Exhibit 10.28

EXHIBIT VI

INTER-COMPANY EXPENSE AGREEMENT

BETWEEN

PATRONS FIRE INSURANCE COMPANY

AND

PATRONS MUTUAL INSURANCE COMPANY OF CONNECTICUT

THIS AGREEMENT, made as of the 18th day of June, 2001, between Patrons Mutual
Insurance Company of Connecticut (“Patrons CT”) and Patron Fire Insurance
Company of Rhode Island (“Patrons RI”), both mutual insurance companies
organized and exiting under the laws of the State of Connecticut.

WITNESSETH:

WHEREAS, the Boards of Directors of each of Patrons CT and Patrons RI have, at
meetings duly convened and held, authorized and approved the formulation and
implementation of a plan for a common management services arrangement and the
preparation, execution and delivery of such agreements as may be necessary and
appropriate to the effectuation of such common management services arrangement
and

WHEREAS, the parties wish to set forth herein certain methodologies in
determining the expenses charged for the services provided by the Management
Services Agreement, effective August 30th, 1996;

NOW, THEREFORE, in consideration of the premises and of the covenants contained
in the Management Services Agreement, and for other good and valuable
consideration, it is agreed as follows:

Section 1. SERVICES. Commencing on the Effective Date (as defined below) and
until the termination of this Agreement, Patrons CT shall provide to Patrons RI
such management services as shall be reasonably necessary or desirable for the
conduct of the

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insurance business of Patrons RI. Such services shall include, but not be
limited to, accounting, tax and auditing services, legal services, actuarial
services, employee benefit plans and personnel administration, insurance
production and underwriting services, processing and payment of claims,
servicing of policyholders, billing and collection services, software
development services, electronic data processing operations, communications
operations, investment and property management services.

Section 2. CHARGES. Patrons RI agrees to pay to Patrons CT a charge equal to all
expenses, direct and indirect, reasonably and equitably determined by Patrons CT
to be attributable to Patrons RI for services and facilities provided by the
former to the latter pursuant hereto, except to the extent application of laws
or regulations would otherwise require.

The basis for determining such charges to Patrons RI shall be similar to those
used by Patrons CT for internal cost distribution including, where applicable,
time records prepared for this purpose. Such basis shall be modified and
adjusted where necessary or appropriate to reflect fairly and equitably the
actual incidence of cost incurred by Patrons CT on behalf of Patrons RI.

Patrons CT’s determination of charges hereunder shall be conclusive as between
such parties, except that if the Patrons RI objects to any such determination,
it shall so advise Patrons CT within thirty (30) days of receipt of notice of
said determination. Unless such parties can reconcile any such objection, or
otherwise agree, they shall select a firm of independent certified public
accountants which shall determine the charges properly allocable to Patrons RI
and shall, within a reasonable time, submit such determination, together with
the basis therefor, in writing to both parties whereupon such determination
shall be binding. The expenses of any such determination by a firm of
independent certified public accountants shall be borne as determined to be
equitable by such accountants.

Section 3. SETTLEMENT. At quarterly intervals, Patrons CT shall submit to
Patrons RI an account of amounts payable and the account shall be settled within
thirty (30) days thereafter. The amounts payable by Patrons RI may be offset by
reciprocal obligations due to Patrons RI from the Inter-company Pooling
Arrangement, so that only net amounts shall be required to be transferred
between the parties. Settlement shall be in the form of cash or cash equivalent
securities.

 

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Section 4. ACCOUNTING RECORDS. Patrons CT shall be responsible for maintaining
full and accurate accounting records of all services rendered and facilities
used pursuant to this Agreement and such additional information as Patrons RI
may reasonably request for purposes of its internal accounting operations.
Patrons CT shall keep such accounting records insofar as they pertain to the
computation of charges hereunder available at its principal offices for audit,
inspection and copying by Patrons RI or any governmental agency having
jurisdiction during reasonable business hours.

Section 5. TERMINATION. This agreement shall terminate upon the termination of
that certain Management Services Agreement dated August 30th, 1996 between the
parties hereto, as amended from time to time.

Section 6. SETTLEMENT OF TERMINATION. No later than ninety (90) days after the
effective date of termination, Patrons CT shall deliver to Patrons RI a detailed
written statement for all charges incurred and not included in any previous
statement to the effective date of termination. The amounts owed hereunder shall
be due and payable within thirty (30) days of receipt of such statement.

Section 7. ASSIGNMENT AND ADDITIONAL PARTIES. This Agreement shall not be
assignable by Patrons CT or Patrons RI without the consent of the other party,
except in the case of assignment to a corporation or other organization which is
a successor to Patrons RI or Patrons CT, as the case may be, in which case such
successor shall be bound hereunder and by the terms of said assignment in the
same manner as its assignor is bound hereunder.

Section 8. GOVERNING LAW. This Agreement shall be governed by and constructed in
accordance with Connecticut law.

Section 9. This Agreement may be executed in one or more counterparts, and by
different parties on separate counterparts, either of which shall and will be
treated and considered as an original, but all of which together shall
constitute one and the same instrument.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and delivered as of the day and year first above written.

 

PATRONS FIRE INSURANCE COMPANY OF

    CONNECTICUT

By

 

 

 

Its Vice President and Treasurer

 

PATRONS MUTUAL INSURANCE COMPANY OF

    CONNECTICUT

By

 

 

 

Its President and CEO

 

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EXHIBIT V

AMENDMENT NO. 1

to the

INTER-COMPANY EXPENSE AGREEMENT

(hereinafter and thereafter referred to as the “Agreement”)

between

Patrons Mutual Insurance Company of Connecticut, a Connecticut corporation
(“Patrons CT”), and Patrons Fire Insurance Company of Rhode Island, a
Connecticut corporation (“Patrons RI”), dated June 18th, 2001. Patrons CT and
Patrons RI are sometimes herein referred to individually as a “Party” and
collectively as the “Parties”.

It is understood and agreed that, effective September 30, 2002, this Agreement
is amended as follows:

Section 3., SETTLEMENT shall be amended as follows:

Section 3. Settlement. At quarterly intervals, Patrons CT shall submit to
Patrons RI an account of amounts payable and the account shall be settled within
ninety (90) days thereafter. The amounts payable by Patrons RI may be offset by
reciprocal obligations due to Patrons RI from the Inter-company Pooling
Arrangement, so that only net amounts shall be required to be transferred
between the parties. Settlement shall be in the form of cash or cash equivalent
securities.

ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.

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IN WITNESS WHEREOF, the parties hereto, have caused this Agreement to, be
executed by their duly authorized officers effective as of the day and year set
forth in the opening paragraph of this Agreement.

 

Patrons Mutual Insurance Company

of Connecticut

By:

 

 

Date:

 

___________

Name:

 

William Siclari

Title:

 

President & CEO

 

Patrons Fire Insurance Company of Rhode Island

By:

 

 

Date:

 

___________

Name:

 

William Siclari

Title:

 

President & CEO

 

Attest:

 

                Treasurer

Patrons Mutual Insurance Company of Connecticut

 

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SECOND AMENDMENT

to

INTER-COMPANY EXPENSE AGREEMENT

among

PATRONS FIRE INSURANCE COMPANY OF RHODE ISLAND

PATRONS MUTUAL INSURANCE COMPANY OF CONNECTICUT

STATE AUTOMOBILE MUTUAL INSURANCE COMPANY

and

STATE AUTO PROPERTY & CASUALTY INSURANCE COMPANY

This Second Amendment to Inter-Company Expense Agreement (“Second Amendment”),
dated as of December 14, 2007, amends the Inter-Company Expense Agreement (the
“Expense Agreement”), dated as of June 18, 2001, as amended, by and between
Patrons Fire Insurance Company of Rhode Island (“Patrons RI”) and Patrons Mutual
Insurance Company of Connecticut (“Patrons CT”) as follows:

RECITALS

WHEREAS, Patrons RI and Patrons CT have previously entered into the Expense
Agreement and the First Amendment to Expense Agreement, effective as of
September 30, 2002; and

WHEREAS, Patrons CT and Patrons RI will affiliate their business operations with
State Automobile Mutual Insurance Company (“SAM”) upon the closing of the
transactions contemplated by the Amended and Restated Affiliation Agreement (the
“Restated Affiliation Agreement”), by and among SAM, Patrons CT and Litchfield
Mutual Fire Insurance Company; and

WHEREAS, the parties intend to add SAM and State Auto Property and Casualty
Insurance Company (“SAP&C”) as parties to the Expense Agreement, and to set
forth herein certain methodologies in determining the expenses charged for
services provided to Patrons RI by SAM and SAP&C.

STATEMENT OF AGREEMENT

In consideration of the mutual covenants set forth herein and INTENDING TO BE
LEGALLY BOUND HEREBY, the parties to this Second Amendment agree to amend the
Expense Agreement as follows:

 

1.

Capitalized terms used in this Second Amendment (including the Recitals) which
are not otherwise defined herein shall have the meanings ascribed to such terms
in the Expense Agreement.

 

2.

Upon the Effective Date (as defined below) of this Second Amendment, SAM and
SAP&C shall supplement the management and operations services provided to
Patrons RI by Patrons CT pursuant to Section 1 of the Expense Agreement. The
parties acknowledge that Patrons CT has its own employees who provide
managerial, supervisory, administrative, technical, professional, and clerical
services to Patrons RI. Notwithstanding the foregoing, Patrons CT and Patrons RI
understand and agree that State Auto P&C, acting by and through its employees,
is authorized to provide certain other executive, administrative,

 

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technical, managerial and professional support services to Patrons RI as needed
and agreed upon by the parties, while SAM is authorized to provide certain data
processing equipment, office supplies and equipment, furniture and fixtures,
automobiles and such other items of tangible personal property or facilities to
Patrons RI as needed and agreed upon by the parties, the costs of which shall be
allocated as described below.

 

3.

Section 2 of the Expense Agreement is hereby deleted in its entirety and
replaced by the following:

“Patrons RI agrees to pay to Patrons CT, SAM and SAP&C a charge equal to all
expenses, direct and indirect, reasonably and equitably determined by Patrons
CT, SAM and SAP&C to be attributable to Patrons RI for services and facilities
provided by the former to the latter pursuant hereto, except to the extent
application of laws or regulations would otherwise require.

“The basis for determining such charges to Patrons RI shall be similar to those
used by Patrons CT, SAM and SAP&C for internal cost distribution including,
where applicable, time records prepared for this purpose. Such basis shall be
modified and adjusted where necessary or appropriate to reflect fairly and
equitably the actual incidence of cost incurred by Patrons CT, SAM and SAP&C on
behalf of Patrons RI. Patrons CT’s, SAM’s and SAP&C’s determination of charges
hereunder shall be conclusive as between such parties, except that if the
Patrons RI objects to any such determination it shall so advise Patrons CT, SAM
and SAP&C within thirty (30) days of receipt of notice of said determination.
Unless such parties can reconcile any such objection, or otherwise agree, they
shall select a firm of independent certified public accountants which shall
determine the charges properly allocable to Patrons RI and shall, within a
reasonable time, submit such determination, together with the basis therefor, in
writing to both parties whereupon such determination shall be binding. The
expenses of any such determination by a firm of independent certified public
accountants shall be borne as determined to be equitable by such accountants.”

 

4.

Section 3 of the Expense Agreement is hereby deleted in its entirety and
replaced by the following:

“Within 45 days after the end of each calendar quarter, Patrons CT shall submit
to Patrons RI an account of amounts payable and the account shall be settled
within thirty (30) days thereafter. The amounts payable by Patrons RI may be
offset by reciprocal obligations due to Patrons RI from the Inter-company
Pooling Arrangement, so that only net amounts shall be required to be
transferred between the parties. Settlement shall be in the form of cash or cash
equivalent securities.

“Within 45 days after the end of each calendar quarter, SAM and SAP&C shall
submit to Patrons RI an account of amounts payable and the account shall be
settled within thirty (30) days thereafter. SAM and SAP&C shall pay none of
Patrons RI’s insurance losses, loss adjustment expenses and underwriting
expenses. Underwriting expenses include, without limitation, expenses for SAP&C
employees providing services on behalf of Patrons RI for only part of their
time, which expenses shall be allocated in accordance with statutory accounting
principles to Patrons RI in proportion to the amount of time those employees
spend on behalf of Patrons RI. Patrons RI’s share of pension and benefit
expenses under the benefit plans for employees of SAP&C shall be allocated to
Patrons RI based on the percentage of SAP&C’s payroll expenses allocated to
Patrons RI pursuant to the terms hereof. The amounts payable by Patrons RI may
be offset by any reciprocal obligations due to Patrons RI, so that only net
amounts shall be required to be transferred between the parties. Settlement
shall be in the form of cash or cash equivalent securities.”

 

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5.

Section 4 of the Expense Agreement is hereby deleted in its entirety and
replaced by the following:

“Patrons CT, SAM and SAP&C shall be responsible for maintaining full and
accurate accounting records of all services rendered and facilities used
pursuant to this Agreement and such additional information as Patrons RI may
reasonably request for purposes of its internal accounting operations. Expenses
shall be apportioned in accordance with statutory accounting principles
consistently applied. The books, accounts, and records shall be so maintained as
to clearly and accurately disclose the nature and details of the transactions
including such accounting information as is necessary to support the expenses
apportioned to the respective parties. Patrons CT, SAM and SAP&C shall keep such
accounting records insofar as they pertain to the computation of charges
hereunder available at its principal offices for audit, inspection and copying
by Patrons RI or any governmental agency having jurisdiction during reasonable
business hours.”

 

6.

Section 6 of the Expense Agreement is hereby deleted in its entirety and
replaced by the following:

“No later than ninety (90) days after the effective date of termination, Patrons
CT, SAM and SAP&C shall deliver to Patrons RI a detailed written statement for
all charges incurred and not included in any previous statement to the effective
date of termination. The amounts owed hereunder shall be due and payable within
thirty (30) days of receipt of such statement.”

 

7.

Section 7 of the Expense Agreement is hereby deleted in its entirety and
replaced by the following:

“This Agreement shall not be assignable by Patrons CT, SAM, SAP&C or Patrons RI
without the consent of the other parties, except in the case of assignment to a
corporation or other organization which is a successor to Patrons RI, SAM, SAP&C
or Patrons CT, as the case may be, in which case such successor shall be bound
hereunder and by the terms of said assignment in the same manner as its assignor
is bound hereunder. Under no circumstances can this Agreement be assigned
without the prior approval of the Insurance Departments of Connecticut and
Ohio.”

 

8.

The following is hereby added to the Expense Agreement as new Section 10:

“COMPLETE AGREEMENT. This document, together with such amendments hereto as may
from time to time be validly executed in writing by the parties, constitutes the
entire agreement between the parties and supersedes all prior or contemporaneous
discussions, negotiations, representations, or agreements relating to the
subject matter of this Agreement.”

 

9.

The following is hereby added to the Expense Agreement as new Section 11:

“AMENDMENT. This Agreement may be amended by mutual consent of the parties.
Except as provided herein, no alteration or variation of the terms of this
Agreement shall be valid unless made in writing and signed by all the parties to
this Agreement. Furthermore, no alteration or variation of the terms of this
Agreement shall be valid unless prior approval for such alteration or variation
has been received from the Commissioners of the Ohio and the Connecticut
Departments of Insurance.”

 

10.

This Second Amendment shall be effective (the “Effective Date”) as of the
Patrons Closing Date (as defined in the Restated Affiliation Agreement).
Notwithstanding the foregoing, the effectiveness of this Second Amendment is
subject to the receipt of all regulatory consents required to implement the
terms of this Second Amendment. Until such time as all such regulatory consents
have been obtained, this Second Amendment shall not become operative to amend
the Expense Agreement in any manner whatsoever and shall be of no force or
effect.

 

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11.

This Second Amendment constitutes an integral part of the Expense Agreement. In
the event of any inconsistencies between the provisions of the Expense Agreement
and this Second Amendment, the provisions of this Second Amendment shall
control. Except as expressly amended hereby, the terms and provisions of the
Expense Agreement shall continue in full force and effect without change for the
balance of the term thereof.

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to be
duly executed as of the day and year first above written.

 

PATRONS MUTUAL INSURANCE COMPANY OF CONNECTICUT

By:

 

/s/ William Siclari

 

William Siclari, President

PATRONS FIRE INSURANCE COMPANY OF RHODE ISLAND

By:

 

/s/ William Siclari

 

William Siclari, President

STATE AUTOMOBILE MUTUAL INSURANCE COMPANY

By:

 

/s/ Robert P. Restrepo, Jr.

 

Robert P. Restrepo, Jr., President

STATE AUTO PROPERTY & CASUALTY

INSURANCE COMPANY

By:

 

/s/ Robert P. Restrepo, Jr.

 

Robert P. Restrepo, Jr., President

 

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