Document:

<PAGE>
                                                                   Exhibit 10.46

                  PROPERTY CATASTROPHE OVERLYING EXCESS OF LOSS
                              REINSURANCE CONTRACT

                                    ISSUED TO

                    STATE AUTOMOBILE MUTUAL INSURANCE COMPANY
                            MILBANK INSURANCE COMPANY
                      STATE AUTO NATIONAL INSURANCE COMPANY
                    STATE AUTO INSURANCE COMPANY OF WISCONSIN
                       FARMERS CASUALTY INSURANCE COMPANY
                          MID-PLAINS INSURANCE COMPANY
                      STATE AUTO INSURANCE COMPANY OF OHIO
                       MERIDIAN SECURITY INSURANCE COMPANY
                   MERIDIAN CITIZENS MUTUAL INSURANCE COMPANY
                  MERIDIAN CITIZENS SECURITY INSURANCE COMPANY
                      STATE AUTO FLORIDA INSURANCE COMPANY

                                       BY

               STATE AUTO PROPERTY AND CASUALTY INSURANCE COMPANY

<PAGE>
                    STATE AUTOMOBILE MUTUAL INSURANCE COMPANY
                            MILBANK INSURANCE COMPANY
                      STATE AUTO NATIONAL INSURANCE COMPANY
                    STATE AUTO INSURANCE COMPANY OF WISCONSIN
                       FARMERS CASUALTY INSURANCE COMPANY
                          MID-PLAINS INSURANCE COMPANY
                      STATE AUTO INSURANCE COMPANY OF OHIO
                       MERIDIAN SECURITY INSURANCE COMPANY
                   MERIDIAN CITIZENS MUTUAL INSURANCE COMPANY
                  MERIDIAN CITIZENS SECURITY INSURANCE COMPANY
                      STATE AUTO FLORIDA INSURANCE COMPANY

                  PROPERTY CATASTROPHE OVERLYING EXCESS OF LOSS
                              REINSURANCE CONTRACT

                                TABLE OF CONTENTS
                                -----------------

<TABLE>
<CAPTION>
ARTICLE NO.            TITLE                                    PAGE
-----------            -----                                    ----

<S>                    <C>                                        <C>
ARTICLE I              BUSINESS COVERED                           1

ARTICLE II             EXCLUSIONS                                 1 - 3

ARTICLE III            TERM                                       3

ARTICLE IV             TERRITORY                                  3

ARTICLE V              AMOUNT OF LIMIT AND RETENTION              4

ARTICLE VI             ULTIMATE NET LOSS                          4

ARTICLE VII            NET RETAINED LINES                         5

ARTICLE VIII           UNDERLYING EXCESS                          5

ARTICLE IX             DEFINITION OF LOSS OCCURRENCE              5 - 6

ARTICLE X              NOTICE OF LOSS AND LOSS SETTLEMENT         6

ARTICLE XI             PREMIUM                                    7

ARTICLE XII            CURRENCY                                   7

ARTICLE XIII           OFFSET                                     7

ARTICLE XIV            ACCESS TO RECORDS                          7

ARTICLE XV             ERRORS AND OMISSIONS                       7

ARTICLE XVI            TAXES                                      8

ARTICLE XVII           INSOLVENCY                                 8

ARTICLE XVIII          ARBITRATION                                9
</TABLE>

<PAGE>
 Exhibit A

 War Exclusion Clause

 Pools, Associations & Syndicates Exclusion Clause

 Nuclear Incident Exclusion Clause - Physical
 Damage - Reinsurance - U.S.A.

 Nuclear Incident Exclusion Clause - Physical Damage - Reinsurance - CANADA

<PAGE>

                  PROPERTY CATASTROPHE OVERLYING EXCESS OF LOSS
                  ---------------------------------------------
                              REINSURANCE CONTRACT
                              --------------------

                                     BETWEEN

                    STATE AUTOMOBILE MUTUAL INSURANCE COMPANY
                            MILBANK INSURANCE COMPANY
                      STATE AUTO NATIONAL INSURANCE COMPANY
                    STATE AUTO INSURANCE COMPANY OF WISCONSIN
                       FARMERS CASUALTY INSURANCE COMPANY
                          MID-PLAINS INSURANCE COMPANY
                      STATE AUTO INSURANCE COMPANY OF OHIO
                       MERIDIAN SECURITY INSURANCE COMPANY
                   MERIDIAN CITIZENS MUTUAL INSURANCE COMPANY
                  MERIDIAN CITIZENS SECURITY INSURANCE COMPANY
                      STATE AUTO FLORIDA INSURANCE COMPANY
             (HEREINAFTER COLLECTIVELY REFERRED TO AS THE "COMPANY")

                                       AND

               STATE AUTO PROPERTY AND CASUALTY INSURANCE COMPANY
            (HEREINAFTER REFERRED TO AS THE SUBSCRIBING "REINSURER")

                                    ARTICLE I
                                    ---------

BUSINESS COVERED:
-----------------
         The Reinsurer shall indemnify the Company for the net excess liability
         as hereinafter provided and specified, which may accrue to the Company
         as a result of any loss or losses which may occur during the currency
         of the Contract under any and all policies, contracts, binders and
         other evidence of insurance and reinsurance, oral or written
         (hereinafter referred to as "Policies") heretofore or hereafter issued
         or entered into by or on behalf of the Company and classified by the
         Company as Fire, Allied Lines, Homeowners (property coverages),
         Farmowners (property coverages), Commercial Multiple Peril policies
         (property coverages), Ocean Marine, Inland Marine and Automobile
         Physical Damage.

                                   ARTICLE II
                                   ----------

EXCLUSIONS:
-----------

         The following shall be excluded from the scope of this Contract:

         1.       Business written and classified by the Company as:

                  a)       Aviation Insurance;
                  b)       Casualty Insurance (i.e. Accident, Health, Third
                           Party Liability, Workers Compensation and Employers
                           Liability, Fidelity, Plate Glass and Burglary and
                           Theft when written as such);
                  c)       Credit Insurance;
                  d)       Financial Guarantee Insurance;

                                       1
<PAGE>

                  e)       Insolvency Insurance;
                  f)       Life Insurance;
                  g)       Mortgage Impairment Insurance;
                  h)       Title Insurance;
                  i)       Surety;
                  j)       Flood Insurance when written as such;
                  k)       Earthquake Insurance when written as such;
                  l)       Difference in Conditions Insurance;
                  m)       Ocean Marine Insurance when written as such, except
                           yachts;
                  n)       Boiler and Machinery;
                  o)       Multiple Peril policies other than the Property
                           coverages as included in the Business Covered
                           Section, hereof;
                  p)       Reinsurance, but not to exclude so-called agency
                           reinsurance, reinsurance of an individual risk or
                           policy, or any intercompany pooling arrangements.

         2.       Wind and Hail on growing and standing crops.

         3.       Manufacture, processing, storage, filling or breaking down of
                  explosives.

         4.       Oil and petrochemical refineries and pipelines and oil or gas
                  drilling rigs.

         5.       Excess of Loss insurance or reinsurance where the deductible
                  exceeds $100,000.

         6.       Bridges and Tunnels where the Total Insured Value over all
                  interests exceeds $300,000,000.

         7.       Extra Contractual Obligations and Losses in Excess of Policy
                  Limits as per the following definitions:

                  a)       Extra contractual obligations, which shall mean any
                           punitive, exemplary, compensatory or consequential
                           damages, other than loss in excess of policy limits,
                           paid or payable by the Company as a result of an
                           action against it by its insured, its insured's
                           assignee or a third party claimant, which action
                           alleges negligence, fraud or bad faith on the part of
                           the Company in handling a claim under a Policy
                           subject to this Contract.

                  b)       Loss in excess of policy limits, which shall mean an
                           amount that the Company would have been contractually
                           liable to pay had it not been for the limit of the
                           original Policy as a result of an action against it
                           by its insured or its insured's assignee. Such loss
                           in excess of the limit shall have been incurred
                           because of failure by the Company to settle within
                           the Policy limit, or by reason of alleged or actual
                           negligence, fraud, or bad faith in rejecting an offer
                           of settlement or in the preparation of the defense or
                           in the trial of any action against its insured or in
                           the preparation or prosecution of an appeal
                           consequent upon such action.

         8.       Loss/or Damage/or Costs/or Expenses arising from seepage
                  and/or Pollution and/or Contamination, other than
                  Contamination from Smoke Damage. Nevertheless, this exclusion
                  does not preclude payment of the cost of removal of debris of
                  property damaged by a loss otherwise covered hereunder, but
                  subject always to a limit of 25% of the Company's property
                  loss under the original Policy.

                                       2
<PAGE>

         9.       Loss in respect of overhead transmission and distribution
                  lines and their supporting structure other than those on or
                  within 150 meters (or 500 feet) of the insured premises. It is
                  understood and agreed that public utilities extension and/or
                  suppliers extension and/or contingent business interruption
                  coverages are not subject to this exclusion, provided that
                  these are not part of a transmitters' or distributors' Policy.

         10.      Liability of the Company arising by contract, operation of
                  law, or otherwise, from its participation or membership,
                  whether voluntary or involuntary, in any insolvency fund.
                  "Insolvency Fund" includes any guaranty fund, insolvency fund,
                  plan, pool, association, fund or other arrangement, howsoever
                  denominated, established or governed, which provides for any
                  assessment of or payment or assumption by the Company of part
                  or all of any claim, debt, charge, fee, or other obligation of
                  an insurer, or its successors or assigns, which has been
                  declared by any competent authority to be insolvent, or which
                  is otherwise deemed unable to meet any claim, debt, charge,
                  fee or other obligation in whole or in part.

         11.      War Risk as per the "War Exclusion Clause" attached hereto.

         12.      Pools, Associations and Syndicates as per the "Pools,
                  Associations & Syndicates Exclusion Clause" attached hereto.

         13.      Nuclear Incident as per the "Nuclear Incident Exclusion Clause
                  - Physical Damage - Reinsurance - U.S.A." (NMA 1119) attached
                  hereto.

         14.      Nuclear Incident as per the "Nuclear Incident Exclusion Clause
                  - Physical Damage - Reinsurance - CANADA" (NMA 1980a) attached
                  hereto.

         15.      Loss, damage, costs, and/or expenses resulting from: i) the
                  release or dispersion of or contamination from harmful
                  micro-organisms or other biological contagion; ii) the release
                  or dispersion of or contamination from harmful chemical agents
                  or contaminants; iii) the use of any nuclear device or release
                  or dispersion of radioactive contamination.

         16.      Loss, damage, costs, and/or expenses resulting from an act of
                  terrorism.

                                   ARTICLE III
                                   -----------

TERM:
-----

         The term of this Contract shall be from 12:01 A.M., Eastern Time, July
         1, 2003 to 12:01 A.M., Eastern Time, July 1, 2004.

         If the liability of the Reinsurer under this Contract terminates while
         a loss occurrence giving rise to a claim hereunder is in progress, then
         the Reinsurer shall be liable as if the whole loss occurrence had
         occurred during the term of this Contract, provided that no part of
         that loss occurrence is claimed against any renewal or replacement of
         this Contract.

                                   ARTICLE IV
                                   ----------

TERRITORY:
----------

         This Contract shall cover wherever the Company's Policies cover.

                                       3
<PAGE>

                                    ARTICLE V
                                    ---------

AMOUNT OF LIMIT AND RETENTION:
------------------------------

         No claim shall be made hereunder unless and until the Company, on a
         pooled basis where applicable, shall have first sustained an Ultimate
         Net Loss (as defined below) in excess of $120,000,000, regardless of
         the number of Policies under which such loss is payable or the number
         of interests insured. The Reinsurer shall then be liable for the amount
         of Ultimate Net Loss for the Company in excess of $120,000,000 per
         occurrence, but the sum recoverable from the Reinsurer in respect of
         each such loss occurrence shall not exceed the Cat Cover Cap (as
         defined below), nor more than the Cat Cover Cap, in respect of all loss
         occurrences during the term of this contract. The Cat Cover Cap is such
         amount as is available to the Reinsurer from State Auto Financial
         Corporation ("STFC"), the Reinsurer's immediate parent, following
         STFC's sale of its class A Preferred Stock to SAF Funding Corporation
         ("SAF"), an independent special purpose Delaware corporation, pursuant
         to the terms of a Standby Purchase Agreement between STFC and SAF dated
         November 16, 2001 and any amendments thereto or replacements thereof,
         which is part of a structured contingent financing arrangement effected
         through: x) the then current Credit Agreement between SAF and one or
         more financial institutions (the "Lenders"); y) the aforesaid Standby
         Purchase Agreement; and z) the then current Put Agreement among STFC,
         State Automobile Mutual Insurance Company, and the Lenders (it being
         understood and agreed that as of the date hereof the Cat Cover Cap
         shall not exceed $100,000,000).

         The applicability of coverage under this contract is subject to at
         least two risks being involved in the same loss occurrence.

                                   ARTICLE VI
                                   ----------

ULTIMATE NET LOSS:
------------------

         The term "ultimate net loss" shall mean the amount that the Company
         pays as insured losses. Ultimate net loss also includes, but is not
         limited to, all expenses incurred by the Company in connection with the
         settlement of losses or resistance to or negotiations concerning a
         loss, including salaries and expenses of employees of the Company while
         diverted from their normal duties to the service of field adjustment
         but shall not include any office expenses of the Company. However,
         nothing in this Article shall be construed to prevent the Company from
         including all such amounts defined as ultimate net loss attributable to
         the Group (as defined below), on a pooled basis where applicable, for
         the first $120,000,000 of ultimate net loss. The Group shall mean,
         collectively, the Company and State Auto Property and Casualty
         Insurance Company.

         Subject to Article VIII, all salvages and recoveries and payments (net
         of the cost of obtaining any salvage, recovery or payment), whether
         recovered or received prior or subsequent to loss settlement under this
         Contract, including amounts recoverable under other reinsurance,
         whether collected or not, shall be applied as if recovered or received
         prior to the aforesaid settlement and shall be deducted from the actual
         loss incurred to arrive at the amount of ultimate net loss. Nothing in
         this Article shall be construed to mean losses are not recoverable
         until the ultimate net loss to the Company has been ascertained.

                                       4
<PAGE>

                                   ARTICLE VII
                                   -----------

NET RETAINED LINES:
-------------------

         This Contract applies to only that portion of any policy which the
         Company and the other members of the Group, on a pooled basis where
         applicable, retains net for its own account.

         The amount of the Reinsurer's liability hereunder in respect of any
         loss shall not be increased by reason of the inability of the Company
         to collect from any other reinsurer, whether specific or general, any
         amounts which may have become due whether such inability arises from
         the insolvency of such other reinsurer or otherwise.

                                  ARTICLE VIII
                                  ------------

UNDERLYING EXCESS:
------------------

         The Company has in force underlying catastrophe excess of loss
         reinsurance and recoveries thereunder shall be disregarded for all
         purposes of this Contract and shall inure to the sole benefit of the
         Company.

                                   ARTICLE IX

DEFINITION OF LOSS OCCURRENCE:
------------------------------

         The term "loss occurrence" shall mean the sum of all individual losses
         directly occasioned by any one disaster, accident or loss or series of
         disasters, accidents or losses arising out of one event which occurs
         within the area of one state of the United States or province of Canada
         and states or provinces contiguous thereto and to one another. However,
         the duration and extent of any one "loss occurrence" shall be limited
         to all individual losses sustained by the Company occurring during any
         period of one hundred sixty-eight (168) consecutive hours arising out
         of and directly occasioned by the same event except that the term "loss
         occurrence" shall be further defined as follows:

                  A.       As regards windstorm, hail, tornado, hurricane,
                           cyclone, including ensuing collapse and water damage,
                           all individual losses sustained by the Company
                           occurring during any period of seventy-two (72)
                           consecutive hours arising out of and directly
                           occasioned by the same event. However, the event need
                           not be limited to one state or province or states or
                           provinces contiguous thereto.

                  B.       As regards riot, riot attending a strike, civil
                           commotion, vandalism and malicious mischief, all
                           individual losses sustained by the Company occurring
                           during any period of seventy-two (72) consecutive
                           hours within the area of one municipality or county
                           and the municipalities or counties contiguous thereto
                           arising out of and directly occasioned by the same
                           event. The maximum duration of seventy-two (72)
                           consecutive hours may be extended in respect of
                           individual losses which occur beyond such seventy-two
                           (72) consecutive hours during the continued
                           occupation of an insured's premises by strikers,
                           provided such occupation commenced during the
                           aforesaid period.

                                       5
<PAGE>

                  C.       As regards earthquake (the epicentre of which need
                           not necessarily be within the territorial confines
                           referred to in the opening paragraph of this Article)
                           and fire following directly occasioned by the
                           earthquake, only those individual fire losses which
                           commence during the period of one hundred and
                           sixty-eight (168) consecutive hours may be included
                           in the Company's "loss occurrence."

                  D.       As regards "freeze", only individual losses directly
                           occasioned by collapse, breakage of glass and water
                           damage (caused by bursting of frozen pipes and tanks)
                           may be included in the Company's "loss occurrence."

                  For all "loss occurrences" except as referred to under
                  sub-paragraph B, the Company may choose the date and time when
                  any such period of consecutive hours commences, provided that
                  it is not earlier than the date and time of the occurrence of
                  the first recorded individual loss sustained by the Company
                  arising out of that disaster, accident, or loss and provided
                  that only one such period of one hundred and sixty-eight (168)
                  consecutive hours shall apply with respect to one event,
                  except for those "loss occurrences" referred to in
                  sub-paragraph A above, where only one such period of
                  seventy-two (72) consecutive hours shall apply with respect to
                  one event, regardless of the duration of the event.

                  As respect those "loss occurrences" referred to in
                  sub-paragraph B above, if the disaster, accident or loss
                  occasioned by the event is of greater duration than
                  seventy-two (72) consecutive hours, then the Company may
                  divide that disaster, accident or loss into two or more "loss
                  occurrences" provided no two periods overlap and no individual
                  loss is included in more than one such period and provided
                  that no period commences earlier than the date and time of the
                  occurrence of the first recorded individual loss sustained by
                  the Company arising out of that disaster, accident or loss.

                  No individual losses occasioned by an event that would be
                  covered by seventy-two (72) hours clauses may be included in
                  any "loss occurrence" claimed under the one hundred and
                  sixty-eight (168) hours provision.

                                    ARTICLE X
                                    ---------

NOTICE OF LOSS AND LOSS SETTLEMENT:
-----------------------------------

         The Company shall adjust, settle, or compromise all claims and losses
         hereunder.

         All loss settlements by the Company which comply with the terms hereof
         shall be unconditionally binding upon the Reinsurer.

         The Company shall advise the Reinsurer promptly of all claims and any
         subsequent developments pertaining thereto, which may, in the Company's
         opinion, develop into losses involving Reinsurance hereunder.
         Inadvertent omission or oversight in dispatching such advices shall in
         no way affect the liability of the Reinsurer under this Contract
         provided the Company informs the Reinsurer of such omission or
         oversight promptly upon its discovery.

         The Reinsurer shall tender all loss payments as soon as practicable
         after receipt of any proof of loss.

                                       6
<PAGE>

                                   ARTICLE XI
                                   ----------

PREMIUM:
--------

         The premium to be paid to the Reinsurer shall be $3,450,000, payable in
         four equal quarterly installments. Each company shall pay a percentage
         of the premium based on its share of written premiums of the subject
         lines of business as estimated in Exhibit A.

                                   ARTICLE XII
                                   -----------

CURRENCY:
---------

         All retentions, limits and premiums referenced in this Contract are
         expressed in United States Dollars and all payments made by either
         party shall be made in United States Dollars.

         Amounts paid or received by the Company in any other currency shall be
         converted to United States Dollars at the rate of exchange at the date
         such transaction is entered on the books of the Company.

                                  ARTICLE XIII
                                  ------------

OFFSET:
-------

         The Company and the Reinsurer, each at its option, may offset any
         balance or balances, whether on account of premiums, claims and losses,
         loss expenses or salvages due from one party to the other under this
         Contract; provided, however, that in the event of the insolvency of a
         party hereto, offsets shall only be allowed in accordance with
         applicable statutes and regulations.

                                   ARTICLE XIV
                                   -----------

ACCESS TO RECORDS:
------------------

         The Company shall place at the disposal of the Reinsurer at all
         reasonable times, and the Reinsurer shall have the right to inspect
         through its designated representatives, during the term of this
         Contract and thereafter, all books, records and papers of the Company
         in connection with any reinsurance hereunder, or the subject matter
         hereof.

                                   ARTICLE XV
                                   ----------

ERRORS AND OMISSIONS:
---------------------

         Any inadvertent delay, omission or error shall not be held to relieve
         either party hereto from any liability which would attach to either
         party if such delay, omission or error had not been made, provided such
         delay, omission or error is rectified as soon as practicable after
         discovery.

                                       7
<PAGE>

                                   ARTICLE XVI
                                   -----------

TAXES:
------

         In consideration of the terms under which this Contract is issued, the
         Company undertakes not to claim any deduction of the premium hereon
         when making Canadian tax returns, or when making tax returns, other
         than income or profits tax returns, to any state or territory of the
         United States of America or to the District of Columbia.

                                  ARTICLE XVII
                                  ------------

INSOLVENCY:
-----------

         The reinsurance under this Contract shall be payable by the Reinsurer
         on the basis of the liability of one or more of the Companies under the
         Policy or Policies reinsured without diminution because of the
         insolvency of one or more of the Companies reinsured or because the
         liquidator, receiver, conservator or statutory successor of the
         Company(ies) has failed to pay all or a portion of any claim.

         In the event of the insolvency of one or more of the Companies
         reinsured, the liquidator, receiver, conservator or statutory successor
         of the Company(ies) shall give written notice to the Reinsurer of the
         pendency of a claim against the insolvent Company(ies) on the Policy or
         Policies reinsured within a reasonable time after such claim is filed
         in the insolvency proceeding and during the pendency of such claim the
         Reinsurer may investigate such claim and interpose, at its own expense,
         in the proceeding where such claim is to be adjudicated any defense or
         defenses which it may deem available to the Company(ies) or its
         liquidator, receiver, conservator or statutory successor. The expense
         thus incurred by the Reinsurer shall be chargeable subject to court
         approval against the insolvent Company(ies) as part of the expense of
         liquidation to the extent of a proportionate share of the benefit which
         may accrue to the Company(ies) solely as a result of the defense
         undertaken by the Reinsurer.

         Where two or more Reinsurers are involved in the same claim and a
         majority in interest elect to interpose defense to such claim, the
         expense shall be apportioned in accordance with the terms of this
         Contract as though such expense had been incurred by the Company(ies).

         In the event of the insolvency of one or more of the Companies
         reinsured, the reinsurance under this Contract shall be payable by the
         Reinsurer directly to the Company(ies) or to the liquidator, receiver,
         conservator or statutory successor, except as provided by subsection
         (A) of section 4118 of the Insurance Law of New York or except where
         (I) the Contract specifies another payee of such Reinsurance in the
         event of the insolvency of the Company(ies) and (II) the Reinsurer with
         the consent of the direct insureds and, with the prior approval of the
         Superintendent of Insurance of New York to the certificate of
         assumption issued to New York direct insureds, has assumed such policy
         obligations of the Company(ies) as its direct obligations to the payees
         under such policies, in substitution for the obligations of the
         Company(ies) to such payees.

                                       8
<PAGE>
                                  ARTICLE XVIII
                                  -------------

ARBITRATION:
------------

         If any dispute shall arise between the parties to this Contract, either
         before or after its termination, with reference to the interpretation
         of this Contract or the rights of either party with respect to any
         transactions under this Contract, including the formation or validity
         thereof, the dispute shall be referred to three (3) arbitrators as a
         condition precedent to any right of action arising under this Contract.
         The arbitrators shall be active or retired disinterested officers of
         insurance or reinsurance companies or Lloyd's Underwriters other than
         the parties or their affiliates. One arbitrator shall be chosen by each
         party and the third by the two so chosen. If either party refuses or
         neglects to appoint an arbitrator within thirty (30) days after the
         receipt of written notice from the other party requesting it to do so,
         the requesting party may nominate two (2) arbitrators who shall choose
         the third.

         In the event the arbitrators do not agree on the selection of the third
         arbitrator within thirty (30) days after both arbitrators have been
         named, the Company shall petition the American Arbitration Association
         to appoint the third arbitrator. If the American Arbitration
         Association fails to appoint the third arbitrator within thirty (30)
         days after it has been requested to do so, either party may request a
         justice of a court of general jurisdiction of the state in which the
         arbitration is to be held, to appoint an officer or retired officer of
         an insurance or reinsurance company or Lloyd's Underwriter as the third
         arbitrator. In the event both parties request the appointment of the
         third arbitrator, the third arbitrator shall be the soonest named in
         writing by the justice of the court.

          Each party shall submit its case to the arbitrators within thirty (30)
         days of the appointment of the arbitrators. The arbitrators shall
         consider this Contract an honorable engagement rather than merely a
         legal obligation; they are relieved of all judicial formalities and may
         abstain from following the strict rules of law. The decision of a
         majority of the arbitrators shall be final and binding on both the
         Company and the Reinsurer. Judgment may be entered upon the award of
         the arbitrators in any court having jurisdiction.

         Each party shall bear the fee and expenses of its own arbitrator, one
         half of the fee and the expenses of the third arbitrator and one half
         of the other expenses of the arbitration. In the event both arbitrators
         are chosen by one party, the fees of the arbitrators shall be equally
         divided between the parties.

         Any such arbitration shall take place in Columbus, Ohio unless some
         other location is mutually agreed upon by the parties.

                                       9
<PAGE>

                                    EXHIBIT A

                    State Automobile Mutual Insurance Company
                            Milbank Insurance Company
                      State Auto National Insurance Company
                    State Auto Insurance Company of Wisconsin
                       Farmers Casualty Insurance Company
                          Mid-Plains Insurance Company
                      State Auto Insurance Company of Ohio
                       Meridian Security Insurance Company
                   Meridian Citizens Mutual Insurance Company
                  Meridian Citizens Security Insurance Company
                      State Auto Florida Insurance Company

       PROPERTY CATASTROPHE OVERLYING EXCESS OF LOSS REINSURANCE CONTRACT

                                 FOR THE PERIOD
                     12:01 A.M., EASTERN TIME, JULY 1, 2003
                                     THROUGH
                     12:01 A.M., EASTERN TIME, JULY 1, 2004

                               PREMIUM CALCULATION

         Subject Premium - July 1, 2002 through June 30, 2003

<TABLE>
<CAPTION>

             Annual                                                       SAIC of                                   SAIC of
         Statement Line     Mutual         Milbank         National      Wisconsin      Farmers     Mid-Plains        Ohio
         -------------- --------------  -------------   -------------   ------------  ------------  ----------   -------------
<S>                       <C>             <C>             <C>             <C>           <C>           <C>           <C>
           1.0  @  100%    26,798,889        902,562               0        162,003       282,163           0         844,939
           2.1  @  100%    16,502,966        631,274               0         97,328       204,073           0         489,271
           3.0  @   65%             0      3,187,031               0              0             0           0               0
           4.0  @   65%    49,119,117      9,256,044               0      4,090,031     1,633,235           0         475,847
           5.0  @   50%    23,902,711      1,160,344               0              0       187,450           0               0
           8.0  @   90%       667,516          1,794               0          6,104            89           0         236,208
           9.0  @  100%    14,078,570      1,173,158               0        463,151       122,350           0          71,506
          12.0  @  100%     1,832,990          5,660               0          1,795         7,937           0          15,175
          21.1  @   50%    40,333,419      8,818,353      13,050,806      4,981,975     5,960,947     375,418         505,039
          21.2  @   50%    10,610,444        307,199               0              0        59,053           0               0
                        --------------  -------------   -------------   ------------  ------------  ----------   -------------
                          183,846,621     25,443,418      13,050,806      9,802,386     8,457,296     375,418       2,637,986

Percent of Total              69.3995%        9.6045%         4.9265%        3.7003%       3.1925%     0.1417%         0.9958%

Est. Annual Premium         2,394,284        331,356         169,964        127,660       110,140       4,888          34,356

Est. Quarterly Installment    598,571         82,839          42,491         31,915        27,535       1,222           8,589

<CAPTION>

             Annual       Meridian       Citizens     Citizens   State Auto
         Statement Line   Security        Mutual      Security    Florida          Total
         -------------- -------------  ------------  ----------  ----------   --------------
<S>                       <C>            <C>                 <C>         <C>    <C>
           1.0  @  100%    1,231,732             0           0           0       30,222,288
           2.1  @  100%      613,814             0           0           0       18,538,726
           3.0  @   65%    7,440,540     2,221,442           0           0       12,849,013
           4.0  @   65%    3,870,931             0           0           0       68,445,206
           5.0  @   50%      985,449             0           0           0       26,235,953
           8.0  @   90%       11,835             0           0           0          923,546
           9.0  @  100%      754,453        72,836           0           0       16,736,023
          12.0  @  100%       60,883        68,438           0           0        1,992,877
          21.1  @   50%    3,408,946        49,627           0           0       77,484,528
          21.2  @   50%      505,899             0           0           0       11,482,594
                        -------------  ------------  ----------  ----------   --------------
                          18,884,482     2,412,343           0           0      264,910,755

Percent of Total              7.1286%       0.9106%     0.0000%     0.0000%        100.0000%

Est. Annual Premium          245,936        31,416           0           0        3,450,000

Est. Quarterly Installme      61,484         7,854           0           0          862,500
</TABLE>

<PAGE>

                              WAR EXCLUSION CLAUSE
                              --------------------

As regards interests which at time of loss or damage are on shore, no liability
shall attach hereto in respect of any loss or damage which is occasioned by war,
invasion, hostilities, acts of foreign enemies, civil war, rebellion,
insurrection, military or usurped power, or martial law or confiscation by order
of any government or public authority.

This War Exclusion Clause shall not, however, apply to interests which at time
of loss or damage are within the territorial limits of the United States of
America (comprising the fifty States of the Union and the District of Columbia,
its territories and possessions, including the Commonwealth of Puerto Rico and
including Bridges between the United States of America and Mexico provided they
are under United States ownership), Canada, St. Pierre and Miquelon, provided
such interests are insured under policies, endorsements or binders containing a
standard war or hostilities or warlike operations exclusion clause.

Nevertheless, this Clause shall not be construed to apply to loss or damage
occasioned by riots, strikes, civil commotion, vandalism, and malicious damage.

<PAGE>
                POOLS, ASSOCIATIONS & SYNDICATES EXCLUSION CLAUSE
                -------------------------------------------------

SECTION A:
----------

EXCLUDING:
----------

         (a)      All Business derived directly or indirectly from any Pool,
                  Association or Syndicate which maintains its own reinsurance
                  facilities.

         (b)      Any Pool or Scheme (whether voluntary or mandatory) formed
                  after March 1, l968 for the purpose of insuring Property
                  whether on a country-wide basis or in respect of designated
                  areas. This exclusion shall not apply to so-called Automobile
                  Insurance Plans or other Pools formed to provide coverage for
                  Automobile Physical Damage.

SECTION B:
----------

It is agreed that business written by the Company for the same perils, which is
known at the time to be insured by, or in excess of underlying amounts placed in
the following Pools, Associations, or Syndicates, whether by way of insurance or
reinsurance, is excluded hereunder:

         Industrial Risk Insurers,
         Associated Factory Mutuals,
         Improved Risk Mutuals,
         Any Pool, Association or Syndicate formed for the purpose of
             writing Oil, Gas or Petro-Chemical Plants and/or Oil or Gas
             Drilling Rigs,
         United States Aircraft Insurance Group, Canadian Aircraft Insurance
         Group, Associated Aviation Underwriters, American Aviation
         Underwriters.

SECTION B does not apply:

         (a)      Where the Total Insured Value over all interests of the risk
                  in question is less than $300,000,000.

         (b)      To interests traditionally underwritten as Inland Marine or
                  Stock and/or Contents written on a Blanket basis.

         (c)      To Contingent Business Interruption, except when the Company
                  is aware that the key location is known at the time to be
                  insured in any Pool, Association or Syndicate named above,
                  other than as provided for under Section B (a).

         (d)      To risks as follows:

                  Offices, Hotels, Apartments, Hospitals, Educational
                  Establishments, Public Utilities (other than Railroad
                  Schedules) and Builder's Risks on the classes of risks
                  specified in this subsection (d) only.

                                   Page 1 of 3

<PAGE>

WHERE THIS CLAUSE ATTACHES TO CATASTROPHE EXCESSES, THE FOLLOWING SECTION C IS
ADDED:

SECTION C:
----------

NEVERTHELESS the Reinsurer specifically agrees that liability accruing to the
Company from its participation in residual market mechanisms including but not
limited to:

         (l)      The following so-called "Coastal Pools":

                  ALABAMA INSURANCE UNDERWRITING ASSOCIATION
                  FLORIDA WINDSTORM UNDERWRITING ASSOCIATION ("FWUA")
                  LOUISIANA INSURANCE UNDERWRITING ASSOCIATION
                  MISSISSIPPI WINDSTORM UNDERWRITING ASSOCIATION
                  NORTH CAROLINA INSURANCE UNDERWRITING ASSOCIATION
                  SOUTH CAROLINA WINDSTORM AND HAIL UNDERWRITING ASSOCIATION
                  TEXAS WINDSTORM INSURANCE ASSOCIATION

                                       AND

         (2)      All "FAIR Plan" and "Rural Risk Plan" business

                                       AND

                  The Florida Property and Casualty Joint Underwriting
                  Association ("FPCJUA"), the Florida Residential Property and
                  Casualty Joint Underwriting Association ("RPCJUA") and the
                  California Earthquake Authority ("CEA")

for all perils otherwise protected hereunder shall not be excluded, except,
however, that this reinsurance does not include any increase in such liability
resulting from:

         (i)      The inability of any other participant in such "Coastal Pool"
                  and/or "FAIR Plan" and/or "Rural Risk Plan" and/or Residual
                  Market Mechanisms to meet its liability.

         (ii)     Any claim against such "Coastal Pool" and/or "FAIR Plan"
                  and/or "Rural Risk Plan" and/or Residual Market Mechanisms, or
                  any participant therein, including the Company, whether by way
                  of subrogation or otherwise, brought by or on behalf of any
                  Insolvency Fund (as defined in the Insolvency Fund Exclusion
                  Clause incorporated in this Contract).

SECTION D:
---------

         (1)      Notwithstanding Section C above, in respect of the CEA, where
                  an assessment is made against the Company by the CEA, the
                  Company may include in the Ultimate Net Loss only that
                  assessment directly attributable to each separate loss
                  occurrence covered hereunder. The Company's initial capital
                  contribution to the CEA shall not be included in the Ultimate
                  Net Loss.

         (2)      Notwithstanding Section C above, in respect of the FWUA,
                  FPCJUA and RPCJUA, where an assessment is made against the
                  Company by the FWUA, the FPCJUA, the RPCJUA, or any
                  combination thereof, the maximum loss that the Company may
                  include in the Ultimate Net Loss in respect of any loss
                  occurrence hereunder shall not exceed the lesser of:

                  a)       The Company's assessment from the relevant entity
                           (FWUA, FPCJUA and/or RPCJUA) for the accounting year
                           in which the loss occurrence commenced, or

                                   Page 2 of 3
<PAGE>

                  b)       The product of the following:

                           (i)      The Company's percentage participation in
                                    the relevant entity for the accounting year
                                    in which the loss occurrence commenced; and

                           (ii)     The relevant entity's total losses in such
                                    loss occurrence.

Any assessments for accounting years subsequent to that in which the loss
occurrence commenced may not be included in the Ultimate Net Loss hereunder.
Moreover, notwithstanding Section C above, in respect of the FWUA, the FPCJUA
and/or the RPCJUA, the Ultimate Net Loss hereunder shall not include any monies
expended to purchase or retire bonds as a consequence of being a member of the
FWUA, the FPCJUA and/or the RPCJUA. For the purposes of this Contract, the
Company may not include in the Ultimate Net Loss any assessment or any
percentage assessment levied by the FWUA, the FPCJUA and/or the RPCJUA to meet
the obligations of an insolvent insurer member or other party, or to meet any
obligations arising from the deferment by the FWUA, FPCJUA and/or RPCJUA of the
collection of monies.

                                   Page 3 of 3

<PAGE>

              NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE -
              -----------------------------------------------------
                              REINSURANCE - U.S.A.
                              --------------------

1)   This Agreement does not cover any loss or liability accruing to the
     Reinsured, directly or indirectly, and whether as Insurer or Reinsurer,
     from any Pool of Insurers or Reinsurers formed for the purpose of covering
     Atomic or Nuclear Energy risks.

2)   Without in any way restricting the operation of paragraph 1) of this
     Clause, this Agreement does not cover any loss or liability accruing to the
     Reinsured, directly or indirectly, and whether as Insurer or Reinsurer,
     from any insurance against Physical Damage (including business interruption
     or consequential loss arising out of such Physical Damage) to:

     I.   Nuclear reactor power plants including all auxiliary property on the
          site, or

     II.  Any other nuclear reactor installation, including laboratories
          handling radioactive materials in connection with reactor
          installations, and "critical facilities" as such, or

     III. Installations for fabricating complete fuel elements or for processing
          substantial quantities of "special nuclear material," and for
          reprocessing, salvaging, chemically separating, storing or disposing
          of "spent" nuclear fuel or waste materials, or

     IV.  Installations other than those listed in paragraph 2) III above using
          substantial quantities of radioactive isotopes or other products of
          nuclear fission.

3)   Without in any way restricting the operations of paragraphs 1) and 2)
     hereof, this Agreement does not cover any loss or liability by radioactive
     contamination accruing to the Reinsured, directly or indirectly, and
     whether as Insurer or Reinsurer, from any insurance on property which is on
     the same site as a nuclear reactor power plant or other nuclear
     installation and which normally would be insured therewith except that this
     paragraph 3) shall not operate:

     a)   where the Reinsured does not have knowledge of such nuclear reactor
          power plant or nuclear installation, or
     b)   where said insurance contains a provision excluding coverage for
          damage to property caused by or resulting from radioactive
          contamination, however caused. However, on and after 1st, January 1960
          this sub-paragraph b) shall only apply provided the said radioactive
          contamination exclusion provision has been approved by the
          Governmental Authority having jurisdiction thereof.

4)   Without in any way restricting the operations of paragraphs 1), 2) and 3)
     hereof, this Agreement does not cover any loss or liability by radioactive
     contamination accruing to the Reinsured, directly or indirectly, and
     whether as Insurer or Reinsurer, when such radioactive contamination is a
     named hazard specifically insured against.

5)   It is understood and agreed that this Clause shall not extend to risks
     using radioactive isotopes in any form where the nuclear exposure is not
     considered by the Reinsured to be the primary hazard.

6)   The term "special nuclear material" shall have the meaning given it in the
     Atomic Energy Act of 1954, or by any law amendatory thereof.

7)   Reinsured to be sole judge of what constitutes:

     a)   substantial quantities, and

     b)   the extent of installation, plant or site.

NOTE: Without in any way restricting the operation of paragraph 1) hereof, it is
understood and agreed that:

     a)   all policies issued by the Reinsured on or before 31st, December 1957,
          shall be free from the application of the other provision of this
          Clause until expiry date or 31st, December 1960, whichever first
          occurs whereupon all the provisions of this Clause shall apply,
     b)   with respect to any risk located in Canada policies issued by the
          Reinsured on or before 31st, December 1958, shall be free from the
          application of the other provisions of this Clause until expiry date
          or 31st, December 1960, whichever first occurs whereupon all the
          provisions of this Clause shall apply.

<PAGE>

              NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE -
              -----------------------------------------------------
                              REINSURANCE - CANADA
                              --------------------

1)   This Agreement does not cover any loss or liability accruing to the
     Reinsured, directly or indirectly, and whether as Insurer or Reinsurer,
     from any Pool of Insurers or Reinsurers formed for the purpose of covering
     Atomic or Nuclear Energy risks.

2)   Without in any way restricting the operation of paragraph 1) of this
     Clause, this Agreement does not cover any loss or liability accruing to the
     Reinsured, directly or indirectly, and whether as Insurer or Reinsurer,
     from any insurance against Physical Damage (including business interruption
     or consequential loss arising out of such Physical Damage) to:

     (a)  Nuclear reactor power plants including all auxiliary property on the
          site, or
     (b)  Any other nuclear reactor installation, including laboratories
          handling radioactive materials in connection with reactor
          installations, and critical facilities as such, or
     (c)  Installations for fabricating complete fuel elements or for processing
          substantial quantities of prescribed substances, and for reprocessing,
          salvaging, chemically separating, storing or disposing of spent
          nuclear fuel or waste materials, or
     (d)  Installations other than those listed in (c) above using substantial
          quantities of radioactive isotopes or other products of nuclear
          fission.

3)   Without in any way restricting the operations of paragraphs 1) and 2) of
     this Clause, this Agreement does not cover any loss or liability by
     radioactive contamination accruing to the Reinsured, directly or
     indirectly, and whether as Insurer or Reinsurer, from any insurance on
     property which is on the same site as a nuclear reactor power plant or
     other nuclear installation and which normally would be insured therewith,
     except that this paragraph 3) shall not operate:

     (a)  where the Reinsured does not have knowledge of such nuclear reactor
          power plant or nuclear installation, or
     (b)  where said insurance contains a provision excluding coverage for
          damage to property caused by or resulting from radioactive
          contamination, however caused.

4)   Without in any way restricting the operations of paragraphs 1), 2) and 3)
     of this Clause, this Agreement does not cover any loss or liability by
     radioactive contamination accruing to the Reinsured, directly or
     indirectly, and whether as Insurer or Reinsurer, when such radioactive
     contamination is a named hazard specifically insured against.

5)   This Clause shall not extend to risks using radioactive isotopes in any
     form where the nuclear exposure is not considered by the Reinsured to be
     the primary hazard.

6)   The term "radioactive material" means uranium, thorium, plutonium,
     neptunium, their derivatives and compounds, radioactive isotopes of other
     elements and any other substances which may be designated by or pursuant to
     any law, act or statute, or any law amendatory thereof as being prescribed
     substances capable of releasing atomic energy, or as being requisite for
     the production, use or application of atomic energy.

7)   Reinsured to be sole judge of what constitutes:

     a)   substantial quantities, and
     b)   the extent of installation, plant or site.

8)   Without in any way restricting the operation of paragraphs 1), 2), 3) and
     4) of this Clause, this Agreement does not cover any loss or liability
     accruing to the Reinsured, directly or indirectly, and whether as Insurer
     or Reinsurer caused:

     a)   by any nuclear incident as defined by The Nuclear Liability Act or any
          other nuclear liability act, law or statute, or any law amendatory
          thereof or nuclear explosion, except for ensuing loss or damage which
          results directly from fire, lightning or explosion of natural, coal or
          manufactured gas;

     b)   by contamination by radioactive material.

NOTE: Without in any way restricting the operation of paragraphs 1), 2), 3) and
4) of this Clause, paragraph 8) of this Clause shall only apply to all original
contracts of the Reinsured whether new, renewal or replacement which become
effective on or after December 31, 1992.

<PAGE>

                       INTERESTS AND LIABILITIES AGREEMENT
                       -----------------------------------

                                     BETWEEN

                    STATE AUTOMOBILE MUTUAL INSURANCE COMPANY
                            MILBANK INSURANCE COMPANY
                      STATE AUTO NATIONAL INSURANCE COMPANY
                    STATE AUTO INSURANCE COMPANY OF WISCONSIN
                       FARMERS CASUALTY INSURANCE COMPANY
                          MID-PLAINS INSURANCE COMPANY
                      STATE AUTO INSURANCE COMPANY OF OHIO
                       MERIDIAN SECURITY INSURANCE COMPANY
                   MERIDIAN CITIZENS MUTUAL INSURANCE COMPANY
                  MERIDIAN CITIZENS SECURITY INSURANCE COMPANY
                      STATE AUTO FLORIDA INSURANCE COMPANY

                                 (THE "COMPANY")

                                       AND

               STATE AUTO PROPERTY AND CASUALTY INSURANCE COMPANY

                          (THE SUBSCRIBING "REINSURER")

It is hereby mutually agreed by and between the Company on the one part, and the
Subscribing Reinsurer on the other part that effective July 1, 2003, the
Subscribing Reinsurer's share of the Interests and Liabilities of the PROPERTY
CATASTROPHE OVERLYING EXCESS OF LOSS REINSURANCE CONTRACT attached hereto and
forming part of this Agreement, shall be for ONE HUNDRED PERCENT (100%).

IN WITNESS WHEREOF, the parties hereto by their authorized representative have
executed this Agreement as of the date specified below:

Signed in Columbus, Ohio this 13th day of November, 2003.

         STATE AUTO PROPERTY AND CASUALTY INSURANCE COMPANY

         By  /s/ John R. Lowther
            --------------------------------------------------------
         Title Senior Vice President, Secretary and General Counsel
               ----------------------------------------------------

                                   Page 1 of 2

<PAGE>

Signed in Columbus, Ohio this 13th day of November, 2003.

         STATE AUTOMOBILE MUTUAL INSURANCE COMPANY
         MILBANK INSURANCE COMPANY
         STATE AUTO NATIONAL INSURANCE COMPANY
         STATE AUTO INSURANCE COMPANY OF WISCONSIN
         FARMERS CASUALTY INSURANCE COMPANY
         MID-PLAINS INSURANCE COMPANY
         STATE AUTO INSURANCE COMPANY OF OHIO
         MERIDIAN SECURITY INSURANCE COMPANY
         MERIDIAN CITIZENS MUTUAL INSURANCE
         COMPANY MERIDIAN CITIZENS SECURITY INSURANCE COMPANY
         STATE AUTO FLORIDA INSURANCE COMPANY

         By  /s/ John R. Lowther
            ----------------------------------------------
         Title Senior Vice President and General Counsel
               ----------------------------------------------------

                                   Page 2 of 2<PAGE>

                                                                   EXHIBIT 10(e)

                         EXECUTIVE EMPLOYMENT AGREEMENT

         THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement"), effective as of
January 1, 2004 by and between REGENT COMMUNICATIONS, INC., a Delaware
corporation (the "Company"), and TERRY S. JACOBS ("Employee").

                                    RECITALS

         WHEREAS, the Company is engaged in the business, either directly or
through affiliates, of owning and operating radio broadcasting stations (the
"Business"), with principal offices in Covington, Kentucky. For purposes of this
Agreement, the term "Company" shall include the Company, its subsidiaries,
affiliates, and assignees and any successors in interest of the Company and its
subsidiaries and/or affiliates.

         WHEREAS, Employee has been actively engaged in the radio broadcasting
business since 1979 and has extensive knowledge and a unique understanding of
the operation of the Business.

         WHEREAS, the Company desires to employ Employee, and Employee desires
to be employed by the Company, as Chairman and Chief Executive Officer of the
Company.

         NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:

         1.       EMPLOYMENT.

                  1.1      ENGAGEMENT OF EMPLOYEE. The Company agrees to employ
Employee and Employee agrees to accept employment as the Chairman and Chief
Executive Officer of the Company, all in accordance with the terms and
conditions of this Agreement.

                  1.2      DUTIES AND POWERS.

                           (a)      During the Employment Period, Employee will
serve as the Company's Chairman and Chief Executive Officer, and will have such
responsibilities, duties and authority as customarily held by executives in such
a position in comparable companies, and will render services of an executive and
administrative character, and act in such other executive capacity for the
Company, as the Company's board of directors (the "Board") shall from time to
time direct. Employee shall devote his reasonable best efforts, energies and
abilities to the business and affairs of the Company. Employee shall perform the
duties and carry out the responsibilities assigned to him, to the best of his
ability, in a diligent, trustworthy and businesslike manner for the purpose of
advancing the business of the Company and in a manner he reasonably believes to
be in and not opposed to the best interests of the Company.

                           (b)      Employee acknowledges that his duties and
responsibilities will require his concentrated business efforts and agrees that
during the Employment Period he will not engage directly or indirectly in any
other business activity or have any business pursuits or interests

<PAGE>

which materially interfere or conflict with the performance of Employee's duties
hereunder or which compete directly with the Company; provided, however, nothing
in this Section 1.2 shall be deemed to prohibit Employee from investing in the
stock of any competing corporation listed on a national securities exchange or
traded in the over-the-counter market, but only if his associates (as such term
is defined in Regulation 14A promulgated under the Securities Exchange Act of
1934, as in effect on the date hereof), collectively, do not own more than an
aggregate of three percent of the stock of such corporation. Notwithstanding the
foregoing or anything else in this Agreement to the contrary, the parties agree
and acknowledge that Employee currently serves as a member of the board of
directors of Capital Title Group, Inc. and of American Financial Group and their
respective affiliates, and may continue to do so throughout the Employment
Period so long as such activities do not materially interfere with any of
Employee's other obligations to the Company hereunder. In addition, Employee may
serve on additional boards of directors during the Employment Period and
volunteer his service to charitable, business and other public service agencies,
clubs or organizations so long as such board or other service does not
materially interfere or conflict with the performance of Employee's duties
hereunder and so long as such activities are not rendered for a competitor of
the Company. Any and all fees or remuneration paid to Employee in consideration
of work and services performed outside the scope of Employee's employment
hereunder shall inure to the benefit of Employee.

                           (c)      The parties hereto agree that none of
Employee's duties hereunder shall require him to, and Employee agrees that he
will not without the consent of the Board, which consent shall not be
unreasonably withheld, change his personal residence from the Greater
Cincinnati, Ohio SMSA Area.

                  1.3      EMPLOYMENT PERIOD. Employee's employment under this
Agreement shall begin effective on January 1, 2004 and shall continue through
and until December 31, 2006 (the "Employment Period"). Notwithstanding anything
to the contrary contained herein, the Employment Period is subject to
termination pursuant to Section 1.4 and Section 1.5 below.

                  1.4      TERMINATION BY THE COMPANY. The Company has the right
to terminate Employee's employment under this Agreement, by notice to Employee
in writing at any time, (i) for "Cause," (ii) without Cause for any or no
reason, and (iii) due to the Disability of Employee. Any such termination shall
be effective upon the date of service of such notice pursuant to Section 15.
This Agreement shall terminate automatically upon Employee's death.

         "Cause" as used herein means the occurrence of any of the following
events:

                           (a)      the determination by the Board in the
exercise of its reasonable judgment that Employee has committed an act or acts
constituting (i) a crime involving moral turpitude, dishonesty or theft, (ii)
dishonesty or disloyalty with respect to the Company, or (iii) fraud;

                           (b)      the determination by the Board in the
exercise of its reasonable judgment that Employee has committed an act that
indicates alcohol or drug abuse by Employee that adversely affects his
performance hereunder;

                                       -2-

<PAGE>

                           (c)      a material breach by Employee of any of the
terms and conditions of Sections 3 or 4 of this Agreement; or

                           (d)      Employee's gross negligence, habitual
neglect, or intentional misconduct in the performance of his duties hereunder.

         Employee shall be deemed to have a "Disability" for purposes of this
Agreement if Employee shall be unable, by reason of illness or physical or
mental incapacity or disability (from any cause or causes whatsoever), to
perform Employee's essential job functions hereunder, whether with or without
reasonable accommodation by the Company, in substantially the manner and to the
extent required hereunder prior to the commencement of such Disability, for a
total period of 90 days in any 180-day period. In the event Employee shall be
under a Disability, the Company shall have the right to terminate Employee's
employment hereunder during the continuance of such Disability upon at least
thirty (30) days prior written notice to Employee. Such determination shall not
be arbitrary or unreasonable, and the Board shall take into consideration the
opinion of Employee's personal physician, if reasonably available, as well as
applicable provisions of the Americans with Disabilities Act, but such
determination by the Board, if not arbitrary or unreasonable, shall be final and
binding on the parties hereto.

                  1.5      TERMINATION BY EMPLOYEE. Employee has the right to
terminate his employment under this Agreement for any or no reason, upon ninety
(90) days prior written notice to the Company.

                  1.6      BOARD OF DIRECTORS AND RESIGNATION. Throughout the
Employment Period, the Company agrees to seek to cause Employee to be elected to
the Board. Unless by virtue of his beneficial ownership of voting stock of the
Company he has voting control over a number of shares sufficient to assure his
election to the Board, upon the termination of Employee's employment with the
Company for any reason, Employee shall be deemed to have automatically resigned
from any position he may then hold on the Board. Such resignation shall be
deemed effective immediately without the requirement that a written resignation
be delivered.

                  1.7      INDEMNITY. The Company shall indemnify Employee and
hold him harmless to the fullest extent permissible under applicable law for all
acts or decisions made by him in good faith while performing services for the
Company. The Company shall also use its best efforts to obtain coverage for him
under any insurance policy obtained during the term of this Agreement covering
the other officers and directors of the Company against lawsuits.

         2.       COMPENSATION AND BENEFITS.

                  2.1      BASE COMPENSATION. During the Employment Period, the
Company will pay Employee an annual base salary of $352,688 per annum (the "Base
Salary"), payable in accordance with the Company's regular payroll policy for
senior executive salaried employees. At least once every twelve (12) months, the
Board and/or the Board's Compensation Committee shall perform an annual review
of Employee's Base Salary based on Employee's performance of his duties and the
Company's other compensation policies and make such increase thereto as it deems
appropriate, provided that at each such twelve-month interval the Base Salary
shall be increased from its level during the prior twelve-month period at least
by a percentage no less than the percentage increase in

                                       -3-

<PAGE>

the Consumer Price Index - All Items during such prior twelve-month period. Upon
termination of the Employment Period, the Base Salary for any partial year will
be prorated based on the number of days elapsed in such year during which the
Employment Period had continued.

                  2.2      SENIOR MANAGEMENT PLAN BONUS. Within seventy five
(75) days following the end of each fiscal year, the Board and/or the Board's
Compensation Committee, as part of its annual review of Employee's performance,
shall consider in its sole discretion the merits of a bonus to Employee pursuant
to and in accordance with the Regent Communications, Inc. Senior Management
Bonus Plan, and in the event a bonus is warranted, shall cause the Company to
award to Employee a bonus (the "Senior Management Plan Bonus") for such year in
an amount to be determined by the Board and/or the Board's Compensation
Committee in its reasonable judgment.

                  2.3      STOCK OPTIONS AND OTHER EQUITY-BASED INCENTIVES. It
is agreed that, in addition to and not in lieu of Senior Management Plan
Bonuses, the Company will, in January of each year and on such terms and
conditions as the Board and/or the Board's Compensation Committee shall deem
appropriate, in its sole discretion, grant to Employee pursuant to the Company's
1998 Management Stock Option Plan qualified and/or non-qualified options to
acquire common stock of the Company and/or grant to Employee stock options or
other equity-based incentives pursuant to any other incentive compensation plans
as may be adopted by the Company from time to time. For purposes of this
Agreement, the term "options" shall be deemed to mean stock options and any
other equity-based incentives including, but not limited to, restricted stock,
stock units, stock appreciation rights and similar instruments.

                  2.4      BENEFITS. In addition to the Base Salary, any Senior
Management Plan Bonus and any stock options payable or granted to Employee
hereunder, Employee will be entitled to the following benefits during the
Employment Period:

                           (a)      payments of premiums for hospitalization,
disability, life and health insurance, to the extent offered by the Company, and
in amounts consistent with Company policy, for all key management employees, as
reasonably determined by the Board;

                           (b)      up to four (4) weeks paid vacation each year
with salary, provided that unused vacation time shall not be carried over to
subsequent years;

                           (c)      reimbursement for reasonable, ordinary and
necessary out-of-pocket business expenses incurred by Employee in the
performance of his duties, subject to the Company's policies in effect from time
to time with respect to travel, entertainment and other expenses, including
without limitation, requirements with respect to reporting and documentation of
such expenses;

                           (d)      use of an automobile at the Company's
expense which shall include expenses for parking in the area of the Company's
offices and for comprehensive insurance coverage for the automobile; and

                           (e)      other benefit arrangements and perquisites,
including a 401(k) or similar tax deferral plan, to the extent made generally
available by the Company to its executives and key management employees.

                                       -4-

<PAGE>

                  2.5      TAXES, ETC. All compensation payable to Employee
hereunder is stated in gross amount and shall be subject to all applicable
withholding taxes, other normal payroll and any other amounts required by law to
be withheld.

                  2.6      COMPENSATION AFTER TERMINATION.

                           (a)      If the Employment Period is terminated (i)
by the Company without Cause; (ii) by reason of Employee's Disability; or (iii)
through expiration of the Employment Period or death of Employee, then, (1) all
shares of the Company's capital stock beneficially owned by the Employee may, at
the Company's election, be repurchased by the Company for cash equal to the fair
market value thereof at the effective date of termination (with the cash payment
in full made promptly after a termination pursuant to this Section 2.6(a)(i) or
2.6(a)(iii) and with the cash payment made in three equal consecutive annual
installments beginning on the date of termination pursuant to this Section
2.6(a)(ii)); (2) except as otherwise provided in the specific terms of the
option agreement or grant, all unvested options to purchase stock of the Company
held by Employee shall cease and terminate as of the date of termination, and
all vested but unexercised options to purchase stock of the Company held by
Employee may, at the Company's election, be repurchased by the Company
(according to the same payment terms as apply to shares of the Company's capital
stock) for an amount constituting the excess of fair market value of the shares
subject to the options over the exercise price of the options, if any, and if
there is no such excess, then such options may be repurchased by the Company for
one hundred dollars ($100) in the aggregate; whereupon, the Company shall have
no further obligations hereunder or otherwise with respect to Employee's
employment from and after the termination or expiration date (except for the
unpaid installments and payment of Employee's current Base Salary accrued
through the date of termination or expiration) and the Company shall continue to
have all other rights available hereunder (including without limitation, all
rights under Sections 3 and 4 at law or in equity). For purposes of this
Agreement, "fair market value" of shares of the Company's capital stock shall be
determined as follows:

                                    i.       If the Company's stock is listed on
a national securities exchange, the fair market value shall be the average of
the highest and lowest selling price of a share of stock on such exchange on the
date of termination, or if there were no sales on such date, then on the next
prior business day on which there were sales.

                                    ii.      If the stock is traded other than
on a national securities exchange, the fair market value shall be the average
between the closing bid and asked price on the date of termination, as reported
by the National Association of Securities Dealers Automated Quotation System or
such other source of quotations for, or reports of trading of, the stock as the
Board of Directors may select from time to time, or if there is no bid and asked
price on said date, then on the next prior business day on which there was a bid
and asked price.

         If neither of the methods described in (i) or (ii) above is available,
and the Company and the Employee cannot agree on the fair market value within
thirty (30) days after termination, then each of the Company and the Employee
shall promptly appoint an appraiser, who will in turn promptly select a third
appraiser, and the three appraisers will, within thirty (30) days of their
appointment, determine the fair market value of the stock in such manner as a
majority of them deems appropriate.

         Any shares of stock and any options purchased by the Company shall be
transferred to the

                                       -5-

<PAGE>

Company free and clear of all liens, encumbrances or rights of third parties.

                           (b)      If the Employment Period is terminated by
the Company because of Employee's Disability, the Company agrees to continue to
pay Employee his current Base Salary during such period of Disability, said
payments to continue for a maximum of one year. Thereafter, Employee shall be
paid by the Company's insurer, if any, such disability benefits as may be paid
to any employee of the Company under any disability plan then in effect, if any.

                           (c)      If the Employment Period is terminated by
the Company without Cause, Employee shall be entitled to receive as severance
pay (in addition to the payment of the Base Salary through the date of
termination as well as a prorated Discretionary Bonus) an amount equal to the
greater of (i) his current Base Salary for a period equal to twelve (12) months
and (ii) Employee's current Base Salary for the remainder of the Employment
Period, such amount to be payable in regular installments in accordance with the
Company's general payroll practices for salaried employees. Employee shall have
no obligation to mitigate these post-employment payments by seeking other
employment. Except pursuant to Section 2.6(a), the Company shall have no other
obligations hereunder or otherwise with respect to Employee's employment from
and after the termination or expiration date, and the Company shall continue to
have all other rights available hereunder (including, without limitation, all
rights under Sections 3, 4, and 6 at law or in equity).

                           (d)      If the Employment Period is terminated by
either the Company or the Employee following a Change of Control or if the
Employee's employment is terminated within 24 months of a Change of Control
notwithstanding that the Employment Period has otherwise expired, Employee shall
be entitled to receive (i) all compensation accrued and unpaid prior to the date
of termination, compensation and (ii) an amount equal to 2.25 times his current
Base Salary, provided, however, that in no event shall the amount due pursuant
to this clause (ii) be calculated upon a base salary less than the Employee's
Base Salary as of the date of the Change of Control. The amounts payable to
Employee pursuant to this Section 2.6(d) shall be paid in a lump sum and in
immediately available funds on the date that the Employee's employment is
terminated. Employee shall not be required to mitigate the amount of any payment
required by this Section 2.6(d) by seeking other employment or otherwise and no
such payment shall be offset or reduced by the amount of any compensation or
benefits provided to Employee in any subsequent employment. In the event that
the payment amounts due to Employee pursuant to this Section 2.6(d) and other
provisions of this Agreement following a Change of Control would result in an
"excess parachute payment" within the meaning of Section 280G of the Internal
Revenue Code of 1986, as amended ("Code"), then the amount due to Employee shall
be capped at the maximum amount payable to Employee before such "excess
parachute payment" provisions would otherwise apply.

         For purposes of this Agreement, the term "Change of Control" shall mean
the purchase or other acquisition by any person, entity or group of persons,
within the meaning of section 13(d) or 14(d) of the Securities Exchange Act of
1934 ("Act"), or any comparable successor provisions, of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Act) of 30 percent or
more of either the outstanding shares of common stock or the combined voting
power of Regent Communications, Inc.'s then outstanding voting securities
entitled to vote generally, or the approval by the stockholders of Regent
Communications, Inc. of a reorganization, merger, or consolidation, in each
case, with respect to which persons who were stockholders of Regent
Communications, Inc. immediately prior to such reorganization, merger or
consolidation do not, immediately thereafter,

                                       -6-

<PAGE>

own more than 50 percent of the combined voting power entitled to vote generally
in the election of directors of the reorganized, merged or consolidated Regent
Communications, Inc.'s then outstanding securities, or a liquidation or
dissolution of Regent Communications, Inc. or of the sale of all or
substantially all of Regent Communications, Inc.'s assets.

                           (e)      If the Employment Period is terminated
pursuant to Section 2.6(a)(iii), 2.6(b), 2.6(c) or 2.6(d) above, Employee shall
be entitled to receive, at such time it would otherwise be payable, any Senior
Management Plan Bonus which would have been payable, based upon the Company's
performance over the full fiscal year, prorated for that portion of the fiscal
year during which the Employee was employed by the Company.

                           (f)      If the Employment Period is terminated
pursuant to Section 2.6(a)(iii), 2.6(b), 2.6(c) or 2.6(d) above, for a number of
months equal to the lesser of (a) twelve (12) or (b) the number of months
remaining until Employee's 65th birthday (the "Continuation Period"), the
Company shall at its expense continue on behalf of Employee and his dependents
and beneficiaries (to the same extent provided to the dependents and
beneficiaries prior to Employee's termination) the life insurance, medical,
dental, and hospitalization benefits provided (x) to Employee by the Company at
any time within ninety (90) days preceding such termination, or (y) to other
similarly situated executives who continue in the employ of the Company during
the Continuation Period. The coverage and benefits (including deductibles and
costs) provided in this Section 2.6 (f) during the Continuation Period shall be
no less favorable to Employee and his dependents and beneficiaries, than the
most favorable of such coverages and benefits set forth in clauses (x) and (y)
above. The Company's obligation hereunder with respect to the foregoing benefits
shall be limited to the extent that Employee obtains any such benefits pursuant
to a subsequent employer's benefit plans, in which case the Company may reduce
the coverage of any benefits it is required to provide Employee hereunder as
long as the aggregate coverages and benefits of the combined benefit plans are
no less favorable to Employee than the coverages and benefits required to be
provided hereunder. This Section 2.6(f) shall not be interpreted so as to limit
any benefits to which Employee or his dependents or beneficiaries may be
entitled under any of the Company's employee benefit plans, programs or
practices following Employee's termination of employment, including without
limitation, retiree medical and life insurance benefits.

                  2.7      PROFIT SHARING, PENSION AND SALARY DEFERRAL BENEFITS.
It is understood by the parties to this Agreement that, during the Employment
Period, Employee shall be entitled to participate in or accrue benefits under
any pension, salary deferral or profit sharing plan now existing or hereafter
created for employees of the Company upon terms and conditions equivalent to
those which the Company may provide for other senior executive employees.

         3.       COVENANT NOT TO COMPETE.

                  3.1      NON-COMPETITION. Employee agrees that during the
Employment Period and for the 18-month period immediately following the
termination of his employment with the Company, he shall not, within a
twenty-five (25) mile radius of any radio station transmission tower or studio
then owned or operated, directly or indirectly, by the Company (the
"Territory"), engage in any of the following activities:

                                       -7-

<PAGE>

                           (a)      Directly or indirectly enter into the employ
or render any service to or act in concert with any person, partnership,
corporation or other entity engaged in the ownership or operation of radio
stations (the "Radio Business") with a radio station transmission tower or
studio located within the Territory; or

                           (b)      Directly or indirectly engage in the Radio
Business with a radio station transmission tower or studio located within the
Territory on his own account; or

                           (c)      Become interested in any such Radio Business
with a radio station transmission tower or studio located within the Territory
directly or indirectly as an individual, partner, shareholder, director,
officer, principal, agent, employee, consultant, creditor or in any other
relationship or capacity; provided, that the purchase of a publicly traded
security of a corporation engaged in the Radio Business shall not in itself be
deemed violative of this Agreement so long as Employee does not own, directly or
indirectly, more than 3% of the securities of such corporation.

                  3.2      NON-SOLICITATION. Employee agrees that during the
Employment Period and for the 18-month period immediately following the
termination of his employment with the Company, he shall not (other than in the
regular course of the Company's business) within the Territory solicit, directly
or indirectly, business of the type then being performed by the Company from any
person, partnership, corporation or other entity which is a customer of the
Company at the time Employee's employment with the Company terminates, or was
such a customer within the one-year period immediately prior thereto, or to the
knowledge of Employee at the date of termination of employment, is a person,
partnership, corporation or other entity with which the Company plans to do a
substantial amount of business within the one-year period after such termination
of employment.

         4.       NON-INDUCEMENT AND NON-DISCLOSURE.

                  4.1      NON-INDUCEMENT. Employee agrees that during the
Employment Period and for a one-year period immediately following the
termination of his employment with the Company, he shall not directly or
indirectly, individually or on behalf of persons not parties to this Agreement,
aid or endeavor to solicit or induce any of the Company's employees to leave
their employment with the Company in order to accept employment with Employee or
another person, partnership, corporation or other entity.

                  4.2      NON-DISCLOSURE. At no time shall Employee divulge,
furnish or make accessible to anyone (other than in the regular course of the
Company's business) any knowledge or information with respect to confidential
information or data of the Company, or with respect to any confidential
information or data of any of the customers of the Company, or with respect to
any other confidential aspect of the business or products or services of the
Company or its customers. Upon termination of his employment with the Company,
Employee shall return to the Company all records, documents and material
containing confidential information of the Company prepared by Employee or
coming into his possession by virtue of his employment with the Company,
including all copies thereof.

         5.       EFFECT OF TERMINATION WITHOUT CAUSE. Notwithstanding the
provisions of Sections 3 and 4 above, the restrictions imposed upon Employee in
Sections 3.1, 3.2, and 4.1 of this Agreement

                                       -8-

<PAGE>

during the period following the termination of his employment hereunder shall
apply in the event Employee's employment hereunder is terminated by the Company
without cause pursuant to Section 1.4(ii) only for a period of one year provided
Employee has received and has elected to accept the severance pay under Section
2.6(c).

         6.       REMEDIES. Employee acknowledges and agrees that the covenants
set forth in Sections 3 and 4 of this Agreement (collectively, the "Restrictive
Covenants") are reasonable and necessary for the protection of the Company's
business interests and compliance therewith will not deprive Employee of the
ability to earn a suitable living, that irreparable injury will result to the
Company if Employee breaches any of the terms of the Restrictive Covenants, and
that in the event of Employee's actual or threatened breach of any such
Restrictive Covenants, the Company will have no adequate remedy at law. Employee
accordingly agrees that in the event of any actual or threatened breach by him
of any of the Restrictive Covenants, the Company shall be entitled to immediate
temporary injunctive and other equitable relief, without the necessity of
showing actual monetary damages, subject to hearing as soon thereafter as
possible. In such event, the periods of time referred to in Sections 3 and 4
shall be deemed extended for a period equal to the respective period during
which Employee is in breach thereof, in order to provide for injunctive relief
and specific performance for a period equal to the full term thereof. Nothing
contained herein shall be construed as prohibiting the Company from pursuing any
other remedies available to it for such breach or threatened breach, including
the recovery of any damages which it is able to prove. The covenants contained
in Section 4 and 5 shall be construed as separate covenants, and if any court
shall finally determine that the restraints provided for in any such covenants
are too broad as to the geographic area, activity or time covered, said area,
activity or time covered may be reduced to whatever extent the court deems
reasonable and such covenants shall be enforced as to such reduced area,
activity or time. Employee shall indemnify and hold Company harmless from any
liability, loss, damage, judgment, cost or expense(including reasonable
attorneys' fees and expenses) arising out of any claim or suit resulting from
Employee's breach of these covenants or his failure to perform a duty hereunder.

         7.       NO OTHER NON-COMPETE AGREEMENTS. Notwithstanding anything to
the contrary contained herein, Employee hereby represents, warrants and
covenants to Company that Employee (i) is not a party to nor bound by any
non-competition, non-solicitation, confidentiality or other agreement of any
kind which would conflict with or prevent his employment hereunder or the full
performance of all of his duties hereunder, and (ii) has not, and will not,
wrongfully use any confidential information or know-how taken from another
employer. Employee hereby agrees to indemnify and hold the Company harmless from
any claim, loss, damage and expense hereafter incurred by the Company as a
result of any breach of the foregoing representations, warranties or covenants
made by Employee in this Section.

         8.       LIFE INSURANCE. The Company may at its discretion and at any
time apply for and procure as owner and for its own benefit and at its own
expense, insurance on the life of Employee in such amounts and in such form or
forms as the Company may choose. Employee shall cooperate with the Company in
procuring such insurance and shall, at the request of the Company, submit to
such medical examinations, supply such information and execute such documents as
may be required by the insurance company or companies to whom the Company has
applied for such insurance. Employee shall have no interest whatsoever in any
such policy or policies, except that, upon the termination of Employee's
employment hereunder, Employee shall have the privilege of

                                       -9-

<PAGE>

purchasing any such insurance from the Company for an amount equal to the actual
premiums thereon previously paid by the Company.

         9.       INCOME TAX TREATMENT. Employee and the Company acknowledge
that it is the intention of the Company to deduct all amounts paid under Section
2 hereof as ordinary and necessary business expenses for income tax purposes.
Employee agrees and represents that he will treat all amounts paid hereunder as
ordinary income for income tax purposes, and should he report such amounts as
other than ordinary income for income tax purposes, he will indemnify and hold
the Company harmless from and against any and all taxes, penalties, interest,
costs and expenses, including reasonable attorneys' and accounting fees and
costs, which are incurred by the Company directly or indirectly as a result
thereof.

         10.      ASSIGNMENT. No party hereto may assign or delegate any of its
rights or obligations hereunder without the prior written consent of the other
party hereto, provided, however, the Company shall have the right to assign all
or any part of its rights and obligations under this Agreement to (i) any
affiliate of the Company to which the Business is assigned at any time or (ii)
the purchaser of all or substantially all of the assets of the Company. Except
as otherwise expressly provided herein, all covenants and agreements contained
in this Agreement by or on behalf of any of the parties hereto shall bind and
inure to the benefit of the respective successors and permitted assigns of the
parties hereto whether so expressed or not.

         11.      SEVERABILITY. Whenever possible, each provision of this
agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.

         12.      COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same Agreement.

         13.      DESCRIPTIVE HEADINGS; INTERPRETATION. The descriptive headings
in this Agreement are inserted for convenience of reference only and are not
intended to be part of or to affect the meaning or interpretation of this
Agreement. The use of the word "including" in this Agreement shall be by way of
example rather than by limitation.

         14.      NOTICES. All notices, demands or other communications to be
given or delivered under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been duly given if (i) delivered
personally to the recipient, (ii) sent to the recipient by reputable express
courier service (charges prepaid) or mailed to the recipient by certified or
registered mail, return receipt requested and postage prepaid, or (iii)
transmitted by telecopy to the recipient with a confirmation copy to follow the
next day to be delivered by overnight carrier. Such notices, demands and other
communications shall be sent to the addresses indicated below:

         (a)     If to Employee:             (b)     If to the Company:

                 Terry S. Jacobs                     Regent Communications, Inc.
                 100 East RiverCenter Blvd.          100 East RiverCenter Blvd.

                                      -10-

<PAGE>

                 9th Floor                           9th Floor
                 Covington, KY 41011                 Covington, KY 41011
                 Facsimile No. 859/292-0352          Facsimile No.: 859/292-0352

or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party. Date
of service of such notice shall be (w) the date such notice is personally
delivered, (x) three days after the date of mailing if sent by certified or
registered mail, (y) one day after the date of delivery to the overnight courier
if sent by overnight courier or (z) the next business day after the date of
transmittal by telecopy.

         15.      PREAMBLE; PRELIMINARY RECITALS. The Preliminary Recitals set
forth in the Preamble hereto are hereby incorporated and made part of this
Agreement.

         16.      WAIVER. No modification, termination or attempted waiver of
this Agreement shall be valid unless in writing and signed by the party against
whom the same is sought to be entered. Either party's failure to enforce any
provision or provisions of this Agreement shall not in any way be construed as a
waiver of any such provision or provisions as to any future violations thereof,
nor prevent that party thereafter from enforcing each and every other provision
of this Agreement. The rights granted the parties herein are cumulative and the
waiver by a party of any single remedy shall not constitute a waiver of such
party's right to assert all other legal remedies available to him or it under
the circumstances.

         17.      ADDITIONAL OBLIGATIONS. Both during and after the Employment
Period, Employee shall, upon reasonable notice, furnish the Company with such
information as may be in Employee's possession, and cooperate with the Company,
as may reasonably be requested by the Company (and, after the Employment Period,
with due consideration for Employee's obligations with respect to any new
employment or business activity) in connection with any litigation in which the
Company or any affiliate is or may become a party. The Company shall reimburse
Employee for all reasonable expenses incurred by Employee in fulfilling
Employee's obligations under this Section 17.

         18.      GOVERNING LAW. This Agreement shall be construed and enforced
in accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Agreement shall be governed by, the laws
of the Commonwealth of Kentucky without giving effect to provisions thereof
regarding conflict of laws.

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

                                      -11-

<PAGE>

                                             COMPANY:

                                             REGENT COMMUNICATIONS, INC.

                                             By: /s/ William L. Stakelin
                                                --------------------------------
                                             Title: President

                                             EMPLOYEE:

                                             /s/ Terry S. Jacobs
                                             -----------------------------------
                                             Terry S. Jacobs

                                      -12-

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