As of June 6, 2003

Keith E. Lindner

One East Fourth Street

Cincinnati, Ohio  45202

 

          Re:          Agreement

 

Dear Keith:

 

           The purpose of this Agreement ("Agreement") is to set forth in
writing our agreements concerning your separation from American Financial Group,
Inc. and any related organizations, including, without limitation, American
Financial Corporation, AFC Holding Company, American Premier Underwriters, Inc.,
and their successors and permitted assigns (collectively, "AFG" or "Company").

           To that end, you and AFG hereby agree as follows:

 1.  OFFICER / DIRECTOR POSITIONS. Your last active date of service will be June
     6, 2003 and your term as a Director or officer of AFG, its subsidiaries and
     affiliates will end that date.
 2.  SALARY CONTINUATION. Your salary will continue at $500,000 per year for
     five years to be paid bi-weekly for each twelve-month period , starting on
     June 6, 2003. This five-year period is the "Salary Continuation Period".
     This salary continuation will not be reduced by any other earnings or
     income you may earn from other sources during the Salary Continuation
     Period.
 3.  HEALTH INSURANCE BENEFITS. You may continue to participate in AFG's health
     insurance benefits plans (currently, family medical and family dental) for
     the Salary Continuation Period, subject to normal plan deductibles,
     premiums in effect from time to time and co-payments in effect from time to
     time; provided, however, such eligibility will terminate if you become
     eligible for health insurance benefits through subsequent employment. You
     will be eligible for COBRA continuation of benefits at the end of the
     Salary Continuation Period (unless eligibility terminates earlier) and will
     receive notification under separate cover.
 4.  STOCK OPTIONS. You previously have been granted American Financial Group,
     Inc. (AFG) stock options, of which 751,272 are currently outstanding and
     587,272 are currently exercisable. The options granted February 20, 2003
     shall terminate on June 6, 2003. All other outstanding options, totaling
     696,272 options, shall become fully (100%) vested and exercisable on June
     6, 2003 and will expire three years after that date; provided, however,
     that nothing contained in this Agreement shall extend the original
     expiration date of any of such options. You will receive a letter from AFG
     confirming the approval of these provisions by the AFG Compensation
     Committee. Contact Jim Kennedy at 513.579.2538 with questions or to
     exercise options.
 5.  LIFE INSURANCE / ACCIDENTAL DEATH & DISMEMBERMENT (ADD). Company paid
     coverage of two times your annual salary for Basic Life / ADD Insurance
     coverage shall continue during the Salary Continuation Period. At the end
     of the Salary Continuation Period, you will be eligible to convert the
     balance of the Company-paid Life Insurance to a self-paid non-term
     insurance contract; a conversion form will be provided. You are not a
     current participant in either the Optional Life or Dependent Life benefit
     programs and have no future participation rights in those programs.
 6.  FLEXIBLE SPENDING ACCOUNT. Deductions for healthcare will continue through
     the Salary Continuation Period. You will have until May 1 of each year to
     file for any reimbursable claims incurred during the prior calendar year.
 7.  SHORT TERM DISABILITY/LONG TERM DISABILITY. Short Term Disability and Long
     Term Disability coverages cease as of June 6, 2003, your last active day of
     service.
 8.  ANNUAL BONUS PLAN. You are not and will not be a participant in AFG's 2003
     Annual Bonus Plan and any bonus plan for subsequent years. As a result, you
     will not receive any bonus payment in 2004 through 2008.
 9.  EXECUTIVE INSURANCE PROGRAM. Your eligibility to participate in the
     Executive Insurance Program (currently, automobile / homeowners / basic
     umbrella) at AFG expense will continue during the Salary Continuation
     Period (unless the Program is discontinued during such Period for AFG
     senior executives) and will cease as of the renewal date for policies
     issued on or before the last day within the last year of the Salary
     Continuation Period.
 10. AFG RETIREMENT AND SAVINGS PLAN.

     401(k) Savings Account
     
     . You are fully (100%) vested in your 401(k) account. Your normal payroll
     deduction for your 401(k) account deferral will continue through the Salary
     Continuation Period. If you do not wish the deferral to be taken, you can
     contact AFG In-Touch at 800.458.2387. You will be eligible for any 401(k)
     Company Match applicable for covered compensation in Plan Years 2003, 2004,
     2005, 2006 and 2007 covered in the Salary Continuation Period. Distribution
     of your Account will all be made under normal plan parameters.
     
     
     
     Retirement Account / Auxiliary RASP.
     
     You are fully (100%) vested in your AFG retirement account and Auxiliary
     RASP account. You will be eligible for any contributions applicable to
     those accounts on covered compensation during Plan Years covered in the
     Salary Continuation Period. Distribution will be made under normal plan
     parameters. Call AFG In-Touch for details.
     
     

 11. SURVIVORSHIP. In the event of your death or disability during the Salary
     Continuation Period (but only if you are not at the time of your death in
     breach of Paragraphs 18, 19, 20 and/or 23), any payments remaining under
     Paragraph 3 will be made by AFG to your current spouse, Courtney (if she
     survives you and was still married to you) or to your estate if your
     current spouse, Courtney, dies before you do or if you are no longer
     married to her at the time of your death. Payments will be made on the same
     schedule called for in those Paragraphs. If payments to Courtney begin
     under this Paragraph and she then dies while any payments remain, any
     remaining payments due under those Paragraphs will be made to her estate.
     AFG shall have the right, at its option, to obtain life insurance on your
     life in the amount of the salary continuation payable under this Agreement
     and you shall cooperate with AFG to the extent reasonably necessary to
     enable AFG to obtain such policy.
 12. PLAN SPONSOR. The Plans covered in Paragraphs 3, 5, 6 and 10 are AFG
     sponsored plans.
 13. OTHER BENEFITS. Your eligibility for all other benefits not specifically
     mentioned herein will cease as of June 6, 2003, the last active day of your
     employment. The Company reserves the right to revise, amend or terminate
     any benefit plan at any time.
 14. COMPANY PROPERTY. You agree to immediately return all AFG property that has
     been entrusted to you.
 15. OFFICE SPACE; OTHER. At its sole cost and expense, the Company will provide
     you during the Salary Continuation Period with (i) your current office on
     the ninth floor and current two parking spaces at the Chiquita building for
     yourself and administrative staff or another office and other parking
     spaces comparable to your current office and parking spaces, (ii)
     information technology support, network connection and copiers comparable
     to those which you currently enjoy, and (iii) security services comparable
     to those currently provided to you.
 16. ADMINISTRATIVE STAFF. At its sole cost and expense, including normal
     employee benefits based on average number of hours worked, the Company will
     employ two administrative assistants upon the same terms as those with whom
     you currently work during the Salary Continuation Period.
 17. COMPANY AIRCRAFT. For the security of you and you and your family, you are
     encouraged to use the Company aircraft when engaged in Company business
     matters and up to fifteen hours per calendar year for the personal travel
     of you or your immediate family. Such usage shall be at the Company's sole
     cost and expense, and if personal use, shall be reflected in your
     compensation as it has in the past.
 18. NON-SOLICITATION / NON-HIRE OF COMPANY EMPLOYEES. During the Salary
     Continuation Period, you agree that you will not directly or indirectly
     solicit for employment or consulting services or hire or retain any person
     who is employed by AFG on June 6, 2003 or who was employed by AFG in the
     twelve months prior to June 6, 2003.
 19. NON-COMPETE. For the Salary Continuation Period you agree that you will
     not:

     directly or indirectly compete with AFG in seeking investment opportunities
     in which AFG has an investment in the property and casualty insurance
     business or annuity, life and supplement health insurance business within
     any state where AFG offers its insurance products or services for purposes
     of selling or attempting to sell any products or services that compete
     directly with insurance products or services (including without limitation
     annuities and insurance brokerage services) sold by AFG; nor
     
     solicit or initiate contact with any insurance agents or customers with
     whom AFG does or has done business or actively solicited to do business
     within the twelve month period prior to June 6, 2003 for purposes of
     selling or attempting to sell any products or services that compete
     directly with insurance products or services (including without limitation
     annuities and insurance brokerage services) sold by AFG.

     You acknowledge that for purposes of this Paragraph 19 Infinity Property
     and Casualty Corporation is included as a part of AFG.

 20. CONFIDENTIAL INFORMATION. During the term of your employment, you have had
     access to and become familiar with various trade secrets and other
     confidential information of AFG. This may include but is not limited to
     sales and marketing strategies, pricing, rates, commission and fee
     structures, salaries, financial data, products and product lines, the
     identity of the agents or organizations with which AFG does business or may
     do business and other information. You agree that AFG has taken reasonable
     steps to preserve the confidentiality of these trade secrets and other
     confidential information. You agree not to disclose, directly or
     indirectly, or use in any way any such trade secrets or other confidential
     information. You also agree that you will not take with you any originals
     or copies of any information which you or any other person developed
     regarding AFG or its trade secrets or other confidential information.
 21. OTHER EMPLOYMENT. AFG acknowledges that its obligations under this
     Agreement (except as provided in Paragraph 3) continue in the event of your
     employment with another entity, subject to your compliance with your
     obligations under this Agreement, including those in Paragraphs 18, 19 and
     20.
 22. REMEDIES. You recognize that a violation of Paragraphs 18, 19 and 20 would
     irreparably injure AFG. Accordingly, you agree that AFG may, in addition to
     pursuing its remedies at law, obtain emergency and injunctive relief and
     that no bond or security shall be required. In addition, any breach of
     these paragraphs will entitle AFG to suspend any further payments under
     this Agreement while pursuing its remedies at law or equity.
 23. AVAILABILITY. You agree to make yourself available to answer questions and
     advise AFG upon reasonable request during the Salary Continuation Period.
     During the Salary Continuation Period, you will also use your best efforts
     to make yourself available at reasonable times and for reasonable periods
     of time if your cooperation is required or requested to assist AFG in
     connection with litigation or regulatory inquiries relating to matters
     arising while you were an officer of AFG.
 24. GENERAL RELEASE OF AFG. Except as provided herein, you hereby irrevocably
     and unconditionally release, acquit and forever discharge AFG (including
     stockholders, subsidiaries, affiliates and any of their directors,
     officers, employees and all persons acting through them) from any and all
     claims, obligations, administrative actions, damages, suits and expenses of
     any nature whatsoever, known or unknown, that exist or could exist, through
     the date on which this Agreement is signed. This release includes, but is
     not limited to, claims under state and federal law; claims under any
     employee stock plan in which you participated; claims of contract and
     quasi-contract; and claims of wrongful discharge, whistle-blowing and
     violation of public policy. Notwithstanding the above, the foregoing
     release does not include claims for fraud, willful misconduct or criminal
     acts on the part of AFG, claims under this Agreement or claims under the
     indemnification agreement described in Paragraph 27 below.
 25. GENERAL RELEASE OF KEITH E. LINDNER. Except as provided herein, AFG hereby
     irrevocably and unconditionally releases, acquits and forever discharges
     you (and your heirs, successors and assigns) from any and all claims,
     obligations, administrative actions, damages, suits and expenses of any
     nature whatsoever, known or unknown, that exist or could exist through the
     date on which this Agreement is signed. This release includes, but is not
     limited to, claims under state and federal law and claims of contract and
     quasi-contract. Notwithstanding the above, the foregoing release does not
     include claims for fraud, willful misconduct or criminal act on your part
     or claims under this Agreement.
 26. CONFIDENTIALITY. It is understood and agreed that you will keep the terms
     of this Agreement confidential and shall not disclose the Agreement, its
     existence or the terms thereof to any person or other entity other than as
     may be required by law or corporate requirements, or to your spouse,
     attorney, and tax advisor. You may disclose to potential employers or
     employers (or employment firms which represent them) that you are subject
     to the restrictions and obligations contained in Paragraphs 18, 19 and 20
     of this Agreement.
 27. INDEMNIFICATION AGREEMENT. AFG acknowledges that the indemnification
     agreement between it and you dated June 19, 2002 remains in full force and
     effect in connection with any claims (as defined in such agreement) brought
     against you as a result of your position as a director or officer of AFG or
     any if its subsidiaries. Your service under this Agreement has been
     designated as an "indemnified capacity" by AFG's Board of Directors for
     purposes of that indemnification agreement, thereby extending the benefits
     of that indemnification agreement to your service under this Agreement.
 28. CONSIDERATION. In executing this Agreement, you acknowledge that in
     exchange for the release contained in Paragraph 24, AFG is providing you
     with total consideration which exceeds what you would have received and
     were entitled to under AFG policies and practices had you not given this
     release and that this consideration has been determined pursuant to open,
     arms length negotiations.
 29. ENTIRE AGREEMENT. This is the entire agreement between you and AFG. It is
     entered into knowingly and voluntarily by you.
 30. APPLICABLE LAW. This Agreement is made and entered into in the State of
     Ohio, and shall in all respects be interpreted, enforced and governed by
     the laws of the State of Ohio.
 31. BINDING ON PARTIES. This Agreement shall be binding upon and shall inure to
     the benefit of the parties and their heirs, legal representatives,
     executors, administrators, successors and permitted assigns. All items of
     this Agreement shall survive a change in control of AFG. Neither party may
     assign or transfer this Agreement, or any rights or obligations hereunder,
     without the prior written consent of the other party, which consent will
     not be unreasonably withheld.
 32. SEVERABILITY. If any provision of this Agreement is held to be illegal,
     invalid, or unenforceable in any respect, the parties agree that such term
     or provision shall be deemed to be modified to the extent necessary to
     permit its enforcement to the maximum extent permitted by applicable law.
 33. MATERIALITY. Each of the above listed obligations are material and any
     breach will entitle the non-breaching party to enforce this Agreement in a
     court of law.

            Keith, if after review of this Agreement, you find that it
accurately and completely sets forth the agreement between you and AFG, please
sign, date and return the original to Jim Kennedy at the address below.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

Very truly yours,

     

AMERICAN FINANCIAL GROUP, INC.

             

By:    /s/James E. Evans                              

 

          James E. Evans

 

          Senior Vice President and General Counsel

           

ACCEPTED AND AGREED:

             

/s/ Keith E. Lindner                            

 

Keith E. Lindner

     

            11/8/2003                                

 

Date

             

Return signed original to:

 

James C. Kennedy, Vice President, Deputy

 

  General Counsel & Secretary

 

American Financial Group, Inc.

 

One East Fourth Street

 

Cincinnati, OH 45202