisite determination of entitlement to indemnification shall be deemed to have been made and the Executive Officer shall be entitled to such indemnification absent (i) a misstatement by the Executive Officer of a material fact, or an omission of a material fact necessary to make the Executive Officer’s statement not materially misleading, in connection with the request for indemnification, or (ii) a

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prohibition of such indemnification under applicable law; provided, however, that such 60-day period may be extended for a reasonable time, not to exceed an additional 30 days, if the person, persons or entity making such determination with respect to entitlement to indemnification in good faith requires such additional time to obtain or evaluate documentation and/or information relating to making such determination; and provided, further, that the foregoing provisions of this subsection shall not apply if the determination of entitlement to indemnification is to be made by the shareholders pursuant to Section 6(b) of this Agreement and within 120 days after the final disposition of the Proceeding a meeting of State Auto shareholders is held for the purpose of making such determination and such determination is made at such meeting.

(g) The Executive Officer shall cooperate with the person, persons or entity making such determination with respect to the Executive Officer’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to the Executive Officer and reasonably necessary to such determination. Any Independent Counsel, member of the Board or shareholder of State Auto shall act reasonably and in good faith in making a determination regarding the Executive Officer’s entitlement to indemnification under this Agreement. Any Expenses incurred by the Executive Officer in so cooperating with the person, persons or entity making such determination shall be borne by State Auto (irrespective of the determination as to the Executive Officer’s entitlement to indemnification) and State Auto indemnifies and agrees to hold the Executive Officer harmless from any such costs.

(h) State Auto acknowledges that a settlement or other disposition short of final judgment may be successful if it permits a party to avoid expense, delay, distraction, disruption and uncertainty. In the event that any Proceeding to which the Executive Officer is a party is resolved in any manner other than by adverse judgment against the Executive Officer (including, without limitation, settlement of such Proceeding with or without payment of money or other consideration) it shall be presumed that the Executive Officer has been successful on the merits or otherwise in such Proceeding. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.

(i) The termination of any Proceeding or of any claim, issue or matter in any Proceeding, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of the Executive Officer to indemnification or create a presumption that the Executive Officer did not act in good faith and in a manner which the Executive Officer reasonably believed to be in or not opposed to the best interests of State Auto or, with respect to any criminal Proceeding, that the Executive Officer had reasonable cause to believe that the Executive Officer’s conduct was unlawful.

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§7. Remedies of the Executive Officer .

(a) In the event that (i) a determination is made pursuant to Section 6 of this Agreement that the Executive Officer is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 5 of this Agreement, or (iii) payment of indemnification is not made within 30 days after a determination has been made that the Executive Officer is entitled to indemnification or such determination is deemed to have been made pursuant to Section 6 of this Agreement, the Executive Officer shall be entitled to an adjudication in the Court of Common Pleas of the Executive Officer’s entitlement to such indemnification or payment of Expenses or indemnification. The Executive Officer shall commence such proceeding seeking an adjudication within 180 days following the date on which the Executive Officer first has the right to commence such proceeding pursuant to this subsection. State Auto shall not oppose the Executive Officer’s right to seek any such adjudication.

(b) In the event that a determination shall have been made pursuant to Section 6(b) of this Agreement that the Executive Officer is not entitled to indemnification, any judicial proceeding commenced pursuant to this section shall be conducted in all respects as a de novo trial on the merits, and the Executive Officer shall not be prejudiced by reason of any adverse determination under Section 6(b) .

(c) If a determination shall have been made pursuant to Section 6(b) of this Agreement that the Executive Officer is entitled to indemnification, State Auto shall be bound by such determination in any judicial proceeding commenced pursuant to this section, absent:

(i) A misstatement by the Executive Officer of a material fact, or an omission of a material fact necessary to make the Executive Officer’s misstatement not materially misleading in connection with the application for indemnification; or

(ii) A prohibition of such indemnification under applicable law.

(d) In the event that the Executive Officer, pursuant to this section, seeks a judicial adjudication of the Executive Officer’s rights under, or to recover damages for breach of, this Agreement, or to collect money due under this Agreement, or to recover under any directors’ and officers’ liability insurance policies maintained by State Auto, State Auto shall pay on the Executive Officer’s behalf, in advance, any and all Expenses actually and reasonably incurred by the Executive Officer in such judicial adjudication, regardless of whether the Executive Officer ultimately is determined to be entitled to such indemnification, recovery of damages, collection of money or recovery of insurance proceeds, unless it is determined in such judicial adjudication that each of the material assertions made by the Executive Officer as a basis for such action were not made in good faith or were frivolous.

(e) State Auto shall be precluded from asserting in any judicial proceeding commenced pursuant to this section that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court that State Auto is bound by all the provisions of this Agreement.

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§8. Notice by Executive Officer . The Executive Officer shall promptly notify State Auto in writing on being served with any summons, citation, subpoena, complaint, indictment, information, or other document relating to any matter that may be subject to indemnification under this Agreement, whether civil, criminal, administrative, or investigative; but the omission to so notify State Auto will not relieve State Auto from any liability that it may have to the Executive Officer if such omission does not prejudice State Auto’s rights, but if such omission does prejudice State Auto’s rights, it will relieve State Auto from liability only to the extent of such prejudice; nor will the omission relieve State Auto from any liability that it may have to the Executive Officer otherwise than under this Agreement. With respect to any Proceeding of which the Executive Officer notifies State Auto:

(a) State Auto will be entitled to participate in such Proceeding at its own expense.

(b) Except as otherwise provided below, to the extent that it may wish, State Auto jointly with any other indemnifying party similarly notified will be entitled to assume the defense of the Proceeding, with counsel reasonably satisfactory to the Executive Officer. After notice from State Auto to the Executive Officer of its election so to assume the defense, State Auto will not be liable to the Executive Officer under this Agreement for any Expenses subsequently incurred by the Executive Officer in connection with the defense other than reasonable costs of investigation or as otherwise provided below. The Executive Officer will have the right to employ the Executive Officer’s own counsel in such Proceeding, but the fees and Expenses of such counsel will be at the expense of the Executive Officer unless: (i) the employment of counsel by the Executive Officer has been authorized by State Auto; (ii) the Executive Officer has reasonably concluded that there may be a conflict of interest between State Auto and the Executive Officer in the conduct of the defense of such Proceeding or that counsel may not be adequately representing the Executive Officer; or (iii) State Auto has not in fact employed counsel to assume the defense of such Proceeding, in each case of which the Expenses of counsel employed by the Executive Officer will be at the expense of State Auto. State Auto is not entitled to assume the defense of any Proceeding as to which the Executive Officer has made the conclusion provided in (ii) above has occurred.

(c) State Auto shall not settle any action or claim in any manner that would impose any penalty or limitation on the Executive Officer without the Executive Officer’s written consent.

(d) The Executive Officer shall not make any admission or effect any settlement with respect to a Proceeding without State Auto’s written consent unless the Executive Officer shall have determined to undertake the Executive Officer’s own defense in such matter and has waived the benefits of this Agreement in writing delivered to State Auto. State Auto is not liable to indemnify the Executive Officer under this Agreement for any amounts paid in settlement of any action or claim effected without its written consent.

(e) Neither the Executive Officer nor State Auto shall unreasonably withhold consent to any proposed settlement. The Executive Officer and State Auto shall cooperate to the extent reasonably possible with each other and with State Auto’s insurers, in attempts to defend or settle such Proceeding.

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§9. Non-Exclusivity; Insurance; Subrogation .

(a) Non-Exclusive Right . The rights of indemnification as provided by this Agreement shall not be deemed exclusive of any other rights to which the Executive Officer may at any time be entitled under applicable law, the articles of incorporation of State Auto, the Regulations, any agreement, a vote of shareholders, a resolution of directors or otherwise. No amendment, alteration or repeal of this Agreement or of any provision of this Agreement shall limit or restrict any right of the Executive Officer under this Agreement in respect of any action taken or omitted by the Executive Officer prior to such amendment, alteration or repeal. To the extent that a change in the OCL, whether by statute or judicial decision, permits greater indemnification than would be afforded currently under the Regulations and this Agreement, it is the intent of the parties to this Agreement that the Executive Officer shall enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy conferred in this Agreement is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.

(b) D&O Insurance . State Auto shall use its best efforts to maintain an insurance policy or policies providing liability insurance for officers which is at least as favorable to the Executive Officer as the policy in effect on the date of this Agreement and for so long as the Executive Officer’s services are covered pursuant to this Agreement, provided and to the extent that such insurance is available on a reasonable commercial basis. However, the Executive Officer shall continue to be entitled to the indemnification rights provided pursuant to this Agreement regardless of whether liability or other insurance coverage is at any time obtained or retained by State Auto. Any payments in fact made to the Executive Officer under an insurance policy obtained or retained by State Auto shall reduce the obligation of State Auto to make payments under this Agreement by the amount of the payments made under any such insurance policy. In the event that insurance becomes unavailable in the amount or scope of coverage of the policy in effect on the date of this Agreement on a reasonable commercial basis and State Auto foregoes maintenance of all or a portion of such insurance coverage, State Auto shall stand as a self-insurer with respect to the coverage, or portion of such coverage, not retained, and shall indemnify the Executive Officer against any loss arising out of the reduction or cancellation of such insurance coverage.

(c) Subrogation . In the event of any payment under this Agreement, State Auto shall be subrogated to the extent of such payment to all of the rights of recovery of the Executive Officer, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable State Auto to bring suit to enforce such rights.

(d) Offset of Insurance Proceeds . State Auto shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable under this Agreement if and to the extent that the Executive Officer has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

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(e) Offset for Other Payments . State Auto’s obligation to indemnify or advance Expenses under this Agreement to the Executive Officer who is or was serving at the request of State Auto as a Corporate Fiduciary of another Enterprise shall be reduced by any amount the Executive Officer has actually received as indemnification or advancement of Expenses from such other Enterprise.

(f) Changes in Code of Regulations . No provision of the Regulations as hereafter amended shall limit or restrict any right of the Executive Officer under this Agreement for indemnification or advancement of expenses for any action taken or omitted by the Executive Officer in the Executive Officer’s role as Corporate Fiduciary prior to such amendment, alteration or repeal whether or not (i) the acts or omissions giving rise to the action, suit or proceeding for which the Executive Officer seeks indemnification were known to State Auto at the time of any such amendment (ii) the Executive Officer is or is not a Corporate Fiduciary at the time of such amendment, or (iii) the acts or omissions giving rise to the action, suit or proceeding for which the Executive Officer seeks indemnification were known to State Auto at the time the Executive Officer ceased to be a Corporate Fiduciary.

§10. Duration of Agreement . All obligations of State Auto contained in this Agreement shall apply retroactively beginning to the date the Executive Officer began serving as a Corporate Fiduciary and shall continue during the period that the Executive Officer serves as a Corporate Fiduciary and for so long thereafter as the Executive Officer may be subject to any possible claim or any threatened, pending or completed Proceeding as a result, directly or indirectly, of the Executive Officer serving as a Corporate Fiduciary. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties to this Agreement and their respective successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of State Auto), assigns, spouses, heirs, executors and personal and legal representatives.

§11. Enforcement .

(a) State Auto expressly confirms and agrees that it has entered into this Agreement and assumes the obligations imposed on it by this Agreement in order to induce the Executive Officer to serve as an executive officer of State Auto, and State Auto acknowledges that the Executive Officer is relying upon this Agreement in serving as an executive officer of State Auto.

(b) This Agreement constitutes the entire agreement between the parties to this Agreement with respect to the subject matter of this Agreement and supersedes all prior agreements and understandings, oral, written and implied, between the parties with respect to the subject matter of this Agreement.

§12. Severability . The invalidity of unenforceability of any provision of this Agreement shall in no way affect the validity or enforceability of any other provision. Without limiting the generality of the foregoing, this Agreement is intended to confer upon the Executive Officer indemnification rights to the fullest extent permitted by the OCL. In the event any provision of this Agreement conflicts with any applicable law, such provision shall be deemed modified, consistent with the aforementioned intent, to the extent necessary to resolve such conflict.

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§13. Modification and Waiver . No supplement, modification, termination or amendment of this Agreement shall be binding unless executed in writing by both of the parties to this Agreement. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions (whether or not similar) of this Agreement nor shall such waiver constitute a continuing waiver.

§14. Notice By the Executive Officer . The Executive Officer agrees promptly to notify State Auto in writing upon being served with or otherwise receiving any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification under this Agreement. The failure to so notify State Auto shall not relieve State Auto of any obligation which it may have to the Executive Officer under this Agreement or otherwise unless and only to the extent that such failure or delay materially prejudices State Auto.

§15. Notices . All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, and if not so confirmed, then on the next business day, (c) five days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (e) one day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent:

To the Executive Officer at the address set forth below the Executive Officer’s signature to this Agreement.

To State Auto at:

State Auto Insurance Companies

518 East Broad Street

Columbus, Ohio 43215

Attention: Chief Executive Officer

Facsimile: (614) 464-4911

with a copy to:

State Auto Insurance Companies

518 East Broad Street

Columbus, Ohio 43215

Attention: General Counsel

Facsimile: (614) 719-0173

Or to such other address as may have been furnished to the Executive Officer by State Auto or to State Auto by the Executive Officer, as the case may be.

§16. Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same Agreement. This Agreement may also be executed and delivered by facsimile signature and in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

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§17. Headings . The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction of this Agreement.

§18. Governing Law and Consent to Jurisdiction . This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Ohio, without regard to its conflict of laws rules. State Auto and the Executive Officer irrevocably and unconditionally:

(a) Agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the Court of Common Pleas of Franklin County, State of Ohio (the “ Court of Common Pleas ”), and not in any other state or federal court in the United States of America or any court in any other country;

(b) Consent to submit to the exclusive jurisdiction of the Court of Common Pleas for purposes of any action or proceeding arising out of or in connection with this Agreement;

(c) Waive any objection to the laying of venue of any such action or proceeding in the Court of Common Pleas; and

(d) Waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Court of Common Pleas has been brought in an improper or inconvenient forum.

§19. Definitions . For purposes of this Agreement:

(a) “ Corporate Fiduciary ” means the status of a person as a current or former director, officer, employee or agent of State Auto, State Automobile Mutual Insurance Company or their respective subsidiaries and affiliates or as a current or former director, trustee, officer, employee, member, manager or agent of any other Enterprise that such person is or was serving at the request of State Auto.

(b) “ Disinterested Director ” means a director of State Auto who is not and was not a party to the Proceeding in respect of which indemnification is sought by the Executive Officer.

(c) “ Enterprise ” shall mean any corporation (for profit or nonprofit), limited liability company, partnership, joint venture, association, joint-stock company, trust, employee benefit plan or unincorporated organization, including without limitation State Auto, State Automobile Mutual Insurance Company and their respective subsidiaries and affiliates.

(d) “ Expenses ” shall include all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs,

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printing and binding costs, telephone charges, postage, delivery service fees and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, participating, or being or preparing to be a witness in a Proceeding. Expenses also shall include Expenses incurred in connection with any appeal resulting from any Proceeding, including without limitation the premium, security for, and other costs relating to any cost bond, supersede as bond, or other appeal bond or its equivalent. Expenses, however, shall not include amounts paid in settlement by the Executive Officer or the amount of judgments, penalties, fines, or excise taxes against the Executive Officer.

(e) “ Indemnifiable Event ” means any event, circumstance or situation, including any Proceeding, in which indemnification is or may be available to the Executive Officer under the provisions of Sections 2 or 3 of this Agreement.

(f) “ Independent Counsel ” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent or perform services for:

(i) State Auto or the Executive Officer in any matter material to either such party, or

(ii) Any other party to the Proceeding giving rise to a claim for indemnification hereunder.

Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either State Auto or the Executive Officer in an action to determine the Executive Officer’s rights under this Agreement.

(g) “ Proceeding ” includes any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought by or in the right of State Auto or otherwise and whether civil, criminal, administrative or investigative, in which the Executive Officer was, is or will be involved as a party or otherwise, by reason of the fact that the Executive Officer is or was serving as a Corporate Fiduciary, by reason of any conduct of the Executive Officer while serving as a Corporate Fiduciary; in each case whether or not the Executive Officer is serving as a Corporate Fiduciary at the time any liability or expense is incurred for which indemnification can be provided under this Agreement.

[Remainder of page blank. Signatures on following page.]

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Signature Page of Officer Indemnification Agreement (English)

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Exhibit 10.4

INDEMNIFICATION AGREEMENT

This Indemnification Agreement (this “ Agreement ”) is made as of November 14, 2008, between State Automobile Mutual Insurance Company, an Ohio mutual insurance company (“ State Auto ”), and Mark A. Blackburn (the “ Director ”).

Background Information

A. The Director is a member of State Auto’s Board of Directors (the “ Board ”) and, in that capacity, is performing valuable services for State Auto.

B. The Code of Regulations of State Auto, as amended and in effect on the date hereof (the “ Regulations ”), provides for indemnification of directors of State Auto in accordance with Chapter 1702, Nonprofit Corporation Law, of the Ohio Revised Code (the “ OCL ”). In addition, the OCL expressly provides that it is not the exclusive source for indemnification rights and that individual contracts of indemnification may be entered into between an Ohio corporation and its directors.

C. The Board has evaluated the sufficiency of liability insurance and the statutory indemnification provided by the OCL as to their adequacy to protect directors against the various legal risks and potential liabilities associated with their serving as directors of State Auto, and the Board has concluded that such insurance and statutory indemnification may not be adequate protection to directors.

D. In order to induce and encourage highly experienced and capable persons to serve as members of the Board, the Board has determined, after due consideration of the terms of this Agreement and the various other options available to State Auto, that this Agreement is not only reasonable and prudent, but is necessary to promote and ensure the best interests of State Auto.

E. The Board has further determined that its prior form of indemnification agreement with its directors should be replaced with a new form of indemnification agreement.

Statement of Agreement

The parties acknowledge the accuracy of the foregoing Background Information and hereby agree as follows:

§1. Agreement to Serve . The Director agrees to continue to serve as a director of State Auto, faithfully and to the best of the Director’s ability, so long as elected or appointed and qualified in accordance with the applicable provisions of the Regulations.

§2. Indemnification .

(a) Indemnification of Director . State Auto shall indemnify the Director to the maximum extent permitted by the OCL in effect on the date of this Agreement, and as the OCL may be hereafter amended from time to time (but, in the case of any such amendment, only to the extent the amendment permits State Auto to provide broader indemnification rights and protection than the OCL permitted State Auto to provide before the amendment), by reason of the Director serving as a Corporate Fiduciary (as defined in Section 19 ).

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(b) Indemnification for Expenses When Wholly or Partly Successful . To the extent that the Director is, by reason of the Director serving as a Corporate Fiduciary, a party to and is successful, on the merits or otherwise, in any Proceeding (as defined in Section 19 ), State Auto shall indemnify the Director to the maximum extent permitted by the OCL in effect on the date of this Agreement, and as the OCL may be hereafter amended from time to time (but, in the case of any such amendment, only to the extent the amendment permits State Auto to provide broader indemnification rights and protection than the OCL permitted State Auto to provide before the amendment), against all Expenses (as defined in Section 19 ) actually and reasonably incurred by the Director or on the Director’s behalf in connection with such Proceeding. If the Director is not wholly successful in such Proceeding, but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, then State Auto shall indemnify the Director against all Expenses actually and reasonably incurred by the Director or on the Director’s behalf in connection with each successfully resolved claim, issue or matter. For purposes of this section and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

(c) Indemnification for Expenses of a Witness . To the extent that the Director is, by reason of the Director serving as a Corporate Fiduciary, a witness in any Proceeding to which the Director is not a party, the Director shall be indemnified against all Expenses actually and reasonably incurred by the Director or on the Director’s behalf in connection with such Proceeding.

§3. Additional Indemnification . In addition to the indemnification provided for in Section 2 of this Agreement, State Auto shall indemnify the Director against all Expenses, judgments, penalties, fines, excise taxes and amounts paid in settlement actually and reasonably incurred by the Director or on the Director’s behalf if, by reason of the Director serving as a Corporate Fiduciary, the Director is, or is threatened to be made, a party to or participant in any Proceeding (including a Proceeding by or in the right of State Auto).

Notwithstanding the foregoing, State Auto shall not be obligated under this Agreement to provide indemnification to the Director in the following situations:

(a) In connection with any Proceeding in which a court of competent jurisdiction determines, in a final adjudication from which there is no further right of appeal, that the Director’s actions were knowingly fraudulent, deliberately dishonest or willfully wrongful;

(b) In connection with any Proceeding in which a court of competent jurisdiction determines, in a final adjudication from which there is no further right of appeal, that indemnification under the specific circumstances would be unlawful;

(c) In connection with any Proceeding in which the only liability asserted against the Director is pursuant to section 1702.55 of the OCL;

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(d) To the extent payment has actually been made to or on behalf of the Director under any insurance policy or other indemnity provision, except with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision;

(e) In connection with an accounting of profits made from the purchase and sale (or sale and purchase) by the Director of securities of State Auto within the meaning of Section 16(b) of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), or similar provisions of state statutory law or common law;

(f) With respect to any conduct of the Director that does not directly relate to the Director’s services as a Corporate Fiduciary; or

(g) In connection with any Proceeding (or any part of any Proceeding) initiated by the Director, including any Proceeding (or any part of any Proceeding) initiated by the Director against State Auto or other Corporate Fiduciaries, unless:

(i) The Proceeding is brought by the Director to enforce any of the Director’s rights under this Agreement or to collect money due under this Agreement;

(ii) The Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation; or

(iii) State Auto provides the indemnification, in its sole discretion, pursuant to the powers vested in State Auto under applicable law.

As applicable, any determination shall be made under the procedures, and subject to the presumptions, set forth in Sections 6 and 7 of this Agreement.

§4. Contribution .

(a) If in connection with an Indemnifiable Event (as defined in Section 19 ) State Auto is jointly liable with the Director (or would be if joined in the applicable Proceeding), State Auto shall pay the entire amount of such Indemnifiable Event without requiring the Director to contribute to such payment, and State Auto waives and relinquishes any right of contribution it may have against the Director. State Auto shall not enter into any settlement of any Proceeding in which State Auto is jointly liable with the Director (or would be if joined in such Proceeding) unless such settlement provides for a full and final release of all claims asserted against the Director.

(b) Without diminishing or impairing the obligations of State Auto set forth in the preceding subsection, if, for any reason, the Director shall be required to pay any amount in connection with an Indemnifiable Event in which State Auto is jointly liable with the Director (or would be if joined in the applicable Proceeding), State Auto shall contribute to such payment an amount equal to the relative benefits received by State Auto and all Corporate Fiduciaries, other than the Director, who are jointly liable with the Director (or would be if joined in the applicable Proceeding), on the one hand, and the

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Director, on the other hand, from the transaction from which such Indemnifiable Event arose; provided, however, that the proportion determined on the basis of relative benefit may, to the extent necessary to conform to law, be further adjusted by reference to the relative fault of State Auto and all Corporate Fiduciaries, other than the Director, who are jointly liable with the Director (or would be if joined in the applicable Proceeding), on the one hand, and the Director, on the other hand, in connection with the events that resulted in the Indemnifiable Event, as well as any other equitable considerations which the law may require to be considered. The relative fault of State Auto and all Corporate Fiduciaries, other than the Director, who are jointly liable with the Director (or would be if joined in the applicable Proceeding), on the one hand, and the Director, on the other hand, shall be determined by reference to, among other things, the degree to which their actions were motivated by intent to gain personal profit or advantage, the degree to which their liability is primary or secondary and the degree to which their conduct is active or passive.

(c) State Auto agrees to fully indemnify and hold the Director harmless from any claims of contribution which may be brought by Corporate Fiduciaries, other than the Director, who may be jointly liable with the Director in connection with an Indemnifiable Event.

(d) To the maximum extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to the Director for any reason whatsoever, State Auto, in lieu of indemnifying the Director, shall contribute to the amount incurred by the Director in connection with the Indemnifiable Event, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect:

(i) The relative benefits received by State Auto and the Director as a result of the event(s) or transaction(s) giving rise to the Indemnifiable Event; and

(ii) The relative fault of State Auto, the Director and other Corporate Fiduciaries in connection with such event(s) or transaction(s).

§5. Advancement of Expenses . State Auto shall advance all Expenses incurred by or on behalf of the Director in connection with any Proceeding within 30 days after the receipt by State Auto of an indemnification statement and undertaking from the Director substantially in the form attached hereto as Exhibit A (the “ Indemnification Statement and Undertaking ”) requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding.

Any advances of Expenses made pursuant to this section shall be unsecured and interest free.

If the Director is subsequently required to repay the amount of any advancement of Expenses to State Auto, then any amounts payable by the Director to State Auto may be offset by any obligations due to the Director from State Auto, so that only net amounts shall be required to be transferred between the parties.

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§6. Procedures and Presumptions for Determination of Entitlement to Indemnification . Subject to the terms and conditions of this Agreement, it is the intent of this Agreement to secure for the Director rights of indemnity that are as favorable as may be permitted under the OCL and public policy of the State of Ohio. Accordingly, the parties agree that the following procedures and presumptions shall apply in the event of any question as to whether the Director is entitled to indemnification under this Agreement:

(a) If the Director desires to request indemnification pursuant to this Agreement, then the Director shall submit to the secretary of State Auto an Indemnification Statement and Undertaking, along with all documents and information as are reasonably available to the Director and are reasonably necessary to determine whether and to what extent the Director is entitled to indemnification. The secretary of State Auto shall, promptly upon receipt of such Indemnification Statement and Undertaking, advise the Board in writing that the Director has requested indemnification pursuant to this Agreement.

(b) A determination as to the Director’s entitlement to indemnification under this Agreement shall be made in the specific case by one of the following four methods, which shall be at the election of the Board:

(i) By a majority vote of a quorum consisting of the Disinterested Directors (as defined in Section 19 );

(ii) If the quorum described in Section 6(b)(i) is not obtainable or if a majority vote of the Disinterested Directors so directs, by Independent Counsel (as defined in Section 19 ) in a written opinion to the Board, a copy of which shall be delivered to the Director;

(iii) By the members of State Auto; or

(iv) By the Court of Common Pleas (as defined in Section 18(a) ).

(c) If the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 6(b) of this Agreement, the Independent Counsel shall be selected as provided in this subsection. The Independent Counsel shall be selected by the Board, and the secretary of State Auto shall promptly give written notice of such selection to the Director. The Director may, within ten days after such written notice of selection shall have been given, deliver to State Auto, as the case may be, a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “ Independent Counsel ” as defined in Section 19 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected shall act as Independent Counsel. If a written objection is made and substantiated by the Board, the Independent Counsel selected may not serve as Independent Counsel unless and until such objection is withdrawn or the Court of Common Pleas has determined that such objection is without merit. State Auto shall pay any and all reasonable fees and Expenses of Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to Section 6(b) of this Agreement,

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and State Auto shall pay all reasonable fees and Expenses incident to the procedures of this subsection, regardless of the manner in which such Independent Counsel was selected or appointed.

(d) In making a determination with respect to entitlement to indemnification under this Agreement, the person or persons or entity making such determination shall presume that the Director is entitled to indemnification under this Agreement. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence. Neither the failure of State Auto to have made a determination prior to the commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because the Director has met the applicable standard of conduct, nor an actual determination by State Auto that the Director has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the Director has not met the applicable standard of conduct.

(e) The Director shall be deemed to have acted in good faith if the Director’s action is based on the records or books of account of the Enterprise (as defined in Section 19 of this Agreement), including financial statements, or on information supplied to the Director by the officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Enterprise. In addition, the knowledge and/or actions, or failure to act, of any Corporate Fiduciary other than the Director shall not be imputed to the Director for purposes of determining the right to indemnification under this Agreement. Whether or not the foregoing provisions of this subsection are satisfied, it shall in any event be presumed that the Director has at all times acted in good faith and in a manner the Director reasonably believed to be in or not opposed to the best interests of State Auto. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.

(f) The determination of the Director’s entitlement to indemnification must be made by the person, persons or entity empowered or selected under Section 6 to make such determination not later than 60 days after the final disposition of the Proceeding, whether by judgment, order, settlement, dismissal, arbitration award, conviction, acceptance of a plea of nolo contendere or its equivalent. If a determination is not made within such period, the requisite determination of entitlement to indemnification shall be deemed to have been made and the Director shall be entitled to such indemnification absent (i) a misstatement by the Director of a material fact, or an omission of a material fact necessary to make the Director’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law; provided, however, that such 60-day period may be extended for a reasonable time, not to exceed an additional 30 days, if the person, persons or entity making such determination with respect to entitlement to indemnification in good faith requires such additional time to obtain or evaluate documentation and/or information relating to making such determination; and provided, further, that the foregoing provisions of this subsection shall not apply if the determination of entitlement to indemnification is to be made by the members pursuant to Section 6(b) of this Agreement and within 120 days after the final disposition of the Proceeding a meeting of State Auto members is held for the purpose of making such determination and such determination is made at such meeting.

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(g) The Director shall cooperate with the person, persons or entity making such determination with respect to the Director’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to the Director and reasonably necessary to such determination. Any Independent Counsel, member of the Board or member of State Auto shall act reasonably and in good faith in making a determination regarding the Director’s entitlement to indemnification under this Agreement. Any Expenses incurred by the Director in so cooperating with the person, persons or entity making such determination shall be borne by State Auto (irrespective of the determination as to the Director’s entitlement to indemnification) and State Auto indemnifies and agrees to hold the Director harmless from any such costs.

(h) State Auto acknowledges that a settlement or other disposition short of final judgment may be successful if it permits a party to avoid expense, delay, distraction, disruption and uncertainty. In the event that any Proceeding to which the Director is a party is resolved in any manner other than by adverse judgment against the Director (including, without limitation, settlement of such Proceeding with or without payment of money or other consideration) it shall be presumed that the Director has been successful on the merits or otherwise in such Proceeding. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.

(i) The termination of any Proceeding or of any claim, issue or matter in any Proceeding, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of the Director to indemnification or create a presumption that the Director did not act in good faith and in a manner which the Director reasonably believed to be in or not opposed to the best interests of State Auto or, with respect to any criminal Proceeding, that the Director had reasonable cause to believe that the Director’s conduct was unlawful.

§7. Remedies of the Director .

(a) In the event that (i) a determination is made pursuant to Section 6 of this Agreement that the Director is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 5 of this Agreement, or (iii) payment of indemnification is not made within 30 days after a determination has been made that the Director is entitled to indemnification or such determination is deemed to have been made pursuant to Section 6 of this Agreement, the Director shall be entitled to an adjudication in the Court of Common Pleas of the Director’s entitlement to such indemnification or payment of Expenses or indemnification. The Director shall commence such proceeding seeking an adjudication within 180 days following the date on which the Director first has the right to commence such proceeding pursuant to this subsection. State Auto shall not oppose the Director’s right to seek any such adjudication.

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(b) In the event that a determination shall have been made pursuant to Section 6(b) of this Agreement that the Director is not entitled to indemnification, any judicial proceeding commenced pursuant to this section shall be conducted in all respects as a de novo trial on the merits, and the Director shall not be prejudiced by reason of any adverse determination under Section 6(b) .

(c) If a determination shall have been made pursuant to Section 6(b) of this Agreement that the Director is entitled to indemnification, State Auto shall be bound by such determination in any judicial proceeding commenced pursuant to this section, absent:

(i) A misstatement by the Director of a material fact, or an omission of a material fact necessary to make the Director’s misstatement not materially misleading in connection with the application for indemnification; or

(ii) A prohibition of such indemnification under applicable law.

(d) In the event that the Director, pursuant to this section, seeks a judicial adjudication of the Director’s rights under, or to recover damages for breach of, this Agreement, or to collect money due under this Agreement, or to recover under any directors’ and officers’ liability insurance policies maintained by State Auto, State Auto shall pay on the Director’s behalf, in advance, any and all Expenses actually and reasonably incurred by the Director in such judicial adjudication, regardless of whether the Director ultimately is determined to be entitled to such indemnification, recovery of damages, collection of money or recovery of insurance proceeds, unless it is determined in such judicial adjudication that each of the material assertions made by the Director as a basis for such action were not made in good faith or were frivolous.

(e) State Auto shall be precluded from asserting in any judicial proceeding commenced pursuant to this section that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court that State Auto is bound by all the provisions of this Agreement.

§8. Notice by Director . The Director shall promptly notify State Auto in writing on being served with any summons, citation, subpoena, complaint, indictment, information, or other document relating to any matter that may be subject to indemnification under this Agreement, whether civil, criminal, administrative, or investigative; but the omission to so notify State Auto will not relieve State Auto from any liability that it may have to the Director if such omission does not prejudice State Auto’s rights, but if such omission does prejudice State Auto’s rights, it will relieve State Auto from liability only to the extent of such prejudice; nor will the omission relieve State Auto from any liability that it may have to the Director otherwise than under this Agreement. With respect to any Proceeding of which the Director notifies State Auto:

(a) State Auto will be entitled to participate in such Proceeding at its own expense.

(b) Except as otherwise provided below, to the extent that it may wish, State Auto jointly with any other indemnifying party similarly notified will be entitled to assume the defense of the Proceeding, with counsel reasonably satisfactory to the Director. After

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notice from State Auto to the Director of its election so to assume the defense, State Auto will not be liable to the Director under this Agreement for any Expenses subsequently incurred by the Director in connection with the defense other than reasonable costs of investigation or as otherwise provided below. The Director will have the right to employ the Director’s own counsel in such Proceeding, but the fees and Expenses of such counsel will be at the expense of the Director unless: (i) the employment of counsel by the Director has been authorized by State Auto; (ii) the Director has reasonably concluded that there may be a conflict of interest between State Auto and the Director in the conduct of the defense of such Proceeding or that counsel may not be adequately representing director; or (iii) State Auto has not in fact employed counsel to assume the defense of such Proceeding, in each case of which the Expenses of counsel employed by the Director will be at the expense of State Auto. State Auto is not entitled to assume the defense of any Proceeding as to which the Director has made the conclusion provided in (ii) above has occurred.

(c) State Auto shall not settle any action or claim in any manner that would impose any penalty or limitation on the Director without the Director’s written consent.

(d) Director shall not make any admission or effect any settlement with respect to a Proceeding without State Auto’s written consent unless the Director shall have determined to undertake the Director’s own defense in such matter and has waived the benefits of this Agreement in writing delivered to State Auto. State Auto is not liable to indemnify the Director under this Agreement for any amounts paid in settlement of any action or claim effected without its written consent.

(e) Neither the Director nor State Auto shall unreasonably withhold consent to any proposed settlement. The Director and State Auto shall cooperate to the extent reasonably possible with each other and with State Auto’s insurers, in attempts to defend or settle such Proceeding.

§9. Non-Exclusivity; Insurance; Subrogation .

(a) Non-Exclusive Right . The rights of indemnification as provided by this Agreement shall not be deemed exclusive of any other rights to which the Director may at any time be entitled under applicable law, the articles of incorporation of State Auto, the Regulations, any agreement, a vote of members, a resolution of directors or otherwise. No amendment, alteration or repeal of this Agreement or of any provision of this Agreement shall limit or restrict any right of the Director under this Agreement in respect of any action taken or omitted by the Director prior to such amendment, alteration or repeal. To the extent that a change in the OCL, whether by statute or judicial decision, permits greater indemnification than would be afforded currently under the Regulations and this Agreement, it is the intent of the parties to this Agreement that the Director shall enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy conferred in this Agreement is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.

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(b) D&O Insurance . State Auto shall use its best efforts to maintain an insurance policy or policies providing liability insurance for directors which is at least as favorable to the Director as the policy in effect on the date of this Agreement and for so long as the Director’s services are covered pursuant to this Agreement, provided and to the extent that such insurance is available on a reasonable commercial basis. However, the Director shall continue to be entitled to the indemnification rights provided pursuant to this Agreement regardless of whether liability or other insurance coverage is at any time obtained or retained by State Auto. Any payments in fact made to the Director under an insurance policy obtained or retained by State Auto shall reduce the obligation of State Auto to make payments under this Agreement by the amount of the payments made under any such insurance policy. In the event that insurance becomes unavailable in the amount or scope of coverage of the policy in effect on the date of this Agreement on a reasonable commercial basis and State Auto foregoes maintenance of all or a portion of such insurance coverage, State Auto shall stand as a self-insurer with respect to the coverage, or portion of such coverage, not retained, and shall indemnify the Director against any loss arising out of the reduction or cancellation of such insurance coverage.

(c) Subrogation . In the event of any payment under this Agreement, State Auto shall be subrogated to the extent of such payment to all of the rights of recovery of the Director, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable State Auto to bring suit to enforce such rights.

(d) Offset of Insurance Proceeds . State Auto shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable under this Agreement if and to the extent that the Director has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

(e) Offset for Other Payments . State Auto’s obligation to indemnify or advance Expenses under this Agreement to the Director who is or was serving at the request of State Auto as a Corporate Fiduciary of another Enterprise shall be reduced by any amount the Director has actually received as indemnification or advancement of Expenses from such other Enterprise.

(f) Changes in Code of Regulations . No provision of the Regulations hereafter amended shall limit or restrict any right of the Director under this Agreement for indemnification or advancement of expenses for any action taken or omitted by the Director in the Director’s role as Corporate Fiduciary prior to such amendment, alteration or repeal whether or not (i) the acts or omissions giving rise to the action, suit or proceeding for which the Director seeks indemnification were known to State Auto at the time of any such amendment (ii) the Director is or is not a Corporate Fiduciary at the time of such amendment, or (iii) the acts or omissions giving rise to the action, suit or proceeding for which the Director seeks indemnification were known to State Auto at the time the Director ceased to be a Corporate Fiduciary.

§10. Duration of Agreement . All obligations of State Auto contained in this Agreement shall apply retroactively beginning to the date the Director began serving as a Corporate Fiduciary and shall continue during the period that the Director serves as a Corporate Fiduciary and for so

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long thereafter as the Director may be subject to any possible claim or any threatened, pending or completed Proceeding as a result, directly or indirectly, of the Director serving as a Corporate Fiduciary. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties to this Agreement and their respective successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of State Auto), assigns, spouses, heirs, executors and personal and legal representatives.

§11. Enforcement .

(a) State Auto expressly confirms and agrees that it has entered into this Agreement and assumes the obligations imposed on it by this Agreement in order to induce the Director to serve as a director of State Auto, and State Auto acknowledges that the Director is relying upon this Agreement in serving as a director of State Auto.

(b) This Agreement constitutes the entire agreement between the parties to this Agreement with respect to the subject matter of this Agreement and supersedes all prior agreements and understandings, oral, written and implied, between the parties with respect to the subject matter of this Agreement.

§12. Severability . The invalidity of unenforceability of any provision of this Agreement shall in no way affect the validity or enforceability of any other provision. Without limiting the generality of the foregoing, this Agreement is intended to confer upon the Director indemnification rights to the fullest extent permitted by the OCL. In the event any provision of this Agreement conflicts with any applicable law, such provision shall be deemed modified, consistent with the aforementioned intent, to the extent necessary to resolve such conflict.

§13. Modification and Waiver . No supplement, modification, termination or amendment of this Agreement shall be binding unless executed in writing by both of the parties to this Agreement. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions (whether or not similar) of this Agreement nor shall such waiver constitute a continuing waiver.

§14. Notice By the Director . The Director agrees promptly to notify State Auto in writing upon being served with or otherwise receiving any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification under this Agreement. The failure to so notify State Auto shall not relieve State Auto of any obligation which it may have to the Director under this Agreement or otherwise unless and only to the extent that such failure or delay materially prejudices State Auto.

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§15. Notices . All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, and if not so confirmed, then on the next business day, (c) five days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (e) one day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent:

To the Director at the address set forth below the Director’s signature to this Agreement.

To State Auto at:

State Auto Insurance Companies

518 East Broad Street

Columbus, Ohio 43215

Attention: Chief Executive Officer

Facsimile: (614) 464-4911

with a copy to:

State Auto Insurance Companies

518 East Broad Street

Columbus, Ohio 43215

Attention: General Counsel

Facsimile: (614) 719-0173

Or to such other address as may have been furnished to the Director by State Auto or to State Auto by the Director, as the case may be.

§16. Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same Agreement. This Agreement may also be executed and delivered by facsimile signature and in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

§17. Headings . The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction of this Agreement.

§18. Governing Law and Consent to Jurisdiction . This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Ohio, without regard to its conflict of laws rules. State Auto and the Director irrevocably and unconditionally:

(a) Agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the Court of Common Pleas of Franklin County, State of Ohio (the “ Court of Common Pleas ”), and not in any other state or federal court in the United States of America or any court in any other country;

(b) Consent to submit to the exclusive jurisdiction of the Court of Common Pleas for purposes of any action or proceeding arising out of or in connection with this Agreement;

(c) Waive any objection to the laying of venue of any such action or proceeding in the Court of Common Pleas; and

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(d) Waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Court of Common Pleas has been brought in an improper or inconvenient forum.

§19. Definitions . For purposes of this Agreement:

(a) “ Corporate Fiduciary ” means the status of a person as a current or former director, officer, employee or agent of State Auto or as a current or former director, trustee, officer, employee, member, manager or agent of any other Enterprise that such person is or was serving at the request of State Auto.

(b) “ Disinterested Director ” means a director of State Auto who is not and was not a party to the Proceeding in respect of which indemnification is sought by the Director.

(c) “ Enterprise ” shall mean any corporation (for profit or nonprofit), limited liability company, partnership, joint venture, association, joint-stock company, trust, employee benefit plan or unincorporated organization, including without limitation State Auto, State Automobile Mutual Insurance Company and their respective subsidiaries and affiliates.

(d) “ Expenses ” shall include all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, participating, or being or preparing to be a witness in a Proceeding. Expenses also shall include Expenses incurred in connection with any appeal resulting from any Proceeding, including without limitation the premium, security for, and other costs relating to any cost bond, supersede as bond, or other appeal bond or its equivalent. Expenses, however, shall not include amounts paid in settlement by the Director or the amount of judgments, penalties, fines, or excise taxes against the Director.

(e) “ Indemnifiable Event ” means any event, circumstance or situation, including any Proceeding, in which indemnification is or may be available to the Director under the provisions of Sections 2 or 3 of this Agreement.

(f) “ Independent Counsel ” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent or perform services for:

(i) State Auto or the Director in any matter material to either such party, or

(ii) Any other party to the Proceeding giving rise to a claim for indemnification hereunder.

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Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either State Auto or the Director in an action to determine the Director’s rights under this Agreement.

(g) “ Proceeding ” includes any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought by or in the right of State Auto or otherwise and whether civil, criminal, administrative or investigative, in which the Director was, is or will be involved as a party or otherwise, by reason of the fact that the Director is or was serving as a Corporate Fiduciary, by reason of any conduct of the Director while serving as a Corporate Fiduciary; in each case whether or not the Director is serving as a Corporate Fiduciary at the time any liability or expense is incurred for which indemnification can be provided under this Agreement.

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Exhibit 10.5

OFFICER INDEMNIFICATION AGREEMENT

This Officer Indemnification Agreement (this “ Agreement ”) is made as of May 8, 2009, between State Auto Financial Corporation, an Ohio corporation (“ State Auto ”), and Clyde H. Fitch, Jr. (the “ Executive Officer ”).

Background Information

A. The Executive Officer is a member of State Auto’s senior management and, in that capacity, is performing valuable services for State Auto.

B. The Code of Regulations of State Auto, as amended and in effect on the date hereof (the “ Regulations ”), provides for indemnification of officers of State Auto in accordance with Chapter 1701, General Corporation Law, of the Ohio Revised Code (the “ OCL ”). In addition, the OCL expressly provides that it is not the exclusive source for indemnification rights and that individual contracts of indemnification may be entered into between an Ohio corporation and its officers.

C. The State Auto Board of Directors (the “ Board ”) has evaluated the sufficiency of liability insurance and the statutory indemnification provided by the OCL as to their adequacy to protect certain executive officers against the various legal risks and potential liabilities associated with the performance of their duties on behalf of State Auto, and the Board has concluded that such insurance and statutory indemnification may not be adequate protection to such officers.

D. The Board has determined, after due consideration of the terms of this Agreement and the various other options available to State Auto, that this Agreement is reasonable and prudent and in the best interests of State Auto.

Statement of Agreement

The parties acknowledge the accuracy of the foregoing Background Information and hereby agree as follows:

§1. Agreement to Serve . The Executive Officer agrees to continue to serve as an officer of State Auto, faithfully and to the best of the Executive Officer’s ability, so long as elected or appointed as an officer of State Auto by the Board.

§2. Indemnification .

(a) Indemnification of Executive Officer . State Auto shall indemnify the Executive Officer to the maximum extent permitted by the OCL in effect on the date of this Agreement, and as the OCL may be hereafter amended from time to time (but, in the case of any such amendment, only to the extent the amendment permits State Auto to provide broader indemnification rights and protection than the OCL permitted State Auto to provide before the amendment), by reason of the Executive Officer serving as a Corporate Fiduciary (as defined in Section 19 ).

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(b) Indemnification for Expenses When Wholly or Partly Successful . To the extent that the Executive Officer is, by reason of the Executive Officer serving as a Corporate Fiduciary, a party to and is successful, on the merits or otherwise, in any Proceeding (as defined in Section 19 ), State Auto shall indemnify the Executive Officer to the maximum extent permitted by the OCL in effect on the date of this Agreement, and as the OCL may be hereafter amended from time to time (but, in the case of any such amendment, only to the extent the amendment permits State Auto to provide broader indemnification rights and protection than the OCL permitted State Auto to provide before the amendment), against all Expenses (as defined in Section 19 ) actually and reasonably incurred by the Executive Officer or on the Executive Officer’s behalf in connection with such Proceeding. If the Executive Officer is not wholly successful in such Proceeding, but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, then State Auto shall indemnify the Executive Officer against all Expenses actually and reasonably incurred by the Executive Officer or on the Executive Officer’s behalf in connection with each successfully resolved claim, issue or matter. For purposes of this section and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

(c) Indemnification for Expenses of a Witness . To the extent that the Executive Officer is, by reason of the Executive Officer serving as a Corporate Fiduciary, a witness in any Proceeding to which the Executive Officer is not a party, the Executive Officer shall be indemnified against all Expenses actually and reasonably incurred by the Executive Officer or on the Executive Officer’s behalf in connection with such Proceeding.

§3. Additional Indemnification . In addition to the indemnification provided for in Section 2 of this Agreement, State Auto shall indemnify the Executive Officer against all Expenses, judgments, penalties, fines, excise taxes and amounts paid in settlement actually and reasonably incurred by the Executive Officer or on the Executive Officer’s behalf if, by reason of the Executive Officer serving as a Corporate Fiduciary, the Executive Officer is, or is threatened to be made, a party to or participant in any Proceeding (including a Proceeding by or in the right of State Auto).

Notwithstanding the foregoing, State Auto shall not be obligated under this Agreement to provide indemnification to the Executive Officer in the following situations:

(a) In connection with any Proceeding in which a court of competent jurisdiction determines, in a final adjudication from which there is no further right of appeal, that the Executive Officer’s actions were knowingly fraudulent, deliberately dishonest or willfully wrongful;

(b) In connection with any Proceeding in which a court of competent jurisdiction determines, in a final adjudication from which there is no further right of appeal, that indemnification under the specific circumstances would be unlawful;

(c) In connection with any Proceeding in which the only liability asserted against the Executive Officer is pursuant to section 1701.95 of the OCL;

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(d) To the extent payment has actually been made to or on behalf of the Executive Officer under any insurance policy or other indemnity provision, except with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision;

(e) In connection with an accounting of profits made from the purchase and sale (or sale and purchase) by the Executive Officer of securities of State Auto within the meaning of Section 16(b) of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), or similar provisions of state statutory law or common law;

(f) With respect to any conduct of the Executive Officer that does not directly relate to the Executive Officer’s services as a Corporate Fiduciary; or

(g) In connection with any Proceeding (or any part of any Proceeding) initiated by the Executive Officer, including any Proceeding (or any part of any Proceeding) initiated by the Executive Officer against State Auto or other Corporate Fiduciaries, unless:

(i) The Proceeding is brought by the Executive Officer to enforce any of the Executive Officer’s rights under this Agreement or to collect money due under this Agreement;

(ii) The Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation; or

(iii) State Auto provides the indemnification, in its sole discretion, pursuant to the powers vested in State Auto under applicable law.

As applicable, any determination shall be made under the procedures, and subject to the presumptions, set forth in Sections 6 and 7 of this Agreement.

§4. Contribution .

(a) If in connection with an Indemnifiable Event (as defined in Section 19 ) State Auto is jointly liable with the Executive Officer (or would be if joined in the applicable Proceeding), State Auto shall pay the entire amount of such Indemnifiable Event without requiring the Executive Officer to contribute to such payment, and State Auto waives and relinquishes any right of contribution it may have against the Executive Officer. State Auto shall not enter into any settlement of any Proceeding in which State Auto is jointly liable with the Executive Officer (or would be if joined in such Proceeding) unless such settlement provides for a full and final release of all claims asserted against the Executive Officer.

(b) Without diminishing or impairing the obligations of State Auto set forth in the preceding subsection, if, for any reason, the Executive Officer shall be required to pay any amount in connection with an Indemnifiable Event in which State Auto is jointly liable with the Executive Officer (or would be if joined in the applicable Proceeding), State Auto shall contribute to such payment an amount equal to the relative benefits received by State Auto and all Corporate Fiduciaries, other than the Executive Officer, who are jointly liable

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with the Executive Officer (or would be if joined in the applicable Proceeding), on the one hand, and the Executive Officer, on the other hand, from the transaction from which such Indemnifiable Event arose; provided, however, that the proportion determined on the basis of relative benefit may, to the extent necessary to conform to law, be further adjusted by reference to the relative fault of State Auto and all Corporate Fiduciaries, other than the Executive Officer, who are jointly liable with the Executive Officer (or would be if joined in the applicable Proceeding), on the one hand, and the Executive Officer, on the other hand, in connection with the events that resulted in the Indemnifiable Event, as well as any other equitable considerations which the law may require to be considered. The relative fault of State Auto and all Corporate Fiduciaries, other than the Executive Officer, who are jointly liable with the Executive Officer (or would be if joined in the applicable Proceeding), on the one hand, and the Executive Officer, on the other hand, shall be determined by reference to, among other things, the degree to which their actions were motivated by intent to gain personal profit or advantage, the degree to which their liability is primary or secondary and the degree to which their conduct is active or passive.

(c) State Auto agrees to fully indemnify and hold the Executive Officer harmless from any claims of contribution which may be brought by Corporate Fiduciaries, other than the Executive Officer, who may be jointly liable with the Executive Officer in connection with an Indemnifiable Event.

(d) To the maximum extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to the Executive Officer for any reason whatsoever, State Auto, in lieu of indemnifying the Executive Officer, shall contribute to the amount incurred by the Executive Officer in connection with the Indemnifiable Event, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect:

(i) The relative benefits received by State Auto and the Executive Officer as a result of the event(s) or transaction(s) giving rise to the Indemnifiable Event; and

(ii) The relative fault of State Auto, the Executive Officer and other Corporate Fiduciaries in connection with such event(s) or transaction(s).

§5. Advancement of Expenses . State Auto shall advance all Expenses incurred by or on behalf of the Executive Officer in connection with any Proceeding within 30 days after the receipt by State Auto of an indemnification statement and undertaking from the Executive Officer substantially in the form attached hereto as Exhibit A (the “ Indemnification Statement and Undertaking ”) requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding.

Any advances of Expenses made pursuant to this section shall be unsecured and interest free.

If the Executive Officer is subsequently required to repay the amount of any advancement of Expenses to State Auto, then any amounts payable by the Executive Officer to State Auto may be offset by any obligations due to the Executive Officer from State Auto, so that only net amounts shall be required to be transferred between the parties.

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§6. Procedures and Presumptions for Determination of Entitlement to Indemnification . Subject to the terms and conditions of this Agreement, it is the intent of this Agreement to secure for the Executive Officer rights of indemnity that are as favorable as may be permitted under the OCL and public policy of the State of Ohio. Accordingly, the parties agree that the following procedures and presumptions shall apply in the event of any question as to whether the Executive Officer is entitled to indemnification under this Agreement:

(a) If the Executive Officer desires to request indemnification pursuant to this Agreement, then the Executive Officer shall submit to the secretary of State Auto an Indemnification Statement and Undertaking, along with all documents and information as are reasonably available to the Executive Officer and are reasonably necessary to determine whether and to what extent the Executive Officer is entitled to indemnification. The secretary of State Auto shall, promptly upon receipt of such Indemnification Statement and Undertaking, advise the Board in writing that the Executive Officer has requested indemnification pursuant to this Agreement.

(b) A determination as to the Executive Officer’s entitlement to indemnification under this Agreement shall be made in the specific case by one of the following four methods, which shall be at the election of the Board:

(i) By a majority vote of a quorum consisting of the Disinterested Directors (as defined in Section 19 );

(ii) If the quorum described in Section 6(b)(i) is not obtainable or if a majority vote of the Disinterested Directors so directs, by Independent Counsel (as defined in Section 19 ) in a written opinion to the Board, a copy of which shall be delivered to the Executive Officer;

(iii) By the shareholders of State Auto; or

(iv) By the Court of Common Pleas (as defined in Section 18(a) ).

(c) If the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 6(b) of this Agreement, the Independent Counsel shall be selected as provided in this subsection. The Independent Counsel shall be selected by the Board, and the secretary of State Auto shall promptly give written notice of such selection to the Executive Officer. The Executive Officer may, within ten days after such written notice of selection shall have been given, deliver to State Auto, as the case may be, a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “ Independent Counsel ” as defined in Section 19 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected shall act as Independent Counsel. If a written objection is made and substantiated by the Board, the Independent Counsel selected may not serve as Independent Counsel unless and until such objection is

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withdrawn or the Court of Common Pleas has determined that such objection is without merit. State Auto shall pay any and all reasonable fees and Expenses of Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to Section 6(b) of this Agreement, and State Auto shall pay all reasonable fees and Expenses incident to the procedures of this subsection, regardless of the manner in which such Independent Counsel was selected or appointed.

(d) In making a determination with respect to entitlement to indemnification under this Agreement, the person or persons or entity making such determination shall presume that the Executive Officer is entitled to indemnification under this Agreement. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence. Neither the failure of State Auto to have made a determination prior to the commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because the Executive Officer has met the applicable standard of conduct, nor an actual determination by State Auto that the Executive Officer has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the Executive Officer has not met the applicable standard of conduct.

(e) The Executive Officer shall be deemed to have acted in good faith if the Executive Officer’s action is based on the records or books of account of the Enterprise (as defined in Section 19 of this Agreement), including financial statements, or on information supplied to the Executive Officer by other officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Enterprise. In addition, the knowledge and/or actions, or failure to act, of any Corporate Fiduciary other than the Executive Officer shall not be imputed to the Executive Officer for purposes of determining the right to indemnification under this Agreement. Whether or not the foregoing provisions of this subsection are satisfied, it shall in any event be presumed that the Executive Officer has at all times acted in good faith and in a manner the Executive Officer reasonably believed to be in or not opposed to the best interests of State Auto. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.

(f) The determination of the Executive Officer’s entitlement to indemnification must be made by the person, persons or entity empowered or selected under Section 6 to make such determination not later than 60 days after the final disposition of the Proceeding, whether by judgment, order, settlement, dismissal, arbitration award, conviction, acceptance of a plea of nolo contendere or its equivalent. If a determination is not made within such period, the requisite determination of entitlement to indemnification shall be deemed to have been made and the Executive Officer shall be entitled to such indemnification absent (i) a misstatement by the Executive Officer of a material fact, or an omission of a material fact necessary to make the Executive Officer’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law; provided, however, that such 60-day period may be extended for a reasonable time, not to exceed an additional 30 days,

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if the person, persons or entity making such determination with respect to entitlement to indemnification in good faith requires such additional time to obtain or evaluate documentation and/or information relating to making such determination; and provided, further, that the foregoing provisions of this subsection shall not apply if the determination of entitlement to indemnification is to be made by the shareholders pursuant to Section 6(b) of this Agreement and within 120 days after the final disposition of the Proceeding a meeting of State Auto shareholders is held for the purpose of making such determination and such determination is made at such meeting.

(g) The Executive Officer shall cooperate with the person, persons or entity making such determination with respect to the Executive Officer’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to the Executive Officer and reasonably necessary to such determination. Any Independent Counsel, member of the Board or shareholder of State Auto shall act reasonably and in good faith in making a determination regarding the Executive Officer’s entitlement to indemnification under this Agreement. Any Expenses incurred by the Executive Officer in so cooperating with the person, persons or entity making such determination shall be borne by State Auto (irrespective of the determination as to the Executive Officer’s entitlement to indemnification) and State Auto indemnifies and agrees to hold the Executive Officer harmless from any such costs.

(h) State Auto acknowledges that a settlement or other disposition short of final judgment may be successful if it permits a party to avoid expense, delay, distraction, disruption and uncertainty. In the event that any Proceeding to which the Executive Officer is a party is resolved in any manner other than by adverse judgment against the Executive Officer (including, without limitation, settlement of such Proceeding with or without payment of money or other consideration) it shall be presumed that the Executive Officer has been successful on the merits or otherwise in such Proceeding. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.

(i) The termination of any Proceeding or of any claim, issue or matter in any Proceeding, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of the Executive Officer to indemnification or create a presumption that the Executive Officer did not act in good faith and in a manner which the Executive Officer reasonably believed to be in or not opposed to the best interests of State Auto or, with respect to any criminal Proceeding, that the Executive Officer had reasonable cause to believe that the Executive Officer’s conduct was unlawful.

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§7. Remedies of the Executive Officer .

(a) In the event that (i) a determination is made pursuant to Section 6 of this Agreement that the Executive Officer is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 5 of this Agreement, or (iii) payment of indemnification is not made within 30 days after a determination has been made that the Executive Officer is entitled to indemnification or such determination is deemed to have been made pursuant to Section 6 of this Agreement, the Executive Officer shall be entitled to an adjudication in the Court of Common Pleas of the Executive Officer’s entitlement to such indemnification or payment of Expenses or indemnification. The Executive Officer shall commence such proceeding seeking an adjudication within 180 days following the date on which the Executive Officer first has the right to commence such proceeding pursuant to this subsection. State Auto shall not oppose the Executive Officer’s right to seek any such adjudication.

(b) In the event that a determination shall have been made pursuant to Section 6(b) of this Agreement that the Executive Officer is not entitled to indemnification, any judicial proceeding commenced pursuant to this section shall be conducted in all respects as a de novo trial on the merits, and the Executive Officer shall not be prejudiced by reason of any adverse determination under Section 6(b) .

(c) If a determination shall have been made pursuant to Section 6(b) of this Agreement that the Executive Officer is entitled to indemnification, State Auto shall be bound by such determination in any judicial proceeding commenced pursuant to this section, absent:

(i) A misstatement by the Executive Officer of a material fact, or an omission of a material fact necessary to make the Executive Officer’s misstatement not materially misleading in connection with the application for indemnification; or

(ii) A prohibition of such indemnification under applicable law.

(d) In the event that the Executive Officer, pursuant to this section, seeks a judicial adjudication of the Executive Officer’s rights under, or to recover damages for breach of, this Agreement, or to collect money due under this Agreement, or to recover under any directors’ and officers’ liability insurance policies maintained by State Auto, State Auto shall pay on the Executive Officer’s behalf, in advance, any and all Expenses actually and reasonably incurred by the Executive Officer in such judicial adjudication, regardless of whether the Executive Officer ultimately is determined to be entitled to such indemnification, recovery of damages, collection of money or recovery of insurance proceeds, unless it is determined in such judicial adjudication that each of the material assertions made by the Executive Officer as a basis for such action were not made in good faith or were frivolous.

(e) State Auto shall be precluded from asserting in any judicial proceeding commenced pursuant to this section that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court that State Auto is bound by all the provisions of this Agreement.

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§8. Notice by Executive Officer . The Executive Officer shall promptly notify State Auto in writing on being served with any summons, citation, subpoena, complaint, indictment, information, or other document relating to any matter that may be subject to indemnification under this Agreement, whether civil, criminal, administrative, or investigative; but the omission to so notify State Auto will not relieve State Auto from any liability that it may have to the Executive Officer if such omission does not prejudice State Auto’s rights, but if such omission does prejudice State Auto’s rights, it will relieve State Auto from liability only to the extent of such prejudice; nor will the omission relieve State Auto from any liability that it may have to the Executive Officer otherwise than under this Agreement. With respect to any Proceeding of which the Executive Officer notifies State Auto:

(a) State Auto will be entitled to participate in such Proceeding at its own expense.

(b) Except as otherwise provided below, to the extent that it may wish, State Auto jointly with any other indemnifying party similarly notified will be entitled to assume the defense of the Proceeding, with counsel reasonably satisfactory to the Executive Officer. After notice from State Auto to the Executive Officer of its election so to assume the defense, State Auto will not be liable to the Executive Officer under this Agreement for any Expenses subsequently incurred by the Executive Officer in connection with the defense other than reasonable costs of investigation or as otherwise provided below. The Executive Officer will have the right to employ the Executive Officer’s own counsel in such Proceeding, but the fees and Expenses of such counsel will be at the expense of the Executive Officer unless: (i) the employment of counsel by the Executive Officer has been authorized by State Auto; (ii) the Executive Officer has reasonably concluded that there may be a conflict of interest between State Auto and the Executive Officer in the conduct of the defense of such Proceeding or that counsel may not be adequately representing the Executive Officer; or (iii) State Auto has not in fact employed counsel to assume the defense of such Proceeding, in each case of which the Expenses of counsel employed by the Executive Officer will be at the expense of State Auto. State Auto is not entitled to assume the defense of any Proceeding as to which the Executive Officer has made the conclusion provided in (ii) above has occurred.

(c) State Auto shall not settle any action or claim in any manner that would impose any penalty or limitation on the Executive Officer without the Executive Officer’s written consent.

(d) The Executive Officer shall not make any admission or effect any settlement with respect to a Proceeding without State Auto’s written consent unless the Executive Officer shall have determined to undertake the Executive Officer’s own defense in such matter and has waived the benefits of this Agreement in writing delivered to State Auto. State Auto is not liable to indemnify the Executive Officer under this Agreement for any amounts paid in settlement of any action or claim effected without its written consent.

(e) Neither the Executive Officer nor State Auto shall unreasonably withhold consent to any proposed settlement. The Executive Officer and State Auto shall cooperate to the extent reasonably possible with each other and with State Auto’s insurers, in attempts to defend or settle such Proceeding.

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§9. Non-Exclusivity; Insurance; Subrogation .

(a) Non-Exclusive Right . The rights of indemnification as provided by this Agreement shall not be deemed exclusive of any other rights to which the Executive Officer may at any time be entitled under applicable law, the articles of incorporation of State Auto, the Regulations, any agreement, a vote of shareholders, a resolution of directors or otherwise. No amendment, alteration or repeal of this Agreement or of any provision of this Agreement shall limit or restrict any right of the Executive Officer under this Agreement in respect of any action taken or omitted by the Executive Officer prior to such amendment, alteration or repeal. To the extent that a change in the OCL, whether by statute or judicial decision, permits greater indemnification than would be afforded currently under the Regulations and this Agreement, it is the intent of the parties to this Agreement that the Executive Officer shall enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy conferred in this Agreement is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.

(b) D&O Insurance . State Auto shall use its best efforts to maintain an insurance policy or policies providing liability insurance for officers which is at least as favorable to the Executive Officer as the policy in effect on the date of this Agreement and for so long as the Executive Officer’s services are covered pursuant to this Agreement, provided and to the extent that such insurance is available on a reasonable commercial basis. However, the Executive Officer shall continue to be entitled to the indemnification rights provided pursuant to this Agreement regardless of whether liability or other insurance coverage is at any time obtained or retained by State Auto. Any payments in fact made to the Executive Officer under an insurance policy obtained or retained by State Auto shall reduce the obligation of State Auto to make payments under this Agreement by the amount of the payments made under any such insurance policy. In the event that insurance becomes unavailable in the amount or scope of coverage of the policy in effect on the date of this Agreement on a reasonable commercial basis and State Auto foregoes maintenance of all or a portion of such insurance coverage, State Auto shall stand as a self-insurer with respect to the coverage, or portion of such coverage, not retained, and shall indemnify the Executive Officer against any loss arising out of the reduction or cancellation of such insurance coverage.

(c) Subrogation . In the event of any payment under this Agreement, State Auto shall be subrogated to the extent of such payment to all of the rights of recovery of the Executive Officer, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable State Auto to bring suit to enforce such rights.

(d) Offset of Insurance Proceeds . State Auto shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable under this Agreement if and to the extent that the Executive Officer has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

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(e) Offset for Other Payments . State Auto’s obligation to indemnify or advance Expenses under this Agreement to the Executive Officer who is or was serving at the request of State Auto as a Corporate Fiduciary of another Enterprise shall be reduced by any amount the Executive Officer has actually received as indemnification or advancement of Expenses from such other Enterprise.

(f) Changes in Code of Regulations . No provision of the Regulations as hereafter amended shall limit or restrict any right of the Executive Officer under this Agreement for indemnification or advancement of expenses for any action taken or omitted by the Executive Officer in the Executive Officer’s role as Corporate Fiduciary prior to such amendment, alteration or repeal whether or not (i) the acts or omissions giving rise to the action, suit or proceeding for which the Executive Officer seeks indemnification were known to State Auto at the time of any such amendment (ii) the Executive Officer is or is not a Corporate Fiduciary at the time of such amendment, or (iii) the acts or omissions giving rise to the action, suit or proceeding for which the Executive Officer seeks indemnification were known to State Auto at the time the Executive Officer ceased to be a Corporate Fiduciary.

§10. Duration of Agreement . All obligations of State Auto contained in this Agreement shall apply retroactively beginning to the date the Executive Officer began serving as a Corporate Fiduciary and shall continue during the period that the Executive Officer serves as a Corporate Fiduciary and for so long thereafter as the Executive Officer may be subject to any possible claim or any threatened, pending or completed Proceeding as a result, directly or indirectly, of the Executive Officer serving as a Corporate Fiduciary. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties to this Agreement and their respective successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of State Auto), assigns, spouses, heirs, executors and personal and legal representatives.

§11. Enforcement .

(a) State Auto expressly confirms and agrees that it has entered into this Agreement and assumes the obligations imposed on it by this Agreement in order to induce the Executive Officer to serve as an executive officer of State Auto, and State Auto acknowledges that the Executive Officer is relying upon this Agreement in serving as an executive officer of State Auto.

(b) This Agreement constitutes the entire agreement between the parties to this Agreement with respect to the subject matter of this Agreement and supersedes all prior agreements and understandings, oral, written and implied, between the parties with respect to the subject matter of this Agreement.

§12. Severability . The invalidity of unenforceability of any provision of this Agreement shall in no way affect the validity or enforceability of any other provision. Without limiting the generality of the foregoing, this Agreement is intended to confer upon the Executive Officer indemnification rights to the fullest extent permitted by the OCL. In the event any provision of this Agreement conflicts with any applicable law, such provision shall be deemed modified, consistent with the aforementioned intent, to the extent necessary to resolve such conflict.

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§13. Modification and Waiver . No supplement, modification, termination or amendment of this Agreement shall be binding unless executed in writing by both of the parties to this Agreement. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions (whether or not similar) of this Agreement nor shall such waiver constitute a continuing waiver.

§14. Notice By the Executive Officer . The Executive Officer agrees promptly to notify State Auto in writing upon being served with or otherwise receiving any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification under this Agreement. The failure to so notify State Auto shall not relieve State Auto of any obligation which it may have to the Executive Officer under this Agreement or otherwise unless and only to the extent that such failure or delay materially prejudices State Auto.

§15. Notices . All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, and if not so confirmed, then on the next business day, (c) five days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (e) one day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent:

To the Executive Officer at the address set forth below the Executive Officer’s signature to this Agreement.

To State Auto at:

State Auto Insurance Companies

518 East Broad Street

Columbus, Ohio 43215

Attention: Chief Executive Officer

Facsimile: (614) 464-4911

with a copy to:

State Auto Insurance Companies

518 East Broad Street

Columbus, Ohio 43215

Attention: General Counsel

Facsimile: (614) 719-0173

Or to such other address as may have been furnished to the Executive Officer by State Auto or to State Auto by the Executive Officer, as the case may be.

§16. Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same Agreement. This Agreement may also be executed and delivered by facsimile signature and in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

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§17. Headings . The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction of this Agreement.

§18. Governing Law and Consent to Jurisdiction . This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Ohio, without regard to its conflict of laws rules. State Auto and the Executive Officer irrevocably and unconditionally:

(a) Agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the Court of Common Pleas of Franklin County, State of Ohio (the “ Court of Common Pleas ”), and not in any other state or federal court in the United States of America or any court in any other country;

(b) Consent to submit to the exclusive jurisdiction of the Court of Common Pleas for purposes of any action or proceeding arising out of or in connection with this Agreement;

(c) Waive any objection to the laying of venue of any such action or proceeding in the Court of Common Pleas; and

(d) Waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Court of Common Pleas has been brought in an improper or inconvenient forum.

§19. Definitions . For purposes of this Agreement:

(a) “ Corporate Fiduciary ” means the status of a person as a current or former director, officer, employee or agent of State Auto, State Automobile Mutual Insurance Company or their respective subsidiaries and affiliates or as a current or former director, trustee, officer, employee, member, manager or agent of any other Enterprise that such person is or was serving at the request of State Auto.

(b) “ Disinterested Director ” means a director of State Auto who is not and was not a party to the Proceeding in respect of which indemnification is sought by the Executive Officer.

(c) “ Enterprise ” shall mean any corporation (for profit or nonprofit), limited liability company, partnership, joint venture, association, joint-stock company, trust, employee benefit plan or unincorporated organization, including without limitation State Auto, State Automobile Mutual Insurance Company and their respective subsidiaries and affiliates.

(d) “ Expenses ” shall include all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs,

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printing and binding costs, telephone charges, postage, delivery service fees and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, participating, or being or preparing to be a witness in a Proceeding. Expenses also shall include Expenses incurred in connection with any appeal resulting from any Proceeding, including without limitation the premium, security for, and other costs relating to any cost bond, supersede as bond, or other appeal bond or its equivalent. Expenses, however, shall not include amounts paid in settlement by the Executive Officer or the amount of judgments, penalties, fines, or excise taxes against the Executive Officer.

(e) “ Indemnifiable Event ” means any event, circumstance or situation, including any Proceeding, in which indemnification is or may be available to the Executive Officer under the provisions of Sections 2 or 3 of this Agreement.

(f) “ Independent Counsel ” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent or perform services for:

(i) State Auto or the Executive Officer in any matter material to either such party, or

(ii) Any other party to the Proceeding giving rise to a claim for indemnification hereunder.

Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either State Auto or the Executive Officer in an action to determine the Executive Officer’s rights under this Agreement.

(g) “ Proceeding ” includes any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought by or in the right of State Auto or otherwise and whether civil, criminal, administrative or investigative, in which the Executive Officer was, is or will be involved as a party or otherwise, by reason of the fact that the Executive Officer is or was serving as a Corporate Fiduciary, by reason of any conduct of the Executive Officer while serving as a Corporate Fiduciary; in each case whether or not the Executive Officer is serving as a Corporate Fiduciary at the time any liability or expense is incurred for which indemnification can be provided under this Agreement.

[Remainder of page blank. Signatures on following page.]

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Signature Page of Officer Indemnification Agreement (Fitch)

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Exhibit 10.6

OFFICER INDEMNIFICATION AGREEMENT

This Officer Indemnification Agreement (this “ Agreement ”) is made as of May 8, 2009, between State Auto Financial Corporation, an Ohio corporation (“ State Auto ”), and James A. Yano (the “ Executive Officer ”).

Background Information

A. The Executive Officer is a member of State Auto’s senior management and, in that capacity, is performing valuable services for State Auto.

B. The Code of Regulations of State Auto, as amended and in effect on the date hereof (the “ Regulations ”), provides for indemnification of officers of State Auto in accordance with Chapter 1701, General Corporation Law, of the Ohio Revised Code (the “ OCL ”). In addition, the OCL expressly provides that it is not the exclusive source for indemnification rights and that individual contracts of indemnification may be entered into between an Ohio corporation and its officers.

C. The State Auto Board of Directors (the “ Board ”) has evaluated the sufficiency of liability insurance and the statutory indemnification provided by the OCL as to their adequacy to protect certain executive officers against the various legal risks and potential liabilities associated with the performance of their duties on behalf of State Auto, and the Board has concluded that such insurance and statutory indemnification may not be adequate protection to such officers.

D. The Board has determined, after due consideration of the terms of this Agreement and the various other options available to State Auto, that this Agreement is reasonable and prudent and in the best interests of State Auto.

Statement of Agreement

The parties acknowledge the accuracy of the foregoing Background Information and hereby agree as follows:

§1. Agreement to Serve . The Executive Officer agrees to continue to serve as an officer of State Auto, faithfully and to the best of the Executive Officer’s ability, so long as elected or appointed as an officer of State Auto by the Board.

§2. Indemnification .

(a) Indemnification of Executive Officer . State Auto shall indemnify the Executive Officer to the maximum extent permitted by the OCL in effect on the date of this Agreement, and as the OCL may be hereafter amended from time to time (but, in the case of any such amendment, only to the extent the amendment permits State Auto to provide broader indemnification rights and protection than the OCL permitted State Auto to provide before the amendment), by reason of the Executive Officer serving as a Corporate Fiduciary (as defined in Section 19 ).

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(b) Indemnification for Expenses When Wholly or Partly Successful . To the extent that the Executive Officer is, by reason of the Executive Officer serving as a Corporate Fiduciary, a party to and is successful, on the merits or otherwise, in any Proceeding (as defined in Section 19 ), State Auto shall indemnify the Executive Officer to the maximum extent permitted by the OCL in effect on the date of this Agreement, and as the OCL may be hereafter amended from time to time (but, in the case of any such amendment, only to the extent the amendment permits State Auto to provide broader indemnification rights and protection than the OCL permitted State Auto to provide before the amendment), against all Expenses (as defined in Section 19 ) actually and reasonably incurred by the Executive Officer or on the Executive Officer’s behalf in connection with such Proceeding. If the Executive Officer is not wholly successful in such Proceeding, but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, then State Auto shall indemnify the Executive Officer against all Expenses actually and reasonably incurred by the Executive Officer or on the Executive Officer’s behalf in connection with each successfully resolved claim, issue or matter. For purposes of this section and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

(c) Indemnification for Expenses of a Witness . To the extent that the Executive Officer is, by reason of the Executive Officer serving as a Corporate Fiduciary, a witness in any Proceeding to which the Executive Officer is not a party, the Executive Officer shall be indemnified against all Expenses actually and reasonably incurred by the Executive Officer or on the Executive Officer’s behalf in connection with such Proceeding.

§3. Additional Indemnification . In addition to the indemnification provided for in Section 2 of this Agreement, State Auto shall indemnify the Executive Officer against all Expenses, judgments, penalties, fines, excise taxes and amounts paid in settlement actually and reasonably incurred by the Executive Officer or on the Executive Officer’s behalf if, by reason of the Executive Officer serving as a Corporate Fiduciary, the Executive Officer is, or is threatened to be made, a party to or participant in any Proceeding (including a Proceeding by or in the right of State Auto).

Notwithstanding the foregoing, State Auto shall not be obligated under this Agreement to provide indemnification to the Executive Officer in the following situations:

(a) In connection with any Proceeding in which a court of competent jurisdiction determines, in a final adjudication from which there is no further right of appeal, that the Executive Officer’s actions were knowingly fraudulent, deliberately dishonest or willfully wrongful;

(b) In connection with any Proceeding in which a court of competent jurisdiction determines, in a final adjudication from which there is no further right of appeal, that indemnification under the specific circumstances would be unlawful;

(c) In connection with any Proceeding in which the only liability asserted against the Executive Officer is pursuant to section 1701.95 of the OCL;

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(d) To the extent payment has actually been made to or on behalf of the Executive Officer under any insurance policy or other indemnity provision, except with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision;

(e) In connection with an accounting of profits made from the purchase and sale (or sale and purchase) by the Executive Officer of securities of State Auto within the meaning of Section 16(b) of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), or similar provisions of state statutory law or common law;

(f) With respect to any conduct of the Executive Officer that does not directly relate to the Executive Officer’s services as a Corporate Fiduciary; or

(g) In connection with any Proceeding (or any part of any Proceeding) initiated by the Executive Officer, including any Proceeding (or any part of any Proceeding) initiated by the Executive Officer against State Auto or other Corporate Fiduciaries, unless:

(i) The Proceeding is brought by the Executive Officer to enforce any of the Executive Officer’s rights under this Agreement or to collect money due under this Agreement;

(ii) The Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation; or

(iii) State Auto provides the indemnification, in its sole discretion, pursuant to the powers vested in State Auto under applicable law.

As applicable, any determination shall be made under the procedures, and subject to the presumptions, set forth in Sections 6 and 7 of this Agreement.

§4. Contribution .

(a) If in connection with an Indemnifiable Event (as defined in Section 19 ) State Auto is jointly liable with the Executive Officer (or would be if joined in the applicable Proceeding), State Auto shall pay the entire amount of such Indemnifiable Event without requiring the Executive Officer to contribute to such payment, and State Auto waives and relinquishes any right of contribution it may have against the Executive Officer. State Auto shall not enter into any settlement of any Proceeding in which State Auto is jointly liable with the Executive Officer (or would be if joined in such Proceeding) unless such settlement provides for a full and final release of all claims asserted against the Executive Officer.

(b) Without diminishing or impairing the obligations of State Auto set forth in the preceding subsection, if, for any reason, the Executive Officer shall be required to pay any amount in connection with an Indemnifiable Event in which State Auto is jointly liable with the Executive Officer (or would be if joined in the applicable Proceeding), State Auto shall contribute to such payment an amount equal to the relative benefits received by State Auto and all Corporate Fiduciaries, other than the Executive Officer, who are jointly liable

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with the Executive Officer (or would be if joined in the applicable Proceeding), on the one hand, and the Executive Officer, on the other hand, from the transaction from which such Indemnifiable Event arose; provided, however, that the proportion determined on the basis of relative benefit may, to the extent necessary to conform to law, be further adjusted by reference to the relative fault of State Auto and all Corporate Fiduciaries, other than the Executive Officer, who are jointly liable with the Executive Officer (or would be if joined in the applicable Proceeding), on the one hand, and the Executive Officer, on the other hand, in connection with the events that resulted in the Indemnifiable Event, as well as any other equitable considerations which the law may require to be considered. The relative fault of State Auto and all Corporate Fiduciaries, other than the Executive Officer, who are jointly liable with the Executive Officer (or would be if joined in the applicable Proceeding), on the one hand, and the Executive Officer, on the other hand, shall be determined by reference to, among other things, the degree to which their actions were motivated by intent to gain personal profit or advantage, the degree to which their liability is primary or secondary and the degree to which their conduct is active or passive.

(c) State Auto agrees to fully indemnify and hold the Executive Officer harmless from any claims of contribution which may be brought by Corporate Fiduciaries, other than the Executive Officer, who may be jointly liable with the Executive Officer in connection with an Indemnifiable Event.

(d) To the maximum extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to the Executive Officer for any reason whatsoever, State Auto, in lieu of indemnifying the Executive Officer, shall contribute to the amount incurred by the Executive Officer in connection with the Indemnifiable Event, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect:

(i) The relative benefits received by State Auto and the Executive Officer as a result of the event(s) or transaction(s) giving rise to the Indemnifiable Event; and

(ii) The relative fault of State Auto, the Executive Officer and other Corporate Fiduciaries in connection with such event(s) or transaction(s).

§5. Advancement of Expenses . State Auto shall advance all Expenses incurred by or on behalf of the Executive Officer in connection with any Proceeding within 30 days after the receipt by State Auto of an indemnification statement and undertaking from the Executive Officer substantially in the form attached hereto as Exhibit A (the “ Indemnification Statement and Undertaking ”) requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding.

Any advances of Expenses made pursuant to this section shall be unsecured and interest free.

If the Executive Officer is subsequently required to repay the amount of any advancement of Expenses to State Auto, then any amounts payable by the Executive Officer to State Auto may be offset by any obligations due to the Executive Officer from State Auto, so that only net amounts shall be required to be transferred between the parties.

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§6. Procedures and Presumptions for Determination of Entitlement to Indemnification . Subject to the terms and conditions of this Agreement, it is the intent of this Agreement to secure for the Executive Officer rights of indemnity that are as favorable as may be permitted under the OCL and public policy of the State of Ohio. Accordingly, the parties agree that the following procedures and presumptions shall apply in the event of any question as to whether the Executive Officer is entitled to indemnification under this Agreement:

(a) If the Executive Officer desires to request indemnification pursuant to this Agreement, then the Executive Officer shall submit to the secretary of State Auto an Indemnification Statement and Undertaking, along with all documents and information as are reasonably available to the Executive Officer and are reasonably necessary to determine whether and to what extent the Executive Officer is entitled to indemnification. The secretary of State Auto shall, promptly upon receipt of such Indemnification Statement and Undertaking, advise the Board in writing that the Executive Officer has requested indemnification pursuant to this Agreement.

(b) A determination as to the Executive Officer’s entitlement to indemnification under this Agreement shall be made in the specific case by one of the following four methods, which shall be at the election of the Board:

(i) By a majority vote of a quorum consisting of the Disinterested Directors (as defined in Section 19 );

(ii) If the quorum described in Section 6(b)(i) is not obtainable or if a majority vote of the Disinterested Directors so directs, by Independent Counsel (as defined in Section 19 ) in a written opinion to the Board, a copy of which shall be delivered to the Executive Officer;

(iii) By the shareholders of State Auto; or

(iv) By the Court of Common Pleas (as defined in Section 18(a) ).

(c) If the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 6(b) of this Agreement, the Independent Counsel shall be selected as provided in this subsection. The Independent Counsel shall be selected by the Board, and the secretary of State Auto shall promptly give written notice of such selection to the Executive Officer. The Executive Officer may, within ten days after such written notice of selection shall have been given, deliver to State Auto, as the case may be, a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “ Independent Counsel ” as defined in Section 19 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected shall act as Independent Counsel. If a written objection is made and substantiated by the Board, the Independent Counsel selected may not serve as Independent Counsel unless and until such objection is

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withdrawn or the Court of Common Pleas has determined that such objection is without merit. State Auto shall pay any and all reasonable fees and Expenses of Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to Section 6(b) of this Agreement, and State Auto shall pay all reasonable fees and Expenses incident to the procedures of this subsection, regardless of the manner in which such Independent Counsel was selected or appointed.

(d) In making a determination with respect to entitlement to indemnification under this Agreement, the person or persons or entity making such determination shall presume that the Executive Officer is entitled to indemnification under this Agreement. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence. Neither the failure of State Auto to have made a determination prior to the commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because the Executive Officer has met the applicable standard of conduct, nor an actual determination by State Auto that the Executive Officer has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the Executive Officer has not met the applicable standard of conduct.

(e) The Executive Officer shall be deemed to have acted in good faith if the Executive Officer’s action is based on the records or books of account of the Enterprise (as defined in Section 19 of this Agreement), including financial statements, or on information supplied to the Executive Officer by other officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Enterprise. In addition, the knowledge and/or actions, or failure to act, of any Corporate Fiduciary other than the Executive Officer shall not be imputed to the Executive Officer for purposes of determining the right to indemnification under this Agreement. Whether or not the foregoing provisions of this subsection are satisfied, it shall in any event be presumed that the Executive Officer has at all times acted in good faith and in a manner the Executive Officer reasonably believed to be in or not opposed to the best interests of State Auto. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.

(f) The determination of the Executive Officer’s entitlement to indemnification must be made by the person, persons or entity empowered or selected under Section 6 to make such determination not later than 60 days after the final disposition of the Proceeding, whether by judgment, order, settlement, dismissal, arbitration award, conviction, acceptance of a plea of nolo contendere or its equivalent. If a determination is not made within such period, the requisite determination of entitlement to indemnification shall be deemed to have been made and the Executive Officer shall be entitled to such indemnification absent (i) a misstatement by the Executive Officer of a material fact, or an omission of a material fact necessary to make the Executive Officer’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law; provided, however, that such 60-day period may be extended for a reasonable time, not to exceed an additional 30 days,

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if the person, persons or entity making such determination with respect to entitlement to indemnification in good faith requires such additional time to obtain or evaluate documentation and/or information relating to making such determination; and provided, further, that the foregoing provisions of this subsection shall not apply if the determination of entitlement to indemnification is to be made by the shareholders pursuant to Section 6(b) of this Agreement and within 120 days after the final disposition of the Proceeding a meeting of State Auto shareholders is held for the purpose of making such determination and such determination is made at such meeting.

(g) The Executive Officer shall cooperate with the person, persons or entity making such determination with respect to the Executive Officer’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to the Executive Officer and reasonably necessary to such determination. Any Independent Counsel, member of the Board or shareholder of State Auto shall act reasonably and in good faith in making a determination regarding the Executive Officer’s entitlement to indemnification under this Agreement. Any Expenses incurred by the Executive Officer in so cooperating with the person, persons or entity making such determination shall be borne by State Auto (irrespective of the determination as to the Executive Officer’s entitlement to indemnification) and State Auto indemnifies and agrees to hold the Executive Officer harmless from any such costs.

(h) State Auto acknowledges that a settlement or other disposition short of final judgment may be successful if it permits a party to avoid expense, delay, distraction, disruption and uncertainty. In the event that any Proceeding to which the Executive Officer is a party is resolved in any manner other than by adverse judgment against the Executive Officer (including, without limitation, settlement of such Proceeding with or without payment of money or other consideration) it shall be presumed that the Executive Officer has been successful on the merits or otherwise in such Proceeding. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.

(i) The termination of any Proceeding or of any claim, issue or matter in any Proceeding, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of the Executive Officer to indemnification or create a presumption that the Executive Officer did not act in good faith and in a manner which the Executive Officer reasonably believed to be in or not opposed to the best interests of State Auto or, with respect to any criminal Proceeding, that the Executive Officer had reasonable cause to believe that the Executive Officer’s conduct was unlawful.

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§7. Remedies of the Executive Officer .

(a) In the event that (i) a determination is made pursuant to Section 6 of this Agreement that the Executive Officer is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 5 of this Agreement, or (iii) payment of indemnification is not made within 30 days after a determination has been made that the Executive Officer is entitled to indemnification or such determination is deemed to have been made pursuant to Section 6 of this Agreement, the Executive Officer shall be entitled to an adjudication in the Court of Common Pleas of the Executive Officer’s entitlement to such indemnification or payment of Expenses or indemnification. The Executive Officer shall commence such proceeding seeking an adjudication within 180 days following the date on which the Executive Officer first has the right to commence such proceeding pursuant to this subsection. State Auto shall not oppose the Executive Officer’s right to seek any such adjudication.

(b) In the event that a determination shall have been made pursuant to Section 6(b) of this Agreement that the Executive Officer is not entitled to indemnification, any judicial proceeding commenced pursuant to this section shall be conducted in all respects as a de novo trial on the merits, and the Executive Officer shall not be prejudiced by reason of any adverse determination under Section 6(b) .

(c) If a determination shall have been made pursuant to Section 6(b) of this Agreement that the Executive Officer is entitled to indemnification, State Auto shall be bound by such determination in any judicial proceeding commenced pursuant to this section, absent:

(i) A misstatement by the Executive Officer of a material fact, or an omission of a material fact necessary to make the Executive Officer’s misstatement not materially misleading in connection with the application for indemnification; or

(ii) A prohibition of such indemnification under applicable law.

(d) In the event that the Executive Officer, pursuant to this section, seeks a judicial adjudication of the Executive Officer’s rights under, or to recover damages for breach of, this Agreement, or to collect money due under this Agreement, or to recover under any directors’ and officers’ liability insurance policies maintained by State Auto, State Auto shall pay on the Executive Officer’s behalf, in advance, any and all Expenses actually and reasonably incurred by the Executive Officer in such judicial adjudication, regardless of whether the Executive Officer ultimately is determined to be entitled to such indemnification, recovery of damages, collection of money or recovery of insurance proceeds, unless it is determined in such judicial adjudication that each of the material assertions made by the Executive Officer as a basis for such action were not made in good faith or were frivolous.

(e) State Auto shall be precluded from asserting in any judicial proceeding commenced pursuant to this section that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court that State Auto is bound by all the provisions of this Agreement.

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§8. Notice by Executive Officer . The Executive Officer shall promptly notify State Auto in writing on being served with any summons, citation, subpoena, complaint, indictment, information, or other document relating to any matter that may be subject to indemnification under this Agreement, whether civil, criminal, administrative, or investigative; but the omission to so notify State Auto will not relieve State Auto from any liability that it may have to the Executive Officer if such omission does not prejudice State Auto’s rights, but if such omission does prejudice State Auto’s rights, it will relieve State Auto from liability only to the extent of such prejudice; nor will the omission relieve State Auto from any liability that it may have to the Executive Officer otherwise than under this Agreement. With respect to any Proceeding of which the Executive Officer notifies State Auto:

(a) State Auto will be entitled to participate in such Proceeding at its own expense.

(b) Except as otherwise provided below, to the extent that it may wish, State Auto jointly with any other indemnifying party similarly notified will be entitled to assume the defense of the Proceeding, with counsel reasonably satisfactory to the Executive Officer. After notice from State Auto to the Executive Officer of its election so to assume the defense, State Auto will not be liable to the Executive Officer under this Agreement for any Expenses subsequently incurred by the Executive Officer in connection with the defense other than reasonable costs of investigation or as otherwise provided below. The Executive Officer will have the right to employ the Executive Officer’s own counsel in such Proceeding, but the fees and Expenses of such counsel will be at the expense of the Executive Officer unless: (i) the employment of counsel by the Executive Officer has been authorized by State Auto; (ii) the Executive Officer has reasonably concluded that there may be a conflict of interest between State Auto and the Executive Officer in the conduct of the defense of such Proceeding or that counsel may not be adequately representing the Executive Officer; or (iii) State Auto has not in fact employed counsel to assume the defense of such Proceeding, in each case of which the Expenses of counsel employed by the Executive Officer will be at the expense of State Auto. State Auto is not entitled to assume the defense of any Proceeding as to which the Executive Officer has made the conclusion provided in (ii) above has occurred.

(c) State Auto shall not settle any action or claim in any manner that would impose any penalty or limitation on the Executive Officer without the Executive Officer’s written consent.

(d) The Executive Officer shall not make any admission or effect any settlement with respect to a Proceeding without State Auto’s written consent unless the Executive Officer shall have determined to undertake the Executive Officer’s own defense in such matter and has waived the benefits of this Agreement in writing delivered to State Auto. State Auto is not liable to indemnify the Executive Officer under this Agreement for any amounts paid in settlement of any action or claim effected without its written consent.

(e) Neither the Executive Officer nor State Auto shall unreasonably withhold consent to any proposed settlement. The Executive Officer and State Auto shall cooperate to the extent reasonably possible with each other and with State Auto’s insurers, in attempts to defend or settle such Proceeding.

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§9. Non-Exclusivity; Insurance; Subrogation .

(a) Non-Exclusive Right . The rights of indemnification as provided by this Agreement shall not be deemed exclusive of any other rights to which the Executive Officer may at any time be entitled under applicable law, the articles of incorporation of State Auto, the Regulations, any agreement, a vote of shareholders, a resolution of directors or otherwise. No amendment, alteration or repeal of this Agreement or of any provision of this Agreement shall limit or restrict any right of the Executive Officer under this Agreement in respect of any action taken or omitted by the Executive Officer prior to such amendment, alteration or repeal. To the extent that a change in the OCL, whether by statute or judicial decision, permits greater indemnification than would be afforded currently under the Regulations and this Agreement, it is the intent of the parties to this Agreement that the Executive Officer shall enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy conferred in this Agreement is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.

(b) D&O Insurance . State Auto shall use its best efforts to maintain an insurance policy or policies providing liability insurance for officers which is at least as favorable to the Executive Officer as the policy in effect on the date of this Agreement and for so long as the Executive Officer’s services are covered pursuant to this Agreement, provided and to the extent that such insurance is available on a reasonable commercial basis. However, the Executive Officer shall continue to be entitled to the indemnification rights provided pursuant to this Agreement regardless of whether liability or other insurance coverage is at any time obtained or retained by State Auto. Any payments in fact made to the Executive Officer under an insurance policy obtained or retained by State Auto shall reduce the obligation of State Auto to make payments under this Agreement by the amount of the payments made under any such insurance policy. In the event that insurance becomes unavailable in the amount or scope of coverage of the policy in effect on the date of this Agreement on a reasonable commercial basis and State Auto foregoes maintenance of all or a portion of such insurance coverage, State Auto shall stand as a self-insurer with respect to the coverage, or portion of such coverage, not retained, and shall indemnify the Executive Officer against any loss arising out of the reduction or cancellation of such insurance coverage.

(c) Subrogation . In the event of any payment under this Agreement, State Auto shall be subrogated to the extent of such payment to all of the rights of recovery of the Executive Officer, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable State Auto to bring suit to enforce such rights.

(d) Offset of Insurance Proceeds . State Auto shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable under this Agreement if and to the extent that the Executive Officer has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

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(e) Offset for Other Payments . State Auto’s obligation to indemnify or advance Expenses under this Agreement to the Executive Officer who is or was serving at the request of State Auto as a Corporate Fiduciary of another Enterprise shall be reduced by any amount the Executive Officer has actually received as indemnification or advancement of Expenses from such other Enterprise.

(f) Changes in Code of Regulations . No provision of the Regulations as hereafter amended shall limit or restrict any right of the Executive Officer under this Agreement for indemnification or advancement of expenses for any action taken or omitted by the Executive Officer in the Executive Officer’s role as Corporate Fiduciary prior to such amendment, alteration or repeal whether or not (i) the acts or omissions giving rise to the action, suit or proceeding for which the Executive Officer seeks indemnification were known to State Auto at the time of any such amendment (ii) the Executive Officer is or is not a Corporate Fiduciary at the time of such amendment, or (iii) the acts or omissions giving rise to the action, suit or proceeding for which the Executive Officer seeks indemnification were known to State Auto at the time the Executive Officer ceased to be a Corporate Fiduciary.

§10. Duration of Agreement . All obligations of State Auto contained in this Agreement shall apply retroactively beginning to the date the Executive Officer began serving as a Corporate Fiduciary and shall continue during the period that the Executive Officer serves as a Corporate Fiduciary and for so long thereafter as the Executive Officer may be subject to any possible claim or any threatened, pending or completed Proceeding as a result, directly or indirectly, of the Executive Officer serving as a Corporate Fiduciary. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties to this Agreement and their respective successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of State Auto), assigns, spouses, heirs, executors and personal and legal representatives.

§11. Enforcement .

(a) State Auto expressly confirms and agrees that it has entered into this Agreement and assumes the obligations imposed on it by this Agreement in order to induce the Executive Officer to serve as an executive officer of State Auto, and State Auto acknowledges that the Executive Officer is relying upon this Agreement in serving as an executive officer of State Auto.

(b) This Agreement constitutes the entire agreement between the parties to this Agreement with respect to the subject matter of this Agreement and supersedes all prior agreements and understandings, oral, written and implied, between the parties with respect to the subject matter of this Agreement.

§12. Severability . The invalidity of unenforceability of any provision of this Agreement shall in no way affect the validity or enforceability of any other provision. Without limiting the generality of the foregoing, this Agreement is intended to confer upon the Executive Officer indemnification rights to the fullest extent permitted by the OCL. In the event any provision of this Agreement conflicts with any applicable law, such provision shall be deemed modified, consistent with the aforementioned intent, to the extent necessary to resolve such conflict.

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§13. Modification and Waiver . No supplement, modification, termination or amendment of this Agreement shall be binding unless executed in writing by both of the parties to this Agreement. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions (whether or not similar) of this Agreement nor shall such waiver constitute a continuing waiver.

§14. Notice By the Executive Officer . The Executive Officer agrees promptly to notify State Auto in writing upon being served with or otherwise receiving any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification under this Agreement. The failure to so notify State Auto shall not relieve State Auto of any obligation which it may have to the Executive Officer under this Agreement or otherwise unless and only to the extent that such failure or delay materially prejudices State Auto.

§15. Notices . All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, and if not so confirmed, then on the next business day, (c) five days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (e) one day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent:

To the Executive Officer at the address set forth below the Executive Officer’s signature to this Agreement.

To State Auto at:

State Auto Insurance Companies

518 East Broad Street

Columbus, Ohio 43215

Attention: Chief Executive Officer

Facsimile: (614) 464-4911

with a copy to:

State Auto Insurance Companies

518 East Broad Street

Columbus, Ohio 43215

Attention: General Counsel

Facsimile: (614) 719-0173

Or to such other address as may have been furnished to the Executive Officer by State Auto or to State Auto by the Executive Officer, as the case may be.

§16. Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same Agreement. This Agreement may also be executed and delivered by facsimile signature and in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

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§17. Headings . The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction of this Agreement.

§18. Governing Law and Consent to Jurisdiction . This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Ohio, without regard to its conflict of laws rules. State Auto and the Executive Officer irrevocably and unconditionally:

(a) Agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the Court of Common Pleas of Franklin County, State of Ohio (the “ Court of Common Pleas ”), and not in any other state or federal court in the United States of America or any court in any other country;

(b) Consent to submit to the exclusive jurisdiction of the Court of Common Pleas for purposes of any action or proceeding arising out of or in connection with this Agreement;

(c) Waive any objection to the laying of venue of any such action or proceeding in the Court of Common Pleas; and

(d) Waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Court of Common Pleas has been brought in an improper or inconvenient forum.

§19. Definitions . For purposes of this Agreement:

(a) “ Corporate Fiduciary ” means the status of a person as a current or former director, officer, employee or agent of State Auto, State Automobile Mutual Insurance Company or their respective subsidiaries and affiliates or as a current or former director, trustee, officer, employee, member, manager or agent of any other Enterprise that such person is or was serving at the request of State Auto.

(b) “ Disinterested Director ” means a director of State Auto who is not and was not a party to the Proceeding in respect of which indemnification is sought by the Executive Officer.

(c) “ Enterprise ” shall mean any corporation (for profit or nonprofit), limited liability company, partnership, joint venture, association, joint-stock company, trust, employee benefit plan or unincorporated organization, including without limitation State Auto, State Automobile Mutual Insurance Company and their respective subsidiaries and affiliates.

(d) “ Expenses ” shall include all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs,

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printing and binding costs, telephone charges, postage, delivery service fees and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, participating, or being or preparing to be a witness in a Proceeding. Expenses also shall include Expenses incurred in connection with any appeal resulting from any Proceeding, including without limitation the premium, security for, and other costs relating to any cost bond, supersede as bond, or other appeal bond or its equivalent. Expenses, however, shall not include amounts paid in settlement by the Executive Officer or the amount of judgments, penalties, fines, or excise taxes against the Executive Officer.

(e) “ Indemnifiable Event ” means any event, circumstance or situation, including any Proceeding, in which indemnification is or may be available to the Executive Officer under the provisions of Sections 2 or 3 of this Agreement.

(f) “ Independent Counsel ” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent or perform services for:

(i) State Auto or the Executive Officer in any matter material to either such party, or

(ii) Any other party to the Proceeding giving rise to a claim for indemnification hereunder.

Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either State Auto or the Executive Officer in an action to determine the Executive Officer’s rights under this Agreement.

(g) “ Proceeding ” includes any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought by or in the right of State Auto or otherwise and whether civil, criminal, administrative or investigative, in which the Executive Officer was, is or will be involved as a party or otherwise, by reason of the fact that the Executive Officer is or was serving as a Corporate Fiduciary, by reason of any conduct of the Executive Officer while serving as a Corporate Fiduciary; in each case whether or not the Executive Officer is serving as a Corporate Fiduciary at the time any liability or expense is incurred for which indemnification can be provided under this Agreement.

[Remainder of page blank. Signatures on following page.]

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Signature Page of Officer Indemnification Agreement (Yano)

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Exhibit 10.7

STATE AUTO FINANCIAL CORPORATION

2009

EQUITY INCENTIVE COMPENSATION PLAN

Background Information

The directors and shareholders of State Auto Financial Corporation, an Ohio Corporation, (the “ Company ”), previously approved the Amended and Restated Equity Incentive Compensation Plan (the “ Amended Plan ”) to provide equity-based awards to key employees of the Company and its affiliates in order to more closely align the interests of the recipient key employees with the interests of the Company’s shareholders. The Amended Plan shall, by its terms, expire on July 1, 2010. The directors and shareholders of the Company now desire to approve and adopt the 2009 Equity Incentive Compensation Plan (the “ Plan ”) to provide equity-based awards and compensation for future periods.

Section 1. Purposes of Plan

The Plan is intended to advance the interests of the Company and its shareholders by enhancing the ability of the Company and its affiliates to attract and retain highly-qualified key employees and by providing additional incentives and compensation to such employees to achieve the Company’s long-term business plans and objectives. The Plan is also intended to encourage and enable key employees to participate in the Company’s future prosperity and growth by providing the participants with incentives and compensation based on the Company’s performance, development and financial success. The Plan is not intended to be, and shall not be construed as, a deferred compensation plan.

These purposes will be achieved by granting to key employees equity-based awards (the “ Awards ”) under the Plan in the form of: (A) Incentive Stock Options (“ ISOs ”), which are intended to qualify under Section 422 of the Internal Revenue Code of 1986, as amended (the “ Code ”); (B) stock options which are not intended to qualify as ISOs (“ NQSOs ”) (ISOs and NQSOs are referred to together hereinafter as “ Stock Options ”); (C) common shares of the Company (the “ Shares ”), which will be subject to a vesting schedule based on the recipient’s continued employment (“ Restricted Shares ”); (D) Shares which will be subject to a vesting schedule based on certain performance objectives (“ Performance Shares ”), (E) Performance Units as described in Section 9, and (F) Other Stock-Based Awards as described in Section 10. For purposes of this Plan, the terms “parent” and “subsidiary” mean “parent corporation” and “subsidiary corporation” respectively, as those terms are defined in Code Section 424.

Section 2. Administration

The Plan shall be administered by a committee (the “ Committee ”) which shall be the Compensation Committee of the Company’s Board of Directors (the “ Board ”). The members of the Committee shall serve at the pleasure of the Board, which may remove members from the Committee or appoint new members to the Committee from time to time and members of the Committee may resign by written notice to the Chairman of the Board or the Secretary of the Company. The members of the Committee shall not be eligible to participate in the Plan while

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serving on the Committee, and each member shall be a “non-employee director” within the meaning of Rule 16b-3, as amended, under the Securities Exchange Act of 1934 (the “Exchange Act”). Additionally, each member of the Committee shall be an “outside director” within the meaning of Code Section 162(m).

Unless otherwise determined by the Board, the Committee shall have full and final authority to administer the Plan in accordance with its terms, including, without limitation, authority, to the extent not inconsistent with the specific provisions of the Plan, to: (A) interpret all provisions of the Plan consistent with law; (B) designate the key employees to receive Awards under the Plan (such recipients, “ Participants ”); (C) determine the frequency of Awards; (D) determine the number and type of Awards to be granted to each Participant; (E) determine the terms and conditions, not inconsistent with the terms hereof, of any Award, including without limitation, time and performance restrictions; (F) prescribe the form and terms of instruments evidencing any Awards granted under this Plan; (G) determine the vesting requirement, if any, for Awards; (H) make special Award grants when appropriate; (I) adopt, amend and rescind general and special rules and regulations for the Plan’s administration including administrative rules, guidelines and practices governing the Plan as it shall, from time to time, deem advisable; (J) direct employees of the Company, its parent and the Company’s and its parent’s subsidiary corporations and affiliates, and advisors to prepare such materials or perform such analyses as the Committee deems necessary and appropriate; (K) interpret the terms and provisions of the Plan and any Award granted and any agreements relating thereto; (L) make all other determinations necessary or advisable for the administration of this Plan; and (M) take any other actions the Committee considers appropriate in connection with, and otherwise supervise the administration of, the Plan.

The Committee may designate selected Committee members or certain employees of the Company to assist the Committee in the administration of the Plan and may grant authority to such persons to execute documents on behalf of the Committee.

Any interpretation or administration of the Plan by the Committee, and all actions of the Committee, shall be made in the Committee’s sole discretion and shall be final, binding and conclusive on the Company, its shareholders, its parent and subsidiary corporations, and all Participants in the Plan, their respective legal representatives, successors and assigns, and upon all persons claiming under it through any of them.

Service on the Committee shall constitute service as a member of the Board of Directors of the Company, so that members of the Committee shall be entitled to indemnification, reimbursement and other protections as directors of the Company as set forth in the Company’s Amended and Restated Articles of Incorporation and Amended and Restated Code of Regulations, as each may be further amended from time to time, as set forth in the Indemnity Agreements between the Company and each of its directors, and additionally as provided, and to the full extent not prohibited, by law.

Section 3. Eligibility and Factors to be Considered in Granting Awards

The employees eligible to receive Awards under the Plan (“ Eligible Employees ”) shall include only employees of the Company or its parent or the Company’s or its parent’s subsidiary corporations or affiliates who: (A) are executive, administrative, professional or technical personnel who, in the opinion of the Committee, have responsibilities affecting the management,

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development or financial success of the Company or one or more of its subsidiaries or other affiliated entities; (B) perform services for the benefit of the Company, its parent or subsidiary corporations; and (C) are otherwise eligible employees as defined by applicable law. No director of the Company who is not also an employee of the Company, its parent or the Company’s or its parent’s subsidiary corporations or affiliates shall be eligible to participate in the Plan.

In making any determination as to the employees to whom Awards shall be granted, the Committee shall take into account, in each case, the level and responsibility of the employee’s position, the level of the employee’s performance, the employee’s level of compensation, the assessed potential of the employee and such other factors as the Committee in its sole discretion shall deem relevant to the accomplishment of the purposes of the Plan.

Section 4. Shares Subject to Plan

The maximum aggregate number of common shares, without par value, of the Company (“ Shares ”) which may be issued under the Plan shall be 2,000,000 shares; provided that in no event shall more than 33% of the Shares authorized for issuance under the Plan be granted in the form of Awards other than Stock Options. For each calendar year, the maximum number of Shares which may be granted to Participants during that year in the form of Awards of Stock Options, Restricted Shares and Performance Shares shall not exceed 1.5% of the total number of shares outstanding as of December 31 of the prior year. For each calendar year, the maximum number of Shares which may be granted to any individual during that year in the form of Awards of Stock Options, Restricted Shares and Performance Shares shall not exceed 250,000 Shares.

The Shares which may be issued under the Plan may be authorized but unissued Shares or issued Shares reacquired by the Company and held as treasury Shares. If any Shares subject to a Stock Option granted under the Plan are forfeited by the holder thereof, or if any Restricted Shares or Performance Shares granted under the Plan are forfeited by the holder thereof, or if any Stock Option or other Award granted under the Plan terminates without a payment or transfer being made to the Award recipient in the form of Shares, then such Shares shall again be available for distribution in connection with future Awards under the Plan. If any Award granted under the Plan expires or terminates for any reason without having been fully exercised, the unpurchased Shares which had been subject to that Award shall again be available for other Awards to be granted under the Plan. The aggregate number of Shares shall be subject to adjustment under Section 11.(A) of the Plan.

Section 5. Grant of Awards

Any Awards may be granted alone or in addition to other Awards granted under the Plan. Any Awards granted under the Plan shall be in such form as the Committee may from time to time approve, consistent with the Plan, and the provisions of Awards need not be the same with respect to each Participant.

Each Award granted under the Plan shall be authorized by the Committee and shall be evidenced by a written award agreement (the “ Award Agreement ”), in the form approved by the Committee from time to time, which shall be dated as of the date approved by the Committee in connection with the grant, signed by an officer of the Company authorized by the Committee, and signed by the Participant, and which shall describe the Award and state that the Award is subject to all the terms and provisions of the Plan and such other terms and provisions, not inconsistent with

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the Plan, as the Committee may approve. The date on which the Committee approves the granting of an Award shall be deemed to be the date on which the Award is granted for all purposes, unless the Committee otherwise specifies. The granting of an Award under the Plan, however, shall be effective only if and when a written Award Agreement is duly executed and delivered by or on behalf of the Company and the Participant. Any Award Agreement which is not duly executed and returned by the Participant within 60 days of the granting of the Award shall be null and void.

Section 6. Stock Options

The Committee may, in its sole discretion and subject to the provisions of the Plan, grant to Eligible Employees and Participants at such times as it deems appropriate, Stock Options to purchase Shares. Stock Options granted under this Plan may be: (i) Options which are intended to qualify as ISOs under Code Section 422; and/or (ii) Stock Options which are not intended to qualify under Code Section 422. Stock Options may be allotted to Eligible Employees or Participants in such amounts, subject to the limitations specified in this Section and Sections 3 and 4 of the Plan, as the Committee, in its sole discretion, may from time to time determine.

Stock Options granted hereunder shall be evidenced by a Stock Option Award Agreement executed as set forth in Section 5 above, containing such terms and provisions not inconsistent with the terms of the Plan as are recommended and approved from time to time by the Committee. Each Stock Option Award Agreement shall be consistent with the Plan, including, without limitation, the following provisions:

For the purposes of the Plan “ Fair Market Value ” means, as of any given transaction date, the following: (1) if the Company’s Shares are listed on a national securities exchange at the time of the transaction, then the Fair Market Value of each Share shall be no less than the average of the highest and lowest selling price on such exchange on the transaction date, or if there were no sales on said date, then on the next prior business day on which there were sales; (2) if the Company’s Shares are traded other than on a national securities exchange on the transaction date, then the Fair Market Value of each Share shall be not less than the last sale price as reported on the Nasdaq Stock Market as of the close of the regular trading day or the mean between the bid and asked price as reported on the National Association of Securities Dealers as the case may be, on the transaction date, or if there is no sale price or bid and asked price on said date, then on the next prior business date on which there was a sale price or bid or asked price. Notwithstanding the foregoing, Fair Market Value may be determined at the time of such transaction and according to the standard market processes or the procedures of the Plan’s third party administrator, as applicable.

If the Company’s Shares are not traded on any security exchange or reported on the Nasdaq Stock Market or by the National Association of Securities Dealers, then the Committee shall exercise its best judgment to make a good faith determination of the

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fair market value per Share. Such determination shall include a valuation of the Company’s present and future earnings capacity for the purpose of determining the fair market value of a Share of the Company’s Shares as of a specified date. The value determined shall be defined as the fair market value of a Share of stock for a specified period of time as defined by the Committee.

The Committee retains the right to determine the price per Share at which each NQSO granted under the Plan may be exercised, provided that no NQSO shall be granted at less than Fair Market Value.

A Stock Option granted under the Plan shall terminate, and the right of the Participant (or the Participant’s estate, personal representative, or beneficiary) to purchase Shares upon exercise of the Stock Option shall expire, after the date determined by the Committee at the time the Stock Option is granted (the “ Expiration Date ”). No Stock Option, however, may have a life of more than 10 years after the date the Stock Option is granted. In the case of a Participant who owns stock representing more than 10% of the total combined voting power of all classes of the Company’s stock, or the stock of any subsidiary at the time an ISO is granted, the ISO may not have a life of more than five years after the date on which it is granted. The date on which the Committee approves the granting of a Stock Option shall be deemed the date on which the Stock Option is granted, unless the Committee specifically designates a different date on which the Stock Option shall be deemed to have been granted, subject to Section 6.(A) of the Plan.

An Eligible Employee or Participant who has been continuously employed by the Company, its parent or the Company’s or its parent’s subsidiaries and affiliates since the date of the Stock Option grant is eligible to exercise all Stock Options granted beginning on the Vesting Date, or on the date on which the Stock Option is granted, whichever is later, and continuing up to and including the Expiration Date. The Committee will decide in each case to what extent leaves of absence for government or military service, illness, temporary disability or other reasons shall not for this purpose be deemed interruptions of continuous employment.

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Each Stock Option granted under this Plan shall be deemed exercised, in whole or in part, when the Participant shall indicate the decision to do so by written notice delivered in person or by facsimile or electronic transmission or by certified mail to the Secretary of the Company. The notice shall state the election to exercise the Stock Option, the number of Shares with respect to which it is being exercised, the person in whose name the stock certificate or certificates is to be registered and the address and Social Security Number of such recipient. The notice shall be signed by the person or persons entitled to exercise the Stock Option and, if the Stock Option is being exercised by any person or persons other than the Participant, be accompanied by proof, satisfactory to legal counsel of the Company, of the right of such person to exercise the Stock Option. The Participant shall at the same time tender to the Company payment in full, in cash or by certified bank cashier’s or teller’s check, for the Shares for which the Stock Option is exercised and shall comply with such other reasonable requirements as the Committee may establish, pursuant to Section 11.(D) of the Plan. These provisions shall not preclude exercise of, or payment for a Stock Option by any other proper legal method specifically approved by the Committee, including, but not limited to, the constructive delivery or actual delivery of eligible, unrestricted Shares with a Fair Market Value equal to the total option price at the time of exercise in accordance with rules and procedures prescribed or approved by the Committee.

Except as otherwise set forth in any agreement between the Participant and the Company with respect to the Stock Option, as approved by the Committee, no person, estate or other entity shall have any of the rights of the shareholder with reference to Shares subject to a Stock Option until a certificate for the Shares has been issued by the Company.

A Stock Option granted under this Plan may be exercised for any lesser number of Shares than the full amount for which it could be exercised. Such a partial exercise of a Stock Option shall not affect the right to exercise the Stock Option from time to time in accordance with this Plan for the remaining Shares subject to the Stock Option. The Stock Option may be exercised only with respect to full Shares and no fractional Shares of common stock shall be issued upon exercise of the Option.

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Section 7. Restricted Shares

Restricted Shares awarded under the Plan shall be subject to the following terms and conditions and such additional terms and conditions not inconsistent with the terms of the Plan as the Committee deems appropriate. Each Restricted Share grant shall be evidenced by a Restricted Share Award Agreement, executed as set forth in Section 5, above, which shall be consistent with the Plan, including without limitation, the following provisions:

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The Committee shall have the authority, in its sole discretion, to accelerate the time at which any or all of the restrictions shall lapse with respect to any Restricted Shares or to remove any or all restrictions after the grant of such Restricted Shares. Unless otherwise determined by the Committee at or after grant or termination of the Participant’s employment, if the Participant’s employment by the Company and its parent or subsidiaries terminates during the Restriction Period, all Restricted Shares held by such Participant and still subject to restriction, shall be forfeited by the Participant.

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Section 8. Performance Shares

Performance Shares awarded under the Plan shall be subject to the following terms and conditions and such additional terms and conditions not inconsistent with the terms of the Plan as the Committee deems appropriate. Each Performance Share grant shall be evidenced by a Performance Share Award Agreement, executed as set forth in Section 5, above, which shall be consistent with the Plan, including without limitation the following provisions:

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The Committee shall have the authority, in its sole discretion, to accelerate the time at which any or all of the restrictions shall lapse with respect to any Performance Shares. Unless otherwise determined by the Committee at or after grant or termination of the Participant’s employment, if the Participant’s employment by the Company and its subsidiaries terminates during the Performance Period or the Restriction Period, all Performance Shares held by such Participant and still subject to restriction shall be forfeited by the Participant.

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Section 9. Performance Units

The Committee may award performance units under the Plan (“ Performance Units ”), which shall represent the right of the Participant to receive an amount equal to the value related to the Performance Units awarded, such value to be determined in the manner established by the Committee at the time of the Award, but may not be less than a value per Performance Unit equal

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to the Fair Market Value of a Share. For each calendar year, the maximum number of Performance Units which may be granted to any individual during that year shall not exceed 100,000 Performance Units. Each Performance Unit grant shall be evidenced by a Performance Unit Award Agreement as provided in Section 5, above, which shall be consistent with the Plan, including without limitation the following provisions:

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Section 10. Other Stock-Based Awards

The Committee is authorized, subject to limitations under applicable law, to grant such other Awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, the Stock and factors that may influence the value of the Stock, as deemed by the Committee to be consistent with the purposes of the Plan, including, without limitation, convertible or exchangeable debt securities, other rights convertible or exchangeable into Stock, purchase rights for Stock, Awards with value and payment contingent upon performance of the Company or any other factors designated by the Committee and Awards valued by reference to the book value of Stock or the value of securities of or the performance of

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specified Subsidiaries (“ Other Stock-Based Awards ”). The Committee shall determine the terms and conditions of such Awards. Stock issued pursuant to an Award in the nature of a purchase right granted under this Section 10 shall be purchased for such consideration, paid for at such times, by such methods, and in such forms, including, without limitation, cash, Stock, other Awards or other property, as the Committee shall determine. Cash awards, as an element of or supplement to any other Award under the Plan, may be granted pursuant to this Section 10.

Section 11. Other Provisions

In the event of any other recapitalization or any merger, consolidation or other reorganization of the Company, the Committee shall make such adjustment, if any, as it may deem appropriate to accurately reflect the number and kind of Shares deliverable, and the option prices payable, upon subsequent exercise of any then outstanding Awards, as determined by the Committee in its sole discretion.

The Committee’s determination of the adjustments appropriate to be made under this Section 11.(A) shall be conclusive upon all Participants and other Eligible Employees under the Plan. Notwithstanding anything in this Section 11.(A) to the contrary, any adjustment made under this Section 11.(A) shall be made in a manner that will not constitute a “modification” within the meaning defined in Code Section 424(h).

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In the case of the exercise of any Stock Option by a person or estate acquiring the right to exercise the Stock Option by bequest or inheritance, the Committee may require reasonable evidence as to the ownership of the Stock Option and may require consents and releases of taxing authorities that it may deem advisable.

The Committee may require each person acquiring Shares under the Plan (1) to represent and warrant to and agree with the Company in writing that such person is acquiring the Shares without a view to the distribution thereof, and (2) to make such additional representations, warranties and agreements with respect to the investment intent of such person or persons as the Committee may reasonably request. Any certificates for such Shares may include any legend which the Committee deems appropriate to reflect any restrictions on transfer.

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All Shares or other securities delivered under the Plan shall be subject to such stop-transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Shares are then listed and any applicable Federal or State securities law, and the Committee may cause a legend or legends to be put on any certificates evidencing such Shares to make appropriate reference to such restrictions.

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