<PAGE>   1
                                                                   Exhibit 10.12


                             AMERIGROUP CORPORATION
                          EMPLOYEE STOCK PURCHASE PLAN

1.       PURPOSE The AMERIGROUP Corporation Employee Stock Purchase Plan (the
"Plan") is being established for the benefit of employees of AMERIGROUP
Corporation, a Delaware corporation (the "Company"), and its Designated
Subsidiaries. The Plan is intended to provide the employees of the Employer with
an opportunity to purchase common shares, par value $0.01 per share, of the
Company (the "Shares"). It is the intention of the Company that the Plan qualify
as an "employee stock purchase plan" within the meaning of Section 423 of the
Code, and the provisions of the Plan shall be construed in a manner consistent
with the requirements of such Section of the Code.

2.       DEFINITIONS

         a. "Board" shall mean the Board of Directors of the Company.

         b. "Change in Capitalization" shall mean any increase, reduction, or
change or exchange of Shares for a different number or kind of shares or other
securities or property by reason of a reclassification, recapitalization,
merger, consolidation, reorganization, issuance of warrants or rights, stock
dividend, stock split or reverse stock split, combination or exchange of shares,
repurchase of shares, change in corporate structure or otherwise; or any other
corporate action, such as declaration of a special dividend, that affects the
capitalization of the Company.

         c. "Change in Control" means the first to occur of any one of the
events set forth in the following paragraphs:

         (i) any Person is or becomes the "Beneficial Owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company (not including in the securities Beneficially Owned by such Person any
securities acquired directly from the Company) representing 25% or more of the
Company's then outstanding securities, excluding any Person who becomes such a
Beneficial Owner in connection with a transaction described in clause (A) of
paragraph (iii);

         (ii) the following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals who, on the
effective date of a Public Offering, constitute the Board of Directors and any
new director (other than a director whose initial assumption of office is in
connection with an actual or threatened election contest, including but not
limited to a consent solicitation, relating to the election of directors of the
Company) whose appointment or election by the Board of Directors or nomination
for election by the Company's stockholders was approved or recommended by a vote
of at least two-thirds (2/3) of the directors then still in office who either
were directors on the Effective Date or whose appointment, election or
nomination for election was previously so approved or recommended;
<PAGE>   2
         (iii) there is consummated a merger or consolidation of the Company
with any other corporation other than (A) a merger or consolidation which
results in the directors of the Company immediately prior to such merger or
consolidation continuing to constitute at least a majority of the board of
directors of the Company, the surviving entity or any parent thereof, or (B) a
merger or consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company (not including in the
securities Beneficially Owned by such Person any securities acquired directly
from the Company) representing 25% or more of the combined voting power of the
Company's then outstanding securities; or

         (iv) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or there is consummated an agreement
for the sale or disposition by the Company of all or substantially all of the
Company's assets, other than a sale or disposition by the Company of all or
substantially all of the Company's assets to an entity at least a majority of
the board of directors of which comprises individuals who were directors of the
Company immediately prior to such sale or disposition.

         d. "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.

         e. "Committee" shall mean the Compensation Committee or any other
committee of members of the Board appointed by the Board to administer the Plan
and to perform the functions set forth herein.

         f. "Company" shall mean AMERIGROUP Corporation, a corporation organized
under the laws of the State of Delaware, or any successor corporation.

         g. "Compensation" shall mean the fixed salary, wages, commissions,
overtime pay and bonuses paid by an Employer to an Employee as reported by the
Employer to the United States government for Federal income tax purposes,
including an Employee's portion of compensation deferral contributions pursuant
to Section 401(k) of the Code, any amount excludable pursuant to Section 125 of
the Code and/or any non-qualified compensation deferral, but excluding any
foreign service allowance, commissions, severance pay, expense reimbursement or
any credit or benefit under any employee plan maintained by the Employer.

         h. "Continuous Status as an Employee" shall mean the absence of any
interruption or termination of service as an Employee. Continuous Status as an
Employee shall not be considered interrupted in the case of a leave of absence
agreed to in writing by the Employee's Employer, if such leave is for a
continuous period of not more than one year or re-employment upon the expiration
of such leave is guaranteed by contract or statute.


                                       2
<PAGE>   3
         i. "Designated Subsidiaries" shall mean the Subsidiaries of the Company
which have been designated by the Board from time to time in its sole discretion
as eligible to participate in the Plan, which may include corporations which
become Subsidiaries of the Company after the adoption of the Plan.

         j. "Employee" shall mean any employee of the Company or a Designated
Subsidiary, excluding any employee who has been employed for less than 90 days,
employees whose customary employment is for less than 20 hours per week, and
employees whose customary employment is for not more than 5 months in any
calendar year.

         k. "Employer" shall mean, as to any particular Employee, the
corporation which employs such Employee, whether it is the Company or a
Designated Subsidiary of the Company.

         l. "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.

         m. "Exercise Date" shall mean the last Trading Day of each Offering
Period, except as the Committee may otherwise provide.

         n. "Fair Market Value" as of a particular date shall mean the fair
market value of a Share as determined by the Committee in its sole discretion;
provided that (i) if the Shares are admitted to trading on a national securities
exchange, fair market value of a Share on any date shall be the closing sale
price reported for such Share on such exchange on the last day preceding such
date on which a sale was reported, (ii) if the Shares are admitted to quotation
on the National Association of Securities Dealers Automated Quotation ("Nasdaq")
System or other comparable quotation system and has been designated as a
National Market System ("NMS") security, fair market value of a Share on any
date shall be the closing sale price reported for such share on such system on
the last date preceding such date on which a sale was reported, or (iii) if the
Shares are admitted to quotation on the Nasdaq System but has not been
designated as an NMS security, fair market value of a Share on any date shall be
the average of the highest bid and lowest asked prices of such share on such
system on the last date preceding such date on which both bid and ask prices
were reported.

         o. "Offering Date" shall mean the first Trading Day of each Offering
Period of the Plan. The Offering Date of an Offering Period is the grant date
for the options offered in such Offering Period.

         p. "Offering Period" shall mean a period as described in Section 4
hereof.

         q. "Parent" shall mean any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company if, at the time of
granting an option, each of the corporations other than the Company owns shares
possessing 50% or more of the total


                                       3
<PAGE>   4
combined voting power of all classes of shares in one of the other corporations
in such chain.

         r. "Participant" shall mean an Employee who participates in the Plan.

         s. "Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except
that such term shall not include (i) the Company or any of its subsidiaries,
(ii) a trustee or other fiduciary holding securities under an employee benefit
plan of the Company or any of its affiliates, (iii) an underwriter temporarily
holding securities pursuant to an offering of such securities, or (iv) a
corporation owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company.

         t. "Plan" shall mean the AMERIGROUP Corporation Employee Stock Purchase
Plan, as amended from time to time.

         u. "Plan Year" shall mean the calendar year, except that the first Plan
Year shall begin the date of a Public Offering (or such later date as may be
established by the Committee) and shall end on the next December 31.

         v. "Public Offering" means the first underwritten initial public
offering of Shares by the Company.

         w. "Shares" shall mean shares of the common stock, par value $0.01 per
share, of the Company stated on a post split basis effected in connection with
the Initial Public Offering.

         x. "Subsidiary" shall mean any corporation (other than the Company) in
an unbroken chain of corporations beginning with the Company if, at the time of
granting an option, each of the corporations other than the last corporation in
the unbroken chain owns shares possessing fifty percent (50%) or more of the
total combined voting power of all classes of shares in one of the other
corporations in such chain.

         y. "Trading Day" shall mean a day on which national stock exchanges and
the Nasdaq system are open for trading.

3.       ELIGIBILITY

         a. Subject to the requirements of Section 4.b. hereof, any person who
is an Employee as of an Offering Date shall be eligible to participate in the
Plan and be granted an option for the Offering Period commencing on such
Offering Date.

         b. Notwithstanding any provisions of the Plan to the contrary, no
Employee shall be granted an option under the Plan (i) if, immediately after the
grant, such Employee (or any other person whose shares would be attributed to
such Employee pursuant to Section 424(d) of the Code) would own shares and/or
hold outstanding options to purchase shares possessing five


                                       4
<PAGE>   5
percent (5%) or more of the total combined voting power or value of all classes
of shares of the Company or of any Subsidiary or Parent of the Company, or (ii)
which permits such Employee's right to purchase shares under all employee stock
purchase plans (as described in Section 423 of the Code) of the Company and any
Subsidiary or Parent of the Company to accrue at a rate which exceeds
twenty-five thousand dollars ($25,000) of Fair Market Value of such shares
(determined at the time such option is granted) for any calendar year in which
such option would be outstanding at any time. Any amounts received from an
Employee which cannot be used to purchase Shares as a result of this limitation
will be returned as soon as possible to the Employee without interest.

4.       OFFERING PERIODS The first Offering Period shall commence on the first
Trading Day on or after the date of the Public Offering (or such later date as
may be established by the Committee) and end on the last Trading Day on or
before December 31, 2000. Unless otherwise determined by the Committee, each
subsequent Offering Period shall have a duration of six months, commencing on
the first Trading Day on or after January 1 and July 1 of each year. The Plan
shall continue until terminated in accordance with Section 19 hereof. Subject to
Section 19 hereof, the Committee shall have the power to change the duration
and/or the frequency of Offering Periods with respect to future offerings. In no
event shall any option granted hereunder be exercisable more than 27 months from
its date of grant.

5.       GRANT OF OPTION; PARTICIPATION; PRICE

         a. On each Offering Date the Company shall commence an offering by
granting each eligible Employee an option to purchase Shares, subject to the
limitations set forth in Sections 3b and 11 hereof. Each option so granted shall
be exercisable for the number of Shares described in Section 8 hereof and shall
be exercisable only on the Exercise Date.

         b. Each eligible Employee may elect to become a Participant in the Plan
with respect to an Offering Period by filing (at such time and in such form and
manner as the Committee shall require) a subscription agreement with his or her
Employer authorizing payroll deductions in accordance with Section 6 hereof.
Such authorization will remain in effect for subsequent Offering Periods, until
modified or terminated by the Participant by giving written notice to his or her
Employer at such time and in such form and manner as the Committee shall
require.

         c. The option price per Share subject to an offering shall be 85% of
the Fair Market Value of a Share on (i) the Offering Date or (ii) the Exercise
Date, whichever is lower.


                                       5
<PAGE>   6
6.       PAYROLL DEDUCTIONS

         a. Subject to Section 5b hereof, a Participant may, in accordance with
rules and procedures adopted by the Committee, authorize a payroll deduction of
any whole percentage from 2 percent to 10 percent of such Participant's
Compensation each pay period. Subject to Section 6c hereof, a Participant may
increase or decrease such payroll deduction (including a cessation of payroll
deductions) by filing a new authorization form with his or her Employer at such
time and in such form and manner as the Committee shall require. All payroll
deductions made by a Participant shall be credited to such Participant's account
under the Plan.

         b. Notwithstanding the foregoing, to the extent necessary to comply
with Section 423(b)(8) of the Code and Section 3b hereof, a Participant's
payroll deductions may be decreased to 0% at any time during an Offering Period.
Payroll deductions shall recommence at the rate provided in such Participant's
subscription agreement at the beginning of the next-following Offering Period,
unless terminated by the Participant as provided in Section 9 hereof.

         c. A Participant may withdraw from the Plan as provided in Section 9
hereof, which will terminate his or her payroll deductions for the Offering
Period in which such withdrawal occurs. A Participant who decreases the rate of
his or her payroll deductions to 0% during an Offering shall not be eligible to
authorize further payroll deductions under the Plan until the beginning of the
next-following Offering Period.

7.       EXERCISE OF OPTION

         a. Unless a Participant withdraws from the Plan as provided in Section
9 hereof, or unless the Committee otherwise provides, such Participant's
election to purchase Shares shall be exercised automatically on the Exercise
Date, and the maximum number of Shares (excluding any fractional Shares) subject
to such option will be purchased for such Participant at the applicable option
price with (i) the accumulated payroll deductions and (ii) any cash dividends
paid on Shares which have been credited to the Participant's account under the
Plan pursuant to Section 10 hereof.

         b. Any cash balance remaining in a Participant's account after the
termination of an Offering Period will be carried forward to the Participant's
account for the purchase of Shares during the next Offering Period if the
Participant has elected to continue to participate in the Plan. Otherwise the
Participant will receive a cash payment equal to the cash balance of his or her
account.



                                       6
<PAGE>   7
         c. The Shares purchased upon exercise of an option hereunder shall be
credited to the Participant's account under the Plan as of the Exercise Date and
shall be deemed to be transferred to the Participant on such date. Except as
otherwise provided herein, the Participant shall have all rights of a
shareholder with respect to such Shares upon their being credited to the
Participant's account.

8.       DELIVERY OF SHARES

         a. As promptly as practicable after receipt by the Company of a written
request for withdrawal of Shares from any Participant, the Company shall arrange
the delivery to such Participant of a share certificate representing the Shares
in the Participant's account which the Participant requests to withdraw (any
fractional Share being paid in cash). Subject to Section 8b hereof and such
additional restrictions as the Committee may impose in its discretion,
withdrawals may be made no more frequently than once each calendar year. Shares
received upon share dividends or share splits shall be treated as having been
purchased on the Exercise Date of the Shares to which they relate.

         b. Subject to such restrictions as the Committee may impose in its
discretion, Shares may be withdrawn by a Participant more than once during a
calendar year under the following circumstances: (i) within 60 days following a
Change in Control of the Company or (ii) upon the approval of the Committee, in
its sole discretion.

9.       WITHDRAWAL; TERMINATION OF EMPLOYMENT

         a. A Participant may withdraw at any time all, but not less than all,
cash amounts in his or her account under the Plan that have not been used to
purchase Shares (including, without limitation, the payroll deductions and cash
dividends credited to such Participant's account) by giving written notice to
the Company at such time and in such form and manner as the Committee shall
require. All such payroll deductions and cash dividends credited to such
Participant's account shall be paid to such Participant promptly after receipt
of such Participant's notice of withdrawal and such Participant's option for the
Offering Period in which the withdrawal occurs shall be automatically
terminated. No further payroll deductions for the purchase of Shares will be
made for such Participant during such Offering Period, and any additional cash
dividends during the Offering Period shall be distributed to the Participant.

         b. Upon termination of a Participant's Continuous Status as an Employee
during the Offering Period for any reason, including voluntary termination,
retirement or death, the payroll deductions and cash dividends credited to such
Participant's account that have not been used to purchase Shares shall be
returned (and any future cash dividends shall be distributed) to such
Participant or, in the case of such Participant's death, to the person or
persons entitled thereto under Section 13 hereof, and such Participant's option
will be automatically terminated.


                                       7
<PAGE>   8
         c. A Participant's withdrawal from an offering will not have any effect
upon such Participant's eligibility to participate in a succeeding offering or
in any similar plan which may hereafter be adopted by the Company.

10.      DIVIDENDS AND INTEREST

         a. Cash dividends paid on Shares held in a Participant's account shall
  be credited to such Participant's account and used in addition to payroll
  deductions to purchase Shares on the Exercise Date. Dividends paid in Shares
  or share splits of the Shares shall be credited to the accounts of
  Participants. Dividends paid in property other than cash or Shares shall be
  distributed to Participants as soon as practicable.

         b. No interest shall accrue on or be payable with respect to the
payroll deductions or credited cash dividends of a Participant in the Plan.

11.      SHARES

         a. Subject to adjustment as provided in Section 17 hereof, the maximum
number of Shares which shall be reserved for sale under the Plan shall be
[_________] Shares. Such Shares shall be either authorized and unissued Shares
or Shares which have been reacquired by the Company. If the total number of
Shares which would otherwise be subject to options granted pursuant to Section
5a hereof on an Offering Date exceeds the number of Shares then available under
the Plan (after deduction of all Shares for which options have been exercised or
are then outstanding), the Committee shall make a pro rata allocation of the
Shares remaining available for option grant in as uniform a manner as shall be
practicable and as it shall determine to be equitable. In such event, the
Committee shall give written notice to each Participant of such reduction of the
number of option Shares affected thereby and shall similarly reduce the rate of
payroll deductions, if necessary.

         b. Shares to be delivered to a Participant under the Plan will be
registered in the name of the Participant or, at the election of the
Participant, in the name of the Participant and another person as joint tenants
with rights of survivorship.

12.      ADMINISTRATION The Plan shall be administered by the Committee, and the
Committee may select administrator(s) to whom its duties and responsibilities
hereunder may be delegated. The Committee shall have full power and authority,
subject to the provisions of the Plan, to promulgate such rules and regulations
as it deems necessary for the proper administration of the Plan, to interpret
the provisions and supervise the administration of the Plan, and to take all
action in connection therewith or in relation thereto as it deems necessary or
advisable. Any decision reduced to writing and signed by a majority of the
members of the Committee shall be fully effective as if it had been made at a
meeting duly held. Except as otherwise provided by the Committee, each Employer
shall be charged with all expenses incurred in the administration of the Plan
with respect to such Employer's Employees. No member of the


                                       8
<PAGE>   9
Committee shall be personally liable for any action, determination, or
interpretation made in good faith with respect to the Plan, and all members of
the Committee shall be fully indemnified by the Company with respect to any such
action, determination or interpretation. All decisions, determinations and
interpretations of the Committee shall be final and binding on all persons,
including the Company, the Participant (or any person claiming any rights under
the Plan from or through any Participant) and any shareholder.

13.      DESIGNATION OF BENEFICIARY

         a. A Participant may file with the Company, on forms supplied by the
Company, a written designation of a beneficiary who is to receive any Shares and
cash remaining in such Participant's account under the Plan in the event of the
Participant's death.

         b. Such designation of beneficiary may be changed by the Participant at
any time by written notice to the Company, on forms supplied by the Company. In
the event of the death of a Participant and in the absence of a beneficiary
validly designated under the Plan who is living at the time of such
Participant's death, the Company shall deliver such Shares and/or cash to the
executor or administrator of the estate of the Participant or, if no such
executor or administrator has been appointed (to the knowledge of the Company),
the Company, in its discretion, may deliver such Shares and/or cash to the
spouse or to any one or more dependents or relatives of the Participant in
accordance with the applicable laws of descent and distribution, or if no
spouse, dependent or relative is known to the Company, then to such other person
as the Company may designate.

14.      TRANSFERABILITY Neither payroll deductions, dividends or dividend
reinvestments credited to a Participant's account nor any rights with regard to
the exercise of an option or to receive Shares under the Plan may be assigned,
transferred, pledged or otherwise disposed of in any way by the Participant
(other than by will, the laws of descent and distribution or as provided in
Section 13 hereof). Any such attempt at assignment, transfer, pledge or other
disposition shall be without effect, except that the Company may treat such act
as an election to withdraw funds in accordance with Section 9 hereof.

15.      USE OF FUNDS All payroll deductions, dividends and reinvested dividends
received or held by the Company under the Plan may be used by the Company for
any corporate purpose, and the Company shall not be obligated to segregate such
funds.

16.      REPORTS Individual accounts will be maintained for each Participant in
the Plan. Statements of account will be given to Participants as soon as
practicable following each Offering Period, which statements will set forth the
amounts of payroll deductions, dividends and dividend reinvestments, the per
Share purchase price, the number of Shares purchased, the aggregate Shares in
the Participant's account and the remaining cash balance, if any.

17.      EFFECT OF CERTAIN CHANGES In the event of a Change in Capitalization or
the


                                       9
<PAGE>   10
distribution of an extraordinary dividend, the Committee shall conclusively
determine the appropriate equitable adjustments, if any, to be made under the
Plan, including without limitation adjustments to the number of Shares which
have been authorized for issuance under the Plan but have not yet been placed
under option, as well as the price per Share covered by each option under the
Plan which has not yet been exercised. In the event of a Change in Control of
the Company, the Offering Period shall terminate unless otherwise provided by
the Committee.

18.      TERM OF PLAN Subject to the Board's right to discontinue the Plan (and
thereby end its Term) pursuant to Section 19 hereof, the Term of the Plan (and
its last Offering Period) shall end on the tenth anniversary of a Public
Offering. Upon any discontinuance of the Plan, unless the Committee shall
determine otherwise, any assets remaining in the Participants' accounts under
the Plan shall be delivered to the respective Participant (or the Participant's
legal representative) as soon as practicable.

19.      AMENDMENT TO AND DISCONTINUANCE OF PLAN The Board may at any time
amend, suspend or discontinue the Plan. Except as provided in Section 17 hereof,
no such suspension or discontinuance may adversely affect options previously
granted and no amendment may make any change in any option theretofore granted
which adversely affects the rights of any Participant which accrued prior to the
date of effectiveness of such amendment without the consent of such Participant.
No amendment shall be effective unless it receives the requisite approval of the
shareholders of the Company if such shareholder approval of such amendment is
required to comply with Rule 16b-3 under the Exchange Act or Section 423 of the
Code or to comply with any other applicable law, regulation or stock exchange
rule.

20.      NOTICES All notices or other communications by a Participant to the
Company under or in connection with the Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location, or by
the person, designated by the Company for the receipt thereof.

21.      REGULATIONS AND OTHER APPROVALS; GOVERNING LAW

         a. This Plan and the rights of all persons claiming hereunder shall be
construed and determined in accordance with the laws of the State of Delaware
without giving effect to the choice of law principles thereof, except to the
extent that such law is preempted by federal law.

         b. The obligation of the Company to sell or deliver Shares with respect
to options granted under the Plan shall be subject to all applicable laws, rules
and regulations, including all applicable federal and state securities laws, and
the obtaining of all such approvals by governmental agencies as may be deemed
necessary or appropriate by the Committee.

         c. To the extent applicable hereto, the Plan is intended to comply with
Rule 16b-3 under the Exchange Act, and the Committee shall interpret and
administer the provisions of the


                                       10
<PAGE>   11
Plan in a manner consistent therewith. Any provisions inconsistent with such
Rule shall be inoperative and shall not affect the validity of the Plan.

22.      WITHHOLDING OF TAXES If the Participant makes a disposition, within the
meaning of Section 424(c) of the Code and regulations promulgated thereunder, of
any Share or Shares issued to such Participant pursuant to such Participant's
exercise of an option, and such disposition occurs within the two-year period
commencing on the day after the Offering Date or within the one-year period
commencing on the day after the Exercise Date, such Participant shall, within
ten (10) days of such disposition, notify the Company thereof and thereafter
immediately deliver to the Company any amount of Federal, state or local income
taxes and other amounts which the Company informs the Participant the Company is
required to withhold.

23.      EFFECTIVE DATE The Plan shall be effective as of the date of a Public
Offering, subject to the approval of the Plan by the shareholders of the Company
within 12 months before or after the date the Plan is adopted.



                                       11