<PAGE>

                                 SECOND AMENDMENT TO
                                   CREDIT AGREEMENT

     THIS SECOND AMENDMENT TO CREDIT AGREEMENT is made and dated as of December
31, 1997 (the "Amendment") among PACIFICARE HEALTH SYSTEMS, INC., formerly known
as N-T Holdings, Inc., a Delaware corporation (the "Company"), the Banks party
to the Credit Agreement referred to below, and BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, a national banking association, as Agent (the "Agent"),
and amends that certain Credit Agreement dated as of October 31, 1996, as
amended by that certain First Amendment to Credit Agreement dated as of August
15, 1997 (as so amended, the "Credit Agreement").

                                       RECITALS

     WHEREAS, the Company has requested the Agent and the Banks to amend certain
provisions of the Credit Agreement, and the Agent and the Banks are willing to
do so, on the terms and conditions specified herein;

     NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereby agree as follows:

     1.   TERMS. All terms used herein shall have the same meanings as in the
Credit Agreement unless otherwise defined herein.

     2.   AMENDMENT. The Credit Agreement is hereby amended as follows:

          2.1 AMENDMENTS TO SECTION 1.1. The definitions of the terms
"Applicable Level" and "Applicable Margin" in Section 1.1 of the Credit
Agreement are hereby amended and restated to read in their entirety as follows:

          "Applicable Level" means one of the levels set forth below determined
     by the Senior Unsecured Debt Rating as follows:

               "LEVEL 1" means any period during which the Senior Unsecured Debt
          Rating is better than or equal to at least two of the following three
          ratings: (i) A- by S&P and/or (ii) A3 by Moody's and/or (iii) A- by 
          Fitch.

               "LEVEL 2" means any period (other than a Level 1 Period) during
          which the Senior Unsecured Debt Rating is better than or equal to at 
          least two of the following three ratings: (i) BBB+ by S&P and/or (ii)
          Baal by Moody's and/or (iii) BBB+ by Fitch.

               "LEVEL 3" means any period (other than a Level 1 Period or Level
          2 Period) during which the Senior Unsecured Debt Rating is better 
          than or equal to at least two of the following three ratings: (i) BBB
          by S&P and/or (ii) Baa2 by Moody's and/or (iii) BBB by Fitch.

                                          1
<PAGE>

               "LEVEL 4" means any period (other than a Level 1 Period, Level 2
          Period or Level 3 Period) during which the Senior Unsecured Debt 
          Rating is better than or equal to at least two of the following three
          ratings: (i) BBB- by S&P and/or (ii) Baa3 by Moody's and/or (iii) 
          BBB- by Fitch.

               "LEVEL 5"  means any period (other than a Level 1 Period, Level 2
          Period, Level 3 Period or Level 4 Period) during which the Senior 
          Unsecured Debt Rating is better than or equal to at least two of the 
          following three ratings: (i) BB+ by S&P and/or (ii) Bal by Moody's 
          and/or (iii) BB+ by Fitch.

                LEVEL 6"  means any period (other than a Level 1 Period, Level 2
          Period, Level 3 Period, Level 4 Period or Level 5 Period) during which
          the Senior Unsecured Debt Rating is better than or equal to at least 
          two of the following three ratings: (i) BB by S&P and/or (ii) Ba2 by 
          Moody's and/or (iii) BB by Fitch.

               "LEVEL 7" means any period (other than a Level 1 Period, Level 2
          Period, Level 3 Period, Level 4 Period, Level 5 Period or Level 6 
          Period) during which the Senior Unsecured Debt Rating is better or 
          equal to at least two of the following three ratings: (i) BB- by S&P 
          and/or (ii) Ba3 by Moody's and/or (iii) BB- by Fitch.

               "LEVEL 8" means any period other than a Level 1 Period, Level 2
          Period, Level 3 Period, Level 4 Period, Level 5 Period, Level 6 
          Period or Level 7 Period.

          For purposes of the foregoing, (a) if the Senior Unsecured Debt
     Ratings fall within different Levels, the Applicable Level shall be based
     upon the Level in which the largest number of Senior Unsecured Debt Ratings
     fall; PROVIDED, that if there shall be no such Level, the highest and the
     lowest Level shall be excluded and the Applicable Level shall be the
     remaining Level; (b) if only two Senior Debt Ratings exist and they shall
     fall within different Levels, the Applicable Level shall be based upon the
     higher (numerically lower) of the available Levels unless such Levels are
     more than one Level apart, in which case the Applicable Level shall be one
     Level higher than the lower Level; (c) if only one Senior Unsecured Debt
     Rating exists, the Applicable Level shall be based upon the Level in which
     such rating falls and (d) if no Senior Unsecured Debt Rating shall be
     available from at least one of S&P, Moody's or Fitch, the Applicable Level
     shall be Level 8.

          "Applicable Margin" means, in the case of Facility Fees, Base Rate
     Committed Loans or LIBOR Committed Loans, a rate per annum determined by
     reference to the Applicable Level as follows:

<TABLE>
<CAPTION>

                    Applicable Base     Applicable LIBOR
 Applicable Level     Rate Margin         Rate Margin        Facility Fee
 ----------------     -----------         -----------        ------------
<S>                 <C>                 <C>                  <C>
 Level 1                 0.0%                0.200%              0.100%
 Level 2                 0.0%                0.225%              0.125%
 Level 3                 0.0%                0.250%              0.150%
 Level 4                 0.0%                0.325%              0.175%
 Level 5                 0.0%                0.550%              0.200%

                                          2
<PAGE>

 Level 6                 0.0%                0.775%              0.225%
 Level 7                 0.250%              1.250%              0.250%
 Level 8                 0.700%              1.700%              0.300%

</TABLE>

          Changes in the Applicable Margin shall take effect (i) in the case of
     the Applicable LIBOR Rate Margin for LIBOR Loans, at the beginning of the
     following Interest Period and (ii) otherwise, as of the date of public
     announcement by S&P. Moody's or Fitch, as applicable.

          2.2   AMENDMENTS TO SECTION 2.9. Section 2.9 of the Credit Agreement
     is hereby amended by inserting "(a)" immediately after "MANDATORY
     COMMITMENT REDUCTIONS" and by adding a new subsection (b) thereto reading
     in its entirety as follows:

          (b)  The aggregate Commitments shall automatically and permanently be
     reduced by an amount equal to the first $350,000,000 of the net cash
     proceeds received by the Company from the incurrence of any Indebtedness
     permitted by Section 7.3(d). Such payments shall be applied to the
     mandatory Commitment reductions set forth in clause (a) above in direct
     order of application.

          2.3  AMENDMENTS TO SECTION 2.11.

          (a)  Clause (a) of Section 2.11 of the Credit Agreement is hereby
     amended by deleting the phrase "(in the case of LIBOR Loans)" from the
     fifth and sixth lines thereof.

          (b)  Clause (c) of Section 2.11 of the Credit Agreement is hereby
     amended by inserting "plus the Applicable Base Rate Margin" after the words
     "Base Rate" in the ninth line thereof.

          2.4  AMENDMENTS TO SECTION 7.7.

          (a)  Clause (d) of Section 7.7 of the Credit Agreement is hereby
     amended and restated in its entirety to read as follows:

               "(d) from and after December 1, 1997, the Company may repurchase
          up to $500,000,000 of its Class A capital stock, its Class B capital
          stock or its preferred stock, PROVIDED, that, immediately after giving
          effect to such proposed action, there exists no Default or Event of
          Default;

          (b)  Clause (e) of Section 7.7 of the Credit Agreement is hereby
     amended and restated in its entirety to read as follows:

               "(e) Intentionally omitted;"

                                          3
<PAGE>


          2.5  AMENDMENT TO SECTION 7.3.

          (a)  Clause (b) of Section 7.3 of the Credit Agreement is hereby
     amended by deleting "on the Closing Date" and substituting therefore "on
     December 1, 1997."

          (b)  Clause (d) of Section 7.3 of the Credit Agreement is hereby
     amended and restated in its entirety to read as follows:

          "(d) Other unsecured Indebtedness incurred by the Company after
     December 1, 1997 in an aggregate amount not to exceed $500,000,000;
     PROVIDED in no event may such Indebtedness have terms more restrictive than
     those set forth in this Agreement nor may the principal payment dates under
     such Indebtedness commence prior to March 31, 2002;"

          (c)  Clause (h) of Section 7.3 of the Credit Agreement is hereby
     amended and restated in its entirety to read as follows:

          "(h) Additional Indebtedness of the Company and its Subsidiaries up to
     but not exceeding an aggregate amount of $100,000,000 at any time
     outstanding, with not more than $50,000,000 of such amount being
     attributable to Indebtedness of the Company's Subsidiaries to Persons other
     than the Company or any other Subsidiary of the Company."

          2.6  AMENDMENT TO SECTION 7.7. Clause (a) of Section 7.7 of the Credit
Agreement is hereby amended and restated in its entirety to read as follows:

          "(a) the Company may declare and (i) make dividend payments or other -
     distributions payable solely in its common stock, and (ii) so long as both
     before and after giving effect thereto no Default or Event of Default would
     exist and so long as the aggregate amount of such dividend payments in any
     Fiscal Year does not exceed $12,000,000, pay current dividends on its
     Series A Cumulative Convertible Preferred Stock outstanding as of the
     Effective Date;

          2.7  AMENDMENT TO SECTION 7.10. Section 7.10 of the Credit Agreement
is hereby amended and restated in its entirety to read as follows:

          7.10 FINANCIAL COVENANTS. The Company shall not permit:

               (a)  its Leverage Ratio, as of the end of any fiscal quarter, to
          exceed (i) 3.0 to 1.00 at any time from completion of the FHP
          Acquisition through December 31, 1997, (ii) 3.75 to 1.00 from January
          1, 1998 through March 31, 1998, (iii) 3.5 to 1.00 from April 1, 1998
          through June 30, 1998, (iv) 3.25 to 1.00 from July 1, 1998 through
          September 30, 1998, and (v) 3.00 to 1.00 at any time thereafter;

               (b)  its Fixed Charges Coverage Ratio, as of the end of any
          fiscal quarter, to be less than (i) 2.00 to 1.00 at any time from
          completion of the FHP Acquisition through December 31, 1997, (ii) 2.5
          to 1.00 from January 1, 1998

                                          4
<PAGE>

          through December 31, 1998, (iii) 2.75 to 1.00 from January 1, 1999
          through December 31, 1999 and (iv) 3.0 to 1.00 at any time thereafter;
          or

               (c)  its Net Worth, as of the end of any fiscal quarter, to be
          less than (i) 90% of its Net Worth immediately following completion of
          the FHP Acquisition, PLUS (ii) 50% of the consolidated net income
          (without giving effect to any consolidated net losses and after the
          payment of any dividends on any preferred stock) of the Company and
          its Subsidiaries for each fiscal quarter beginning after completion of
          the FHP Acquisition, PLUS (iii) 50% of the Net Equity Proceeds from
          any equity offering by the Company or any conversion of Series A
          Cumulative Convertible Preferred Shares after the date hereof, MINUS
          the aggregate purchase price for all of the Company's Class A capital
          stock, Class B capital stock and preferred stock repurchased after
          December 1, 1997.

          The Fixed Charges Coverage Ratio and the Adjusted EBITDA component of
          the Leverage Ratio shall be calculated on a Combined Basis for the
          quarters ending before the FHP Acquisition and on a consolidated basis
          after the FHP Acquisition.

          2.8  AMENDMENT TO SCHEDULE 7.3. Schedule 7.3 of the Credit Agreement
is hereby amended and restated to read in its entirety as set forth on Schedule
7.3 attached hereto.

     3.   REPRESENTATIONS AND WARRANTIES. The Company represents and warrants to
the Agent and the Banks that, on and as of the date hereof, and after giving
effect to this Amendment:

          3.1  AUTHORIZATION. The execution, delivery and performance by the
Company of this Amendment has been duly authorized by all necessary corporate
action, and this Amendment has been duly executed and delivered by the Company.

          3.2  BINDING OBLIGATION. This Amendment constitutes the legal, valid
and binding obligations of the Company, enforceable against it in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting the enforcement of creditors'
rights generally or by equitable principles relating to enforceability.

          3.3  NO LEGAL OBSTACLE TO AMENDMENT. The execution, delivery and
performance by the Company of this Amendment has been duly authorized by all
necessary corporate action, and does not and will not:

          (a)  contravene the terms of any of the Company's Organization
     Documents;

          (b)  conflict with in any material respect or result in any material
     breach or contravention of, or the creation of any Lien under, any document
     evidencing any material Contractual Obligation to which the Company is a
     party or any order, injunction, writ or decree of any Governmental
     Authority to which the Company or its property is subject; or

          (c)  violate any material Requirement of Law.

                                          5
<PAGE>

          3.4  GOVERNMENTAL AUTHORIZATION. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against the Company of
this Amendment other than that which has been obtained.

          3.5  INCORPORATION OF CERTAIN REPRESENTATIONS. The representations and
warranties of the Company set forth in Article V of the Credit Agreement are
true and correct in all respects on and as of the date hereof as though made on
and as of the date hereof, except as to such representations made as of an
earlier specified date.

          3.6  DEFAULT. No Default or Event of Default under the Credit
Agreement has occurred and is continuing.

     4.   CONDITIONS, EFFECTIVENESS. The effectiveness of this Amendment shall
be subject to the compliance by the Company with its agreements herein
contained, and to the delivery of the following to Agent in form and substance
satisfactory to Agent:

          4.1  AUTHORIZED SIGNATORIES.  A certificate, signed by the Secretary
or an Assistant Secretary of the Company and dated the date of this Amendment,
as to the incumbency of the person or persons authorized to execute and deliver
this Amendment and any instrument or agreement required hereunder on behalf of
the Company.

          4.2  AUTHORIZING RESOLUTIONS.  A certificate, signed by the Secretary
or an Assistant Secretary of the Company and dated the date of the Amendment, as
to the resolutions of the Company's board of directors authorizing the
transactions contemplated by this Amendment.

          4.3  AMENDMENT FEE. Payment to the Agent, for the PRO RATA benefit of
each Bank approving this Amendment, of an amendment fee in an amount equal to
 .10 % of the aggregate amount of the Commitments held by the Banks approving
this Amendment.

          4.4  GUARANTOR AFFIRMATIONS.  Acknowledgment and reaffirmation letters
in the form of EXHIBIT A hereto, duly executed by each of the Guarantors.

          4.5  OTHER EVIDENCE.  Such other evidence with respect to the Company
or any other person as the Agent or any Bank may reasonably request to establish
the consummation of the transactions contemplated hereby, the taking of all
corporate action in connection with this Amendment and the Agreement and the
compliance with the conditions set forth herein.

     5.   MISCELLANEOUS.

          5.1  EFFECTIVENESS OF THE CREDIT AGREEMENT AND THE Notes. Except as
hereby expressly amended, the Credit Agreement and the Notes shall each remain
in full force and effect, and are hereby ratified and confirmed in all respects
on and as of the date hereof.

          5.2  WAIVERS.  This Amendment is limited solely to the matters
expressly set forth herein and is specific in time and in intent and does not
constitute, nor should it be

                                          6
<PAGE>

construed as, a waiver or amendment of any other term or condition, right, power
or privilege under the Credit Agreement or under any agreement, contract,
indenture, document or instrument mentioned therein; nor does it preclude or
prejudice any rights of the Agent or the Banks thereunder, or any exercise
thereof or the exercise of any other right, power or privilege, nor shall it
require the Banks to agree to an amendment, waiver or consent for a similar
transaction or on a future occasion, nor shall any future waiver of any right,
power, privilege or default hereunder, or under any agreement, contract,
indenture, document or instrument mentioned in the Credit Agreement, constitute
a waiver of any other right, power, privilege or default of the same or of any
other term or provision.

          5.3  COUNTERPARTS. This Amendment may be executed in any number of
counterparts, and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.

          5.4  GOVERNING LAW.  This Amendment shall be governed by and construed
in accordance with the laws of the State of California.




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



                                        PACIFICARE HEALTH SYSTEMS, INC.,
                                        formerly known as N-T Holdings, Inc.

                                        By:
                                           -----------------------------------
                                        Name:
                                             ---------------------------------
                                        Title:
                                              --------------------------------



                                        BANK OF AMERICA NATIONAL TRUST
                                        AND SAVINGS ASSOCIATION, as Agent

                                        By:
                                           -----------------------------------
                                        Name:
                                             ---------------------------------
                                        Title:
                                              --------------------------------


                                          7
<PAGE>

                                        BANK OF AMERICA NATIONAL TRUST AND
                                        SAVINGS ASSOCIATION, as a Bank

                                        By:
                                           -----------------------------------
                                        Name:
                                             ---------------------------------
                                        Title:
                                              --------------------------------



                                        THE CHASE MANHATTAN BANK

                                        By:
                                           -----------------------------------
                                        Name:
                                             ---------------------------------
                                        Title:
                                              --------------------------------




                                        CITICORP USA, INC.

                                        By:
                                           -----------------------------------
                                        Name:
                                             ---------------------------------
                                        Title:
                                              --------------------------------



                                        THE BANK OF NEW YORK

                                        By:
                                           -----------------------------------
                                        Name:
                                             ---------------------------------
                                        Title:
                                              --------------------------------




                                        THE BANK OF NOVA SCOTIA

                                        By:
                                           -----------------------------------
                                        Name:
                                             ---------------------------------
                                        Title:
                                              --------------------------------


                                          8
<PAGE>


                                        BANQUE NATIONALE DE PARIS

                                        By:
                                           -----------------------------------
                                        Name:
                                             ---------------------------------
                                        Title:
                                              --------------------------------


                                        By:
                                           -----------------------------------
                                        Name:
                                             ---------------------------------
                                        Title:
                                              --------------------------------



                                        THE DAI-ICHI KANGYO BANK, LTD.,
                                        LOS ANGELES AGENCY

                                        By:
                                           -----------------------------------
                                        Name:
                                             ---------------------------------
                                        Title:
                                              --------------------------------




                                        THE INDUSTRIAL BANK OF JAPAN,
                                        LIMITED, LOS ANGELES AGENCY

                                        By:
                                           -----------------------------------
                                        Name:
                                             ---------------------------------
                                        Title:
                                              --------------------------------




                                        COOPERATIEVE CENTRALE RAIFFEISEN-
                                        BOERENLEENBANK B.A., "RABOBANK
                                        NEDERLAND" NEW YORK BRANCH

                                        By:
                                           -----------------------------------
                                        Name:
                                             ---------------------------------
                                        Title:
                                              --------------------------------


                                        By:
                                           -----------------------------------
                                        Name:
                                             ---------------------------------
                                        Title:
                                              --------------------------------

                                          9
<PAGE>


                                        SANWA BANK CALIFORNIA

                                        By:
                                           -----------------------------------
                                        Name:
                                             ---------------------------------
                                        Title:
                                              --------------------------------



                                        THE SUMITOMO BANK, LIMITED, LOS
                                        ANGELES BRANCH

                                        By:
                                           -----------------------------------
                                        Name:
                                             ---------------------------------
                                        Title:
                                              --------------------------------




                                        WELLS FARGO BANK, N.A.

                                        By:
                                           -----------------------------------
                                        Name:
                                             ---------------------------------
                                        Title:
                                              --------------------------------


                                        By:
                                           -----------------------------------
                                        Name:
                                             ---------------------------------
                                        Title:
                                              --------------------------------




                                        BANCA COMMERCIALE ITALIANA
                                        LOS ANGELES FOREIGN BRANCH

                                        By:
                                           -----------------------------------
                                        Name:
                                             ---------------------------------
                                        Title:
                                              --------------------------------



                                          10
<PAGE>

                                        BANQUE PARIBAS

                                        By:
                                           -----------------------------------
                                        Name:
                                             ---------------------------------
                                        Title:
                                              --------------------------------


                                        By:
                                           -----------------------------------
                                        Name:
                                             ---------------------------------
                                        Title:
                                              --------------------------------




                                        CIBC INC.

                                        By:
                                           -----------------------------------
                                        Name:
                                             ---------------------------------
                                        Title:
                                              --------------------------------



                                        COMMERZBANK AKTIENGESELLSCHAFT, LOS
                                        ANGELES BRANCH

                                        By:
                                           -----------------------------------
                                        Name:
                                             ---------------------------------
                                        Title:
                                              --------------------------------


                                        By:
                                           -----------------------------------
                                        Name:
                                             ---------------------------------
                                        Title:
                                              --------------------------------




                                        CREDIT LYONNAIS NEW YORK BRANCH

                                        By:
                                           -----------------------------------
                                        Name:
                                             ---------------------------------
                                        Title:
                                              --------------------------------



                                          11
<PAGE>

                                        CREDIT SUISSE FIRST BOSTON

                                        By:
                                           -----------------------------------
                                        Name:
                                             ---------------------------------
                                        Title:
                                              --------------------------------


                                        By:
                                           -----------------------------------
                                        Name:
                                             ---------------------------------
                                        Title:
                                              --------------------------------




                                        THE FIRST NATIONAL BANK OF CHICAGO

                                        By:
                                           -----------------------------------
                                        Name:
                                             ---------------------------------
                                        Title:
                                              --------------------------------




                                        THE FUJI BANK, LIMITED

                                        By:
                                           -----------------------------------
                                        Name:
                                             ---------------------------------
                                        Title:
                                              --------------------------------




                                        MELLON BANK, N.A.

                                        By:
                                           -----------------------------------
                                        Name:
                                             ---------------------------------
                                        Title:
                                              --------------------------------




                                        THE MITSUBISHI TRUST AND BANKING
                                        CORPORATION, LOS ANGELES AGENCY

                                        By:
                                           -----------------------------------
                                        Name:
                                             ---------------------------------
                                        Title:
                                              --------------------------------

                                          12
<PAGE>

                                        PNC BANK, N.A.

                                        By:
                                           -----------------------------------
                                        Name:
                                             ---------------------------------
                                        Title:
                                              --------------------------------




                                        THE SAKURA BANK, LTD., LOS ANGELES
                                        AGENCY

                                        By:
                                           -----------------------------------
                                        Name:
                                             ---------------------------------
                                        Title:
                                              --------------------------------




                                        SOCIETE GENERALE

                                        By:
                                           -----------------------------------
                                        Name:
                                             ---------------------------------
                                        Title:
                                              --------------------------------




                                        THE TOKAI BANK, LIMITED,
                                        LOS ANGELES AGENCY

                                        By:
                                           -----------------------------------
                                        Name:
                                             ---------------------------------
                                        Title:
                                              --------------------------------




                                        UNION BANK OF CALIFORNIA, N.A.

                                        By:
                                           -----------------------------------
                                        Name:
                                             ---------------------------------
                                        Title:
                                              --------------------------------


                                          13
<PAGE>


                                        THE SANWA BANK, LIMITED,
                                        LOS ANGELES BRANCH

                                        By:
                                           -----------------------------------
                                        Name:
                                             ---------------------------------
                                        Title:
                                              --------------------------------


                                          14