AMERIGROUP CORPORATION

2003 EQUITY INCENTIVE PLAN

NONQUALIFIED STOCK OPTION AGREEMENT

This Nonqualified Stock Option Agreement (the “Option Agreement”) is made and
entered into as of      (the “Date of Grant”), by and between AMERIGROUP
Corporation, a Delaware corporation (the “Company”), and      (the “Optionee”).
Capitalized terms not defined herein shall have the meaning ascribed to them in
the Company’s 2003 Equity Incentive Plan (the “Plan”).

1. Number of Shares. The Company hereby grants to Optionee an option (this
“Option”) to purchase      Shares (the “Option Shares”) at an Exercise Price per
Share of $     , subject to all of the terms and conditions of this Option
Agreement and the Plan.

2. Option Term. The term of the Option and of this Option Agreement (the “Option
Term”) shall commence on the Date of Grant set forth above and, unless the
Option is previously terminated pursuant to Section 5 below, shall terminate on
the tenth anniversary thereof (the “Expiration Date”). As of the Expiration
Date, all rights of the Optionee hereunder shall terminate.

3. Conditions of Exercise.

[If granted pursuant to AMERIGROUP’s Bonus Plan]

(a) Subject to Section 5 below, the Option shall become vested on the Date of
Grant as to      percent (     %) of the Option Shares, as to an additional
     percent (     %) of the Option Shares on April 1, 200     and as to an
additional      percent (     %) of the Option Shares quarterly thereafter, such
that the Option shall become fully (100%) vested on      , 200_.

[If granted other than under AMERIGROUP’s Bonus Plan]

(a) Subject to Section 5 below, the Option shall become vested as to      of the
Option Shares on the first anniversary of the Date of Grant, and as to an
additional      of the Option Shares quarterly thereafter, such that the Option
shall become fully (100%) vested on      .

(b) Prior to the Expiration Date, this Option may be exercised in whole or in
part at any time as to Option Shares which have vested; provided, however, that
in the event Optionee terminates employment or service with the Company and all
Parents, Subsidiaries and Affiliates, from and after such Termination Date (as
defined in Section 5 below), this Option may be exercised only with respect to
Option Shares that have vested as of the Termination Date.

(c) This Option may not be exercised for a fraction of a share.

4. Method of Exercise of Option.

(a) The Option may be exercised by delivering to the Company an executed stock
option exercise agreement in the form attached hereto as Exhibit A, or in such
other form as may be approved by the Administrator from time to time (the
“Exercise Agreement”), which shall set forth, inter alia, (i) Optionee’s
election to exercise the Option and (ii) the number of shares of Common Stock
being purchased, and payment in full of the aggregate Exercise Price of the
shares being purchased. If someone other than the Optionee exercises the Option,
then such person must submit documentation reasonably acceptable to the Company
verifying that such person has the legal right to exercise the Option.

(b) The Option may not be exercised unless such exercise is in compliance with
all applicable federal and state securities law, as they are in effect on the
date of exercise.

(c) Payment of the aggregate Exercise Price for Option Shares being purchased
and any applicable withholding taxes may be made (i) in cash or by check,
(ii) to the extent permitted by applicable law, by means of a cashless exercise
procedure through a broker acceptable to the Administrator, (iii) through
delivery of unrestricted Shares already owned by the Optionee for more than six
months on the date of surrender, to the extent the shares have an aggregate Fair
Market Value on the date of surrender equal to the aggregate Exercise Price of
the Shares as to which such Option shall be exercised, or (iv) by any other
means of exercise authorized from time to time by the Administrator.

5. Effect of Termination of Employment or Service and Change in Control.

(a) Termination of Employment or Service Generally. Upon the termination of
Optionee’s employment or service with the Company and all Parents, Subsidiaries
and Affiliates under any circumstances other than for Cause, the Option shall
immediately terminate as to any Option Shares that have not previously vested as
of the date of such termination (the “Termination Date”). Any portion of the
Option that has vested as of the Termination Date shall be exercisable in whole
or in part for a period of 90 days following the Termination Date; provided,
however, that in the event of termination by reason of Optionee’s death or
Disability, such exercise period shall extend until the date that is six months
from the Termination Date; provided, further, that in no event may the Option be
exercised after the Expiration Date. Upon expiration of such 90-day or six-month
period, as applicable, any unexercised portion of the Option shall terminate in
full (whether or not then exercisable).

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(b) Termination for Cause. Immediately upon the termination of Optionee’s
employment or service with the Company or any Parent, Subsidiary or Affiliate
for Cause, the Option shall terminate in full (whether or not then exercisable).

[At the discretion of the Committee, either]

(c) Change in Control. Any portion of the Option that has not previously vested
shall become fully vested if the Optionee’s employment with or service as a
director, consultant or advisor to the Company or any Parent, Subsidiary or
Affiliate is terminated by the Company or any Parent, Subsidiary or Affiliate or
any successor entity for any reason other than for Cause within two years
following a Change in Control or if the Optionee terminates employment with (or
other service to) the Company or any Parent, Subsidiary or Affiliate within two
years following the Change in Control and after there is a material adverse
change in the nature or status of the Optionee’s duties or responsibilities from
those in effect immediately prior to the Change in Control.

[or]

(c) Change in Control. Any portion of the Option that has not previously vested
shall become fully vested upon a Change in Control

6. Adjustments. In the event of any Change in Capitalization, the Administrator
shall take such actions pursuant to Section 5 of the Plan as it deems
appropriate.

7. Nontransferability of Option. Except under the laws of descent and
distribution, the Optionee shall not be permitted to sell, transfer, pledge or
assign the Option and this Option Agreement; provided, however, that, subject to
such terms and conditions as the Administrator may establish, the Optionee shall
be permitted to transfer this Option to a trust controlled by the Optionee
during the Optionee’s lifetime for estate planning purposes or to make a gift of
this Option to an Immediate Family Member. Unless transferred pursuant to the
foregoing sentence, the Option shall be exercisable, during the Optionee’s
lifetime, only by the Optionee. Without limiting the generality of the
foregoing, except as otherwise provided herein, the Option may not be assigned,
transferred, pledged or hypothecated in any way, shall not be assignable by
operation of law, and shall not be subject to execution, attachment or similar
process. Any attempted assignment, transfer, pledge, hypothecation or other
disposition of the Option contrary to the provisions hereof, and the levy of any
execution, attachment or similar process upon the Option shall be null and void
and without effect.

8. Notices. All notices and other communications under this Agreement shall be
in writing and shall be given by facsimile or first class mail, certified or
registered with return receipt requested, and shall be deemed to have been duly
given three days after mailing or 24 hours after transmission by facsimile to
the respective parties named below:

         
If to the Company:
  AMERIGROUPCorporation

 
  4425 Corporation Lane
 
  Virginia Beach, VA 23462

 
  Facsimile: (757) 557-6743

 
  Attn: Stanley F. Baldwin

If to the Optionee:
    —  
 
       

     
     
Facsimile:      

Either party hereto may change such party’s address for notices by notice duly
given pursuant hereto.

9. Tax Consequences. The tax laws and regulations applicable to the exercise of
the Option and the disposition of the Option Shares are complex and subject to
change. Optionee should consult a tax adviser before exercising the Option or
disposing of the Shares.

10. Securities Laws Requirements. The Option shall not be exercisable to any
extent, and the Company shall not be obligated to transfer any Option Shares to
the Optionee upon exercise of such Option, if such exercise, in the opinion of
counsel for the Company, would violate the Securities Act of 1933 (the
“Securities Act”) or any other Federal or state statutes having similar
requirements as may be in effect at that time.

11. No Obligation to Register Option Shares. The Company shall be under no
obligation to register the Option Shares pursuant to the Securities Act or any
other Federal or state securities laws.

12. Investment Representation. The Optionee hereby represents and warrants to
the Company that the Optionee, by reason of the Optionee’s business or financial
experience (or the business or financial experience of the Optionee’s
professional advisors who are unaffiliated with and who are not compensated by
the Company or any affiliate or selling agent of the Company, directly or
indirectly), has the capacity to protect the Optionee’s own interests in
connection with the transactions contemplated under this Option Agreement.

13. Market Stand-Off. In connection with any underwritten public offering by the
Company of its equity securities pursuant to an effective registration statement
filed under the Securities Act for such period as the Company or its
underwriters may request (such period not to exceed 180 days following the date
of the applicable offering), the Optionee shall not, directly or indirectly,
sell, make any short sale of, loan, hypothecate, pledge, offer, grant or sell
any option or other contract for the purchase of, purchase any option or other
contract for the sale of, or otherwise dispose of or transfer, or agree to
engage in any of the foregoing transactions with respect

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to, any Option Shares acquired under this Option Agreement without the prior
written consent of the Company or its underwriters.

14. Protections Against Violations of Agreement. No purported sale, assignment,
mortgage, hypothecation, transfer, pledge, encumbrance, gift, transfer in trust
(voting or other) or other disposition of, or creation of a security interest in
or lien on, any of the Option Shares by any holder thereof in violation of the
provisions of this Agreement or the Certificate of Incorporation or the Bylaws
of the Company, will be valid, and the Company will not transfer any of said
Option Shares on its books nor will any of said Option Shares be entitled to
vote, nor will any dividends be paid thereon, unless and until there has been
full compliance with said provisions to the satisfaction of the Company. The
foregoing restrictions are in addition to and not in lieu of any other remedies,
legal or equitable, available to enforce said provisions.

15. Withholding Requirements. The Company’s obligations under this Option
Agreement shall be subject to all applicable tax and other withholding
requirements, and the Company shall, to the extent permitted by law, have the
right to deduct any withholding amounts from any payment or transfer of any kind
otherwise due to the Optionee.

16. Failure to Enforce Not a Waiver. The failure of the Company to enforce at
any time any provision of this Option Agreement shall in no way be construed to
be a waiver of such provision or of any other provision hereof.

17. Governing Law. This Option Agreement shall be governed by and construed
according to the laws of the State of Delaware without regard to its principles
of conflict of laws.

18. Incorporation of Plan. The Plan is hereby incorporated by reference and made
a part hereof, and the Option and this Option Agreement shall be subject to all
terms and conditions of the Plan.

19. Amendments. The Administrator may amend the terms of this Option Agreement
prospectively or retroactively at any time, but no such amendment shall impair
the rights of Optionee hereunder without his or her consent.

20. Rights as a Stockholder. Neither the Optionee nor any of the Optionee’s
successors in interest shall have any rights as a stockholder of the Company
with respect to any shares of Common Stock subject to the Option until the date
of issuance of a stock certificate for such shares of Common Stock.

21. Agreement Not a Contract for Services. Neither the Plan, the granting of the
Option, this Option Agreement nor any other action taken pursuant to the Plan
shall constitute or be evidence of any agreement or understanding, express or
implied, that the Optionee has a right to continue to provide services as an
officer, director, employee, consultant or advisor of the Company or any Parent,
Subsidiary or Affiliate for any period of time or at any specific rate of
compensation.

22. Survival of Terms. This Option Agreement shall apply to and bind the
Optionee and the Company and their respective permitted assignees and
transferees, heirs, legatees, executors, administrators and legal successors.

23. Representations. The Optionee has reviewed with his own tax advisors the
Federal, state, local and foreign tax consequences of the transactions
contemplated by this Option Agreement. The Optionee is relying solely on such
advisors and not on any statements or representations of the Company or any of
its agents. The Optionee understands that he (and not the Company) shall be
responsible for any tax liability that may arise as a result of the transactions
contemplated by this Option Agreement.

24. Authority of the Administrator. The Administrator shall have full authority
to interpret and construe the terms of the Plan and this Option Agreement. The
determination of the Administrator as to any such matter of interpretation or
construction shall be final, binding and conclusive.

25. Acceptance. The Optionee hereby acknowledges receipt of a copy of the Plan
and this Option Agreement. Optionee has read and understand the terms and
provision thereof, and accepts the Option subject to all the terms and
conditions of the Plan and this Agreement.

IN WITNESS WHEREOF, the parties hereto have executed and delivered this Option
Agreement on the day and year first above written.

AMERIGROUP Corporation

By

Stanley F. Baldwin
Executive Vice President, General Counsel
and Secretary

     
Name of NQ Holder

Address:

Social Security Number:

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EXHIBIT A

AMERIGROUP CORPORATION
2003 EQUITY INCENTIVE PLAN

NONQUALIFIED STOCK OPTION AGREEMENT
NOTICE OF EXERCISE

______________, ____

AMERIGROUP Corporation
[Address]

Attn:

On      , I was granted an option (an “Option”) by AMERIGROUP Corporation (the
“Company”) under the Company’s 2003 Equity Incentive Plan (the “Plan”) and a
stock option agreement, between myself and the Company (the “Agreement”). This
letter is to notify you that I wish to purchase Option Shares under the
Agreement as set forth below.

Exercise of Option

1. I wish to purchase      Option Shares at the current exercise price of
$    per share for a total cost of $     .

2. I am paying for these Option Shares as follows:

           By enclosing cash and/or a certified or cashier’s check payable to
the Company in the amount of $     .

           By means of a cashless exercise procedure through the following
broker:      .

           By delivery of unrestricted shares of Company stock already owned by
me for more than six months on the date of surrender, and which have an
aggregate fair market value on the date of surrender equal to the aggregate
exercise price of the Option Shares as to which the Option is being exercised,
with any fractional share amounts to be settled by cash and/or a certified or
cashier’s check.

3. I am paying the local, state and federal withholding taxes and/or all other
taxes that the Company has advised me are due as follows:

           By enclosing cash and/or a certified or cashier’s check payable to
the Company in the amount of $     .

           By authorizing the Company to withhold from the number of Option
Shares I would otherwise receive that number of whole Shares having a fair
market value equal to the minimum tax withholding due, with any fractional share
amounts to be settled by cash and/or a certified or cashier’s check.

           By delivery of unrestricted shares of Company stock already owned by
me for more than six months on the date of surrender, and which have an
aggregate fair market value on the date of surrender equal to the aggregate
exercise price of the Option Shares as to which the Option is being exercised,
with any fractional share amounts to be settled by cash and/or a certified or
cashier’s check.

4. In exercising my Option I hereby warrant and represent to the Company that I
acknowledge that the Company has no obligation to issue a certificate evidencing
any Option Shares purchasable by me until the purchase price of such Option
Shares is fully paid as set forth in the Option Agreement.

Very truly yours,

Optionee

Name and Address (please print)

         
Telephone Number
    (    )
 
       
Social Security Number
       
 
       

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