EX-10.1






EMPLOYMENT AGREEMENT




THIS EMPLOYMENT AGREEMENT (the “Agreement”), dated as of January 16, 2008 (the “Effective
Date”), is by and between JAMES G. CARLSON (the “Executive”) and AMERIGROUP CORPORATION, a Delaware
corporation (the “Company”).



RECITALS




A. Executive has heretofore been active as an executive officer of the Company and has been
integral to the operation of the Company’s business (the “Business”).



B. In order to preserve and promote the conduct of the Business, the Company desires to retain
Executive’s continued services in a new role, as President and Chief Executive Officer, and
Executive agrees to render such services in such position, on the terms and conditions hereinafter
set forth.



NOW THEREFORE, in consideration of the premises, Executive’s continued employment and the
mutual promises contained herein provided, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, and intending to be legally bound, the parties
hereto agree as follows:



1. Employment.



(a) General. The Company shall continue to employ Executive on a full-time basis to
perform such duties as may be assigned from time to time by the Company, and Executive agrees to
continue such employment with the Company, on and subject to the terms and conditions herein
provided.



(b) Duties; Reporting. Executive agrees to serve as President and Chief Executive
Officer of the Company. Executive shall at all times report to, and his activities shall at all
times be subject to the direction and control of, the Company’s Board of Directors (the “Board”).
Executive shall devote his full business time, energy, attention and services to the diligent,
faithful and competent discharge of all duties and directions in respect of the business and
affairs of the Company as may from time to time be vested in or reasonably requested of him by the
Board; provided, however, Executive may engage in community, charitable, and educational
activities. Executive shall obtain the prior approval of the Nominating and Governance Committee
of the Board before serving as a director for any for-profit company or enterprise or any
not-for-profit organization.



(c) Place of Performance. Executive shall perform his principal employment duties
hereunder at the offices of the Company in Virginia Beach, Virginia, or at such other location(s)
as the Company may reasonably designate from time to time on a temporary basis. Executive also
shall undertake such travel as is necessary in connection with the performance by Executive of his
duties hereunder.



(d) Director Nomination. For so long as Executive is employed as President and Chief
Executive Officer pursuant to this Agreement, the Board shall designate and nominate Executive as a
director of the Company and, if elected by the stockholders of the Company, Executive shall accept
such position and diligently perform the duties arising from such position.



2. Term. Subject to Section 4 below, the term of Executive’s employment under this
Agreement shall commence on the Effective Date and continue until the third (3rd) anniversary of
the Effective Date, provided, such term shall automatically renew on a year-to-year basis
thereafter until terminated by either party in accordance with Section 4 below.



3. Compensation and Benefits. During the term of Executive’s employment under this
Agreement and subject to Section 4 below, the Company shall pay or provide, as applicable, to
Executive the following:



(a) Base Salary. The Company shall pay Executive a base salary at an annual rate of
Seven Hundred Twenty-Five Thousand Dollars ($725,000) per year (as adjusted pursuant to this
Section 3(a), the “Base Salary”). Annually, beginning March 2008, the Board shall review the Base
Salary and in its discretion determine whether merit-based adjustments are appropriate.



(b) Fringe Benefits. Executive will be entitled to participate on the same basis with
all other management employees of the Company in the Company’s standard benefits package generally
available for senior management, as well as all other officers and employees of the Company,
provided that Executive meets the eligibility criteria established for each such plan (Executive’s
eligibility and benefit level shall be determined separately for each plan and all such
determinations shall be made by the parties charged in the plan with responsibility for such
determinations).



(c) Cash and Equity Incentive Plans. Executive will be entitled to participate in the
Company’s cash and equity incentive compensation plans for senior management, as in effect from
time to time (currently the AMERIGROUP Corporation 2007 Cash Incentive Plan and the AMERIGROUP
Corporation 2005 Equity Incentive Plan), in accordance with the terms and conditions of the plans,
including such opportunities and limitations as may be applicable specifically to Executive’s
position.



(d) Change in Control. Executive will be entitled to participate in the Company’s
programs and policies that are applicable in the event of a change in control of the Company, as in
effect from time (currently the AMERIGROUP Corporation Change in Control Benefit Policy), in
accordance with the terms and conditions of the programs and policies, including such provisions as
may be applicable specifically to Executive’s position.



(e) Business Expenses. The Company shall reimburse Executive for reasonable and
necessary out-of-pocket expenses incurred in connection with his duties hereunder, including,
without limitation, business entertainment, community involvement, business development, travel on
behalf of the Company, including, without limitation, lodging and transportation expenses incurred
in connection with such business trips. Executive agrees to provide accurate and itemized expense
records so that the Company may receive the benefit of any and all applicable tax deductions with
respect thereto, and the Company agrees to provide reimbursement within a reasonable time and in
accordance with the timeframe used for reimbursement for other management employees of the Company
after receipt of such documentation.



4. Termination and Effect on Compensation.



(a) Termination. Executive’s employment under this Agreement may be terminated as
follows:



(i) Without Cause by the Company. The Company may terminate Executive’s employment at
any time without Cause (defined below) by giving written notice to Executive, which notice shall
specify whether the termination is effective immediately or at a future date not to exceed sixty
(60) days from the date of notice (in the event that the Company specifies such a future date,
Executive will until such date provide such transition services as may be reasonably requested);



(ii) With Cause by the Company. The Company may terminate Executive’s employment at
any time for Cause by giving written notice to Executive, which termination shall be effective
immediately;



(iii) Without Changed Circumstances by Executive. Executive may terminate his
employment at any time for any reason whatsoever or for no reason upon not less than sixty (60)
days’ prior written notice to the Company;



(iv) For Changed Circumstances by Executive. Executive may terminate his employment
at any time for Changed Circumstances (defined below) upon not less than forty-five (45) days’
prior written notice (the “Notice Period”) to the Company specifying such Changed Circumstances
(and the change, event or action giving rise thereto), provided that such notice is given within
thirty (30) days after the initial occurrence of such Changed Circumstances, and provided further
that the change, event or action giving rise to the Changed Circumstances has not been cured as of
the expiration of the Notice Period; and



(v) Death or Permanent Disability. Executive’s employment shall terminate immediately
if Executive dies or becomes Permanently Disabled (defined below).



(b) Effect of Termination.



(i)(A) In the event that (x) the Company terminates Executive’s employment pursuant to Section
4(a)(i) (Without Cause), or (y) Executive terminates his employment pursuant to Section 4(a)(iv)
(For Changed Circumstances), the Company shall within thirty (30) days after the effective date of
such termination pay Executive a cash amount equal to the sum of (aa) all Base Salary which has
accrued as of the date of Executive’s termination and is then unpaid and any cash bonus under
Section 3(c) that has been awarded by the Board and is then unpaid, (bb) the value (based on
Executive’s then-current Base Salary) of paid annual leave which has accrued through the effective
date of Executive’s termination and is then unused, and (cc) the Special Separation Payment
(defined below). The “Special Separation Payment” shall be a lump sum amount equal to the sum of
(1) two times (2x) the amount of Executive’s Base Salary rate for the applicable year, plus
(2) two times (2x) the amount of Executive’s annual cash bonus target (currently the MJO Bonus
Annual Target) for the applicable year under the 2007 Cash Incentive Plan or its successor.
Notwithstanding anything to the contrary set forth herein, if any termination is effected pursuant
to Section 4(a)(i) or 4(a)(iv) during the Protected Period (as defined in the Company’s Change in
Control Benefit Policy), the Special Separation Payment shall not be paid unless and except to the
extent that it exceeds the amount payable under the Company’s Change in Control Benefit Policy on
account of Executive’s termination (and the Company and Executive agree that, notwithstanding
anything to the contrary in the Change in Control Benefit Policy, the amount payable thereunder
shall be determined without regard to any subordination principle expressed therein).



(B) Notwithstanding the foregoing, the Company’s obligation to pay Executive any amount in
respect of the Special Separation Payment shall be contingent upon Executive’s execution and
delivery to the Company of a Severance Agreement (with terms that are not inconsistent with the
terms of this Agreement) and a Release of all Claims in the forms requested by the Company and, to
the extent that the Severance Agreement and/or Release of all Claims includes a statutory
revocation/rescission period, the expiration of such period without Executive having revoked the
release.



(ii) In the event that Executive’s employment terminates pursuant to Section 4(a)(v) (Death or
Permanent Disability), the Company shall pay Executive or his estate the same amount that is
payable pursuant to Section 4(b)(A), including the limitations applicable to termination during the
Protected Period (as defined in the Company’s Change in Control Benefit Policy), provided (x) in
the case of termination related to death, such amount shall be reduced by all amounts payable to
Executive’s beneficiaries pursuant to life insurance policies on Executive’s life (group term or
otherwise) maintained by the Company, and shall be paid within thirty (30) days of Executive’s
death, (y) in the case of termination related to Executive being Permanently Disabled, such amount
shall be paid in full on the first day of the first month following the month in which such
termination became effective, provided such amount shall be reduced by the present value as
calculated by the Company using the prime rate (as announced by the Company’s primary lending
institution as of the date of determination of the Permanent Disability) as the discount rate for
such calculation, of any monthly disability benefit that will be payable to Executive during the
first twenty-four (24) months of disability, under any disability insurance coverage provided to
Executive by the Company (group or individual), and (z) the Company’s obligation to pay Executive
or his estate any amount pursuant to this Section 4(b)(ii) shall be contingent upon Executive’s (or
his personal representative’s), or the personal representative of Executive’s estate, execution and
delivery to the Company of a Severance Agreement (with terms that are not inconsistent with the
terms of this Agreement) and a Release of all Claims in the forms requested by the Company and, to
the extent that the Severance Agreement and/or Release of all Claims includes a statutory
revocation/rescission period, the expiration of such period without Executive having revoked the
release.



(iii) In the event that Executive’s employment terminates for any reason other than pursuant
to (A) Section 4(a)(i) (Without Cause), (B) Section 4(a)(iv) (For Changed Circumstances) or Section
4(a)(v) (Death or Disability), the Company shall pay Executive the sum of (x) any Base Salary which
has accrued as of the date of Executive’s termination and is then unpaid, and (y) the value (based
on Executive’s then-current Base Salary) of paid annual leave which has accrued through the
effective date of Executive’s termination and is then unused. For clarity, the preceding sentence
shall apply in the event that Executive is terminated pursuant to Section 4(a)(ii) (With Cause) or
Executive terminates his employment pursuant to Section 4(a)(iii) (Without Changed Circumstances)
or Executive otherwise resigns.



(iv) Except for the payments described in Sections 4(b)(A), 4(a)(ii) or 4(b)(iii) above, as
applicable, Executive shall not receive or be entitled to any other compensation or benefits from
the Company or any of its affiliates after the termination of Executive’s employment hereunder
(other than Executive’s right to maintain COBRA coverage for the period required by applicable law,
and any amount payable to Executive pursuant to the terms of any Long Term Incentive Plan
established by the Compensation Committee of the Board under the Company’s 2007 Cash Incentive Plan
or its successor), including without limitation any bonus(es) under Section 3.



(v) Upon the effective date of any termination of Executive’s employment hereunder, Executive
shall be deemed to have resigned from the Board and any and all offices and other positions held by
Executive in the Company and/or any of its affiliates and upon the Company’s request, Executive
shall confirm such resignation in writing.



(c) Definitions Used Above.



(i) “Cause” means conduct involving one or more of the following: (A) the substantial and
continuing failure of Executive to render services to the Company in accordance with Executive’s
obligations and position with the Company, provided the Board gives Executive notice with
reasonable detail of the nature of such failure and, if such failure is capable of cure, Executive
fails to cure such failure within thirty (30) days after receipt of such notice; (B) Executive’s
dishonesty, gross negligence, breach of fiduciary duty, willful misconduct or violation of any laws
or regulations applicable to the Company; (C) the commission by Executive of an act of fraud or
embezzlement; (D) the conviction of, or plea of nolo contendere by, Executive of a felony or any
lesser crime generally regarded as involving moral turpitude, (E) the engaging in, or commission by
the Executive of, any intentional act which, in the good faith judgment of the Board, has, or is
reasonably likely to have, a material adverse effect on the public perception or business of the
Company; (F) Executive’s repeated impairment due to alcohol, controlled substances or drugs or the
performance by Executive of his duties hereunder under the influence of alcohol, controlled
substances or drugs (excluding prescribed drugs); or (G) a material breach of the terms of an
agreement with the Company or any subsidiary or affiliate, provided that the Board gives Executive
notice with reasonable detail of such breach and, if such breach is capable of cure, Executive
fails to cure such breach within thirty (30) days after receipt of such notice.



(ii) “Changed Circumstances” means without the consent of Executive, (A) the Board effects any
changes in the duties and responsibilities of Executive that are materially inconsistent with the
duties and responsibilities of Executive immediately prior to the implementation of such changes or
(B) the Board reduces Executive’s target annual compensation by ten percent (10%) or more,
excluding any reductions effected in an across-the-board manner to the salaries paid to Company’s
executive officers.



(iii) Executive shall be deemed “Permanently Disabled” if Executive suffers any physical or
mental condition that qualifies Executive for a disability benefit under the disability plan
maintained by the Company on the date of determination.



5. Breach by Executive. Should Executive materially breach any of the provisions
hereof, or should Executive breach any of the covenants, representations, warranties or other
provisions of any agreement to which Executive and the Company are parties, in addition to and not
in limitation of any other rights or remedies the Company may have: (a) the Company shall not be
bound to make any further payments that it may owe to Executive under this or any other agreement
to which Executive and the Company are parties, until such breach is cured to the Company’s
reasonable satisfaction; (b) the Company may offset against any such amount(s) owed hereunder any
damages it believes it has incurred as a result of such breach; (c) the Company may recover money
damages; and (d) in addition to its rights to damages and its other rights, the Company shall be
entitled to obtain equitable relief for any such breach so that Executive shall be required to
cease and desist immediately from breaching any such provision of this or any such other agreement
(it being agreed that damages alone would be inadequate to compensate the Company and would be an
inadequate remedy for such breach).



6. Other Special Covenants. As a condition to the Company’s execution and delivery of
this Agreement (and as further consideration of the Company’s covenants hereunder),
contemporaneously herewith Employee has executed and delivered to the Company an Executive
Noncompetition, Nondisclosure and Developments Agreement.



7. Governing Law; Jurisdiction and Venue. This Agreement, and the rights and
obligations of the Company and Executive hereunder, shall be governed by and construed in
accordance with the laws of the Commonwealth of Virginia applicable to contracts made and to be
performed therein. Each of the Parties hereby agrees and submits to the jurisdiction and venue of
any state or federal court sitting in Norfolk, Virginia (the “Chosen Courts”), in any action or
proceeding arising out of or relating to this Agreement. Each Party agrees that the Chosen Courts
shall have exclusive jurisdiction for such purposes and each Party agrees not to bring any action
or proceeding arising out of or relating to this Agreement in any other court, waives any objection
to laying venue in any such action or proceeding in the Chosen Courts, and waives any objection
that the Chosen Courts are an inconvenient forum or do not have jurisdiction.



8. Severability. The parties agree that each provision herein shall be treated as a
separate and independent clause, and the unenforceability of one clause shall in no way impair the
enforceability of any of the other clauses herein. Should any provision of this Agreement be held
by a court of competent jurisdiction to be unenforceable, or enforceable only if modified, such
holding shall not affect the validity of the remainder of this Agreement, the balance of which
shall continue to be binding upon the parties hereto with any such modification to become a part
hereof and treated as though contained in this original Agreement.



9. Reformation. The parties hereto agree that any court of competent jurisdiction may
modify any unenforceable provision of this Agreement in lieu of severing the unenforceable
provision from this Agreement in its entirety, whether by rewriting the offending provision,
deleting any or all of the offending provision, adding language to this Agreement, or making such
other modification that the court deems warranted to carry out the agreement of the parties. The
parties hereto expressly agree that this Agreement as so modified by the court shall be binding
upon and enforceable against each of them.



10. Assignment. Neither the Company nor the Executive nor any of his beneficiaries
may assign, pledge or encumber the other party’s interests in this Agreement or any part thereof.
Notwithstanding the foregoing, the Company may assign this Agreement in whole or in part to any
person, partnership, corporation, limited liability company or entity deriving title to the
Business or the assets or goodwill of the Company, including, without limitation, any affiliate.



11. Waivers and Modifications. No amendment, modification or waiver of any provision
of this Agreement shall be effective unless the same shall be set forth in a writing signed by the
parties. This Agreement shall not be construed more strictly against one party by virtue of the
fact it may have been prepared by counsel for such party, it being recognized that each of the
parties have contributed substantially and materially to the preparation of this Agreement.



12. Entire Agreement. This Agreement constitutes the entire understanding and
agreement between the parties hereto with respect to the subject matter hereof. This Agreement
shall inure to the benefit of the respective parties’ heirs, personal representatives, successors
and permitted assigns.



13. No Waiver of Breach or Remedy. A waiver by either party of the breach of any of
the provisions of this Agreement by the other party shall not be deemed a waiver by either party of
any subsequent breach, nor shall recourse to any remedy hereunder be deemed a waiver of any other
or further relief or remedy provided for herein.



14. Notices. All notices hereunder shall be in writing and shall be delivered in
person or mailed by certified or registered mail, return receipt requested, addressed as follows:



	 	 	 
	If to the Company, to:

	 	AMERIGROUP Corporation

4425 Corporation Lane, Suite 300

Virginia Beach, Virginia 23462

Attention: Stanley F. Baldwin

Executive Vice President and General Counsel
	If to the Executive, to:

	 	James G. Carlson

     

     






15. Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which together shall constitute one and the
same instrument.



16. Section Headings. The descriptive section headings herein have been inserted for
convenience only and shall not be deemed to define, limit, or otherwise affect the construction of
any provision hereof.



17. Withholding. Notwithstanding any other provision of this Agreement, the Company
may withhold from amounts payable under this Agreement all federal, state, local, and foreign taxes
that are required to be withheld by applicable laws or regulations..



18. Seals. This Agreement is executed and delivered under seal, and the designation
“[SEAL]” on this Agreement shall be as effective as the affixing of a seal physically thereto.



[Remainder of page intentionally left blank — signature page follows]




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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have set their
hands and seals hereunto as of the day and year above first written.




EXECUTIVE:



[SEAL]




James G. Carlson




COMPANY:




AMERIGROUP CORPORATION,


a Delaware corporation



[SEAL] By:



Name: Stanley F. Baldwin     




	 	 	Title: Executive Vice President,
Secretary and General Counsel






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