Exhibit 10.65

STATE AUTO PROPERTY & CASUALTY INSURANCE COMPANY

INCENTIVE DEFERRED COMPENSATION AGREEMENT

This agreement is made effective                         , 200        , at
Columbus, Ohio, by and between State Auto Property & Casualty Insurance Company,
a South Carolina corporation (the “Company”), and                         , an
employee of the Company (“Participant”).

Background Information

A. It is the desire of the Company to assist the Participant in providing for
his retirement through the use of a deferred compensation arrangement, and to
encourage the Participant to continue employment with the Company until
retirement age.

B. The Company is willing to provide such supplemental retirement benefits to
the Participant out of its general assets, provided he satisfies the
requirements of this agreement for such benefits, as an incentive for the
Participant to continue his employment relationship with the Company.

C. Participant also desires to defer and postpone a portion of the compensation
to be earned for services to be rendered in the balance of the current year and
in subsequent years of employment from time to time thereafter, and, in
consideration of the performance of future services for the Company by the
Participant, the Company is willing to permit the Participant to defer and
postpone a portion of such compensation, on the terms and subject to the
conditions of this agreement.

AGREEMENT

The Company and the Participant acknowledge the accuracy of the foregoing
background information and agree as follows:

ARTICLE I—EMPLOYMENT

§1.1 Employment. The Company agrees to employ the Participant and the
Participant agrees to serve the Company in such capacity as the Company may
designate from time to time, and on such terms and conditions as the Company in
its sole discretion may request, until terminated by either party, or on such
terms as may be set forth in a separate written employment agreement between the
parties, if any.

§1.2 Compensation. The Company shall pay the Participant during the term of his
employment hereunder such salary and such other compensation as may be
specifically provided for under any written employment agreement between the
parties, or, if none, as the Company

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may from time to time determine. As additional incentive compensation and
supplemental retirement income, the Company shall also pay the benefits provided
in Article III, below, to the Participant provided he satisfies all the
requirements and conditions set forth in this agreement to be entitled to such
benefits.

§1.3 Rights Preserved. Nothing in this agreement shall be construed to confer
upon the Participant the right to continue in the employment of the Company, or
to require the Company to continue the employment of the Participant. The
employment relationship between the Company and the Participant shall be “at
will” and may be terminated at any time by the Company or the Participant with
or without cause, except as may otherwise be specifically provided in any
written employment agreement between the parties.

ARTICLE II—DEFERRED COMPENSATION ACCUMULATIONS

§2.1 Deferral and Matching Values. Within 30 days of the effective date of this
agreement, and not later than any subsequent December 31 of each year throughout
the term of this agreement, the Participant and the Company may, by mutual
written agreement, provide for deferred and postponed payment of a percentage of
the Participant’s Compensation which otherwise would be paid during the balance
of the initial or next calendar year, as applicable, of employment for services
to be rendered in that year. Whether the Participant is eligible to elect such a
deferral during any calendar year is determined by the Company, in its
discretion, and the eligibility of the Participant during one year does not
affect eligibility in subsequent years. The Participant shall continue as a
participant during any ineligible years, but shall be treated as inactive. The
amount to be deferred shall be that as set forth on the Deferral Election Form,
which is hereby incorporated by reference. The minimum amount which may be
deferred by the Participant during an active year is 1% of Compensation less the
amount deferrable through the State Auto Insurance Companies Capital
Accumulation Plan (the “Qualified Plan”). For this purpose, “Compensation”
includes only salary, commission, and bonus payments made to the Participant for
personal services rendered to or for the Company during the year, or contributed
to this Plan under §2.2. or to the Qualified Plan on behalf of the Participant
pursuant to a salary deferral election, and does not include other cash or
noncash compensation, expense reimbursements, or fringe benefits provided to the
Participant. The Company will credit the deferred compensation amount agreed to
for the next calendar year to the Participant’s Accumulations from time to time
as the deferred amounts otherwise would have been earned by the Participant or,
in the case of amounts initially deferred to the Qualified Plan which are
refundable due to limitations applicable to such Plan, at the time the refund
would have been made but for an election hereunder to defer said amounts to this
Plan. Amounts credited to the Participant’s Accumulations due to such voluntary
deferral elections, as adjusted for real or hypothetical earnings or losses as
set forth in §2.2 below, shall be referred to as the “Deferral Value.”

In addition, the Company will credit a matching amount to the Participant’s
Accumulations equal to the same rate of match applicable to salary deferrals
under the Qualified Plan for the year. “Caps” on the match under the Qualified
Plan will also apply to the match under this Agreement with the match under this
Agreement being offset by the match to the Qualified Plan to the extent
duplicative. The Company’s matching amounts credited to the

 

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Participant’s Accumulations, as adjusted for real or hypothetical earnings or
losses as set forth in §2.2 below, shall be referred to as the “Matching Value.”

§2.2 Record of Accumulations. Solely for the purpose of measuring the amount of
the Company’s obligations to the Participant or his beneficiaries under this
agreement, the Company will maintain a separate bookkeeping record of the
Deferral Value and the Matching Value (jointly, the Participant’s
“Accumulations”). Subject to Section 409A of the Internal Revenue Code of 1986,
as amended (“Code”), the Company, in its discretion, may either credit a
hypothetical earnings rate to the Participant’s balance of Accumulations for the
year, or may actually invest an amount equal to the amount credited to the
Participant’s Accumulations from time to time in an account or accounts in its
name in the investment options (as defined in the Plan), which investment
options may include some or all of those used for investment purposes under the
Qualified Plan, as determined by the Company in its discretion. If such separate
investment options are made available, the Participant may be permitted to
direct the investment with such investment options of the portion of the
Company’s accounts allocable to him under this agreement in the same manner he
is permitted to direct the investment of his account in the Qualified Plan,
except that certain of the investment options may not be available options under
this agreement and the Plan. The Company is not obligated to make these or any
other particular investment options available, however, if investments are in
fact made.

Subject to Section 409A of the Code, the Company will credit the Participant’s
Accumulations with hypothetical or actual earnings or losses at least annually
based on the earnings rate declared by the Company or the performance results of
the investment option(s) chosen pursuant to the Company’s or the Participant’s
directions, and shall determine the fair market value of the Participant’s
Accumulations based on the bookkeeping record or the fair market value of the
portion of the investment option(s) representing the Participant’s
Accumulations. The determination of the earnings, losses or fair market value of
the Participant’s Accumulations may be adjusted by the Company to reflect its
payroll, income or other taxes or costs associated with this agreement, as
determined by the Company in its sole discretion.

ARTICLE III—BENEFITS

§3.1 Eligibility for Benefits—Vesting. The Participant or his beneficiaries
shall be entitled to benefits from the Company as set forth in this Article III
only upon satisfaction of the vesting requirements of this section. The
Participant shall not be fully vested in and entitled to benefits hereunder with
respect to his Matching Value Accumulations until completion of five (5) years
of service for the Company. A “Year of Service” for vesting purposes means a
period of twelve consecutive calendar months during which the Participant was
employed by the Company. Years of Service shall be calculated from the
Participant’s hire date and anniversaries thereof. The Participant shall also
become 100% vested in his Matching Value Accumulations upon retirement, or upon
his death or Total Disability prior to retirement or other termination of
service, regardless of his years of service for the Company.

“Total Disability” under this agreement shall mean a physical or mental
condition which totally and presumably permanently prevents the Participant from
engaging in his usual occupation or any occupation for which he is qualified by
reason of training, education, or

 

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experience. The Company shall determine the existence of a Total Disability in
its sole discretion and may require the Participant to submit to periodic
medical examinations at the Participant’s expense to confirm the existence and
continuation of a Total Disability.

If the Participant terminates employment with the Company for any reason other
than death, retirement or Total Disability, prior to the date he has retired or
completed five Years of Service as defined above, all rights of the Participant,
his designated beneficiaries, executors, administrators, or any other person to
receive benefits with respect to his Matching Value Accumulations under this
agreement shall be forfeited. If the Participant is subsequently re-employed by
the Company, no benefits forfeited hereunder shall be reinstated, and the
Participant shall not be given credit for his prior Years of Service with the
Company under any incentive deferred compensation agreement entered into upon
such re-employment unless, and then only to the extent that, the Company
determines otherwise in its sole discretion.

Notwithstanding the foregoing, the Participant shall always be 100% vested in
the portion of his Accumulations attributable to his Deferral Value.

§3.2 Retirement Benefits. Upon retirement from the Company, the Participant
shall be eligible to receive payment of the amounts credited to the
Participant’s Accumulations as a monthly benefit payable for 60 months. The
amount of this monthly benefit shall equal the amount necessary to amortize the
Participant’s Accumulations in approximately equal monthly installments of
principal plus actual earnings (or less actual losses) during the period of
distribution or, subject to Section 409A of the Code, in the Company’s sole
discretion, the monthly distributions may instead be computed based on the
amortization of the Participant’s Accumulations as a monthly benefit payable for
60 substantially equal monthly installments computed using an interest rate
declared by the Company in its sole discretion from time to time during such
period of distribution. In the event the retirement benefits payable pursuant to
this agreement are subject to taxation under the Federal Insurance Contributions
Act, Federal Unemployment Tax Act or any similar present or future tax levied on
employers for payments to employees, the amount payable hereunder shall be
reduced by the Company’s share of any such tax payable with respect to the
retirement benefits. The Participant must provide the Company at least 30 days
advance written notice of his intention to retire and receive benefits
hereunder. Payment of benefits shall begin on the first day of the second month
following satisfaction of all requirements for a benefit hereunder, except in
the case of a “Key Employee” (as defined in Section 409A of the Code). A
Participant who is a Key Employee shall not be eligible to receive any benefits
under this Plan until at least six months after the date such Participant
otherwise would be eligible to receive such benefits under this section or
section 3.5.

§3.3 Death Benefits. In the event of the death of the Participant while
receiving benefit payments under any provision of this agreement, the Company
shall pay the beneficiary or beneficiaries designated by the Participant the
remaining payments due under this agreement in accordance with the method of
distribution in effect to the Participant at the date of death. In the event of
the death of the Participant prior to the commencement of the distribution of
benefits under this agreement, the Company shall pay the vested portion of such
benefits to the beneficiary or beneficiaries designated by the Participant,
beginning as soon as practicable after the Participant’s death. Such benefits
shall be paid as a monthly payment equal to the amount necessary to amortize the
Participant’s Accumulations as a monthly benefit payable for 60

 

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months, computed under one of the alternative methods provided for retirement
benefits under §3.2, as selected, subject to Section 409A of the Code, by the
Company in its sole discretion.

§3.4 Disability Benefits. Upon the Participant’s Total Disability as defined in
§3.1 prior to satisfying the requirements for a retirement benefit under §3.2,
the Participant shall be eligible to receive payment of the amounts credited to
his Participant’s Accumulations as a monthly benefit commencing after six months
of Total Disability and payable for 60 months. The amount of this monthly
benefit shall equal the amount necessary to amortize the Participant’s
Accumulations as a monthly benefit payable for 60 months, computed under one of
the alternative methods provided for retirement benefits under §3.2, as
selected, subject to Section 409A of the Code, by the Company in its sole
discretion.

Disability shall be considered to have ended and entitlement to a disability
benefit shall cease if the Participant (a) is reemployed by the Company, or
(b) engages in any substantially gainful activity, except for such employment as
is found by the Company in its sole discretion to be for the primary purpose of
rehabilitation or not incompatible with a finding of total and permanent
disability. If entitlement to a disability benefit ceases in accordance with the
provisions of this paragraph, the Participant shall not be prevented from
qualifying for a benefit under another provision of this agreement.

§3.5 Termination of Service for Other Reasons. If the Participant’s service for
the Company terminates for any reason other than retirement in accordance with
§3.2, death, or Total Disability, then the vested portion of the Participant’s
Accumulations shall be paid, beginning as soon as administratively practicable,
to the Participant as a monthly benefit payable for 60 months, computed under
one of the alternative methods provided for retirement benefits under §3.2, as
selected by the Company in its sole discretion.

§3.6 Payment Alternatives. In addition, the Company may alter the payment method
in effect from time to time in its sole discretion as necessary or desirable to
avoid the loss of a tax deduction under Code §162(m). The amount of monthly
payments to be made over a period of time other than 60 months shall be computed
under one of the methodologies applicable to the payment of benefits under this
agreement in the normal form of distribution, as determined by the Company in
its sole discretion, subject to Section 409A of the Code.

§3.7 Beneficiary Designation. The Participant shall designate one or more
beneficiaries on a form to be supplied by the Company to receive any
Accumulations payable in the event of his death. The Participant may change his
beneficiary designation at any time (without the consent of any prior
beneficiary) by executing a revised beneficiary designation form and delivering
it to the Company before his death. In the absence of a beneficiary designation,
or in the event the designated beneficiary predeceases the Participant or cannot
be located, any death benefits provided under this agreement shall be paid to
the Participant’s estate.

ARTICLE IV—MISCELLANEOUS

§4.1 Right to Assets. Nothing contained in this agreement and no action taken
pursuant to the provisions of this agreement shall create or be construed to
create a trust of any kind, or a fiduciary relationship between the Company and
the Participant, any designated

 

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beneficiary, or any other person. If the Company elects to invest any funds in
connection with this agreement, all such investments shall continue for all
purposes to be a part of the general assets of the Company, and no person other
than the Company shall by virtue of the provisions of this agreement have any
interest in such funds. To the extent the Participant, any designated
beneficiary, or any other person acquires a right to receive payments from the
Company under this agreement, such right shall be no greater than the right of
any unsecured general creditor of the Company.

§4.2 Assignment and Alienation Prohibited. Neither the Participant, his
surviving spouse, nor other beneficiaries under this agreement shall have the
power or right to transfer, assign, anticipate, hypothecate, mortgage, commute,
modify, or otherwise encumber, in advance, any of the benefits payable
hereunder, nor shall any of said benefits be subject to seizure for the payment
of any debts, judgments, alimony, or separate maintenance owed by the
Participant or his beneficiary, nor be transferable by operation of law in the
event of bankruptcy, insolvency, or otherwise. In the event the Participant or
any beneficiary attempts assignment, commutation, hypothecation, transfer, or
disposal of the benefits hereunder, the Company’s liabilities hereunder shall
forthwith cease and terminate.

§4.3 Revocation. This agreement shall continue in effect until revoked or
terminated by the Company and, specifically shall continue in effect during any
period when the Company, in the exercise of its discretion, decides that the
Participant is not entitled to participate in any deferral or matching
contributions to his Accumulations. This agreement may be amended or revoked at
any time or times, in whole or in part, by the Company in its sole discretion.
However, unless the parties agree otherwise, in the event of a modification or
revocation, the Participant shall be entitled to the vested benefits, if any,
that have accrued through the date of such amendment or revocation. Such
benefits shall be payable at such times and in such amounts as are provided in
this agreement, or, subject to Section 409A of the Code and applicable Treasury
regulations, the Company may, in its sole discretion, elect to accelerate
distribution and pay all vested amounts after this agreement terminates.

§4.4 Effect On Other Company Benefit Plans. Nothing contained in this agreement
shall affect the right of the Participant to participate in or be covered by any
qualified or non-qualified pension, profit-sharing, group, bonus, or other
supplemental compensation or fringe benefit plan constituting a part of the
Company’s existing or future compensation structure. Should the amount of the
Participant’s benefits available under the Qualified Plan or any other
tax-qualified pension plan be reduced in any year by reason of the Participant’s
elective deferrals under this agreement, the Company will increase the
Participant’s Accumulations hereunder to compensate for such reduction.

§4.5 Interpretation. The Board of Directors of the Company, or the Compensation
Committee or the Chairman as its designee, shall have full power and authority
to interpret, construe, and administer this agreement, and the interpretation
and construction thereof and actions thereunder by the Board or its designee,
including any valuation of the Participant’s Accumulations or the amount or
recipient of the payments to be made therefrom, shall be binding and conclusive
on all persons for all purposes. No member of the Board of Directors nor any
designee shall be liable to any person for any action taken or omitted in
connection with the interpretation and administration of this agreement,
provided that the foregoing shall not relieve

 

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any person of liability for any action taken or omitted in bad faith. Whenever
under this agreement monthly benefits may be payable in substantially equal
monthly installments computed using an interest rate declared by the Company in
its sole discretion from time to time during such period of distribution, the
calculation of such monthly benefit payments shall be made under any method
deemed reasonable by the Company, in its sole discretion, subject to
Section 409A of the Code.

§4.6 Binding Effect. This agreement shall be binding upon and inure to the
benefit of the Company, its successors, and assigns and the Participant and his
heirs, executors, administrators, and legal representatives.

§4.7 Entire Agreement. This agreement and its exhibits, if any, represent and
embody the entire agreement and understanding of the parties hereto with respect
to the subject matter hereof and supersede all prior and contemporaneous
agreements and understandings relative to this subject matter.

§4.8 Genders and Numbers. Whenever permitted by the context each pronoun shall
include other genders or numbers.

§4.9 Captions. The captions at the beginnings of the several sections of this
agreement are not part of the context of this agreement, but are merely labels
to assist in locating those sections, and shall be ignored in construing this
agreement.

§4.10 Applicable Law. State Auto Property & Casualty Insurance Company is a
South Carolina corporation and has its principal executive offices in the State
of Ohio. This agreement has been negotiated and executed in the State of Ohio
and the parties hereby agree that the validity, meaning, and performance of this
agreement are to be determined, governed, and enforced under the laws of the
State of Ohio, except that any applicable conflict or choice of laws principles
of Ohio law that would result in the application of the laws of any other state
or jurisdiction to the validity, meaning, or performance of this agreement shall
not apply.

§4.11 Tax Withholding. In addition to deductions, withholdings, or reductions
under Sections 2.2 and/or 3.2, the Company (and any agent of the Company) is
authorized to withhold from any payment under this agreement the amount of
withholding taxes due, in the opinion of the Company, in respect of such payment
and to take other action as may be necessary, in the opinion of the Company, to
satisfy all obligations for the payment of such taxes. Any employee taxes due
upon deferrals or upon vesting of matching amounts may be deducted, in
accordance with Section 409A of the Code, from Participant’s Accumulations.

§4.12 Code Section 409A Amendments. Notwithstanding any provision to the
contrary in this agreement or the Deferral Election Form, nothing shall restrict
the Company’s right to amend this agreement, without the consent of Participants
and without additional consideration to affected Participants, to the extent
necessary to avoid taxation, penalties, and/or interest arising under
Section 409A of the Code, even if such amendments reduce, restrict, or eliminate
rights granted under this agreement before such amendments. Although the Company
shall use its best efforts to avoid the imposition of taxation, penalties,
and/or interest under Section 409A of the Code, tax treatment of deferrals and
matching amounts under this agreement is not

 

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warranted or guaranteed. Neither the Company, the Board, nor any delegatee shall
be held liable for any taxes, penalties, interest, or other monetary amounts
owed by any Participant, employee, or beneficiary as a result of the deferral or
payment of any amounts under this agreement or as a result of the Company’s
administration of amounts subject to this agreement.

 

 

STATE AUTO PROPERTY & CASUALTY INSURANCE COMPANY: By:      Title:     

Participant:

 

 

      

 

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