EXHIBIT 10.57

EXECUTIVE AGREEMENT

This Executive Agreement (this “Agreement”) is made as of December 20, 2011, by
and among State Auto Financial Corporation, an Ohio corporation (“State Auto
Financial”), State Automobile Mutual Insurance Company, an Ohio-domiciled mutual
insurance company (“State Auto Mutual”), and Robert P. Restrepo, Jr. (the
“Executive”).

BACKGROUND INFORMATION

State Auto Financial is a majority-controlled, publicly-traded holding company
subsidiary of State Auto Mutual, which is the ultimate controlling entity of the
State Auto holding company system and, together with their respective operating
subsidiaries and affiliates, State Auto Financial and State Auto Mutual engage
in the property casualty and specialty insurance business. Each of State Auto
Financial and State Auto Mutual (collectively, the “Companies”) considers the
establishment and maintenance of a sound and vital management to be an important
part of their overall corporate strategy and to be essential to protecting and
enhancing the interests of the Companies and their respective owners. As part of
this corporate strategy, the Companies wish to act to retain their
well-qualified executive officers notwithstanding any actual or threatened
change in control of State Auto Financial or State Auto Mutual.

Executive is a party to an Employment Agreement with the Companies dated as of
December 20, 2011, as it may be amended from time to time (the “Employment
Agreement”). The Employment Agreement does not address the impact of a Change in
Control (as defined below), except to incorporate by reference the provisions of
this Agreement.

Executive is the Chairman, Chief Executive Officer and President of State Auto
Financial and State Auto Mutual and their respective subsidiaries and
affiliates, and the Executive’s services, experience and knowledge of the
business of the Companies, and reputation and contacts in the industry are
extremely valuable to the Companies. The Executive’s continued dedication,
availability, advice, and counsel to the Companies are deemed important to the
Companies, the Boards of Directors of State Auto Financial and State Auto Mutual
(collectively, the “Board”), and their shareholders and policyholders,
respectively. It is, therefore, in the best interests of the Companies to secure
the continued services of the Executive notwithstanding any actual or threatened
change in control of the Companies. Accordingly, the Boards of State Auto
Financial and State Auto Mutual, acting by and through the Compensation
Committee and Nominating and Governance Committee, respectively, have approved
this Agreement with the Executive and authorized its execution and delivery on
behalf of the Companies.

STATEMENT OF AGREEMENT

In consideration of the mutual covenants set forth herein and INTENDING TO BE
LEGALLY BOUND HEREBY, the Companies and Executive hereby agree as follows:

1. Term of Agreement. This Agreement will begin on the date entered above and
will continue in effect through December 31, 2015; provided, however, that this
Agreement shall terminate concurrent with the termination of the Employment
Agreement. Notwithstanding the

 

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above, if a “Change of Control” (as defined herein) of the Companies occurs
during the term of this Agreement, the term of this Agreement will be extended
for the lesser of thirty-six (36) months beyond the end of the month in which
any such Change of Control occurs, or until December 31, 2015.

2. Definitions. The following defined terms shall have the meanings set forth
below, for purposes of this Agreement:

 

  (a)

Annual Base Salary. “Annual Base Salary” means the greater of (1) the highest
annual rate of base salary in effect for the Executive during the 12 month
period immediately prior to a Change of Control or, (2) the annual rate of base
salary in effect at the time Notice of Termination is given (or on the date
employment is terminated if no Notice of Termination is required).

 

  (b)

Average Annual Award. “Average Annual Award” means the average of the two most
recent cash payments paid or payable to the Executive under the Companies’ LBP
immediately preceding the Change Year.

 

  (c)

Cause. “Cause” shall be given the meaning used in the Employment Agreement.

 

  (d)

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

 

  (1)

Any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)) is or becomes the
“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of State Auto Financial representing 30% or more of
the combined voting power of State Auto Financials then outstanding securities,
excluding (i) any acquisition by State Auto Financial or any Subsidiary;
(ii) any acquisition by any employee benefit plan (or related trust) sponsored
or maintained by State Auto Financial, a Subsidiary or State Auto Mutual or any
such acquisition by State Auto Mutual; or

 

  (2)

A majority of the Board of Directors of State Auto Financial at any time is
comprised of other than Continuing Directors (for purposes of this Agreement,
the term “Continuing Director” means a director who was either (A) first elected
or appointed as a Director prior to the date of this Agreement; or
(B) subsequently elected or appointed as a director if such director was
nominated by the Nominating and Governance Committee of State Auto Financial or
appointed by at least two thirds of the then Continuing Directors); or

 

  (3)

Any event or transaction if State Auto Financial would be required to report it
in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Exchange Act; or

 

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  (4)

Any of the following occurs:

 

  (A)

a merger or consolidation of State Auto Financial, other than a merger or
consolidation in which the voting securities of State Auto Financial immediately
prior to the merger or consolidation continue to represent (either by remaining
outstanding or being converted into securities of the surviving entity) more
than 50% of the combined voting power of State Auto Financial or surviving
entity immediately after the merger or consolidation with another entity;

 

  (B)

a sale, exchange, lease, mortgage, pledge, transfer, or other disposition (in a
single transaction or a series of related transactions) of all or substantially
all of the assets of State Auto Financial which shall include, without
limitation, the sale of assets or earning power aggregating more than 50% of the
assets or earning power of State Auto Financial on a consolidated basis;

 

  (C)

a reorganization, reverse stock split, or recapitalization of State Auto
Financial which would result in any of the foregoing; or

 

  (D)

a transaction or series of related transactions having, directly or indirectly,
the same effect as any of the foregoing.

 

  (5)

As respects State Auto Mutual, any of the following occurs:

 

  (A)

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

 

  (B)

State Auto Mutual completes a conversion to a stock insurance company and as a
result of which a majority of the Board of Directors of State Auto Mutual or its
successor is comprised of other than Continuing Directors (as defined above).

 

  (6)

Notwithstanding the foregoing, for purposes of this Change of Control
definition, the percentage of securities ownership listed under subsection
(d)(1) above (i.e., 30%) shall increase or decrease, as the case may be, such
that the percentage of securities ownership is consistent with any future
changes to the percentage of securities ownership represented in the Change of
Control definition in Section 11(B)(2)(a) (or any successor Section) of the
State Auto Financial Corporation 2009 Equity Incentive Compensation Plan, as
amended from time to time, or any successor plan thereto.

 

  (e)

Change Year. “Change Year” means the calendar year in which a Change of Control
occurs.

 

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  (f)

Disability. “Disability” shall be given the meaning used in the Employment
Agreement.

 

  (g)

Employee Benefits. “Employee Benefits” means the perquisites, benefits, and
service credit for benefits as provided under any and all employee retirement
income and welfare benefit policies, plans, programs, or arrangements in which
the Executive is entitled to participate, including without limitation any stock
option, stock purchase, stock appreciation, savings, pension, supplemental
executive retirement, or other retirement income or welfare benefit, deferred
compensation, incentive compensation, group or other life, health,
medical/hospital, or other insurance (whether funded by actual insurance or
self-insured by the Companies), disability, salary continuation, expense
reimbursement, and other employee benefit policies, plans, programs, or
arrangements that may now exist or any equivalent successor policies, plans,
programs, or arrangements that may be adopted hereafter, providing perquisites
and benefits at least as great in a monetary equivalent as are payable
thereunder prior to a Change in Control.

 

  (h)

Employment Agreement. “Employment Agreement” means as described above.

 

  (i)

Good Reason. “Good Reason” means the occurrence of any one or more of the
following:

 

  (1)

The assignment to the Executive of duties which are materially and adversely
different from or inconsistent with the duties, responsibilities, and status of
the Executive’s position at any time during the 12 month period prior to such
Change of Control, or which result in a significant change in the Executive’s
authority and responsibility as the Chief Executive Officer of the Companies;

 

  (2)

A material reduction by the Companies in the Executive’s Annual Base Salary in
place as of the day immediately prior to a Change of Control, or the failure to
grant salary increases and bonus payments on a basis comparable to those granted
to other executives of the Companies, or a reduction of the Executive’s most
recent highest incentive bonus potential under the Executive’s LBP prior to such
Change of Control, or any successor to such arrangement;

 

  (3)

A demand by the Companies that the Executive relocate to a location in excess of
35 miles from the location where the Executive is currently based, or in the
event of any such relocation with the Executive’s express written consent, the
failure of the Companies or a Subsidiary to pay (or reimburse the Executive for)
all reasonable moving expenses incurred by the Executive relating to a change of
principal residence in connection with such relocation and to indemnify the
Executive against any loss in the sale of the Executive’s principal residence in
connection with any such change of residence and any expenses incurred by
Executive that are

 

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directly attributable to such sale (for purposes of this provision, “loss” is
understood to mean a sale of such principal residence at a price less than the
adjusted basis in such residence);

 

  (4)

The failure of the Companies to obtain a satisfactory agreement from any
successor to the Companies to assume and agree to perform this Agreement, as
contemplated in Section 16 of this Agreement;

 

  (5)

The failure of the Companies to provide the Executive with substantially the
same Employee Benefits that were provided to him immediately prior to the Change
in Control, or with a package of Employee Benefits that, though one or more of
such benefits may vary from those in effect immediately prior to such Change in
Control, is substantially comparable in all material respects to such Employee
Benefits taken as a whole; or

 

  (6)

Any material reduction in the Executive’s compensation or benefits or adverse
change in the Executive’s location or duties, if such reduction or adverse
change occurs at any time after the commencement of any discussion with a third
party relating to a possible Change of Control of the Companies involving such
third party, if such reduction or adverse change is in contemplation of such
possible Change of Control and such Change of Control is actually consummated
within 12 months after the date of such reduction or adverse change.

The existence of Good Reason shall not be affected by the Executive’s incapacity
due to physical or mental illness. The Executive’s determination of Good Reason
shall be conclusive and binding upon the parties to this Agreement provided such
determination has been made in good faith. Executive shall provide the Companies
with written notice of his intent to terminate with Good Reason within a period
not to exceed 90 days of the initial existence of the condition constituting
Good Reason. The Companies shall have a period of 30 days in which it may remedy
the condition and prevent Executive’s termination for Good Reason. The
determination as to whether an event that constitutes “Good Reason” exists shall
be made in a manner consistent with the guidance published under Section 409A of
the Code.

 

  (j)

Notice of Termination. “Notice of Termination” means a written notice indicating
the specific termination provision in this Agreement relied upon and setting
forth in reasonable detail the facts and circumstances claimed to provide a
basis for the separation from service under the provision so indicated.

 

  (k)

Retirement. “Retirement” means having reached normal retirement age as defined
in the State Auto Insurance Companies Employee Retirement Plan (“State Auto
Pension Plan”) or taking early retirement in accordance with the terms of the
State Auto Pension Plan.

 

  (l)

Severance Benefits. “Severance Benefits” means the benefits described in
Section 4 of this Agreement, as adjusted by the applicable provisions of
Section 5 of this Agreement.

 

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  (m)

Special SERP. “Special SERP” means the Supplemental Executive Retirement Plan
that became effective January 1, 2007.

 

  (n)

Subsidiary. “Subsidiary” means any corporation, insurance company, or other
entity a majority of the voting control of which is directly or indirectly owned
or controlled at the time by State Auto Financial.

3. Eligibility for Severance Benefits. The Companies or their successor shall
pay or provide to the Executive the Severance Benefits if the Executive incurs a
separation from service (as defined in Section 409A of the Internal Revenue Code
of 1986, as amended (“Code”)), during the term of this Agreement:

 

  (a)

by the Companies at any time within 24 months after a Change of Control; or

 

  (b)

by the Executive for Good Reason at any time within 24 months after a Change of
Control; or

 

  (c)

by the Companies at any time after an agreement has been reached with an
unaffiliated third party, the performance of which agreement would result in a
Change of Control involving such third party, if such Change of Control is
actually consummated within 12 months after the date of such separation from
service. Notwithstanding any provision of Section 2(d) to the contrary, a
“Change in Control” for purposes of this Section 3(c) shall not be deemed to
have occurred unless the Change in Control event constitutes a “change in
ownership or effective control of a corporation, or a change in the ownership of
a substantial portion of the assets of a corporation” under Section 409A of the
Code.

4. Severance Benefits. The Executive, if eligible under Section 3 of this
Agreement, shall receive the following Severance Benefits, adjusted by the
applicable provisions of Section 5 of this Agreement (in addition to accrued
compensation, bonuses, and vested benefits and other equity based awards);

 

  (a)

Annual Base Salary. In addition to any accrued compensation payable as of the
Executive’s separation from service (either by reason of Executive’s Employment
Agreement or otherwise), a lump sum cash amount equal to the Executive’s Annual
Base Salary, multiplied by 2.99, unless at the time of such separation from
service the Executive is within two years of mandatory retirement on
December 31, 2015, in which case the benefit due under this Section 4(a) shall
not exceed Executive’s Annual Base Salary multiplied by a factor equal to the
number of months remaining until December 31, 2015, presented as a whole integer
and a fraction of a partial year (e.g., 15 months equals 1.25).

 

  (b)

Annual Incentive Compensation. In addition to any compensation otherwise payable
pursuant to the Executive’s LBP and the bonus payable under the Companies’
Quality Performance Bonus Plan (“QPB Plan”), a lump sum cash amount equal to the
Executive’s Average Annual Award and the total bonus under the QPB Plan paid to
Executive during the calendar year immediately preceding the Change Year,
multiplied by 2.99 unless at the time of such separation from

 

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service the Executive is within two years of mandatory retirement on
December 31, 2015, in which case the benefit due under this Section 4(b) shall
not exceed the Executive’s Average Annual Award and total bonus under the QPB
Plan, as aforesaid multiplied by a factor equal to the number of months
remaining until December 31, 2015, presented as a whole integer and a fraction
of a partial year (e.g., 15 months equals 1.25). In order to be entitled to a
payment pursuant to this Section 4(b), the Executive must have been a party to
LBP or QPB at some time during the 12 month period immediately preceding the
Change of Control. In addition, Executive shall be entitled to receive a
prorated LBP for the Change Year.

 

  (c)

Health Care Reimbursement. The Companies shall pay Executive an amount equal to
the Companies’ then current monthly per employee cost of providing State Auto’s
health insurance benefit multiplied by 24, or by the number of months until
December 31, 2015, whichever is less. Such amount shall be paid in a lump sum.

 

  (d)

Insurance Benefits. For a two year period commencing on the date the employment
is terminated, or until December 31, 2015, whichever is earlier, the Companies
will arrange to provide to the Executive at the Companies’ expense, subject to
the then current employee contribution being paid by Executive, if any, with:

 

  (1)

Life Insurance. Life and accidental death and dismemberment insurance coverage
(including any supplemental coverage, purchase opportunity, and double indemnity
for accidental death that was available to the Executive) equal (including
policy terms) to that in effect at the time Notice of Termination is given (or
on the date the employment is terminated if no Notice of Termination is
required) or, if more favorable to the Executive, equal to that in effect at the
date immediately prior to the Change of Control.

 

  (2)

Disability Insurance. Disability insurance coverage (including policy terms)
equal to that in effect at the time Notice of Termination is given (or on the
date employment is terminated if no Notice of Termination is required) or, if
more favorable to the Executive, equal to that in effect immediately prior to
the Change of Control; provided, however, that no income replacement benefits
will be payable under such disability policy with regard to the two year period
following a separation from service provided that the payments payable under
Sections 4(a) and (b) above have been made. Notwithstanding the foregoing, if
the Companies secure insurance policies under this Section and payment under
such policies results in an overpayment to the Executive, the Companies reserve
the right to seek return of the excess payments made to or benefits received by
the Executive.

 

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In the event the Executive’s participation in any such plan or program is not
permitted by the applicable terms of the governing plan document or policy, the
Companies will directly provide, at no after-tax cost to the Executive, the
benefits to which the Executive would be entitled under such plans and programs.
Any taxable welfare benefits provided to Executive pursuant to this Section 4(c)
that are not “disability pay” or “death benefits’ within the meaning of Treasury
Regulation Section 1.409A-1(a)(5) (collectively, the “Applicable Benefits”)
shall be subject to the following requirements in order to comply with
Section 409A of the Code. The amount of any Applicable Benefits provided during
one taxable year shall not affect the amount of the Applicable Benefits provided
in any other taxable year. No Applicable Benefits may be liquidated or exchanged
for another benefit. During the period of 6 months immediately following
Executive’s separation from service, Executive shall be obligated to pay the
Companies the full cost for any Applicable Benefits that do not constitute
health benefits of the type required to be provided under Section 4980B of the
Code, and the Companies shall reimburse Executive for any such payments on the
first business day that is more than 6 months after Executive’s separation from
service.

 

  (e)

Retirement Benefits. The Executive will be entitled to receive retirement
benefits as provided under the Companies’ defined benefit (qualified and
nonqualified) retirement plans (which shall include the Supplemental Retirement
Plan (“SERP”) and the Special SERP, but not include any severance plans) in
which the Executive participates. The benefits specified in this subsection will
be paid under the terms of, and at the same time and in the same form as
provided under, the qualified retirement plans, SERP, Special SERP, or other
similar nonqualified arrangement designated by the Companies according to its
terms and conditions. Notwithstanding the foregoing, if any qualified plan
benefit provided under this subsection is unable to be paid under the terms of
the applicable qualified plan, such benefits shall be paid at the same time and
in the same form as benefits that are paid under the SERP.. The benefits
specified in this subsection will include all ancillary benefits, such as early
retirement and survivor rights and benefits available at retirement. The amount
payable to the Executive or the Executive’s beneficiaries under this subsection
shall equal the excess of (1) the retirement benefits that would be paid to the
Executive or the Executive’s beneficiaries, under such defined benefit
retirement plans of the Companies in which the Executive participates if (A) the
terms of such plans were those most favorable to the Executive in effect at any
time during the period commencing prior to the Change of Control and ending on
the date of Notice of Termination (or on the separation from service date if no
Notice of Termination is required), and (B) the Executive’s highest average
annual compensation as defined under such defined benefit retirement plans; over
(2) the retirement benefits that are payable to the Executive or the Executive’s
beneficiaries under such defined benefit retirement plans of the Companies in
which the Executive participates.

 

  (f)

Outplacement. The Companies shall pay all reasonable fees Executive actually
incurs for appropriate outplacement services up to a maximum equal to 1 5 % of
the Executive’s Annual Base Salary used to calculate the Executive’s benefit
under Section 4(a) of this Agreement, plus provide a travel expense account of
up to $5,000 to reimburse job search travel. Such reimbursements shall be
limited to those amounts paid within 24 months of the Executive’s date of
separation from service with the Companies.

 

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  (g)

Stock Options. Stock Options or other Equity based awards held by the Executive
become exercisable upon a Change of Control according to the terms of the
Companies’ equity compensation plans and any option agreements effecting
outstanding option grants or other equity based awards, as interpreted by State
Auto Financial’s Compensation Committee as such Committee existed immediately
prior to the Change of Control.

In computing and determining Severance Benefits under Sections 4(a), (b), (c),
(d), (e), (f) and (g) above, a decrease in the Executive’s salary, incentive
bonus potential, or insurance benefits shall be disregarded if such decrease
occurs within six months before a Change of Control, is in contemplation of such
Change of Control, and is taken to avoid the effect of this Agreement should
such action be taken after such Change of Control. In such event, the salary,
incentive bonus potential, and/or insurance benefits used to determine Severance
Benefits shall be that in effect immediately before the decrease that is
disregarded pursuant to this Section 4.

The Severance Benefits provided in Sections 4(a), 4(b), and 4(c) above shall be
paid not later than 45 business days following the date the Executive’s
employment terminates, subject to the requirements of the following paragraph.
Notwithstanding the foregoing, in the event Executive is a “specified employee”
as defined in Code Section 409A, any payments under this Agreement due to a
separation from service (as defined in Section 409A of the Code) and subject to
Code Section 409A shall be delayed until a date that is six months after the
date of separation from service (or, if earlier, the date of death of
Executive). Payments to which a ‘specified employee” would otherwise be entitled
during the first six months following the date of separation shall be
accumulated and paid as of the first day of the seventh month following the date
of separation from service.

Notwithstanding any provision to the contrary, the payments and benefits due to
Executive under this Agreement shall commence no later than 90 days after
Executive’s separation from service, provided that Executive has executed a
valid release of State Auto, and its respective officers, directors and
employees, from any and all actions, suits, proceedings, claims and demands
relating to Executive’s employment and termination, and the applicable
revocation period has expired within this period.

5. Excess Severance Payment. If any Severance Benefit or other benefit paid or
provided under Section 4, above, or the acceleration of stock option vesting,
would be subject to excise tax pursuant to Code Section 4999 (or any similar
federal or state excise tax), but would not be so subject if the total of such
payments would be reduced by 10% or less, then such payment shall be reduced by
the minimum amount necessary so as not to cause State Auto to have paid an
Excess Severance Payment as defined in Code Section 280G(b)(1) and so Executive
will not be subject to Excise Tax pursuant to Code Section 4999. The calculation
of the 280G reduction shall be approved by State Auto’s independent certified
public accounting firm engaged by State Auto immediately prior to the Change of
Control and the calculation shall be provided to Executive in writing. Executive
shall then be given 15 days, or such longer period as Executive reasonably
requests and to which State Auto agrees, such agreement not to be unreasonably

 

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withheld, to accept or reject the calculation of the 280G reduction. If
Executive rejects the 280G reduction calculation and the parties are thereafter
unable to agree within an additional 45 days, the arbitration provisions of
Section 12 shall control. State Auto shall reimburse Executive for all
reasonable legal and accounting fees incurred with respect to the calculation of
the 280G reduction and any disputes related thereto. Any payments owed to
Executive under this Section 5, which are subject to the rules under Code
Section 409A and related regulations, shall be made to Executive no later than
the end of the calendar year following the calendar year in which the taxes are
remitted to the taxing authority. In the event that the amount of any Severance
Benefit that would be payable to or for the benefit of Executive under this
Agreement must be modified or reduced to comply with this provision, it shall be
modified or reduced on a pro-rata basis. In no event shall the total payments be
reduced by more than 10% in order to avoid treatment as an Excess Severance
Payment.

6. Withholding of Taxes. To the extent required by the law, the Companies shall
withhold from the payments made hereunder any taxes required to be withheld by
the federal or any state or local government.

In accordance with Section 409A of the Code and the regulations issued
thereunder, this Agreement shall permit the payment of amounts necessary to
(a) satisfy the employment tax withholding obligations that arise under this
Agreement prior to the date that payment may otherwise be made under this
Agreement and/or (b) satisfy the excise tax or underpayment penalties owed under
Section 409A of the Code in the event of a violation of Section 409A of the Code
under this Agreement.

7. Delayed Payments. In the event of a genuine dispute between the Companies or
any Subsidiary and the Executive regarding the amount or timing of benefits
under this Agreement, a delay in the payment of amounts under this Agreement
shall not cause the Executive to violate Section 409A of the Code to the extent
that such delay satisfies the conditions set forth in Section 409A of the Code
and applicable regulations thereunder.

8. Acknowledgement. The Companies hereby acknowledges that it will be difficult
and may be impossible for the Executive to find reasonably comparable
employment, or to measure the amount of damages which the Executive may suffer
as a result of separation from service hereunder. Accordingly, the payment of
the Severance Benefits by the Companies to the Executive in accordance with the
terms of this Agreement is hereby acknowledged by the Companies to be reasonable
and will be liquidated damages, and the Executive will not be required to
mitigate the amount of any payment provided for in this Agreement by seeking
other employment or otherwise, nor will any profits, income, earnings, or other
benefits from any source whatsoever create any mitigation, offset, reduction, or
any other obligation on the part of the Executive hereunder or otherwise. The
Companies shall not be entitled to set off or counterclaim against amounts
payable hereunder with respect to any claim, debt, or obligation of the
Executive.

9. Enforcement Costs; Interest. The Companies are aware that, upon the
occurrence of a Change in Control, the Board or a stockholder of the Companies
may then cause or attempt to cause the Companies to refuse to comply with their
obligations under this Agreement, or may cause or attempt to cause the Companies
to institute, or may institute, litigation, arbitration, or

 

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other legal action seeking to have this Agreement declared unenforceable, or may
take, or attempt to take, other action to deny the Executive the benefits
intended under this Agreement. In these circumstances, the purpose of this
Agreement could be frustrated. It is the intent of the Companies that the
Executive not be required to incur the expenses associated with the enforcement
of the Executive’s rights under this Agreement by litigation, arbitration, or
other legal action nor be bound to negotiate any settlement of the Executive’s
rights hereunder under threat of incurring such expenses because the cost and
expense thereof would substantially detract from the benefits intended to be
extended to the Executive under this Agreement. Accordingly, if following a
Change in Control it should appear to the Executive that the Companies have
failed to comply with any of their obligations under this Agreement, or in the
event that the Companies or any other person takes any action to declare this
Agreement void or unenforceable, or institute any litigation or other legal
action designed to deny, diminish or to recover from the Executive, the benefits
intended to be provided to the Executive hereunder, the Companies irrevocably
authorizes the Executive from time to time to retain counsel (legal and
accounting) of the Executive’s choice at the expense of the Companies as
provided in this Section 9 to represent the Executive in connection with or the
initiation or defense of any litigation or other legal action, whether by or
against the Companies or any director, officer, stockholder, or other person
affiliated with the Companies. Notwithstanding any existing or prior
attorney-client relationship between the Companies and such counsel, the
Companies irrevocably consents to the Executive entering into an attorney-client
relationship with such counsel, and in that connection the Companies and the
Executive agree that a confidential relationship shall exist between the
Executive and such counsel. The reasonable fees and expenses of counsel selected
from time to time by the Executive as provided in this Section 9 shall be paid
or reimbursed to the Executive by the Companies on a regular, periodic basis
upon presentation by the Executive of a statement or statements prepared by such
counsel in accordance with their customary practices; provided, however, that
the amount of expenses eligible for reimbursement during a calendar year may not
affect the expenses eligible for reimbursement in any other calendar year, and
provided further, that the reimbursement of any eligible expenses shall be made
on or before the last day of the calendar year following the calendar year in
which such expense was incurred. In any action involving this Agreement, the
Executive shall be entitled to prejudgment interest on any amounts found to be
due him from the date such amounts would have been payable to the Executive
pursuant to this Agreement at an annual rate of interest equal to the prime
commercial rate in effect at the corporation’s principal bank or their successor
from time to time during the prejudgment period plus 4 percent.

10. Forfeiture Events; Clawback Rights.

 

  (a)

The Board may, in its discretion, require Executive to repay the Companies all
or any portion of the amounts paid as Severance Benefits if:

 

  (1)

Executive violates any non-competition, non-solicitation or confidentiality
covenant applicable to the Executive and for the benefit of the Companies,
including such covenants included in this Agreement;

 

  (2)

It is later discovered that Executive engaged in conduct detrimental to the
Companies during the Employment Term which has a material adverse effect on the
Companies as determined by the Board of Directors of State Auto Mutual, in its
discretion; or

 

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(3) (A) The amount of any of the Severance Benefits was calculated based upon
the achievement of certain financial results      of the Companies that were
subsequently the subject of a financial statement restatement by the Companies;

(B) Executive engaged in conduct detrimental to the Companies that caused or
substantially contributed to the need for the financial statement restatement by
the Companies; and

(C) The amount of Executive’s Severance Benefits would have been lower than the
amount actually awarded to Executive had the financial results been properly
reported.

Notwithstanding the foregoing, if the Board determines that Executive engaged in
fraudulent conduct, then the Board will seek repayment of the Severance
Benefits. This provision shall not be the exclusive remedy of the Companies with
respect to such matters.

 

  (b)

The terms of any compensation recovery or recoupment policy heretofore or
hereafter adopted by the Board, including any and all amendments thereto (a
“clawback policy”), are hereby incorporated into this Agreement by reference. In
addition to the terms and conditions set forth in this Agreement, Executive
agrees that any amounts payable or paid to Executive under this Agreement shall
be subject to the terms of any clawback policy of the Board.

11. Indemnification. From and after the earliest to occur of a Change of Control
or separation from service, the Companies shall (a) for a period of five years
after such occurrence, provide the Executive (including the Executive’s heirs,
executors, and administrators) with coverage under a standard directors’ and
officers’ liability insurance policy at the Companies’ expense, and
(b) indemnify and hold harmless the Executive, to the fullest extent permitted
or authorized by the law of the State of Ohio as it may from time to time be
amended, if the Executive is (whether before or after the Change of Control)
made or threatened to be made a party to any threatened, pending or completed
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative, by reason of the fact that the Executive is or was a director,
officer, or employee of the Companies or any Subsidiary, or is or was serving at
the request of the Companies or any Subsidiary, as a director, trustee, officer,
or employee of an insurance company, corporation, partnership, joint venture,
trust, or other enterprise. The indemnification provided by this Section 11
shall not be deemed exclusive of any other rights to which the Executive may be
entitled under the charter or bylaws of the Companies or of any Subsidiary, or
any agreement, vote of shareholders or disinterested directors, or otherwise,
both as to action in the Executive’s official capacity and as to action in
another capacity while holding such office, and shall continue as to the
Executive after the Executive has ceased to be a director, trustee, officer, or
employee and shall inure to the benefit of the heirs, executors, and
administrators of the Executive.

 

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12. Arbitration. The method for resolving any dispute arising out of this
Agreement shall be binding arbitration in accordance with this Section. Except
as provided otherwise in this Section, arbitration pursuant to this Section
shall be governed by the Commercial Arbitration Rules of the American
Arbitration Association, A party wishing to obtain arbitration of an issue shall
deliver written notice to the other party, including a description of the issue
to be arbitrated. Within 15 days after either party demands arbitration, the
Companies and the Executive shall each appoint an arbitrator. Within 15
additional days, these two arbitrators shall appoint the third arbitrator by
mutual agreement; if they fail to agree within this 15 day period, then the
third arbitrator shall be selected promptly pursuant to the rules of the
American Arbitration Association for Commercial Arbitration. The arbitration
panel shall hold a hearing in Columbus, Ohio, within 90 days after the
appointment of the third arbitrator. The fees and expenses of the arbitrator,
and any American Arbitration Association fees, shall be paid by the Companies.
Both the Companies and the Executive may be represented by counsel (legal and
accounting) and may present testimony and other evidence at the hearing. Within
90 days after commencement of the hearing, the arbitration panel will issue a
written decision; the majority vote of two of the three arbitrators shall
control. The majority decision of the arbitrators shall be binding on the
parties. The Executive shall be entitled to seek specific performances of the
Executive’s rights under this Agreement during the pendency of any dispute or
controversy arising under or in connection with this Agreement.

13. Employment Rights. This Agreement sets forth the Severance Benefits payable
to the Executive in the event the Executive’s employment with the Companies is
terminated under certain conditions specified in Section 3 of this Agreement.
This Agreement is not an employment contract nor shall it confer upon the
Executive any right to continue in the employ of the Companies or their
Subsidiaries and shall not in any way affect the right of the Companies or their
Subsidiaries to dismiss or otherwise terminate the Executive’s employment at any
time with or without cause.

14. Arrangements Not Exclusive. The specific benefit arrangements referred to in
this Agreement are not intended to exclude the Executive from participation in
or from other benefits available to executive personnel generally or to preclude
the Executive’s right to other compensation or benefits as may be authorized by
the Board at any time. The provisions of this Agreement and any payments
provided for hereunder shall not reduce any amounts otherwise payable, or in any
way diminish the Executive’s existing rights, or rights which would accrue
solely as the result of the passage of time under any compensation plan, benefit
plan, incentive plan, stock option plan, employment agreement, or other
contract, plan, or arrangement except as may be specified in such contract, plan
or arrangement. Notwithstanding anything to the contrary in this Section 14, the
Severance Benefits provided in Section 4 of this Agreement are in lieu of any
benefits to which the Executive would be entitled following the Executive’s
separation from service pursuant to any Employment Agreement with the Companies,
if the separation from service is due to a Change of Control.

15. Termination. This Agreement shall terminate if the employment of the
Executive with the Companies shall terminate prior to a Change of Control;
provided, however, that this

 

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Agreement shall not terminate upon Executive’s separation from service in the
event of a pending Change of Control event as described in Section 3(c), above.
Executive agrees that, upon termination of Executive’s employment for any reason
set forth, Executive shall immediately resign as a director and officer from all
State Auto companies.

16. Successors; Binding Agreements. This Agreement shall inure to the benefit of
and be enforceable by the Executive’s personal and legal representatives,
executors, administrators, successors, heirs, distributees, devisees, and
legatees. The Executive’s rights and benefits under this Agreement may not be
assigned, except that if the Executive dies while any amount would still be
payable to the Executive hereunder if the Executive had continued to live, all
such amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement, to the beneficiaries designated by the Executive to
receive benefits under this Agreement in Exhibit A or, if there is no such
beneficiary, to the Executive’s estate. The Companies will require any successor
(whether direct or indirect, by purchase, merger, consolidation, or otherwise)
to all or substantially all of the business and/or assets of the Companies (or
of any division or Subsidiary thereof employing the Executive) to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Companies would be required to perform it if no such succession
had taken place. Failure of the Companies to obtain such assumption and
agreement prior to the effectiveness of any such succession shall be a breach of
this Agreement and shall entitle the Executive to compensation from the
Companies in the same amount and on the same terms to which the Executive would
be entitled hereunder if the Executive terminated employment for Good Reason
following a Change of Control.

17. No Vested Interest. Neither the Executive nor the Executive’s beneficiaries
shall have any right, title, or interest in any benefit under this Agreement
prior to the occurrence of the right to the payment of such benefit.

18. Notice. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered personally or mailed by United
States registered mail, return receipt requested, postage prepaid, addressed to
such addresses as each party may designate from time to time to the other party
in writing in the manner provided herein. Unless designated otherwise, notices
to the Companies should be sent to the Companies at:

State Auto Financial Corporation

518 East Broad Street

Columbus, Ohio 43215

Attention: General Counsel

Until designated otherwise, notices shall be sent to the Executive at the
address indicated on the Beneficiary Designation and Notice form attached hereto
as Exhibit A. If the parties by mutual agreement supply each other with
telecopier numbers for the purposes of providing notice by facsimile, such
notice shall also be proper notice under this Agreement. Notice sent by
certified or registered mail shall be effective two days after deposit by
delivery to the U.S. Post Office.

 

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19. Savings Clause. If any payments otherwise payable to the Executive under
this Agreement are prohibited or limited by any statute or regulation in effect
at the time the payments would otherwise be payable (any such limiting statute
or regulation a “Limiting Rule”):

 

  (a)

Companies will use their best efforts to obtain the consent of the appropriate
governmental agency to the payment by Companies to the Executive of the maximum
amount that is permitted (up to the amounts that would be due to the Executive
absent the Limiting Rule); and

 

  (b)

the Executive will be entitled to elect to have apply, and therefore to receive
benefits directly under, either (i) this Agreement (as limited by the Limiting
Rule) or (ii) any generally applicable Companies severance, separation pay,
and/or salary continuation plan that may be in effect at the time of the
Executive’s separation from service.

Following any such election, the Executive will be entitled to receive benefits
under this Agreement or plan elected only if and to the extent the Agreement or
plan is applicable and subject to their specific terms.

20. Amendment; Waiver. This Agreement may not be amended or modified and no
provision may be waived unless such amendment, modification, or waiver is agreed
to in writing and signed by the Executive and the Companies; provided, however,
that this Agreement shall be amended and/or modified as necessary to comply with
Section 409A of the Code or regulations issued thereunder.

21. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.

22. Counterparts. This Agreement may be executed in several counterparts, each
of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.

23. Governing Law. Except as otherwise provided, this Agreement shall be
governed by the laws of the State of Ohio, without giving effect to any conflict
of law provisions.

24. Section 409A of the Code. It is intended that this Agreement shall comply
with the provisions of Section 409A of the Code and the Treasury regulations
relating thereto, or an exemption to Section 409A of the Code, and payments,
rights and benefits may only be made, satisfied or provided under this Agreement
upon an event and in a manner permitted by Section 409A of the Code, to the
extent applicable, so as not to subject Executive to the payment of taxes and
interest under Section 409A of the Code. In furtherance of this intent, this
Agreement shall be interpreted, operated and administered in a manner consistent
with these intentions. Terms defined in this Agreement shall have the meanings
given to such terms under Section 409A of the Code if and to the extent required
in order to comply with Section 409A of the Code. No payments to be made under
this Agreement may be accelerated or deferred except as specifically permitted
under Section 409A of the Code. To the extent that any regulations or other
guidance

 

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issued under Section 409A of the Code would result in the Executive being
subject to payment of additional income taxes or interest under Section 409A of
the Code, the parties agree to amend this Agreement to maintain to the maximum
extent practicable the original intent of this Agreement while avoiding the
application of such taxes or interest under Section 409A of the Code. Any
payments that qualify for the “short-term deferral” exception or another
exception under Section 409A of the Code shall be paid under the applicable
exception. For purposes of the limitations on nonqualified deferred compensation
under Section 409A of the Code, each payment of compensation under this
Agreement shall be treated as a separate payment of compensation for purposes of
applying the Section 409A of the Code deferral election rules and the exclusion
under Section 409A of the Code for certain short-term deferral amounts. In no
event may the Executive, directly or indirectly, designate the calendar year of
any payment under this Agreement.

25. Venue. The Companies and Executive designate either the Court of Common
Pleas of Franklin County, Ohio or the U.S. District Court in Columbus, Ohio as
the exclusive courts of competent jurisdiction and venue for any actions or
proceedings related to this Agreement and hereby irrevocably consent to such
designation, jurisdiction and venue.

SIGNATURES APPEAR ON NEXT PAGE

 

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IN WITNESS WHEREOF, the parties have signed this Agreement as of the day and
year written above.

 

State Auto Financial Corporation: By:  

/s/ Paul Williams

  Paul Williams, Chair of the   Compensation Committee State Automobile Mutual
Insurance Company: By:  

/s/ Michael J. Fiorile

  Michael J. Fiorile, Chair of the   Nominating and Governance Committee
Executive:

/s/ Robert P. Restrepo, Jr.

Robert P. Restrepo, Jr.

 

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