exv10w2



 





Exhibit 10.2




Opening Transaction




	 	 	 
	 

	 	AMERIGROUP Corporation
	To:

	 	4425 Corporation Lane
	 

	 	Virginia Beach, VA 23462
	 
	 	 
	A/C:

	 	[Insert Account Number]
	 
	 	 
	From:

	 	Wells Fargo Bank, National Association
	 
	 	 
	Re:

	 	Issuer Warrant Transaction
	 
	 	 
	Ref. No:

	 	[Insert Reference Number]
	 
	 	 
	Date:

	 	March 22, 2007





 


Dear Sir(s):




     The purpose of this communication (this “Confirmation”) is to set forth the terms and
conditions of the above-referenced transaction entered into on the Trade Date specified below (the
“Transaction”) between Wells Fargo Bank, National Association (“Dealer”) and AMERIGROUP Corporation
(“Issuer”). This communication constitutes a “Confirmation” as referred to in the ISDA Master
Agreement specified below.



     1. This Confirmation is subject to, and incorporates, the definitions and provisions of the
2000 ISDA Definitions (including the Annex thereto) (the “2000 Definitions”) and the definitions
and provisions of the 2002 ISDA Equity Derivatives Definitions (the “Equity Definitions”, and
together with the 2000 Definitions, the “Definitions”), in each case as published by the
International Swaps and Derivatives Association, Inc. (“ISDA”). In the event of any inconsistency
between the 2000 Definitions and the Equity Definitions, the Equity Definitions will govern. For
purposes of the Equity Definitions, each reference herein to a Warrant shall be deemed to be a
reference to a Call Option or an Option, as context requires.



     Each party is hereby advised, and each such party acknowledges, that the other party has
engaged in, or refrained from engaging in, substantial financial transactions and has taken other
material actions in reliance upon the parties’ entry into the Transaction to which this
Confirmation relates on the terms and conditions set forth below.



     This Confirmation evidences a complete and binding agreement between Dealer and Issuer as to
the terms of the Transaction to which this Confirmation relates. This Confirmation shall be
subject to an agreement (the “Agreement”) in the form of the 1992 ISDA Master Agreement as if
Dealer and Issuer had executed an agreement in such form on the date hereof (but without any
Schedule except for (i) the election of Loss and Second Method and US Dollars (“USD”) as the
Termination Currency, (ii) the replacement of the word “third” in the last line of Section 5(a)(i)
with the word “first” and (iii) the election that the “Cross Default” provisions of Section
5(a)(vi) shall apply to Issuer, with a “Threshold Amount” of USD10 million).



     All provisions contained in, or incorporated by reference to, the Agreement will govern this
Confirmation except as expressly modified herein. In the event of any inconsistency between this
Confirmation and either the Definitions or the Agreement, this Confirmation shall govern.



 









 





     2. The Transaction is a Warrant Transaction, which shall be considered a Share Option
Transaction for purposes of the Equity Definitions. The terms of the particular Transaction to
which this Confirmation relates are as follows:



	 	 	 
	General Terms:
	 	 
	 
	 	 
	Trade Date:
	 	March 22, 2007
	 
	 	 
	Effective Date:
	 	March 28, 2007, or such other date as agreed between the parties, subject to Section 8(k) below
	 
	 	 
	Components:
	 	The Transaction will be divided into individual Components, each with the terms set forth in this Confirmation, and, in particular, with the Number of Warrants and Expiration Date set forth in this Confirmation.  The payments and deliveries to be made upon settlement of the Transaction will be determined separately for each Component as if each Component were a separate Transaction under the Agreement.
	 
	 	 
	Warrant Style:
	 	European
	 
	 	 
	Warrant Type:
	 	Call
	 
	 	 
	Seller:
	 	Issuer
	 
	 	 
	Buyer:
	 	Dealer
	 
	 	 
	Shares:
	 	The Common Stock of Issuer, par value USD0.01 per share (Ticker Symbol: “AGP”).
	 
	 	 
	Number of Warrants:
	 	For each Component, as provided in Annex A to this Confirmation.
	 
	 	 
	Warrant Entitlement:
	 	One Share per Warrant
	 
	 	 
	Strike Price:
	 	USD53.7675
	 
	 	 
	Premium:
	 	USD23,688,000.00 (Premium per Warrant USD4.1980)
	 
	 	 
	Premium Payment Date:
	 	The Effective Date
	 
	 	 
	Exchange:
	 	New York Stock Exchange
	 
	 	 
	Related Exchange:
	 	All Exchanges
	 
	 	 
	Procedures for Exercise:
	 	 
	 
	 	 
	In respect of any Component:
	 	 
	 
	 	 
	Expiration Time:
	 	Valuation Time
	 
	 	 
	Expiration Date:
	 	As provided in Annex A to this Confirmation (or, if such date is not a Scheduled Trading Day, the next following Scheduled Trading Day that is not already an Expiration Date for another Component); provided that if that date is a Disrupted Day, the Expiration Date for such Component shall be the first succeeding Scheduled Trading Day that is not a Disrupted Day and is not or is not deemed to be an Expiration Date in respect of any other Component
of the Transaction hereunder; and provided further that if the Expiration






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	 	Date has not occurred pursuant to the preceding proviso as of the Final Disruption Date, the Final Disruption Date shall be the Expiration Date (irrespective of whether such date is an Expiration Date in respect of any other Component for the Transaction).  “Final Disruption Date” means November 2, 2012.  Notwithstanding the foregoing and anything to the contrary in the Equity Definitions, if a Market Disruption Event occurs on any
Expiration Date, the Calculation Agent may determine that such Expiration Date is a Disrupted Day only in part, in which case the Calculation Agent shall make adjustments to the number of Warrants for the relevant Component for which such day shall be the Expiration Date and shall designate the Scheduled Trading Day determined in the manner described in the immediately preceding sentence as the Expiration Date for the remaining Warrants for such Component.  Section 6.6 of the Equity Definitions shall not apply to any Valuation Date occurring
 on an Expiration Date.
	 
	 	 
	Market Disruption Event:
	 	Section 6.3(a) of the Equity Definitions is hereby amended by deleting the words "during the one hour period that ends at the relevant Valuation Time, Latest Exercise Time, Knock-in Valuation Time or Knock-out Valuation Time, as the case may be," in clause (ii) thereof.
	 
	 	 
	Automatic Exercise:
	 	Applicable; and means that the Number of Warrants for the corresponding Expiration Date will be deemed to be automatically exercised at the Expiration Time on such Expiration Date unless Buyer notifies Seller and the Calculation Agent (by telephone or in writing) prior to the Expiration Time on such Expiration Date that it does not wish Automatic Exercise to occur, in which case Automatic Exercise will not apply to such Expiration Date.
	 
	 	 
	Issuer’s Telephone Number
and Telex and/or Facsimile 
Number
and Contact Details for purpose of
Giving Notice:
	 	To:                                 AMERIGROUP Corporation
	 
	 	                           4425 Corporation Lane
	 
	 	                           Virginia Beach, VA 23462
	 
	 	Attn:                            Office of General Counsel
	 
	 	Telephone:             757-490-6900
	 
	 	 
	Settlement Terms:
	 	 
	In respect of any Component:
	 	 
	 
	 	 
	Settlement Currency:
	 	USD
	 
	 	 
	Net Share Settlement:
	 	On each Settlement Date, Issuer shall deliver to Dealer a number of Shares equal to the Number of Shares to be Delivered for such Settlement Date to the account specified by Dealer and cash in lieu of any fractional Shares valued at the Relevant Price on the Valuation Date corresponding to such Settlement Date.  If, in the






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	 	reasonable opinion of Issuer, Dealer or the Calculation Agent based on advice of counsel, for any reason, the Shares deliverable upon Net Share Settlement would not be immediately freely transferable by Dealer under Rule 144(k) under the Securities Act of 1933, as amended (the “Securities Act”), then the Calculation Agent may elect for Dealer to either (x) accept delivery of such Shares notwithstanding any restriction on transfer or (y) have the provisions set forth
in Section 8(b) below apply.
	 
	 	 
	 
	 	The Number of Shares to be Delivered shall be delivered by Issuer to Dealer no later than 12:00 noon (local time in New York City) on the relevant Settlement Date.
	 
	 	 
	Number of Shares to be Delivered:
	 	In respect of any Exercise Date, subject to the last sentence of Section 9.5 of the Equity Definitions, the product of (i) the number of Warrants exercised or deemed exercised on such Exercise Date, (ii) the Warrant Entitlement and (iii) (A) the excess of the VWAP Price on the Valuation Date occurring on such Exercise Date over the Strike Price (or, if no such excess, zero) divided by (B) such VWAP Price.
	 
	 	 
	VWAP Price:
	 	For any Valuation Date, the New York Volume Weighted Average Price per share of Shares for the regular trading session (including any extensions thereof) of the Exchange on such Valuation Date (without regard to pre-open or after hours trading outside of such regular trading session) as published by Bloomberg at 4:15 p.m. New York City time (or 15 minutes following the end of any extension of the regular trading session) on such date, on
Bloomberg page “AGP.N <Equity> AQR” (or any successor thereto) (or if such published volume-weighted average price is unavailable or is manifestly incorrect, the market value of one Share on such Valuation Date, as determined by the Calculation Agent using a volume-weighted method).
	 
	 	 
	Other Applicable Provisions:
	 	The provisions of Sections 9.1(c), 9.8, 9.9, 9.10, 9.11 (except that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws as a result of the fact that Seller is the Issuer of the Shares) and 9.12 of the Equity Definitions will be applicable as if "Physical Settlement"
applied to the Transaction.
	 
	 	 
	Adjustments:
	 	 
	 
	 	 
	In respect of any Component:
	 	 
	 
	 	 
	Method of Adjustment:
	 	Calculation Agent Adjustment; provided that in respect of an Extraordinary Dividend, “Calculation






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	 	Agent Adjustment” shall be as described in the provision below.
	 
	 	 
	Extraordinary Dividend
	 	Any cash dividend or distribution on the Shares with an ex dividend date occurring on or after the Trade Date and on or prior to the Expiration Date.
	 
	 	 
	Extraordinary Dividend Adjustment:
	 	If at any time during the period from and including the Trade Date, to but excluding the last Expiration Date, an ex-dividend date for an Extraordinary Dividend occurs, then the Calculation Agent will make adjustments to the Strike Price, the Number of Warrants, the Warrant Entitlement and/or any other variable relevant to the exercise, settlement, payment or other terms of the Transaction to preserve the fair value of the Transaction to Buyer after taking into account such
 Extraordinary Dividend.
	 
	 	 
	Extraordinary Events:
	 	 
	 
	 	 
	Consequences of Merger Events:
	 	 
	 
	 	 
	(a) Share-for-Share:
	 	Modified Calculation Agent Adjustment
	 
	 	 
	(b) Share-for-Other:
	 	Cancellation and Payment (Calculation Agent                                                        Determination)
	 
	 	 
	(c) Share-for-Combined:
	 	Component Adjustment; provided that if less than 10% of the consideration received by holders of Shares in such Merger Event comprises consideration other than Listed Shares (as defined below in Section 8(j)) (such consideration, the “Other Consideration”), then the Calculation Agent may adjust the relative size of the relevant portion of the Transaction to which Cancellation and Payment (Calculation Agent Determination)
applies up to the sum of (x) the percentage of the consideration received by holders of Shares in such Merger Event comprising the Other Consideration and (y) 10%.
	 
	 	 
	Tender Offer:
	 	Applicable
	 
	 	 
	Consequences of Tender Offers:
	 	 
	 
	 	 
	(a)Share-for-Share:
	 	Modified Calculation Agent Adjustment
	 
	 	 
	(b) Share-for-Other:
	 	Modified Calculation Agent Adjustment
	 
	 	 
	(c) Share-for-Combined:
	 	Modified Calculation Agent Adjustment
	 
	 	 
	 
	 	 
	 
	 	 
	Modified
Calculation Agent Adjustment:
	 	If, in respect of any Merger Event or Tender Offer to which Modified Calculation Agent Adjustment applies, the adjustments to be made in accordance with Section 12.2(e)(i) or Section 12.3(d)(i), as the case may be, of the Equity Definitions would result in Issuer being different from the issuer of the Shares, then with respect to such Merger Event or Tender Offer, as a condition precedent to the adjustments contemplated in Section 12.2(e)(i) or Section






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	 	12.3(d)(i), as the case may be, of the Equity Definitions, Issuer, the issuer of the Shares and Buyer shall, prior to the Merger Date or Tender Offer, as the case may be, have entered into such documentation containing representations, warranties and agreements relating to securities law and other issues as requested by the Calculation Agent that the Calculation Agent has determined, in its reasonable discretion, to be reasonably necessary or appropriate to
allow Buyer to continue as a party to the Transaction, as adjusted under Section 12.2(e)(i) or Section 12.3(d)(i), as the case may be, of the Equity Definitions, and to preserve Hedging Party’s hedging or hedge unwind activities in connection with the Transaction in a manner compliant with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Buyer and Hedging Party, and if such conditions are not met or if the Calculation Agent determines
that no adjustment that it could make under Section 12.2(e)(i) or Section 12.3(d)(i), as the case may be, of the Equity Definitions will produce a commercially reasonable result, then the consequences set forth in Section 12.2(e)(ii) or Section 12.3(d)(ii), as the case may be, of the Equity Definitions shall apply.
	 
	 	 
	Reference Markets:
	 	For the avoidance of doubt, and without limiting the generality of the foregoing provisions, any adjustment effected by the Calculation Agent pursuant to Section 12.2(e) and/or Section 12.3(d) of the Equity Definitions may be determined by reference to the adjustment(s) made in respect of Merger Events or Tender Offers, as the case may be, in the convertible bond market.
	 
	 	 
	Nationalization, Insolvency
or Delisting:
	 	Cancellation and Payment (Calculation Agent Determination); provided that in addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it shall also constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, the American Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors);
if the Shares are immediately re-listed, re-traded or re-quoted on any such exchange or quotation system, such exchange or quotation system shall thereafter be deemed to be the Exchange.
	 
	 	 
	Additional Disruption Events:
	 	 
	 
	 	 
	(a) Change in Law:
	 	Applicable; provided that Section 12.9(a)(ii) of the Equity Definitions shall be amended by inserting (i) at the end of the fifth line thereof the following phrase: "(or GS)", (ii) at the end of clause (X) the following






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	 	phrase: “(or, in the case of GS, a Hedging Party Related Transaction)”; and (iii) in clause (Y), immediately following the words “such Transaction”, the following phrase: “(or, in the case of GS,
a Hedging Party Related Transaction).”
	 
	 	 
	GS:
	 	Goldman Sachs International or any of its affiliates to which Goldman Sachs International assigns its rights and obligations under a Hedging Party Related Transaction.
	 
	 	 
	Hedging Party Related
Transaction:
	 	A transaction between GS and Buyer or its affiliate evidenced by a confirmation that refers to the Transaction.
	 
	 	 
	(b) Failure to Deliver:
	 	Applicable
	 
	 	 
	(c) Insolvency Filing:
	 	Applicable
	 
	 	 
	(d) Hedging Disruption:
	 	Applicable; provided that Section 12.9(a)(v) of the Equity Definitions shall be amended by inserting at the end of clause (A) the following phrase: “(or a Hedging Party Related Transaction).”
	 
	 	 
	(e) Increased Cost of Hedging:
	 	Applicable; provided that Section 12.9(a)(vi) of the Equity Definitions shall be amended by inserting at the end of clause (A) the following phrase: “(or a Hedging Party Related Transaction)”; provided that, notwithstanding anything to the contrary in Section 12.9(a)(v) of the Equity Definitions, at any time Hedging Party’s net hedge position (a “Net Long Position”) in respect of the Hedging Party Related
Transaction and any other transaction in respect of Shares entered into by Dealer and Hedging Party on the date hereof is a long position, then a Hedging Disruption would occur if (x) an event described in Section 12.9(a)(v) of the Equity Definitions has occurred in respect of a Hedging Party Related Transaction and (y) Hedging Party, in its discretion, is unable to effect a transfer or assignment of the  Hedging Party Related Transaction (or a portion thereof) to a third party so that
such an event does not exist after using its commercially reasonable efforts in attempting to effect such transfer or assignment in accordance with the terms of the Hedging Party Related Transaction for five consecutive Scheduled Trading Days.  If an event described in Section 12.9(a)(v) of the Equity Definitions has occurred at a time at which Hedging Party has a Net Long Position, the Calculation Agent will adjust one or more terms of the Transaction to account for the difference in the
economic position in respect of an option transaction with terms matching that of
the Transaction (an “Equivalent Transaction”) of a hypothetical dealer who is fully hedged in respect of such Equivalent Transaction and a hypothetical dealer hedging such Equivalent Transaction with respect to whom such an event has occurred to the same extent and for the same






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	 	duration as such event with respect to Hedging Party and the Hedging Party Related Transaction.
	 
	 	 
	(f) Loss of Stock Borrow:
	 	Applicable; provided that Section 12.9(a)(vii) of the Equity Definitions shall be amended by inserting in the third line thereof following the words "such Transaction" the following phrase: "(or a Hedging Party Related Transaction)."
	 
	 	 
	 Maximum Stock Loan Rate:
	 	1% per annum
	 
	 	 
	(g) Increased Cost of Stock Borrow:
	 	Applicable; provided that Section 12.9(a)(viii) of the Equity Definitions shall be amended by inserting in the second line thereof following the words "such Transaction" the following phrase: "(or a Hedging Party Related Transaction)."
	 
	 	 
	Initial Stock Loan Rate:
	 	0.25% per annum
	 
	 	 
	Hedging Party:
	 	GS
	 
	 	 
	Determining Party:
	 	GS
	 
	 	 
	Non-Reliance:
	 	Applicable
	 
	 	 
	Agreements and Acknowledgments
	 	 
	Regarding Hedging Activities:
	 	Applicable
	 
	 	 
	Additional Acknowledgments:
	 	Applicable






	 	 	 	 	 	 	 
	3.

	 	Calculation Agent:
	 	GS	 	 
	 
	 	 	 	 	 	 
	4.

	 	Account Details:	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Dealer Payment Instructions:
	 	To be provided by Dealer	 	 
	 
	 	 	 	 	 	 
	 

	 	Issuer Payment Instructions:
	 	To be provided by Issuer.	 	 
	 
	 	 
	5.

	 	Offices:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	The Office of Dealer for the Transaction is:
	 
	 	 	 	 	 	 
	 	 	          550 California Street, 14th Floor, San Francisco, CA 94104
	 
	 	 	 	 	 	 
	 	 	The Office of Issuer for the Transaction is:
	 
	 	 	 	 	 	 
	 	 	          4425 Corporation Lane, Virginia Beach, VA 23462
	 
	 	 	 	 	 	 
	6.	 	Notices: For purposes of this Confirmation:






	 	 	 	 	 
	(a)	 	Address for notices or communications to Issuer:
	 
	 	 	 	 
	 

	 	To:
	 	AMERIGROUP Corporation
	 

	 	 	 	4425 Corporation Lane
	 

	 	 	 	Virginia Beach, VA 23462
	 

	 	Attn:
	 	Office of General Counsel
	 

	 	Telephone:
	 	757-490-6900
	 
	 	 	 	 
	(b)	 	Address for notices or communications to Dealer:
	 
	 	 	 	 
	 

	 	To:
	 	Wells Fargo Bank, N.A.
	 

	 	 	 	550 California Street
	 

	 	 	 	14th Floor
	 

	 	 	 	San Francisco, CA 94104






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	 	Attn:
	 	Financial Products Documentation Group
	 

	 	 	 	Equities Trading Manager
	 

	 	Telephone:
	 	(415) 396-3962
	 

	 	Facsimile:
	 	(415) 646-9208
	 
	 	 	 	 
	 

	 	With a copy to:	 	 
	 
	 	 	 	 
	 

	 	Attn:
	 	Michele Beasley
	 

	 	Facsimile:
	 	(415) 646-9208
	 
	 	 	 	 
	(c)	 	Address for notices or communications to GS:
	 
	 	 	 	 
	 	 	All communications relating to the Transaction or the Agreement shall be transmitted
exclusively:
	 
	 	 	 	 
	 

	 	Through:
	 	Goldman, Sachs & Co.
	 

	 	 	 	One New York Plaza
	 

	 	 	 	New York, NY 10004
	 

	 	Attn:
	 	Equity Operations: Options and Derivatives
	 

	 	Telephone:
	 	(212) 902-1981
	 

	 	Facsimile:
	 	(212) 428-1980/1983
	 
	 	 	 	 
	 

	 	With a copy to:	 	 
	 
	 	 	 	 
	 

	 	Attn:
	 	Tracey McCabe
	 

	 	 	 	Equity Capital Markets
	 

	 	Telephone:
	 	(212) 357-0428
	 

	 	Facsimile:
	 	(212) 902-3000






     7. Representations, Warranties and Agreements:



     (a) In addition to the representations and warranties in the Agreement and those contained
elsewhere herein, Issuer represents and warrants to and for the benefit of, and agrees with, Dealer
and GS as follows:




     (i) On the Trade Date, (A) none of Issuer and its officers and directors is aware of
any material nonpublic information regarding Issuer or the Shares and (B) all reports and
other documents filed by Issuer with the Securities and Exchange Commission pursuant to the
Exchange Act when considered as a whole (with the more recent such reports and documents
deemed to amend inconsistent statements contained in any earlier such reports and
documents), do not contain any untrue statement of a material fact or any omission of a
material fact required to be stated therein or necessary to make the statements therein, in
the light of the circumstances in which they were made, not misleading.




     (ii) Without limiting the generality of Section 13.1 of the Equity Definitions, Issuer
acknowledges that neither Dealer nor GS is making any representations or warranties with
respect to the treatment of the Transaction under FASB Statements 128, 133, 149 or 150,
EITF Issue No. 00-19 (or any successor issue statements) or under FASB’s Liabilities &
Equity Project.




     (iii) Prior to the Trade Date, Issuer shall deliver to Dealer and GS a resolution of
Issuer’s board of directors authorizing the Transaction and such other certificate or
certificates as either Dealer or GS shall reasonably request.




     (iv)
Issuer is not entering into this Confirmation to create actual or
apparent trading activity in the Shares (or any security convertible into or exchangeable
for Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any
security convertible into or exchangeable for Shares) or otherwise in violation of the
Exchange Act.




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     (v) Issuer is not, and after giving effect to the transactions contemplated hereby
will not be, an “investment company” as such term is defined in the Investment Company Act
of 1940, as amended.




     (vi) On the Trade Date and the Premium Payment Date (A) the assets of Issuer at their
fair valuation exceed the liabilities of Issuer, including contingent liabilities, (B) the
capital of Issuer is adequate to conduct the business of Issuer and (C) Issuer has the
ability to pay its debts and obligations as such debts mature and does not intend to, or
does not believe that it will, incur debt beyond its ability to pay as such debts mature.




     (vii) Issuer shall not take any action to decrease the number of Available Shares
below the Capped Number (each as defined below).




     (viii) The representations and warranties of Issuer set forth in Section 3 of the
Agreement and Section 1 of the Purchase Agreement dated as of the Trade Date between Issuer
and Goldman, Sachs & Co. as representative of the several Purchasers party thereto (the
“Purchase Agreement”) are true and correct as of the Trade Date and the Effective Date and
are hereby deemed to be repeated to Dealer and GS as if set forth herein.




     (ix) Issuer understands no obligations of Dealer to it hereunder will be entitled to
the benefit of deposit insurance and that such obligations will not be guaranteed by any
affiliate of Dealer or any governmental agency.




     (x) (A) During the period starting on the first Expiration Date and ending on the
last Expiration Date (the “Settlement Period”), the Shares or securities that are
convertible into, or exchangeable or exercisable for Shares, are not, and shall not be,
subject to a “restricted period,” as such term is defined in Regulation M under the
Exchange Act (“Regulation M”) and (B) Issuer shall not engage in any “distribution,” as
such term is defined in Regulation M, other than a distribution meeting the requirements of
the exceptions set forth in sections 101(b)(10) and 102(b)(7) of Regulation M, until the
second Exchange Business Day immediately following the Settlement Period.




     (xi) During the Settlement Period, neither Issuer nor any “affiliate” or “affiliated
purchaser” (each as defined in Rule 10b-18 of the Exchange Act (“Rule 10b-18”)) shall
directly or indirectly (including, without limitation, by means of any cash-settled or
other derivative instrument) purchase, offer to purchase, place any bid or limit order that
would effect a purchase of, or commence any tender offer relating to, any Shares (or an
equivalent interest, including a unit of beneficial interest in a trust or limited
partnership or a depository share) or any security convertible into or exchangeable or
exercisable for Shares, except through GS & Co.



     (b) Each of Dealer and Issuer agrees and represents that it is an “eligible contract
participant” as defined in Section 1a(12) of the U.S. Commodity Exchange Act, as amended.



     (c) Each of Dealer and Issuer acknowledges that the offer and sale of the Transaction to it is
intended to be exempt from registration under the Securities Act of 1933, as amended (the
“Securities Act”), by virtue of Section 4(2) thereof. Accordingly, Dealer represents and warrants
to Issuer that (i) it has the financial ability to bear the economic risk of its investment in the
Transaction and is able to bear a total loss of its investment and its investments in and
liabilities in respect of the Transaction, which it understands are not readily marketable, are not
disproportionate to its net worth, and it is able to bear any loss in connection with the
Transaction, including the loss of its entire investment in the Transaction, (ii) it is an
“accredited investor” as that term is defined in Regulation D as promulgated under the Securities
Act, (iii) it is entering into the Transaction for its own account without a view to the
distribution or resale thereof, (iv) the assignment, transfer or other disposition of the
Transaction has not been and will not be registered under the Securities Act and is restricted
under this Confirmation, the Securities Act and state securities laws, (v) its financial condition
is such that it has no need for liquidity with respect to its investment in the Transaction and no
need to dispose of any portion thereof to satisfy any existing or contemplated undertaking or
indebtedness and is capable of assessing the merits of and understanding (on its own behalf or
through independent professional advice), and understands and accepts, the terms, conditions and
risks of the Transaction.



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     (d) Each of Dealer and Issuer agrees and acknowledges (A) that this Confirmation is (i) a
“securities contract,” as such term is defined in Section 741(7) of Title 11 of the United States
Code (the “Bankruptcy Code”), with respect to which each payment and delivery hereunder is a
“settlement payment,” as such term is defined in Section 741(8) of the Bankruptcy Code, and (ii) a
“swap agreement,” as such term is defined in Section 101(53B) of the Bankruptcy Code, with respect
to which each payment and delivery hereunder is a “transfer,” as such term is defined in Section
101(54) of the Bankruptcy Code, and (B) that Dealer is entitled to the protections afforded by,
among other sections, Section 362(b)(6), 362(b)(17), 546(e), 546(g), 555 and 560 of the Bankruptcy
Code.



     (e) Issuer shall deliver to Dealer and GS an opinion of counsel, dated as of the Trade Date
and reasonably acceptable to each of Dealer and GS in form and substance, with respect to the
matters set forth in Section 3(a) of the Agreement, and an incumbency certificate in customary
form.



     8. Other Provisions:



     (a) Alternative Calculations and Payment on Early Termination and on Certain Extraordinary
Events. If Issuer shall owe Buyer any amount pursuant to Sections 12.2, 12.3, 12.6, 12.7 or 12.9
of the Equity Definitions (except in the event of a Tender Offer a Merger Event, Insolvency or
Nationalization in each case, in which the consideration or proceeds to be paid to holders of
Shares consists solely of cash) or pursuant to Section 6(d)(ii) of the Agreement (except in the
event of an Event of Default in which Issuer is the Defaulting Party or a Termination Event in
which Issuer is the Affected Party, that resulted from an event or events within Issuer’s control)
(a “Payment Obligation”), Issuer shall have the right, in its sole discretion, to satisfy any such
Payment Obligation by the Share Termination Alternative (as defined below) by giving irrevocable
telephonic notice to Buyer and the Calculation Agent, confirmed in writing within one Scheduled
Trading Day, by 4:00 P.M. New York City time on the Merger Date, Tender Offer Date, Announcement
Date or Early Termination Date, as applicable (“Notice of Share Termination”). Upon such Notice of
Share Termination, the following provisions shall apply on the Scheduled Trading Day immediately
following the Merger Date, the Tender Offer Date, Announcement Date or Early Termination Date, as
applicable:



	 	 	 
	Share Termination Alternative:

	 	Applicable and means that Issuer shall
deliver to Dealer the Share Termination
Delivery Property on the date on which
the Payment Obligation would otherwise be
due pursuant to Section 12.7 or 12.9 of
the Equity Definitions or Section
6(d)(ii) of the Agreement, as applicable
(the “Share Termination Payment Date”),
in satisfaction of the Payment
Obligation.
	 
	 	 
	Share Termination Delivery 

Property:

	 	
A number of Share Termination Delivery
Units, as calculated by the Calculation
Agent, equal to the Payment Obligation
divided by the Share Termination Unit
Price. The Calculation Agent shall
adjust the Share Termination Delivery
Property by replacing any fractional
portion of the aggregate amount of a
security therein with an amount of cash
equal to the value of such fractional
security based on the values used to
calculate the Share Termination Unit
Price.
	 
	 	 
	Share Termination Unit Price:

	 	The value of property contained in one
Share Termination Delivery Unit on the
date such Share Termination Delivery
Units are to be delivered as Share
Termination Delivery Property, as
determined by the Calculation Agent in
its discretion by commercially reasonable
means and notified by the Calculation
Agent to Issuer at the time of
notification of the Payment Obligation.
	 
	 	 
	Share Termination Delivery Unit:

	 	In the case of a Termination Event, Event
of Default or Delisting, one Share or, in
the case of an Insolvency,
Nationalization, Merger Event or Tender
Offer, a Share or a unit consisting of
the number or amount of each type of
property received by a holder of one
Share (without consideration of any
requirement to pay cash or other
consideration in lieu of fractional
amounts of any securities) in such
Insolvency,






11









 






	 	 	 
	 

	 	Nationalization, Merger Event or Tender Offer. If such Insolvency,
Nationalization, Merger Event or Tender Offer involves a choice of
consideration to be received by holders, such holder shall be deemed to have
elected to receive the maximum possible amount of cash.
	 
	 	 
	Failure to Deliver:

	 	Applicable
	 
	 	 
	Other applicable provisions:

	 	If Share Termination Alternative is
applicable, the provisions of Sections 9.8,
9.9, 9.10, 9.11 (except that the
Representation and Agreement contained in
Section 9.11 of the Equity Definitions shall
be modified by excluding any representations
therein relating to restrictions,
obligations, limitations or requirements
under applicable securities laws as a result
of the fact that Seller is the Issuer of the
Shares) and 9.12 of the Equity Definitions
will be applicable as if “Physical
Settlement” applied to the Transaction,
except that all references to “Shares” shall
be read as references to “Share Termination
Delivery Units”. If, in the reasonable
opinion of counsel to Issuer, Dealer or GS,
for any reason, any securities comprising the
Share Termination Delivery Units deliverable
pursuant to this Section 8(a) would not be
immediately freely transferable by Dealer
under Rule 144(k) under the Securities Act,
then Dealer may elect to either (x) accept
delivery of such securities notwithstanding
any restriction on transfer or (y) have the
provisions set forth in Section 8(b) below
apply.






     (b) Registration/Private Placement Procedures. (i) With respect to the Transaction, the
following provisions shall apply to the extent provided for above opposite the caption “Net Share
Settlement” in Section 2 or in paragraph (a) of this Section 8. If so applicable, then, at the
election of Issuer by notice to Buyer and GS within one Exchange Business Day after the relevant
delivery obligation arises, but in any event at least one Exchange Business Day prior to the date
on which such delivery obligation is due, either (A) all Shares or Share Termination Delivery
Units, as the case may be, delivered by Issuer to Buyer and by Buyer to Hedging Party shall be, at
the time of such delivery, covered by an effective registration statement of Issuer for immediate
resale by Buyer or by Hedging Party, as the case may be (such registration statement and the
corresponding prospectus (the “Prospectus”) (including, without limitation, any sections describing
the plan of distribution) in form and content commercially reasonably satisfactory to Buyer and
Hedging Party) or (B) Issuer shall deliver additional Shares or Share Termination Delivery Units,
as the case may be, so that the value of such Shares or Share Termination Delivery Units, as
determined by the Calculation Agent to reflect an appropriate liquidity discount, equals the value
of the number of Shares or Share Termination Delivery Units that would otherwise be deliverable if
such Shares or Share Termination Delivery Units were freely tradeable (without prospectus delivery)
upon receipt by Buyer (such value, the “Freely Tradeable Value”); provided that, if requested by
Dealer or Hedging Party, Issuer shall make the election described in this clause (B) with respect
to Shares delivered on all Settlement Dates no later than one Exchange Business Day prior to the
first Expiration Date, and the applicable procedures described below shall apply to all Shares
delivered on the Settlement Dates on an aggregate basis. (For the avoidance of doubt, as used in
this paragraph (b) only, the term “Issuer” shall mean the issuer of the relevant securities, as the
context shall require.)



     (ii) If Issuer makes the election described in clause (b)(i)(A) above:




     (A) Buyer (or an affiliate of Buyer designated by Buyer) and Hedging Party (or an
affiliate of Hedging Party designated by Hedging Party) shall be afforded a reasonable
opportunity to conduct a due diligence investigation with respect to Issuer that is
customary in scope for underwritten offerings of equity securities and that yields results
that are commercially reasonably satisfactory to Buyer, Hedging Party or such respective
affiliates, as the case may be, in its discretion; and




     (B) Buyer (or an affiliate of Buyer designated by Buyer), Hedging Party (or an
affiliate of Hedging Party designated by Hedging Party) and Issuer shall enter into an
agreement (a “Registration Agreement”) on commercially reasonable terms in connection with
the public resale of such Shares or Share Termination Delivery Units, as the case may be,
by Buyer, Hedging Party or



12









 







any such affiliate substantially similar to underwriting agreements customary for
underwritten offerings of equity securities, in form and substance commercially reasonably
satisfactory to Buyer, Hedging Party and/or any such affiliates and Issuer, which
Registration Agreement shall include, without limitation, provisions substantially similar
to those contained in such underwriting agreements relating to the indemnification of, and
contribution in connection with the liability of, Buyer, Hedging Party and their respective
affiliates and Issuer, shall provide for the payment by Issuer of all expenses in
connection with such resale, including all registration costs and all fees and expenses of
counsel for Buyer and counsel for Hedging Party, and shall provide for the delivery of
accountants’ “comfort letters” to Buyer, Hedging Party and/or any such affiliate with
respect to the financial statements and certain financial information contained in or
incorporated by reference into the Prospectus.



     (iii) If Issuer makes the election described in clause (b)(i)(B) above:




     (A) Buyer (or an affiliate of Buyer designated by Buyer), Hedging Party (or an
affiliate of Hedging Party designated by Hedging Party) and any potential institutional
purchaser of any such Shares or Share Termination Delivery Units, as the case may be, from
Buyer, Hedging Party and/or any such designated affiliate shall be afforded a commercially
reasonable opportunity to conduct a due diligence investigation in compliance with
applicable law with respect to Issuer customary in scope for private placements of equity
securities (including, without limitation, the right to have made available to them for
inspection all financial and other records, pertinent corporate documents and other
information reasonably requested by them), subject to execution by such recipients of
customary confidentiality agreements reasonably acceptable to Issuer;




     (B) Buyer (or an affiliate of Buyer designated by Buyer) and Hedging Party (or an
affiliate of Hedging Party designated by Hedging Party) and Issuer shall enter into an
agreement (a “Private Placement Agreement”) on commercially reasonable terms in connection
with the private placement of such Shares or Share Termination Delivery Units, as the case
may be, by Issuer to Buyer or such an affiliate, the private resale of such shares by Buyer
or such an affiliate to Hedging Party or its affiliate and the private resale of such
            shares by Hedging Party or such an affiliate, substantially similar to private placement
purchase agreements customary for private placements of equity securities, in form and
substance commercially reasonably satisfactory to Buyer, Hedging Party, their respective
affiliates and Issuer, which Private Placement Agreement shall include, without limitation,
provisions substantially similar to those contained in such private placement purchase
agreements relating to the indemnification of, and contribution in connection with the
liability of, Buyer, Hedging Party and their respective affiliates and Issuer, shall
provide for the payment by Issuer of all expenses in connection with such resale, including
all fees and expenses of counsel for Buyer and counsel for Hedging Party, shall contain
representations, warranties and agreements of Issuer reasonably necessary or advisable to
establish and maintain the availability of an exemption from the registration requirements
of the Securities Act for such resales, and shall use best efforts to provide for the
delivery of accountants’ “comfort letters” to Buyer, Hedging Party and/or any such
affiliate with respect to the financial statements and certain financial information
contained in or incorporated by reference into the offering memorandum prepared for the
resale of such Shares; and




     (C) Issuer agrees that any Shares or Share Termination Delivery Units so delivered to
Dealer, (i) may be transferred by and among Dealer, Hedging Party and their respective
affiliates, and Issuer shall effect such transfers without any further action by Dealer or
Hedging Party and (ii) after the minimum “holding period” within the meaning of Rule 144(d)
under the Securities Act has elapsed with respect to such Shares or any securities issued
by Issuer comprising such Share Termination Delivery Units, Issuer shall promptly remove,
or cause the transfer agent for such Shares or securities to remove, any legends referring
to any such restrictions or requirements from such Shares or securities upon delivery by
Dealer (or such affiliate of Dealer) or by Hedging Party (or such affiliate of Hedging
Party) to Issuer or such transfer agent of seller’s and broker’s representation letters
customarily delivered by Dealer or Hedging Party, as the case may be, in connection with
resales of restricted securities pursuant to Rule 144 under the Securities Act, without any
further requirement for the delivery of any certificate, consent, agreement, opinion of
counsel, notice or any other document, any transfer tax stamps or payment of any other
amount or



13









 







any other action by Dealer (or such affiliate of Dealer) or by Hedging Party (or such
affiliate of Hedging Party), as the case may be.




     (D) Issuer shall not take, or cause to be taken, any action that would make
unavailable either the exemption pursuant to Section 4(2) of the Securities Act for the
sale by Issuer to Dealer (or any affiliate designated by Dealer) of the Shares or Share
Termination Delivery Units, as the case may be, or the exemption pursuant to Section 4(1)
or Section 4(3) of the Securities Act for resales of the Shares or Share Termination
Delivery Units, as the case may be, by Dealer (or any such affiliate of Dealer).



     (c) Make-whole Shares. If Issuer (x) elects to deliver Share Termination Delivery Units
pursuant to paragraph (a) of this Section 8 or (y) makes the election described in clause (b)(i)(B)
of paragraph (b) of this Section 8, then Dealer shall deliver such Shares or Share Termination
Units to the Hedging Party under a Hedging Party Related Transaction and Hedging Party or its
affiliate may sell (which sale shall be made in a commercially reasonable manner) such Shares or
Share Termination Delivery Units, as the case may be, during a period (the “Resale Period”)
commencing on the Exchange Business Day following delivery of such Shares or Share Termination
Delivery Units, as the case may be, and ending on the Exchange Business Day on which Hedging Party
or its affiliate completes the sale of all such Shares or Share Termination Delivery Units, as the
case may be, or a sufficient number of Shares or Share Termination Delivery Units, as the case may
be, so that the realized net proceeds of such sales exceed the amount of the Payment Obligation (in
the case of clause (x), or in the case that both clause (x) and clause (y) apply) or the Freely
Tradeable Value (in the case that only clause (y) applies) (such amount of the Payment Obligation
or Freely Tradeable Value, as the case may be, the “Required Proceeds”). If any of such delivered
Shares or Share Termination Delivery Units remain after such realized net proceeds exceed the
Required Proceeds, Dealer shall return such remaining Shares or Share Termination Delivery Units to
Issuer. If the Required Proceeds exceed the realized net proceeds from such resale, Issuer shall
transfer to Dealer by the open of the regular trading session on the Exchange on the Exchange
Trading Day immediately following the last day of the Resale Period the amount of such excess (the
“Additional Amount”) in cash or in a number of additional Shares (“Make-whole Shares”) in an amount
that, based on the Relevant Price on the last day of the Resale Period (as if such day was the
“Valuation Date” for purposes of computing such Relevant Price), has a dollar value equal to the
Additional Amount. The Resale Period shall continue to enable the sale of the Make-whole Shares in
the manner contemplated by this Section 8(c). This provision shall be applied successively until
the Additional Amount is equal to zero, subject to Section 8(e).



     (d) Beneficial Ownership. Notwithstanding anything to the contrary in the Agreement or this
Confirmation, in no event shall Buyer be entitled to receive, or shall be deemed to receive, any
Shares if, (i) immediately upon giving effect to such receipt of such Shares, the “beneficial
ownership” (within the meaning of Section 13 of the Exchange Act and the rules promulgated
thereunder) of Shares by Buyer, any of its affiliates subject to aggregation with Buyer for the
purposes of the “beneficial ownership” test under Section 13 of the Exchange Act and all persons
who may form a “group” (within the meaning of Rule 13d-5(b)(1) under the Exchange Act) with Buyer
with respect to “beneficial ownership” of any Shares (collectively, “Buyer Group”) would be equal
to or greater than 9.0% or more of the outstanding Shares, (ii) the receipt of such Shares would
require prior regulatory approval by a state insurance regulator and such approval has not been
received or the receipt of such Shares would otherwise be prohibited under State laws, regulations
or regulatory orders applicable to ownership of Shares (“Applicable State Laws”) or (iii) the
receipt of such Shares would cause Buyer, Buyer Group or any person whose ownership position would
be aggregated with that of Buyer or Buyer Group under any Applicable State Law be subject to any
reporting or registration obligation or requirement under any Applicable State Law. If any
delivery owed to Buyer hereunder is not made, in whole or in part, as a result of this provision,
Issuer’s obligation to make such delivery shall not be extinguished and Issuer shall make such
delivery as promptly as practicable after, but in no event later than one Exchange Business Day
after, Buyer gives notice to Issuer that such delivery (i) would not result in Buyer Group directly
or indirectly so beneficially owning in excess of 9% of the outstanding Shares, (ii) would not
require prior regulatory approval by a state insurance regulator that has not been received or be
otherwise be prohibited under any Applicable State Laws and (iii) would not cause Buyer, Buyer
Group or any person whose ownership position would be aggregated with that of Buyer or Buyer Group
under any Applicable State Law to be subject to any reporting or registration obligation or
requirement under any Applicable State Law.



14









 





     (e) Limitations on Settlement by Issuer. Notwithstanding anything herein or in the Agreement
to the contrary, in no event shall Issuer be required to deliver Shares in connection with the
Transaction in excess of a number of Shares equal to two times the aggregate Number of Shares for
all Components (as such number may be adjusted from time to time in accordance with the provisions
hereof) (the “Capped Number”). Issuer represents and warrants to Dealer and Hedging Party (which
representation and warranty shall be deemed to be repeated on each day that the Transaction is
outstanding) that the Capped Number is equal to or less than the number of authorized but unissued
Shares of the Issuer that are not reserved for future issuance in connection with transactions in
the Shares (other than the Transaction) on the date of the determination of the Capped Number (such
Shares, the “Available Shares”). In the event Issuer shall not have delivered the full number of
Shares otherwise deliverable as a result of this Section 8(e) (the resulting deficit, the “Deficit
Shares”), Issuer shall be continually obligated to deliver, from time to time until the full number
of Deficit Shares have been delivered pursuant to this paragraph, Shares when, and to the extent,
that (i) Shares are repurchased, acquired or otherwise received by Issuer or any of its
subsidiaries after the Trade Date (whether or not in exchange for cash, fair value or any other
consideration), (ii) authorized and unissued Shares reserved for issuance in respect of other
transactions prior to such date which prior to the relevant date become no longer so reserved and
(iii) Issuer additionally authorizes any unissued Shares that are not reserved for other
transactions. Issuer shall immediately notify Dealer of the occurrence of any of the foregoing
events (including the number of Shares subject to clause (i), (ii) or (iii) and the corresponding
number of Shares to be delivered) and promptly deliver such Shares thereafter.



     (f) Equity Rights. Buyer acknowledges and agrees that this Confirmation is not intended to
convey to it rights with respect to the Transaction that are senior to the claims of common
stockholders in the event of Issuer’s bankruptcy. For the avoidance of doubt, the parties agree
that the preceding sentence shall not apply at any time other than during Issuer’s bankruptcy to
any claim arising as a result of a breach by Issuer of any of its obligations under this
Confirmation or the Agreement. For the avoidance of doubt, the parties acknowledge that this
Confirmation is not secured by any collateral that would otherwise secure the obligations of Issuer
herein under or pursuant to any other agreement.



     (g) Agreement in Respect of Termination Amounts. In determining any amounts payable in
respect of the termination or cancellation of the Transaction pursuant to Section 6 of the
Agreement or Article 12 of the Equity Definitions, the Calculation Agent shall make such
determination without regard to (i) changes to costs of funding, stock loan rates or expected
dividends, or (ii) losses or costs incurred in connection with terminating, liquidating or
re-establishing any hedge related to the Transaction (or any gain resulting from any of them).



     (h) Transfer and Assignment. Buyer may transfer or assign its rights and obligations
hereunder and under the Agreement, in whole or in part, at any time to any bank or broker-dealer or
any affiliate thereof that in either case regularly enters into over-the-counter equity derivative
transactions without the consent of Issuer. Notwithstanding any other provision of this
Confirmation to the contrary requiring or allowing Buyer to receive or deliver any Shares, Buyer
may designate any of its affiliates to receive or deliver such Shares and otherwise perform Buyer’s
obligations in respect of the Transaction and any such designee may assume such obligation. Buyer
shall be discharged of its obligation hereunder only to the extent of any such performance.



     (i) Disclosure. Effective from the date of commencement of discussions concerning the
Transaction, Issuer and each of its employees, representatives, or other agents may disclose to any
and all persons, without limitation of any kind, the tax treatment and tax structure of the
Transaction and all materials of any kind (including opinions or other tax analyses) that are
provided to Issuer relating to such tax treatment and tax structure.



     (j) Additional Termination Events. The occurrence of either one of the following shall
constitute an Additional Termination Event with respect to which the Transaction shall be the sole
Affected Transaction and Issuer shall be the sole Affected Party; provided that with respect to any
Additional Termination Event, Dealer may choose to treat part of the Transaction as the sole
Affected Transaction, and, upon the termination of the Affected Transaction, a Transaction with
terms identical to those set forth herein except with a Number of Warrants equal to the unaffected
number of Warrants shall be treated for all purposes as the Transaction, which shall remain in full
force and effect:



15









 





     (i) within the period commencing on the Trade Date and ending on the second
anniversary of the Premium Payment Date, Hedging Party reasonably determines that it is
advisable for Buyer to terminate a portion of the Transaction so that Hedging Party ‘s
related hedging activities will comply with applicable securities laws, rules or
regulations;



     (ii) any Person (as defined below) acquires beneficial ownership, directly or
indirectly, through a purchase, merger or other acquisition transaction or series of
transactions, of Shares entitling the Person to exercise 50% or more of the total voting
power of all shares of our capital stock entitled to vote generally in elections of
directors, other than an acquisition by Issuer, any of its subsidiaries or any of its
employee benefit plans;



     (iii) Issuer (a) merges or consolidates with or into any other Person, other than a
subsidiary, another Person merges with or into Issuer, or Issuer conveys, sells, transfers
or leases all or substantially all of its assets to another Person or (b) engages in any
recapitalization, reclassification or other transaction in which all or substantially all
Shares is exchanged for or converted into cash, securities or other property, in each case,
other than any merger or consolidation:



     (A) that does not result in a reclassification, conversion, exchange or cancellation
of the outstanding Shares;



     (B) pursuant to which the consideration received by holders of Shares immediately
prior to the transaction entitles such holders to exercise, directly or indirectly, 50% or
more of the voting power of all shares of capital stock entitled to vote generally in the
election of directors of the continuing or surviving corporation immediately after such
transaction; or



     (C) which is effected solely to change Issuer’s jurisdiction of incorporation and
results in a reclassification, conversion or exchange of outstanding Shares solely into shares of common stock of the surviving entity; or



     (iv) at any time Issuer’s Continuing Directors (as defined below) do not constitute a
majority of Issuer’s board of directors (or, if applicable, a successor Person to Issuer);
or



     (v) Issuer is liquidated or dissolved or holders of Shares approve any plan or
proposal for liquidation or dissolution of Issuer.



     Notwithstanding the foregoing, a transaction set forth in clause (ii) or (iii) above
will not constitute an Additional Termination Event if at least 90% of the consideration
paid for the Shares (excluding cash payments for fractional shares and cash payments made
pursuant to dissenters’ appraisal rights and cash dividends) in such transaction consists
of shares of capital stock or American Depositary Receipts in respect of shares of common
stock traded on any of the New York Stock Exchange, the American Stock Exchange, the NASDAQ
Global Select Market or the NASDAQ Global Market (or any of their respective successors)
(or will be so traded or quoted immediately following the completion of the merger or
consolidation or such other transaction).



     For purposes of these provisions, whether a person is a “beneficial owner” will be
determined in accordance with Rule 13d-3 under the Exchange Act, and “Person” includes any
syndicate or group that would be deemed to be a “person” under Section 13(d)(3) of the
Exchange Act.



     “Continuing Directors” means (i) individuals who on the date of original issuance of
the notes constituted Issuer’s board of directors and (ii) any new directors whose election
to Issuer’s board of directors or whose nomination for election by stockholders of Issuer
was approved by at least a majority of the directors then still in office either who were
directors on the date of original issuance of the notes or whose election or nomination for
election was previously so approved;



16









 






     (k) Effectiveness. If, prior to the Effective Date, Hedging Party reasonably determines that
Hedging Party’s hedging activities under any Hedging Party Related Transaction could be viewed as
not complying with applicable securities laws, rules or regulations, the Transaction shall be
cancelled and shall not become effective, and neither party shall have any obligation to the other
party in respect of the Transaction.



     (l) Extension of Settlement. The Calculation Agent may divide any Component into additional
Components and designate the Expiration Date and the Number of Warrants for each such Component if
the Calculation Agent determines, in its reasonable discretion, that such further division is
necessary or advisable to preserve Hedging Party’s hedging activity under any Hedging Party Related
Transaction in light of existing liquidity conditions or to enable Hedging Party to effect
purchases of Shares in connection with its hedging activity under such Hedging Party Related
Transaction in a manner that would, if Hedging Party were Issuer or an affiliated purchaser of
Issuer, be in compliance with applicable legal and regulatory requirements.



     (m) Governing Law. THIS CONFIRMATION SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK
(WITHOUT REFERENCE TO ITS CHOICE OF LAW DOCTRINE).



     (n) No Set-off. The provisions of Section 2(c) of the Agreement shall not apply to the
Transaction. Each party waives any and all rights it may have to set-off delivery or payment
obligations it owes to the other party under the Transaction against any delivery or payment
obligations owed to it by the other party, whether arising under the Agreement, under any other
agreement between parties hereto, by operation of law or otherwise.



     (o) Amendment. If the Initial Purchasers party to the Purchase Agreement exercise their right
to purchase additional convertible notes as set forth therein, then, at the discretion of Issuer,
Issuer may elect that Dealer and Issuer will either enter into a new confirmation evidencing
additional warrants to be issued by Issuer to Dealer or amend this Confirmation to evidence such
additional warrants (in each case on pricing terms acceptable to Dealer and Issuer) (such
additional confirmation or amendment to this Confirmation to provide for the payment by Dealer to
Issuer of the additional premium related thereto in an amount to be agreed between the parties).



     (p) Lock Up. Prior to the first anniversary of the Trade Date, if the Initial Purchasers
party to the Purchase Agreement exercise their right to purchase additional convertible notes set
forth therein and Issuer does not elect to issue the maximum number of Additional Warrants as
provided in paragraph (o) above, Issuer shall not issue or enter into any warrant, a call option, a
variable forward or other derivative linked to the Shares (collectively, “Warrants”), whether cash
settled and/or physically settled and/or net share settled, without a prior written consent of
Dealer which shall not be unreasonably withheld, unless such Warrants are issued (i) pursuant to
any present or future employee, director or consultant benefit plan or program of Issuer or any
hedging arrangements in respect thereof, (ii) to all Issuer’s stockholders as a free distribution
or a distribution for less than the fair market value of such Warrants (as determined by the
Calculation Agent), (iii) as part of mandatorily convertible units in a bona fide capital raising
transaction unrelated to the convertible notes sold pursuant to the Purchase Agreement, or (iv) as
part of a bona fide Share repurchase transaction unrelated to the convertible notes sold pursuant
to the Purchase Agreement. “Additional Warrants” shall equal to the product of (i) the Warrant
Entitlement, (ii) the initial conversion rate of the convertible notes and (iii) the aggregate
principal amount of the additional convertible notes purchased by the Initial Purchasers divided by
USD1,000.



     (q) Early Termination or Cancellation. Notwithstanding anything to the contrary in the Equity
Definitions or the Agreement, to the extent that Dealer would otherwise have the right under the
Equity Definitions or the Agreement to elect to cancel the Transaction, to designate an Early
Termination Date in respect of the Transaction or to determine any amount due upon the cancellation
or early termination of the Transaction, the Calculation Agent shall make such election,
designation or determination, as the case may be, in place of Dealer.



17









 





     (r) Third Party Beneficiary. GS shall be the third party beneficiary of Issuer’s
representations, warranties, agreements, indemnities and other obligations hereunder and will have
a right to directly enforce those obligations against Issuer.



     9. Arbitration.



     All parties to this Confirmation are giving up the right to sue each other in court, including
the right to a trial by jury, except as provided by the rules of the arbitration forum in which a
claim is filed.



     Arbitration awards are generally final and binding; a party’s ability to have a court reverse
or modify an arbitration award is very limited.



     The ability of the parties to obtain documents, witness statements and other discovery is
generally more limited in arbitration than in court proceedings.



     The arbitrators do not have to explain the reason(s) for their award.



     The panel of arbitrators will typically include a minority of arbitrators who were or are
affiliated with the securities industry, unless Issuer is a member of the organization sponsoring
the arbitration facility, in which case all arbitrators may be affiliated with the securities
industry.



     The rules of some arbitration forums may impose time limits for bringing a claim in
arbitration. In some cases, a claim that is ineligible for arbitration may be brought in court.



     The rules of the arbitration forum in which the claim is filed, and any amendments thereto,
shall be incorporated into this Confirmation.



     Issuer agrees that any and all controversies that may arise between Issuer and Dealer,
including, but not limited to, those arising out of or relating to the Agreement or the Transaction
hereunder, shall be determined by arbitration conducted before The New York Stock Exchange, Inc.
(“NYSE”) or NASD Dispute Resolution (“NASD-DR”), or, if the NYSE and NASD-DR decline to hear the
matter, before the American Arbitration Association, in accordance with their arbitration rules
then in force. The award of the arbitrator shall be final, and judgment upon the award rendered
may be entered in any court, state or federal, having jurisdiction.



     No person shall bring a putative or certified class action to arbitration, nor seek to enforce
any pre-dispute arbitration agreement against any person who has initiated in court a putative
class action or who is a member of a putative class who has not opted out of the class with respect
to any claims encompassed by the putative class action until: (i) the class certification is
denied; (ii) the class is decertified; or (iii) Issuer is excluded from the class by the court.



     Such forbearance to enforce an agreement to arbitrate shall not constitute a waiver of any
rights under this Confirmation except to the extent stated herein.



18









 





     Issuer hereby agrees (a) to check this Confirmation carefully and immediately upon receipt so
that errors or discrepancies can be promptly identified and rectified and (b) to confirm that the
foregoing (in the exact form provided by Dealer) correctly sets forth the terms of the agreement
between Dealer and Issuer with respect to the Transaction, by manually signing this Confirmation or
this page hereof as evidence of agreement to such terms and providing the other information
requested herein and immediately returning an executed copy to Wells Fargo Bank, National
Association, Facsimile No. (415) 646-9208, with a copy to Goldman, Sachs & Co., Equity Derivatives
Documentation Department, Facsimile No. (212) 428-1980/83.



	 	 	 	 	 
	 	 	Yours faithfully,
	 
	 	 	 	 
	 	 	WELLS FARGO BANK, NATIONAL ASSOCIATION
	 
	 	 	 	 
	 

	 	By:	 	/s/ Gordy Holterman
	 

	 	 	 	 
	 

	 	 	 	Name:  Gordy Holterman
	 

	 	 	 	Title:  Executive Vice President






	 	 	 	 	 
	Agreed and accepted by:	 	 
	 
	 	 	 	 
	AMERIGROUP CORPORATION	 	 
	 
	 	 	 	 
	By:
	 	/s/ James W. Treuss	 	 
	 

	 	 

Name:  James W. Treuss
	 	 
	 

	 	Title:   Executive Vice President and Chief Financial Officer	 	 






 









 





Annex A



For each Component of the Transaction, the Number of Warrants and Expiration Date is set forth
below.




	 	 	 	 	 	 	 
	Component Number	 	Number of Warrants	 	Expiration Date
	  1

	 	 	112,854	 	 	   August 13, 2012
	  2

	 	 	112,854	 	 	   August 14, 2012
	  3

	 	 	112,854	 	 	   August 15, 2012
	  4

	 	 	112,854	 	 	   August 16, 2012
	  5

	 	 	112,854	 	 	   August 17, 2012
	  6

	 	 	112,854	 	 	   August 20, 2012
	  7

	 	 	112,854	 	 	   August 21, 2012
	  8

	 	 	112,854	 	 	   August 22, 2012
	  9

	 	 	112,854	 	 	   August 23, 2012
	10

	 	 	112,854	 	 	   August 24, 2012
	11

	 	 	112,854	 	 	   August 27, 2012
	12

	 	 	112,854	 	 	   August 28, 2012
	13

	 	 	112,854	 	 	   August 29, 2012
	14

	 	 	112,854	 	 	   August 30, 2012
	15

	 	 	112,855	 	 	   August 31, 2012
	16

	 	 	112,855	 	 	September 4, 2012
	17

	 	 	112,855	 	 	September 5, 2012
	18

	 	 	112,855	 	 	September 6, 2012
	19

	 	 	112,855	 	 	September 7, 2012
	20

	 	 	112,855	 	 	September 10, 2012
	21

	 	 	112,855	 	 	September 11, 2012
	22

	 	 	112,855	 	 	September 12, 2012
	23

	 	 	112,855	 	 	September 13, 2012
	24

	 	 	112,855	 	 	September 14, 2012
	25

	 	 	112,855	 	 	September 17, 2012
	26

	 	 	112,855	 	 	September 18, 2012
	27

	 	 	112,855	 	 	September 19, 2012
	28

	 	 	112,855	 	 	September 20, 2012
	29

	 	 	112,855	 	 	September 21, 2012
	30

	 	 	112,855	 	 	September 24, 2012
	31

	 	 	112,855	 	 	September 25, 2012
	32

	 	 	112,855	 	 	September 26, 2012
	33

	 	 	112,855	 	 	September 27, 2012






20









 






	 	 	 	 	 	 	 
	Component Number	 	Number of Warrants	 	Expiration Date
	34

	 	 	112,855	 	 	          September 28, 2012
	35

	 	 	112,855	 	 	  October 1, 2012
	36

	 	 	112,855	 	 	  October 2, 2012
	37

	 	 	112,855	 	 	  October 3, 2012
	38

	 	 	112,855	 	 	  October 4, 2012
	39

	 	 	112,855	 	 	  October 5, 2012
	40

	 	 	112,855	 	 	  October 8, 2012
	41

	 	 	112,855	 	 	  October 9, 2012
	42

	 	 	112,855	 	 	October 10, 2012
	43

	 	 	112,855	 	 	October 11, 2012
	44

	 	 	112,855	 	 	October 12, 2012
	45

	 	 	112,855	 	 	October 15, 2012
	46

	 	 	112,855	 	 	October 16, 2012
	47

	 	 	112,855	 	 	October 17, 2012
	48

	 	 	112,855	 	 	October 18, 2012
	49

	 	 	112,855	 	 	October 19, 2012
	50

	 	 	112,855	 	 	October 22, 2012







21