Exhibit 10.1

PURCHASE AGREEMENT

PURCHASE AGREEMENT, dated as of March 30, 2006 (the “Agreement”), by and between
Nationwide Financial Services, Inc. (the “Issuer”), and UBS AG, London Branch
(“UBS”) acting through UBS Securities LLC (“Agent”) as agent.

W I T N E S S E T H

WHEREAS, the Issuer has publicly announced its intention to repurchase shares of
its Class A common stock, par value $0.01 per share (the “Common Stock”), from
time to time (the “Repurchase Program”); and

WHEREAS, the Issuer desires to enter into the Agreement with UBS in order to
effect the Repurchase Program;

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

Section 1. Definitions.

As used herein the following terms shall have the meanings set forth below:

“Announcement Date” means in respect of a Merger Event, the date of the first
public announcement of a firm intention to merge or to make an offer that leads
to the Merger Event, as determined by the Calculation Agent.

“Bankruptcy” means the Issuer is dissolved (other than pursuant to a
consolidation, amalgamation or merger); (2) becomes insolvent or is unable to
pay its debts or fails or admits in writing its inability generally to pay its
debts as they become due; (3) makes a general assignment, arrangement or
composition with or for the benefit of its creditors; (4) institutes or has
instituted against it a proceeding seeking a judgment of insolvency or
bankruptcy or any other relief under any bankruptcy or insolvency law or other
similar law affecting creditors’ rights, or a petition is presented for its
winding-up or liquidation, and, in the case of any such proceeding or petition
instituted or presented against it, such proceeding or petition (A) results in a
judgment of insolvency or bankruptcy or the entry of an order for relief or the
making of an order for its winding-up or liquidation or (B) is not dismissed,
discharged, stayed or restrained in each case within 30 days of the institution
or presentation thereof; (5) has a resolution passed for its winding-up,
official management or liquidation (other than pursuant to a consolidation,
amalgamation or merger); (6) seeks or becomes subject to the appointment of an
administrator, provisional liquidator, conservator, receiver, trustee, custodian
or other similar official for it or for all or substantially all its assets;
(7) has a secured party take

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possession of all or substantially all its assets or has a distress, execution,
attachment, sequestration or other legal process levied, enforced or sued on or
against all or substantially all its assets and such secured party maintains
possession, or any such process is not dismissed, discharged, stayed or
restrained, in each case within 30 days thereafter; (8) causes or is subject to
any event with respect to it which, under the applicable laws of any
jurisdiction, has an analogous effect to any of the events specified in clauses
(1) to (7) (inclusive); or (9) takes any action in furtherance of, or indicating
its consent to, approval of, or acquiescence in, any of the foregoing acts.

“Bloomberg Screen Volume at Price Page” shall mean the display designated as
page “NFS Equity AQR” on the Bloomberg Financial Service or such page as may
replace the Volume at Price page on that service for the purpose of displaying
daily volume and volume-weighted trading prices of equity securities during the
normal trading hours of 9:30 a.m. to 4:00 p.m., New York Time or, if such
service does not then publish daily volume and volume-weighted trading prices of
the Common Stock, such other page and services selected by the Calculation Agent
that reports daily volume and weighted trading prices of the Common Stock.

“Borrowed Shares” means, as of any date, the number of Shares borrowed by UBS in
connection with this Transaction, as determined in good faith by the Calculation
Agent.

“Calculation Agent” shall mean UBS Securities LLC.

“Calculation Date” means the first Trading Day after the Last Averaging Date.

“Closing Price” of the Common Stock on any day shall mean the last reported
sales price regular way on such day or, in case no such sales price is reported
on such day, the average of the reported closing bid and asked prices regular
way of the Common Stock, in each case on the New York Stock Exchange, or if not
then traded on the New York Stock Exchange the principal securities exchange or
quotation system on which the Common Stock is then listed or admitted to
trading, or if not then listed or admitted to trading on a securities exchange
or quotation system, the average of the closing bid and asked prices of the
Common Stock in the over-the-counter market on the day in question as reported
by the National Quotations Bureau Incorporated, or a similarly generally
accepted reporting service, or, if not so available in such manner, as furnished
by any New York Stock Exchange member firm selected in good faith by the
Calculation Agent.

“Combined Consideration” means New Shares in combination with Other
Consideration.

“Cross Default” means the occurrence or existence of (1) a default, event of
default or other similar condition or event (however described) in respect of
the Issuer under one or more agreements or instruments relating to the payment
of money in an aggregate amount of not less than $50 million which has resulted
in such agreement or instrument becoming, or becoming capable at such time of
being declared, due and payable before it would otherwise have been due and
payable (after giving effect to any applicable notice requirement or

 

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grace period) or (2) a default by the Issuer in making one or more payments on
the due date thereof in an aggregate amount of not less than $50 million under
such agreements or instruments (after giving effect to any applicable notice
requirement or grace period).

“Determined Amount” has the meaning ascribed to it in Section 3(d).

“Discount” means $0.46.

“Dividend Event” means the payment of an ordinary or extraordinary dividend of
distribution by the Issuer in any of the time periods specified below with a
value, as determined by the Calculation Agent in good faith, that exceeds the
amount specified below for such period by $0.01 or more.

 

Period

   Dividend Amount

March 30, 2006 through and including June 30, 2006

   $ 0.23

July 1, 2006 through and including September 30, 2006

   $ 0.23

October 1, 2006 through and including the Last Averaging Date, if later than
October 1, 2006

   $ 0.00

“Excess Shares” means the number of Shares (if any) equal to (a)(i) the
Settlement Amount divided by (ii) the Reference Price minus (b) the Determined
Amount.

“Execution Period” shall mean the period commencing on the First Averaging Date
and ending on the earlier of (i) the Last Averaging Date of the last Tranche,
(ii) the Merger Event Termination Date or (iii) the Termination Event
Termination Date.

“Failure to Pay or Deliver” means failure by the Issuer to make, when due, any
payment under this Agreement or any delivery of Shares under this Agreement
required to be made by it if such failure is not remedied on or before the third
Trading Day after notice of such failure is given to the Issuer by UBS or the
Agent.

“Final VWAP-Minus Price” means, in respect of each Tranche, (i) the arithmetic
average of daily volume-weighted average prices of Shares in each Trading Day
from the First Averaging Date up to and including the Last Averaging Date in
respect of such Tranche, as listed on Bloomberg Screen Volume at Price Page,
minus (ii) the Discount.

“First Averaging Date” means, with respect to each Tranche, April 3, 2006.

“Hedge Account Shares” means, as of any date, the Number of Shares minus the
Borrowed Shares.

 

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“Last Averaging Date” means a trading day determined by UBS that is no later
than the Latest Completion Date and no earlier than:

 

 

-

April 13, 2006 in the case of Tranche One

 

 

-

April 21, 2006 in the case of Tranche Two

 

 

-

April 28, 2006 in the case of Tranche Three

 

 

-

May 5, 2006 in the case of Tranche Four

 

 

-

May 12, 2006 in the case of Tranche Five

 

 

-

May 19, 2006 in the case of Tranche Six

Notice of the Last Averaging Date shall be given by UBS not later than 8:00 pm
New York time on the business day following the Last Averaging Date. Notice
shall be irrevocable once provided to Issuer. If no notice is provided, then the
Last Averaging Date with respect to each Tranche shall be October 3, 2006.

“Latest Completion Date” means October 3, 2006.

“Material Subsidiary” means Nationwide Life Insurance Company, Nationwide Life
and Annuity Insurance Company and Nationwide Life Insurance Company of America.

“Merger Event” means, in respect of any relevant Shares, any
(i) reclassification or change of such Shares that results in a transfer of or
an irrevocable commitment to transfer all of such Shares outstanding,
(ii) consolidation, amalgamation or merger of the Issuer with or into another
entity (other than a consolidation, amalgamation or merger in which such Issuer
is the continuing entity and which does not result in any such reclassification
or change of all of such Shares outstanding) or (iii) other takeover offer for
such Shares that results in a transfer or an irrevocable commitment to transfer
all such Shares (other than such Shares owned or controlled by the offeror), in
each case if the Merger Date is on or before the Last Averaging Date.

“Net Share Settlement” shall mean settlement by the Issuer of its obligations
hereunder in accordance with Section 3(c).

“New Shares” means shares of the offeror or a third party in connection with a
Merger Event.

“Number of Shares” means the quotient of (i) $120,000,000 divided by (ii) the
Closing Price of the Common Stock on March 30, 2006.

“Other Consideration” means cash and/or any securities (other than New Shares)
or assets (whether of the offeror or a third party).

“Payment Date” has the meaning ascribed to it in Section 3(b).

 

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“Principal Account” means the notional principal account referred to in
Section 3(a).

“Purchase Price” has the meaning ascribed to it in Section 2(a) below.

“Purchasing Date” means any Trading Day during the Execution Period.

“Reference Price” means the Closing Price of the Common Stock on the last
Trading Day of the Execution Period .

“Settlement Amount” shall mean (i) in the case of the Issuer, the amount of any
negative balance in the Principal Account as of the Calculation Date, and
(ii) in the case of UBS, the amount of any positive balance in the Principal
Account as of the Calculation Date, in each case as determined by the
Calculation Agent, and as adjusted by the Calculation Agent to reflect the
accrual of interest thereon at the rate set forth for that day opposite the
caption “Open” under the caption “Federal Funds” as displayed on Bloomberg Page
BTMM, from and excluding the third Trading Day following the Calculation Date
hereunder to and including the actual Payment Date, if the Payment Date occurs
following the third Trading Day following the Calculation Date hereunder.

“Share-for-Combined” means, in respect of a Merger Event, that the consideration
for the relevant Shares consists of Combined Consideration.

“Share-for-Other” means, in respect of a Merger Event, that the consideration
for the relevant Shares consists solely of Other Consideration.

“Share-for-Share” means, in respect of a Merger Event, that the consideration
for the relevant Shares consists (or, at the option of the holder of such
Shares, may consist) solely of New Shares.

“Shelf Registration” means a registration statement in form and substance
reasonably acceptable to UBS for an offering to be made on a continuous basis
pursuant to Rule 415 under the Securities Act, registering UBS’s resale, in any
manner or manners designated by UBS, of all the Settlement Shares, any
Make-Whole Shares, and any other Shares held by UBS in connection with this
transaction which, in the opinion of counsel to UBS, are required to be included
in the Shelf Registration to be resold by UBS to the public.

“Short Squeeze” shall mean a situation where (i) UBS has determined, in its
judgment, that it is unable to hedge its exposure to the transaction
contemplated hereby because of the lack of sufficient shares of Common Stock
being made available for borrowing from lenders, including without limitation
UBS’ being required to redeliver shares of Common Stock to any lender at the
demand of such lender and not being able to meet such obligation in full in a
timely manner by reasonable efforts to borrow shares of Common Stock from
another lender, or (ii) UBS would incur a cost to borrow shares of Common Stock
to hedge its exposure to the transaction contemplated hereby that is greater
than a rate equal to 50 basis points per annum.

 

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“Stock Settlement Amount” shall mean (i) in the case that the Issuer is required
to pay the Settlement Amount to UBS and has elected to pay the Settlement Amount
by delivery of shares of Common Stock to UBS pursuant to Section 3(c), an
amount, determined by the Calculation Agent, equal to the Settlement Amount to
be paid by the Issuer pursuant to Section 3(a), divided by the Reference Price,
and (ii) in the case that UBS is required to pay the Settlement Amount to the
Issuer and the Issuer has elected to require UBS to satisfy the obligation by
delivery of shares of Common Stock to the Issuer pursuant to Section 3(h), an
amount, determined by the Calculation Agent, equal to the Settlement Amount to
be paid by UBS pursuant to Section 3(a), divided by the weighted average price
per share actually paid by UBS to purchase such Stock Settlement Shares.

“Stock Settlement Shares” shall mean such whole number of shares equal to the
Stock Settlement Amount.

“Termination Event” shall mean the occurrence of a (i) Bankruptcy, (ii) Cross
Default, (iii) Failure to Pay or Deliver, (iv) Short Squeeze or (v) Dividend
Event.

“Termination Event Termination Date” has the meaning ascribed to it in Section 8
below.

“Trading Day” shall mean any day on which the Common Stock is traded on the New
York Stock Exchange or, if not then traded on the New York Stock Exchange, the
principal securities exchange or quotation system on which such securities are
then traded or, if not then traded on a securities exchange or quotation system,
in the over-the-counter market.

“Tranche” shall have the meaning ascribed to it in Section 2.

Section 2. Purchase and Sale.

Subject to the terms and conditions set forth herein, UBS agrees to sell to the
Issuer, and the Issuer agrees to purchase from UBS, shares of Common Stock (the
“Shares”) in an amount equal to the Number of Shares for an aggregate purchase
price of $120,000,000 (the “Purchase Price”) At 4:00 P.M. on April 4, 2006, UBS
shall deliver or cause to be delivered the Shares through the facilities of The
Depository Trust Company to the Issuer (the “Settlement Date”), against payment
by the Issuer of the Purchase Price, by wire transfer of immediately available
funds. The parties understand and agree that the delivery of the Shares by or on
behalf of UBS upon the payment of the Purchase Price by the Issuer is
irrevocable and that as of the Settlement Date the Issuer will be the sole
beneficial owner of the Shares for all purposes. The Number of Shares shall be
divided into six equal tranches (each, a “Tranche”), which shall be designated,
successively, Tranche One, Tranche Two, Tranche Three, Tranche Four, Tranche
Five and Tranche Six.

As compensation to UBS for its commitment and services hereunder, the Issuer on
the Settlement Date will pay to UBS by wire transfer of immediately available
funds (i) a

 

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commission equal to $0.025 per share for the Shares to be delivered by UBS
hereunder on the Settlement Date and (ii) a transaction fee of $330,165.00
(collectively, the “Contract Fees”). The Contract Fees shall not be subject to
refund.

Section 3. Settlement.

(a) On the Settlement Date, the Calculation Agent shall establish a notional
Principal Account in an amount equal to the Purchase Price.

(i) The Principal Account shall be reduced on the third day following the Last
Averaging Date in respect of each Tranche in an amount equal to the product of
(x) the quotient of (i) the Number of Shares divided by (ii) six, and (y) the
Final VWAP-Minus Price with respect of such Tranche (the “Final Tranche
Amount”). The parties acknowledge that more than one Tranche may have the same
Last Averaging Date; and

(ii) Following the Last Averaging Date in respect of each Tranche, the Principal
Account shall be increased each day in order to reflect the accrual of interest
on the Final Tranche Amount in respect of such Tranche at the rate set forth for
that day opposite the caption “Open” under the caption “Federal Funds” as
displayed on Bloomberg Page BTMM, from and excluding the third Trading Day
following the Last Averaging Date in respect of such Tranche, to and including
the Calculation Date.

On the first Trading Day immediately following the last day of the Execution
Period, the Calculation Agent will calculate the Settlement Amount and, if
applicable, the Stock Settlement Amount, notify (the “Settlement Amount
Notification”) the Issuer of the Settlement Amount and, if applicable, the Stock
Settlement Amount and provide a schedule of its calculations thereof. The
Calculation Agent shall respond promptly to all questions raised by the Issuer
relating to such calculations. If the Issuer objects to the calculation of the
Settlement Amount and, if applicable, the Stock Settlement Amount, the Issuer
shall promptly notify the Calculation Agent, and the Issuer and UBS agree to use
their good faith best efforts to reach an agreement as to the Settlement Amount
and, if applicable, the Stock Settlement Amount. In the further event that the
Issuer and UBS are not able to reach an agreement, the Issuer and UBS shall
appoint a third party with sufficient expertise to determine the calculation of
the Settlement Amount and, if applicable, the Stock Settlement Amount, and such
calculations shall be binding on both parties. The fees and expenses of such
expert shall be shared equally by the Issuer and UBS.

(b) On the third Trading Day immediately following the Calculation Date (the
“Payment Date”), if the Settlement Amount is positive, UBS shall pay the
Settlement Amount to the Issuer and, if the Settlement Amount is negative, the
Issuer shall pay the absolute value of such Settlement Amount to UBS. Except as
provided in paragraphs (c) and (d) of this Section, all payments to be made
under this Section 3 shall be made on the Payment Date by wire transfer of
immediately available funds.

 

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(c) If the Issuer is required to pay the Settlement Amount to UBS pursuant to
paragraph (b) of this Section, the Issuer may, at its option, satisfy the
obligation by the delivery to UBS of a number of whole shares of Common Stock
(and a payment of cash in lieu of fractional shares, if any) equal to the Stock
Settlement Amount. In order to exercise this option, the Issuer must (each, a
“Condition on Net Share Settlement”) (i) notify UBS of its election to have any
Settlement Amount payable in shares of Common Stock no later than three days
following the Last Averaging Date in respect of the last Tranche (the “Stock
Election Notice”), (ii) enter into a registration rights agreement with UBS in
form and substance acceptable to UBS (the “Registration Rights Agreement”) not
later than the 10 days following the Last Averaging Date in respect of the last
Tranche, which agreement will contain, among other things, customary
representations and warranties and indemnification and other rights, including
rights to customary opinions of counsel and accountant’s “comfort letters,”
relating to the registration of the Stock Settlement Shares, the Make-whole
Shares and any additional shares of Common Stock as to which UBS is named as a
selling securityholder in the Shelf Registration (the “Registered Shares”);
(iii) the Shelf Registration shall have been declared effective by the
Securities and Exchange Commission (the “SEC”) not less than fifteen days
following the Last Averaging Date in respect of the last Tranche; and (iv) the
Issuer shall use its reasonable best efforts to maintain the effectiveness of
the Shelf Registration until all Registered Shares have been sold by UBS.
Subject to paragraph 3(g) below, if any of the conditions in the preceding
sentence are not met, the provisions of this paragraph (c) shall be inoperative
and the Issuer shall be obligated to pay any applicable Settlement Amount by
wire transfer of immediately available funds. If the Issuer complies with all of
its obligations under this paragraph (c), then at 9:30 A.M. on the Payment Date,
the Issuer shall deliver to UBS (x) a certificate or certificates representing
the fully paid and nonassessable Stock Settlement Shares, in such denominations
and in such names as UBS may specify and (y) the cash payment, if any, in lieu
of fractional shares by wire transfer of immediately available funds. The
parties understand and agree that the deliveries made pursuant to the preceding
sentence shall be irrevocable and shall satisfy in full the Issuer’s obligations
under this Section 3.

If the Issuer delivers Stock Settlement Shares to UBS pursuant to this paragraph
(c) and within ten Trading Days after the Payment Date, UBS resells all or any
portion of the Stock Settlement Shares and the net proceeds received by UBS upon
resale of such shares exceeds the Settlement Amount (or if less than all of the
Stock Settlement Shares are resold, the applicable pro rata portion of the
Settlement Amount), UBS shall promptly refund in cash such difference to the
Issuer; provided that UBS may, at its option, satisfy its obligation under this
sentence by returning to the Issuer any portion of the Stock Settlement Shares
that would, if sold, have resulted in net proceeds in excess of the Settlement
Amount. In the event that such net proceeds are less than the Settlement Amount
(or if less than all of the Stock Settlement Shares are resold, the applicable
pro rata portion of the Settlement Amount), the Issuer shall pay in cash or
additional shares of Common Stock (the “Make-whole Shares”) such difference (the
“Make-whole Amount”) to UBS promptly after receipt of notice thereof. In the
event that Issuer elects to pay the Make-whole Amount in additional shares of
Common Stock, the requirements set forth in this paragraph (c) with respect to
payment of the Settlement Amount in Shares, including Make-whole requirements,
shall apply, such that UBS shall pay to the Issuer any such excess and the
Issuer shall pay to UBS in cash or Make-Whole Shares any additional

 

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Make-Whole Amount. In calculating the net proceeds from the resale of any Stock
Settlement Shares there shall be deducted from such proceeds any amount equal to
the customary underwriting discount or commission for underwritten offerings of
common stock by companies comparable to the Issuer multiplied by the total
number of Shares sold for the account of UBS pursuant to a Shelf Registration.

(d) Notwithstanding any other provision in this Agreement, if Issuer exercises
its right pursuant to Section 3(c) above, Issuer shall not be obliged to
deliver, in connection with this Agreement, in excess of 30 million shares of
Common Stock, as recalculated from time to time (the “Determined Amount”).

(e) Issuer hereby represents and warrants that it will:

(i) calculate the Determined Amount based on the maximum amount able to be
calculated in accordance with EITF 00-19 or any successor financial statement
guidance; and

(ii) in respect of all equity derivative transactions in respect of which
Issuer’s equity securities constitute (all or part of) the instruments
underlying such transactions (the “Derivative Trades”), use the same methodology
to derive the Determined Amount (howsoever described) applicable to each
Derivative Trade as is used to derive the Determined Amount for this Agreement.

(f) UBS agrees that, in respect of any obligations Issuer has duly elected be
satisfied pursuant to Section 3(c) above, in the event of Issuer’s bankruptcy,
UBS shall not have rights in bankruptcy that rank senior to the rights in
bankruptcy of common shareholders of Issuer.

(g) If the Issuer has used its reasonable best efforts to satisfy the Conditions
on Net Share Settlement but has been unable to because the Shelf Registration is
not declared effective by the SEC within the time set out in paragraph 3(c) (or,
where UBS has previously agreed to extend such period based on a request by the
Issuer pursuant to paragraph 3(g)(ii), within such period as extended pursuant
to paragraph 3(g)(ii)), then the Issuer may elect to:

(i) deliver the relevant number of Shares to UBS in which case:

(A) the day on which the Issuer makes such an election to deliver such Shares is
the “Issuer Election Date”, and

(B) Issuer shall withdraw any Registration Statement filed with the SEC in
connection with the Shares, and

 

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(C) Issuer will enter into a private placement purchase agreement with UBS in
form and substance reasonably acceptable to UBS no later than the next Trading
Day following the Issuer Election Date, and

(D) Issuer shall deliver to UBS such Shares on the Settlement Date which, for
the purposes of this paragraph 3(g)(i)(D), shall be the third Trading Day
following the Issuer Election Date, and

(E) in addition to any Make-whole Amount payable by Issuer pursuant to paragraph
3(c) herein, Issuer shall deliver to UBS such additional Shares until UBS has
realized actual net proceeds upon resale of such Shares equal to the Settlement
Amount. At its election, UBS may by a written notice to Issuer retain a number
of Shares delivered by Issuer pursuant to this paragraph 3(g)(i). If UBS so
elects, UBS shall be deemed to have sold each such retained Share for an amount
equal to the price per Share obtained by UBS in the last Share sold by UBS prior
to sending written notice of its intention to retain Shares to Issuer. In no
event will UBS be obligated to exercise its right to retain Shares; or

(ii) request UBS to extend the period within which the Registration Statement is
to be declared effective by the SEC for a further period specified in writing by
UBS at the time of such extension.

(h) If UBS is required to pay the Settlement Amount to the Issuer pursuant to
paragraph (b) of this Section, the Issuer may, at its option, elect that UBS
satisfy the obligation by the delivery to the Issuer of a number of whole shares
of Common Stock (and a payment of cash in lieu of fractional shares, if any)
equal to the Stock Settlement Amount. In order to exercise this option, the
Issuer must notify UBS of its election to have any Settlement Amount payable in
shares of Common Stock no later than 15 days prior to the Payment Date (the
“Stock Election Notice”). If the condition in the preceding sentence is not met,
the provisions of this paragraph (h) shall be inoperative and UBS shall be
obligated to pay any applicable Settlement Amount by wire transfer of
immediately available funds. If the Issuer complies with all of its obligations
under this paragraph (h), then at 9:30 A.M. on the Payment Date, UBS shall
deliver to the Issuer (i) a certificate or certificates representing the fully
paid and nonassessable Stock Settlement Shares, and (ii) the cash payment, if
any, in lieu of fractional shares by wire transfer of immediately available
funds. The parties understand and agree that the deliveries made pursuant to the
preceding sentence shall be irrevocable and shall satisfy in full UBS’
obligations under this Section 3.

Section 4. Anti-dilution Adjustments.

(a) Subdivisions and Combinations of Common Stock. In the event that the
outstanding shares of the Common Stock shall be subdivided or split into a
greater number of shares of Common Stock where the effective date of such
subdivision or the record date for such split occurs during the Execution
Period, the number of shares of Common Stock referred to herein shall be deemed
to be proportionately increased and the Final VWAP-Minus Price and Discount
shall be deemed to be proportionately decreased; conversely, in case outstanding
shares of Common Stock shall each be combined into a smaller number of shares of
Common Stock through a combination of shares of Common Stock or a reverse stock
split where the

 

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effective date of such combination or the record date for such reverse stock
split occurs during the Execution Period, the number of shares of Common Stock
referred to herein shall be deemed to be proportionately decreased and the Final
VWAP-Minus Price and Discount shall be deemed to be proportionately increased.
Any adjustment pursuant to this paragraph (a) shall become effective (i) in the
case of a subdivision or combination of the Common Stock, at the close of
business on the record date for such subdivision or combination or (ii) in the
case of a stock split or reverse stock split, at the split, at the close of
business on the record date for such stock split or reverse stock split.

(b) Merger Events. In respect of each Merger Event, UBS and the Issuer or the
person formed by such consolidation or resulting from such merger or which
acquired such assets or which acquires the Issuer’s Common Stock, as the case
may be, shall negotiate in good faith to amend this Agreement to give
appropriate effect to such transaction. [In the event that the parties are
unable to reach an agreement ten (10) Trading Days prior to the effective date
of such transaction (the “Merger Event Termination Date”), (i) the Execution
Period shall terminate on the Merger Event Termination Date, (ii) the Principal
Account shall be reduced on such date by an amount equal to the product of
(x) an amount equal to the cash and fair market value (as determined by the
Issuer’s Board of Directors whose good faith determination shall be conclusive
and binding) of the securities and/or property payable or distributable upon
such transaction in respect of one share of Common Stock and (y) the number of
Borrowed Shares as of such date, and (iii) the Settlement Amount shall be
further adjusted by the Calculation Agent by the amount that the Calculation
Agent reasonably determines in good faith to be UBS’s total losses and costs in
connection with the early termination of this Agreement, including any loss of
option value, cost of funding, or loss or cost incurred as a result of its
terminating, liquidating, obtaining or reestablishing any hedge or related
trading position.

If payment is required of Issuer in connection with a Merger Event, the Issuer
shall have the right, in its sole discretion, to elect (the “Extraordinary
Transaction Election”) to satisfy any such payment obligation by Net Share
Settlement of this Transaction PROVIDED THAT, in connection with a
“Share-for-Combined” Merger Event or “Share-for-Other” Merger Event, the
Extraordinary Transaction Election is available to satisfy only the percentage
of such payment obligation equal to the percentage of the non-cash consideration
over the total Combined Consideration (in the case of a “Share-for-Combined”
Merger Event) or total Other Consideration (in the case of a “Share-for-Other”
Merger Event). The remaining percentage of such payment obligation must be
satisfied in cash. The Issuer shall make any election to settle the Transaction
by way of Net Share Settlement within two Trading Days of the Announcement Date
but in any event not less than twenty Trading Days prior to the effective date
of such merger.

(c) Tender Offers. In the event that an offer is made to the holders of Common
Stock to tender shares of Common Stock for cash (other than an offer
constituting a Merger Event), UBS may, in its discretion (i) accelerate the Last
Averaging Date or (ii) adjust the Number of Shares. UBS shall notify the Issuer
in writing as to the terms of any adjustment made pursuant to this Section 4(c)
no later than 5 days after the tender offer is made.

 

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(d) Other Events. In the event of any corporate event of the Issuer not
specifically addressed in subsections (a), (b) or (c) of this Section 4 or in
the event that UBS, in its good faith judgment, determines that the adjustments
described in subsections (a), (b) or (c) of this Section 4 will not result in an
equitable adjustment of the terms of the transaction described herein, and
provided that, in each case, such corporate event impacts the rights or
obligations of a holder of Common Stock, the terms of the transaction described
herein shall be subject to adjustment by UBS (including, without limitation, the
First Averaging Date, the Last Averaging Date and the Number of Shares) as in
the exercise of its good faith judgment it deems appropriate under the
circumstances in order to result in an equitable adjustment to this transaction.
In the event that the Issuer objects to the adjustments in this Section 4, the
Issuer shall promptly so notify UBS, and the Issuer and UBS agree to use their
good faith best efforts to reach an agreement as to the adjustment. In the
further event that the Issuer and UBS are not able to reach an agreement, the
Issuer and UBS shall appoint a third party with sufficient expertise to
determine the adjustment and such adjustment shall be binding on both parties.
The fees and expenses of such expert shall be shared equally by the Issuer and
UBS.

Section 5. Acknowledgement.

The Issuer acknowledges and agrees that it is not relying, and has not relied,
upon UBS or Agent with respect to the legal, accounting, tax or other
implications of this Agreement and that it has conducted its own analysis of the
legal, accounting, tax and other implications of this Agreement. The Issuer
further acknowledges and agrees that neither UBS nor Agent have acted as its
advisor in any capacity in connection with this Agreement or the transactions
contemplated by this Agreement. The Issuer acknowledges that neither UBS nor
Agent is acting as the agent for the Issuer in effecting any purchase of Common
Stock pursuant to this Agreement. The Issuer understands and acknowledges that
UBS and its affiliates may from time to time effect transactions, for their own
account or the account of customers, and hold positions, in securities or
options on securities of the Issuer and that UBS and its affiliates may continue
to conduct such transactions during the Execution Period.

Section 6. Representations and Warranties.

(a) The Issuer hereby represents and warrants to UBS that:

(i) it has all necessary corporate power and authority to enter into this
Agreement and the Registration Rights Agreement and the transactions
contemplated hereby and thereby;

(ii) this Agreement has been duly authorized, validly executed and delivered by
the Issuer and constitutes a valid and legally binding obligation of the Issuer
enforceable in accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors’ rights
and to general equity principles;

 

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(iii) the Registration Rights Agreement, when and if executed and delivered
pursuant to Section 3(c) hereof, shall have been duly authorized, validly
executed and delivered by the Issuer and shall constitute a valid and legally
binding obligation of the Issuer enforceable in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors’ rights and to general equity principles;

(iv) if Stock Settlement Shares are delivered pursuant to Section 3(c) or
Section 3(g), as the case may be, the Stock Settlement Shares, when delivered to
UBS or to the Issuer, as the case may be, will have been duly authorized and
will be duly and validly issued, fully paid and nonassessable and free of
preemptive and other rights;

(v) the transactions contemplated by this Agreement, including the delivery of
the Stock Settlement Shares pursuant to Section 3(c) or Section 3(g), as the
case may be, are consistent with the authorization of the Repurchase Program by
the Issuer’s Board of Directors;

(vi) the Issuer is not entering into this Agreement to facilitate a distribution
of the Common Stock (or any security convertible into or exchangeable for Common
Stock) or in connection with a future issuance of securities;

(vii) the Issuer is not entering into this Agreement to create actual or
apparent trading activity in the Common Stock (or any security convertible into
or exchangeable for Common Stock) or to raise or depress the price of the Common
Stock (or any security convertible into or exchangeable for Common Stock);

(viii) the repurchase of the Shares by the Issuer, the compliance by the Issuer
with all of the provisions of this Agreement and the consummation of the
transactions herein contemplated will not conflict with or result in a breach
(each, a “Breach”) of any of the terms or provisions of, or constitute a default
(each a “Default”) under, any indenture, mortgage, deed of trust, loan agreement
or any other agreement or instrument to which the Issuer or any of its Material
Subsidiaries is a party (collectively, “Contracts”) or by which the Issuer or
any of its Material Subsidiaries is bound or to which any of the property or
assets of the Issuer or any of its Material Subsidiaries is subject (except such
Breach or Default as would not reasonably be expected to materially adversely
affect the ability of the Issuer to perform its obligations under any Contract),
nor will such action result in any violation of the provisions of the
Certificate of Incorporation or By-laws of the Issuer, nor will such action
result in any material violation by the Issuer of any applicable statute, order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Issuer or any of its properties; and

(ix) no consent, approval, authorization, order, registration or qualification
of or with any court or governmental agency or body having jurisdiction over the
Issuer or any of its properties is required for the repurchase of the Shares by
the Issuer, the compliance by the Issuer with all the terms of this Agreement,
or the consummation by the Issuer of the transactions contemplated by this
Agreement, other than the registration of the

 

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Stock Settlement Shares and any Make-whole Shares under the Securities Act in
accordance with the provisions of Section 3(c), which registration shall be
completed not less than fifteen days following the Last Averaging Date in
respect of the last Tranche, and such authorizations, orders, registrations and
qualifications as may be required under state or securities or blue sky laws in
connection with the resale by UBS of the Registered Shares.

(b) UBS hereby represents and warrants to the Issuer:

(i) it has all power and authority to enter into this Agreement and the
Registration Rights Agreement and the transactions contemplated hereby and
thereby;

(ii) this Agreement has been duly authorized, validly executed and delivered by
UBS and constitutes a valid and legally binding obligation of UBS enforceable in
accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors’ rights and to general
equity principles; and

(iii) the Registration Rights Agreement, when and if executed and delivered
pursuant to Section 3(c) hereof, shall have been duly authorized, validly
executed and delivered by UBS and shall constitute a valid and legally binding
obligation of UBS enforceable in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors’ rights and to general equity principles.

Section 7. Indemnification.

(a) In the event that UBS becomes involved in any capacity in any action,
proceeding or investigation brought by or against any person in connection with
the transactions contemplated by this Agreement, the Issuer periodically will
reimburse UBS for its reasonable legal and other expenses (including the
reasonable cost of any investigation and preparation) incurred in connection
therewith; provided that such expenses will be promptly refunded to the Issuer
to the extent incurred in connection with a matter as to which UBS is not
entitled to indemnification under this Section 7. The Issuer also will indemnify
and hold UBS harmless against any losses, claims, damages or liabilities to
which UBS may become subject in connection with the transactions contemplated by
this Agreement, except to the extent that any such loss, claim, damage or
liability results from the gross negligence or bad faith of UBS in effecting the
transactions contemplated by this Agreement. If for any reason the foregoing
indemnification is unavailable to UBS or insufficient to hold it harmless, then
the Issuer shall contribute to the amount paid or payable by UBS as a result of
such loss, claim, damage or liability in such proportion as is appropriate to
reflect not only the relative benefits received by the Issuer on the one hand
and UBS on the other hand in the transactions contemplated by this Agreement as
well as the relative fault of the Issuer and UBS with respect to such loss,
claim, damage or liability and any other relevant equitable considerations. The
relative benefits to the Issuer, on the one hand, and UBS, on the other hand,
shall be in the same proportion as the Aggregate Purchase Price bears to the
commissions received by UBS pursuant to the last

 

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paragraph of Section 2. The reimbursement, indemnity and contribution
obligations of the Issuer under this Section 7 shall be in addition to any
liability which the Issuer may otherwise have, shall extend upon the same terms
and conditions to any affiliate of UBS and the partners, directors, officers,
agents, employees and controlling persons (if any), as the case may be, of UBS
and any such affiliate and shall be binding upon and inure to the benefit of any
successors, assigns, heirs and personal representatives of the Issuer, UBS, any
such affiliate and any such person. The Issuer also agrees that UBS nor any of
such affiliates, partners, directors, officers, agents, employees or controlling
persons shall have any liability to the Issuer for or, in connection with any
matter referred to in this Agreement except to the extent that any losses,
claims, damages, liabilities or expenses incurred by the Issuer result from the
gross negligence or bad faith of UBS in effecting the transactions that are the
subject of this Agreement. The foregoing provisions shall survive any
termination or completion of this Agreement.

(b) Promptly after receipt by UBS or any of its affiliates, partners, directors,
agents, employees or controlling persons entitled to indemnification pursuant to
this Section 7 (each, an “Indemnified Party”) of notice of the commencement of
any action, such Indemnified Party will, if a claim in respect thereof may be
made against the Issuer under this Section 7, notify the Issuer in writing of
the commencement thereof, but the omission so to notify the Issuer will not
relieve it from any liability which it may have to any Indemnified Party under
this Section 7 except to the extent that the Issuer’s rights are materially
prejudiced as a result of such delay. Upon receipt of such notice, the Issuer
shall be entitled to participate at its own expense in the defense, or if it so
elects, to assume the defense of such action, in which event such defense shall
be conducted by counsel chosen by the Issuer and reasonably satisfactory to the
Indemnified Party or Indemnified Parties who shall be a defendant or defendants
in any such action and such defendant or defendants shall bear the fees and
expenses of any additional counsel retained by them; but if the Issuer shall
elect not to assume the defense of such action, the Issuer will reimburse such
Indemnified Party or Indemnified Parties for the reasonable fees and expenses of
any counsel retained by them; provided however, if the defendants in any such
action (including impleaded parties) include both the Indemnified Parties and
the Issuer and counsel for the Issuer shall have reasonably concluded that there
may be a conflict of interest involved in the representation by a single counsel
of both the Indemnifying Parties and the Issuer, the Indemnified Party or
Indemnified Parties shall have the right to select separate counsel,
satisfactory to the Issuer (it being understood, however, that the Issuer shall
not be liable for the expenses of more than one separate counsel representing
Indemnified Parties who are parties to such action).

Section 8. Termination Event.

Upon the occurrence of a Termination Event and so long as such Termination Event
shall be continuing, UBS may, in its discretion, by notice to the Issuer (the
date of such notice and the notice referred to in the succeeding clause being
referred to herein as the “Notice Date”), direct that the Execution Period shall
forthwith terminate on the date specified in such notice (the “Termination Event
Termination Date”). In such an event, (i) the Execution Period shall terminate
on the Termination Event Termination Date, (ii) the Principal Account shall be
reduced on such date by an amount equal to the sum of (A) the product of (x) the
number of

 

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Hedge Account Shares and (y) the arithmetic average of daily volume-weighted
average prices of Shares in each Trading Day from the First Averaging Date up to
and excluding the Notice Date, as listed on Bloomberg Screen Volume at Price
Page and (B) the total purchase price paid by UBS for the Shares of Common Stock
that are purchased by UBS during the period commencing on and including the
Notice Date to and including the Termination Event Termination Date in order to
cover the remaining number of Borrowed Shares, (iii) the Principal Account shall
be increased to reflect an appropriate accrual of interest at the Federal Funds
Open Rate, as determined in good faith by the Calculation Agent, to reflect
interest earned by UBS in respect of the aggregate Purchase Price received from
the Issuer, (iv) the Principal Account shall be decreased to reflect UBS’s
actual cost of borrowing shares of Common Stock to hedge its obligations
hereunder as determined reasonably and in good faith by the Calculation Agent,
and (v) the Settlement Amount shall be further adjusted by the amount that the
Calculation Agent reasonably determines in good faith to be UBS’ total losses
and costs in connection with the early termination of this Agreement, including
any loss of bargain, cost of funding, or loss or cost incurred as a result of
its terminating, liquidating, obtaining or reestablishing any hedge or related
trading position. In the event that the Issuer objects to any adjustments made
pursuant to this Section 8, the Issuer shall promptly notify UBS, and the Issuer
and UBS agree to use their good faith best efforts to reach an agreement as to
the adjustment. In the further event that the Issuer and UBS are not able to
reach an agreement in respect of any such adjustment, the Issuer and UBS shall
appoint a third party with sufficient expertise to determine the adjustment and
such adjustment shall be binding on both parties. The fees and expenses of such
expert shall be shared equally by the Issuer and UBS.

Section 9. Miscellaneous.

(a) Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the reminder of the terms, provisions, covenants and obligations
set forth herein shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.

(b) Assignment. Neither the rights under this Agreement nor the obligations
created by this Agreement shall be assignable or delegable, in whole or in part,
by either party hereto without the prior written consent of the other (which
consent shall not be unreasonably withheld), and any attempt to assign or
delegate any rights or obligations arising under this Agreement without such
consent shall be void.

(c) Waivers, etc. No failure or delay on the part of either party in exercising
any power or right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. No
amendment, modification or waiver of any provision of this Agreement nor consent
to any departure by either party therefrom shall in any event be effective
unless the same shall be in writing and, in the case of a waiver or consent,
shall be effective only in the specific instance and for the purpose for which
given.

 

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(d) Beneficiaries. This Agreement shall be binding upon, and inure solely to the
benefit of, the Issuer, UBS and, to the extent provided in Section 7 hereof, the
affiliates, partners, directors, officers, agents, employees and controlling
persons, if any, of UBS, and their respective successors, assigns, heirs and
personal representatives, and no other person shall acquire any rights
hereunder.

(e) Rights of Set-Off. In addition to any rights of set-off a party may have as
a matter of law or otherwise, upon occurrence of an Event of Default with
respect to the Issuer, UBS shall have the right, without prior notice to the
Issuer or any other person, to (i) set off any obligation of the Issuer owing to
UBS or any affiliate of UBS against any obligations of UBS or any affiliate of
UBS owing to the Issuer, or (ii) for the purpose of cross-currency set-off,
convert any obligation to another currency at the market rate determined by UBS,
or (iii) if an obligation is unascertained, in good faith estimate that
obligation and set off in respect of the estimate, subject to the relevant party
accounting to the other when the obligation is ascertained. Nothing in this
Section 9(e) will have the effect of creating a charge or other security
interest.

(f) Changes of Law. If, due to any change in applicable law or regulations or
the interpretation thereof by any court of law or other body having jurisdiction
subsequent to the date of this Agreement, performance of any provision of this
Agreement or any transaction contemplated thereby shall become impracticable or
impossible, the parties hereto shall use their best efforts to find and employ
an alternative means to achieve the same or substantially the same result as
contemplated by such provision.

(g) Confidentiality. Subject to Section 5(a), to any contrary requirement of law
and to the right of each party to enforce its rights hereunder in any legal
action, each party shall keep strictly confidential and shall cause its
employees and agents to keep strictly confidential the terms of this Agreement
and any information of or concerning the other party which it or any of its
agents or employees may acquire pursuant to, or in the course of performing its
obligations under, any provision of this Agreement. In the event disclosure is
permitted pursuant to the preceding sentence, the disclosing party shall
(i) provide prior notice of such disclosure to the other party, (ii) use its
best efforts to minimize the extent of such disclosure and (iii) comply with all
reasonable requests of the other party to minimize the extent of such
disclosure. This Section 9(g) shall not prevent either party from disclosing
information as necessary to third-party advisors in connection with the
transactions contemplated hereby provided that such advisors agree in writing to
be bound by this Section 9(g) as if a party hereto. UBS hereby consents to the
issuance of a press release by the Issuer announcing its entry into this
Agreement and the filing with the SEC of a copy of this Agreement.

(h) Agent. UBS Securities LLC shall act as “agent” for UBS and the Issuer within
the meaning of Rule 15a-6 under the Exchange Act. The Agent is not a principal
to this Agreement and shall have no responsibility or liability to UBS or the
Issuer in respect of this Agreement, including, without limitation, in respect
of the failure of UBS or the Issuer to pay or perform under this Agreement. Each
of UBS and the Issuer agrees to proceed solely against the other to collect or
recover any securities or money owing to it in connection with or

 

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as a result of this Agreement. The Agent shall otherwise have no liability in
respect of this Agreement, except for its gross negligence or willful misconduct
in performing its duties as Agent hereunder. As a broker-dealer registered with
the SEC, UBS Securities LLC, in its capacity as agent, will be responsible for
(i) effecting the transaction contemplated in this Agreement, (ii) issuing all
required notices, confirmations and statements to Buyer and Seller and
(iii) maintaining books and records relating to this Agreement.

(i) Headings. Descriptive headings herein are for convenience only and shall not
control or affect the meaning or construction of any provision of this
Agreement.

(j) Counterparts. This Agreement may be executed by the parties hereto in
counterparts, and each such executed counterpart shall be, and shall be deemed
to be, an original instrument and all such counterparts, taken together, shall
constitute one and the same instrument.

(k) Notices. All notices, consents, requests, instructions, approvals and other
communications provided for herein shall be validly given, made or served if in
writing and delivered personally, by telegram, by telecopy or sent by overnight
courier, postage prepaid, to:

 

UBS AG, London Branch at:

 

c/o UBS Securities LLC

677 Washington Boulevard

Stamford, CT 06901

Attention of: Adam Frieman

Fax Number:  203-719-7031

 

With a copy to such address to attention of:

Legal and External Affairs

 

the Issuer at:

  

One Nationwide Plaza, 1-13-G3

Columbus, OH 43215

Attention of:

  

Roger W. Green

Fax Number:

  

614-677-6688

With a copy to:

  

Denise L. Skingle

Associate General Counsel

One Nationwide Plaza, 1-35-16

Columbus, OH 43215

Fax Number:

  

614-249-2418

or to such other address as any party may, from time to time, designate in a
written notice given in a like manner. Notice given by telegram or telecopy
shall be deemed delivered when evidence

 

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of the transmission is received by the sender and shall be confirmed in writing
by overnight courier, postage prepaid. Notice given by overnight courier as set
out above shall be deemed delivered the business day after the date the same is
mailed.

(l) Account Details.

 

UBS:

 

Cash Payments for Stock Purchase

Citibank, New York

ABA# 021 000 089

A/C# 4065 2556

UBS Securities, LLC

 

Cash Payments for Settlement

UBS AG Stamford

f/o UBS AG London Branch

ABA# 026-007-993

AC# 101-WA-140007-000

 

Issuer:

Bank: Bank of New York, New York City

ABA #:

  

021000018

Account Name:

  

Nationwide Financial Services Inc.

Account #:

  

8900323973

(m) Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the state of New York without reference
to conflict of law principles. Each party hereto irrevocably submits to the
extent permitted under applicable law to the non-exclusive jurisdiction of the
federal and state courts located in the Borough of Manhattan, State of New York.
Each party waives, to the fullest extent permitted by applicable law, any right
it may have to a trial by jury in respect of any suit, action or proceeding
relating to this Agreement.

 

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IN WITNESS WHEREOF, UBS and the Issuer have caused this Agreement to be duly
authorized, executed and delivered as of the date first written above.

 

UBS AG, LONDON BRANCH

By:

 

/s/ Akshay Mansukhani

 

Name: Akshay Mansukhani

 

Title: Associate Director

By:

 

/s/ Dmitriy Mandel

 

Name: Dmitriy Mandel

 

Title: Executive Director, Equity Risk Management

 

NATIONWIDE FINANCIAL SERVICES, INC.

By:

 

/s/ Roger W. Green

 

Name: Roger W. Green

 

Title: Officer, Investor Relations

 

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