EX-10.1






FIFTH AMENDMENT




TO CREDIT AND GUARANTY AGREEMENT




THIS FIFTH AMENDMENT TO CREDIT AND GUARANTY AGREEMENT (this “Amendment”) is dated as of
December 15, 2008 and is entered into by and among AMERIGROUP CORPORATION, a Delaware corporation
(“Borrower”), certain subsidiaries of Borrower, as Guarantors, the Lenders listed on the signature
pages hereto, WACHOVIA CAPITAL MARKETS, LLC (“Wachovia Capital Markets”), as Joint Lead Arranger
and Joint Bookrunner, GOLDMAN SACHS CREDIT PARTNERS L.P. (“GSCP”), as Joint Lead Arranger, Joint
Bookrunner (GSCP and Wachovia Capital Markets in such capacities, the “Arrangers”), and as
Syndication Agent (in such capacity, “Syndication Agent”), and WACHOVIA BANK, NATIONAL ASSOCIATION,
as Administrative Agent (together with its permitted successors in such capacity, “Administrative
Agent”) and as Issuing Bank (together with its permitted successor in such capacity, “Issuing
Bank”), and is made with reference to that certain CREDIT AND GUARANTY AGREEMENT dated as of March
26, 2007 (as amended through the date hereof, the “Credit Agreement”) by and among Borrower, the
subsidiaries of Borrower named therein, Lenders, Arrangers, Syndication Agent, Issuing Bank and
Administrative Agent. Capitalized terms used herein without definition shall have the same
meanings herein as set forth in the Credit Agreement after giving effect to this Amendment.



RECITALS




WHEREAS, the Credit Parties have requested that Requisite Lenders and Issuing Bank agree to
amend certain provisions of the Credit Agreement as provided for herein; and



WHEREAS, subject to certain conditions, Requisite Lenders and Issuing Bank are willing to
agree to such amendment relating to the Credit Agreement.



NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants
herein contained, the parties hereto agree as follows:




	 	 	SECTION I. AMENDMENTS TO CREDIT AGREEMENT






A. Section 1.1 of the Credit Agreement is hereby amended by amending and restating
the following defined terms:




“Base Rate” means, for any day, a rate per annum equal to the greatest of (i) the
Prime Rate in effect on such day, (ii) the Federal Funds Effective Rate in effect on
such day plus 1/2 of 1% and (iii) the Adjusted Eurodollar Rate for a one month Interest
Period on such day (or if such day is not a Business Day, the immediately preceding
Business Day) plus 1%, provided that, for the avoidance of doubt, the Adjusted
Eurodollar Rate for any day shall be calculated on a daily basis in a manner consistent
with the definition of Adjusted Eurodollar Rate. If for any reason the Administrative
Agent shall have determined (which determination shall be conclusive in the absence of
manifest error) that it is unable to ascertain the Federal Funds Effective Rate, for any
reason, including the inability or failure of the Administrative Agent to obtain
sufficient quotations in accordance with the terms thereof, the Base Rate shall be
determined without regard to clause (ii) above, as appropriate, until the circumstances
giving rise to such inability no longer exist. Any change in the Base Rate due to a
change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted Eurodollar
Rate shall be effective on the opening of business on the date of such change.”




“Eligible Assignee” means (i) any Lender, any Affiliate of any Lender and any
Related Fund (any two or more Related Funds being treated as a single Eligible Assignee
for all purposes hereof), (ii) any commercial bank, insurance company, investment or
mutual fund or other entity that is an “accredited investor” (as defined in Regulation D
under the Securities Act) and which extends credit or buys loans, (iii) any other Person
(other than a natural person) approved by the Administrative Agent, the Issuing Bank,
and, in the absence of an Event of Default, the Borrower (each such approval not to be
unreasonably withheld or delayed), and (iv) solely for purposes of any purchases of Term
Loans in accordance with Section 10.6(i) of this Agreement, the Borrower;
provided, other than as set forth in clause (iv) of this definition, neither the
Borrower nor any Subsidiary or Affiliate of the Borrower shall be an Eligible Assignee.”




B. Section 1.1 of the Credit Agreement is hereby amended by inserting the following
defined terms in their appropriate alphabetical order:




“Borrower Assignment Agreement” means with respect to any assignment to the
Borrower pursuant to Section 10.6(i) hereof, an Assignment and Assumption Agreement
substantially in the form of Exhibit M, with such amendments or modifications as may be
approved by Administrative Agent and the Borrower.




“Borrower Assignment Effective Date” as defined in Section 10.6(i)(iv).




“Borrower Loan Purchase” means any purchase of the Term Loans by the Borrower
pursuant to Section 10.6(i).




“Clearing Price” as defined in the Offer Document.




“Expiration Time” as defined in the Offer Document.




“Fifth Amendment Closing Date” means December 15, 2008.




“Maximum Offer Amount” as defined in the Offer Document.




“Maximum Permitted Offer” as defined in Section 10.6(i)(i).




“Maximum Purchase Price” as defined in the Offer Document.




“Offer” as defined in Section 10.6(i)(i).




“Offer Document” means a Notice of an Offer to Purchase by the Borrower, together
with all attachments thereto, all in the form of Exhibit N, as the same may be amended
or modified from time to time.




“Purchase Notice” as defined in Section 10.6(i)(i).




C. Section 2.14(e)(i) of the Credit Agreement is hereby amended and restated in its
entirety to read as follows:




“(i) In the event that there shall be Excess Cash Flow for any Fiscal Year
(commencing with the Fiscal Year ending December 31, 2007; provided that for the Fiscal
Year ending December 31, 2007 only, the calculation of Excess Cash Flow under this
Section 2.14(d)(i) shall include only the third and fourth fiscal quarters of 2007),
Borrower shall, no later than ninety days after the end of such Fiscal Year, prepay the
Loans as set forth in Section 2.15(b) in an aggregate amount equal to (i) 50% of such
Excess Cash Flow minus (ii) voluntary repayments of the Loans and any purchases,
repayments, retirements or cancellation of Term Loans in an amount equal to the actual
amount paid in cash for such purchases, repayments, retirements or cancellation of Term
Loans in accordance with Section 10.6(i) hereof (excluding repayments of Revolving Loans
or Swing Line Loans except to the extent the Revolving Commitments are permanently
reduced in connection with such repayments); provided, that if, as of the last day of
the most recently ended Fiscal Year, the Leverage Ratio (determined for any such period
by reference to the Compliance Certificate delivered pursuant to Section 5.2(a)
calculating the Leverage Ratio as of the last day of such Fiscal Year) shall be
1.50:1.00 or less, Borrower shall only be required to make the prepayments and/or
reductions otherwise required hereby in an amount equal to (i) 25% of such Excess Cash
Flow minus (ii) voluntary repayments of the Loans and any purchases, repayments,
retirements or cancellation of Term Loans in an amount equal to the actual amount paid
in cash for such purchases, repayments, retirements or cancellation of Term Loans in
accordance with Section 10.6(i) hereof (excluding repayments of Revolving Loans or Swing
Line Loans except to the extent the Revolving Commitments are permanently reduced in
connection with such repayments).”




D. Section 2.17 of the Credit Agreement is hereby amended by adding the following
new sentence at the conclusion thereof:




“The provisions of this Section 2.17 shall not be construed to apply to (a) any
payment made by the Borrower pursuant to and in accordance with the express terms of
this Agreement or (b) any payment obtained by any Lender as consideration for the
assignment or sale of a participation in any of its Term Loans or other Obligations owed
to it (including, without limitation, pursuant to Section 10.6).”




E. Section 6.1 of the Credit Agreement is hereby amended by:



(a) deleting “and” at the end of Section 6.1(s);



(b) replacing the period at the end of Section 6.1(t) with “; and”;



(c) inserting a new Section 6.1(u) immediately after Section 6.1(t) as
follows:




“(u) Liens on certain cash collateral required to be deposited in order to cash
collateralize Indebtedness permitted by Section 6.3(o).”




F. Section 6.2(k) of the Credit Agreement is hereby amended and restated in its
entirety to read as follows:




“(k) Permitted Acquisitions, the consideration for which constitutes (i) less than
$40,000,000 in the aggregate in any Fiscal Year, and (ii) less than $100,000,000 in the
aggregate from the Fifth Amendment Closing Date to the date of determination;”




G. Section 6.3 of the Credit Agreement is hereby amended by:



(a) deleting “and” at the end of Section 6.3(m);



(b) replacing the period at the end of Section 6.3(n) with “; and”; and



(c) inserting a new Section 6.3(o) immediately after Section 6.3(n) as
follows:




“(o) secured Indebtedness of Borrower or any of its Subsidiaries consisting of
letters of credit in an aggregate principal amount of up to $30,000,000 at any time
outstanding.”




H. Section 6.6(ii) of the Credit Agreement is hereby amended and restated in its
entirety to read as follows:




“(ii) the Borrower may (x) during any Fiscal Year, make Restricted Junior Payments
of up to $20,000,000 plus 50% of the Borrower Net Income (or, if Borrower Net
Income is negative, 100% of the Borrower Net Income) for the prior Fiscal Year (it being
agreed that any charges related to the Judgment or any settlement thereof (not to exceed
the size of the Credit Facilities) shall be excluded from the calculation of Borrower
Net Income in this Section 6.6(ii)(x)) plus only with respect to Restricted
Junior Payments made within the six month period beginning on the Fifth Amendment
Closing Date, up to 50% of the $50,000,000 aggregate amount provided in the following
clause (y) not used in such six month period for the purchase of Convertible Senior
Notes and (y) within six months after the Fifth Amendment Closing Date, purchase
Convertible Senior Notes and warrants related thereto in an aggregate amount not to
exceed $50,000,000, so long as, in the case of any Restricted Junior Payment made
pursuant to this clause (ii), (a) no Default or Event of Default shall have occurred and
be continuing at the time of such payment or exist immediately after giving effect
thereto and (b) the Borrower shall have delivered to the Administrative Agent a
compliance certificate signed by an Authorized Officer demonstrating compliance with the
financial covenants hereunder and a Minimum Liquidity of not less than $100,000,000, in
each case, after giving effect to the subject Restricted Junior Payment and reaffirming
that the representations and warranties made hereunder are true and complete in all
material respects as of such date; provided, however, that (A) the
Minimum Liquidity condition shall not apply to any distribution in the form of cash
settlements with respect to either the Spread Overlay Agreements in accordance with the
terms thereof or the early conversion of the Convertible Senior Notes in accordance with
the terms thereof and (B) the Minimum Liquidity condition shall only apply to Restricted
Junior Payments (other than those described in the preceding clause (A)) in excess of an
aggregate amount of $20,000,000 of such Restricted Junior Payments made pursuant to this
clause (ii),”




I. Section 6.7(d) of the Credit Agreement is hereby amended and restated in its
entirety to read as follows:




“(d) Except in connection with a refinancing or refunding permitted hereunder,
make any prepayment, redemption, defeasance or acquisition for value of (including,
without limitation, by way of depositing money or securities with the trustee with
respect thereto before due for the purpose of paying when due), or refund, refinance or
exchange of any Indebtedness (other than the purchase of Convertible Senior Notes and
warrants related thereto as permitted under Section 6.6, the Indebtedness under the
Credit Documents and intercompany Indebtedness permitted hereunder) other than regularly
scheduled payments of principal and interest on such Indebtedness.”




J. Section 6.18 of the Credit Agreement is hereby amended by inserting the
following proviso at the conclusion thereof:




“; provided further, however, that the purchase of Convertible
Senior Notes and warrants related thereto as permitted under Section 6.6 and any
amendments to Interest Rate Agreements related to the purchase of such Convertible
Senior Notes are expressly permitted hereunder.”




K. Section 10.6(c) of the Credit Agreement is hereby amended by:



(a) deleting “and” at the end of Section 10.6(c)(i);



(b) replacing the period at the end of Section 10.6(c)(ii) with “; and”;



(c) inserting a new Section 10.6(c)(iii) immediately after Section
10.6(c)(ii) as follows:




“(iii) to any Person meeting the criteria of clause (iv) of the definition of the
term “Eligible Assignee” upon the giving of prompt notice to Administrative Agent.”




L. Section 10.6 of the Credit Agreement is hereby amended by inserting a new
Section 10.6(i) immediately after the end of Section 10.6(h) as follows:




“(i) Certain Permitted Term Loan Purchases. Notwithstanding anything to the
contrary contained in this Section 10.6 or any other provision of this Agreement, so long as
(x) no Default or Event of Default has occurred and is continuing or would result therefrom
and (y) the proceeds of Revolving Loans are not used for any Borrower Loan Purchases
otherwise permitted under this Section 10.6(i), the Borrower may purchase outstanding Term
Loans on the following basis:




(i) At any time prior to December 31, 2009, the Borrower may notify the
Administrative Agent in the form of Exhibit O hereto (each, a “Purchase Notice”)
that it wishes to make one or more offers to Lenders to purchase the Term Loans
pursuant to the Offer Document (each, an “Offer”) in an aggregate amount specified
by the Borrower, with such Offer to be consummated pursuant to the terms of the
Borrower Assignment Agreement. The Borrower shall have the right, in accordance
with the procedures in the Offer Document, to purchase the Term Loans, for cash, at
a purchase price determined in accordance with the Offer set forth in the Offer
Document; provided that no Offer in accordance with the terms of this
Section 10.6(i) shall be (A) less than $5,000,000 in aggregate principal amount of
the outstanding Term Loans for each Offer undertaken by the Borrower (or such lesser
amount as shall constitute the aggregate unused amount of the Maximum Permitted
Offer), and (B) more than the aggregate principal amount of the outstanding Term
Loans for all Offers undertaken by the Borrower (the “Maximum Permitted Offer”); and
provided further that, each assignment of Term Loans pursuant to
this Section 10.6(i)(i) shall be in an aggregate amount of not less than $500,000
(or such lesser amount (x) as may be agreed to by Borrower and Administrative Agent,
(y) as shall constitute the aggregate amount of the Term Loans of the assigning
Lender, or (z) as shall constitute the aggregate pro rata share of the Term Loans of
the assigning Lender in the event of pro ration as contemplated in the Offer
Document).




(ii) In connection with any assignment pursuant to Section 10.6(i), each of the
assigning Lender and the Borrower in its capacity as purchaser of the tendered Term
Loans acknowledges as of the Borrower Assignment Effective Date that (i) the
Borrower Loan Purchase and the assignment are in accordance with the terms of
Section 10.6(i), (ii) the other party to the Borrower Assignment Agreement currently
may have, and later may come into possession of, information regarding the Credit
Documents or the Credit Parties that is not known to it and that may be material to
a decision to enter into the Borrower Assignment Agreement (“Excluded Information”),
(iii) it has independently and without reliance on the other party made its own
analysis and determined to enter into the Borrower Assignment Agreement and to
consummate the transactions contemplated thereby notwithstanding its lack of
knowledge of the Excluded Information and (iv) the other party shall have no
liability to it, and it hereby to the extent permitted by law waives and releases
any claims it may have against the other party under applicable laws or otherwise,
with respect to the nondisclosure of the Excluded Information in connection with
such assignment; provided that the Excluded Information shall not and does
not affect the truth or accuracy of the representations or warranties of such party
in the Standard Terms and Conditions set forth in the Borrower Assignment Agreement.
Each of the assigning Lender and the Borrower in its capacity as purchaser of the
tendered Term Loans further acknowledges that the Excluded Information may not be
available to the Administrative Agent or the other Lenders.




(iii) The Borrower acknowledges and agrees that it will make payment of the
purchase price for Term Loans accepted for payment pursuant to the Offer Documents
by transmitting funds directly to the assigning Lender in accordance with the terms
of the Offer Document.




(iv) Assignment of any Borrower Loan Purchases shall be effective upon
recordation in the Register (in the manner set forth below) by the Administrative
Agent following receipt of a fully executed Borrower Assignment Agreement effecting
the assignment thereof (as provided in Section 10.6(d)). Each assignment shall be
recorded in the Register on the Business Day the Assignment Agreement is received by
the Administrative Agent, if received by 12:00 noon New York City time, and on the
following Business Day if received after such time, prompt notice thereof shall be
provided to Borrower and a copy of such Assignment Agreement shall be maintained, as
applicable. The date of such recordation of a transfer shall be referred to herein
as the “Borrower Assignment Effective Date.” The provisions of Section 10.6(b)
shall not be applicable to any Borrower Loan Purchases consummated pursuant to
Section 10.6(i).




(v) No Borrower Loan Purchase pursuant to this Section 10.6(i) shall be deemed
to be a voluntary prepayment pursuant to Section 2.13, Section 2.14, Section 2.15,
Section 2.16 or Section 2.17 hereunder.




(vi) Following a Borrower Loan Purchase, no interest shall accrue from and
after the Borrower Assignment Effective Date on any Term Loans purchased by the
Borrower and such purchased Term Loans shall be deemed cancelled or retired for all
purposes and no longer outstanding (and may not be resold by the Borrower), for all
purposes of this Agreement and all other Credit Documents (notwithstanding any
provisions herein or therein to the contrary), including, but not limited to (A) the
making of, or the application of, any payments to the Lenders under this Agreement
or any other Credit Document, (B) the making of any request, demand, authorization,
direction, notice, consent or waiver under this Agreement or any other Credit
Document, (C) the providing of any rights to the Borrower as a Lender under this
Agreement or any other Credit Document, (D) the determination of Requisite Lenders,
(E) the calculation of the financial covenants set forth in Section 6.15, or for any
similar or related purpose, under this Agreement or any other Credit Document.




(vii) The Lenders hereby consent to the transactions described in this Section
10.6(i) and waive the requirements of any provision of this Agreement (including,
without limitation, Sections 2.13, 2.15, 2.16, 2.17 and 10.6 (other than Section
10.6(i))) and any other Credit Document that might otherwise result in a breach of
this Agreement, a Default or an Event of Default as a result of or in connection
with the consummation of any Borrower Loan Purchase.




(viii) The provisions of this Section 10.6(i) shall not require the Borrower to
undertake and consummate any Offer; provided that to the extent the Borrower
undertakes to consummate any Offer, it shall purchase the principal amount of all
validly tendered Term Loans at or below the Clearing Price up to the Maximum Offer
Amount. Notwithstanding anything herein to the contrary, to the extent the Borrower
terminates, cancels or withdraws any Offer, it shall not be permitted to submit
another Purchase Notice to the Administrative Agent for a period of ten consecutive
Business Days.”




M. The Exhibits to the Credit Agreement are hereby amended by adding the following
new Exhibits thereto as set forth in Annex I attached hereto:



	 	 	 
	“Exhibit MBorrower Assignment Agreement

	Exhibit NOffer Document

	Exhibit OPurchase Notice”

	SECTION II.

	 	AMENDMENT FEE






As consideration for the execution and delivery of this Amendment, the Borrower shall pay to
Administrative Agent, for the ratable benefit of those Lenders who have executed and delivered this
Amendment on or before the Fifth Amendment Effective Date (the “Consenting Lenders”), an amendment
fee (the “Amendment Fee”), in an amount equal to the greater of (i) the product of (a) 0.25%
multiplied by (b) the sum of (x) the aggregate Revolving Commitments then in effect
plus (y) the aggregate Term Loans then outstanding, to be allocated among the Consenting
Lenders based on their pro rata share of the sum of (A) aggregate Revolving Exposure of all
Consenting Lenders plus (B) the aggregate Term Loan Exposure of all Consenting Lenders and
(ii) such other amount agreed upon between the Borrower and Administrative Agent, which fee shall
be non-refundable and fully earned and payable on the Fifth Amendment Effective Date.




	 	 	SECTION III. CONDITIONS TO EFFECTIVENESS





This Amendment shall become effective as of the date hereof only upon the satisfaction of all
of the following conditions precedent (the date of satisfaction of such conditions being referred
to herein as the “Fifth Amendment Effective Date”):




A. Execution. Administrative Agent shall have received a counterpart signature page
of this Amendment duly executed by each of the Credit Parties, the Requisite Lenders and
Issuing Bank.




B. Necessary Consents and Other Documents. Each Credit Party shall have obtained
all material consents necessary or advisable in connection with the transactions
contemplated by this Amendment and Administrative Agent and Lenders shall have received
such other documents, information or agreements regarding the Credit Parties as
Administrative Agent or Collateral Agent may reasonably request.




C. Fees and Expenses. The Borrower shall have paid to Administrative Agent, for the
ratable benefit of the Consenting Lenders, the Amendment Fee in immediately available
funds. The Borrower shall have paid, in each case to the extent invoiced prior to the
Fifth Amendment Effective Date, all reasonable disbursements, fees and expenses of the
Administrative Agent in connection with the preparation, reproduction, execution and
delivery of this Amendment (including, without limitation, the reasonable disbursements,
fees and expenses of Latham & Watkins LLP, counsel for the Administrative Agent with
respect thereto) in immediately available funds.




	 	 	SECTION IV. REPRESENTATIONS AND WARRANTIES





In order to induce Lenders and Issuing Bank to enter into this Amendment and to amend the
Credit Agreement in the manner provided herein, each Credit Party which is a party hereto
represents and warrants to each Lender that the following statements are true and correct in all
material respects:




A. Incorporation of Representations and Warranties From Credit Agreement. The
representations and warranties contained in Section 4 of the Credit Agreement are and
will be true and correct in all material respects on and as of the Fifth Amendment
Effective Date with respect to this Amendment and the Credit Agreement as amended by
this Amendment to the same extent as though made on and as of that date, except to the
extent such representations and warranties specifically relate to an earlier date, in
which case they were true and correct in all material respects on and as of such earlier
date.




B. Absence of Default. No event has occurred and is continuing or will result from
the consummation of the transactions contemplated by this Amendment that would
constitute an Event of Default or a Default.




	 	 	SECTION V. MISCELLANEOUS






A. Reference to and Effect on the Credit Agreement and the Other Credit
Documents.



(i) On and after the Fifth Amendment Effective Date, each reference in the
Credit Agreement to “this Amendment”, “hereunder”, “hereof”, “herein” or words of
like import referring to the Credit Agreement, and each reference in the other
Credit Documents to the “Credit Agreement”, “thereunder”, “thereof” or words of like
import referring to the Credit Agreement shall mean and be a reference to the Credit
Agreement as amended by this Amendment.



(ii) Except as specifically amended by this Amendment, the Credit Agreement and
the other Credit Documents shall remain in full force and effect and are hereby
ratified and confirmed. Without limiting the generality of the foregoing, each
Guarantor hereby reaffirms its guaranty of the Obligations and the Liens securing
those guaranties, notwithstanding the effectiveness of this Amendment.



(iii) The execution, delivery and performance of this Amendment shall not
constitute a waiver of any provision of, or operate as a waiver of any right, power
or remedy of any Agent or Lender under, the Credit Agreement or any of the other
Credit Documents.




B. Headings. Section and Subsection headings in this Amendment are
included herein for convenience of reference only and shall not constitute a part of
this Amendment for any other purpose or be given any substantive effect.




C. Applicable Law. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT
LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK),
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.




D. Counterparts. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of which
when so executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may be
detached from multiple separate counterparts and attached to a single counterpart so
that all signature pages are physically attached to the same document.



[Remainder of this page intentionally left blank.]

1


IN WITNESS WHEREOF, the parties hereto
have caused this Amendment to be duly executed and delivered by their respective officers thereunto
duly authorized as of the date first written above.




	 	 	 	AMERIGROUP CORPORATION	 






By:      

Name:

Title:





	 	 	 	PHP
HOLDINGS, INC.	 






By:      

Name:

Title:




AMERIGROUP HEALTH SOLUTIONS, INC.




By:      

Name:

Title:





	 	 	 	WACHOVIA BANK, NATIONAL ASSOCIATION,






as Administrative Agent, Collateral Agent, Swing Line Lender,
Issuing Bank and a Lender




By:      

Name: 

Title:




2




	 	 	 	     ,





as a Lender




By:      

Name:

Title:




3




ANNEX I TO FIFTH AMENDMENT TO CREDIT AGREEMENT




EXHIBIT M




Borrower Assignment Agreement

(to be used solely with the Offer)




ASSIGNMENT AND ASSUMPTION AGREEMENT




This Assignment and Assumption Agreement (the “Assignment”) is dated as of the Borrower
Assignment Effective Date set forth below and is entered into by and between [Insert name of
Assignor] (the “Assignor”) and Amerigroup Corporation, a Delaware corporation (the “Assignee”).
Capitalized terms used but not defined herein shall have the meanings given to them in the Credit
Agreement identified below (as it may be amended, restated, supplemented or otherwise modified from
time to time, the “Credit Agreement”), receipt of a copy of which is hereby acknowledged by the
Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed
to and incorporated herein by reference and made a part of this Assignment as if set forth herein
in full.



For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the
Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to
and in accordance with the Standard Terms and Conditions set forth in Annex 1 attached hereto and
Section 10.6(i) of the Credit Agreement, as of the Borrower Assignment Effective Date, which shall
be inserted by the Administrative Agent as contemplated in Section 10.6(i)(iii) of the Credit
Agreement, the interest in and to all of the Assignor’s rights and obligations under the Credit
Agreement and any other documents or instruments delivered pursuant thereto that represents the
amount and percentage interest identified below of all of the Assignor’s outstanding rights and
obligations under the Term Loans (the “Assigned Interest”). Such sale and assignment is without
recourse to the Assignor and, except as expressly provided in this Assignment and the Credit
Agreement, without representation or warranty by the Assignor.



	 	 	 	 	 	 	 	 	 
	1.
	 	Assignor:	 	 	—	 
	2.
	 	Assignee:	 	Amerigroup Corporation
	3.
	 	Borrower:	 	Amerigroup Corporation
	4.
	 	Administrative Agent:	 	Wachovia Bank, National Association, as the
	 
	 	 	 	 	 	administrative agent under the Credit Agreement
	5.
	 	Credit Agreement:	 	The Credit and Guaranty Agreement, dated as of
	 
	 	 	 	 	 	March 26, 2007, by and among Borrower, certain
	 
	 	 	 	 	 	subsidiaries of Borrower, the Lenders party
	 
	 	 	 	 	 	thereto, Wachovia Capital Markets, LLC, as Joint
	 
	 	 	 	 	 	Lead Arranger and Joint Bookrunner, Goldman Sachs
	 
	 	 	 	 	 	Credit Partners L.P., as Joint Lead Arranger,
	 
	 	 	 	 	 	Joint Bookrunner and as Syndication Agent, and
	 
	 	 	 	 	 	Wachovia Bank, National Association (“Wachovia
	 
	 	 	 	 	 	Bank”), as Administrative Agent (in such
	 
	 	 	 	 	 	capacity, the “Administrative Agent”) and as
	 
	 	 	 	 	 	Issuing Bank.  Capitalized terms used but not
	 
	 	 	 	 	 	defined herein shall have the meanings given to
	 
	 	 	 	 	 	them in the Credit Agreement







	6.	 	Assignor’s Interest under the Credit Agreement:





	 	 	 	 	 
	Facility
	 	Aggregate Amount of Term Loans of Lender1
	 
	 	 	 	 
	Term Loans
	 	 	—	%
	 
	 	 	 	 







	7.	 	Assigned Interest:





List below the Term Loans to be assigned by Assignor to Assignee subject to the terms and
conditions of the Offer, including, without limitation, the pro rata reduction procedures set forth
in the Offer Document.



	 	 	 	 	 	 	 
	Purchase Price at

which Term Loans

are being tendered

to Assignee

(per $1,000

principal amount)2

	 	Principal Face

Amount of Term

Loans to be

Assigned to

Assignee

subject to

pro rata reduction 3
	 	







Pro Rated Principal

Amount of

Term Loans Assigned4
	 	









Percentage Assigned

of Term Loans5
	 

	 	 
	 	 
	 	 
	$     

	 	$     
	 	$     
	 	     %
	 

	 	 
	 	 
	 	 






Borrower Assignment Effective Date:      , 20     [TO BE INSERTED BY ADMINISTRATIVE AGENT
AND WHICH SHALL BE THE BORROWER ASSIGNMENT EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE
REGISTER THEREFOR.]




	8.	 	Notice and Wire Instructions:





	 	 	 
	[NAME OF ASSIGNOR]	 	 
	Notices:

	 	

	


     

	 	AMERIGROUP CORPORATION

Notices:
	     

     

Attention:

Telecopier:

with a copy to:

     

	 	—

4425 Corporation Lane

Virginia Beach, Virginia 23462

Attention: James W. Truess

Telecopier: (757) 473-2738

with a copy to:
	     

     

Attention:

Telecopier:

Wire Instructions:

	 	4425 Corporation Lane

Virginia Beach, Virginia 23462

Attention: Stanley F. Baldwin

Telecopier: (757) 557-6743

Wire Instructions:
	 

	 	 






9. The Assignor acknowledges and agrees that (i) tenders of the Term Loans will constitute a
binding agreement between the Assignor and the Assignee in accordance with the terms and conditions
contained in the Offer Documents; (ii) validly tendered Term Loans will be deemed to have been
accepted by the Assignee if and when the Assignee gives written notice of acceptance to the
Administrative Agent; and (iii) it will not have any withdrawal rights with respect to any tender
of its Term Loans.



10. The Assignee acknowledges and agrees that from and after the Borrower Assignment Effective
Date, no interest shall accrue and any Term Loans assigned by the Assignor shall be deemed
cancelled for all purposes and no longer outstanding.



[Signatures on the Following Page]




1 Set forth, to at least 9 decimals, as a percentage of the
Term Loans of all Lenders thereunder.



2 To be completed by Assignor.



3 To be completed by Assignor.



4 To be completed by the Administrative Agent based on the pro
ration procedures set forth in the Offer Documents.



5 To be completed by the Administrative Agent, set forth,
to at least 9 decimals, as a percentage of the Term Loans of all Lenders
thereunder.



4



The Assignor acknowledges and agrees that tenders of its Term Loans pursuant to the procedures
described in the Offer Document constitute the Assignor’s acceptance of the terms and conditions
(including the pro ration procedures) contained in the Offer Documents and this Assignment.



The terms set forth in this Assignment are hereby agreed to:




ASSIGNOR


[NAME OF ASSIGNOR]




By:     

Name:

Title:





ASSIGNEE


AMERIGROUP CORPORATION




By:     

Name:

Title:




5



ANNEX 1




STANDARD TERMS AND CONDITIONS FOR ASSIGNMENT




AND ASSUMPTION AGREEMENT





	 	 	SECTION VI. Representations and Warranties.






	 	6.1	 	Assignor. The Assignor (a) represents and warrants
that (i) it is the legal and beneficial owner of the Assigned Interest, (ii)
the Assigned Interest is free and clear of any lien, encumbrance or other
adverse claim (except the liens created and permitted under Section 10.6(h) of
the Credit Agreement, which liens shall be automatically released upon the
transfer of the Assigned Interest to the Assignee) and (iii) it has full power
and authority, and has taken all action necessary, to execute and deliver this
Assignment and to consummate the transactions contemplated hereby; (b) assumes
no responsibility with respect to (i) any statements, warranties or
representations made in or in connection with any Credit Document, (ii) the
execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Credit Agreement or any other instrument or document delivered
pursuant thereto, other than this Assignment (as amended, herein collectively
the “Credit Documents”), or any collateral thereunder, (iii) the financial
condition of Borrower, any of its Subsidiaries or Affiliates or any other
Person obligated in respect of any Credit Document or (iv) the performance or
observance by Borrower, any of its Subsidiaries or Affiliates or any other
Person of any of their respective obligations under any Credit Document; and
(c) it has read and agrees to all of the terms and conditions (including the
pro ration procedures) of the Purchase Offer (as defined in the Offer
Documents) set forth in the Offer Documents. The Assignor will, upon request,
execute and deliver any additional documents deemed by the Administrative Agent
or the Assignee to be necessary or desirable to complete the sale, assignment
and transfer of the Assigned Interest.






	 	6.2	 	Assignee. The Assignee (a) represents and warrants
that (i) it has full power and authority, and has taken all action necessary,
to execute and deliver this Assignment and to consummate the transactions
contemplated hereby and to become a Lender under the Credit Agreement, (ii) it
meets all requirements of clause (iv) of the definition of an Eligible Assignee
under the Credit Agreement, (iii) it has transmitted same-day funds to the
Assignor on the Borrower Assignment Effective Date, and (iv) from and after the
Borrower Assignment Effective Date, no interest shall accrue and any Term Loans
assigned by the Assignor shall be deemed cancelled for all purposes and no
longer outstanding.






	 	6.3	 	Each of Assignor and Assignee acknowledges that (i) this
Assignment is in accordance with the terms of Section 10.6(i) of the Credit
Agreement, (ii) the other party currently may have, and later may come into
possession of, information regarding the Credit Documents or the Credit Parties
that is not known to it and that may be material to a decision to enter into
the Assignment (“Excluded Information”), (iii) it has independently and without
reliance on the other party made its own analysis and determined to enter into
the Assignment and to consummate the transactions contemplated hereby
notwithstanding its lack of knowledge of the Excluded Information and (iv) the
other party shall have no liability to it, and it hereby to the extent
permitted by law waives and releases any claims it may have against the other
party under applicable laws or otherwise, with respect to the nondisclosure of
the Excluded Information in connection with this Assignment; provided
that the Excluded Information shall not and does not affect the truth or
accuracy of the representations or warranties of such party in these Standard
Terms and Conditions. Each of Assignor and Assignee further acknowledges that
the Excluded Information may not be available to the Administrative Agent or
the other Lenders in the Credit Agreement.






	 	6.4	 	Each of Assignor and Assignee acknowledges that it has not
violated any applicable laws relating to this Assignment or the transactions
contemplated herein.





	 	 	 
	SECTION VII.

SECTION VIII.

	 	Payments. From and after the Borrower Assignment Effective

Date, the Administrative Agent shall make all payments of

interest in respect of the Assigned Interest (excluding

payments of principal) to the Assignor for amounts which have

accrued to but excluding the Borrower Assignment Effective

Date. No interest shall accrue from and after the Borrower

Assignment Effective Date and the Assigned Interest shall be

deemed cancelled for all purposes and no longer outstanding.

General Provisions. This Assignment shall be binding upon, and

inure to the benefit of, the parties hereto and their

respective successors and assigns. This Assignment may be

executed in any number of counterparts, which together shall

constitute one instrument. Delivery of an executed counterpart

of a signature page of this Assignment by telecopy shall be

effective as delivery of a manually executed counterpart of

this Assignment. This Assignment shall be governed by, and

construed in accordance with, the internal laws of the State of

New York without regard to conflict of laws principles thereof.






6




EXHIBIT N




NOTICE OF AN OFFER TO PURCHASE




Offer to Purchase for Cash the Outstanding Term Loans listed below in the Maximum Offer Amount

specified below at a Purchase Price Not Greater than the Maximum Purchase Price specified below Nor

Less than the Minimum Purchase Price specified below




	 	 	 	 	 	 	 
	Outstanding Loans

	 	Maximum Offer Amount
	 	Maximum Purchase

Price

(per $1,000

principal face

amount)
	 	Minimum Purchase

Price

(per $1,000

principal face

amount)
	 

	 	 
	 	 
	 	 
	Term Loans

	 	$[     ]
	 	$[     ]
	 	$[     ]
	 

	 	 
	 	 
	 	 






The offer to purchase (as set forth herein, the “Purchase Offer”) Term Loans (as defined in
the Credit Agreement (as defined herein)) will expire at [TIME], New York City time, on [DATE] (the
“Expiration Time”). Lenders (as defined in the Credit Agreement) owning Term Loans seeking to
accept the Purchase Offer must send in via facsimile or email to the attention of Mike Clawson
(Fax. No.: (704) 383-0550; email: michael.clawson@wachovia.com) an offer in the form of Annex A
hereto (the “Sale Offer”) and a validly executed Assignment and Assumption Agreement in the form of
Annex B hereto, in each case prior to the Expiration Time.



Subject to the terms and conditions in this Notice of an Offer to Purchase, the Outline of
Auction Mechanics (the “Auction Mechanics”) and the related documents (collectively, the “Offer
Documents”), Amerigroup Corporation (“we”, “us” or “Purchaser”) is offering to purchase for cash
$[     ] (such amount, the “Maximum Offer Amount”) in aggregate principal face amount of Term
Loans outstanding under the Credit Agreement at a purchase price not greater than $[     ] (such
amount, the “Maximum Purchase Price”) nor less than $[     ] (such amount, the “Minimum Purchase
Price”) per $1,000 principal face amount at a price determined by the “Modified Dutch Auction”
procedures described below. The Purchaser may increase the Maximum Offer Amount at any time, and
from time to time, prior to the fifth Business Day after the Administrative Agent has initially
determined the Clearing Price (as defined below). If the Purchaser so elects, the Administrative
Agent, in consultation with the Purchaser, shall redetermine the Clearing Price based on such
increased Maximum Offer Amount.



Under the “Modified Dutch Auction” procedures we are using, the Administrative Agent (defined
below) in consultation with us will select the lowest purchase price (the “Clearing Price”) that
will allow us to purchase the Maximum Offer Amount (or such lesser amount of Term Loans for which
we have received the aggregate Sale Offers), at prices not greater than the Maximum Purchase Price
nor less than the Minimum Purchase Price per $1,000 principal face amount. First, to the extent
the Purchaser elects to purchase Term Loans, all principal amount of validly tendered Term Loans
for which Sale Offers are received at a price lower than the Clearing Price will be purchased at
the purchase price specified by such participating Lender, and such tendered principal amounts will
not be subject to pro ration, and thereafter, all principal amount of Term Loans tendered at the
Clearing Price will be acquired at such Clearing Price, subject to pro ration procedures set forth
below. We will not purchase any principal amount of Term Loans validly tendered at a price above
the Clearing Price. In the event that the aggregate principal amount of Term Loans for which
validly executed Sale Offers and Assignment and Assumption Agreements are received (prior to the
Expiration Time) exceeds the Maximum Offer Amount and the Purchaser elects to purchase Term Loans
pursuant to the Purchase Offer, the Purchaser will purchase all principal amount of Term Loans
tendered by the Lenders below the Clearing Price first, and then to the extent of the remaining
amounts under the Maximum Offer Amount, the Purchaser will purchase all principal amount of Term
Loans tendered by the Lenders at the Clearing Price ratably based on the respective principal
amounts of such tendered Term Loans.



Note that not all principal amount of Term Loans accepted for purchase in the Purchase Offer
will be purchased at the Clearing Price. If a participating Lender specifies an offer price for
principal amount of a Term Loan that is less than the Clearing Price, such Lender will first
receive for such principal amount the purchase price specified by such participating Lender and
such tendered principal amount will not be subject to proration. Only principal amount of Term
Loans tendered at the Clearing Price will be subject to proration.



We intend to disseminate announcements in respect of any amendment, cancellation or
termination of the Purchase Offer or extension of the Expiration Time or any other relevant matter
to you through Wachovia Bank, National Association, in its capacity as administrative agent
(“Administrative Agent”) under the Credit and Guaranty Agreement, dated as of March 26, 2007 (as
amended, amended and restated, modified or supplemented from time to time, the “Credit Agreement”),
among the Purchaser, certain subsidiaries of the Purchaser, the Lenders party thereto (“Lenders”),
Wachovia Capital Markets, LLC, as Joint Lead Arranger and Joint Bookrunner, Goldman Sachs Credit
Partners L.P., as Joint Lead Arranger, Joint Bookrunner and as Syndication Agent, and Wachovia
Bank, National Association (“Wachovia Bank”), as Administrative Agent (in such capacity, the
“Administrative Agent”) and as Issuing Bank. Neither Wachovia Bank, nor any of its affiliates
assumes any responsibility for the accuracy or completeness of the information concerning us, or
our affiliates contained in the Offer Documents or for any failure by us to disclose events that
may have occurred and may affect the significance or accuracy of such information.



NONE OF THE PURCHASER AND THE ADMINISTRATIVE AGENT OR ANY OF THEIR RESPECTIVE AFFILIATES MAKES
ANY RECOMMENDATION PURSUANT TO THE OFFER DOCUMENTS AS TO WHETHER OR NOT LENDERS SHOULD SELL THEIR
TERM LOANS TO THE PURCHASER PURSUANT TO THE OFFER DOCUMENTS. EACH LENDER SHOULD MAKE ITS OWN
DECISION AS TO WHETHER TO SELL ANY OF ITS TERM LOAN AND IF SO, THE PRINCIPAL AMOUNT OF, AND WITH
RESPECT TO SALES, THE PRICE TO BE SOUGHT FOR, SUCH TERM LOANS. IN ADDITION, EACH LENDER SHOULD
CONSULT ITS OWN ATTORNEY, BUSINESS ADVISOR OR TAX ADVISOR AS TO LEGAL, BUSINESS, TAX AND RELATED
MATTERS CONCERNING THIS PURCHASE OFFER AND THE OFFER DOCUMENTS.



All deliveries, correspondence and requests for additional copies of documentation may be
directed to the Administrative Agent at the address and telephone numbers set forth below.



The Administrative Agent:



Wachovia Bank, National Association


301 S. College Street


Charlotte, NC 28288-0608


Attn: Loan Trading Desk – Mike Clawson


Email: michael.clawson@wachovia.com


Tel.: (704) 383-9330



Please contact the Administrative Agent if you have any questions about this Purchase Offer or the
Offer Documents.



[DATE]



7




OUTLINE OF AUCTION MECHANICS




The Offer Documents contain important information that should be read carefully before any
decision is made with respect to the Purchase Offer. None of the Purchaser, its Boards of
Directors, the Administrative Agent or any of their respective affiliates makes any recommendation
as to whether Lenders should participate in the Purchase Offer. Lenders must make their own
decisions as to whether to participate in the Purchase Offer.6 Capitalized terms not otherwise
defined in this Outline of Auction Mechanics have the meanings assigned to them in the Notice of an
Offer to Purchase.



	 	 	 
	The Purchaser

	 	Amerigroup Corporation, a Delaware

corporation (the “Purchaser”).
	 

	 	 
	Term Loans

	 	All Term Loans (as defined in the Credit

Agreement defined below) outstanding under

the Credit and Guaranty Agreement, dated as

of March 26, 2007 (as amended, amended and

restated, modified or supplemented from time

to time, the “Credit Agreement”), among the

Purchaser, certain subsidiaries of the

Purchaser, the Lenders party thereto

(“Lenders”), Wachovia Capital Markets, LLC,

as Joint Lead Arranger and Joint Bookrunner,

Goldman Sachs Credit Partners L.P., as Joint

Lead Arranger, Joint Bookrunner and as

Syndication Agent, and Wachovia Bank,

National Association (“Wachovia Bank”), as

Administrative Agent (in such capacity, the

“Administrative Agent”) and as Issuing Bank.
	 

	 	 
	The Purchase Offer

	 	The Purchaser is offering to purchase for

cash, on the terms and subject to the

conditions set forth below and in the Offer

Documents, any and all of Term Loans from

Lenders (as set forth herein, the “Purchase

Offer”).

The Purchase Offer is not conditioned on any

minimum aggregate principal amount of Term

Loans being offered by Lenders for sale

(other than the Minimum Assignment Amount (as

defined herein)). If the Purchaser elects to

purchase Term Loans pursuant to the Purchase

Offer and less than the aggregate principal

amount of Term Loans that the Purchaser is

seeking to purchase are offered for sale by

Participating Lenders (defined below), all

principal amount of Term Loans validly

tendered at or below the Clearing Price will

be accepted and the applicable price up to

the Clearing Price will be paid to such

tendering Lenders.

In the event that the aggregate principal

amount of Term Loans for which validly

tendered Sale Offers exceed the Maximum Offer

Amount and the Purchaser elects to purchase

Term Loans pursuant to the Purchase Offer,

the Purchaser will purchase all principal

amount of Term Loans tendered by the Lenders

below the Clearing Price first, and then to

the extent of the remaining amounts under the

Maximum Offer Amount, the Purchaser will

purchase all principal amount of Term Loans

tendered by the Lenders at the Clearing Price

ratably based on the respective principal

amounts of such tendered Term Loans. The

Administrative Agent (in consultation with

the Purchaser) will determine the final pro

ration factor as soon as practicable after

the Expiration Time and will announce such

pro ration factor to the Lenders that have

submitted a Sale Offer (collectively, the

“Participating Lenders”) via Syndtrak; such

determination of the final pro ration factor

will be final and binding on the

Participating Lenders.
	 

	 	 
	Maximum Offer Amount

	 	The Maximum Offer Amount is $[     ].

The Purchaser may increase the Maximum Offer

Amount at any time, and from time to time,

prior to the fifth Business Day after the

Administrative Agent has initially determined

the Clearing Price (as defined below). If

the Purchaser so elects, the Administrative

Agent, in consultation with the Purchaser,

shall redetermine the Clearing Price based on

such increased Maximum Offer Amount.
	 

	 	 
	Purchase Price

	 	The Purchaser is conducting the Purchase

Offer through a procedure commonly called a

“Modified Dutch Auction”. This procedure

allows the tendering Lender to select the

price, within an applicable price range

specified by the Purchaser, at which such

Lender is willing to sell the principal

amount of its Term Loans.

The Purchaser is offering to purchase Term

Loans for cash at a price not greater than

$[     ] nor less than $[     ] per $1,000

principal face amount. The Purchaser will

select the lowest purchase price, which is

referred to herein as the Clearing Price,

that will allow the Purchaser to purchase the

Maximum Offer Amount (or such lesser amount

of Term Loans for which the Purchaser

received the aggregate Sale Offers). To the

extent the Purchase Offer is not cancelled,

withdrawn or terminated by the Purchaser,

first, all principal amount of Term Loans for

which Sale Offers are validly received at a

price lower than the Clearing Price will be

purchased at the purchase price specified by

such participating Lender, and such tendered

principal amount will not be subject to pro

ration, and thereafter, all principal amount

of Term Loans tendered at the Clearing Price

will be acquired at such Clearing Price,

subject to pro ration procedures set forth

above. We will not purchase any principal

amount of Term Loans tendered at a price

above the Clearing Price.

In the event no Lenders have validly tendered

any Term Loans following the Purchase Offer

or as otherwise agreed to by the

Administrative Agent, the Purchaser reserves

the right at any time prior to the Expiration

Time (as may be extended by the Purchaser by

three business days) to amend the Purchase

Offer to increase the Maximum Offer Amount or

the Maximum Purchase Price for all Lenders.
	 

	 	 
	
 
	 	In order to select the purchase price at

which a Lender wishes to sell its Term Loans,

each Lender must indicate in its (i) offer in

the form of Annex A (“Sale Offer”) and (ii)

Section 7 of the Assignment Agreement (form

of such agreement attached hereto as Annex

B), in each case the price within the

specified range (in multiples of $5 per

$1,000 principal amount) at which such Lender

wishes to offer the principal face amount of

its Term Loans for sale to the Purchaser (the

“Offer Price”). A Lender may not submit more

than one Sale Offer, and may not specify more

than one Offer Price in its Sale Offer.
	
 
	 	 
	Setting the Purchase Price

	 	In the event any changes are required to the

executed Assignment and Assumption Agreement,

the Administrative Agent shall notify the

applicable Participating Lender of such

required changes and shall request an

acknowledgment by such Participating Lender,

which acknowledgement shall be provided by

such Participating Lender no later than two

days of receipt thereof.

Each Sale Offer shall be in an aggregate

amount of not less than $500,000, or such

lesser amount (x) as may be agreed to by the

Purchaser and the Administrative Agent, (y)

as shall constitute the aggregate amount of

the Term Loans of the Participating Lender or

(z) as shall constitute the aggregate pro

rata share of the Term Loans of the

Participating Lender in the event of pro

ration as contemplated herein (the “Minimum

Assignment Amount”).
	 

	 	 
	Expiration Time

	 	[TIME], New York City time on [DATE]
	 

	 	 
	Effective Date

	 	The effective date for the Purchase Offer

shall be the date recorded by the

Administrative Agent in the Register (as

defined in the Credit Agreement) in

accordance with Section 10.6(i)(iii) (the

“Borrower Assignment Effective Date”). From

and after such Borrower Assignment Effective

Date, no interest shall accrue and any Term

Loans purchased by the Purchaser shall be

deemed cancelled for all purposes and no

longer outstanding.
	 

	 	 
	Purpose of the Purchase Offer

	 	The purpose of the Purchase Offer is to

improve the consolidated financial position

of the Purchaser by acquiring and cancelling

a portion of the outstanding principal amount

of Term Loans at a discount to face amount.

The Purchaser believes such an improved

financial position will benefit those Lenders

that retain ownership of Loans and/or

Commitments (as each term is defined in the

Credit Agreement) after the consummation of

the Purchase Offer. Furthermore, the

Purchaser believes that the Purchase Offer

provides an opportunity to owners of Term

Loans to gain liquidity with respect to such

Term Loans that such Lenders may not

otherwise have. The Purchaser believes that

purchasing such Term Loans pursuant to the

Offer Documents is an effective use of our

cash resources at this time.
	 

	 	 
	Conditions to the Purchase

Offer

	 	Delivery, to the Administrative Agent prior

to the Expiration Time, of a validly executed

(i) Assignment and Assumption Agreement and

(ii) Sale Offer; provided that the Purchaser

shall not be required to accept for payment,

purchase or pay for any principal amount of

Term Loans that are the subject of validly

executed and delivered Assignment and

Assumption Agreements and Sale Offers, and

may terminate any or all of the Purchase

Offer and treat all executed and delivered

Assignment and Assumption Agreements as null

and void and without any legal effect.
	 

	 	 
	Withdrawal Rights

	 	The Lenders shall have withdrawal rights

pursuant to the Offer Documents. Any Sale

Offer or Assignment and Assumption Agreement

delivered to the Administrative Agent may be

modified, revoked, terminated or cancelled by

a Lender prior to the Expiration Time.
	 

	 	 
	Unpurchased Term Loans

	 	All principal amount of Term Loans not

purchased pursuant to the Offer Documents

will remain outstanding.
	 

	 	 
	Source of Funds

	 	[The Purchaser intends to finance the

Purchase Offer with available cash on hand.]
	 

	 	 
	Acceptance and Payment of

Term Loans

	 	Upon the terms and subject to the conditions

set forth in the Offer Documents, the

Purchaser will purchase, by accepting for

payment, an aggregate principal amount of

Term Loans up to the Maximum Offer Amount

that are the subject of validly executed and

delivered (x) Assignment and Assumption

Agreements and (y) Sale Offer.

Administrative Agent will disseminate to the

Participating Lenders announcements in

connection with the Purchaser’s acceptance

for payment of Term Loans, notice of the

Clearing Price and any other relevant notices

or information through Syndtrak.

The Purchaser will make payment of the

purchase price for Term Loans accepted for

payment pursuant to the Offer Documents by

transmitting directly to the Participating

Lenders such payments in same-day funds on

the Borrower Assignment Effective Date. Any

Term Loans so purchased shall be deemed

cancelled for all purposes and no longer

outstanding.
	 

	 	 
	Miscellaneous

	 	All questions as to the form of documents and

validity and eligibility (including time of

receipt) of Term Loans that are the subject

of a Sale Offer will be determined by the

Purchaser and the Administrative Agent and

their determination will be final and

binding. The Purchaser’s and Administrative

Agent’s interpretation of the terms and

conditions of the Purchase Offer will be

final and binding.
	 

	 	 






8




Annex A




[FORM OF SALE OFFER]




Wachovia Bank, National Association


301 S. College Street


Charlotte, NC 28288-0608


Attention: Loan Trading Desk – Mike Clawson


Fax No.: 704- 383-0550


Email: michael.clawson@wachovia.com




Re: Offer to Purchase Term Loans under the Amerigroup Credit Agreement announced on
Syndtrak on [DATE] 




	 	 	Ladies and Gentlemen:





Reference is made to (i) the Credit and Guaranty Agreement, dated as of March 26, 2007 (as
amended, amended and restated, modified or supplemented from time to time, the “Credit Agreement”),
among Amerigroup Corporation (the “Purchaser”), certain subsidiaries of the Purchaser, the Lenders
party thereto (“Lenders”), Wachovia Capital Markets, LLC, as Joint Lead Arranger and Joint
Bookrunner, Goldman Sachs Credit Partners L.P., as Joint Lead Arranger, Joint Bookrunner and as
Syndication Agent, and Wachovia Bank, National Association (“Wachovia Bank”), as Administrative
Agent (in such capacity, the “Administrative Agent”) and as Issuing Bank, and (ii) the Notice of an
Offer to Purchase announced on Syndtrak on [DATE].




The undersigned Lender of the Term Loans (as defined in the Credit Agreement) hereby
attaches its validly executed Assignment Agreement hereto as Annex 1 and gives its
irrevocable notice to the Administrative Agent that it desires to sell the principal amount
of Term Loans held by such Lender to the Purchaser in accordance with Section 10.6(i) of the
Credit Agreement at the sale prices specified below next to such principal amount:



	 	 	 
	Aggregate Principal Face Amount of

Term Loans Offered for Sale7

	 	Prepayment Price per $1,000 principal

amount of Initial Term Loans

(expressed as a discount to par)
	 

	 	 







Very truly yours,




	 	 	 	[Name
of Lender]





	 	 	 	 	 
	By:
	 	 	—	 
	   Title:








6 No person has been authorized to give any information or to
make any representations other than those contained in the Notice of an Offer
to Purchase and the Outline of Auction Mechanics and, if given or made, such
information or representations must not be relied upon as having been
authorized. The Notice of an Offer to Purchase, the Outline of Auction
Mechanics and the related documents (the “Offer Documents”) do not
constitute an offer to buy or the solicitation of an offer to sell Term Loans
in any circumstances in which such offer or solicitation is unlawful. Neither
the delivery of the Offer Documents nor any purchase of Term Loans will, under
any circumstances, create any implication that the information contained in the
Offer Documents is current as of any time subsequent to the date of such
information.




7 Amount needs to be equal to a minimum of $500,000 (or such
lesser amount (x) as may be agreed to by the Purchaser and the Administrative
Agent, (y) as shall constitute the aggregate amount of the Term Loans of the
assigning Lender or (z) as shall constitute the aggregate pro rata share of the
Term Loans of the assigning Lender in the event of pro ration as contemplated
herein).



9



EXHIBIT O




Purchase Notice




[Borrower Letterhead]





Wachovia Bank, National Association




301 S. College Street




Charlotte, NC 28288-0608




Attention: Loan Trading Desk – Mike Clawson




Re: Offer to Purchase Term Loans under the Amerigroup Credit Agreement




Ladies and Gentlemen:




Reference is made to the Credit and Guaranty Agreement, dated as of March 26, 2007 (as
amended, amended and restated, modified or supplemented from time to time, the “Credit
Agreement”), among Amerigroup Corporation (the “Purchaser”), the subsidiaries of the
Purchaser named therein, the lenders party thereto from time to time (“Lenders”), Wachovia
Capital Markets, LLC, as Joint Lead Arranger and Joint Bookrunner, Goldman Sachs Credit
Partners L.P., as Joint Lead Arranger, Joint Bookrunner and as Syndication Agent, and
Wachovia Bank, National Association, as Administrative Agent (in such capacity, the
“Administrative Agent”) and as Issuing Bank.




The Purchaser hereby gives notice to the Administrative Agent that it is offering to
purchase for cash up to $[     ] in aggregate principal face amount of Term Loans
outstanding under the Credit Agreement at a purchase price not greater than $[     ] nor
less than $[     ] per $1,000 principal amount.




Very truly yours,




AMERIGROUP CORPORATION




By:     

Name:

Title:





10