NATIONWIDE FINANCIAL SERVICES INC/
EXHIBIT 10.32
<DOCUMENT>
<TYPE>EX-10.32
<SEQUENCE>2
<FILENAME>l84674aex10-32.txt
<DESCRIPTION>EXHIBIT 10.32
<TEXT>

<PAGE>   1
                                                                   Exhibit 10-32

                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT (the "Agreement") entered into as of May 26,
2000, by and between Nationwide Mutual Insurance Company (the "Company") and
W.G. Jurgensen ("Executive").

         WHEREAS, pursuant to the Offer Letter dated May 26, 2000, between the
Company and Executive (the "Offer Letter"), Executive has agreed to become the
Chief Executive Officer of the Company, Nationwide Financial Services, Inc.
("NFS") and any other Nationwide entity as directed by the Board of Directors of
the Company (the "Board").

         WHEREAS, the parties desire to enter into an agreement to reflect
Executive's executive capacities in the Company's business and to provide for
Executive's employment by the Company, upon the terms and conditions set forth
herein.

         WHEREAS, Executive has agreed to certain confidentiality,
non-competition and non-solicitation covenants contained hereunder, in
consideration of the benefits provided to Executive under this Agreement.

         WHEREAS, certain capitalized terms shall have the meanings given those
terms in Section 4 of this Agreement.

         NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:

         1. EMPLOYMENT. The Company hereby agrees to employ Executive, and
Executive hereby accepts such employment and agrees to perform Executive's
duties and responsibilities, in accordance with the terms, conditions and
provisions hereinafter set forth. The parties agree that the terms of this
Agreement shall supersede and replace the Offer Letter.

         1.1. REPRESENTATIONS. Executive hereby represents to the Company that
Executive is under no contractual obligation to refrain from working for a
competitor of any prior employer. Executive also hereby represents to the
Company that he knows of no circumstances that would adversely affect his
ability to perform effectively the functions essential to the position of Chief
Executive Officer as described in this Agreement.

         1.2. EMPLOYMENT TERM. This Agreement shall be effective as of May 26,
2000 (the "Employment Date"), and shall continue through June 30, 2003, unless
the Agreement is terminated sooner in accordance with Section 2 or 3 below. On
June 30, 2002 and each subsequent June 30, the term of the Agreement shall
automatically renew for successive periods of one year, so that the remaining
term shall always be at least one year, unless either party gives

<PAGE>   2

written notice to the other party, prior to a June 30 renewal date, that the
Agreement shall not be further extended, or unless the Agreement is terminated
sooner in accordance with Section 2 or 3 below. The period commencing on the
Employment Date and ending on the date on which the term of Executive's
employment under the Agreement shall terminate is hereinafter referred to as the
"Employment Term." If a Change of Control (as defined in Section 4) occurs, the
Employment Term shall be automatically extended to the later of (i) the end of
the then existing initial or renewal period or (ii) the date that is two years
after the Change of Control, unless the Employment Term is sooner terminated
according to Section 2 or 3 below. The failure of the Company to renew this
Agreement shall not be considered a termination of Executive's employment under
this Agreement and shall not give Executive grounds to terminate employment for
Good Reason (as defined in Section 4) under this Agreement.

         1.3. DUTIES AND RESPONSIBILITIES. During the Employment Term, Executive
shall serve as the Chief Executive Officer of the Company, NFS and any other
Nationwide entity as directed by the Board, and in such other senior executive
positions as the Board determines, and Executive shall report to the Board.
Executive shall be nominated to be a member of the Board and the boards of
directors of NFS and any other Nationwide entity as directed by the Board as
soon as practicable after his Employment Date. Executive shall perform all
duties and accept all responsibilities incident to the foregoing positions or as
may be reasonably assigned to him by the Board.

         1.4. EXTENT OF SERVICE. During the Employment Term, Executive agrees to
use Executive's full and best efforts to carry out Executive's duties and
responsibilities under Section 1.3 hereof with the highest degree of loyalty and
the highest standards of care and, consistent with the other provisions of this
Agreement, Executive agrees to devote substantially all of Executive's business
time, attention and energy thereto. The foregoing shall not be construed as
preventing Executive from making investments in other businesses or enterprises,
provided that Executive agrees not to become engaged in any other business
activity which, in the reasonable judgment of the Board, is likely to interfere
with Executive's ability to discharge Executive's duties and responsibilities to
the Company. The Executive will not serve on the board of directors of an entity
unrelated to the Company (other than a non-profit charitable organization)
without the consent of the Board.

         1.5. BASE SALARY. For all the services rendered by Executive hereunder,
the Company shall pay Executive a base salary ("Base Salary") at an annual rate
of $850,000 ($70,833 per month) for the portion of the 2000 calendar year
following his Employment Date. Executive's Base Salary shall be reviewed
periodically after the 2000 calendar year for appropriate increases by the Board
(or a committee of the Board) pursuant to the Board's normal performance review
policies for senior level executives. Executive's annual rate of Base Salary, as
adjusted by the Board, shall be at least $1,000,000 by April 1, 2002, if
Executive remains an employee of the Company. Executive's Base Salary shall be
payable in installments at such times as the Company customarily pays its other
employees.

                                       -2-

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         1.6. SHORT-TERM INCENTIVE COMPENSATION. Executive shall receive an
annual performance bonus based on the terms and conditions of the Company's CEO
Performance Incentive Plan, or other such successor plans, with a target bonus
of 150% of Base Salary and a maximum bonus of 300% of Base Salary. Unless
Executive's employment is terminated for Cause prior to the normal bonus payment
date, Executive shall receive a minimum guaranteed 2000 plan year bonus at
target without proration. Additional bonuses will be as awarded in the
discretion of the Board or a committee of the Board.

         1.7. LONG-TERM INCENTIVE COMPENSATION.

                   (a) As a hiring inducement, Executive shall receive an
initial grant of a ten-year non-qualified stock option to purchase 60,000 shares
of NFS common stock under the NFS Long-Term Equity Compensation Plan ("LTEP"),
with an option price equal to the New York Stock Exchange closing price of NFS
stock on the Executive's Employment Date. The option will vest over a five-year
period, if Executive remains an employee of the Company, at a rate of 12,000
shares per year on each of the first five anniversaries of Executive's
Employment Date. The option will have other standard provisions for options
granted by NFS to its executives.

                   (b) As a hiring inducement, Executive shall receive an
initial grant of 25,000 shares of restricted common stock of NFS, which will
vest over a five-year period, if Executive remains an employee of the Company,
at a rate of 12,500 shares on the third anniversary of the Employment Date,
6,250 shares on the fourth anniversary of the Employment Date and 6,250 shares
on the fifth anniversary of the Employment Date. The restricted stock will have
other standard provisions for restricted stock granted by NFS to its executives.

                   (c) As a hiring inducement, Executive shall receive a target
long-term incentive award of $1,500,000 under the Company's Long-Term
Performance Plan ("LTPP") for the 1999-2001 performance cycle. Any payment under
this grant will be pro-rated by a two-thirds participation rate. The long-term
incentive award will have other standard provisions for long-term incentive
awards granted by the Company to its executives.

                   (d) Executive will be eligible to receive future grants under
the Company's and/or NFS's stock incentive programs consistent with competitive
pay practices generally and with awards made to other senior executives of the
Company. Upon commencement of employment, Executive shall receive an initial
annual grant of a ten-year non-qualified stock option to purchase 150,000 shares
of NFS common stock under the LTEP, with an option price equal to the New York
Stock Exchange closing price of NFS stock on the Employment Date. The option
will vest over a three-year period, if Executive remains an employee of the
Company, at a rate of 50,000 shares per year on each of the first three
anniversaries of the Employment Date. The option will have other standard
provisions for options granted by NFS to its executives.

                                       -3-

<PAGE>   4

                   (e) Executive will be eligible to receive future grants under
the Company's cash long-term incentive programs consistent with competitive pay
practices generally and with participation by other senior executives of the
Company. Upon commencement of employment, Executive shall receive an initial
annual grant of a $1,950,000 target award under the Company's LTPP for the
2000-2002 performance cycle. Any payment under this grant will be made without a
length of employment based proration.

                   (f) Executive's incentive compensation shall be subject to
the terms of the applicable plans and shall be determined based on Executive's
individual performance and Company or NFS stock performance as determined by the
Board (or a committee of the Board).

         1.8. RETIREMENT, WELFARE AND OTHER BENEFIT PLANS AND PROGRAMS.

                   (a) During the Employment Term, Executive (and his eligible
dependents, where applicable) shall be entitled to participate in all employee
retirement and welfare benefit plans and programs on terms no less favorable to
Executive than the terms made available to the Company's other senior level
executives (including without limitation group and executive life,
hospitalization and disability insurance plans, health programs, and pension,
profit sharing, 401(k) and similar benefit plans (qualified, non-qualified and
supplemental plans)), as such retirement and welfare plans may be in effect from
time to time and subject to the eligibility requirements of such plans.

                   (b) If Executive is not immediately eligible to participate
in the Company's health plan upon his Employment Date, the Company shall pay
Executive an amount equal to the COBRA premiums paid by Executive for health
coverage (for Executive and his eligible dependents) under the health plan of
Executive's former employer for the period after the Employment Date and prior
to his eligibility under the Company's applicable health plan. The Company will
also pay Executive an amount (a "gross-up" amount) to cover the income and
payroll taxes that Executive incurs as a result of the Company's payment of such
COBRA premium amount and the payment described in this sentence.

                   (c) During the Employment Term, Executive shall be provided
with a Company automobile and other executive fringe benefits and perquisites
under the same terms as those made available to the Company's senior level
executives (including without limitation automobile allowance, club memberships
and dues and similar programs), as such programs may be in effect from time to
time. During the Employment Term, Executive shall be entitled to vacation and
sick leave in accordance with the Company's policies on vacation, holiday and
other pay for time not worked.

                   (d) Nothing in this Agreement shall prevent the Company from
amending or terminating any retirement, welfare or other employee benefit plans,
programs, policies or perquisites from time to time as the Company deems
appropriate.

                                       -4-

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         1.9. SPECIAL RETIREMENT BENEFIT.

                   (a) Upon termination of employment for any reason, subject to
the vesting provisions in subsection (b) below, Executive will be entitled to
receive from the Company a special retirement benefit ("SRB") which, when added
to any benefits payable under all qualified and nonqualified defined benefit
retirement plans of the Company and its Affiliates (including without limitation
supplemental benefits payable under Section 2.2 or 3.5 of this Agreement) and
any of Executive's former employers (exclusive of amounts attributable to
Executive's voluntary contributions), will produce an aggregate single life
annuity pension payable at age 65 in an annual amount equal to (i) multiplied by
(ii), where:

                          (i) is equal to the number of full and partial years
         (not to exceed 16.25 years) of Executive's service with the Company (or
         any Affiliate); and


                          (ii) is equal to (A) .04 multiplied by (B) Executive's
         Final Average Pay (as defined below),

up to an annual maximum of 65% of Executive's Final Average Pay.

For purposes of the foregoing, Executive's "Final Average Pay" shall be equal to
the average of the base salary and annual bonus amounts earned by Executive
during the five-consecutive year period (or, if less, the number of years) of
Executive's employment with the Company and its Affiliates which produces the
highest average; provided, however, in no event will Executive's Final Average
Pay be less than Executive's initial annual Base Salary as described in Section
1.5 ($850,000 per year) and guaranteed 2000 annual bonus ($1,275,000) as
described in Section 1.6.

         (b) The SRB will be subject to five-year cliff vesting, taking into
account only Executive's service with the Company and its Affiliates after his
Employment Date, so that the SRB will be 100% vested on April 1, 2005, if
Executive is continuously employed by the Company or an Affiliate through that
date. In the event Executive's employment terminates for any reason that
entitles Executive to severance benefits under Section 2.2 or 3.5, the SRB
(accrued to the date of termination) shall fully vest and, after a Change of
Control, shall be computed as if Executive received credit for service and
compensation for the severance period reflected by any salary-and-bonus-based
severance benefits received pursuant to Section 3.5.

         (c) In the event of Executive's termination of employment prior to age
65, Executive may elect to have the accrued vested SRB commence early (but not
prior to age 62), subject to a reduction of 4% of the benefit amount for each
full year that the pension commences prior to age 65.

                                       -5-

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         (d) The SRB may be paid in any form available under the Company's
tax-qualified defined benefit plans, as elected by Executive. The Company's
actuary shall calculate the SRB and any survivor annuity described below, and
the actuary's reasonable determination shall be binding on all persons for all
purposes.

         (e) In the event of Executive's death after the Employment Date but
before the SRB becomes payable, Executive's surviving spouse will receive a
survivor annuity for her life equal to the 50% survivor annuity (based on the
vested SRB accrued to the date of death) which would have been payable if
Executive had terminated his employment immediately prior to the date of his
death (or, if earlier, on his actual Termination Date) and elected to commence
the SRB in the form of a joint and 50% survivor annuity on his 62nd birthday or,
if later, the date of his death, and survived until such payments commenced. If
Executive dies while employed by the Company or an Affiliate, the survivor
annuity will be based on the SRB (accrued to the date of death) as if it were
fully vested. Any such survivor benefit will be paid in any form available under
the Company's tax-qualified defined benefit plans, as elected by Executive's
surviving spouse. The survivor benefit will begin to be paid as soon as is
practicable after Executive's death and shall be subject to a reduction for
commencement prior to the date on which Executive would have attained age 62
based on the Company's tax-qualified defined benefit plan early retirement
factors. The survivor benefit shall be reduced by the amount of any
pre-retirement survivor benefit payable to Executive's surviving spouse under
the qualified and nonqualified defined benefit retirement plans of the Company
and its Affiliates (including without limitation supplemental benefits payable
under Section 2.2 or 3.5 of this Agreement) and Executive's former employers.

         1.10.  RELOCATION.  The Company will pay all costs of the relocation of
Executive and his family from Illinois to Ohio in accordance with the
Company's  relocation  policy,  supplemented  as follows:

                  (a) The Company will reimburse Executive for reasonable
         temporary living expenses for Executive and his family in the Columbus,
         Ohio area for a period not to exceed one year from the Employment Date;

                  (b) The Company will make available to Executive the
         opportunity to sell his present primary residence in Illinois at its
         appraised value through a relocation firm mutually acceptable to
         Executive and the Company; and

                  (c) All relocation reimbursements will be "grossed-up" for
         applicable income and payroll taxes with respect to such reimbursements
         and such "gross-up" payments.

         1.11. REIMBURSEMENT OF EXPENSES. During the Employment Term, Executive
shall be provided with reimbursement of reasonable expenses related to
Executive's employment by the Company on a basis no less favorable than that
which may be authorized from time to time for senior level executives of the
Company.

                                       -6-

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         2. TERMINATION. Executive's employment shall terminate upon the
occurrence of any of the following events:


         2.1. TERMINATION WITHOUT CAUSE. The Company (by action of the Board)
may remove Executive at any time without Cause (as defined in Section 4) from
the position in which Executive is employed hereunder (in which case the
Employment Term shall be deemed to have ended) upon not less than 60 days' prior
written notice pursuant to Section 15 to Executive; provided, however, that, in
the event that such notice is given, Executive shall be under no obligation to
render any additional services to the Company and shall be allowed to seek other
employment.

         2.2. BENEFITS PAYABLE UPON TERMINATION WITHOUT CAUSE.

                   (a) Upon any removal described in Section 2.1 above,
Executive shall be entitled to receive only the amount due to Executive under
the Company's then current severance pay plan for employees, if any. No other
payments or benefits shall be due under this Agreement to Executive, but
Executive shall be entitled to any benefits accrued or earned in accordance with
the terms of any applicable benefit plans and programs of the Company.

                   (b) Notwithstanding the provisions of Section 2.2(a), in the
event of a removal described in Section 2.1 during the Employment Term, if
Executive executes and does not revoke a written release upon such removal or
resignation, substantially in the form attached hereto as EXHIBIT A (the
"Release"), of any and all claims against the Company and all related parties
with respect to all matters arising out of Executive's employment by the
Company, or the termination thereof (other than claims based upon any severance
entitlements under the terms of this Agreement or entitlements under any plans
or programs of the Company under which Executive has accrued a benefit),
Executive shall be entitled to receive the severance benefits described below,
in lieu of the payment described in Section 2.2(a). Payment of the lump sum
benefits described below (other than as described in subsections (ii) and (iv)
below) shall be made within 30 days after Executive's Termination Date (as
defined in Section 4) or the end of the revocation period for the Release, if
later.

         (i) Executive shall receive a lump sum cash payment equal to three
times Executive's annual Base Salary in effect immediately before the
Termination Date (before subtracting salary reduction amounts of Base Salary
under the Company's benefit plans and programs).

         (ii) Executive shall receive Executive's annual short-term incentive
bonus (PIP) for the year in which Executive's Termination Date occurs, at the
time that annual bonuses for the year are paid to other executives, based on the
Company's actual performance for the year, but in an amount not less than
Executive's target annual bonus in effect for the year.

                                       -7-

<PAGE>   8

         (iii) The Company shall pay Executive an amount equal to the after-tax
cost to the Executive of continuing the medical and dental coverage under COBRA
or the Company's retiree medical plan, if applicable, for Executive, and, where
applicable, his or her spouse and dependents, for the greater of (x) the
18-month period following the Termination Date or (y) the Severance Period (as
defined in Section 4). The COBRA health care continuation coverage period under
Section 4980B of the Code (as defined in Section 4) shall run concurrently with
the period described in the preceding sentence.

         (iv) Executive shall receive the following lump sum payments with
respect to the long-term incentive awards (LTPP) in effect for Executive at his
or her Termination Date:

                  (x) Executive shall receive a pro rated portion of each
         outstanding long-term incentive award for which Executive's Termination
         Date does not occur in the final year of the award period (for example,
         if the award period is three years, the awards for which the
         Termination Date occurs in year one or two). The pro rated payment for
         each such long-term incentive award shall be computed as the target
         incentive award in effect for Executive multiplied by a fraction, the
         numerator of which is the number of years that the incentive award has
         been outstanding (including the year in which the Termination Date
         occurs as a whole year) and the denominator of which is the number of
         years in the incentive award period.

                  (y) Executive shall receive each long-term incentive award for
         which Executive's Termination Date occurs in the final year of the
         award period, at the time that such long-term incentive awards are paid
         to other executives, based on the Company's actual performance for the
         award period, but in an amount not less than Executive's target
         long-term incentive award in effect for such period.

The foregoing payments shall be made under the Company's long-term incentive
plan, to the extent consistent with the terms of such plan. If the payments
calculated above exceed the payments actually made to Executive under the
Company's long-term incentive plan with respect to the foregoing awards, any
such excess amount shall be paid to Executive under this Agreement.

         (v) Executive's outstanding stock options and restricted stock with
respect to stock of NFS or any Affiliate of the Company shall become vested and
exercisable on the Termination Date to the extent that such options and
restricted stock would have become vested and exercisable on the next vesting
date had Executive remained an employee of the Company. All other unvested stock
options and restricted stock shall be forfeited, except to the extent that the
applicable grant agreement requires otherwise. No additional grants shall be
made to Executive after Executive's termination of employment.

                                       -8-

<PAGE>   9

         (vi) Executive shall receive supplemental benefits under this Agreement
equal to:

                  (A) the accrued benefits that Executive would have received
         under the Nationwide Retirement Plan, Nationwide Supplemental
         Retirement Plan, Nationwide Excess Benefit Plan, Nationwide Savings
         Plan, Nationwide Supplemental Defined Contribution Plan and Nationwide
         Individual Deferred Compensation Plan, as in effect at Executive's
         Termination Date, had Executive's benefits under those Plans been fully
         vested as of Executive's Termination Date, reduced by

                  (B) the accrued benefits that Executive actually receives
         under the Nationwide Retirement Plan, Nationwide Supplemental
         Retirement Plan, Nationwide Excess Benefit Plan, Nationwide Savings
         Plan, Nationwide Supplemental Defined Contribution Plan and Nationwide
         Individual Deferred Compensation Plan.

The benefits under this  subsection  (vi) shall be paid in the same forms and at
the same times as  Executive's  benefits under the  applicable  Plans  described
above  are paid (or  would  have  been  paid had  Executive's  interests  in the
applicable Plans been fully vested).  The benefits payable under this subsection
(vi) and subsection (vii) below shall not result in any duplication of benefits.

         (vii) If Executive's Termination Date occurs within three years of the
date on which Executive would have been first eligible to retire under the
Nationwide Retirement Plan, Executive shall receive a supplemental benefit under
this Agreement equal to:

                  (A) the accrued  benefits that  Executive  would have received
         under  the  Nationwide   Retirement   Plan,   Nationwide   Supplemental
         Retirement  Plan and  Nationwide  Excess  Benefit  Plan as in effect at
         Executive's  Termination  Date,  had Executive  earned  service and age
         credit for the period  ending on the first to occur of (i) three  years
         after the Termination Date or (ii) the earliest date on which Executive
         would have been  eligible  to retire  under the  Nationwide  Retirement
         Plan,  and had Executive  been fully vested in his or her benefit under
         such Plans, reduced by

                  (B) the accrued  benefits  that  Executive  actually  receives
         under  the  Nationwide   Retirement   Plan,   Nationwide   Supplemental
         Retirement  Plan and  Nationwide  Excess Benefit Plan, and the benefits
         payable  under  subsection  (vi) above with  respect to the  Nationwide
         Retirement Plan, Nationwide Supplemental Retirement Plan and Nationwide
         Excess Benefit Plan.

The  benefits  under this  subsection  (vii)  shall be paid after the end of the
Severance Period in the same forms and at the same times as Executive's benefits
under the  applicable  Nationwide  Plans  are paid (or would  have been paid had
Executive's interests in the applicable Plans been fully vested).

                                       -9-

<PAGE>   10

         (viii) The Company shall pay Executive a lump sum cash payment equal to
the matching contributions that the Company would have made for Executive under
the Nationwide Savings Plan and the Nationwide Supplemental Defined Contribution
Plan, as in effect at Executive's Termination Date, as if Executive continued in
employment for the Severance Period, receiving compensation at a rate equal to
Executive's covered compensation amount for the calendar year prior to the year
in which the Termination Date occurs and as if Executive continued the same rate
of contributions to those plans as in effect immediately before Executive's
Termination Date.

         (ix) The Company shall cause Executive to receive service and age
credit for purposes of eligibility under the Company's retiree medical plan, and
service credit for purposes of cost-sharing, until the end of the Severance
Period, as if Executive had continued in employment during the Severance Period.

         (x) During the Severance Period, the Company shall pay or reimburse
Executive for the cost of outplacement assistance services (not to exceed a
total of $11,000) provided by any outplacement agency selected by Executive.

         (xi) During the Severance Period, the Company shall pay or reimburse
Executive for financial counseling services from the Company's financial
counseling vendor in an annual amount equal to the value of the financial
counseling services provided by the Company annually to Executive immediately
before Executive's Termination Date.

         (xii) Executive shall have the right to purchase from the Company the
Company-provided automobile used by Executive at Executive's Termination Date,
at a price equal to the then fair market value of the automobile.

         (xiii) Executive shall have the right to retain the computer, printer,
fax machine and office furniture that was provided by the Company for use by
Executive at his residence at the Termination Date.

         (xiv) Executive can elect to have the Company transfer to Executive the
country club membership that Executive received in connection with his
employment with the Company, or Executive can elect to have the Company provide
a loss of membership payment to Executive under the terms of the Company's
country club membership program in effect for senior level executives at
Executive's Termination Date.

         (xv) Executive shall receive any other amounts earned, accrued or owing
but not yet paid under Section 1 above and any other benefits in accordance with
the terms of any applicable plans and programs of the Company.

                                      -10-

<PAGE>   11

         2.3. RETIREMENT OR OTHER VOLUNTARY TERMINATION. Executive may
voluntarily terminate employment for any reason, including voluntary retirement,
upon 30 days' prior written notice pursuant to Section 15, without liability
other than as elsewhere provided herein. Without limiting other provisions of
this Agreement, such termination shall not affect Executive's continuing
obligations under Sections 6, 7, 8, 10, 11 and 14 through 22 of this Agreement,
which shall continue in effect according to their terms. After the effective
date of a voluntary termination, except as provided in Section 3.3 or 3.4 (with
respect to a resignation for Good Reason or a resignation during a Window
Period), no further payments shall be due under this Agreement. However,
Executive shall be entitled to any benefits due in accordance with the terms of
any applicable benefit plans and programs of the Company.

         2.4. DISABILITY. The Company (by action of the Board) may terminate
Executive's employment if Executive has been unable to perform the essential
functions of his position with the Company, even with reasonable accommodation,
by reason of physical or mental incapacity for a period of six consecutive
months ("Disability"); provided, however, that the Company shall continue to pay
Executive's Base Salary until the Company acts to terminate Executive's
employment. Executive agrees, in the event of a dispute under this Section 2.4
relating to Executive's Disability, to submit to a physical examination by a
licensed physician selected by the Board. Executive acknowledges that the
provisions of this Section 2.4 supersede the employment termination provisions
otherwise applied to disabled employees. If Executive's employment terminates on
account of Disability, no further payments shall be due under this Agreement.
However, Executive shall be entitled to (i) any benefits due in accordance with
the terms of any applicable benefit plans and programs of the Company and (ii) a
pro rated bonus for the year in which Executive's Disability occurs, which bonus
shall be calculated according to Section 2.2(b)(ii) above.

         2.5. DEATH. If Executive dies while employed by the Company, the
Company shall pay to Executive's executor, legal representative, administrator
or designated beneficiary, as applicable, (i) any amounts earned, accrued or
owing but not yet paid under Section 1 above and any benefits accrued or earned
under the Company's benefit plans and programs according to the terms of such
plans and (ii) a pro rated bonus for the year in which Executive's death occurs,
which bonus shall be calculated according to Section 2.2(b)(ii) above.
Otherwise, the Company shall have no further liability or obligation under this
Agreement to Executive's executors, legal representatives, administrators, heirs
or assigns.

         2.6. CAUSE. The Company (by action of the Board) may terminate
Executive's employment at any time for Cause upon written notice to Executive,
in which event all payments under this Agreement shall cease, except for Base
Salary to the extent already accrued. Executive shall be entitled to any
benefits accrued or earned before his termination in accordance with the terms
of any applicable benefit plans and programs of the Company; provided that
Executive shall not be entitled to receive any unpaid short-term or long-term
cash incentive payments or unvested options.

                                      -11-

<PAGE>   12

         3.   CHANGE OF CONTROL.

         3.1. EFFECT OF CHANGE OF CONTROL. If a Change of Control occurs and
Executive's employment terminates under the circumstances described below, the
provisions of this Section 3 shall apply, instead of the provisions of Section
2.1 and 2.2.

         3.2. TERMINATION WITHOUT CAUSE UPON OR AFTER A CHANGE OF CONTROL. Upon
or after a Change of Control, the Company (by action of the Board) may remove
Executive at any time without Cause from the position in which Executive is
employed hereunder (in which case the Employment Term shall be deemed to have
ended) upon not less than 60 days' prior written notice pursuant to Section 15
to Executive; provided, however, that, in the event that such notice is given,
Executive shall be under no obligation to render any additional services to the
Company and shall be allowed to seek other employment.

         3.3. RESIGNATION FOR GOOD REASON UPON OR AFTER A CHANGE OF CONTROL.
Upon or after a Change of Control, Executive may initiate termination of
employment by resigning under this Section 3 for Good Reason (as defined in
Section 4). Executive shall give the Company not less than 60 days' prior
written notice pursuant to Section 15 of such resignation.

         3.4. RESIGNATION DURING A WINDOW PERIOD. If a Change of Control occurs,
Executive may initiate termination of employment by resigning under this Section
3.4 with or without Good Reason during the one month period beginning on the
first anniversary of the consummation of the Change of Control (the "Window
Period"). Executive shall give the Company written notice pursuant to Section 15
during the Window Period of such resignation, with the Termination Date to be
effective not less than 60 days after the date of such notice.

         3.5. BENEFITS PAYABLE UPON TERMINATION WITHOUT CAUSE, RESIGNATION FOR
GOOD REASON OR RESIGNATION DURING A WINDOW PERIOD UPON OR AFTER A CHANGE OF
CONTROL.


                   (a) Upon any removal or resignation described in Section 3.2,
3.3 or 3.4 above, Executive shall be entitled to receive only the amount due to
Executive under the Company's then current severance pay plan for employees, if
any. No other payments or benefits shall be due under this Agreement to
Executive, but Executive shall be entitled to any benefits accrued or earned in
accordance with the terms of any applicable benefit plans and programs of the
Company.

                   (b) Notwithstanding the provisions of Section 3.5(a), in the
event of a removal or resignation described in Section 3.2, 3.3 or 3.4 that
occurs upon or after a Change of Control and during the Employment Term, if
Executive executes and does not revoke a written Release upon such removal or
resignation, Executive shall be entitled to receive the severance benefits
described below, in lieu of the payment described in Section 3.5(a). Payment of
the lump sum benefits described below (other than as described in subsection
(ii) below) shall be made within

                                      -12-

<PAGE>   13

30 days after Executive's Termination Date or the end of the revocation period
for the Release, if later.

          (i) Executive shall receive a lump sum cash payment equal to three
     times Executive's Compensation (as defined in Section 4).

          (ii) Executive shall receive Executive's annual short-term incentive
     bonus (PIP) for the year in which Executive's Termination Date occurs, at
     the time that annual bonuses for the year are paid to other executives,
     based on the Company's performance for the year but in an amount not less
     than Executive's target annual bonus in effect for the year in which the
     Termination Date occurs.

          (iii) During the Severance Period, the Company shall cause Executive,
     and, where applicable, his spouse and dependents, to continue to be
     eligible for the medical, dental and life insurance coverage in effect
     immediately before the Change of Control (or generally comparable coverage)
     as if Executive had continued in employment during the Severance Period,
     and the Company shall pay the cost of such coverage; or, as an alternative,
     at the Company's election, the Company may pay Executive cash in lieu of
     such coverage in an amount equal to Executive's after-tax cost of
     continuing such coverage. The COBRA health care continuation coverage
     period under Section 4980B of the Code shall run concurrently with the
     Severance Period. If Executive qualifies for retiree medical coverage from
     the Company during any portion of the Severance Period, the Company may
     provide such retiree medical coverage during such portion of the Severance
     Period in lieu of the foregoing coverage.

          (iv) Executive shall receive a lump sum payment equal to the long-term
     incentive awards (LTPP) in effect for Executive on the Termination Date,
     based on the Company's actual performance through the Termination Date, but
     in an amount not less than the total target long-term incentive awards in
     effect for Executive on the Termination Date. The foregoing payment shall
     be made under the Company's long-term incentive plan, to the extent
     consistent with the terms of such plan. If the payment calculated above
     exceeds the payment actually made to Executive under the Company's
     long-term incentive plan with respect to the foregoing awards, any such
     excess benefit shall be paid to Executive under this Agreement.

          (v) All stock options and restricted stock with respect to stock of
     NFS or any Affiliate of the Company that are held by Executive shall become
     fully vested and exercisable as of the Termination Date (if not already
     vested and exercisable pursuant to the terms of the applicable plan).

          (vi) Executive shall receive a supplemental benefit under this
     Agreement equal to:

                                      -13-

<PAGE>   14

                  (A) the accrued benefits that Executive would have received
         under the Nationwide Savings Plan, Nationwide Supplemental Defined
         Contribution Plan and Nationwide Individual Deferred Compensation Plan,
         as in effect immediately before the Change of Control had Executive's
         benefits under those Plans been fully vested as of Executive's
         Termination Date, reduced by

                  (B) the accrued benefits that Executive actually receives
         under the Nationwide Savings Plan, Nationwide Supplemental Defined
         Contribution Plan and Nationwide Individual Deferred Compensation Plan.

The benefits under this subsection (vi) shall be paid in the same forms and at
the same times as the benefits under the applicable Plans described above are
paid (or would have been paid had Executive's interests in the applicable Plans
been fully vested), as in effect immediately before the Change of Control. The
benefits under this subsection (vi) and subsection (vii) below shall not result
in any duplication of benefits.

          (vii) Executive shall receive a supplemental benefit under this
     Agreement equal to:

                  (A) the accrued benefits that Executive would have received
         under the Nationwide Retirement Plan, Nationwide Supplemental
         Retirement Plan and Nationwide Excess Benefit Plan had Executive
         received credit for eligibility, age, compensation and benefit accrual
         purposes during the Severance Period under the Nationwide Retirement
         Plan, Nationwide Supplemental Retirement Plan and Nationwide Excess
         Benefit Plan, each as in effect immediately before the Change of
         Control, calculated as if Executive had continued in employment during
         the Severance Period, receiving compensation at the same times as
         compensation is normally paid and in amounts equal to the Compensation,
         and as if Executive had been fully vested in his benefits under such
         Plans, reduced by

                  (B) the accrued benefits that Executive actually receives
         under the Nationwide Retirement Plan, Nationwide Supplemental
         Retirement Plan and Nationwide Excess Benefit Plan.

The benefits under this subsection (vii) shall be paid after the end of the
Severance Period in the same forms and at the same times as benefits under the
applicable Plans described above are paid (or would have been paid had
Executive's interests in the applicable Plans been fully vested), as in effect
immediately before the Change of Control.

          (viii) The Company shall pay Executive a lump sum cash payment equal
     to the matching contributions that the Company would have made for
     Executive under the Nationwide Savings Plan and the Nationwide Supplemental
     Defined Contribution Plan, as in effect immediately before the Change of
     Control, as if Executive continued in employment for the Severance Period
     receiving Executive's Compensation and as if Executive continued the

                                      -14-

<PAGE>   15

same rate of contributions to those plans as in effect immediately before
Executive's Termination Date.

          (ix) The Company shall cause Executive to receive service and age
     credit for purposes of eligibility, and service credit for purposes of
     cost-sharing, under the Company's retiree medical plan until the end of the
     Severance Period, as if Executive had continued in employment during that
     period.

          (x) During the Severance Period, the Company shall pay or reimburse
     Executive for the cost of outplacement assistance services (not to exceed a
     total of $11,000) provided by any outplacement agency selected by
     Executive.

          (xi) During the Severance Period, the Company shall pay or reimburse
     Executive for financial counseling services from the Company's financial
     counseling vendor in an annual amount equal to the value of the financial
     counseling services provided by the Company annually to Executive
     immediately before the Change of Control.

          (xii) Executive may continue to use the Company-provided automobile
     used by Executive at Executive's Termination Date during the Severance
     Period. At the end of the Severance Period, Executive shall have the right
     to purchase the automobile from the Company, at a price equal to the then
     fair market value of the automobile.

          (xiii) Executive shall have the right to retain the computer, printer,
     fax machine and office furniture that was provided by the Company for use
     by Executive at his residence at the Termination Date.

          (xiv) During the Severance Period, the Company shall continue to pay
     the dues on the country club membership that Executive received in
     connection with his employment with the Company. At the end of the
     Severance Period, Executive can elect to have the Company transfer the
     country club membership to Executive, or Executive can elect to have the
     Company provide a loss of membership payment to Executive under the terms
     of the Company's country club membership program in effect for senior level
     executives at Executive's Termination Date.

          (xv) Executive shall receive any other amounts earned, accrued or
     owing but not yet paid under Section 1 above and any other benefits in
     accordance with the terms of any applicable plans and programs of the
     Company.

         3.6.  INCREASE IN PAYMENTS UPON A CHANGE OF CONTROL.


         (a) Anything in this Agreement to the contrary notwithstanding, in the
event that it shall be determined that any payment or distribution by the
Company to or for the benefit of Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this

                                      -15-

<PAGE>   16

Agreement or otherwise (a "Payment"), would constitute an "excess parachute
payment" within the meaning of Section 280G of the Code, the Company shall pay
Executive an additional amount (the "Gross-Up Payment") such that the net amount
retained by Executive after deduction of any excise tax imposed under Section
4999 of the Code, any federal, state and local income tax, employment tax and
excise tax imposed upon the Gross-Up Payment and any interest and penalties
imposed with respect to the foregoing taxes shall be equal to the Payment. For
purposes of determining the amount of the Gross-Up Payment, unless Executive
specifies that other rates apply, Executive shall be deemed to pay federal
income tax and employment taxes at the highest marginal rate of federal income
and employment taxation in the calendar year in which the Gross-Up Payment is to
be made and state and local income taxes at the highest marginal rate of
taxation in the state and locality of Executive's residence on Executive's
Termination Date, net of the maximum reduction in federal income taxes that may
be obtained from the deduction of such state and local taxes.

         (b) All determinations to be made under this Section 3.6 shall be made
by the Company's independent public accountant immediately prior to the Change
of Control (the "Accounting Firm"), which firm shall provide its determinations
and any supporting calculations both to the Company and Executive within 20 days
after Executive's Termination Date. Any such determination by the Accounting
Firm shall be binding upon the Company and Executive. Within ten days after the
Accounting Firm's determination, the Company shall pay the Gross-Up Payment to
Executive.

         (c) Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of a Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after Executive knows of such
claim and shall apprise the Company of the nature of such claim and the date on
which such claim is requested to be paid. Executive shall not pay such claim
prior to the expiration of the 30-day period following the date on which
Executive gives such notice to the Company (or such shorter period ending on the
date that any payment of taxes with respect to such claim is due). If the
Company notifies Executive in writing prior to the expiration of such period
that it desires to contest such claim, Executive shall:

          (i) give the Company any information reasonably requested by the
     Company relating to such claim,

          (ii) take such action in connection with contesting such claim as the
     Company shall reasonably request in writing from time to time, including,
     without limitation, accepting legal representation with respect to such
     claim by an attorney reasonably selected by the Company,

          (iii) cooperate with the Company in good faith in order to contest
     such claim effectively, and

                                      -16-

<PAGE>   17

          (iv) permit the Company to participate in any proceedings relating to
     such claim;

provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold Executive harmless, on an
after-tax basis, for any excise tax, income tax or employment tax, including
interest and penalties, with respect thereto, imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 3.6, the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forego any and all administrative appeals, proceedings, hearing and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct Executive to pay the tax claimed and sue for a refund
or contest the claim in any permissible manner, and Executive agrees to
prosecute such contest to a termination before any administrative tribunal, in a
court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine. If the Company directs Executive to pay such claim and
sue for a refund, the Company shall advance the amount of such payment to
Executive on an interest-free basis and shall indemnify and hold Executive
harmless, on an after-tax basis, from any excise tax, income tax or employment
tax, including interest or penalties with respect thereto, imposed with respect
to such advance or with respect to any imputed income with respect to such
advance. Any extension of the statute of limitations relating to payment of
taxes for the taxable year of Executive with respect to which such contested
amount is claimed to be due shall be limited solely to such contested amount.
The Company's control of the contest shall be limited to issues with respect to
which a Gross-Up Payment would be payable hereunder, and Executive shall be
entitled to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.

         (d) If, after the receipt by Executive of an amount advanced by the
Company pursuant to this Section, Executive becomes entitled to receive any
refund with respect to such claim, Executive shall (subject to the Company's
complying with the requirements of subsection (c)) promptly pay to the Company
the amount of such refund, together with any interest paid or credited thereon
after taxes applicable thereto. If, after the receipt by Executive of an amount
advanced by the Company pursuant to this Section 3.6, a determination is made
that Executive shall not be entitled to any refund with respect to such claim
and the Company does not notify Executive in writing of its intent to contest
such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.

         (e) All of the fees and expenses of the Accounting Firm in performing
the determinations referred to in subsections (b), (c) and (d) above shall be
borne solely by the Company. The Company agrees to indemnify and hold harmless
the Accounting Firm from any and all claims, damages and expenses resulting from
or relating to its determinations pursuant to

                                      -17-

<PAGE>   18

subsections (b), (c) and (d) above, except for claims, damages or expenses
resulting from the gross negligence or wilful misconduct of the Accounting Firm.

         4.  DEFINITIONS.  For purposes of this Agreement, the following terms
shall have the meanings specified in this Section 4:

                   (a) "Affiliate" shall mean any subsidiary of the Company and
any other entity that, directly or indirectly, through one or more
intermediaries, is controlled by or is under common control with the Company, as
determined by the Board.

                   (b) "Cause" shall mean any of the following grounds for
termination of Executive's employment:

          (i) Executive shall have been convicted of a felony;

          (ii) Executive neglects, refuses or fails to perform his material
     duties to the Company (other than a failure resulting from Executive's
     incapacity due to physical or mental illness), which failure has continued
     for a period of at least 30 days after a written notice of demand for
     substantial performance, signed by a duly authorized officer of the
     Company, has been delivered to Executive specifying the manner in which
     Executive has failed substantially to perform;

          (iii) Executive engages in misconduct in the performance of his
     duties;

          (iv) Executive engages in public conduct that is harmful to the
     reputation of the Company;

          (v) Executive breaches any written non-competition, non-disclosure or
     non-solicitation agreement in effect with the Company, including without
     limitation the provisions of Section 6 or 7 of this Agreement; or

          (vi) Executive breaches the Company's written code of business conduct
     and ethics.

                   (c) "Change of Control" shall mean the happening of any of
the following events with respect to the Company, as described in subsections
(i) and (ii) below:

          (i) The following events shall constitute a Change of Control:

               (A) A sale or other disposition of all or substantially all of
          the assets of the Company;

               (B) A liquidation or dissolution of the Company;

                                      -18-

<PAGE>   19

               (C) A change in the composition of 50% or more of the members
         of the Board as a result of a merger, financial arrangement (such as
         the sale of surplus notes of the Company) or other corporate
         transaction, such that the directors who were members of the Board
         immediately before the transaction cease, within two years after the
         transaction, to constitute 50% or more of the board of directors of the
         Company or the successor corporation;

               (D) Entry into an affiliation agreement giving any individual,
          entity or group, other than policyholders, the power to direct or
          cause the direction of the management and policies of the Company;

               (E) Entry into an agreement reinsuring all or substantially all
          the business of the Company (other than through an Affiliate of the
          Company); or

               (F) Consummation of a sale or other disposition of a controlling
          interest in the Company, other than to a direct or indirect wholly
          owned subsidiary of the Company.

          (ii) In addition to the foregoing, the Board may determine, in its
     sole discretion, that any of the events described below shall constitute a
     Change of Control for purposes of this Agreement. None of the events
     described in this Section 4(c)(ii) shall be considered a Change of Control
     for purposes of this Agreement unless the Board determines, in a written
     resolution, that the event shall be considered a Change of Control for
     purposes of this Agreement, and nothing in this Agreement shall obligate
     the Board to make any such determination. The following events may
     constitute a Change of Control if so designated by the Board:

               (A) A demutualization of the Company;

               (B) Establishment of a mutual holding company structure for the
          Company; or

               (C) Any reorganization or other event that the Board considers
          appropriate to characterize as a Change of Control for purposes of
          this Agreement.

               (d) "Code" shall mean the Internal Revenue Code of 1986, as
          amended.

               (e) "Compensation" shall mean (i) Executive's annualized Base
          Salary in effect at Executive's Termination Date (or immediately
          before a Change of Control, if greater), plus (ii) the target annual
          bonus in effect for Executive for the year in which the Termination
          Date occurs (or the year in which a Change of Control occurs, if
          greater), together with (iii) all salary reduction authorized amounts
          of such compensation under any of the Company's benefit plans or
          programs for such calendar year. "Compensation" shall not include the
          value of any long-term incentive compensation, restricted stock or
          stock options or any exercise thereunder.

                                      -19-

<PAGE>   20

               (f) "Exchange Act" shall mean the Securities Exchange Act of
          1934, as amended.

               (g) "Good Reason" shall mean the occurrence of any of the
          following events, upon or after a Change of Control, except in
          connection with the termination of Executive's employment for
          Disability, Cause, as a result of death or by Executive other than for
          Good Reason and except as provided in the last sentence of this
          subsection (g):

                    (i) A change in Executive's position and responsibilities
               (including reporting responsibilities) that represents a
               substantial diminution, as reasonably determined by the Board, of
               Executive's position and responsibilities as in effect
               immediately prior thereto;

                    (ii) The relocation of the offices of the Company at which
               Executive is principally employed to a location more than 50
               miles from the location of such offices immediately prior to the
               relocation, or the Company's requiring Executive to be based
               anywhere other than such offices, except for required travel on
               the Company's business to an extent substantially consistent with
               the Executive's business travel obligations at the date of this
               Agreement;

                    (iii) The failure of the Company to provide Executive with
               aggregate compensation (Base Salary and target long-term and
               short-term incentive compensation) or aggregate benefits that are
               at least equal (in terms of benefit levels and reward
               opportunities) to those provided by the Company to Executive
               immediately before the change; provided, however, that a change
               in compensation or benefits for all executives of the Company, in
               which Executive is treated similarly as all other executives of a
               comparable responsibility level, shall not constitute Good Reason
               under this Agreement; or

                    (iv) The failure of the Company to obtain from its
               successors the express assumption and agreement required under
               Section 16 hereof.

Notwithstanding the foregoing, Executive shall not have Good Reason for
termination if, within 60 days after the date on which Executive gives notice of
his termination, as provided in Section 5, the Company corrects the action or
failure to act that constitutes the grounds for termination for Good Reason as
set forth in Executive's notice of termination.

         (h) "Termination Date" shall mean the effective date of the termination
of Executive's employment relationship with the Company pursuant to this
Agreement.

         (i) "Severance Period" shall mean the period beginning on Executive's
Termination Date and ending three years after the Termination Date.

                                      -20-

<PAGE>   21

         5. NOTICE OF TERMINATION. Any termination of Executive's employment
shall be communicated by a written notice of termination to the other party
hereto given in accordance with Section 15. The notice of termination shall (i)
indicate the specific termination provision in this Agreement relied upon, (ii)
briefly summarize the facts and circumstances deemed to provide a basis for a
termination of employment and the applicable provision hereof, and (iii) specify
the Termination Date in accordance with the requirements of this Agreement.

         6. CONFIDENTIAL INFORMATION. Executive recognizes and acknowledges
that, by reason of Executive's employment by and service to the Company during
and, if applicable, after the Employment Term, Executive will continue to have
access to certain confidential and proprietary information relating to the
business of the Company, which may include, but is not limited to, trade
secrets, trade "know-how", customer information, supplier information, cost and
pricing information, marketing and sales techniques, strategies and programs,
computer programs and software and financial information (collectively referred
to as "Confidential Information"). Executive acknowledges that such Confidential
Information is a valuable and unique asset of the Company and Executive
covenants that Executive will not, unless expressly authorized in writing by the
Board, at any time during the course of Executive's employment, use any
Confidential Information or divulge or disclose any Confidential Information to
any person, firm or corporation except in connection with the performance of
Executive's duties for the Company and in a manner consistent with the Company's
policies regarding Confidential Information. Executive also covenants that at
any time after the termination of such employment, directly or indirectly,
Executive will not use any Confidential Information or divulge or disclose any
Confidential Information to any person, firm or corporation, unless such
information is in the public domain through no fault of Executive or except when
required to do so by law or legal process, in which case Executive will inform
the Company in writing promptly of such required disclosure, but in any event at
least two business days prior to disclosure. All written Confidential
Information (including, without limitation, in any computer or other electronic
format) which comes into Executive's possession during the course of Executive's
employment shall remain the property of the Company. Except as required in the
performance of Executive's duties for the Company, or unless expressly
authorized in writing by the Board, Executive shall not remove any written
Confidential Information from the Company's premises, except in connection with
the performance of Executive's duties for the Company and in a manner consistent
with the Company's policies regarding Confidential Information. Upon termination
of Executive's employment, Executive agrees immediately to return to the Company
all written Confidential Information in Executive's possession. For the purposes
of this Section 6, the term "Company" shall be deemed to include the Company,
its Affiliates and their successors.

         7. NON-COMPETITION; NON-SOLICITATION.

                   (a) During Executive's employment by the Company and for a
period of two years after Executive's termination of employment for any reason,
Executive will not, except with the prior written consent of the Board, directly
or indirectly, own, manage, operate, join, control, finance or participate in
the ownership, management, operation, control or financing of,

                                      -21-

<PAGE>   22

or be connected as an officer, director, employee, partner, principal, agent,
representative, consultant or otherwise with, or use or permit Executive's name
to be used in connection with, any business or enterprise which is engaged in
any financial services, insurance or other business that is competitive with any
business or enterprise in which the Company is engaged, anywhere in the world,
during Executive's employment or (with respect to the application of this
covenant after Executive's termination of employment) during the two year period
preceding Executive's termination of employment. The parties acknowledge that
the Company engages in its business on a worldwide basis, and Executive
acknowledges that his responsibilities extend to the Company's worldwide
operations.

                   (b) The foregoing restrictions shall not be construed to
prohibit the ownership by Executive of less than five percent of any class of
securities of any corporation which is engaged in any of the foregoing
businesses having a class of securities registered pursuant to the Exchange Act,
provided that such ownership represents a passive investment and that neither
Executive nor any group of persons including Executive in any way, either
directly or indirectly, manages or exercises control of any such corporation,
guarantees any of its financial obligations, otherwise takes any part in its
business, other than exercising Executive's rights as a shareholder, or seeks to
do any of the foregoing.

                   (c) Executive further covenants and agrees that during
Executive's employment by the Company and for a period of one year thereafter,
Executive will not, except with the prior written consent of the Board, directly
or indirectly, solicit or hire, or encourage the solicitation or hiring of, any
person who was a managerial or higher level employee of the Company at any time
during the term of Executive's employment by the Company by any employer other
than the Company for any position as an employee, independent contractor,
consultant or otherwise. The foregoing covenant of Executive shall not apply to
any person after 12 months have elapsed after the date on which such person's
employment by the Company has terminated.

                   (d) The covenants described in this Section 7 shall continue
to apply during the period specified herein after Executive's termination of
employment for any reason, without regard to whether Executive executes a
Release or receives any severance benefits as a result of such termination. If
Executive breaches any of the covenants described in this Section 7, the
applicable period during which the covenant applies shall be tolled during the
period of the breach.

                   (e) For the purposes of this Section 7, the term "Company"
shall be deemed to include the Company, its Affiliates and their successors.

                                      -22-

<PAGE>   23

         8.  EQUITABLE RELIEF.

                   (a) Executive acknowledges and agrees that the restrictions
contained in Sections 6 and 7 are reasonable and necessary to protect and
preserve the legitimate interests, properties, goodwill and business of the
Company, that the Company would not have entered into this Agreement in the
absence of such restrictions and that irreparable injury will be suffered by the
Company should Executive breach any of the provisions of those Sections.
Executive represents and acknowledges that (i) Executive has been advised by the
Company to consult Executive's own legal counsel in respect of this Agreement,
and (ii) Executive has had full opportunity, prior to execution of this
Agreement, to review thoroughly this Agreement with Executive's counsel.

                   (b) Executive further acknowledges and agrees that a breach
of any of the restrictions in Sections 6 and 7 cannot be adequately compensated
by monetary damages. Executive agrees that the Company shall be entitled to
preliminary and permanent injunctive relief, without the necessity of proving
actual damages, as well as an equitable accounting of all earnings, profits and
other benefits arising from any violation of Sections 6 or 7 hereof, which
rights shall be cumulative and in addition to any other rights or remedies to
which the Company may be entitled. In the event that any of the provisions of
Sections 6 or 7 hereof should ever be adjudicated to exceed the time,
geographic, service, or other limitations permitted by applicable law in any
jurisdiction, it is the intention of the parties that the provision shall be
amended to the extent of the maximum time, geographic, service, or other
limitations permitted by applicable law, that such amendment shall apply only
within the jurisdiction of the court that made such adjudication and that the
provision otherwise be enforced to the maximum extent permitted by law.

                   (c) Notwithstanding anything in this Agreement to the
contrary, if Executive breaches any of Executive's obligations under Sections 6
or 7 hereof, the Company shall thereafter be obligated only for the accrued,
vested compensation and other benefits provided for in this Agreement or in any
Company benefit plans, policies or practices then applicable to Executive in
accordance with the terms thereof, except that all payments under Sections 1.9,
2 and 3 of this Agreement shall cease.

                   (d) Executive irrevocably and unconditionally (i) agrees that
any suit, action or other legal proceeding arising out of Section 6 or 7 hereof,
including without limitation, any action commenced by the Company for
preliminary and permanent injunctive relief and other equitable relief, may be
brought in a United States District Court for Ohio, or if such court does not
have jurisdiction or will not accept jurisdiction, in any court of general
jurisdiction in Columbus, Ohio, (ii) consents to the non-exclusive jurisdiction
of any such court in any such suit, action or proceeding, and (iii) waives any
objection which Executive may have to the laying of venue of any such suit,
action or proceeding in any such court. Executive also irrevocably and
unconditionally consents to the service of any process, pleadings, notices or
other papers in a manner permitted by the notice provisions of Section 15
hereof.

                                      -23-

<PAGE>   24

                   (e) Executive agrees that for a period of three years
following the termination of Executive's employment for any reason, Executive
will provide, and at all times after the date hereof the Company may similarly
provide, a copy of Sections 6 and 7 hereof to any business or enterprise (i)
which Executive may directly or indirectly own, manage, operate, finance, join,
control or in which Executive may participate in the ownership, management,
operation, financing, or control, or (ii) with which Executive may be connected
as an officer, director, employee, partner, principal, agent, representative,
consultant or otherwise, or in connection with which Executive may use or permit
to be used Executive's name; provided, however, that this provision shall not
apply in respect of Section 7 after expiration of the time periods set forth
therein.

                   (f) For the purposes of this Section 8, the term "Company"
shall be deemed to include the Company, its Affiliates and their successors.

          9. INDEMNIFICATION. The Company shall indemnify Executive with respect
to his actions in the performance of his duties as set forth in Section 1.3 to
the fullest extent permitted by the Company's Amended and Restated Code of
Bylaws as in effect from time to time.

         10.  NON-EXCLUSIVITY OF RIGHTS; RESIGNATION FROM BOARDS.

                   (a) Nothing in this Agreement shall prevent or limit
Executive's continuing or future participation in or rights under any benefit,
bonus, incentive or other plan or program provided by the Company and for which
Executive may qualify; provided, however, that if Executive becomes entitled to
and receives the payments described in Section 2.2(b) or 3.5(b) of this
Agreement, Executive hereby waives Executive's right to receive payments under
any severance plan or similar program applicable to all employees of the
Company.

                   (b) If Executive's employment with the Company terminates for
any reason, Executive shall immediately resign from all boards of directors of
the Company, any Affiliates and any other entities for which Executive serves as
a representative of the Company.

         11. SURVIVORSHIP. The respective rights and obligations of the parties
under this Agreement (including without limitation Sections 6, 7 and 8) shall
survive any termination of Executive's employment to the extent necessary to the
intended preservation of such rights and obligations.

         12. MITIGATION. Executive shall not be required to mitigate the amount
of any payment or benefit provided for in this Agreement by seeking other
employment or otherwise, and there shall be no offset against amounts due
Executive under this Agreement on account of any remuneration attributable to
any subsequent employment that Executive may obtain.

                                      -24-

<PAGE>   25

         13. BENEFIT PLANS; OUTSTANDING AWARDS. All references in this Agreement
to specific retirement or other benefit plans of the Company shall be deemed to
include any successor retirement or other benefit plans. The terms of
Executive's outstanding stock options, restricted stock and long-term incentive
awards are hereby amended to provide that, without adversely affecting any
rights that Executive has under such award agreements, the award agreements are
amended to provide for the accelerated vesting and payments upon termination of
employment as provided in Sections 2.2(b)(iv), 2.2(b)(v), 3.5(b)(iv) and
3.5(b)(v) of this Agreement, to the extent consistent with the applicable plans.
In all respects not amended, the provisions of such outstanding awards shall
remain in effect according to their terms.

         14. ARBITRATION; EXPENSES. In the event of any dispute under the
provisions of this Agreement, other than a dispute in which the primary relief
sought is an equitable remedy such as an injunction, the parties shall be
required to have the dispute, controversy or claim settled by arbitration in
Columbus, Ohio in accordance with the National Rules for the Resolution of
Employment Disputes then in effect of the American Arbitration Association,
before a panel of three arbitrators, two of whom shall be selected by the
Company and Executive, respectively, and the third of whom shall be selected by
the other two arbitrators. Any award entered by the arbitrators shall be final,
binding and nonappealable and judgment may be entered thereon by either party in
accordance with applicable law in any court of competent jurisdiction. This
arbitration provision shall be specifically enforceable. The arbitrators shall
have no authority to modify any provision of this Agreement or to award a remedy
for a dispute involving this Agreement other than a benefit specifically
provided under or by virtue of the Agreement. In the event of a dispute, each
party shall be responsible for its own expenses (including attorneys' fees)
relating to the conduct of the arbitration, and the parties shall share equally
the fees of the American Arbitration Association. Each party shall give the
other party written notice as described in Section 15 of its intent to submit a
claim under this Agreement to arbitration and a description of the basis of such
claim, within six months after the event giving rise to the claim occurs.

         15. NOTICES. All notices and other communications required or permitted
under this Agreement or necessary or convenient in connection herewith shall be
in writing and shall be deemed to have been given when hand delivered or mailed
by registered or certified mail, as follows (provided that notice of change of
address shall be deemed given only when received):

         If to the Company, to:

               Nationwide Mutual Insurance Company
               One Nationwide Plaza, 1-35-03
               Columbus, OH  43215
               Attention:  Senior Vice President - Chief Human Resources Officer
                           Senior Vice President - General Counsel

                                      -25-

<PAGE>   26

         With a required copy to:

                  Morgan, Lewis & Bockius LLP
                  1701 Market Street
                  Philadelphia, PA  19103-2921
                  Attention:  Francis M. Milone

         If to Executive, to:

                  W.G. Jurgensen
                  1551 North Green Bay Road
                  Lake Forest, IL  60045

         With a required copy to:

                  Vedder, Price, Kaufman & Kammholz
                  222 North LaSalle Street, Suite 2600
                  Chicago, IL  60601
                  Attention:  Robert J. Stucker

or to such other names or addresses as the Company or Executive, as the case may
be, shall designate by notice to each other person entitled to receive notices
in the manner specified in this Section.

         16.      CONTENTS OF AGREEMENT; AMENDMENT AND ASSIGNMENT.

                   (a) This Agreement sets forth the entire understanding
between the parties hereto with respect to the subject matter hereof and cannot
be changed, modified, extended or terminated except upon written amendment
approved by the Board and executed on its behalf by a duly authorized officer of
the Company and by Executive.

                   (b) All of the terms and provisions of this Agreement shall
be binding upon and inure to the benefit of and be enforceable by the respective
heirs, executors, administrators, legal representatives, successors and assigns
of the parties hereto, except that the duties and responsibilities of Executive
under this Agreement are of a personal nature and shall not be assignable or
delegatable in whole or in part by Executive. The Company shall require any
successor (whether direct or indirect, by purchase, merger, consolidation,
reorganization or otherwise) to all or substantially all of the business or
assets of the Company, within 15 days of such succession, expressly to assume
and agree to perform this Agreement in the same manner and to the same extent as
the Company would be required to perform if no such succession had taken place.

                                      -26-

<PAGE>   27

         17. SEVERABILITY. If any provision of this Agreement or application
thereof to anyone or under any circumstances is adjudicated to be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect any other provision or application of this Agreement which can be given
effect without the invalid or unenforceable provision or application and shall
not invalidate or render unenforceable such provision or application in any
other jurisdiction. If any provision is held void, invalid or unenforceable with
respect to particular circumstances, it shall nevertheless remain in full force
and effect in all other circumstances.

         18. REMEDIES CUMULATIVE; NO WAIVER. No remedy conferred upon a party by
this Agreement is intended to be exclusive of any other remedy, and each and
every such remedy shall be cumulative and shall be in addition to any other
remedy given under this Agreement or now or hereafter existing at law or in
equity. No delay or omission by a party in exercising any right, remedy or power
under this Agreement or existing at law or in equity shall be construed as a
waiver thereof, and any such right, remedy or power may be exercised by such
party from time to time and as often as may be deemed expedient or necessary by
such party in its sole discretion.

         19. BENEFICIARIES/REFERENCES. Executive shall be entitled, to the
extent permitted under any applicable law, to select and change a beneficiary or
beneficiaries to receive any compensation or benefit payable under this
Agreement following Executive's death by giving the Company written notice
thereof. In the event of Executive's death or a judicial determination of
Executive's incompetence, reference in this Agreement to Executive shall be
deemed, where appropriate, to refer to Executive's beneficiary, estate or other
legal representative.

         20. MISCELLANEOUS. All section headings used in this Agreement are for
convenience only. This Agreement may be executed in counterparts, each of which
is an original. It shall not be necessary in making proof of this Agreement or
any counterpart hereof to produce or account for any of the other counterparts.

         21. WITHHOLDING; TAXES. All payments under this Agreement shall be made
subject to applicable tax withholding, and the Company shall withhold from any
payments under this Agreement all federal, state and local taxes as the Company
is required to withhold pursuant to any law or governmental rule or regulation.
Except as specifically provided otherwise in this Agreement, Executive shall be
responsible for all taxes applicable to amounts payable under this Agreement and
payments under this Agreement shall not be grossed up for taxes.

         22. GOVERNING LAW. This Agreement shall be governed by and interpreted
under the laws of the State of Ohio without giving effect to any conflict of
laws provisions.


                                      -27-

<PAGE>   28

         IN WITNESS WHEREOF, the undersigned, intending to be legally bound,
have executed this Agreement as of the date first above written.

                                            NATIONWIDE MUTUAL INSURANCE COMPANY



                                            By:
                                               ---------------------------------
                                            Name:
                                            Title:




                                            W.G. Jurgensen

                                      -28-

<PAGE>   29

                                    Exhibit A

             SEPARATION OF EMPLOYMENT AGREEMENT AND GENERAL RELEASE

                                       A-1

<PAGE>   30

                                    EXHIBIT A

             SEPARATION OF EMPLOYMENT AGREEMENT AND GENERAL RELEASE

                   WHEREAS ______________ ("Executive") has been employed by
_________________ (the "Company"), and because the Executive's employment with
the Company will terminate effective _____________, Executive and the Company
agree as follows:

1. In consideration of the promises of the Company set forth in paragraph 3
below, Executive, and his or her heirs, executors and administrators, intending
to be legally bound, hereby permanently and irrevocably agrees to the
termination of Executive's employment with the Company effective on
_____________ (or such earlier date as may be communicated in writing by
___________) (the "Termination Date") and hereby REMISE, RELEASE and FOREVER
DISCHARGE the Company and any individual or organization related to the Company
and against whom or which Executive could assert a claim, including
_____________________ (hereinafter referred to collectively as "Releasees"), of
and from any and all causes of action, suits, debts, claims and demands
whatsoever, which he had, has, or may have against Releasees up until the date
of his execution of this Agreement and General Release, other than the Release
Exclusions (as defined below). Particularly, but without limitation, Executive
so releases all claims relating in any way to his employment or the termination
of his employment relationship with the Company, including without limitation
claims under the Ohio Fair Employment Practice Law, Ohio Rev. Code Ann. Section
4112.01 et seq. ("Ohio Fair Employment Practice Law"), Title VII of the Civil
Rights Act of 1964, as amended, Section 42 U.S.C. 2000e et seq. ("Title VII"),
the Americans with Disabilities Act, 42 U.S.C. Section 12101 et seq. (the
"ADA"), the Employee Retirement Income Security Act 29 U.S.C. Section 1001 et
seq. ("ERISA"), the Age Discrimination in Employment Act, as amended 29 U.S.C.
Section 621 et seq. (the "ADEA"), any common law claims and all claims for
counsel fees and costs. Executive agrees that Executive will not file any charge
of discrimination against the Company or any of Releasees under the Ohio Fair
Employment Practice Law, Title VII, ERISA, the ADA or the ADEA, or any other
federal, state or local law. Executive further agrees and covenants that should
any person, organization, or other entity file, charge, claim, sue, or cause or
permit to be filed any civil action, suit or legal proceeding involving any
matter occurring at any time in the past, Executive will not seek or accept any
personal relief in such civil action, suit or legal proceeding. This release
also does not give up Executive's rights, if any, to the following claims that
Executive has or may have (the "Release Exclusions"): (i) to seek
indemnification pursuant to applicable state law and the Company's By-Laws and
(ii) to seek coverage under directors' and officers' liability insurance
policies maintained or required to be maintained by the Company.

1. Executive shall promptly take all steps necessary to dismiss with prejudice
any and all pending complaints, charges and grievances against the Company or
Releasees, regardless of whether they are or have been filed internally or
externally. Executive waives his or her right to institute or have pursued on
his behalf any further complaints or grievances against

                                       A-2

<PAGE>   31

the Company or Releasees for any matter occurring up to the present, regardless
of the forum, other than the Release Exclusions. Executive also agrees that the
payment in Paragraph 3 is in full satisfaction of any liability or obligation to
Executive under the Employment Agreement, dated as of January 1, 2000, between
the Company and Executive.

2. In full consideration of Executive's execution of this Separation of
Employment Agreement and General Release, and his or her agreement to be legally
bound by its terms, the Company will provide Executive with the following
consideration, to which Executive acknowledges he or she would not otherwise be
entitled:

         (a)-(b) Refer to applicable sections of Employment Agreement]

                   Executive understands and expressly agrees that each benefit
enhancement and payment under paragraphs (a) and (b) above is expressly
contingent on Executive's continued employment through _________________, or
such earlier date as may be communicated in writing by the Company.

                   Except as set forth in this Agreement, it is expressly agreed
and understood that Releasees do not have, and will not have, any obligation to
provide Executive at any time in the future with any payments, benefits or
considerations other than those recited in this paragraph, or those required by
law, other than under the terms of any benefit plans which provide benefits or
payments to former employees according to their terms and other than the Release
Exclusions.

3. If Executive brings a legal action against the Company or Releasees in
contravention of any part of this Agreement and General Release, including
paragraph 1 of this Agreement, Executive agrees and acknowledges that he or she
will reimburse the Company or Releasees for all their reasonable attorneys' fees
in defending such action.

4. The parties acknowledge that the performance of the promises of each are
expressly contingent upon the fulfillment and satisfaction of the obligations of
the other party as set forth in this Agreement and General Release.

5. Executive hereby agrees and recognizes that, as of his or her Termination
Date, Executive's employment relationship with the Company or Releasees will be
permanently and irrevocably severed and that Executive waives his or her right
to be hired or rehired in the future by the Company and any of its affiliates.
It is further agreed and understood that Executive will continue to be available
and cooperate in a reasonable manner in providing assistance to the Company in
concluding any matters which are reasonably related to the duties and
responsibilities which Executive had while employed by the Company, provided
that such cooperation and assistance does not interfere with any subsequent
employment obtained by Executive.

                                   A-3

<PAGE>   32

6. Executive agrees and acknowledges that this Agreement is not and shall not be
construed to be an admission of any violation of any federal, state or local
statute or regulation, or of any duty owed by Releasees.

1 Executive agrees, covenants and promises that Executive will not communicate
or disclose the terms of this Agreement and General Release to any persons with
the exception of members of Executive's immediate family and Executive's
attorney and financial advisor. Executive further agrees to refrain from using
or disclosing for the benefit of any person, business or entity other than the
Company, any confidential information relating to the Company's business, which
includes but is not limited to information relating to the Company's employees,
processors, suppliers, customers, services, plans, marketing studies or
analyses, and financial or business affairs. Executive represents that any and
all documents containing such confidential information will be returned to the
Company upon termination of employment.

7. This Agreement and General Release, and the provisions of the Employment
Agreement that survive Executive's termination of employment, constitute the
complete and entire understanding between the parties, and supersede any and all
prior agreements and understandings between the parties to the extent they are
inconsistent with this Agreement.

8. Executive hereby certifies that Executive has read the terms of this
Agreement and General Release, that Executive has been advised by the Company to
consult with an attorney of his or her own choice prior to executing this
Agreement, that Executive has had an opportunity to do so, and that Executive
understands this Agreement's terms and effects. Executive further certifies that
neither Releasees nor any representative of Releasees has made any
representations to Executive concerning this Agreement and General Release other
than those contained herein.

9. Executive acknowledges that Executive has been informed that this Agreement
and General Release includes a waiver of claims under the ADEA, and that
Executive has the right to consider this Agreement and General Release for a
period of 21 days. Executive also understands that he or she has the right to
revoke this Agreement and General Release for a period of seven days following
his execution of this Agreement and General Release by giving written notice to
the Company in care of ___________________, One Nationwide Plaza, Columbus, OH
43215.

10. If any provision of this Agreement and General Release is deemed invalid,
the remaining provisions shall not be affected.

                   IN WITNESS WHEREOF, and intending to be legally bound hereby,
the parties have executed the foregoing Agreement and General Release on the
dates indicated below.

                                       A-4

<PAGE>   33

WITNESS:______________________      _____________________________
                                    Executive

                                    DATE:

WITNESS:______________________      BY:__________________________

                                    TITLE:_______________________

                                    DATE:

                                      A-5
</TEXT>
</DOCUMENT>
