Document:

Exhibit 4.5

                            METTLER-TOLEDO, INC.
                      ENHANCED RETIREMENT SAVINGS PLAN

                            AMENDED AND RESTATED

                        EFFECTIVE AS OF JULY 1, 2002
                   (EXCEPT AS OTHERWISE PROVIDED HEREIN)

<PAGE>

                                  FOREWORD

PURPOSE

Effective  as of October  1, 1988,  Toledo  Scale  Corporation,  a Delaware
corporation,   established  the  Toledo  Scale   Corporation   Savings  and
Investment  Plan  (the  "Plan")  for the  benefit  of  eligible  employees.
Effective  January 1, 1992, the Plan was renamed the  Mettler-Toledo,  Inc.
Savings  and  Investment  Plan,  to  reflect a change in the name of Toledo
Scale Corporation to Mettler-Toledo,  Inc. (the "Company"). Effective as of
July 1, 1994,  the Mettler  Instrument  Corporation  Savings and Investment
Plan was merged into the Plan,  the Plan was amended and restated,  and the
Plan was renamed the "Mettler Toledo Retirement Savings Plan". Effective as
of October 1, 1999,  the  Safeline,  Inc.  401(k)  Plan was merged into the
Plan. Effective as of January 1, 2000, the Plan was amended and restated in
its entirety.  Effective as of July 1, 2002,  the Plan is being restated in
its  entirety   and  the  name  of  the  Plan  is  being   changed  to  the
Mettler-Toledo,  Inc. Enhanced  Retirement Savings Plan. The purpose of the
Plan  is  to  encourage  eligible  employees  of  authorized  divisions  or
departments of the Company or of any authorized company affiliated with the
Company  to  provide  additional   financial  security  and  to  supplement
retirement income by savings on a regular long term basis.

BACKGROUND

As of January 1, 1981 Reliance  Electric Company,  a corporation  organized
and existing under the laws of the State of Delaware ("Reliance Electric"),
amended and restated the Reliance  Electric  Company Savings and Investment
Plan (the "Prior Reliance  Electric Plan") to continue to provide  eligible
employees additional financial security and to supplement retirement income
by savings on a regular and long term basis.

As of October 1, 1983  Reliance  Electric  amended and  restated  the Prior
Reliance  Electric  Plan.  Such  amended and  restated  plan is referred to
herein as the "Reliance Electric Plan".

The Company,  then a  wholly-owned  subsidiary  of Reliance  Electric,  and
Reliance Electric determined that:

1)        Effective as of October 1, 1988,  the Plan should be  established
          to cover eligible employees of the Company in lieu of having such
          employees continue to participate in the Reliance Electric Plan;

2)        All assets and  liabilities  of the Reliance  Electric Plan which
          were  allocable  to eligible  employees  of the Company  would be
          transferred to the Plan and the trust  established in conjunction
          therewith; and

3)        As of the  inception of the Plan and the transfer  thereto of the
          aforementioned  assets and  liabilities of the Reliance  Electric
          Plan,  the  provisions  of the  Plan  would be the  same,  in all
          material respects, as those of the Reliance Electric Plan.

The Company has subsequently amended the Plan from time to time.

This amendment and  restatement of the Plan shall  constitute an amendment,
restatement  and  continuation  of  the  Plan.   Except  as  the  text  may
specifically  provide  otherwise,  the terms and  provisions of the Plan as
hereinafter set forth and as it hereafter may be amended from time to time,
establish  the rights and  obligations  with  respect to  Participants  (as
hereinafter defined) employed on and after July 1, 2002 and to transactions
under  the  Plan  on  and  after  such  date.  Unless  explicitly  provided
otherwise,  the  provisions of this amendment and  restatement  with stated
effective  dates  prior to July 1,  2002  shall  be  deemed  to  amend  the
corresponding  provisions,  if any,  of the Plan as in effect  before  this
amendment  and  restatement  and all  amendments  thereto as of such dates.
Events occurring  before the applicable  effective date of any provision of
this  amendment  and  restatement  shall  be  governed  by  the  applicable
provision of the Plan in effect on the date of the event.

The  adoption  of the Plan in its  entirety  is intended to comply with the
provisions  of Sections  401(a) of the  Internal  Revenue  Code of 1986 and
applicable regulations thereunder.

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                            METTLER-TOLEDO, INC.

                      ENHANCED RETIREMENT SAVINGS PLAN

                                  CONTENTS
                                  --------

                                                                       PAGE

Article I Definitions......................................................1
      1.1   "Account"......................................................1
      1.2   "Administrative Committee".....................................1
      1.3   "After-Tax Contribution Account"...............................1
      1.4   "Appropriate Form".............................................1
      1.5   "Basic Employee Contribution"..................................1
      1.6   "Basic Employee Contribution Account"..........................1
      1.7   "Basic Salary Reduction Contribution"..........................1
      1.8   "Basic Salary Reduction Contribution Account"..................1
      1.9   "Beneficiary"..................................................2
      1.10  "Board" or "Board of Directors"................................2
      1.11  "Code".........................................................2
      1.12  "Common Stock".................................................2
      1.13  "Company"......................................................2
      1.14  "Company Matching Contribution"................................2
      1.15  "Company Matching Contribution Account"........................2
      1.16  "Compensation".................................................2
      1.17  "Disability"...................................................3
      1.18  "Discretionary Contribution"...................................3
      1.19  "Discretionary Contribution Account"...........................3
      1.20  "Early Retirement".............................................3
      1.21  "Effective Date"...............................................3
      1.22  "Eligible Earnings"............................................3
      1.23  "Eligible Employee" ...........................................4
      1.24  "Employee".....................................................4
      1.25  "Employer".....................................................4
      1.26  "Employment Commencement Date".................................5
      1.27  "Enrollment Date"..............................................5
      1.28  "ERISA"........................................................5
      1.29  "Excluded Entity"..............................................5
      1.30  "Group"........................................................5
      1.31  "Highly Compensated Employee"..................................5
      1.32  "Hour of Service" .............................................5
      1.33  "Interactive Electronic Communication" ........................6
      1.34  "Investment Fund"..............................................6
      1.35  "Leased Employee"..............................................7
      1.36  "Mettler Toledo Stock Fund"....................................7
      1.37  "Normal Retirement Age"........................................7
      1.38  "Normal Retirement Date".......................................7
      1.39  "Notice".......................................................7
      1.40  "Participant" .................................................7
      1.41  "Period of Service" ...........................................7
      1.42  "Period of Severance"..........................................8
      1.43  "Plan".........................................................8
      1.44  "Plan Year"....................................................8
      1.45  "Prior Reliance Electric Plan".................................8
      1.46  "Qualified Contribution".......................................8
      1.47  "Qualified Contribution Account"...............................8
      1.48  "Reliance Electric Plan".......................................8
      1.49  "Reemployment Commencement Date"...............................8
      1.50  "Rollover Contribution"........................................8
      1.51  "Rollover Contribution Account"................................8
      1.52  "Safe Harbor Matching Contribution"............................8
      1.53  "Safe Harbor Matching Contribution Account"....................8
      1.54  "Savings Contribution".........................................9
      1.55  "Savings Contribution Account".................................9
      1.56  "Severance from Service".......................................9
      1.57  "Special Contribution".........................................9
      1.58  "Special Contribution Account" ................................9
      1.59  "Special Contribution Year"....................................9
      1.60  "Transition Contribution"......................................9
      1.61  "Transition Contribution Account".............................10
      1.62  "Trustee".....................................................10
      1.63  "Trust Agreement".............................................10
      1.64  "Trust Fund"..................................................10
      1.65  "Valuation Date"..............................................10
      1.66  "Vested Interest".............................................10
      1.67  "Year of Eligibility Service".................................10
      1.68  "Year of Vesting Service".....................................10
Article II Eligibility and Participation..................................12
      2.1   Eligibility Requirements......................................12
      2.2   Commencement of Participation.................................12
      2.3   Beneficiary Designation.......................................13
      2.4   Changes in Status of Eligible Employee........................14
Article III Basic Salary Reduction Contributions..........................15
      3.1   Basic Salary Reduction Contributions..........................15
      3.2   Voluntary Suspension..........................................15
      3.3   Change in Contribution Rates..................................15
      3.4   Limitations on Basic Salary Reduction Contributions
            (Plan Years beginning before January 1, 2003).................16
      3.5   Distributions of Excess Deferrals.............................18
      3.6   Coordination of Excess Amounts under Sections 401(k) and 402(g)
            of the Code (Plan Years beginning before January 1, 2003).....19
      3.7   Catch-up Contributions........................................20
      3.8   Rollover Contributions........................................20
Article IV Employer Contributions.........................................22
      4.1   Company Matching Contributions................................22
      4.2   Safe Harbor Matching Contributions............................22
      4.3   Savings Contributions.........................................23
      4.4   Special Contributions.........................................25
      4.5   Transition Contributions......................................27
      4.6   Discretionary Contributions...................................28
      4.7   Limitation on Annual Additions................................28
      4.8   Limitation on Company Matching Contributions
            (Plan Years beginning before January 1, 2003).................30
      4.9   Aggregate Limitation (Plan Years beginning before
            January 1, 2002)..............................................33
      4.10  Qualified Contributions (Plan Years beginning before
            January 1, 2003)..............................................34
      4.11  Return of Contributions.......................................34
Article V Valuation of Accounts...........................................35
      5.1   Maintenance of Accounts.......................................35
      5.2   Valuation.....................................................35
      5.3   Valuation of Funds............................................35
Article VI Vesting of Accounts............................................36
      6.1   Vesting.......................................................36
      6.2   Treatment of Forfeitures......................................37
      6.3   Reinstatement of Accounts.....................................37
Article VII Investment of Accounts........................................39
      7.1   Investment of Accounts........................................39
      7.2   Investment Elections..........................................39
      7.3   Mettler Toledo Stock Fund.....................................41
      7.4   Voting of Common Stock........................................42
Article VIII Withdrawals During Employment................................44
      8.1   Basic Withdrawals.............................................44
      8.2   Hardship Withdrawals..........................................45
      8.3   Payment of Withdrawals........................................47
      8.4   Values........................................................47
Article IX Distribution of Benefits.......................................48
      9.1   Amount of Distribution........................................48
      9.2   Payment of Distribution.......................................48
      9.3   Deferred Accounts.............................................49
      9.4   Distribution Requirements Applicable
            to Basic Salary Reduction Contributions.......................50
      9.5   Alienation of Benefits........................................50
      9.6   Latest Commencement of Benefits...............................51
      9.7   Mandatory Commencement of Benefits............................51
      9.8   Death Benefits................................................52
      9.9   Distributions Upon Plan Termination or other Events...........52
      9.10  Identity and Competence of Payees.............................52
      9.11  Direct Rollover of Eligible Rollover Distribution.............52
Article X Administration of the Plan......................................54
      10.1  Plan Administrator............................................54
      10.2  Appointment of the Administrative Committee...................54
      10.3  Powers of the Administrative Committee........................55
      10.4  Individual Accounts...........................................57
      10.5  Claim Procedures..............................................57
      10.6  Appointment of Accountant.....................................58
      10.7  Indemnification of Certain Persons............................58
      10.8  Special Withdrawal Period.....................................58
      10.9  Plan Expenses.................................................59
Article XI Operation of the Trust Fund....................................60
      11.1  Trust Fund; Trustee...........................................60
      11.2  Appointment of Investment Manager.............................60
Article XII Adoption, Amendment, Termination and Merger...................61
      12.1  Adoption of the Plan..........................................61
      12.2  Right to Amend................................................61
      12.3  Termination or Discontinuance of Contributions................61
      12.4  Merger, Consolidation or Transfer.............................62
Article XIII Miscellaneous................................................63
      13.1  Uniform Administration........................................63
      13.2  Payments from Trust Fund......................................63
      13.3  Plan Not a Contract of Employment.............................63
      13.4  Applicable Law................................................63
      13.5  Unclaimed Amounts.............................................63
      13.6  Severability..................................................64
      13.7  Employer Records..............................................64
      13.8  Application of Plan Provisions................................64
      13.9  IRC 414(u) Compliance Provision...............................64
      13.10 IRC 125 Compliance Provision..................................64
Article XIV Participation in Plan by Affiliates...........................65
      14.1  Participation by Affiliate....................................65
      14.2  Withdrawal by Affiliate.......................................65
      14.3  Special Rule for Corporate Reorganizations....................66
Article XV Loans..........................................................67
      15.1  Availability..................................................67
      15.2  Terms and Procedures..........................................67
Article XVI Determination of Top-Heavy Status.............................70
      16.1  General.......................................................70
      16.2  Top-Heavy Plan................................................70
      16.3  Super Top-Heavy Plan..........................................70
      16.4  Cumulative Accrued Benefits and Cumulative Accounts...........70
      16.5  Definitions...................................................71
      16.6  Vesting.......................................................72
      16.7  Compensation..................................................72
      16.8  Minimum Contributions.........................................72
      16.9  Defined Benefit and Defined Contribution Plan Fractions.......72
      16.10 Method of Determining Accrued Benefit.........................73
      16.11 Change in Statute Automatically Incorporated..................73
Appendix A  Special Provisions Pertaining to Certain Employees
            of Mettler Instrument Corporation.............................74
Appendix B  Bonus Deferrals...............................................75
Appendix C  Special Provisions Pertaining to Certain Employees of
            ASI Applied Systems, Inc......................................78
Appendix D  Special Provisions Pertaining to Certain Employees of
            Safeline, Inc.................................................82
Exhibit I   Special Contributions.........................................84

<PAGE>

                                 ARTICLE I

                                DEFINITIONS

As used herein,  unless otherwise  defined or required by the context,  the
following words and phrases shall have the meanings indicated.  Some of the
words and phrases  used in the Plan are not defined in this  Article I, but
for convenience are defined as they are introduced into the text.

1.1       "Account" means, to the extent applicable to a given Participant,
          the After-Tax  Contribution Account,  Basic Employee Contribution
          Account,  Basic Salary Reduction  Contribution  Account,  Company
          Matching   Contribution   Account,   Discretionary   Contribution
          Account,  Qualified Contribution Account,  Rollover Account, Safe
          Harbor  Matching  Contribution   Account,   Savings  Contribution
          Account,  Special Contribution Account,  Transition  Contribution
          Account or any subaccount thereof, as the context requires.

1.2       "Administrative  Committee"  means the committee  constituted  to
          administer the Plan in accordance with Section 10.2.

1.3       "After-Tax  Contribution  Account"  means  the  separate  Account
          maintained  for a  Participant  to record  his share of the Trust
          Fund attributable to after-tax  contributions  made on his behalf
          under the Reliance Electric Plan.

1.4       "Appropriate  Form"  means  the form or forms  prescribed  by the
          Administrative Committee for a particular purpose.

1.5       "Basic  Employee  Contribution"  means a  contribution  made by a
          Participant as a condition of participation in the Prior Reliance
          Electric  Plan, as provided in Section 3.02 of the Prior Reliance
          Electric Plan.

1.6       "Basic Employee  Contribution Account" means the separate Account
          maintained  for a  Participant  to record  his share of the Trust
          Fund  attributable  to Basic Employee  Contributions  made on his
          behalf.

1.7       "Basic Salary Reduction  Contribution"  means a contribution made
          by an Employer  pursuant to an  election  by the  Participant  to
          reduce the cash compensation  otherwise  currently payable to him
          by an equivalent  amount,  in accordance  with the  provisions of
          Section 3.1, and such amounts  contributed  by an Employer to the
          Reliance Electric Plan under Section 3.01 thereof. For Plan Years
          beginning on and after  January 1, 2002,  Basic Salary  Reduction
          Contributions  shall also include  catch-up  contributions  under
          Section 3.7.

1.8       "Basic Salary Reduction  Contribution Account" means the separate
          Account  maintained  for a Participant to record his share of the
          Trust Fund  attributable to Basic Salary Reduction  Contributions
          made on his behalf.

1.9       "Beneficiary"  means  the  person or  persons  so  designated  in
          accordance with Section 2.3 to receive benefits payable under the
          Plan as a result of the Participant's death.

1.10      "Board" or "Board of  Directors"  means the Board of Directors of
          the Company.

1.11      "Code" means the Internal  Revenue Code of 1986,  as amended from
          time to time.

1.12      "Common   Stock"  means  the  common   stock  of   Mettler-Toledo
          International Inc. which is a qualifying employer security within
          the meaning of Section 407(d)(5) of ERISA.

1.13      "Company" means Mettler-Toledo,  Inc., a Delaware corporation, as
          now  constituted  or as  may  be  constituted  hereafter,  or any
          person, firm, corporation or partnership which may succeed to its
          business and which adopts the Plan.

1.14      "Company Matching  Contribution"  means an Employer  contribution
          made to the Trust Fund pursuant to Section 4.1.

1.15      "Company  Matching   Contribution  Account"  means  the  separate
          Account  maintained  for a Participant to record his share of the
          Trust Fund attributable to Company Matching Contributions made on
          his behalf.

1.16      "Compensation"  means the (a) the nondeferred  remuneration of an
          Employee for services  rendered to the Group,  inclusive of Basic
          Salary Reduction Contributions, regularly-scheduled paid bonuses,
          sales  commissions,  overtime,  shift  differential and incentive
          earnings,  exclusive of non-regular bonuses, stock option income,
          moving  expenses  paid or reimbursed by a member of the Group and
          the Group's cost for any employee benefit plan (which cost is not
          included  in the gross  income of the  Employee),  including  the
          Plan, except as provided in this Section,  and (b) in the case of
          an  Eligible   Employee  of  an  Employer  which  is  a  "foreign
          subsidiary"  (as  described in Section  406(a) of the Code and to
          which an agreement  entered into under Section 312(1) of the Code
          applies) or a "domestic subsidiary"  (described in Section 407(a)
          of the Code) and who has been  authorized to  participate  in the
          Plan by the Administrative Committee, an amount determined by the
          Administrative  Committee,  using as a guideline  to be uniformly
          and consistently  applied,  that nondeferred  remuneration  which
          would be  considered  as his basic  rate of  compensation  if his
          services  were  performed  in a similar  position  in the  United
          States for the Company, but in no event shall the "Compensation",
          as  determined  by  the  Administrative  Committee,   exceed  the
          nondeferred  remuneration  actually  received by such an Eligible
          Employee.  Effective  for each Plan Year  beginning  on and after
          January 1,  1989,  in no event  shall the amount of  Compensation
          taken into  account  under the Plan  exceed the  adjusted  annual
          limitation  permitted  under  Section  401(a)(17) of the Code for
          such Plan Year. Such adjusted annual limitation shall be for each
          Plan Year  beginning  on and after  January  1, 1989 and prior to
          January 1, 1994,  $200,000 as adjusted  for such year in the same
          manner as under  Section  415(d) of the Code;  for each Plan Year
          beginning  on and after  January  1, 1994 and prior to January 1,
          2002,  $150,000  as  adjusted  for such  year as  provided  under
          Section  401(a)(17)(B)  of  the  Code  and  for  each  Plan  Year
          beginning on and after January 1, 2002,  $200,000 as adjusted for
          such year as provided under Section 401(a)(17)(B) of the Code.

1.17      "Disability"  means the  termination  of service of a Participant
          with the  Employer due to a physical or mental  disability  which
          will  permanently  disable such  Participant  from performing the
          customary  duties  of his  regular  job with the  Employer.  Such
          permanent  disability is to be determined by a licensed physician
          provided by or acceptable to the Administrative Committee.

1.18      "Discretionary  Contribution" means an Employer contribution made
          to the Trust Fund pursuant to Section 4.6.

1.19      "Discretionary  Contribution  Account" means the separate Account
          maintained  for a  Participant  to record  his share of the Trust
          Fund  attributable  to  Discretionary  Contributions  made on his
          behalf.

1.20      "Early Retirement" means a Participant's  termination of service,
          provided  it occurs on or after his 55th  birthday,  but prior to
          his Normal Retirement Date, and after his completion of 10 1-year
          Periods of Service.

1.21      "Effective  Date" means October 1, 1988.  The  effective  date of
          this restatement is July 1, 2002, unless otherwise provided.

1.22      "Eligible Earnings" means:

          (a)  The basic,  regular  earnings of a Participant  for services
               rendered to the Group while the  Participant  is an Eligible
               Employee; provided, however, such earnings shall include the
               items set forth in  subsection  (i) below and shall  exclude
               the items set forth in subsection (ii) below,  and, provided
               further,  that any  forms  of  compensation  not  enumerated
               herein  shall be deemed to be excluded in the same manner as
               if identified in subsection (ii) below:

               (i)  Inclusions:  overtime pay, sales commissions,  vacation
                    pay,  pay during an approved  leave of  absence,  retro
                    pay,    regularly-scheduled    paid   bonuses,    shift
                    differential, Basic Salary Reduction Contributions, and
                    amounts  subject  to  an  Eligible   Employee's  salary
                    reduction  election  under a plan  described in Section
                    125 of the Code.

               (ii) Exclusions: income attributable to a waiver of coverage
                    under   any   Group-provided   medical   program,   any
                    non-regular  bonuses,  stock option income,  any income
                    attributable to fringe or welfare benefits  provided by
                    the Group, any vehicle allowance income attributable to
                    an  Employee's  personal  use of a car owned by a Group
                    member, any amount paid or reimbursed by a Group member
                    relative to an Employee's relocation (without regard to
                    whether such amounts are includable in income or may be
                    deductible by the Employee),  any Group-provided  gifts
                    or awards, any tuition payments or reimbursements,  any
                    severance payments, any sick pay paid by a third party,
                    income  and  any  distributions   from  a  nonqualified
                    retirement or deferred compensation plan.

          (b)  In the case of an  Eligible  Employee  described  in Section
               1.16(b),  "Eligible  Earnings" shall be an amount determined
               by the Administrative Committee,  using as a guideline to be
               uniformly  and   consistently   applied,   that  nondeferred
               remuneration  which  would be  considered  his basic rate of
               compensation  if his  services  were  performed in a similar
               position  for the  Company in the United  States,  but in no
               event shall the  "Eligible  Earnings",  as determined by the
               Administrative    Committee,    exceed    the    nondeferred
               remuneration actually received by such an Eligible Employee.

          (c)  Notwithstanding  any  provision of the Plan to the contrary,
               Eligible  Earnings  shall not  exceed  the  adjusted  annual
               limitation described in Section 1.16.

1.23      "Eligible   Employee"   means  each  Employee  of  any  Employer,
          excluding  (i)  any  Employee  included  in a unit  of  employees
          represented  by a  recognized  bargaining  agent and covered by a
          collective bargaining agreement in which retirement benefits were
          the  subject  of good  faith  bargaining  unless  such  agreement
          specifically  provides for coverage  under the Plan, and (ii) any
          Employee who is a nonresident alien without  U.S.-source  income,
          and (iii) any Employee of who is, for a period of employment with
          an  Employer,  covered  under a  retirement  plan  sponsored by a
          member of the Group and which plan otherwise  primarily  benefits
          employees   in  non-U.S.   employment,   and  (iv)  any  Employee
          classified by an Employer as a co-op  student or intern,  and (v)
          any Employee of an Excluded Entity, while so employed.

          For purposes of Sections 3.4, 4.8 and  4.9,  the  term  "Eligible
          Employee"  means an Eligible  Employee (as  otherwise  defined in
          this  Section  1.23) of an  Employer  who, at any time during the
          Plan Year in question has satisfied the eligibility  requirements
          set forth in Section 2.1,  regardless of whether such  individual
          has elected to become a Participant in the Plan.

          Notwithstanding  any provision of the Plan to the  contrary,  any
          individual who  an  Employer  determines  to  be  an  independent
          contractor, leased employee (including a Leased Employee), leased
          owner, leased manager,  shared employee or person working under a
          similar  classification  shall not  become an  Eligible  Employee
          hereunder,   regardless   of  whether  any  such   individual  is
          ultimately  determined  to be a common law  employee,  unless and
          until the Company shall otherwise  determine.  Any Employee shall
          be  considered  an Eligible  Employee  only during such period in
          which he satisfies the requirements defined above.

1.24      "Employee" means any person performing  services for the Company,
          or any other member of the Group, as a common law employee.

1.25      "Employer" means the Company and any member of the Group that has
          adopted the Plan in  accordance  with Article XIV. As the context
          requires,  the term  "Employer"  may mean any of the Employers or
          all of them.

1.26      "Employment  Commencement  Date"  means  the  date on  which  the
          Employee first performs an Hour of Service.

1.27      "Enrollment  Date" means the first day of any calendar  month and
          such other date or dates as the  Administrative  Committee  shall
          specify.

1.28      "ERISA"  means the  Employee  Retirement  Income  Security Act of
          1974, as amended from time to time.

1.29      "Excluded Entity" means any division of the Company, or any other
          corporation (or division of such a corporation)  subsidiary to or
          affiliated  with the Company,  which qualifies as a member of the
          Group  but  which is not  expressly  authorized  by the  Board of
          Directors  of the Company or its delegate to  participate  in the
          Plan.

1.30      "Group"  means the Company and any other company which is related
          to the Company as a member of a controlled  group of corporations
          in  accordance  with Section  414(b) of the Code or as a trade or
          business under common  control in accordance  with Section 414(c)
          of the  Code,  any  organization  which is part of an  affiliated
          service group in accordance  with Section  414(m) of the Code, or
          any  entity  required  to  be  aggregated  with  the  Company  in
          accordance  with Section  414(o) of the Code and the  regulations
          thereunder.  For the  purposes  under  the  Plan  of  determining
          whether  or  not a  person  is an  Employee  and  the  period  of
          employment  of such  person,  each such  other  company  shall be
          included  in the  definition  of "Group"  only for such period or
          periods  during  which  such  other  company  is so a member of a
          controlled  group,  under common control,  an affiliated  service
          group or  otherwise  required to be  aggregated.  For purposes of
          applying the annual  contributions  limits imposed by Section 415
          of the Code,  the  definition of "control" for this purpose shall
          be modified as required by Section 415(h) of the Code.

1.31      "Highly  Compensated  Employee"  means  any  Employee  who is a 5
          percent owner (as defined in Section  416(i)(1) of the Code) with
          respect  to a member  of the  Group  during  the Plan Year or the
          preceding Plan Year or who both received IRC 414(s)  compensation
          (as defined in Section 3.4(c) hereof except that, for purposes of
          this Section 1.31 and effective for years  beginning on and after
          January 1, 2000, IRC 414(s) compensation shall not include moving
          expenses  paid or reimbursed by a member of the Group) during the
          preceding  Plan Year in excess of $80,000 and was a member of the
          "top-paid  group" (as defined in Section  414(q)(3)  of the Code)
          during such Plan Year.  For  purposes of this Section  1.31,  the
          $80,000  amount is to be indexed at the same time and in the same
          manner as other adjustments under Section 415(d) of the Code.

1.32      "Hour of Service" means:

          (a)  Each hour for which an  Employee  is paid,  or  entitled  to
               payment,  for the  performance  of duties for an Employer of
               member of the Group.  These  hours  shall be credited to the
               Employee for the computation  period or periods in which the
               duties are performed;

          (b)  Each hour for which an  Employee  is paid,  or  entitled  to
               payment, by an Employer or member of the Group on account of
               a period  of time  during  which  no  duties  are  performed
               (irrespective  of whether the  employment  relationship  has
               terminated) due to vacation,  holiday,  illness,  incapacity
               (including disability), layoff, jury duty, military duty, or
               leave  of  absence.  Hours  under  this  paragraph  shall be
               calculated and credited pursuant to the minimum requirements
               prescribed  under Section  2530.200b-2  of the Department of
               Labor  Regulations,  which are  incorporated  herein by this
               reference;

          (c)  Each hour for which back pay,  irrespective of mitigation of
               damages,  is either  awarded or agreed to by an  Employer or
               member of the Group.  The same Hours of Service shall not be
               credited  both under  subsections  (a) or (b) above,  as the
               case may be,  and under this  subsection  (c).  These  hours
               shall be credited to the Employee for the computation period
               or periods to which the award or agreement pertains,  rather
               than the computation  period in which the award,  agreement,
               or payment is made; and

          (d)  Each hour for which  service  credit is  required  under The
               Family  and  Medical  Leave Act of 1993 with  respect  to an
               Employee who is on leave as provided by said Act.

          (e)  Notwithstanding  the foregoing,  in the case of any Employee
               for whom an Employer's records do not accurately reflect the
               actual number of Hours of Service as determined  above, such
               Employee shall be credited with 45 Hours of Service for each
               week in  which  he is  credited  with at  least  one Hour of
               Service.

1.33      "Interactive  Electronic  Communication"  means  a  communication
          between a  Participant  or  Beneficiary  and the person or entity
          designated   by   the   Administrative   Committee   to   perform
          recordkeeping and other administrative  services on behalf of the
          Plan pursuant to a system maintained by such person or entity and
          communicated to each  Participant  and  Beneficiary  whereby each
          such  individual  may make  elections  and  exercise  options  as
          described  herein with respect to all or a portion of his Account
          through  the use of such  system  and a  personal  identification
          number.   If  a  Participant  or  Beneficiary   (i)  consents  to
          participate in Interactive  Electronic  Communication  procedures
          adopted by the  Administrative  Committee  and (ii)  acknowledges
          that  actions  taken  by him  through  the  use  of his  personal
          identification  number  pursuant  to the  Interactive  Electronic
          Communication  procedure constitute his signature for purposes of
          initiating  transactions  such as Investment  Fund  changes,  the
          Participant or Beneficiary, as the case may be, will be deemed to
          have given his  written  consent  and  authorization  to any such
          action  resulting  from  the  use of the  Interactive  Electronic
          Communication system by the Participant or Beneficiary.

1.34      "Investment Fund" means each of the separate  investment  options
          which the  Administrative  Committee,  in its sole discretion and
          pursuant  to  uniform  and  nondiscriminatory   rules,  may  make
          available under the Plan for the investment of Plan contributions
          and Accounts.

1.35      "Leased  Employee" means any person (other than an Employee of an
          Employer)  who pursuant to an agreement  between the Employer and
          any other person ("leasing  organization") has performed services
          for the  Employer  (or  for  the  Employer  and  related  persons
          determined in accordance with Section 414(n)(6) of the Code) on a
          substantially  full-time  basis for a period of at least one year
          and such  services  are  performed  under  primary  direction  or
          control by the recipient.  Except as provided  below,  any person
          satisfying  the  foregoing   criteria  shall  be  treated  as  an
          Employee. Contributions or benefits provided a Leased Employee by
          the  leasing  organization  which are  attributable  to  services
          performed  for the  Employer  shall be treated as provided by the
          Employer.

          Notwithstanding  the  foregoing,  a Leased  Employee shall not be
          considered an Employee of an Employer if (i) such Leased Employee
          is covered  by a money  purchase  pension  plan  providing  (1) a
          nonintegrated  employer  contribution rate of at least 10 percent
          of compensation,  (2) immediate  participation,  and (3) full and
          immediate  vesting;  and (ii) Leased  Employees do not constitute
          more than 20 percent  of the  Employer's  non-Highly  Compensated
          Employee workforce.

1.36      "Mettler  Toledo Stock Fund" means the Investment  Fund described
          in Section 7.3.

1.37      "Normal  Retirement  Age"  means  the  attainment  of age 65 by a
          Participant.

1.38      "Normal  Retirement  Date"  means  the  first  day of  the  month
          coincident with or next following a Participant's 65th birthday.

1.39      "Notice" means,  unless otherwise  specifically  provided herein,
          (i)  written  Notice  on an  Appropriate  Form  provided  by  the
          Administrative  Committee  that  is,  in  the  discretion  of the
          Administrative Committee,  properly completed and executed by the
          party  giving  such Notice and which is  delivered  by hand or by
          mail to the Administrative  Committee or to such party designated
          by the terms of the Plan or by the  Administrative  Committee  to
          receive the  Notice,  or (ii)  Notice by  Interactive  Electronic
          Communication   to  the  person  or  entity   designated  by  the
          Administrative  Committee  to  perform  recordkeeping  and  other
          administrative services on behalf of the Plan. The form of Notice
          satisfactory  in any given  circumstance  under the Plan shall be
          determined by the  Administrative  Committee,  in its discretion,
          and shall be applied  uniformly  to all  Participants  and to all
          Beneficiaries.  Notice to any party as provided  herein  shall be
          deemed  to  be  given  when  it  is  actually   received  (either
          physically or by  Interactive  Electronic  Communication,  as the
          case may be) by the party to whom such Notice is given.

1.40      "Participant"  means  an  Eligible  Employee  who  has  become  a
          participant  in the Plan in  accordance  with  Article  II.  Each
          Participant  shall  continue  to be such after he ceases to be an
          Eligible   Employee  until  his  Accounts  have  been  completely
          distributed.

1.41      "Period of Service"  means that period of time  commencing  on an
          Employee's   Employment   Commencement   Date   or   Reemployment
          Commencement  Date,  whichever is  applicable,  and ending on the
          date  of  his  Severance   from  Service.   Notwithstanding   the
          foregoing,  however,  if an Employee  severs from service with an
          Employer as a result of quit,  discharge,  or retirement and then
          returns to service  within 12 months of such  event,  such period
          shall be counted as part of such  Employee's  Period of  Service.
          For purposes of determining an Employee's Period of Service,  all
          non-successive Periods of Service shall be aggregated;  less than
          one 1-year  Periods of Service  shall be  aggregated on the basis
          that 12 months of service  or 365 days of service  equal a 1-year
          Period of Service.  A Period of Service  also shall  include such
          period of  service in the armed  forces of the  United  States as
          shall be required to be recognized under  applicable  federal law
          with respect to military service.

1.42      "Period of Severance"  means the period of time  commencing on an
          Employee's  Severance from Service and ending on his Reemployment
          Commencement Date.

1.43      "Plan" means the Mettler-Toledo, Inc. Enhanced Retirement Savings
          Plan,  as set  forth in this  document,  including  all  addenda,
          appendices and exhibits  hereto,  as the same may be amended from
          time to time. For purposes of Section  401(a)(27) of the Code and
          Section 407(d)(3) of ERISA, the Plan is a profit sharing plan.

1.44      "Plan Year" means the 12-month  period  commencing on any January
          1.

1.45      "Prior  Reliance  Electric  Plan"  means  the  Reliance  Electric
          Company  Savings and  Investment  Plan,  as amended and  restated
          effective as of January 1, 1981.

1.46      "Qualified  Contribution" means an Employer  contribution made to
          the Trust Fund pursuant to Section 4.10.

1.47      "Qualified  Contribution  Account"  means  the  separate  Account
          maintained  for a  Participant  to record  his share of the Trust
          Fund attributable to Qualified Contributions made on his behalf.

1.48      "Reliance  Electric  Plan" means the  Reliance  Electric  Company
          Savings and Investment Plan, as amended and restated effective as
          of October 1, 1983.

1.49      "Reemployment Commencement Date" means the first date on which an
          Employee  completes  an Hour of  Service  following  a Period  of
          Severance.

1.50      "Rollover   Contribution"   means  a   contribution   made  by  a
          Participant  or Eligible  Employee to the Trust Fund  pursuant to
          Section 3.8.

1.51      "Rollover   Contribution  Account"  means  the  separate  Account
          maintained for a Participant  or Eligible  Employee to record his
          share  of  the   Trust   Fund   attributable   to  his   Rollover
          Contribution.

1.52      "Safe   Harbor   Matching   Contribution"   means   an   Employer
          contribution made to the Trust Fund pursuant to Section 4.2.

1.53      "Safe Harbor  Matching  Contribution  Account" means the separate
          Account  maintained  for a Participant to record his share of the
          Trust Fund  attributable  to Safe Harbor  Matching  Contributions
          made on his behalf.

1.54      "Savings Contribution" means an Employer contribution made to the
          Trust Fund pursuant to Section 4.3.

1.55      "Savings   Contribution   Account"  means  the  separate  Account
          maintained  for a  Participant  to record  his share of the Trust
          Fund attributable to Savings Contributions made on his behalf.

1.56      "Severance  from  Service"  means the  earlier of (i) the date on
          which an Employee  resigns,  retires,  dies or is discharged from
          employment  with an  Employer  or member of the Group,  or (ii) a
          period of twelve  (12)  months  from the first date the  Employee
          remains  absent  from  employment  (with or without  pay) with an
          Employer  or  member  of the  Group  for any  reason  other  than
          resignation,  retirement,  death or discharge,  such as vacation,
          holiday, sickness, disability, leave of absence or layoff.

          The date of the Severance  from Service for a Participant  who is
          absent from  employment by reason of parental  leave shall be the
          second  anniversary  of the  first  day of such  absence,  or, if
          later, the date the parental leave ceased. The period between the
          first and second  anniversaries  of the first date of absence for
          parental  leave  shall be  treated as neither a Period of Service
          nor a Period of  Severance.  For purposes of this  Section  1.56,
          parental  leave means an Employee's  absence from work on account
          of the Employee's  pregnancy,  the birth of the Employee's child,
          the placement of a child with the Employee in connection with the
          adoption of that child by the Employee, or for purposes of caring
          for that child for a period beginning  immediately following that
          birth or placement.

          An absence  will not be  considered  by reason of parental  leave
          unless the Employee  provides the  Administrative  Committee with
          information within 10 working days demonstrating that the absence
          is for one of the reasons described in the preceding sentence. At
          the  end  of  such   absence,   the  Employee  must  provide  the
          Administrative  Committee or its representative  with a record of
          the  number of days of such  absence.  Nothing in this Plan shall
          require  the  Employer  to grant a paid  leave of  absence to any
          Employee.

1.57      "Special Contribution" means an Employer contribution made to the
          Trust Fund pursuant to Section 4.4.

1.58      "Special   Contribution   Account"  means  the  separate  Account
          maintained  for a  Participant  to record  his share of the Trust
          Fund attributable to Special Contributions.

1.59      "Special  Contribution Year" means the 12-month period commencing
          on July 1, 2002 and ending June 30, 2003 and the 12-month  period
          commencing on any July 1 thereafter.

1.60      "Transition  Contribution" means an Employer contribution made to
          the Trust Fund pursuant to Section 4.5.

1.61      "Transition  Contribution  Account"  means the  separate  Account
          maintained  for a  Participant  to record  his share of the Trust
          Fund attributable to Transition Contributions made on his behalf.

1.62      "Trustee" means the individual(s)  and/or  entity(ies)  appointed
          from time to time by the Board to  administer  the Trust  Fund in
          accordance with Section 11.1.

1.63      "Trust  Agreement"  means the agreement  entered into between the
          Company and the Trustee,  as provided for in Section 11.1, as the
          same may be amended from time to time.

1.64      "Trust Fund" means the trust fund  established in accordance with
          Section 11.1 from which benefits provided under this Plan will be
          paid.

1.65      "Valuation  Date"  means each day the New York Stock  Exchange is
          open for business.

1.66      "Vested  Interest"  means that  portion of an Account in which an
          individual  has a  fully  vested  and  nonforfeitable  right,  as
          provided in Article VI.

1.67      "Year of  Eligibility  Service" means a 1-year Period of Service;
          provided,  however,  that  if  an  Employee  is  classified  as a
          temporary employee by his Employer or is a part-time employee who
          is classified  by his Employer as other than a regular  part-time
          employee,  Year of Eligibility  Service shall mean an Eligibility
          Computation  Period  (as  defined  below) in which  the  Employee
          completes at least 1,000 Hours of Service.

          The "Eligibility  Computation Period" with respect to an Employee
          shall mean the 12  consecutive  month  period  that begins on the
          Employee's  Employment  Commencement  Date and ends on the  first
          anniversary thereof, and all such subsequent 12 consecutive month
          periods.

1.68      "Year of  Vesting  Service"  means a 1-year  Period  of  Service,
          whether   or  not  such   Period   of   Service   was   completed
          consecutively;   provided,  however,  that  a  "Year  of  Vesting
          Service" shall not include:

          (a)  Any  portion  of  a  Participant's   Period  of  Service  or
               employment by an Excluded Entity prior to March 1, 1978;

          (b)  Prior to July 1, 1980, any portion of a Participant's Period
               of Service  with  respect to which the  Participant  did not
               make Basic Employee  Contributions  under the Prior Reliance
               Electric Plan;

          (c)  Any Year of Vesting  Service ignored under Section 6.1;

          and, further provided,  however, that a "Year of Vesting Service"
          shall include:

          (d)  Employment  by an  Excluded  Entity  on  March  1,  1978 and
               thereafter  of a person who,  on or after that date,  either
               ceases to be (i) an  Employee  of an  Employer  and  becomes
               employed  by an  Excluded  Entity,  or (ii)  employed  by an
               Excluded  Entity and  becomes an  Employee  of an  Employer,
               except  that if on or after  March 1,  1978 an  Employer  or
               Excluded  Entity is for the first time  included  within the
               definition  of  "Employer"  or "Group",  the  Administrative
               Committee shall  determine,  in a uniform  nondiscriminatory
               manner,  what portion, if any, of service prior to inclusion
               within  such   definition   shall  be  included  under  this
               paragraph (d).

The  use of the masculine  pronoun shall include the feminine and the
singular shall include the plural.

<PAGE>

                                 ARTICLE II

                       ELIGIBILITY AND PARTICIPATION

2.1       Eligibility Requirements
          ------------------------

          (a)  Each  individual who was considered a Participant  under the
               terms of the Plan as of June 30, 2002 shall be  considered a
               Participant  hereunder  as of July  1,  2002  provided  such
               individual satisfies the terms of Section 1.40 as of July 1,
               2002. Except as otherwise provided in an Appendix hereto, on
               and after July 1, 2002 each  Employee  shall be  eligible to
               participate  in the Plan as of the first day of any calendar
               month that follows the date he:

               (i)  Becomes an Eligible Employee; and

               (ii) Elects to participate in accordance with Section 2.2;

               provided,  however,  if  the  Employee  is  classified  as a
               temporary  employee  by  his  Employer  or  is  a  part-time
               employee who is  classified  by his Employer as other than a
               regular  part-time   employee,   such  Employee  shall  also
               complete 1 Year of  Eligibility  Service  while so  employed
               before becoming eligible to participate in the Plan.

               Each Employee who satisfies the requirements of this Section
               2.1(a) shall be notified by his Employer of his eligibility
               to participate.

          (b)  Except as specifically  provided for herein, a Participant's
               active  participation  in the  Plan  (and  the  right  of an
               Eligible  Employee to  participate  in the Plan) shall cease
               and  terminate if and when he incurs a Period of  Severance.
               However,  in the event such  Participant  (or such  Eligible
               Employee)  subsequently returns to employment as an Eligible
               Employee,  he shall again be eligible to  participate in the
               Plan as of his Reemployment  Commencement  Date, upon Notice
               filed with the Administrative Committee.

2.2       Commencement of Participation
          -----------------------------

          (a)  Elective   Participation.   Unless   an   earlier   date  of
               participation  is  applicable   under  Section  2.2(b),   an
               Eligible  Employee  may  become  a  Participant  as  of  any
               Enrollment   Date   following   his   satisfaction   of  the
               eligibility  requirements set forth in Section 2.1, provided
               he remains an Eligible Employee as of the Enrollment Date.

               Such an Employee may elect to become a  Participant  as of a
               given Enrollment Date by giving Notice to the Administrative
               Committee  within  30 days  (or  such  other  period  as the
               Administrative   Committee  may  prescribe)  prior  to  that
               Enrollment Date. The Eligible Employee, in giving Notice (i)
               may authorize his Employer to reduce his Compensation by the
               amount of his Basic Salary Reduction  Contributions pursuant
               to Section 3.1, and (ii) shall make an  investment  election
               from among  those  options  made  available  as  provided in
               Section 7.1. Any such payroll  authorization  or  investment
               election  shall  remain in effect  until  changed  by Notice
               given to the Administrative Committee in the manner provided
               under Sections 3.3 and 7.2, respectively.

               If  an  Eligible  Employee  fails  to  give  Notice  to  the
               Administrative   Committee   before  the   Enrollment   Date
               following his eligibility to participate pursuant to Section
               2.1,  he shall be  deemed to have  elected  to have no Basic
               Salary Reduction  Contributions made on his behalf and shall
               not be  entitled  to Company  Matching  Contributions.  Such
               Eligible  Employee may subsequently  elect to participate as
               provided in this Section  2.2(a) as of any later  Enrollment
               Date.

          (b)  Non-Elective  Participation.   An  Eligible  Employee  shall
               become a  Participant  (if not then  already  a  Participant
               under Section 2.2(a)) on the Enrollment Date coincident with
               or next following the date he:

               (i)  Becomes an Eligible Employee; and

               (ii) Completes 1 Year of Eligibility Service;

               provided  he  remains  an  Eligible   Employee  as  of  such
               Enrollment  Date.  An Eligible  Employee  described  in this
               Section  2.2(b)  may  give  Notice  on  which  he  makes  an
               investment  election from among those options made available
               as provided in Section  7.1.  Any such  investment  election
               shall remain in effect until  changed by Notice given to the
               Administrative   Committee  in  the  manner  provided  under
               Sections 3.3 and 7.2, respectively.

2.3       Beneficiary Designation
          -----------------------

          Each Participant shall designate a Beneficiary on the Appropriate
          Form provided by the  Administrative  Committee.  The  designated
          Beneficiary may be one or more individuals or an estate, trust or
          organization   (other  than  a  corporation);   however,  if  the
          Participant  is married at the time of his death,  his  surviving
          spouse shall  automatically be his sole  Beneficiary  unless such
          spouse had consented on an Appropriate Form to a designation of a
          different  Beneficiary (by name) or to any subsequent change in a
          Beneficiary (by name, unless the consent of such spouse expressly
          permits  designations by the Participant  without any requirement
          for  further  consent  by  such  spouse,   provided  such  spouse
          acknowledges  his or her  right to limit  any such  consent  to a
          specific  Beneficiary  and  such  spouse  states  that  he or she
          voluntarily  elects to relinquish such right).  Such consent must
          be witnessed by a notary public or a plan representative and must
          contain  an  acknowledgment  by such  spouse of the effect of the
          designation.  If more than one individual or trust is named,  the
          Participant  shall indicate the shares and/or  precedence of each
          individual or trust so named.  Any  Beneficiary so designated may
          be changed by the  Participant at any time (subject to his or her
          current  spouse's  consent,  if applicable) by signing and filing
          the Appropriate Form with the Administrative Committee.

          In the event that no Beneficiary  had been  designated or that no
          designated  Beneficiary  survives the Participant,  the following
          Beneficiaries  (if then  living)  shall be  deemed  to have  been
          designated  in the following  priority (1) spouse,  (2) children,
          including adopted children, in equal shares, per stirpes, and (3)
          those who would take under the intestate laws of the jurisdiction
          in which the Participant was domiciled at the time of his death.

2.4       Changes in Status of Eligible Employee
          --------------------------------------

          (a)  If a  Participant  ceases to be  actively  employed  (due to
               layoff,  authorized  leave of  absence  or  otherwise),  but
               remains  an  Eligible  Employee  who has not yet  incurred a
               Severance from Service,  such Participant  shall continue to
               be treated as an active  Participant for all purposes of the
               Plan, except that:

               (i)  No  Basic  Salary  Reductions  Contributions,   Company
                    Matching  Contributions  and/or  Safe  Harbor  Matching
                    Contributions  may be made  during  such  period(s)  of
                    absence unless such Participant  receives  Compensation
                    for such  period(s)  and has made the salary  reduction
                    election  identified  in Section  2.2(a)  applicable to
                    such Compensation;

               (ii) No Discretionary Contributions,  Savings Contributions,
                    Special Contributions or Transition Contributions shall
                    be made to the  Account  maintained  on  behalf of such
                    Participant  unless he is absent from active employment
                    due to an  authorized  leave of  absence  and  receives
                    Eligible Earnings for such period(s) of absence; and

               (iii)Participant  loans shall be  restricted  as provided in
                    Article XV.

          (b)  If a  Participant  is  transferred  from  the  status  of an
               Eligible  Employee to a class of employment not eligible for
               participation in this Plan but continues to be employed by a
               member of the Group, no further  contributions shall be made
               on behalf of the Participant  under the Plan with respect of
               periods on and after the transfer  unless the Participant is
               subsequently  transferred  back to employment as an Eligible
               Employee.  The period of a Participant's  employment in such
               transferred  position  shall  continue to be recognized  for
               purposes of  determining  Years of  Eligibility  Service and
               Years of Vesting Service.

          (c)  If an Employee is transferred from a class of employment not
               eligible for  participation in this Plan to employment as an
               Eligible    Employee,    such   Employee    shall   commence
               participation  in the Plan as provided  in Sections  2.1 and
               2.2  (recognizing all periods of employment with a member of
               the Group for purposes of  determining  Years of Eligibility
               Service and Years of Vesting Service.)

<PAGE>

                                ARTICLE III

                    BASIC SALARY REDUCTION CONTRIBUTIONS

3.1       Basic Salary Reduction Contributions
          ------------------------------------

          Each  Participant  who is an Eligible  Employee  and is receiving
          Compensation  may elect to have his  Employer  make Basic  Salary
          Reduction  Contributions to the Plan on his behalf to be credited
          to his Basic Salary Reduction Contribution Account, in which case
          the cash  Compensation  otherwise  payable by the Employer to the
          Participant  shall be  reduced  by an  amount  equal to the Basic
          Salary  Reduction  Contributions  so made.  The permitted rate of
          Basic  Salary  Reduction  Contributions  shall  be  uniform  with
          respect  to all  Participants  and shall be from 1 percent  to 16
          percent of Compensation  for periods prior to January 1, 2003 and
          from 1 percent to 50 percent of  Compensation  for periods on and
          after January 1, 2003.

          The Administrative  Committee may from time to time specify other
          percentages.  Except as may otherwise be permitted  under Section
          3.7, in no event shall the  aggregate of Basic  Salary  Reduction
          Contributions (and such other "elective deferrals", as defined in
          Section  402(g)(3)  of the Code and the  regulations  thereunder)
          made on a Participant's  behalf with respect to any calendar year
          exceed the dollar limit as in effect with respect to such year in
          accordance with Sections  402(g)(1) and 402(g)(5) of the Code and
          Treasury Regulation Section 1.402(g)-1(d)(1).

3.2       Voluntary Suspension
          --------------------

          A Participant may voluntarily  suspend any Basic Salary Reduction
          Contributions  made  pursuant to this Article III effective as of
          the  first  day of any  month  provided  Notice  is  given to the
          Administrative  Committee  at such  time  and in such  manner  as
          determined by the  Administrative  Committee and  communicated to
          Participants.

          A Participant who has suspended contributions may elect to resume
          Basic  Salary  Reduction  Contributions  made  pursuant  to  this
          Article III as of the first day of any month by giving  Notice to
          the  Administrative  Committee at such time and in such manner as
          determined by the  Administrative  Committee and  communicated to
          Participants.   A  suspension  of  any  Basic  Salary   Reduction
          Contributions  made pursuant to this Article III also may be made
          at such times as are  necessary to comply with the  provisions of
          Article VIII.

3.3       Change in Contribution Rates
          ----------------------------

          A  Participant  may elect to increase  or decrease  the amount of
          Basic Salary Reduction  Contributions made on his behalf,  within
          the limits  specified in Section  3.1,  effective as of the first
          day of any month provided  Notice is given to the  Administrative
          Committee  at such time and in such manner as  determined  by the
          Administrative Committee and communicated to Participants.  Basic
          Salary  Reduction  Contribution  rate changes also may be made at
          such times as are  necessary  to comply  with the  provisions  of
          Section 3.4, Section 4.7, Section 4.8 or Section 8.2.

3.4       Limitations on Basic Salary Reduction Contributions (Plan Years
          ---------------------------------------------------
          beginning before January 1, 2003)

          (a)  Notwithstanding  the  foregoing  provisions  of this Article
               III,  and  effective  solely  with  respect  to  Plan  Years
               beginning   before  January  1,  2003,  the   Administrative
               Committee  shall limit the amount of Basic Salary  Reduction
               Contributions  made  on  behalf  of each  Employee  who is a
               Highly Compensated Employee for each Plan Year to the extent
               necessary  to ensure that either of the  following  tests is
               satisfied:

               (i)  The  "Actual   Deferral   Percentage"  (as  hereinafter
                    defined) for the group of Eligible  Employees,  who are
                    Highly  Compensated  Employees  is not  more  than  the
                    Actual  Deferral   Percentage  of  all  other  Eligible
                    Employees multiplied by 1.25; or

               (ii) The excess of the Actual  Deferral  Percentage  for the
                    group of Eligible  Employees who are Highly Compensated
                    Employees over that of all other Eligible  Employees is
                    not  more  than 2  percentage  points,  and the  Actual
                    Deferral Percentage for the group of Eligible Employees
                    who are Highly  Compensated  Employees is not more than
                    the Actual  Deferral  Percentage of all other  Eligible
                    Employees multiplied by 2.0.

          (b)  For purposes of this Section 3.4, the term "Actual  Deferral
               Percentage"  shall mean, for any specified group of Eligible
               Employees,   the   average  of  such   Employees'   Deferral
               Percentages (as defined below).

          (c)  For  purposes  of  this  Section  3.4,  the  term  "Deferral
               Percentage" shall mean, for any Eligible Employee, the ratio
               of:

               (i)  The   aggregate   of   the   Basic   Salary   Reduction
                    Contributions  which,  in accordance with the rules set
                    forth in Treasury Regulation Section  1.401(k)-1(b)(4),
                    are taken into  account with respect to such Plan Year;
                    to

               (ii) Such Employee's IRC 414(s)  compensation  for such Plan
                    Year. For this purpose,  IRC 414(s)  compensation shall
                    mean  W-2   compensation   as   described  in  Treasury
                    Regulation      Sections      1.414(s)-1(c)(2)      and
                    1.415-2(d)(11),  and shall  also  include  all  amounts
                    currently not included in the  Employee's  gross income
                    by reason of Section 125 or  402(e)(3)  of the Code or,
                    effective  January 1, 2001,  132(f)(4) of the Code.  In
                    the case of an Employee who begins,  resumes, or ceases
                    to be eligible to elect to have Basic Salary  Reduction
                    Contributions  made on his  behalf  during a Plan Year,
                    the amount of IRC 414(s)  compensation  included in the
                    Actual  Deferral  Percentage  test is the amount of IRC
                    414(s) compensation received by the Employee during the
                    entire Plan Year.

               "Deferral Percentage" for the Plan Year beginning on January
               1, 2002 shall not include catch-up contributions deferred by
               a Participant in accordance with Section 3.7 of the Plan and
               Section 414(v) of the Code.

          (d)  The Deferral  Percentage for any Participant who is a Highly
               Compensated  Employee  for the Plan Year and who is eligible
               to have before-tax  contributions made on his behalf under 2
               or more arrangements described in Section 40l(k) of the Code
               that are maintained by the Company, or other Employer, shall
               be determined as if such before-tax  contributions were made
               under a single  arrangement.  Notwithstanding the foregoing,
               certain  plans shall be treated as  separate if  mandatorily
               disaggregated under Treasury Regulations.

               If the Plan is  permissibly  aggregated or is required to be
               aggregated  with other plans  having the same Plan Year,  as
               provided under Treasury Regulation Section  1.401(k)-1(b)(3)
               for  purposes  of  determining  whether  or not  such  plans
               satisfy Sections 401(k),  401(a)(4), and 410(b) of the Code,
               then the  provisions of this Section 3.4 shall be applied by
               determining the Actual Deferral  Percentage of Employees who
               are eligible to participate in the Plan as if all such plans
               were a single plan.

          (e)  In the event the Administrative  Committee  determines prior
               to any  payroll  period  that the  amount  of  Basic  Salary
               Reduction  Contributions  elected to be made  thereafter  is
               likely to cause the  limitation  prescribed  in this Section
               3.4 to be exceeded,  the  Administrative  Committee,  in its
               discretion,  may reduce the amount of Basic Salary Reduction
               Contributions  allowed to be made on behalf of  Participants
               who are  Highly  Compensated  Employees  (and/or  such other
               Participants as the Administrative  Committee may prescribe)
               to  a  rate  determined  by  the  Administrative   Committee
               (including  a  rate  of  0  percent  if  the  Administrative
               Committee so determines). Except as is hereinafter provided,
               the  Participants  to whom such  reduction is applicable and
               the amount of such reduction shall be determined pursuant to
               such   uniform   and   nondiscriminatory    rules   as   the
               Administrative Committee shall prescribe.

          (f)  Notwithstanding the foregoing, with respect to any Plan Year
               beginning  before  January  1,  2003 in which  Basic  Salary
               Reduction  Contributions  made on behalf of Participants who
               are Highly Compensated Employees exceed the applicable limit
               set forth in Section 3.4(a),  the  Administrative  Committee
               may  reduce,  to the  extent  necessary  to comply  with the
               limitations  prescribed  in this  Section 3.4, the amount of
               Basic Salary Reduction  Contributions  made on behalf of the
               Participants  who  are  Highly  Compensated   Employees  (by
               reducing  such  contributions  in the order of Basic  Salary
               Reduction  Contribution amounts beginning with the largest),
               and   distribute   such  excess   Basic   Salary   Reduction
               Contributions (along with income attributable to such excess
               Basic  Salary   Reduction   Contributions,   determined   in
               accordance with Section 3.4(g)) to the affected Participants
               who are Highly Compensated  Employees as soon as practicable
               after the end of such Plan Year,  and in all events prior to
               the end of the next following Plan Year.

          (g)  Income on a  Participant's  excess  Basic  Salary  Reduction
               Contributions  for the Plan Year in which such excess occurs
               and for any  period  thereafter  prior  to the  distribution
               thereof shall be  determined  in the manner  provided for in
               Article V.

          (h)  Notwithstanding any distributions pursuant to the provisions
               of  this   Section  3.4,   excess  Basic  Salary   Reduction
               Contributions  shall be  treated  as  Annual  Additions  for
               purposes of Section 4.7.

          (i)  Distributions  pursuant  to this  Section  3.4 shall be made
               proportionately  from the  Investment  Funds with respect to
               the   Participant's   Account   or   Accounts   from   which
               distribution is made.

          (j)  In the event  that an  Employer  elects to make a  Qualified
               Contribution  on  behalf of any or all  Participants  in the
               Plan, such Qualified Contribution,  to the extent specified,
               shall be treated as a Basic  Salary  Reduction  Contribution
               solely for purposes of this Section 3.4.

          (k)  The  Administrative  Committee may, in its sole  discretion,
               elect to use any  combination  of the methods  described  in
               this  Section  3.4  to  satisfy  the  limitations  contained
               herein; provided,  however, that such combination of methods
               shall be applied in a uniform and nondiscriminatory manner.

          (l)  The Administrative Committee also shall take all appropriate
               steps to meet the  aggregate  limitation  test  contained in
               Section 4.9.

3.5       Distributions of Excess Deferrals
          ---------------------------------

          (a)  Notwithstanding  any other  provision  of the  Plan,  Excess
               Deferrals  (as  hereinafter  defined),  plus any  income and
               minus any loss allocable  thereto for both the calendar year
               and the "gap period"  between the end of the  calendar  year
               and the date the  distribution  is made  (determined  in the
               same  manner as the  method  set forth in  Section  3.4(g)),
               shall  be  distributed  to   Participants   who  claim  such
               allocable Excess  Deferrals,  such  distribution to occur no
               later  than  April 15 of the  calendar  year  following  the
               calendar year in which the excess occurred.

          (b)  For purposes of this Section 3.5,  "Excess  Deferrals" shall
               mean the amount of a  Participant's  Basic Salary  Reduction
               Contributions  (and other  "elective  deferrals"  within the
               meaning  of  Section  402(g)(3)  of the Code) for a calendar
               year that the Participant allocates to this Plan pursuant to
               the claim  procedure  set forth in  Section  3.5(c)  hereof.
               Excess   Deferrals   shall  not  include  any  Basic  Salary
               Reduction  Contributions  (or  other  "elective  deferrals")
               that, for Plan Years beginning on and after January 1, 2002,
               are treated as catch-up  contributions  in  accordance  with
               Section 3.7 of the Plan and Section 414(v) of the Code.

          (c)  A  Participant  may  make a claim  for the  distribution  of
               Excess  Deferrals  pursuant to the terms and  conditions  of
               this Section 3.5(c).  Such  Participant's  claim shall be in
               writing; shall be submitted to the Administrative  Committee
               no later than March 1 of the  calendar  year  following  the
               calendar  year of the Excess  Deferrals;  shall  specify the
               amount  of  the  Participant's   Excess  Deferrals  for  the
               preceding calendar year; and shall be accompanied by (i) the
               Participant's written statement that if such amounts are not
               distributed,  such  Excess  Deferrals,  when  added to other
               "elective deferrals" within the meaning of Section 402(g)(3)
               of the Code,  exceed the limit imposed on the Participant in
               accordance  with the  applicable  provisions of the Code for
               the year in  which  the  deferral  occurred,  and (ii)  such
               documentation as the Administrative  Committee,  in its sole
               discretion,  shall require to substantiate the Participant's
               written statement.  The  Administrative  Committee may, on a
               uniform and nondiscriminatory basis,  automatically deem the
               Participant  to have  made a  claim  for a  distribution  of
               Excess  Deferrals  if such  excess  arises  by  taking  into
               account only those elective  deferrals made to this Plan and
               any other plans of an Employer.

          (d)  The  Excess  Deferrals  distributed  to a  Participant  with
               respect to a calendar year shall be adjusted for income and,
               if there is a loss allocable to the Excess Deferrals,  shall
               in no event  exceed  the lesser of the  Participant's  Basic
               Salary Reduction Contributions Account under the Plan or the
               Participant's  Basic Salary Reduction  Contributions for the
               year.

          (e)  Excess  Deferrals shall be treated as annual additions under
               the Plan,  unless such amounts are distributed no later than
               the   first   April   15th   following   the  close  of  the
               Participant's taxable year in which such excess occurred.

3.6       Coordination of Excess Amounts under Sections 401(k) and 402(g)
          ---------------------------------------------------------------
          of the Code (Plan Years beginning before January 1, 2003)
          -----------

          (a)  The amount of excess Basic Salary Reduction Contributions to
               be   distributed   under  Section  3.4  with  respect  to  a
               Participant for the Plan Year shall be reduced by any Excess
               Deferrals  previously  distributed to such Participant under
               Section 3.5 for the  Participant's  taxable year ending with
               or within such Plan Year.

          (b)  The amount of Excess Deferrals that may be distributed under
               Section 3.5 with respect to a Participant for a taxable year
               shall  be  reduced  by any  excess  Basic  Salary  Reduction
               Contributions previously distributed to such Participant for
               the Plan Year beginning with or within such taxable year.

3.7       Catch-up Contributions
          ----------------------

          (a)  Effective  for any given  Plan Year  beginning  on and after
               January 1, 2002, a Participant  who is in active  employment
               and  is  prevented  from  making   additional  Basic  Salary
               Reduction  Contributions  to the Plan for the Plan Year as a
               result of the  limitations  described in Sections 3.4 and/or
               3.5 of the Plan, or any other applicable limitation, and who
               has or will attain age 50 by the last day of such Plan Year,
               may make an additional contribution to the Plan, hereinafter
               referred to as a "catch-up contribution."

          (b)  The amount of a catch-up  contribution made by a Participant
               shall not exceed the dollar  limitation set forth in Section
               414(v)(2)(B)  of the Code (as  adjusted in  accordance  with
               Section  414(v)(2)(C) of the Code) or the amounts  described
               in Section 414(v)(2)(A) of the Code.

          (c)  Catch-up contributions shall not be subject to the otherwise
               applicable  limitations  described in Sections 401(a)(30) or
               415 of the Code, or any other applicable  limitation for the
               relevant  Plan Year,  limitation  year, or calendar year for
               which such contribution is credited.

          (d)  Catch-up  contributions shall be applicable on an equivalent
               basis to all  Participants  in the Plan who are  eligible to
               make catch-up contributions.

3.8       Rollover Contributions
          ----------------------

          (a)  Under  such  rules  and  procedures  as  the  Administrative
               Committee   may   establish,   any  Eligible   Employee  may
               contribute  to the  Plan in  cash  (or  any  other  property
               acceptable to the Administrative  Committee and the Trustee)
               all  or a  portion  of  the  amount  received  from  a  plan
               described in Section 401(a), 403(a), 408(a) or 408(b) of the
               Code provided such amount qualifies as an Eligible  Rollover
               Distribution  (within  the meaning of Section  9.11,  except
               that after-tax employee contributions will not be accepted).
               Such amount must be in the form of a direct rollover (within
               the meaning of Section 9.11).  Before accepting any rollover
               contribution from an Eligible  Employee,  the Administrative
               Committee  shall  determine  to its  satisfaction  that such
               contribution is an Eligible Rollover Distribution. In making
               such determination, the Administrative Committee may require
               the  Eligible  Employee  to  provide  such  evidence  as may
               reasonably be necessary to establish  that the amounts to be
               rolled-over meet the requirements of this Section.

          (b)  Any rollover contribution made pursuant to the provisions of
               this Section 3.8 shall be deposited into a separate  account
               for such Eligible Employee (his "Rollover Account") to which
               shall  be  credited  the  investment   earnings  and  losses
               attributable  thereto.  An Eligible  Employee  shall be 100%
               vested in his Rollover Account at all times. Notwithstanding
               any provision of Section 7.2 of the Plan to the contrary:

               (i)  An Eligible Employee electing a rollover shall specify,
                    at or prior to the time the  rollover  contribution  is
                    made, the manner in which the amounts rolled over shall
                    be invested in each  Investment  Fund offered under the
                    Plan;  such  investment  election shall specify,  in 5%
                    increments  from  0% to  100%,  the  percentage  of the
                    Eligible   Employee's   rollover   contribution  to  be
                    invested in each Investment Fund;

               (ii) Prior to the date on which  he  becomes  a  Participant
                    hereunder, an Eligible Employee who has made a rollover
                    contribution  shall have the  opportunity to change the
                    manner in which the Rollover Account is invested;  such
                    opportunity  shall be equivalent to that available to a
                    Participant with respect to the Accounts  maintained on
                    such Participant's behalf.

          (c)  An Eligible Employee who makes a rollover contribution,  but
               who is not otherwise  eligible for  membership in accordance
               with  Section  2.1  or any  appendix  hereto,  shall  not be
               entitled to make  contributions  under Article III, or share
               any  Employer  contribution  allocated  in  accordance  with
               Article IV or Article XVI.

          (d)  The Administrative  Committee may promulgate  specific rules
               and regulations governing all aspects of this Section.

<PAGE>

                                 ARTICLE IV

                           EMPLOYER CONTRIBUTIONS

4.1       Company Matching Contributions
          ------------------------------

          Except as otherwise  provided in an appendix  hereto,  as of each
          pay period  beginning before January 1, 2003, each Employer shall
          make Company Matching Contributions to the Plan on behalf of each
          Participant who is an Eligible  Employee of such Employer,  in an
          amount which, when added to available forfeitures, if any, equals
          50 percent of the Basic Salary Reduction  Contributions made with
          respect to the  Participant  during such pay period  which do not
          exceed six percent of the Participant's  Compensation during such
          pay period. Company Matching Contributions shall be made in cash.

4.2       Safe Harbor Matching Contributions
          ----------------------------------

          (a)  Effective with respect to each given pay period beginning on
               and after January 1, 2003, each Employer shall contribute an
               amount to the Trust Fund  equal to the sum of those  amounts
               individually determined with respect to each Participant who
               is an Eligible Employee of such Employer, as follows:

               (i)  100 percent of the Basic Salary Reduction Contributions
                    made with  respect to the  Participant  during such pay
                    period   which  do  not   exceed  3   percent   of  the
                    Participant's Compensation during such pay period; and

               (ii) 50 percent of the Basic Salary Reduction  Contributions
                    made with  respect to the  Participant  during such pay
                    period  which  exceed  3  percent  but do not  exceed 6
                    percent of the Participant's  Compensation  during such
                    pay period.

               Such  contributions  shall  be  designated  as  Safe  Harbor
               Matching   Contributions   and  shall  be  100%  vested  and
               nonforfeitable  when  made.  The  Employer  shall  make Safe
               Harbor  Matching   Contributions   as  soon  as  practicable
               following the end of the pay period to which they relate and
               such  contributions  shall be credited to Participants' Safe
               Harbor  Matching  Contribution  Accounts as of the date they
               are  received by the Trustee or  otherwise  deposited in the
               Trust Fund. Notwithstanding the foregoing provisions of this
               Section  4.2(a),  and effective for Plan Years  beginning on
               and  after  January  1,  2003,  the  Safe  Harbor   Matching
               Contribution  made on  behalf of each  Participant  shall be
               adjusted  as of the last day of a Plan Year to  ensure  that
               the actual Safe Harbor Matching Contribution made equals the
               appropriate  percentages  set forth in this  Section 4.2, as
               determined on a Plan Year basis.

          (b)  Effective  with  respect  to each  Plan  Year in  which  the
               provisions   of   Section   4.2(a)   are   applicable,   the
               Administrative  Committee  shall  provide  Notice during the
               "Safe Harbor Notice Period" (as hereinafter defined) to each
               Eligible Employee who is eligible to participate in the Plan
               during  such Plan  Year.  Such  Notice  shall  describe  the
               following:

               (i)  The formula used to determine the Safe Harbor  Matching
                    Contribution  to be made on behalf of such Employee for
                    such Plan Year;

               (ii) Other  contributions  provided or  permitted  under the
                    Plan;

               (iii)The   conditions   under   which   the    contributions
                    identified under (i) and (ii) above will be made;

               (iv) The  type  and  amount  of  Compensation  that  may  be
                    deferred  under  the  Plan as  Basic  Salary  Reduction
                    Contributions;

               (v)  The  procedures  for making or  changing an election to
                    make Basic Salary Reduction Contributions; and

               (vi) The  withdrawal  and vesting  provisions  applicable to
                    contributions under the Plan.

               For purposes  hereof,  the "Safe Harbor Notice Period" shall
               mean a period  beginning 90 days before the first day of the
               applicable Plan Year and ending 30 days before the first day
               of the applicable Plan Year; provided, however, with respect
               to an Eligible  Employee who becomes eligible to participate
               in the Plan during a given Plan Year in which the provisions
               of Section  4.2(a) are  applicable,  the "Safe Harbor Notice
               Period" shall begin 90 days before the day such Employee may
               first  participate in the Plan and shall end on the day such
               Employee may first participate in the Plan.

          (c)  For Plan  Years  beginning  on and after  January 1, 2003 in
               which  the Safe  Harbor  Matching  Contribution  of  Section
               4.2(a) is made and the Notice  requirement of Section 4.2(b)
               is  satisfied,  the  Employer  elects  to treat  the Plan as
               automatically  satisfying the nondiscrimination in amount of
               employer  contribution  requirements of Section 401(a)(4) of
               the Code.  Notwithstanding any provision of this Section 4.2
               to the contrary, the Employer may suspend future Safe Harbor
               Matching   Contributions  at  any  time  provided  that  the
               procedures for  implementing  such suspension are consistent
               with guidance  promulgated by the Internal  Revenue  Service
               and, provided further,  that for any Plan Year in which such
               suspension  occurs,  the provisions of Section 3.4, 3.6, 4.8
               and 4.9 shall  again  become  applicable  to the extent then
               required by law.

4.3       Savings Contributions
          ---------------------

          (a)  Except as otherwise  provided in an appendix  hereto,  as of
               the end of each  given  Plan  Year  beginning  on and  after
               January 1, 2002, each Employer shall contribute an amount to
               the Trust Fund on behalf of each  Participant  who satisfies
               the criteria in (i), (ii) and (iii) below:

               (i)  The  Participant  is  an  Eligible   Employee  of  such
                    Employer for all or part of such Plan Year; and

               (ii) the Participant is either:

                    (A)  In the active employment of an Employer or another
                         member of the Group as of December 31 of such Plan
                         Year; or

                    (B)  Not in the active  employment  of an  Employer  or
                         another  member of the Group as of  December 31 of
                         such Plan Year due to:

                         (1)  The Employee's Early Retirement or retirement
                              after his Normal Retirement Age;

                         (2)  The Employee's Disability;

                         (3)  The  Employee's  absence  on  account  of  an
                              authorized  leave of absence  with respect to
                              which Eligible Earnings are paid; or

                         (4)  The Employee's death; and

               (iii)The  Participant  has  completed 1 Year of  Eligibility
                    Service  before  or  during  such  Plan  Year,  if  the
                    Participant's  Employment  Commencement  Date  is on or
                    after July 1, 2002.

               The  total  Employer  contributions  made  pursuant  to this
               Section 4.3 with  respect to any given Plan Year shall equal
               the amounts individually determined for such Plan Year under
               subsection (b) below. Such contribution  shall be designated
               as a Savings Contribution, shall be allocated to the Savings
               Contribution  Account of an eligible  Participant as soon as
               practicable  following the date it is made, and shall become
               100% vested and nonforfeitable as of the earlier of the last
               day of the Plan Year to which the contribution  applies,  if
               the  Participant is in the active  employment of an Employer
               on such  date or,  if  applicable  to the  Participant,  the
               relevant date under Section 4.3(a)(ii)(B) above.

          (b)  The  Savings  Contribution  for any given  Plan Year that is
               allocated  on  behalf of a  Participant  who  satisfies  the
               criteria set forth in subsection (a) above shall be equal to
               1 1/2 percent of the  Participant's  Eligible  Earnings  for
               such Plan Year; provided,  however,  that with respect to an
               eligible  Participant whose Employment  Commencement Date is
               on or after July 1, 2002, the Savings Contribution allocated
               on behalf of the  Participant for the Plan Year in which the
               Participant  first  completes 1 Year of Eligibility  Service
               shall  be  limited  to 1 1/2  percent  of the  Participant's
               Eligible  Earnings  during that number of complete  calendar
               months  within  such  Plan  Year  that  follow  the date the
               Participant  completes 1 Year of  Eligibility  Service,  and
               provided further, that the Savings Contribution allocated on
               behalf  of  an  eligible   Participant  for  the  Plan  Year
               beginning  on January 1, 2002 shall not exceed 1 1/2 percent
               of that portion of the  Participant's  Eligible Earnings for
               such Plan Year that are paid on and after July 1, 2002.

          (c)  Notwithstanding any provision of subsection (a) above to the
               contrary, an Employer may elect to make and allocate some or
               all Savings Contributions for a given Plan Year at a time or
               times within such Plan Year, that is earlier than the end of
               the Plan Year,  as set forth in subsection  (a) above.  This
               change in timing may include making such  contributions  and
               allocations   on  a  monthly   or  other   periodic   basis,
               recognizing for purposes of the allocation,  a Participant's
               Eligible   Earnings   for  such   month  or  other   period.
               Notwithstanding  any  provision  of this  Section 4.3 to the
               contrary,  in the event an Employer  makes an election under
               this subsection and as a result, Savings Contributions for a
               given Plan Year are  allocated  on behalf of an Employee who
               is not eligible for an allocation  of Savings  Contributions
               under  subsection (a) above,  the Savings  Contributions  so
               allocated, as increased by investment earnings and decreased
               by investment losses,  shall be treated as forfeitures under
               the Plan.

4.4       Special Contributions
          ---------------------

          (a)  Except as  otherwise  provided in this  Section 4.4 or in an
               appendix  hereto,  as of the end of  each  given  Plan  Year
               beginning on and after January 1, 2002,  each Employer shall
               contribute  an amount  to the  Trust  Fund on behalf of each
               Participant  who is an Eligible  Employee  of such  Employer
               during such Plan Year, who is identified on Exhibit I hereto
               and who is either:

               (i)  In the  active  employment  of an  Employer  or another
                    member  of the  Group as of the  last day of such  Plan
                    Year; or

               (ii) Not in the active  employment of an Employer or another
                    member  of the  Group as of the  last day of such  Plan
                    Year due to:

                    (A)  The  Employee's  Early  Retirement  or  retirement
                         after his Normal Retirement Age;

                    (B)  The Employee's Disability;

                    (C)  The Employee's absence on account of an authorized
                         leave of absence  with  respect to which  Eligible
                         Earnings are paid; or

                    (D)  The Employee's death.

               The  total  Employer  contributions  made  pursuant  to this
               Section 4.4 with  respect to any given Plan Year shall equal
               the sum of those amounts  individually  determined  for such
               Plan Year  under  subsection  (b) below.  Such  contribution
               shall be  designated  as a  Special  Contribution,  shall be
               allocated to the Special Contribution Account of an eligible
               Participant as soon as practicable  following the date it is
               made and shall become 100% vested and  nonforfeitable  as of
               the  earlier  of the last day of the Plan  Year to which the
               contribution  applies,  if the  Participant is in the active
               employment  of an Employer on such date or, if applicable to
               the Participant,  the relevant date under Section 4.4(a)(ii)
               above.

          (b)  Excepted as provided in  subsection  (c) below,  the Special
               Contribution  for any given Plan Year that is  allocated  on
               behalf of a Participant who satisfies the criteria set forth
               in subsection (a) above shall be equal to the product of (i)
               and (ii) below:

               (i)  The monthly amount  identified on Exhibit I hereto with
                    respect to the Participant; and

               (ii) The number of complete  months during such Plan Year in
                    which the Participant  was in the active  employment of
                    an Employer as an Eligible Employee  including,  solely
                    for this purpose, any number of months during which the
                    Participant  was  not in the  active  employment  of an
                    Employer  as an  Eligible  Employee  on  account  of an
                    authorized  leave  of  absence  with  respect  to which
                    Eligible Earnings are paid.

               In no event shall Special Contributions be made on behalf of
               a Participant with respect to any period other than a period
               in which the Participant (1) is in the active  employment of
               an Employer  as an  Eligible  Employee or (2) is not in such
               active  employment  on  account  of an  authorized  leave of
               absence with respect to which Eligible Earnings are paid.

          (c)  Notwithstanding  any  provision  of this  Section 4.4 to the
               contrary,   Special   Contributions   with  respect  to  any
               Participant  identified  on  Exhibit I hereto  shall be made
               during a period  not in  excess  of the  number  of  Special
               Contribution   Years   identified   with   respect   to  the
               Participant on Exhibit I, such Special  Contributions  shall
               be  conditioned  on the  Participant's  satisfaction  of the
               criteria set forth in  subsection  (a) above and the Special
               Contribution  allocated on behalf of an eligible Participant
               for the Plan Year  beginning  on  January  1, 2002 shall not
               exceed the product of (i) the monthly  amount  identified on
               Exhibit I hereto with  respect to the  Participant  and (ii)
               six.

          (d)  Notwithstanding any provision of subsection (a) above to the
               contrary, an Employer may elect to make and allocate some or
               all Special Contributions for a given Plan Year at a time or
               times,  within such Plan Year,  that is earlier than the end
               of the Plan Year, as set forth in subsection (a) above. This
               change in timing may include making such  contributions  and
               allocations   on  a  monthly   or  other   periodic   basis.
               Notwithstanding  any  provision  of this  Section 4.4 to the
               contrary,  in the event an Employer  makes an election under
               this subsection and, as a result,  Special Contributions for
               a given Plan Year are allocated on behalf of an Employee who
               is not eligible for an allocation  of Special  Contributions
               under  subsection (a) above,  the Special  Contributions  so
               allocated, as increased by investment earnings and decreased
               by investment losses,  shall be treated as forfeitures under
               the Plan.

4.5       Transition Contributions
          ------------------------

          (a)  Except as otherwise  provided in an appendix  hereto,  as of
               the end of the Plan Year beginning on January 1, 2002,  each
               Employer  shall  contribute  an amount to the Trust  Fund on
               behalf of each  Participant  who is an Eligible  Employee of
               such  Employer as of June 30, 2002,  who remains an Eligible
               Employee during all or part of the period  beginning on July
               1, 2002 and ending December 31, 2002 and who is either:

               (i)  In the  active  employment  of an  Employer  or another
                    member of the Group as of December 31, 2002; or

               (ii) Not in the active  employment of an Employer or another
                    member of the Group as of December 31, 2002 due to:

                    (A)  The  Employee's  Early  Retirement  or  retirement
                         after his Normal Retirement Age;

                    (B)  The Employee's Disability;

                    (C)  The Employee's absence on account of an authorized
                         leave of absence  with  respect to which  Eligible
                         Earnings be paid; or

                    (D)  The Employee's death.

               The  total  Employer  contributions  made  pursuant  to this
               Section   4.5  shall   equal   the  sum  of  those   amounts
               individually  determined  under  subsection (b) below.  Such
               contribution   shall   be   designated   as   a   Transition
               Contribution,   shall  be   allocated   to  the   Transition
               Contribution  Account of an eligible  Participant as soon as
               practicable  following the date it is made, and shall become
               100%  vested  and  nonforfeitable,  as  of  the  earlier  of
               December  31,  2002,  if the  Participant  is in the  active
               employment  of an Employer on such date or, if applicable to
               the Participant,  the relevant date under Section 4.5(a)(ii)
               above.

          (b)  The  Transition   Contribution  allocated  on  behalf  of  a
               Participant   who   satisfies  the  criteria  set  forth  in
               subsection (a) above shall be equal to 1 1/2 percent of that
               portion of the Participant's Eligible Earnings that are paid
               on and after July 1, 2002 and before January 1, 2003.

          (c)  Notwithstanding any provision of subsection (a) above to the
               contrary, an Employer may elect to make and allocate some or
               all Transition  Contributions  at a time or times within the
               2002 Plan  Year,  that is  earlier  than the end of the Plan
               Year, as set forth in subsection  (a) above.  This change in
               timing may include making such contributions and allocations
               on a  monthly  or  other  periodic  basis,  recognizing  for
               purposes  of  the  allocation,   a  Participant's   Eligible
               Earnings for such month or other period. Notwithstanding any
               provision of this Section 4.5 to the contrary,  in the event
               an Employer makes an election under this subsection and as a
               result,  Transition  Contributions for a given Plan Year are
               allocated  on behalf of an Employee  who is not eligible for
               an allocation of Transition  Contributions  under subsection
               (a) above,  the Transition  Contributions  so allocated,  as
               increased by investment earnings and decreased by investment
               losses, shall be treated as forfeitures under the Plan.

4.6       Discretionary Contributions
          ---------------------------

          (a)  An Employer may, in its sole discretion,  make an additional
               contribution  to the Trust  Fund for any given  Plan Year in
               such amount as the Employer may determine.  Such  additional
               contribution   shall  be  designated   as  a   Discretionary
               Contribution  and,  except  as  otherwise   provided  in  an
               appendix  hereto,  shall be allocated  to the  Discretionary
               Contribution   Account   maintained   on   behalf   of  each
               Participant  who is an Eligible  Employee  of such  Employer
               during the given Plan Year and who otherwise satisfies,  for
               such  Plan  Year,  the  eligibility   requirements   for  an
               allocation of Savings  Contributions  under Section  4.3(a).
               Except as  otherwise  provided  in an appendix  hereto,  the
               allocation  of  a  Discretionary   Contribution   among  the
               Discretionary   Contribution   Accounts  of  such   eligible
               Participants  shall be in the ratio that each such  eligible
               Participant's  Eligible  Earnings  for the  given  Plan Year
               bears  to  the  aggregate  Eligible  Earnings  of  all  such
               eligible   Participants.   A   Participant's   Discretionary
               Contribution  Account shall become vested and nonforfeitable
               as provided in Section 6.1.

          (b)  Notwithstanding any provision of subsection (a) above to the
               contrary, an Employer may elect to make and allocate some or
               all  Discretionary  Contributions for a given Plan Year at a
               time or times  within such Plan Year,  that is earlier  than
               the end of the Plan  Year,  as set forth in  subsection  (a)
               above.  This  change  in  timing  may  include  making  such
               contributions and allocations on a monthly or other periodic
               basis,   recognizing  for  purposes  of  the  allocation,  a
               Participant's  Eligible  Earnings  for  such  month or other
               period. Notwithstanding any provision of this Section 4.6 to
               the  contrary,  in the event an  Employer  makes an election
               under  this  subsection  and  as  a  result,   Discretionary
               Contributions  for a given Plan Year are allocated on behalf
               of an Employee  who is not  eligible  for an  allocation  of
               Discretionary  Contributions under subsection (a) above, the
               Discretionary  Contributions  so allocated,  as increased by
               investment  earnings  and  decreased by  investment  losses,
               shall be treated as forfeitures under the Plan

4.7       Limitation on Annual Additions
          ------------------------------

          Notwithstanding  anything  herein  to the  contrary,  in no event
          shall the Annual Addition (as  hereinafter  defined) with respect
          to any Participant in any Plan Year beginning on or after January
          1, 2002 exceed the lesser of (i) 100 percent of the Participant's
          IRC 415  compensation  (as described in Section  415(c)(3) of the
          Code), or (ii) $40,000,  or such greater amount as is permissible
          under Section 415(c)(1)(A) of the Code, subject to any adjustment
          under Section 415(d) of the Code.

          For purposes of this Section 4.7, with respect to each Plan Year,
          the term "Annual  Addition" with respect to any Participant means
          the  sum of  that  portion  of the  following  amounts,  if  any,
          allocated on behalf of the Participant:

          (a)  Basic Salary Reduction Contributions made in accordance with
               Section 3.1;

          (b)  Company  Matching  Contributions  made  in  accordance  with
               Section 4.1;

          (c)  Safe Harbor Matching  Contributions  made in accordance with
               Section 4.2;

          (d)  Savings Contributions made in accordance with Section 4.3;

          (e)  Special Contributions made in accordance with Section 4.4;

          (f)  Transition  Contributions  made in  accordance  with Section
               4.5;

          (g)  Discretionary  Contributions made in accordance with Section
               4.6;

          (h)  Qualified  Contributions  made in  accordance  with  Section
               4.10;

          (i)  Other  Employer  contributions  that may be permitted  under
               this Plan, including any appendix hereto;

          (j)  Forfeitures; and

          (k)  Amounts described in Code Section 415(l)(1) and 419A(d)(2).

          If a Participant is also  participating in another  tax-qualified
          defined  contribution plan maintained by any member of the Group,
          the otherwise  applicable  limitation on Annual  Additions  under
          this Plan  shall be  reduced  by the  amount of annual  additions
          (within the meaning of Section  415(c)(2)  of the Code) under any
          such other defined contribution plan.

          If the  limitations  applicable to any  Participant in accordance
          with this Section 4.7 would be exceeded,  the contributions  made
          by or on behalf of a Participant  under the Plan shall be reduced
          in the following  order, but only to the extent necessary to meet
          the  limitations:   (i)  after-tax   contributions  made  to  any
          tax-qualified plan sponsored by a member of the Group, (ii) Basic
          Salary  Reduction  Contributions  to the  extent  not  matched by
          Company   Matching   Contributions   or  Safe   Harbor   Matching
          Contributions,  (iii) Basic Salary Reduction Contributions to the
          extent matched by Company  Matching  Contributions,  (iv) Special
          Contributions and (v) Savings,  Transition  and/or  Discretionary
          Contributions.

          In the event that,  notwithstanding  the foregoing  provisions of
          this  Section  4.7,  the  limitations   with  respect  to  Annual
          Additions  prescribed  hereunder are exceeded with respect to any
          Participant  and such excess arises as a consequence  of an error
          in estimating  Compensation or Eligible Earnings,  the allocation
          of forfeitures,  if any, or a reasonable error in determining the
          amount of Basic Salary Reduction Contributions:

               (i)  The after-tax  contribution  and Basic Salary Reduction
                    Contribution  portions of such excess shall be returned
                    to the Participant,  along with any income attributable
                    thereto; and

               (ii) All  other  contributions  shall be held in a  suspense
                    account   and   shall  be  used  to   reduce   Employer
                    contributions  for all  Participants  in the Plan Year,
                    and all succeeding years, as necessary.

4.8       Limitation on Company Matching Contributions (Plan Years beginning
          --------------------------------------------
          before January 1, 2003)

          (a)  Notwithstanding the foregoing  provisions of Article III and
               this  Article IV and  effective  solely with respect to Plan
               Years beginning  before January 1, 2003, the  Administrative
               Committee  shall  limit  the  amount  of  Company   Matching
               Contributions  made on  behalf  of each  Highly  Compensated
               Employee who is eligible to participate in the Plan for each
               Plan Year, to the extent  necessary to ensure that either of
               the following tests is satisfied:

               (i)  The "Actual  Contribution  Percentage"  (as hereinafter
                    defined)  for the group of Eligible  Employees  who are
                    Highly  Compensated  Employees,  is not  more  than the
                    Actual  Contribution  Percentage of all other  Eligible
                    Employees multiplied by 1.25; or

               (ii) The excess of the Actual  Contribution  Percentage  for
                    the  group  of  Eligible   Employees   who  are  Highly
                    Compensated Employees,  over that of all other Eligible
                    Employees is not more than 2 percentage points, and the
                    Actual   Contribution   Percentage  for  the  group  of
                    Eligible Employees who are Highly Compensated Employees
                    is not more than the Actual Contribution  Percentage of
                    all other Eligible Employees multiplied by 2.0.

          (b)  For   purposes  of  this   Section  4.8,  the  term  "Actual
               Contribution Percentage" shall mean, for any specified group
               of  Eligible  Employees,  the  average  of  such  Employees'
               Contribution Percentages (as defined below).

          (c)  For purposes of this  Section  4.8,  the term  "Contribution
               Percentage" shall mean for any Eligible Employee,  the ratio
               of:

               (i)  The Company Matching Contributions which, in accordance
                    with the rules set forth in Treasury Regulation Section
                    1.401(m)-1(b)(4),  are taken into  account with respect
                    to such Plan Year; to

               (ii) Such Employee's IRC 414(s)  compensation  for such Plan
                    Year. For this purpose,  IRC 414(s)  compensation shall
                    mean  W-2   compensation   as   described  in  Treasury
                    Regulation      Sections      1.414(s)-1(c)(2)      and
                    1.415-2(d)(11),  and shall  also  include  all  amounts
                    currently not included in the  Employee's  gross income
                    by reason of Sections 125 of 402(e)(3) of the Code,  or
                    effective  January 1, 2001,  132(f)(4) of the Code.  In
                    the case of an Employee who begins,  resumes, or ceases
                    to be eligible to have Company  Matching  Contributions
                    made on his behalf  during a Plan  Year,  the amount of
                    IRC  414(s)   compensation   included   in  the  Actual
                    Contribution  Percentage  test  is  the  amount  of IRC
                    414(s) compensation received by the Employee during the
                    entire Plan Year.

          (d)  The  Contribution  Percentage  for a  Participant  who  is a
               Highly  Compensated  Employee  for the Plan  Year and who is
               eligible to make after-tax contribution, or to have matching
               employer   contributions  (within  the  meaning  of  Section
               401(m)(4)(A) of the Code) made on his behalf under 2 or more
               plans  described  in  Section  401(a)  of the Code  that are
               maintained  by the  Company,  or other  member of the Group,
               shall  be  determined  as if the  total  of  such  after-tax
               contributions and matching employer  contributions were made
               under a single  arrangement.  Notwithstanding the foregoing,
               certain  plans shall be treated as  separate if  mandatorily
               disaggregated under Treasury Regulations.

               If the Plan is  permissibly  aggregated or is required to be
               aggregated  with other plans  having the same Plan Year,  as
               provided under Treasury Regulation Section  1.401(m)-1(b)(3)
               for  purposes  of  determining  whether  or not  such  plans
               satisfy Section 401(m),  401(a)(4),  and 410(b) of the Code,
               then the  provisions of this Section 4.8 shall be applied by
               determining the Actual Contribution  Percentage of Employees
               who are eligible to  participate  in the Plan as if all such
               plans were a single plan.

          (e)  In the event the Administrative  Committee  determines prior
               to any payroll  period  that the amount of Company  Matching
               Contributions  to be made  thereafter is likely to cause the
               limitation  prescribed  in this  Section 4.8 to be exceeded,
               the Administrative Committee, in its discretion,  may reduce
               the amount of such contributions allowed to be made by or on
               behalf of Participants who are Highly Compensated  Employees
               (and/or  such  other   Participants  as  the  Administrative
               Committee  may  prescribe)  to  a  rate  determined  by  the
               Administrative  Committee  (including a rate of 0 percent if
               the  Administrative  Committee so determines).  Except as is
               hereinafter   provided,   the   Participants  to  whom  such
               reduction  is  applicable  and the amount of such  reduction
               shall  be   determined   pursuant   to  such   uniform   and
               nondiscriminatory  rules  as  the  Administrative  Committee
               shall prescribe.

          (f)  Notwithstanding the foregoing, with respect to any Plan Year
               beginning  before January 1, 2003 in which Company  Matching
               Contributions  made on behalf of Participants who are Highly
               Compensated  Employees exceed the applicable limit set forth
               in Section 4.8(a), the Administrative  Committee may reduce,
               to the  extent  necessary  to  comply  with the  limitations
               prescribed  in this  Section  4.8,  the  amount  of  Company
               Matching  Contributions  made on behalf of the  Participants
               who are  Highly  Compensated  Employees  (by  reducing  such
               Company  Matching  Contribution  in  the  order  of  Company
               matching  Contribution  amounts beginning with the largest),
               and distribute such excess Company  Matching  Contributions,
               to the extent then vested,  (along with income  attributable
               to such vested excess contributions,  as determined pursuant
               to Section  4.8(g))  to the  affected  Participants  who are
               Highly  Compensated  Employees as soon as practicable  after
               the end of such Plan Year,  and in all  events  prior to the
               end of the next  following  Plan Year.  The amount of excess
               Company Matching  Contributions that are not vested shall be
               forfeited,  and shall be held in a suspense account and used
               to   reduce   the   Employer's   future   Company   Matching
               Contributions.

          (g)  Income on excess Company Matching Contributions for the Plan
               Year  in  which  such  excess  occurs  and  for  any  period
               thereafter  prior  to  the  distribution  thereof  shall  be
               determined in the manner provided for in Article V.

          (h)  Notwithstanding any distributions  pursuant to the foregoing
               provisions,  excess Company Matching  Contributions shall be
               treated as Annual Additions for purposes of Section 4.7.

          (i)  Distributions  pursuant  to this  Section  4.8 shall be made
               proportionately  from the  Investment  Funds with respect to
               the   Participant's   Account   or   Accounts   from   which
               distribution is made.

          (j)  In the event that the  Employer  elects to make a  Qualified
               Contribution  on  behalf of any or all  Participants  in the
               Plan,  any  such  Qualified  Contribution,   to  the  extent
               specified,   shall  be   treated   as  a  Company   Matching
               Contribution solely for purposes of this Section 4.8.

          (k)  In determining  whether the requirements of this Section 4.8
               are  satisfied,  the  Administrative  Committee  may, in its
               discretion,  in  accordance  with  regulations,   take  into
               account  Participants' Basic Salary Reduction  Contributions
               made to the Plan pursuant to Section 3.1; provided that such
               contributions are not taken into account in order to satisfy
               the requirements of Section 3.4.

          (l)  The  Administrative  Committee may, in its sole  discretion,
               elect to use any  combination  of the methods  described  in
               this  Section  4.8  to  satisfy  the  limitations  contained
               herein, provided,  however, that such combination of methods
               shall be applied in a uniform and nondiscriminatory manner.

          (m)  The Administrative Committee shall also take all appropriate
               steps to meet the  aggregate  limitation  test  contained in
               Section 4.9.

4.9       Aggregate Limitation (Plan Years beginning before January 1, 2002)
          --------------------

          Any other  provision of the Plan to the contrary  notwithstanding
          and effective  solely with respect to Plan Years beginning before
          January 1, 2002,  the  provisions of this Section 4.9 shall apply
          if the conditions of both (a) and (b) below are satisfied:

          (a)  The sum of (i) the "Actual Deferral  Percentage" (as defined
               in Section 3.4) for the group of Eligible  Employees who are
               Highly   Compensated   Employees   and  (ii)   the   "Actual
               Compensation  Percentage"  (as  defined in Section  4.8) for
               such  group of  Highly  Compensated  Employees  exceeds  the
               "Aggregate Limit" (as hereinafter defined); and

          (b)  Both (i) the  Actual  Deferral  Percentage  for the group of
               Eligible  Employees  who are  highly  Compensated  Employees
               exceeds 125 percent of the Actual Deferral Percentage of all
               other  Eligible  Employees and (ii) the Actual  Contribution
               Percentage  of such  group of Highly  Compensated  Employees
               exceeds 125 percent of the Actual Contribution Percentage of
               all such other Employees.

               The term  "Aggregate  Limit" means the greater of the sum of
               (i) and (ii) below or the sum of (iii) and (iv) below:

               (i)  125 percent of the  greater of (1) the Actual  Deferral
                    Percentage  of the group of Eligible  Employees who are
                    not  Highly  Compensated  Employees,  or (2) the Actual
                    Contribution   Percentage  of  the  group  of  Eligible
                    Employees who are not Highly Compensated Employees, and

               (ii) 2 plus the lesser of (i)(1) or (i)(2)  above (but in no
                    event more than 200  percent of the lesser of (i)(1) or
                    (i)(2) above).

               (iii)125  percent of the  lesser of (1) the Actual  Deferral
                    Percentage  of the group of Eligible  Employees who are
                    not  Highly  Compensated  Employees,  or (2) the Actual
                    Contribution   Percentage  of  the  group  of  Eligible
                    Employees who are not Highly Compensated Employees, and

               (iv) 2 plus the greater of  (iii)(1) or (iii)(2)  above (but
                    in no event  more than 200  percent  of the  greater of
                    (iii)(1) or (iii)(2) above).

          (c)  If the Actual Deferral Percentage and/or Actual Contribution
               Percentage  for the  group  of  Eligible  Employees  who are
               Highly   Compensated   Employees,   determined   after   any
               corrective distribution of excess amounts in accordance with
               the provisions of Section 3.4 and 4.8 have been effectuated,
               exceeds an amount  which would cause the limits set forth in
               the foregoing provisions of this Section 4.9 to be exceeded,
               first the amount of Basic Salary Reduction Contributions and
               then the amount of Company Matching  Contributions  shall be
               reduced in accordance  with Section 3.4 and 4.8, but only to
               the extent  necessary to bring the Plan into compliance with
               the applicable limits set forth in this Section 4.9.

          (d)  In determining  whether the requirements of this Section 4.9
               are  satisfied,  the  Administrative  Committee  may  in its
               discretion,  in  accordance  with  regulations,   take  into
               account  Participants' Basic Salary Reduction  Contributions
               made to the Plan pursuant to Section 3.1, provided that such
               contributions are not taken into account in order to satisfy
               the requirements of Section 3.4.

4.10      Qualified Contributions (Plan Years beginning before January 1, 2003)
          -----------------------

          For Plan Years beginning before January 1, 2003, an Employer may,
          in its sole discretion, make a Qualified Contribution in order to
          satisfy  the  requirements  of Section  3.4 or 4.8.  A  Qualified
          Contribution  is a contribution  that (i) is made by the Employer
          that may be  aggregated  with other  contributions  in accordance
          with Section 3.4 and 4.8;  (ii) is  nonforfeitable  at all times;
          (iii) may not be distributed to a Participant or any  Beneficiary
          until the earliest date provided for in Section  401(k)(2)(B)  of
          the Code (determined without regard to subsection (i)(IV) of such
          Section)  and (iv)  complies  with the  requirements  of Treasury
          Regulation Section 1.401(k)-1(b)(5).

          A  Qualified  Contribution  may  take  the  form  of a  qualified
          matching  contribution (as defined in Treasury Regulation Section
          1.401(k)-(1)(g)(13)(i)),  or a qualified nonelective contribution
          (as      defined     in     Treasury      Regulation      Section
          1.401(k)-1(g)(13)(ii)).  The Employer  shall  specify the form of
          the Qualified  Contribution,  and the  Participants  to whom such
          contribution is to be allocated.

4.11      Return of Contributions
          -----------------------

          Notwithstanding  any  provision  of the Plan to the  contrary,  a
          contribution  (or part  thereof)  made to the Plan by an Employer
          shall be returned to that Employer if:

          (a)  The contribution is made by reason of mistake of fact; or

          (b)  The  contribution is not currently  deductible under Section
               404 of the Code;

          provided that such return of contribution is made within one year
          after  the   mistaken   payment  of  the   contribution   or  the
          disallowance of the tax deduction, as the case may be.

<PAGE>

                                         ARTICLE V

                                   VALUATION OF ACCOUNTS

5.1       Maintenance of Accounts
          -----------------------

          The Administrative  Committee shall separately maintain on behalf
          of each  Participant,  where  applicable,  and  shall  separately
          account for on a reasonable  and consistent  basis,  an After-Tax
          Contribution Account,  Basic Employee Contribution Account, Basic
          Salary   Reduction   Contribution   Account,   Company   Matching
          Contribution   Account,   Discretionary   Contribution   Account,
          Qualified  Contribution  Account,  Rollover Account,  Safe Harbor
          Matching   Account,   Savings   Contribution   Account,   Special
          Contribution Account, and Transition Contribution Account.

5.2       Valuation
          ---------

          As of each Valuation  Date, the  Administrative  Committee  shall
          cause to be adjusted the After-Tax  Contribution  Account,  Basic
          Employee   Contribution    Account,    Basic   Salary   Reduction
          Contribution  Account,  Company  Matching  Contribution  Account,
          Discretionary   Contribution  Account,   Qualified   Contribution
          Account,  Rollover Account, Safe Harbor Matching Account, Savings
          Contribution   Account,   Special   Contribution   Account,   and
          Transition  Contribution  Account for each  Participant  on whose
          behalf any such  Account is  maintained  to reflect  his share of
          contributions  (including  for this  purpose  contributions  made
          after  such  Valuation  Date but  credited  as of such  Valuation
          Date), withdrawals,  distributions, income, expenses payable from
          the Trust Fund (and  allocable to the  Investment  Funds in which
          the  Participant's  Accounts  are  invested)  and any increase or
          decrease  in  the  value  of  such  Investment  Funds  since  the
          preceding  Valuation Date. The fair market value on the Valuation
          Date is to be used for this purpose,  and the respective Accounts
          of  Participants  are  to be  adjusted  in  accordance  with  the
          valuation.

          The  Administrative  Committee  reserves the right to change from
          time to time the  procedures  used in valuing  any one or more of
          the  Accounts or  crediting  and  debiting any one or more of the
          Accounts if it determines,  after due  deliberation  and upon the
          advise of counsel  and/or  the  current  recordkeeper,  that such
          action  is  justified  in  that  it  results  in a more  accurate
          reflection of the fair market value of the Accounts. In the event
          of a conflict  between the  provisions  of Article V and such new
          administrative  procedures,  the  new  administrative  procedures
          shall prevail.

5.3       Valuation of Funds
          ------------------

          The  Administrative  Committee  shall  determine  the fair market
          value of each  Investment  Fund as of the end of each Plan  Year,
          and as soon as  practicable  thereafter  shall deliver or mail to
          each  Participant  or  Beneficiary a statement  setting forth the
          fair market value of his Account in each Investment Fund.

<PAGE>

                                 ARTICLE VI

                            VESTING OF ACCOUNTS

6.1       Vesting
          -------

          (a)  A  Participant  shall  always be 100  percent  vested in the
               value of the After-Tax  Contribution Account, Basic Employee
               Contribution  Account,  Basic Salary Reduction  Contribution
               Account,  Qualified  Contribution Account,  Rollover Account
               and Safe Harbor Matching Account maintained on his behalf. A
               Participant  shall be 100 percent vested in the value of the
               Savings Contribution  Account,  Special Contribution Account
               and Transition Contribution Account maintained on his behalf
               as  provided  in   Sections   4.3(a),   4.4(a)  and  4.5(a),
               respectively.

          (b)  Except as  otherwise  provided in an  appendix  hereto or in
               subsection (d) below,  a Participant  shall be vested in the
               Company  Matching  Contribution  Account  maintained  on his
               behalf in accordance with the following schedule:

               YEARS OF VESTING SERVICE            VESTED INTEREST
               ------------------------            ---------------

                   Less than 3 years                  0 percent
                   3 years or more                  100 percent

               provided,  however, that the portion of the Company Matching
               Contribution   Account   attributable  to  Company  Matching
               Contributions  made with respect to pay periods beginning on
               and after July 1, 2002 and before January 1, 2003,  shall at
               all times be 100 percent vested.

          (c)  Except as  otherwise  provided in an  appendix  hereto or in
               subsection (d) below,  a Participant  shall be vested in the
               Discretionary  Contribution Account maintained on his behalf
               in accordance with the following schedule:

               YEARS OF VESTING SERVICE            VESTED INTEREST
               ------------------------            ---------------

                   Less than 5 years                  0 percent
                   5 years or more                  100 percent

          (d)  Notwithstanding  any  other  provision  of  Article  VI,  an
               Eligible  Employee  shall  become 100 percent  vested in the
               Company Matching  Contribution Account and any Discretionary
               Contribution Account maintained on his behalf at:

               (i)  Normal Retirement Age;

               (ii) Early Retirement;

               (iii) The time he incurs a Disability;

               (iv) Death;

               (v)  Termination of the Plan; or

               (vi) With  respect to only an  Eligible  Employee's  Company
                    Matching   Contribution    Account,    termination   of
                    employment due to the closing of a plant or facility or
                    divestment of all or part of an Employer (but only with
                    respect to Eligible  Employees of such Employer who are
                    affected by such divestment).

          (e)  Notwithstanding  the foregoing,  if a Participant who is not
               fully vested in the Account  maintained on his behalf incurs
               a 1-year Period of Severance and is subsequently  rehired by
               an Employer,  his Years of Vesting Service shall be computed
               by adding (i) his Years of Vesting  Service  earned prior to
               his  Reemployment  Commencement  Date to (ii)  his  Years of
               Vesting   Service   that  he  accrues   subsequent   to  his
               Reemployment    Commencement   Date,   provided   that   the
               Participant's  Period  of  Severance  is  shorter  than  the
               greater  of (i) 5 years,  or (ii) the  aggregate  number  of
               Years of Vesting  Service  earned  prior to his  termination
               date. If the Participant's  Period of Severance equals or is
               longer  than  the  greater  of  (i) 5  years,  or  (ii)  the
               aggregate number of Years of Vesting Service earned prior to
               his  termination  date, his Years of Vesting  Service earned
               prior to his initial  date of  termination  shall be ignored
               for all purposes.

6.2       Treatment of Forfeitures
          ------------------------

          In the event that a Participant terminates employment and is less
          than 100  percent  vested  in all  Accounts,  forfeitures  of his
          non-vested  interest  shall  be used by the  Employer  to  reduce
          future  Employer  contributions  and/or  to pay  reasonable  Plan
          expenses.  Amounts  shall be forfeited on the earlier of the date
          of the  distribution  of his Vested  Interest,  or upon the fifth
          anniversary of the Participant's Severance from Service.

6.3       Reinstatement of Accounts
          -------------------------

          If a former Participant whose termination of employment  resulted
          in a  forfeiture  pursuant  to Section 6.2 is  re-employed  by an
          Employer or any member of the Group,  the  Participant  may elect
          (upon giving 30 days' advance  notice or such other period as may
          be  prescribed  by the  Administrative  Committee)  to repay  the
          Trustee,  in cash, the full amount distributed to the Participant
          in  accordance  with  Article  IX and  such  repayment  shall  be
          allocated to the Participant's Account. In such event, the amount
          of the  forfeiture  (unadjusted  by any gains or losses) shall be
          restored and credited as of the Reemployment Commencement Date to
          the  Participant's  Account in such manner as the  Administrative
          Committee  shall deem  appropriate  pursuant to such  uniform and
          nondiscriminatory rules as it shall from time to time prescribe.

          If a distribution is a result of a termination of employment, the
          time for  repayment  may not end  before  the  earlier of 5 years
          after the first  Reemployment  Commencement  Date or the close of
          the first  period of 5  consecutive  1-year  Periods of Severance
          commencing after the distribution.

          Any Account  which is restored will be derived first from amounts
          forfeited  and  not  yet  applied  to  reduce   future   Employer
          contributions,  and second, if such amounts are not sufficient to
          make a full  restoration,  the Employer  shall make an additional
          contribution in the amount necessary to complete the restoration.
          Years  of  Eligibility  Service  and  Years  of  Vesting  Service
          credited  with  respect  to such  restored  amount  shall also be
          restored.

<PAGE>

                                ARTICLE VII

                           INVESTMENT OF ACCOUNTS

7.1       Investment of Accounts
          ----------------------

          All  contributions  made  to  the  Plan  by  or  on  behalf  of a
          Participant  shall be invested in such  Investment  Fund or Funds
          which the Administrative Committee, in its discretion, shall make
          available to Participants,  Beneficiaries and Eligible Employees.
          The  Administrative  Committee may, at any time add to,  subtract
          from,  or  replace  Investment  Funds  then  being  offered.  The
          Administrative  Committee shall endeavor to provide  Participants
          with the  opportunity  to obtain  sufficient  information to make
          informed decisions regarding all available Investment Funds.

          A portion of an  Investment  Fund may be  invested  in short term
          securities  issued or  guaranteed by the United States of America
          or any agency or instrumentality thereof or any other investments
          of a  short  term  nature,  including  corporate  obligations  or
          participations  therein  and  through  the medium of any  common,
          collective  or  commingled  trust fund  maintained by the Trustee
          which is invested  principally  in property of the kind specified
          in  this  paragraph.  A  portion  of an  Investment  Fund  may be
          maintained in cash.

7.2       Investment Elections
          --------------------

          (a)  When  an  Eligible   Employee   completes  and  returns  the
               Appropriate  Form to  become a  Participant,  he shall  give
               Notice regarding the investment of contributions made on his
               behalf  under the Plan.  The  Notice  shall  specify,  in 5%
               increments  from 0% to 100%,  the  percentage  of all future
               Basic  Salary  Reduction  Contributions,   Company  Matching
               Contributions,    Discretionary   Contributions,   Qualified
               Contributions,  Safe Harbor Matching Contributions,  Savings
               Contributions,    Special   Contributions   and   Transition
               Contributions  (in accordance  with a single  election to be
               applied  uniformly  to all  types  of  contributions)  to be
               invested  in  each   Investment  Fund  which  is  then  made
               available under the Plan.

               A Participant may change the investment elections made under
               this  Section  7.2(a)  at any time by  giving  Notice to the
               Administrative  Committee or its  designee  within such time
               and in accordance  with such means as are  designated by the
               Administrative  Committee and  communicated  to Participants
               and  Eligible  Employees.  Such  Notice of  change  shall be
               subject to the  procedural  specifications  set forth  above
               (and, if applicable, subject to the limitations set forth in
               Section 7.3) and, except as may otherwise be provided in the
               Trust   Agreement,   shall  be  effective  with  respect  to
               contributions   received  by  the   Trustee  (or   otherwise
               deposited  into the Trust Fund) as of the Valuation  Date on
               which the  Notice is  received  or as of the next  following
               Valuation Date, in accordance with procedures established by
               the   Administrative    Committee,   and   communicated   to
               Participants and Eligible Employees.

          (b)  Each Participant and Beneficiary  shall have the opportunity
               to change the manner in which the Accounts maintained on his
               behalf under the Plan are invested.  Such opportunity  shall
               be  exercised  by  giving   Notice  to  the   Administrative
               Committee or its designee within such time and in accordance
               with  such  means as are  designated  by the  Administrative
               Committee  and   communicated  to   Participants,   Eligible
               Employees and affected Beneficiaries. Subject to any minimum
               dollar   limitation   which  may  be   established   by  the
               Administrative  Committee  from  time to time,  such  Notice
               shall specify,  in a whole dollar amount or in 1% increments
               from 0% to 100%,  the dollar  amount,  or  percentage of the
               total  Account  maintained on behalf of the  Participant  or
               Beneficiary  which is to be invested in each Investment Fund
               then made available. Except as may otherwise be set forth in
               the Trust  Agreement,  such Notice  shall be effective as of
               the  Valuation  Date on which the Notice is  received by the
               Trustee  or as of the  next  following  Valuation  Date,  in
               accordance with procedures established by the Administrative
               Committee  and   communicated  to   Participants,   Eligible
               Employees and affected  Beneficiaries.  Notwithstanding  any
               provision of this Section  7.2(b) to the  contrary,  (i) the
               election  hereunder  shall  be  subject  to any  contractual
               limitations imposed on the direct transfer of assets between
               given  Investment  Funds  and  (ii)  in  no  event  shall  a
               Participant  or  Beneficiary be permitted to effect a change
               in the  investment  of his total  Account to the extent that
               the investment  change would  contradict any limitation then
               in effect on  transfers  into or out of the  Mettler  Toledo
               Stock Fund that has been  established by the  Administrative
               Committee,   in  its   discretion,   and   communicated   to
               Participants and Beneficiaries.

          (c)  Any investment  elections or changes in elections under this
               Section 7.2 may be limited or delayed by the  Administrative
               Committee  or  Trustee,  if, in the  judgment of such party,
               giving  immediate  effect to such elections  would adversely
               affect  the  Account  balances  of a  significant  number of
               Participants.

          (d)  In the event a  Participant's  or  Beneficiary's  investment
               election is incomplete,  the Participant or Beneficiary will
               be assumed to have chosen to invest in such  default fund as
               is set forth in the Trust Agreement, or otherwise determined
               by the Administrative Committee.

          (e)  Any investment  election  under the foregoing  provisions of
               this  Section 7.2 shall  remain in effect  until  changed by
               another election under this Section.

          (f)  Each  Participant,  Eligible  Employee  and  Beneficiary  is
               solely  responsible  for  the  selection  of his  investment
               option.  The  Trustee,  the  Administrative  Committee,  the
               Company,   the  Employer,   and  the  directors,   officers,
               supervisors  and  other  employees  of the  Company  and the
               Employer are not empowered to advise a Participant, Eligible
               Employee  or  Beneficiary  as to the  manner  in  which  any
               portion of his Account  shall be invested.  The fact that an
               investment  option is available  under the Plan shall not be
               construed  as  a  recommendation   for  investment  in  that
               investment option.

7.3       Mettler Toledo Stock Fund
          -------------------------

          The  provisions  of this Section  shall become  applicable to the
          extent to which  Participants' and Beneficiaries'  Accounts under
          the Plan are invested in the Mettler Toledo Stock Fund.

          (a)  The Administrative  Committee shall make available under the
               Plan an investment  fund which shall consist  exclusively of
               Common Stock;  provided,  however, that in the discretion of
               the Trustee,  within  guidelines  set by the  Administrative
               Committee,  a portion of such fund may be held in short-term
               interest-bearing  investments  or cash  pending  purchase of
               Common  Stock  and  to  provide  sufficient   liquidity  for
               exchanges  out of the  fund,  withdrawals  and  loans.  Such
               Investment  Fund shall be referred to as the "Mettler Toledo
               Stock  Fund".  Subject to any  limitation  on  contributions
               and/or  transfers  into or out of the Mettler  Toledo  Stock
               Fund  that  the   Administrative   Committee   may,  in  its
               discretion, establish, a Participant or Beneficiary shall be
               permitted  to invest  contributions  made to the Plan on his
               behalf and existing  Accounts  maintained  under the Plan on
               his behalf in the Mettler  Toledo  Stock Fund in  accordance
               with  the  provisions  of  Sections  7.2.  Unless  otherwise
               limited under the terms of the Trust Agreement,  the Trustee
               may, in its discretion, purchase or sell Common Stock on the
               open market or by privately-negotiated transaction; provided
               however,  that any such  purchase or sale shall be made only
               in  exchange  for fair  market  value as  determined  by the
               Trustee and, provided  further,  that no commission shall be
               charged to or paid by the Plan with  respect to any purchase
               or sale of  Common  Stock  between  the  Plan and a party in
               interest  (as  defined  in  Section  3(14)  of  ERISA).  Any
               distributions,  dividends  or other  income  received by the
               Trustee with respect to the Mettler  Toledo Stock Fund shall
               be  reinvested  by the Trustee in the Mettler  Toledo  Stock
               Fund. The  Administrative  Committee shall provide,  at such
               time  and  in  such  manner  as it  shall  determine  in its
               discretion,  whether  share or unit  accounting be performed
               with respect to the Mettler Toledo Stock Fund.

          (b)  The  restrictions  contained  in this  Section  7.3(b) shall
               apply to that portion of the Accounts  maintained  on behalf
               of Participants or  Beneficiaries  which are invested in the
               Mettler  Toledo  Stock  Fund  and,  if  and  to  the  extent
               necessary, any election made by a Participant or Beneficiary
               under the Plan  shall be deemed  modified  to be  consistent
               with this Section 7.3(b).

               Notwithstanding  the provisions of Section 7.2, and Articles
               VIII and XV:

               (i)  No  Participant  or  Beneficiary  may,  on the basis of
                    material  nonpublic  information  with  respect  to the
                    Company or its affiliates,  make an election  permitted
                    by that Section or those  Articles if (1) such election
                    would result in an exchange into or out of, loans from,
                    withdrawals  from,  or an  increase  or decrease in the
                    amount of  contributions  to the Mettler  Toledo  Stock
                    Fund,  and  (2) the  transaction  resulting  from  such
                    election is prohibited by Rule 10b-5.

               (ii) No  officer  may  make an  election  permitted  by that
                    Section or those Articles if such election would result
                    in a  transaction  involving  the Mettler  Toledo Stock
                    Fund  which is not an exempt  transaction  pursuant  to
                    Rule 16b-3.

               For purposes of this Section 7.3(b),  the terms "Rule 10b-5"
               and "Rule  16b-3" shall mean the rules,  as amended,  having
               those   designations   promulgated   by  the  United  States
               Securities   and   Exchange   Commission   pursuant  to  the
               Securities  Exchange Act of 1934, as amended,  and the terms
               "affiliate"  and "officer" shall have the meanings set forth
               in Rule 12b-2 and Rule  16a-1(f),  respectively,  both as so
               promulgated and amended.

7.4       Voting of Common Stock
          ----------------------

          (a)  Each  Participant,  Eligible Employee or Beneficiary who has
               an Account  maintained  on his behalf with an  investment in
               the  Mettler  Toledo  Stock Fund  shall  have the  following
               powers and responsibilities:

               (i)  Prior  to  each  annual  or  special   meeting  of  the
                    shareholders  of  Mettler-Toledo   International   Inc.
                    ("MTI"),  MTI  shall  cause  to be sent to each  person
                    described  in  Section  7.4(a),  a copy  of  the  proxy
                    solicitation material for such meeting, together with a
                    form requesting  confidential  voting  instructions for
                    the  voting of the  Common  Stock  held in the  Mettler
                    Toledo Stock Fund in  proportion to the number of units
                    of  the  Mettler  Toledo  Stock  Fund  held  by  such a
                    person's Accounts or, if applicable, the number of full
                    shares  of Common  Stock  credited  under  the  Mettler
                    Toledo  Stock  Fund to such a person's  Accounts.  Upon
                    receipt of such a person's  instructions,  the  Trustee
                    shall then vote in  person,  or by proxy,  such  Common
                    Stock as so instructed.

               (ii) MTI shall  cause the  Trustee  to  furnish,  as soon as
                    practicable  after  receipt  by the  Trustee,  to  each
                    person  described  in  Section  7.4(a),  notice  of any
                    tender  or   exchange   offer  for,  or  a  request  or
                    invitation  for tenders or exchanges  of,  Common Stock
                    made to the  Trustee.  The Trustee  shall  request from
                    each such person  instructions  as to the  tendering or
                    exchanging  of Common Stock held in the Mettler  Toledo
                    Stock Fund in  proportion to the number of units of the
                    Mettler  Toledo  Stock  Fund  held by  such a  person's
                    Accounts or, if  applicable,  the number of full shares
                    of Common Stock credited under the Mettler Toledo Stock
                    Fund to  such a  person's  Accounts.  Within  the  time
                    specified by the notice of any tender or exchange offer
                    for, or request or invitation  for tenders or exchanges
                    of, Common Stock,  the Trustee shall tender or exchange
                    such Common  Stock as to which the Trustee has received
                    instructions  to tender or  exchange  from the  persons
                    described in Section 7.4(a).

               (iii)Instructions  received  from the persons  described  in
                    Section  7.4(a) by the  Trustee  regarding  the voting,
                    tendering,  or  exchanging  of Common Stock held in the
                    Mettler  Toledo  Stock Fund shall be held in  strictest
                    confidence  and  shall  not be  divulged  to any  other
                    person,  including directors,  officers or employees of
                    MTI and of the Company, except as otherwise required by
                    law, regulation or lawful process.

          (b)  The Trustee shall, in its discretion,  vote Common Stock for
               which the Trustee does not receive affirmative direction and
               shall,  in its  discretion,  determine  whether to tender or
               exchange Common Stock with respect to which the Trustee does
               not receive any affirmative direction.

<PAGE>

                                ARTICLE VIII

                       WITHDRAWALS DURING EMPLOYMENT

8.1       Basic Withdrawals
          -----------------

          Subject to subsections (d), (e) and (f) below, a Participant may,
          by  giving  Notice  to the  Administrative  Committee,  elect  to
          withdraw  amounts  during   employment  in  accordance  with  the
          following order of withdrawal options;  provided,  however,  that
          any  Participant  electing a  withdrawal  from the options  below
          shall be required to exhaust all withdrawal  possibilities  under
          the options preceding the withdrawal option elected:

          (a)  A Participant who is in the active employment of an Employer
               and who has  attained age 65 may withdraw all or any portion
               of the  Account  maintained  on his behalf in which he has a
               Vested Interest.

          (b)  A Participant who is in the active employment of an Employer
               and who has  attained age 59-1/2 but has not attained age 65
               may  withdraw  from the  Account  maintained  on his  behalf
               according to the following schedule:

               (i)  All or any portion of the Account that is  attributable
                    to  contributions  made  prior  to July 1,  2002 and in
                    which he has a Vested Interest;

               (ii) All or any  portion  of the  Rollover  Account  that is
                    attributable  to  Rollover  Contributions  made  on and
                    after July 1, 2002; and

               (iii)All  or  any  portion  of the  Basic  Salary  Reduction
                    Contribution  Account  that is  attributable  to  Basic
                    Salary Reduction  Contributions  made on and after July
                    1, 2002.

          (c)  A Participant who is in the active employment of an Employer
               and who has not yet attained  age 59-1/2 may  withdraw  from
               the  Account  maintained  on  his  behalf  according  to the
               following schedule:

               (i)  A Participant who has made a Rollover  Contribution may
                    withdraw  all or any  portion of the  Rollover  Account
                    maintained on his behalf;

               (ii) A Participant who has made  contributions  to the Prior
                    Reliance  Electric  Plan and/or the  Reliance  Electric
                    Plan  may  withdraw  all or any  portion  of the  Basic
                    Employee    Contribution   Account   and/or   After-Tax
                    Contribution Account maintained on his behalf;

               (iii)All   or  any   portion   of   the   Company   Matching
                    Contribution  Account  maintained on the  Participant's
                    behalf  that  is  attributable   to  Company   Matching
                    Contributions  made  prior to July 1, 2002 and in which
                    he  has  a  Vested  Interest;  provided  that  if  such
                    Participant has  participated in the Plan for less than
                    five  years  such  amount  shall  not  include  Company
                    Matching  Contributions  made  to the  Plan  within  24
                    months prior to the effective  date of the  withdrawal;
                    and

               (iv) For a Participant who suffers a Hardship (as defined in
                    Section 8.2), such portion of the Account maintained on
                    the  Participant's  behalf  in  which  he has a  Vested
                    Interest,   provided   that  if  any   portion  of  the
                    withdrawal is taken from the Participant's Basic Salary
                    Reduction  Contribution  Account,  such withdrawal must
                    exclude   earnings   credited  to  such  Account  after
                    December 31, 1988, and the withdrawal  must satisfy the
                    provisions of Section 8.2.

          (d)  Withdrawals  of a Vested  Interest  shall  be made  from the
               Investment  Funds maintained under the Plan in such order of
               priority  as the  Administrative  Committee,  pursuant  to a
               uniform and nondiscriminatory policy, such direct.

          (e)  Withdrawals  shall be  effective  as of the first day of the
               next  calendar  year quarter  provided  that Notice has been
               given to the  Administrative  Committee at least thirty (30)
               days prior to such quarterly date. Partial  withdrawals from
               any of the above categories may be made only in multiples of
               $100.

          (f)  For periods on and after  January 1, 2000 and before July 1,
               2002, a Participant  who withdraws any portion of the Vested
               Interest  in the  Account  maintained  on his  behalf  under
               Section  8.1(c)(iii) above shall be suspended from receiving
               an allocation of Company Matching Contributions for a period
               of  six  months   following  the  effective   date  of  such
               withdrawal. Except as provided in the preceding sentence and
               in  Section  8.2(b)  below,  a  Participant  exercising  the
               withdrawal provisions of this Section 8.1 shall not have his
               participation  in the Plan  restricted  on  account  of such
               withdrawal.

8.2       Hardship Withdrawals
          --------------------

          For  purposes  of  this  Plan,  the  term   "Hardship"   means  a
          circumstance resulting from an immediate and heavy financial need
          of the Participant.  The Administrative Committee shall not allow
          a Hardship  distribution  to be made to a Participant  unless the
          requirements of subsections (a) and (b) below are satisfied:

          (a)  The Participant may incur a Hardship arising from one of the
               following expenses:

               (i)  Medical  expenses  described  in Section  213(d) of the
                    Code  previously  incurred  by  the  Participant,   the
                    Participant's  spouse  or  dependents  (as  defined  in
                    Section 152 of the Code) or necessary for these persons
                    to obtain  medical care  described in Section 213(d) of
                    the Code;

               (ii) Costs  directly  related to the purchase of a principal
                    residence  for  the  Participant   (excluding  mortgage
                    payments thereon);

               (iii)The cost of tuition  and related  educational  fees for
                    the next 12 months of post-secondary  education for the
                    Participant,  the Participant's  spouse,  children,  or
                    dependents; or

               (iv) The  amount  needed  to  prevent  the  eviction  of the
                    Participant from his principal residence or foreclosure
                    of a mortgage on his principal residence.

          (b)  The distribution by reason of Hardship:

               (i)  May not be more than the  amount  of the  Participant's
                    immediate and heavy financial need, provided,  however,
                    that such need may  include  amounts  necessary  to pay
                    income taxes and penalties  reasonably  anticipated  to
                    result from the distribution;

               (ii) May not be made unless the Participant has obtained all
                    distributions, other than Hardship withdrawals, and all
                    non-taxable  loans that are currently  available  under
                    all qualified and nonqualified  plans of all members of
                    the Group;

               (iii)May not be made  unless the  Participant  is  suspended
                    from having Basic Salary  Reduction  Contributions  and
                    Company  Matching  Contributions  made on his behalf to
                    the Plan  (and he is  suspended  from  making  employee
                    contributions  and elective  contributions to all other
                    qualified   and   nonqualified    plans   of   deferred
                    compensation,   inclusive   of  stock   option,   stock
                    purchase,  and similar plans maintained by an Employer,
                    excluding mandatory employee contributions to a defined
                    benefit  plan or health or welfare  benefit  plans) for
                    the six-month period beginning on the effective date of
                    the Hardship  withdrawal  pursuant to this Section 8.2;
                    and

               (iv) For Hardship  withdrawals taken before January 1, 2002,
                    will  result  in a  limitation  on the  amount of Basic
                    Salary Reduction  Contributions  which may be made on a
                    Participant's  behalf  under  the Plan  (and all  other
                    plans  maintained  by a member  of the  Group)  for the
                    taxable year following the taxable year of the Hardship
                    withdrawal,  with such  limitation  being  equal to the
                    Code Section  402(g) limit for such  following  taxable
                    year less the amount of such Participant's Basic Salary
                    Reduction  Contributions  for the  taxable  year of the
                    Hardship withdrawal.

          After the  6-month  period of  suspension  under  (b)(iii)  above
          ceases,  the  Participant may resume  contributions  hereunder by
          giving Notice in accordance with Section 2.2.

          The  determination  of  the  existence  of  a  Hardship  and  the
          determination  of the amount  required to be  distributed to meet
          the  need  created  by  the   Hardship   shall  be  made  by  the
          Administrative     Committee     pursuant    to    uniform    and
          nondiscriminatory  rules, consistent with the requirements of the
          Code and applicable regulations. The Administrative Committee may
          require  documentation from the Participant for this purpose. The
          Administrative   Committee   shall   reasonably   rely   on   the
          documentation   submitted   by  the   Participant,   unless   the
          Administrative Committee has actual knowledge to the contrary.

          The Company may, by amendment, change the conditions necessary to
          obtain a Hardship  withdrawal,  or may modify or discontinue  the
          Hardship  withdrawal  provisions  of  this  Plan,  to the  extent
          permitted by applicable law or regulation.

8.3       Payment of Withdrawals
          ----------------------

          Any amounts withdrawn under Sections 8.1 and 8.2 shall be paid to
          a Participant as soon as practicable  after the Valuation Date as
          of which the withdrawal election is effective. The withdrawal may
          be in the form of cash or, to the  extent all or a portion of the
          Participant's  applicable  Accounts  are  invested in the Mettler
          Toledo   Stock  Fund,   such  amount   shall  be  paid,   at  the
          Participant's election, in either (i) whole units of Common Stock
          (with fractional units being  distributed in cash), (ii) cash, or
          (iii) a combination of Common Stock and cash.

8.4       Values
          ------

          All withdrawals  under Sections 8.1 and 8.2 shall be based on the
          value of the Account  maintained on behalf of the  Participant as
          of the applicable Valuation Date on which the withdrawal election
          is effective. Such date shall be determined by the Administrative
          Committee, in its discretion,  under nondiscriminatory procedures
          applicable to all eligible Participants.

          Notwithstanding the foregoing,  the Administrative  Committee may
          require a valuation as of the Valuation  Date  following the date
          the request for a  withdrawal  was  received in the event that it
          determines  that,  due to a decline  in the  market  value of all
          Participants'  Accounts,  it  would be in the  best  interest  of
          Participants  and  Beneficiaries to use the later Valuation Date.
          The preceding  sentence shall not apply unless the Administrative
          Committee  determines a fixed period within which all  withdrawal
          requests  will be valued as of such  later  Valuation  Date,  and
          announces such decision, and such period, to all Participants.

<PAGE>

                                 ARTICLE IX

                          DISTRIBUTION OF BENEFITS

9.1       Amount of Distribution
          ----------------------

          Upon a  Participant's  retirement,  death,  Disability,  or other
          termination  of employment  with an Employer and other members of
          the Group,  the Participant or his  Beneficiary,  as the case may
          be, shall be entitled to a distribution of the Vested Interest in
          his Accounts, subject to the following provisions of this Article
          IX. Notwithstanding anything in this Section 9.1 to the contrary,
          Section  2.4(b)  applies to a Participant  who ceases to meet the
          definition  of an Eligible  Employee  but  continues to be in the
          employ of an Employer or other member of the Group.

9.2       Payment of Distribution
          -----------------------

          (a)  As soon as  practicable  upon his  termination of employment
               with the Group for any reason (including Disability or Early
               Retirement) or the occurrence of his Normal Retirement Date,
               a  Participant  shall be  eligible  to elect  payment of his
               Vested Interest.  Payment shall be made in a single lump sum
               distribution  equal  to the  value of his  Vested  Interest;
               provided,  however,  that  effective  January  1,  2000  and
               subject to the involuntary distribution provision of Section
               9.2(c),  the  Participant  may elect  payment  of his Vested
               Interest  in  the  form  of  substantially   equal  periodic
               installments  over a  period  not  in  excess  of  his  life
               expectancy.  Notwithstanding  the foregoing (i) an Employer,
               in the  context of a  business  transaction,  may  arrange a
               transfer  of  assets  and  liabilities  from  the  Plan to a
               qualified   plan   maintained   by  another   party  to  the
               transaction  who will, in connection  with the  transaction,
               employ  individuals who are  Participants  hereunder  (until
               such transfer of assets and liabilities) and (ii) any person
               who  has  satisfied  the  service   requirements  for  Early
               Retirement, but terminates employment prior to attaining the
               age  requirements  set forth therein shall  nevertheless  be
               entitled  upon  satisfaction  of such age  requirements,  to
               receive  distribution of his Plan benefit in the same manner
               as  those  persons  who  satisfy  both  the age and  service
               requirements for an Early Retirement benefit hereunder.

          (b)  The value of the Vested Interest in a Participant's Accounts
               shall be determined  as of the  Valuation  Date on which the
               distribution  election  is  effective.  Such  date  shall be
               determined   by  the   Administrative   Committee,   in  its
               discretion, under nondiscriminatory procedures applicable to
               all  Participants.  Such  Valuation  Date  shall  follow the
               "Election  Period"  (as  hereinafter   defined);   provided,
               however, that a Participant or Beneficiary may affirmatively
               elect an immediate account  distribution  determined as of a
               Valuation Date which falls within the Election Period and on
               which authorized distribution directions are received by the
               Trustee from the  Administrative  Committee or its delegate.
               For purposes  hereof,  the "Election  Period" shall mean the
               30-day   period   commencing   on  the  date  on  which  the
               Administrative   Committee  or  its  delegate  provides  the
               Participant or Beneficiary with  information  regarding Plan
               distributions,  including the Participant's or Beneficiary's
               rights  with  respect  to a  distribution  in the  form of a
               direct  rollover and, if the Vested Interest is in excess of
               the $5,000 threshold  described in subsection (c) below, the
               right  of  the   Participant   to  defer   receipt   of  the
               distribution.

          (c)  If a  Participant's  Vested  Interest  as of the  applicable
               Valuation Date is not in excess of $5,000,  distribution  of
               such Vested  Interest  shall be made as soon as  practicable
               thereafter   in  a  lump  sum  in  cash.   With  respect  to
               distributions  made after December 31, 2001, a Participant's
               Vested Interest for purposes of this subsection (c) shall be
               determined  without  regard to that  portion of the  Account
               that is attributable to Rollover Contributions.

          (d)  A Participant  who  terminated  employment  and whose Vested
               Interest  may not be paid out under the  preceding  sentence
               must elect to either have an immediate  distribution  of his
               Vested  Interest  or  to  defer  said  distribution.   If  a
               Participant elects to defer said distribution,  the election
               may remain in effect  until the later of the dates stated in
               Sections  9.6 and 9.7,  provided,  however,  that subject to
               uniform    administrative    procedures   adopted   by   the
               Administrative  Committee,  such Participant  shall have the
               opportunity to elect an immediate distribution of his Vested
               Interest  as of any  Valuation  Date after such  election is
               made. If a Participant  dies while in deferred  status,  the
               Account will be distributed to the Participant's Beneficiary
               in accordance with Section 9.8.

          (e)  All distributions shall be made in cash; provided,  however,
               that  to the  extent  all or a  portion  of a  Participant's
               Vested  Interest is invested  in the  Mettler  Toledo  Stock
               Fund,  such  amount  shall be paid,  at the  election of the
               Participant, in either (i) whole units of Common Stock (with
               fractional units being  distributed in cash),  (ii) cash, or
               (iii) a  combination  of Common Stock and cash. In the event
               distribution  is  made  in the  absence  of a  Participant's
               distribution  election,  that  portion of an Account that is
               invested  in the  Mettler  Toledo  Stock Fund at the time of
               distribution shall be paid in cash.

          (f)  A Participant  who terminates  employment  shall be given an
               Appropriate  Form.  The form must be filled out and returned
               to the  Company  within  60  days  after  the  Participant's
               termination   of   employment  to   immediately   process  a
               distribution.  Failure  to  return  the form  within 60 days
               after  the  Participant's  termination  will  result  in his
               distribution   being   automatically   deferred   until  the
               effective  date of a  Participant's  election  to receive an
               immediate distribution as described herein.

9.3       Deferred Accounts
          -----------------

          In any case in which a Participant has terminated  employment but
          distribution of his Accounts has not yet occurred,  such Accounts
          shall be  retained  and  administered  under the Plan  until such
          Accounts are distributed.  Except as may otherwise be required by
          applicable  law, the  Administrative  Committee may establish and
          change from time to time rules and restrictions applicable to the
          administration  of any  Accounts  held  on  behalf  of  any  such
          Participants  (which rules and restrictions may differ from those
          generally   applicable   to   active   Participants),   and   the
          Administrative  Committee may assess  against the Accounts of any
          such Participant any reasonable costs of administering  the same.
          Notwithstanding   the   foregoing,   in  no  event  will  such  a
          Participant  be allowed to make  withdrawals  in accordance  with
          Article VIII from such Accounts which have been deferred.

9.4       Distribution Requirements Applicable to Basic Salary Reduction
          Contributions
          --------------------------------------------------------------

          Basic Salary  Reduction  Contributions  and the income  allocable
          thereto  shall in no event be  distributed  to a  Participant  or
          Beneficiary,  as the  case may be,  before  the  earlier  of such
          Participant's  retirement,  death,  Disability,   termination  of
          employment,  the attainment by the Participant of age 59-1/2, the
          Participant's  Hardship, as described in Section 8.2 of the Plan,
          or the  termination  of the Plan  without  the  establishment  or
          maintenance  of a  successor  plan within the meaning of Treasury
          Regulations and with respect to which a lump sum payment is made.

9.5       Alienation of Benefits
          ----------------------

          Except as  otherwise  provided by law, no benefit,  interest,  or
          payment  under  the  Plan  shall  be  subject  in any  manner  to
          anticipation,  alienation,  sale, transfer,  assignment,  pledge,
          encumbrance or charge,  whether voluntary or involuntary,  and no
          attempt  to so  anticipate,  alienate,  sell,  transfer,  assign,
          pledge,  encumber or charge the same shall be valid nor shall any
          such  benefit,  interest,  or payment be in any way liable for or
          subject  to the debts,  contracts,  liabilities,  engagements  or
          torts  of the  person  entitled  to such  benefit,  interest,  or
          payment or subject to attachment, garnishment, levy, execution or
          other legal or equitable process.

          Notwithstanding  the  foregoing,  the  creation,   assignment  or
          recognition  of a right to any benefit  payable with respect to a
          Participant  pursuant to a "qualified  domestic  relations order"
          (as  defined in Section  414(p) of the Code) shall not be treated
          as an assignment  or  alienation  prohibited by this Section 9.5.
          Any other provision of the Plan to the contrary  notwithstanding,
          if a qualified domestic relations order requires the distribution
          of all or part of a  Participant's  benefits  under the Plan, the
          establishment or acknowledgment of the alternate payee's right to
          benefits  under  the Plan in  accordance  with the  terms of such
          qualified domestic relations order shall in all events be applied
          in  a   manner   consistent   with  the   terms   of  the   Plan.
          Notwithstanding the foregoing,  in no event shall the recognition
          of an alternate  payee's  rights in accordance  with this Section
          9.5 be deemed to include the right to make a withdrawal  pursuant
          to the  provisions  of Article VIII or to receive any benefits in
          the form of a partial payment.

          Any  Accounts  maintained  on  behalf  of an  alternate  payee in
          accordance  with this Section 9.5 shall in all events be invested
          in such Investment Fund as the Administrative  Committee may from
          time to time specify.

          Any other provision of the Plan to the contrary  notwithstanding,
          the  Administrative  Committee  is  authorized,  pursuant to such
          uniform and  nondiscriminatory  rules as it shall establish which
          shall be  consistent  with  applicable  law and the  terms of the
          applicable  qualified  domestic  relations  order, to payout as a
          single sum, an alternate  payee's Vested  Interest under the Plan
          if the value of such  interest,  as of the  applicable  valuation
          date,  is not in excess of $5,000.  In addition,  if an alternate
          payee's  Vested  Interest  under the Plan exceeds  $5,000 and the
          alternate  payee is not  entitled  to a share of future  Employer
          contributions under the Plan, the alternate payee may elect to be
          paid such Vested Interest as soon as administratively practicable
          in the form of a lump sum or may  elect to  receive  such  Vested
          Interest  at  any  time  after  the  "earliest   retirement  age"
          described in Section 414(p)(4)(B) of the Code.

9.6       Latest Commencement of Benefits
          -------------------------------

          Unless a Participant  otherwise elects, a Participant's  benefits
          under the Plan shall  begin not later than the 60th day after the
          close  of the Plan  Year in which  the  latest  of the  following
          events  occur (a) the  Participant  attains  age 65; (b) the 10th
          anniversary of the date the  Participant's  participation  in the
          Plan commences; (c) the Participant's employment with the Company
          or any Employer is terminated.

9.7       Mandatory Commencement of Benefits
          ----------------------------------

          Notwithstanding  any  inconsistent  provision  of  the  Plan  and
          effective January 1, 2003, all distributions under the Plan shall
          be made in accordance with Code Section 401(a)(9),  including the
          incidental   death   benefit   requirements   of   Code   Section
          401(a)(9)(G),  and Treasury  Regulations  Sections  1.401(a)(9)-1
          through   1.401(a)(9)-9.   Specifically,   distribution   of  the
          Participant's interest shall:

               (i)  Be completed no later than the Required Beginning Date;
                    or

               (ii) Commence  not later than the  Required  Beginning  Date
                    with distribution to the Participant made over the life
                    of the  Participant  or joint lives of the  Participant
                    and a  designated  beneficiary  or a period  not longer
                    than the life of the  Participant or joint lives of the
                    Participants and a designated beneficiary.

               For purposes of this Section 9.7,  Required  Beginning  Date
               shall mean April 1 of the calendar year  following the later
               of the calendar year in which the Participant attains age 70
               1/2 or the calendar year in which the Participant terminates
               employment or retires; provided, however, if the Participant
               is a  five-percent  owner (as defined in Code Section  416),
               the Required Beginning Date shall be April 1 of the calendar
               year  following the calendar  year in which the  Participant
               attains  age  70  1/2,  regardless  of  the  date  that  the
               five-percent owner terminates employment or retires.

<PAGE>

9.8       Death Benefits
          --------------

          If a Participant  shall die before  complete  distribution of his
          Vested  Interest,   the  undistributed  balance  of  such  Vested
          Interest   shall  be  distributed   to  his   Beneficiary.   Each
          Participant  shall  have the right from time to time to file with
          the  Administrative  Committee a designation  of  Beneficiary  to
          receive death benefits.  Upon the death of the  Participant,  the
          remaining balance of the  Participant's  Vested Interest shall be
          distributed to his  Beneficiary in a lump sum. Such lump sum must
          be paid  within  five years  after the date of the  Participant's
          death.

9.9       Distributions Upon Plan Termination or other Events
          ---------------------------------------------------

          Upon  termination  of  the  Plan,   complete   discontinuance  of
          contributions  by  Employers,  or  closing or  divestment  of any
          Employer  (but only with  respect to Eligible  Employees  of such
          Employer),  Vested Interests of Participants shall be distributed
          at the  time  and  in the  manner  as  may be  decided  on by the
          Administrative  Committee  upon rules that will be uniformly  and
          nondiscriminatory applied.

9.10      Identity and Competence of Payees
          ---------------------------------

          If the Administrative Committee receives evidence satisfactory to
          it that a person  entitled to receive any benefit  under the Plan
          is physically or mentally incompetent to receive such benefit and
          to  give a valid  release  therefore,  or is a  minor,  and  that
          another  person  or an  institution  is then  maintaining  or has
          custody  of such  person,  unless  claim  shall  have  been  made
          therefore by a duly appointed guardian,  committee or other legal
          representative,   the  Administrative   Committee  may  authorize
          payment of such benefit to such other person or  institution  and
          the release of such other person or institution  shall be a valid
          and complete discharge for the payment of such benefit.

          Every person  becoming  entitled to any  benefits  under the Plan
          shall furnish the Administrative  Committee with such information
          as it may  require,  including,  but not limited to, proof of age
          relating to himself and any person nominated as a Beneficiary.

9.11      Direct Rollover of Eligible Rollover Distribution
          -------------------------------------------------

          Notwithstanding  any  provision  of the  Plan to the  contrary  a
          Distributee  may  elect,  subject  to  provisions  adopted by the
          Administrative  Committee  which shall be consistent  with income
          tax  regulations,  to have any  portion of an  Eligible  Rollover
          Distribution  paid  directly  to  an  Eligible   Retirement  Plan
          specified by the  Distributee in a Direct  Rollover to such plan.
          For purposes of this Section:

          (a)  The term  "Distributee"  shall  mean an  Employee  or former
               Employee. In addition, such an individual's surviving spouse
               or such an  individual's  spouse or former  spouse who is an
               alternate  payee within the meaning of Section  414(p)(8) of
               the Code are  Distributees  with  respect to the interest of
               the spouse or former spouse.

          (b)  The term  "Eligible  Rollover  Distribution"  shall mean any
               distribution  of all or any  portion  of the  balance to the
               credit of the Distributee  other than any distribution  that
               is one of a series of substantially  equal periodic payments
               made for the life (or life expectancy) of the Distributee or
               the  joint  lives  (or  joint  life   expectancies)  of  the
               Distributee and his  beneficiary,  or for a specified period
               of ten years or more;  any  distribution  to the extent such
               distribution  is required  under  Section  401(a)(9)  of the
               Code;  that  portion  of  a  Hardship   withdrawal  that  is
               attributable to Basic Salary  Reduction  Contributions;  and
               for  periods  before  January  1, 2002,  the  portion of any
               distribution  that is not includible in gross income. On and
               after January 1, 2002, a portion of a distribution shall not
               fail to be an Eligible Rollover  Distribution merely because
               the portion  consists of  after-tax  employee  contributions
               which are not  includible  in gross  income.  However,  such
               portion may be paid only to an individual retirement account
               or annuity  described in Code Section 408(a) or (b), or to a
               qualified  defined   contribution  plan  described  in  Code
               Section  401(a) or 403(a) that agrees to separately  account
               for amounts so transferred,  including separately accounting
               for the portion of such distribution  which is includible in
               gross income and the portion of such  distribution  which is
               not so includible.

          (c)  The term "Eligible Retirement Plan" shall mean an individual
               retirement account or annuity, as described in Code Sections
               408(a) and 408(b),  respectively,  an annuity plan described
               in  Section  403(a)  of  the  Code,  or  a  qualified  trust
               described  in Section  401(a) of the Code that  accepts that
               Distributee's Eligible Rollover  Distribution.  In addition,
               with respect to Eligible Rollover  Distributions  made after
               December 31, 2001,  an Eligible  Retirement  Plan shall also
               mean an annuity contract  described in Section 403(b) of the
               Code and an eligible plan under  Section  457(b) of the Code
               which is maintained by a state,  political  subdivision of a
               state,  or any  agency  or  instrumentality  of a  state  or
               political  subdivision  of  a  state  and  which  agrees  to
               separately  account for amounts  transferred  into such plan
               from this Plan.  However,  with respect to Eligible Rollover
               Distributions  made  before  January 1, 2002 to a  surviving
               spouse,  an  "Eligible  Retirement  Plan"  is an  individual
               retirement account or annuity.

          (d)  The term "Direct  Rollover" shall mean a payment by the Plan
               to  the   Eligible   Retirement   Plan   specified   by  the
               Distributee.

<PAGE>

                                         ARTICLE X

                                 ADMINISTRATION OF THE PLAN

10.1      Plan Administrator
          ------------------

          The Company shall be the "plan  administrator" of the Plan within
          the  meaning  of ERISA.  Administration  of the Plan shall be the
          responsibility of the Company except to the extent that:

          (a)  Administrative  responsibilities  have been delegated to the
               Administrative  Committee in accordance with this Article X;
               and

          (b)  Authority  to hold  the  Trust  Fund of the  Plan  has  been
               delegated  to  the  Trustee  and  authority  to  direct  the
               investment  and  reinvestment  of the  Trust  Fund  has been
               delegated to the Administrative Committee; and

          (c)  Authority to act for the Company has otherwise been reserved
               to the Board of Directors.

          The Company shall be the "named fiduciary" for purposes of ERISA;
          provided,  however,  that  Participants  and  Beneficiaries  with
          Accounts  maintained  on their  behalf  under  the Plan  shall be
          considered  "named  fiduciaries"  solely  to the  extent of those
          fiduciary duties and responsibilities  which are directly related
          to the exercise of voting  rights with respect to Plan  interests
          invested  in the  Mettler  Toledo  Stock  Fund  (and not to other
          aspects of Plan operation and/or administration).

10.2      Appointment of the Administrative Committee
          -------------------------------------------

          The Administrative Committee shall consist of not less than three
          persons  appointed  from time to time by the Board of  Directors.
          The members of the  Administrative  Committee  shall serve at the
          pleasure  of the  Board of  Directors  without  compensation  and
          without bond or other security at the pleasure of such Board. Any
          member of the  Administrative  Committee may resign by delivering
          his written resignation to the Board of Directors.

          The members of the  Administrative  Committee  may  appoint  from
          their  number  such  committees  with such  powers as they  shall
          determine; may authorize one or more of their number or any agent
          to execute  or  deliver  any  instrument  or make any  payment on
          behalf of the Administrative  Committee;  and may retain counsel,
          employ  agents  and  obtain  clerical,   medical,  actuarial  and
          accounting  services as the Administrative  Committee may require
          or deem advisable from time to time. The Administrative Committee
          shall hold meetings upon notice, at such place or places,  and at
          such time or times as it may from time to time determine.

          A majority of the members of the Administrative Committee then in
          office shall  constitute a quorum for the transaction of business
          at any meeting of the Administrative Committee. All action by the
          Administrative  Committee  shall  be taken  at a  meeting  of the
          Administrative  Committee.  The vote of a majority of the members
          present  at the time of the vote,  if a quorum is present at such
          time,  shall  be the  act of the  Administrative  Committee.  Any
          action  required or  permitted  to be taken at any meeting of the
          Administrative  Committee  may be taken  without a meeting,  if a
          majority of the members of the  Administrative  Committee consent
          thereto in writing.

          Members of the  Administrative  Committee may be  reimbursed  for
          expenses  properly and actually  incurred in the  performance  of
          their duties.

10.3      Powers of the Administrative Committee
          --------------------------------------

          The  Administrative   Committee  shall  have  sole  and  absolute
          discretion to interpret  and apply the  provisions of the Plan to
          determine   the  rights  and   status  of   Eligible   Employees,
          Participants  and all others under the Plan,  to decide  disputes
          arising  under  the  Plan,  and to make  any  determinations  and
          findings of fact with respect to benefits  payable  hereunder and
          the persons  entitled  thereto as may be required for any purpose
          under the Plan. Without limiting the generality of the above, the
          Administrative   Committee  is  hereby   granted  the   following
          authority  which it  shall  discharge  in its  sole and  absolute
          discretion in accordance  with Plan  provisions as interpreted by
          the Administrative Committee:

          (a)  To  make  all   determinations   of  fact  relating  to  the
               eligibility of any Employee to become a Participant, to make
               Basic Salary Reduction Contributions, to receive allocations
               of    Company    Matching    Contributions,    Discretionary
               Contributions,  Safe Harbor Matching Contributions,  Savings
               Contributions,     Special     Contributions,     Transition
               Contributions and/or Qualified  Contributions and to receive
               distributions from the Plan.

          (b)  To authorize  the Trustee to make  payment of benefits  from
               the Trust Fund to Participants and Beneficiaries entitled to
               such  benefits  under the Plan and to  establish  procedures
               governing  the manner in which such  authorizations  will be
               made.

          (c)  To develop procedures for the establishment and verification
               of   service,   Compensation   and   Eligible   Earnings  of
               Participants,  and,  after  affording  Participants  and the
               Employer  an  opportunity  to make  objection  with  respect
               thereto,  to establish such facts  conclusively from time to
               time in advance of retirement.

          (d)  To obtain from the Employer,  Participants and Beneficiaries
               such  information  as  shall  be  necessary  for the  proper
               administration of the Plan.

          (e)  To   establish   rules  and   procedures   relating  to  the
               administration  of  the  Plan  and  the  transaction  of its
               business  and to  enforce  the rules and  procedures  in the
               manner in which it sees fit.

          (f)  To  retain  counsel,  employ  agents  and  provide  for such
               clerical,  accounting  and  consulting  services  as  may be
               necessary   or   appropriate   in   connection    with   the
               administration of the Plan.

          (g)  To perform all reporting and disclosure requirements imposed
               upon the Plan by ERISA,  the  Code,  the  Securities  Act of
               1933, as amended,  the  Securities and Exchange Act of 1934,
               as amended, or any other lawful authority.

          (h)  To  ensure  that  procedures  are   established   which  are
               sufficient to safeguard the  confidentiality  of information
               relating to the purchase,  holding, and sale of Common Stock
               held in the Mettler  Toledo  Stock Fund and the  exercise of
               voting,  tender,  and similar  rights with respect to Common
               Stock held in the  Mettler  Toledo  Stock Fund and to ensure
               that such procedures are being followed.

          (i)  To  appoint  and  remove an  independent  fiduciary  for the
               purpose  of   carrying-out   activities   relating   to  any
               situations  which the  Administrative  Committee  determines
               involves  an  unreasonable   potential  for  undue  Employer
               influence with regard to the direct or indirect  exercise of
               shareholder  rights with respect to Common Stock holdings in
               the Mettler Toledo Stock Fund.

          (j)  To take  such  steps  as it,  in its  discretion,  considers
               necessary or  appropriate  to remedy any inequity  under the
               Plan that results  from  incorrect  information  received or
               communicated or as the consequence of administrative error.

          (k)  To correct any defect, reconcile any inconsistency or supply
               any omission under the Plan.

          (l)  To  allocate  among  its  members  or,  except  as  provided
               otherwise  herein,  to  delegate  to other  persons all or a
               portion of its powers and duties as it sees fit.

          (m)  To exercise such other  authority and  responsibility  as is
               specifically  assigned to it under the terms of the Plan and
               to perform any other acts  necessary to the  performance  of
               its powers and duties.

          All powers of the Administrative  Committee shall be exercised in
          a  uniform  manner  consistent  with all  provisions  of the Plan
          unless  the  power is being  exercised  in  order to  correct  or
          reconcile provisions which are inconsistent. All decisions of the
          Administrative Committee,  including those regarding the facts of
          any case, the  interpretation of any provision of the Plan or its
          application  to any  case,  and as to  any  other  interpretative
          matter or other determination or question under the Plan shall be
          final  and  binding  upon  the  Employer,   Eligible   Employees,
          Participants, Beneficiaries and all other persons, subject to the
          provisions   of   Section   10.5.   Any   action   taken  by  the
          Administrative  Committee  with respect to the rights or benefits
          of  any  person   under  the  Plan  shall  be  revocable  by  the
          Administrative Committee as to payments or distributions from the
          Trust Fund not  theretofore  made  pursuant to such  action;  and
          appropriate  adjustments  may  be  made  in  future  payments  or
          distributions  to a  Participant  or  Beneficiary  to offset  any
          excess payment or make up for any underpayment previously made to
          such Participant or Beneficiary from the Trust Fund. No ruling or
          decision of the  Administrative  Committee  in any one case shall
          create a basis for an  adjustment  in any other case prior to the
          date of written filing of each specific claim.

10.4      Individual Accounts
          -------------------

          The  Administrative  Committee  shall  maintain,  or  cause to be
          maintained,  records  showing  the  individual  balances  in each
          Account  maintained on behalf of  Participants  and other persons
          under  the  Plan.  However,  maintenance  of  those  records  and
          Accounts  shall not require any  segregation  of the funds of the
          Plan.

10.5      Claim Procedures
          ----------------

          For  purposes  of the  Plan,  a claim  for  benefit  is a written
          application  for benefit  filed on an  Appropriate  Form with the
          Administrative  Committee.  In the  event  that any  Participant,
          Beneficiary,   alternate  payee  or  other  person   (hereinafter
          referred  to in this  Section  as the  "Claimant")  claims  to be
          entitled  to a benefit  under the  Plan,  and the  Administrative
          Committee determines that such claim should be denied in whole or
          in part, the Administrative  Committee shall, in writing,  notify
          such  Claimant  within 90 days of  receipt of such claim that his
          claim has been denied,  setting  forth the  specific  reasons for
          such  denial.  Such  notification  shall be  written  in a manner
          reasonably  expected to be  understood by such Claimant and shall
          set  forth  the  pertinent  sections  of the Plan  relied  on, an
          explanation  of  additional  material  or  information,  if  any,
          necessary  for the Claimant to perfect the claim,  a statement of
          why the material or information is necessary,  for periods on and
          after  January 1, 2002,  a statement of the  Claimant's  right to
          bring a  civil  action  under  Section  502(a)  of  ERISA  and an
          explanation of the Plan's claims review procedure,  including the
          time limits  applicable to such  procedure.  Within 90 days after
          the mailing or delivery by the  Administrative  Committee of such
          notice,  such  Claimant  may  request,  by mailing or delivery of
          written notice to the Administrative  Committee,  a review and/or
          hearing by the  Administrative  Committee of the decision denying
          the claim.  If the Claimant fails to request such a review and/or
          hearing  within  such 90 day  period,  it shall  be  conclusively
          determined  for all purposes of this Plan that the denial of such
          claim  by  the  Administrative  Committee  is  correct.  If  such
          Claimant  requests  a  hearing  within  such 90 day  period,  the
          Administrative Committee shall designate a time (which time shall
          be not less  than 7 nor more  than 60 days  from the date of such
          Claimant's  notice to the  Administrative  Committee) and a place
          for such hearing, and shall promptly notify such Claimant of such
          time and place. If only a review is requested, the Claimant shall
          have  30 days  after  filing  a  request  for  review  to  submit
          additional  written  material in support of the claim. As part of
          such review,  the Claimant or his duly authorized  representative
          shall have the right to review,  upon request and free of charge,
          all documents, records or other information relevant to the claim
          and  to  submit  any  written  comments,  documents,  or  records
          relating to the claim to the Administrative Committee.  Following
          a request for review, the Administrative  Committee shall provide
          written  notification  of  its  decision  to the  Claimant.  Such
          decision shall take into account all comments, documents, records
          and other information properly submitted by the Claimant, whether
          or not such  information  was  considered  in the original  claim
          determination.  The  decision  on review  will be  binding on all
          parties,  will be  written  in  such a  manner  calculated  to be
          understood by the Claimant, will contain specific reasons for the
          decision and specific  references to the Plan provisions on which
          its  decision  is based,  will  indicate  that the  Claimant  may
          review,  upon request and free of charge, all documents,  records
          or other  information  relevant to the claim and,  for periods on
          and after  January  1,  2002,  will  contain a  statement  of the
          Claimant's  right to bring a civil action under Section 502(a) of
          ERISA.  Such decision on review shall be made within a reasonable
          time  period  but not  later  than 60 days  after  receiving  the
          request,  unless special  circumstances  require an extension for
          processing  the review.  If such an extension  is  required,  the
          Administrative  Committee  shall  notify  the  Claimant  of  such
          special  circumstances  and of the date,  no later  than 120 days
          after the original  date the review was  requested,  on which the
          Administrative   Committee   will  notify  the  Claimant  of  its
          decision. If the determination of the Administrative Committee is
          favorable to the Claimant, it shall be binding and conclusive. If
          the determination of the  Administrative  Committee is adverse to
          such  Claimant,  it shall be binding  and  conclusive  unless the
          Claimant  notifies the  Administrative  Committee  within 90 days
          after  the  mailing  or  delivery  to him  by the  Administrative
          Committee of its determination that he intends to institute legal
          proceedings  challenging the determination of the  Administrative
          Committee,  and actually  institutes such legal proceeding within
          180 days after such mailing or delivery.

10.6      Appointment of Accountant
          -------------------------

          The Company  shall  engage a  "qualified  public  accountant"  to
          prepare such audited financial statements of the operation of the
          Plan as shall be required by ERISA.

10.7      Indemnification of Certain Persons
          ----------------------------------

          The Company shall  indemnify and hold harmless all members of the
          Administrative  Committee  from  any and all  liability  imposed,
          whether  individually  or  jointly,  under  ERISA  and  under any
          similar legislation,  with respect to any action or omission as a
          fiduciary  of  the  Plan,  unless  such  persons  have  knowingly
          participated  in, or have knowingly  undertaken to conceal an act
          or omission  knowing  that such act or  omission  was a breach of
          their fiduciary duty. The Company may purchase  insurance for the
          Administrative   Committee   to  cover   any  of  its   potential
          liabilities with respect to the Plan.

10.8      Special Withdrawal Period
          -------------------------

          The  Administrative  Committee  may,  once a  year,  suspend  the
          requirements of Section 8.1 of the Plan to provide for a "special
          withdrawal  period" which shall be subject to the  limitations of
          the Plan and/or permit an additional  increase or decrease in the
          Basic Salary Reduction Contribution rate as stated in Section 3.3
          of the Plan.

10.9      Plan Expenses
          -------------

          All  reasonable  expenses,  taxes  and  fees  of  the  Plan,  the
          Administrative   Committee  and  the  Trustee   incurred  in  the
          administration  of the Plan and Trust Fund shall be paid from the
          Trust Fund;  provided,  however that the  obligation of the Trust
          Fund to pay such expenses, taxes and fees shall cease to exist to
          the  extent  that the same are  paid,  at the  discretion  of the
          Company, by the Employers or other members of the Group.

<PAGE>

                                         ARTICLE XI

                                OPERATION OF THE TRUST FUND

11.1      Trust Fund; Trustee
          -------------------

          (a)  All the  funds of the Plan  shall  be held by a  Trustee  or
               Trustees  appointed  from  time  to  time  by the  Board  of
               Directors,  in trust under a Trust Agreement adopted,  or as
               amended,  by the Board for use in providing  the benefits of
               the  Plan  and  paying  its  reasonable  expenses  not  paid
               directly  by any  Employer;  and no  part of the  corpus  or
               income of the Trust Fund shall be used for, or diverted  to,
               purposes   other   than  for  the   exclusive   benefit   of
               Participants or their  Beneficiaries  under the Plan and for
               the payment of the reasonable expenses of the Plan, prior to
               the  satisfaction of all  liabilities  with respect to them,
               provided that any  forfeitures  arising from  termination of
               service  or for  other  reasons  shall  be  used  to  reduce
               Employer contributions otherwise payable, in accordance with
               Article VI. No person shall have any interest in or right to
               any part of the earnings of the Trust Fund or any rights in,
               or to,  or under the  Trust  Fund or any part of the  assets
               thereof,  except as and to the extent expressly  provided in
               the Plan and in the Trust Agreement.

          (b)  The Trustee or  Trustees  also shall  conform to  procedures
               established by the Administrative Committee for disbursal of
               funds of the Plan.  The  Trustee  or  Trustees  shall not be
               liable for any act performed  while subject to directions of
               the  Administrative  Committee  made in accordance  with the
               terms of the Plan.

11.2      Appointment of Investment Manager
          ---------------------------------

          The Board of  Directors  may, in its  discretion,  appoint one or
          more investment  managers (within the meaning of Section 3(38) of
          ERISA) to manage all or part of the assets of the Plan, including
          the power to acquire  and  dispose of said  assets,  as the Board
          shall designate. In that event, authority over and responsibility
          for the management of the assets so designated  shall be the sole
          responsibility of that investment manager.

<PAGE>

                                ARTICLE XII

                ADOPTION, AMENDMENT, TERMINATION AND MERGER

12.1      Adoption of the Plan
          --------------------

          The adoption of this Plan, and of any amendments  thereof adopted
          subsequently,  shall be conditioned on  qualification of the Plan
          under Section 401(a) of the Code.

12.2      Right to Amend
          --------------

          This  Plan  may be  wholly  or  partially  amended  or  otherwise
          modified  at any  time  by  written  instrument  executed  by the
          President or a Vice President of the Company, provided,  however,
          that:

          (a)  No amendment or modification  may be made, at any time prior
               to the  satisfaction of all liabilities  under the Plan with
               respect to  Participants  and their  Beneficiaries  and with
               respect to the expenses of the Plan,  which would permit any
               part of the  corpus or  income of the Trust  Fund to be used
               for or  diverted to  purposes  other than for the  exclusive
               benefit of such  persons  under the Plan and for the payment
               of the expenses of the Plan;

          (b)  No  amendment  or  modification  shall have any  retroactive
               effect so as to deprive  any person of any  benefit  already
               accrued,  except that any amendment may be made  retroactive
               which is  necessary to bring the Plan into  conformity  with
               governmental  regulations  in order to qualify  the Plan for
               tax purposes and meet the requirements of ERISA; and

          (c)  No  amendment  or  modification  may  be  made  which  shall
               increase the duties or  liabilities  of the Trustee  without
               the written consent of the Trustee.

12.3      Termination or Discontinuance of Contributions
          ----------------------------------------------

          (a)  The  Plan  may be  terminated  at any  time by the  Board of
               Directors  by  written  notice  to  the  Employers,  to  the
               Administrative  Committee  and to the  Trustee  at the  time
               acting  hereunder,  but only upon condition that such action
               is taken as shall render it  impossible  for any part of the
               corpus  or  income  of the  Trust  Fund  to be  used  for or
               diverted to purposes other than for the exclusive benefit of
               the Participants and their  Beneficiaries under the Plan and
               for the payment of the administrative costs of the Plan.

          (b)  If the Plan is terminated  under Section 12.3(a) above or in
               the event the Plan is deemed to be partially terminated with
               respect to one or more groups of Eligible Employees, written
               notice  of  such   determination   shall  be  given  to  the
               Employers,  to  the  Administrative  Committee  and  to  the
               Trustee at the time acting  hereunder,  the Trust Fund shall
               be revalued as if the  termination  date were the  Valuation
               Date,  and the current value of the Account of each affected
               Participant  who is then an Eligible  Employee  shall become
               nonforfeitable,  and shall be distributed in accordance with
               Article IX to the extent  permissible  under  applicable law
               and regulations.

          (c)  If the Plan is  terminated by the Board of Directors but the
               Board of Directors  determines  that the Trust Fund shall be
               continued  pursuant to its terms and the  provisions of this
               Section,  no further  contributions  shall be made by either
               Participants  or any  Employer,  but the Trust Fund shall be
               administered as though the Plan were otherwise in full force
               and effect.  If the Trust Fund is  subsequently  terminated,
               the provisions of Section 12.3(b) above shall then apply.

          (d)  In addition to the right to amend or terminate the Plan, any
               Employer  may at any  time,  by  resolution  of its board of
               directors,  discontinue any or all  contributions  under the
               Plan.  Unless  additional action is taken by the Employer in
               connection with a  discontinuance  of  contributions  to the
               Plan, it shall be deemed that Section 12.3(c) is applicable.

12.4      Merger, Consolidation or Transfer
          ---------------------------------

          The  Company  may merge or  consolidate  the Plan with,  transfer
          assets and  liabilities  of the Plan to, or receive a transfer of
          assets and  liabilities  from, any other plan without the consent
          of  any  other   Employer  or  other   person  if  such   merger,
          consolidation  or  transfer is  effectuated  in  accordance  with
          applicable  law and such  other plan  meets the  requirements  of
          Sections   401(a)   and   501(a)  of  the  Code.   No  merger  or
          consolidation  with, or transfer of assets or liabilities to, any
          other plan,  shall be made unless the benefit each Participant in
          this Plan would receive if the Plan were  terminated  immediately
          after such  merger or  consolidation,  or  transfer of assets and
          liabilities,  would be at least as great as the  benefit he would
          have  received had the Plan  terminated  immediately  before such
          merger, consolidation or transfer.

<PAGE>

                                ARTICLE XIII

                               MISCELLANEOUS

13.1      Uniform Administration
          ----------------------

          Whenever,  in the  administration  of the  Plan,  any  action  is
          required  by  an  Employer  or  the   Administrative   Committee,
          including,  but not by way of limitation,  action with respect to
          eligibility  or  classification  of employees,  contributions  or
          benefits,  such  action  shall be uniform in nature as applied to
          all persons similarly  situated and no such action shall be taken
          which will  discriminate in favor of Participants  who are Highly
          Compensated Employees.

13.2      Payments from Trust Fund
          ------------------------

          The  benefits  under the Plan  shall be payable  solely  from the
          Trust Fund and each Participant,  Beneficiary or other person who
          shall  claim the  right to any  payment  under the Plan  shall be
          entitled  to look only to the  Trust  Fund for such  payment.  No
          liability for the payment of benefits or any other payments under
          the Plan shall be imposed upon the Administrative  Committee, the
          Company, any Employer, or the officers, directors or stockholders
          of the Company.

          Except  as  expressly  provided  in  the  Plan,  no  Participant,
          Beneficiary or other person  entitled to benefits may withdraw or
          receive any monies from the Trust Fund.

13.3      Plan Not a Contract of Employment
          ---------------------------------

          Nothing  herein  contained  shall be deemed to give any  Eligible
          Employee or Participant the right to be retained in the employ of
          an Employer  or to  interfere  with the right of the  Employer to
          discharge any Eligible Employee or Participant at any time.

13.4      Applicable Law
          --------------

          Except to the extent  governed by Federal  law, the Plan shall be
          administered  and  interpreted in accordance with the laws of the
          State of Ohio.

13.5      Unclaimed Amounts
          -----------------

          It shall be the sole duty and  responsibility of a Participant or
          Beneficiary to keep the Administrative  Committee apprised of his
          whereabouts  and of his  most  current  mailing  address.  If any
          benefit to be paid under the Plan is unclaimed,  within such time
          period as the Administrative  Committee shall prescribe, it shall
          be forfeited and applied to reduce Employer  contributions and/or
          pay  reasonable  expenses of the Plan in accordance  with Section
          6.2; provided,  however, that such forfeiture shall be reinstated
          if a claim  is made by the  Participant  or  Beneficiary  for the
          forfeited benefit.

<PAGE>

13.6      Severability
          ------------

          If  any  provision  of  this  Plan  is  held  to  be  invalid  or
          unenforceable,  such  determination  shall not  affect  the other
          provisions  of this  Plan.  In such  event,  this  Plan  shall be
          construed  and  enforced  as if  such  provisions  had  not  been
          included herein.

13.7      Employer Records
          ----------------

          The records of a  Participant's  Employer shall be presumed to be
          conclusive   of  the   facts   concerning   his   employment   or
          non-employment,   Periods  of  Service,   Periods  of  Severance,
          Compensation   and  Eligible   Earnings  unless  shown  beyond  a
          reasonable doubt to be incorrect.

13.8      Application of Plan Provisions
          ------------------------------

          This Plan shall be binding on all Participants and  Beneficiaries
          and  upon  heirs,  executors,  administrators,   successors,  and
          assigns of all persons having an interest herein.  The provisions
          of the Plan in no event  shall be  considered  as giving any such
          person any legal or  equitable  right  against the Company or any
          Employer,  any  of  its  officers,   Employees,   directors,   or
          shareholders,  or against the Trustee,  except such rights as are
          specifically  provided  for in the Plan or  hereafter  created in
          accordance with the terms of the Plan.

13.9      IRC 414(u) Compliance Provision
          -------------------------------

          Notwithstanding  any  provision  of the Plan to the  contrary and
          effective as of December 12,  1994,  contributions,  benefits and
          service credit with respect to qualified  military  service shall
          be provided in accordance with Section 414(u) of the Code.

13.10     IRC 125 Compliance Provision
          ----------------------------

          For  purposes of  determining  IRC 414(s)  compensation  (Section
          3.4(c) of the Plan) and IRC 415 compensation  (Section 4.7 of the
          Plan),  amounts under Section 125 of the Code include any amounts
          not  available to a  Participant  in cash in lieu of group health
          coverage because the Participant is unable to certify that he has
          other  health  coverage.  An amount  will be treated as an amount
          under  Section  125 of the  Code  only if the  Employer  does not
          request or collect information  regarding the Participant's other
          health  coverage as part of the enrollment  process of the health
          plan. This Section 13.10 shall apply to Plan Years and limitation
          years beginning on and after January 1, 1998.

<PAGE>

                                ARTICLE XIV

                    PARTICIPATION IN PLAN BY AFFILIATES

14.1      Participation by Affiliate
          --------------------------

          Any member of the Group, for itself or any of its divisions, may,
          with  the  written  consent  of the  Board  of  Directors  of the
          Company,  become a party to this  Plan by  adopting  the Plan for
          some or all of its employees. Upon the filing with the Trustee of
          a certified copy of the resolutions or other documents evidencing
          the  adoption  of this Plan and the  notice to the  Company,  the
          member of the Group shall be included in the Plan as an Employer,
          and shall be bound by all the terms thereof as they relate to its
          employees. Any contributions provided for in the Plan and made by
          such Employer  shall become a part of the Trust Fund and shall be
          held by the Trustee  subject to the terms and  provisions  of the
          Trust Agreement.

14.2      Withdrawal by Affiliate
          -----------------------

          In the event that an  organization  which has become an  Employer
          shall cease to be a member of the Group, such organization  shall
          forthwith be deemed to have withdrawn from the Plan and the Trust
          Agreement.  Also, any 1 or more of the Employers may  voluntarily
          withdraw  from the Plan by giving 6 months'  notice in writing of
          intention  to withdraw to the Board of  Directors  of the Company
          and the  Administrative  Committee (unless a shorter notice shall
          be agreed to by the Board of  Directors  of the  Company  and the
          Administrative  Committee).  The Company may, with the consent of
          the Board of Directors  withdraw  from the Plan at any time,  and
          the Board of Directors may in its discretion at any time withdraw
          the   authorization   of  any   subsidiary  or  any  Employer  to
          participate in the Plan.

          In any of these  circumstances the affected Employees shall cease
          to  be  Participants  under  the  Plan,  and  the  Administrative
          Committee shall arrange for the withdrawal or segregation of such
          Employees'  share of the assets of the Plan,  as  determined by a
          valuation  as of  the  date  of  the  event.  The  Administrative
          Committee  shall have the full discretion as to the nature of the
          funds to be withdrawn or  segregated,  and its valuation  thereof
          for that  purpose  shall be  conclusive.  Unless  a  savings  and
          investment plan substantially similar in form to the Plan or such
          other form as may be approved  by the  Internal  Revenue  Service
          under  Section  401(a) of the Code is  continued  by a  successor
          corporation  for its Employees,  the Plan shall be deemed to have
          terminated  with respect to such  Employees  and such  segregated
          assets  shall  be fully  vested  to them in  accordance  with the
          provisions of Section 12.3. The  Administrative  Committee  shall
          arrange for the disposition of such assets through transfers to a
          successor  trust, as assignment of all or a portion of the rights
          under  any  insurance  contract  or by any  other  means it shall
          determine.

14.3      Special Rule for Corporate Reorganizations
          ------------------------------------------

          In the event the Company  acquires control of any organization by
          purchase of assets or stock, merger, amalgamation,  consolidation
          or any  other  similar  event,  or in the  event  control  of the
          Company  should be  acquired by some other  organization  by such
          means, the Board of Directors,  or the Administrative  Committee,
          or any officer of the Company who has been delegated  appropriate
          authority by the Board of  Directors,  may  authorize  such other
          organization  to  participate  in the Plan  upon  agreement  that
          contributions shall be made as required under the Plan, and shall
          determine to what extent, if any, credit for employment with such
          other  organization  shall be granted as to the employees of such
          other organization for the purpose of determining eligibility and
          vesting rights hereunder.

<PAGE>

                                 ARTICLE XV

                                   LOANS

15.1      Availability
          ------------

          The  Administrative  Committee is  authorized  to  establish  and
          maintain a Participant  loan program and may authorize loans from
          the Plan to  Participants  in such  amounts and  pursuant to such
          terms and procedures as the Administrative  Committee  determines
          in its sole discretion are appropriate,  provided that such loans
          are available to any creditworthy Participant who is an Employee,
          excluding Participants on leave of absence or lay-off,  temporary
          or part-time Employees and terminated Participants,  on a uniform
          and  nondiscriminatory  basis.  Loans shall be permitted  for any
          purpose.

15.2      Terms and Procedures
          --------------------

          All loans shall be granted in accordance with the following terms
          and procedures:

          (a)  The amount of any loan to a Participant shall not exceed the
               lesser of (1)  $50,000  reduced by the excess of the highest
               outstanding   loan  balance  of  the   Participant's   loans
               outstanding  during the  immediately  prior 12-month  period
               (ending  the day  before the new loan is  granted)  over the
               outstanding  balance of all loans to the  Participant on the
               date  the  new  loan  is  made;  or  (2) 50  percent  of the
               Participant's  Vested  Interest.  All  loans  shall be for a
               minimum amount of $1,000.

          (b)  All  loans   shall  be  subject  to  the   approval  of  the
               Administrative Committee or its agent.

          (c)  An application for a loan by a Participant  shall be made on
               an Appropriate Form sent to the Administrative  Committee or
               its agent, whose action thereon shall be final.

          (d)  The period of repayment  for any loan shall be arrived at by
               mutual agreement between the Administrative Committee or its
               agent and the  borrower,  but all loans shall become due and
               payable upon  termination of employment and the period in no
               event shall exceed 5 years.

          (e)  Each loan shall bear a  reasonable  rate of  interest  to be
               determined by the Administrative  Committee to be comparable
               to  commercial  lending  rates  on  bank  loans  secured  by
               certificates  of deposit in the area at the time the loan is
               made.  The  interest  rate on any new loan  that is  granted
               shall be  redetermined  from time to time  pursuant  to such
               uniform and  nondiscriminatory  rules as the  Administrative
               Committee shall prescribe. Each loan shall be secured by the
               present and future balance in the  Participant's  account or
               by such other security as the  Administrative  Committee may
               deem to be adequate.

          (f)  Each loan shall be treated as a separate  investment  of the
               funds credited to such Participant's  Accounts.  Loans shall
               be made from the Investment  Funds maintained under the Plan
               in such order of priority as the  Administrative  Committee,
               pursuant to a uniform and  nondiscriminatory  policy,  shall
               direct.  Payments by a Participant on any such loan shall be
               credited  to  such  Participant's  account  in  the  various
               Investment   Funds   in   the   same   proportions   as  the
               Participant's current investment option election at the time
               loan payments are made.

          (g)  No  distribution  shall be made to any Participant or former
               Participant  or to a  Beneficiary  of any  such  Participant
               unless and until all  unpaid  loans to such  Participant  or
               former Participant, including accrued interest thereon, have
               been paid. In the event of termination  of  employment,  any
               distribution  of  Account  balances  shall be reduced by and
               applied  to repay the amount of any  outstanding  plan loans
               and accrued interest thereon.

          (h)  A Participant may not have more than one loan outstanding at
               any time.

          (i)  Repayment of loans shall be by payroll  deduction,  or other
               approved method, on a level amortization  basis, except that
               a Participant may repay the outstanding principal balance of
               his loan at any time after one year.

          (j)  In the event a  Participant  defaults  on a Plan  loan,  the
               entire  unpaid  balance  of the loan  shall  become  due and
               payable immediately. A Participant will default on a loan if
               any of the following events occur:

               (i)  The termination of the Participant's employment with an
                    Employer for any reason (including death);

               (ii) Failure  of the  Participant  to make  any  payment  of
                    principal or interest on the loan on or before the date
                    such payment is due;

               (iii)Failure of the  Participant  to perform or observe  any
                    of  his  covenants,  duties  or  agreements  under  the
                    promissory  note  executed  by  the  Participant   with
                    respect to the loan;

               (iv) Receipt by the Plan of opinion of counsel to the effect
                    that (A) the Plan will, or could,  lose its status as a
                    qualified  plan under Code  Section  401(a)  unless the
                    loan  is  repaid  or  (B)  the  loan  violates,  or may
                    violate, any provision of the ERISA;

               (v)  Any portion of the Participant's account that is not in
                    excess of the amount that has been  pledged as security
                    for the  loan  becomes  payable  from  the  Plan to the
                    Participant,  to any Beneficiary of the Participant, or
                    to any "alternate payee" of the Participant pursuant to
                    any qualified  domestic  relations order (as defined in
                    Code Section 414(p)); or

               (vi) The Participant  makes an assignment for the benefit of
                    creditors,   files  a  petition   in   bankruptcy,   is
                    adjudicated insolvent or bankrupt, or becomes a subject
                    of any wage earner  plan under the  federal  Bankruptcy
                    Code or under any applicable  state  insolvency law, or
                    there  is  commenced   against  the   Participant   any
                    bankruptcy,  insolvency,  or other  similar  proceeding
                    which remains  undismissed  for a period of 60 days (or
                    the  Participant  by an act  indicates  his consent to,
                    approval of, or acquiescence in any such proceeding).

          (k)  In the event a default on a Participant  loan occurs and the
               Participant  does not pay the entire  unpaid  balance of the
               loan (with accrued unpaid  interest)  within 5 business days
               after the date the default occurs, the Participant's  Vested
               Interest  under the Plan that has been  pledged as  security
               for repayment of the Plan loan shall be applied immediately,
               to the extent required,  to pay the entire unpaid balance of
               the  loan  (and  all  accrued  unpaid   interest   thereon).
               Notwithstanding   the   foregoing,   no   portion   of   the
               Participant's account consisting of, or attributable to, the
               Participant's elective deferrals (as defined in Code Section
               402(g))  shall  be  actually  distributed  for  purposes  of
               eliminating  the  default  before  the date the  Participant
               terminates  employment  with the  Employer,  or if  earlier,
               attains age 59-1/2.

          (l)  Failure by the Administrative  Committee to strictly enforce
               Plan rights  with  respect to a default on a Plan loan shall
               not constitute a waiver of such rights.

<PAGE>

                                ARTICLE XVI

                     DETERMINATION OF TOP-HEAVY STATUS

16.1      General
          -------

          Notwithstanding any other provisions of the Plan to the contrary,
          for any Plan Year in which the Plan is a Top-Heavy  Plan or Super
          Top-Heavy  Plan, the provisions of this Article shall apply,  but
          only to the extent required by Section 416 of the Code.

16.2      Top-Heavy Plan
          --------------

          This Plan shall be Top-Heavy and an Aggregation  Group shall be a
          Top-Heavy  Group if, as of the  Determination  Date for such Plan
          Year, the sum of the cumulative  accrued  benefits and cumulative
          accounts of Key Employees for the Plan Year exceeds 60 percent of
          the  aggregate  of all the  cumulative  accounts  and  cumulative
          accrued benefits.

          (a)  If the Plan is not included in a Required  Aggregation Group
               with other  plans,  then it shall be  Top-Heavy  only if (i)
               when considered by itself it is a Top-Heavy Plan and (ii) it
               is not  included in a Permissive  Aggregation  Group that is
               not a Top-Heavy Group.

          (b)  If the Plan is included in a Required Aggregation Group with
               other  plans,  it shall be  Top-Heavy  only if the  Required
               Aggregation  Group,  including any  permissively  aggregated
               plans, is Top-Heavy.

16.3      Super Top-Heavy Plan
          --------------------

          This  Plan  shall  be a Super  Top-Heavy  Plan if it  would  be a
          Top-Heavy Plan under Section 16.2, by substituting 90 percent for
          60 percent.

16.4      Cumulative Accrued Benefits and Cumulative Accounts
          ---------------------------------------------------

          The   determination  of  the  cumulative   accrued  benefits  and
          cumulative  accounts  under the Plan shall be made in  accordance
          with Treasury Regulation Section 1.416-1 T-24 and 25. The present
          values of accrued benefits and the amounts of account balances of
          an Employee as of the  Determination  Date shall be  increased by
          the  distributions  made with respect to the  Employee  under the
          Plan  and  any  plan  aggregated  with  the  plan  under  Section
          416(g)(2)  of the Code  during  the 1-year  period  ending on the
          Determination  Date.  The preceding  sentence shall also apply to
          distributions  under a  terminated  plan  which,  had it not been
          terminated,  would  have  been  aggregated  with the  Plan  under
          Section   416(g)(2)(A)(i)   of  the  Code.   In  the  case  of  a
          distribution  made  for  a  reason  other  than  separation  from
          service, death, or disability, this provision shall be applied by
          substituting  "5-year period" for "1-year period".  However,  the
          accrued  benefits  and  accounts  of any  individual  who has not
          performed  services  for an  Employer  during the  1-year  period
          ending on the Determination Date shall not be taken into account.

16.5      Definitions
          -----------

          (a)  "Aggregation  Group"  means  either a  Required  Aggregation
               Group or a Permissive Aggregation Group.

          (b)  "Determination  Date"  means with  respect to any Plan Year,
               the last day of the  preceding  Plan Year, or in the case of
               the first  Plan Year of any plan,  the last day of such Plan
               Year,  or such other date as permitted  by the  Secretary of
               the Treasury or his delegate.

          (c)  "Key  Employee"  means any Employee or former  Employee (and
               the  Beneficiaries  of such Employee) who at any time during
               the Plan Year that  includes the  Determination  Date was an
               officer of an Employer  having  annual IRC 415  compensation
               (as  defined in  Section  4.7)  greater  than  $130,000  (as
               adjusted under Section  416(i)(1) of the Code for Plan Years
               beginning  after December 31, 2002), a 5-percent owner of an
               Employer,  or a 1-percent  owner of an  Employer  who has an
               annual  IRC 415  compensation  of more  than  $150,000.  For
               purposes of this subparagraph, no more than 50 Employees (or
               if lesser,  the greater of 3 or 10 percent of the Employees)
               shall be treated as officers.

          (d)  "Non-Key  Employee" means those  individuals who are not Key
               Employees and includes former Key Employees.

          (e)  "Permissive  Aggregation Group" means a Required Aggregation
               Group plus any other plans selected by the Company  provided
               that all such plans when  considered  together  satisfy  the
               requirements of Section 401(a)(4) and 410 of the Code.

          (f)  "Required  Aggregation Group" means a plan maintained by the
               Company in which a Key  Employee is a  participant  or which
               enables any plan in which a Key Employee is a participant to
               meet the  requirements  of Section  401(a)(4) of the Code or
               Section  410 of the Code.  The  Required  Aggregation  Group
               shall  include  any plan  which  would,  but for the fact it
               terminated, be included in the terms of this definition.

<PAGE>

16.6      Vesting
          -------

          For each  Plan  Year in  which  the  Plan is  Top-Heavy  or Super
          Top-Heavy,  the minimum vesting requirements of Section 416(b) of
          the Code shall be satisfied by use of the following schedule:

                    YEARS OF VESTING           VESTED PERCENTAGE
                    SERVICE
                    Less than 3 years               0 percent
                    3 years or more               100 percent

16.7      Compensation
          ------------

          For each Plan Year  Compensation  shall not exceed the limitation
          in effect under Section 1.16 for such year.

16.8      Minimum Contributions
          ---------------------

          For each  Plan  Year in  which  the  Plan is  Top-Heavy  or Super
          Top-Heavy,  minimum Employer  contributions for a Participant who
          is a Non-Key  Employee  shall be required to be made on behalf of
          each  Participant  who is employed by an Employer on the last day
          of the Plan Year. The amount of minimum contribution shall be the
          lesser of the following  percentages of IRC 415  compensation (as
          defined in Section 4.7 for purposes of Annual Additions):

          (a)  Three percent, or

          (b)  The highest  percentage at which Employer  contributions  or
               forfeitures  are made  under  the Plan for the Plan  Year on
               behalf of any Key Employee.

          For purposes of this Section 16.8, all defined contribution plans
          included in a Required  Aggregation Group shall be treated as one
          plan.

          In  the  case  of  a   Participant   under  this  Plan  who  also
          participates in a defined benefit pension plan of a member of the
          Group which contains  provisions  intended to comply with Section
          416 of the Code in the event such plan becomes a Top-Heavy  plan,
          the defined  benefit  pension  plan will  provide  the  top-heavy
          minimum  benefit  which  will be offset by the  benefit  provided
          under this Plan.

16.9      Defined Benefit and Defined Contribution Plan Fractions
          -------------------------------------------------------

          In order to comply with the requirements of Section 416(h) of the
          Code,  in  the  case  of  a  Participant   who  is  or  has  also
          participated  in a defined  benefit  plan of the  Company  or any
          member  of the  Group  in any  Plan  Year in  which  the  Plan is
          Top-Heavy,  there shall be imposed  under this Plan the following
          limitation in addition to any limitation  which may be imposed as
          described  in  Section  4.7.  In any such year  beginning  before
          January 1, 2000, for purposes of satisfying  the aggregate  limit
          on  contributions  and benefits  imposed by Section 415(e) of the
          Code,   benefits   payable  from  this  Plan  shall,   except  as
          hereinafter  described,  be reduced so as to comply  with a limit
          determined in  accordance  with Section  415(e) of the Code,  but
          with the number "1.0"  substituted  for the number  "1.25" in the
          "defined benefit plan fraction" (as defined in Section  415(e)(3)
          of the Code).

          Notwithstanding   the  foregoing,   if  the  application  of  the
          additional limitation set forth in this Section 16.9 would result
          in the  reduction of accrued  benefits of any  Participant  under
          this Plan, such additional limitation shall not become operative,
          so long as (1) no  additional  contributions  by  Group  members,
          forfeitures   or  voluntary   nondeductible   contributions   are
          allocated  to  such  Participant's  accounts  under  any  defined
          contribution  plan maintained by the Company  including this Plan
          and (2) no additional  benefits accrue to such Participant  under
          any defined benefit plan maintained by the Company.

16.10     Method of Determining Accrued Benefit
          -------------------------------------

          Solely for the purpose of  determining  if the Plan, or any other
          plan included in a Required  Aggregation Group of which this Plan
          is a part is  Top-Heavy,  the  accrued  benefit of a  Participant
          other  than a Key  Employee  shall be  determined  under  (1) the
          method,  if any, that uniformly  applies for the accrual purposes
          under all plans  maintained  by the  Company  or any other  Group
          member,  or (2) if there is no such  method,  as if such  benefit
          accrued not more rapidly than the slowest  accrual rate permitted
          under the fractional accrual rate of Section  411(b)(1)(C) of the
          Code.

16.11     Change in Statute Automatically Incorporated
          --------------------------------------------

          In the event that  Congress  should  provide by  statute,  or the
          Treasury  Department should provide by regulation or ruling, that
          the  limitations  provided  in this  Article  XVI  are no  longer
          necessary for the Plan to meet the requirements of Section 401 of
          the Code or other applicable law then in effect, such limitations
          shall  become  void  and  shall  no  longer  apply,  without  the
          necessity of further amendment to the Plan.

Adopted by Mettler-Toledo, Inc., this           day of            ,          .

                                    METTLER-TOLEDO, INC.

                                    By:
                                       ----------------------------------

                                    Title:
                                          -------------------------------

<PAGE>

                                 APPENDIX A

           SPECIAL PROVISIONS PERTAINING TO CERTAIN EMPLOYEES OF
                       METTLER INSTRUMENT CORPORATION

A.1       Purpose and Construction
          ------------------------

          The purpose of this Appendix A is to evidence special  provisions
          applicable to certain employees of Mettler Instrument Corporation
          ("MICo")  affected  by the merger of the MICo Plan into the Plan,
          effective  July 1, 1994.  The provisions of this Appendix A shall
          apply to the individuals as specified  herein.  To the extent the
          provisions of the Plan, as applicable to these  individuals,  are
          inconsistent   with  the  provisions  of  this  Appendix  A,  the
          provisions  of Appendix A shall  govern.  Words and phrases  used
          herein with initial  capital letters which are defined in Article
          I of the Plan are used herein as so defined.

A.2       Pre-Merger Date Service of MICo Employees
          -----------------------------------------

          The period of  employment of an employee of MICo prior to July 1,
          1994 which  shall be  recognized  as  Period(s)  of  Service  and
          Year(s) of Vesting Service  hereunder as of July 1, 1994 shall be
          determined  under Sections 1.41 and 1.68  respectively,  treating
          MICo for such  purpose as having been an Employer  hereunder  for
          all relevant periods;  provided,  however, that in no event shall
          such  determination  result in  Periods  of  Service  or Years of
          Vesting  Service  which are less than  that  Service  accumulated
          under the MICo Plan as of June 30, 1994.

A.3       Vesting of Certain Participants in MICo Plan
          --------------------------------------------

          Notwithstanding  the  provisions  of  Section  6.1,  the  Company
          Matching Contribution Account of an individual who, as of July 1,
          1994, is both an Employee of MICo and a  Participant  in the Plan
          shall be 100% nonforfeitable at all times. All Eligible Employees
          of MICo other  than those  described  in the  preceding  sentence
          shall become vested in Company Matching Contributions made on his
          behalf  on  and  after  July  1,  1994  in  accordance  with  the
          provisions  of Section  6.1,  reflecting  for this  purpose,  the
          provisions  of Section A.2 above.  In no event shall this Section
          A.3  alter  a  Participant's  vested  percentage  in his  Account
          attributable to employer  contributions  made under the MICo Plan
          prior to July 1, 1994 and earnings on such contributions.

<PAGE>

                                 APPENDIX B

                              BONUS DEFERRALS

B.1       Purpose and Construction
          ------------------------

          The purpose of this Appendix B is to evidence special  provisions
          applicable to certain  Employees who are provided herein with the
          opportunity to defer all or part of specified  bonuses which they
          may otherwise receive from the Employers.  The provisions of this
          Appendix  B shall  apply to the  Employees  described  herein and
          shall be effective for Plan Years  beginning on and after January
          1, 1996. To the extent the  provisions of the Plan, as applicable
          to these Employees,  are inconsistent with the provisions of this
          Appendix B, the provisions of Appendix B shall govern.  Words and
          phrases  used  herein  with  initial  capital  letters  which are
          defined in Article I of the Plan are used herein as so defined.

B.2       Eligibility
          -----------

          (a)  Notwithstanding  Sections  2.1  and  3.1  of  the  Plan,  an
               Employee  who  satisfies  the  criteria  specified  in  this
               Section  B.2 with  respect  to a given  Plan  Year  shall be
               eligible  to defer a  specified  portion  (as  described  in
               Section  B.3)  of  a  given  Bonus  Amount  (as  hereinafter
               defined)  applicable  to such Plan Year by giving  Notice to
               the Administrative Committee on or before the Bonus Deferral
               Election Date specified in this Section B.2. With respect to
               any given  Employee,  "Bonus  Amount"  shall mean the annual
               bonus that may be payable  for any given year  beginning  on
               and after January 1, 1996 under the  Employer's  Performance
               Dividend Plan.

          (b)  An Employee  shall be eligible to defer a Bonus  Amount with
               respect to a given Plan Year if:

               (i)  The Employee is expected to be an Eligible  Employee as
                    of the  January  1 of the Plan  Year in which the Bonus
                    Amount is otherwise payable;

               (ii) The Administrative Committee, in its discretion, elects
                    to treat  Bonus  Amounts  applicable  to the given Plan
                    Year as eligible for deferral under the Plan; and

               (iii)The  Employee is not a Highly  Compensated  Employee as
                    of the Bonus  Deferral  Election  Date (as  hereinafter
                    defined);

               provided,  however, that an election to defer a Bonus Amount
               shall  only be given  effect if the  Employee  is in fact an
               Eligible  Employee  as of  the  date  the  Bonus  Amount  is
               otherwise payable.  For purposes hereof, the "Bonus Deferral
               Election  Date" with respect to any given Bonus Amount shall
               be the December 1 of the calendar year immediately preceding
               the  calendar  year in which the Bonus  Amount is  otherwise
               payable.  No Participant may suspend or otherwise change the
               deferral of any Bonus Amount  following the expiration of 30
               days from the Bonus Deferral Election Date.

B.3       Bonus Amount Deferrals
          ----------------------

          Subject to the  limitations  of Sections 3.4 and 3.5 of the Plan,
          that  portion  of a  Bonus  Amount  that  may be  deferred  by an
          Eligible Employee who satisfies the criteria specified in Section
          B.2 shall be from 0 percent to 100 percent of such Bonus  Amount,
          in  multiples  of 25 percent.  The Bonus Amount which an Eligible
          Employee  elects to defer  shall be  credited  to the  Employee's
          Basic  Salary  Reduction  Account and a  corresponding  reduction
          shall  be made  in the  Bonus  Amount  otherwise  payable  to the
          Eligible  Employee  in cash.  The  election  with  respect to the
          deferral of a Bonus  Amount for any given year shall not apply to
          any  subsequent  year.  Except as provided under Section B.5, any
          Bonus Amount  deferred  hereunder shall be invested in accordance
          with the elections in effect under Section 7.2 of the Plan at the
          time of deferral.

B.4       Treatment of Bonus Amount Deferrals
          -----------------------------------

          Notwithstanding any provision of the Plan to the contrary:

          (a)  In no event shall  Company  Matching  Contributions  or Safe
               Harbor  Matching  Contributions  be made with respect to any
               deferral of a Bonus Amount;

          (b)  A  Participant  who  is  ineligible  to  make  Basic  Salary
               Reduction  Contributions under Section 2.4 of the Plan shall
               likewise  be  ineligible  to make a  deferral  of any  Bonus
               Amount; and

          (c)  The limitations on Basic Salary Reduction  Contributions and
               the   provisions   pertaining  to  Basic  Salary   Reduction
               Contributions  in  the  following  Plan  sections  shall  be
               equally applicable to deferrals of Bonus Amounts as follows:

               (i)  Sections 3.4 and 3.5:  deferrals of Bonus Amounts shall
                    be treated as Basic Salary Reduction  Contributions for
                    the Plan Year in which the Bonus  Amounts are otherwise
                    payable;

               (ii) Section  4.7:  deferrals  of  Bonus  Amounts  shall  be
                    included  in  "Annual  Additions"  for the Plan Year in
                    which the Bonus Amounts are otherwise payable and shall
                    be treated as Basic Salary Reduction  Contributions for
                    purposes of the corrective mechanisms described;

               (iii)Section  4.8(k):  deferrals  of  Bonus  Amounts  may be
                    treated as Basic Salary Reduction Contributions for the
                    Plan  Year in which  the Bonus  Amounts  are  otherwise
                    payable  in  the   discretion  of  the   Administrative
                    Committee;

               (iv) Section  8.2(b)(iii)  and  (iv):   deferrals  of  Bonus
                    Amounts  shall be  treated  as Basic  Salary  Reduction
                    Contributions  for the  Plan  Year in which  the  Bonus
                    Amounts  are  otherwise  payable  for  purposes  of the
                    limitations described;

               (v)  Section  9.4:  deferrals  of  Bonus  Amounts  shall  be
                    treated as Basic  Salary  Reduction  Contributions  for
                    purposes of the limitations described.

B.5       New Participants
          ----------------

          In the event an Eligible  Employee first becomes a Participant in
          connection  with  his  election  to  defer a Bonus  Amount,  such
          Employee,  in providing  Notice  specified in Section B.2,  shall
          make  an  investment  election  from  among  those  options  then
          available  under Section 7.1 and shall designate a Beneficiary on
          the Appropriate  Form provided by the  Administrative  Committee.
          Such election and  designation  may be changed in accordance with
          the applicable  provisions of the Plan,  treating,  to the extent
          necessary  under Plan Section 7.2, the deferral of a Bonus Amount
          as a Basic Salary Reduction Contribution.

<PAGE>

                                 APPENDIX C

           SPECIAL PROVISIONS PERTAINING TO CERTAIN EMPLOYEES OF
                         ASI APPLIED SYSTEMS, INC.

C.1       Purpose and Construction
          ------------------------

          The purpose of this Appendix C is to evidence special  provisions
          applicable to ASI Employees.  To the extent the provisions of the
          Plan, as applicable to these  individuals,  are inconsistent with
          the  provisions of this Appendix C, the  provisions of Appendix C
          shall govern.

C.2       Definitions
          -----------

          (a)  "ASI"  means  ASI  Applied  Systems,  Inc.,  a  wholly-owned
               subsidiary  of the  Company  formed in  connection  with the
               acquisition of certain assets of Former ASI.

          (b)  "ASI  Employee"  means any  Employee  in the  employ of ASI,
               including a Former ASI Employee.

          (c)  "ASI Plan" means the ASI  Employees'  Profit  Sharing Plan &
               Trust,  and any successor  thereto,  in effect as of a given
               date hereunder.

          (d)  "Employer Profit Sharing  Contribution" means a contribution
               which,  in the  discretion of the Board,  may be made to the
               Plan on behalf of certain ASI Employees  with respect to any
               given Plan Year. Any Employer  Profit  Sharing  Contribution
               shall be  allocated  as  provided  in  Section  C. 7 of this
               Appendix.

          (e)  "Employer  Profit  Sharing  Contribution  Account" means the
               separate Account  maintained for a Participant who is an ASI
               Employee to record his share of the Trust Fund  attributable
               to Employer Profit Sharing Contributions made on his behalf.

          (f)  "Former ASI" means ASI Applied  Systems,  LLC as said entity
               was in  effect  prior to the date as of  which  the  Company
               acquired   assets   relating  to  said   entity's   reaction
               monitoring operations.

          (g)  "Former ASI  Employee"  means any employee of Former ASI who
               became an Employee of ASI in  connection  with the Company's
               acquisition  of assets  relating  to Former  ASI's  reaction
               monitoring operations.

<PAGE>

C.3       Eligibility of ASI Employees
          ----------------------------

          Notwithstanding  Section  2.1(a)  of the Plan,  any ASI  Employee
          employed  by  ASI as of  May  31,  1999  and  who is an  Eligible
          Employee as of June 1, 1999,  shall become a  Participant  in the
          Plan and shall be  eligible to commence  Basic  Salary  Reduction
          Contributions in accordance with Section C.6 below.

          Any ASI Employee with an Employment Commencement Date on or after
          June 1, 1999 shall  become a  Participant  as of the first day of
          the calendar year quarter  coincident  with or next following the
          latest of (i) the date on which he becomes an ASI Employee,  (ii)
          the date on which he becomes an Eligible Employee,  and (iii) the
          date on which he  completes a 1-year  Period of Service.  Such an
          ASI Employee shall be eligible to commence Basic Salary Reduction
          Contributions as of any Enrollment Date on or following such date
          of participation.

          Effective for Plan Years  beginning on and after January 1, 2003,
          ASI shall be considered an Excluded Entity,  the participation in
          the Plan of any ASI Employee  shall be frozen and no ASI Employee
          may become a Participant in the Plan.

C.4       Pre-Merger Date Service of ASI Employees
          ----------------------------------------

          A Former ASI Employee's  Period of Service shall include  periods
          of  service  with ASI and Former  ASI in  addition  to periods of
          service with Spectra-Tech, Inc. and Spectra-Tech Applied Systems,
          Inc. as provided for in the ASI Plan.

C.5       Vesting of Certain Participants in ASI Plan
          -------------------------------------------

          Notwithstanding the provisions of Section 6.1, the Accounts of an
          individual  who, as of May 31, 1999, is an ASI Employee  shall be
          100%  nonforfeitable  at all  times.  Any  ASI  Employee  with an
          Employment  Commencement  Date on or  after  June 1,  1999  shall
          become vested in the Employer Profit Sharing Contribution Account
          maintained  on his behalf in  accordance  with the  provisions of
          Section  6.1  of  the  Plan  as if the  Employer  Profit  Sharing
          Contribution Account was a Company Matching Contribution Account.

C.6       Basic Salary Reduction Contribution
          -----------------------------------

          Any ASI Employee in the employ of ASI as of May 31, 1999, and who
          is an Eligible  Employee as of June 1, 1999,  may commence  Basic
          Salary  Reduction   Contributions  as  soon  as  administratively
          practicable  following June 1, 1999, or as of any Enrollment Date
          thereafter,  by satisfying the procedural  requirements set forth
          in  Article  II  of  the  Plan.  Notwithstanding  the  percentage
          limitations  set forth in Section 3.1 of the Plan (but subject to
          such other restrictions  contained in Article III thereof),  such
          an ASI Employee may elect Basic Salary Reduction Contributions in
          an  amount   from  1  percent   through  25  percent   (in  whole
          percentages)  of Compensation  otherwise  payable for pay periods
          ending after his Basic Salary Reduction  Contribution election is
          first effective and before January 1, 2000.

          Effective for Plan Years  beginning on and after January 1, 2000,
          each ASI  Employee  shall be eligible to  designate  Basic Salary
          Reduction  Contributions  in  accordance  with Article III of the
          Plan.

          Effective for Plan Years  beginning on and after January 1, 2003,
          an ASI  Employee  shall not be eligible to have an Employer  make
          Basic Salary Reduction Contributions to the Plan on his behalf.

C.7       Employer Profit Sharing Contributions
          -------------------------------------

          As of any given Plan Year  beginning  before January 1, 2003, the
          Board may  decide  whether  to make an  Employer  Profit  Sharing
          Contribution on behalf of eligible ASI Employees participating in
          the Plan. To be eligible for an allocation of any Employer Profit
          Sharing Contribution made for a given Plan Year, the ASI Employee
          must be an Eligible  Employee,  must earn at least 1,000 Hours of
          Service  during  such Plan Year,  and must be  employed as of the
          last  day  of  such  Plan  Year.  The  Employer   Profit  Sharing
          Contribution   shall  be   allocated  to  eligible  ASI  Employee
          Participants  in the ratio that each such eligible  Participant's
          Compensation   for  the  given  Plan  Year  bears  to  the  total
          Compensation of all such eligible Participants for the given Plan
          Year.  Compensation  as used  in this  Section  C.7  shall  be as
          defined  in Section  1.16 of the Plan  provided  that,  effective
          January 1, 2001,  Compensation  for  purposes of this Section C.7
          shall  include  all  amounts  currently  not  included  in an ASI
          Employee's  gross income by reason of Section 125,  132(f)(4) and
          402(e)(3) of the Code.

          The following shall also be applicable to Employer Profit Sharing
          Contributions:

          (a)  An Employer  Profit  Sharing  Contribution  Account shall be
               maintained   on  behalf  of  each   eligible   ASI  Employee
               Participant;

          (b)  Investment   direction  of  the  Employer   Profit   Sharing
               Contribution  Account  maintained on behalf of a Participant
               shall be implemented  in accordance  with Article VII of the
               Plan; and

          (c)  The  forfeiture  provisions in Section 6.2 of the Plan shall
               also apply to nonvested Employer Profit Sharing Contribution
               Accounts.

          Effective for Plan Years  beginning on and after January 1, 2003,
          an ASI Employee shall not be eligible to have an Employer  Profit
          Sharing Contribution made to the Plan on his behalf.

C.8       Other Employer Contributions Not Applicable
          -------------------------------------------

          ASI Employees  participating in the Plan shall not be eligible to
          participate in the Company  Matching  Contribution  provisions of
          Section 4.1 of the Plan,  the Safe Harbor  Matching  Contribution
          provisions of Section 4.2 of the Plan,  the Savings  Contribution
          provisions of Section 4.3 of the Plan,  the Special  Contribution
          Provisions  of  Section  4.4  of  the  Plan  and  the  Transition
          Contribution provisions of Section 4.5 of the Plan.

C.9       Transfer of Accounts of Former ASI Employees
          --------------------------------------------

          Effective  as of  July  1,  1999,  or as  soon  thereafter  as is
          administratively  practicable,  accounts maintained under the ASI
          Plan on behalf of Former ASI Employees shall be transferred  from
          the ASI Plan to the Plan.  Records of such  transferred  accounts
          shall  be kept in such  manner  as the  Administrative  Committee
          shall determine, provided that all protected benefits, rights and
          features  appurtenant  to  such  transferred  accounts  shall  be
          preserved  under the Plan to the extent  preservation is required
          under Section 411(d)(6) of the Code.

C.10      Spinoff of Accounts of ASI Employee Participants
          ------------------------------------------------

          Effective  as of close of business on December  31,  2002,  or as
          soon  thereafter as  administratively  practicable,  all Accounts
          maintained  under the Plan on behalf of Participants who are then
          ASI  Employees  shall be  spunoff to  another  qualified  defined
          contribution  plan  maintained  by an Employer  in a  transaction
          satisfying  the  requirements  of  Section  12.4 of the  Plan and
          Sections 401(a)(12) and 414(l) of the Code.

<PAGE>

                                 APPENDIX D

           SPECIAL PROVISIONS PERTAINING TO CERTAIN EMPLOYEES OF
                               SAFELINE, INC.

D.1       Purpose and Construction
          ------------------------

          The purpose of this Appendix D is to evidence special  provisions
          applicable to employees of Safeline,  Inc.  ("Safeline") who were
          participants in the Safeline,  Inc. 401(k) Plan ("Safeline Plan")
          as of October 1, 1999,  the  effective  date of the merger of the
          Safeline Plan into the Plan. Except as otherwise provided in this
          Appendix D, the provisions of the Plan other than this Appendix D
          shall apply to  employees  of  Safeline  on and after  October 1,
          1999. To the extent the  provisions of the Plan, as applicable to
          these  individuals,  are inconsistent with the provisions of this
          Appendix D, the provisions of Appendix D shall govern.

D.2       Pre-Merger Date Service of Safeline Employees
          ---------------------------------------------

          The period(s) of  employment of an employee of Safeline  prior to
          October 1, 1999 which shall be recognized as Period(s) of Service
          and Year(s) of Vesting  Service  hereunder  as of October 1, 1999
          shall be determined  under  Sections 1.41 and 1.68  respectively,
          treating  Safeline  for such  purpose as having  been an Employer
          hereunder for all relevant periods; provided, however, that in no
          event  shall such  determination  result in Periods of Service or
          Years  of  Vesting  Service  which  are  less  than  the  service
          accumulated under the Safeline Plan as of October 1, 1999.

D.3       Vesting of Safeline Plan Participant
          ------------------------------------

          Notwithstanding the provisions of Section 6.1, the Accounts of an
          individual  who, as of September  30, 1999,  was both an Employee
          and a  participant  in the Safeline Plan shall become 100% vested
          and  nonforfeitable,  without regard to Periods of Service,  upon
          such individual's  attainment of age 55, provided such individual
          is then an Employee.

D.4       Certain Employer Contributions Not Applicable
          ---------------------------------------------

          Employees  of  Safeline  participating  in the Plan  shall not be
          eligible to participate in the Safe Harbor Matching  Contribution
          provisions of Section 4.2 of the Plan,  the Savings  Contribution
          provisions of Section 4.3 of the Plan,  the Special  Contribution
          provisions   of  Section   4.4  of  the  Plan,   the   Transition
          Contribution  provisions  of  Section  4.5 of the  Plan  and  the
          Discretionary Contribution provisions of Section 4.6 of the Plan.

D.5       Cessation of Participation and Spinoff of Safeline Participants
          ---------------------------------------------------------------

          (a)  Effective  for Plan Years  beginning on and after January 1,
               2003,  Safeline shall be considered an Excluded Entity,  the
               participation  in the Plan of Employees of Safeline shall be
               frozen and no Employee of Safeline may become a  Participant
               in the Plan. Further, on and after such date, an Employee of
               Safeline  shall not be  eligible  to have an  Employer  make
               Basic  Salary  Reduction  Contributions  to the  Plan on his
               behalf.

          (b)  Effective as of close of business on December  31, 2002,  or
               as soon  thereafter  as  administratively  practicable,  all
               Accounts maintained under the Plan on behalf of Participants
               who are the  Employees  of  Safeline  shall  be  spunoff  to
               another qualified defined contribution plan maintained by an
               Employer in a transaction  satisfying  the  requirements  of
               Section 12.4 of the Plan and Sections  401(a)(12) and 414(l)
               of the Code.

<PAGE>

                                 EXHIBIT I

                           SPECIAL CONTRIBUTIONS

         EMPLOYEE FILE #         MONTHLY AMT          # OF YEARS *
            000703                    78.35               10
            000706                   207.38                5
            000708                   210.33                5
            000712                   264.99                2
            000717                    99.76               10
            000719                    58.41               15
            000730                    34.41               15
            000735                    36.69               15
            000737                    27.47               15
            000738                    30.99               15
            000740                   279.11                5
            000749                    39.18               15
            000751                    45.98               15
            000752                   295.55                5
            000812                   147.04                5
            000913                   113.62               10
            000914                    50.53               15
            000916                   168.56               10
            000918                    44.21               15
            000923                   148.60                5
            000928                   311.00                4
            000929                   178.28                4
            000931                    38.79               15
            000940                    69.86               15
            000943                    65.47               10
            000946                    51.05               15
            000950                    21.22               15
            000951                   311.40                5
            000953                   342.26                5
            000964                   255.34               10
            006257                   372.60                5
            008174                   111.03               10

<PAGE>
         EMPLOYEE FILE #         MONTHLY AMT          # OF YEARS *
            008546                   475.16                5
            008569                   222.51               10
            008728                    64.84               15
            008752                   170.19               10
            008869                   198.89               10
            009009                   130.54               15
            009168                    78.85               15
            009210                   687.83               10
            009230                   212.10               10
            009254                   176.12               10
            009265                   327.27                5
            009292                    55.82               15
            009531                   110.10               10
            009534                   922.88                5
            009549                   171.65               10
            009555                    26.60               15
            009683                    93.35               10
            009702                   115.85               10
            009708                   125.74               10
            009725                   121.07               10
            009740                    91.96               10
            009778                    56.30               15
            009802                    67.95               10
            009817                    30.57               15
            009882                    29.97               15
            009955                    68.48               15
            009968                   148.64               10
            009994                   335.33                4
            010030                   132.78               15
            010101                   763.52                5
            010104                   295.10                5
            010109                   143.55               10
            015114                   240.56               10
            015189                   271.43               15
            015382                   276.15               10
            020202                   224.08               10
<PAGE>
         EMPLOYEE FILE #         MONTHLY AMT          # OF YEARS *
            020207                   394.49                5
            020208                   141.56               10
            020217                    63.08               15
            020220                   161.38               10
            022569                   121.26               15
            022668                    85.54               10
            026827                   118.47               10
            030007                   185.85               10
            030015                   148.65               10
            030038                   103.52               10
            030079                   101.12               10
            030081                   110.27               10
            030110                    96.32               10
            030129                   138.04               10
            030161                   168.62               10
            030164                    25.10               15
            030175                   140.56               10
            030187                   102.84               10
            030196                    37.20               15
            030218                    58.01               15
            030221                    36.22               15
            030226                   231.44                5
            030261                   292.10               10
            030277                    77.29               15
            030278                   873.40                5
            030304                    28.78               15
            030341                    51.85               15
            030349                    49.79               15
            030357                    58.98               10
            030360                   285.82                5
            030363                    36.48               15
            030371                    51.34               15
            030402                    40.16               15
            030464                    73.24               10
            030471                   101.97               15
            030501                   257.21                5
<PAGE>
         EMPLOYEE FILE #         MONTHLY AMT          # OF YEARS *
            030525                   120.17               15
            030527                    15.28               15
            030550                    16.34               15
            030556                   175.31                5
            030565                   140.59                5
            035082                   156.40               10
            035096                   411.70                5
            035130                   338.84                5
            035141                    62.43               15
            035186                   109.60               10
            035209                    52.60               15
            036000                   120.39               10
            036017                   171.36                5
            036025                   118.58               10
            036026                    47.98               10
            036044                    22.25               15
            036317                   548.34                5
            037011                   143.92               10
            037036                   121.37               10
            037044                   134.94               10
            037062                    97.24               10
            037090                    52.32               15
            037094                   124.67               10
            037110                   105.60               10
            037111                    43.50               15
            037136                   220.82                4
            037154                    76.27               10
            040048                    40.28               15
            040128                   204.89                5
            040139                    91.69               10
            040141                   302.26                5
            040144                    38.63               15
            040146                    99.50               10
            040174                    86.37               10
            040182                   133.36               10
            040209                    31.71               15
<PAGE>
         EMPLOYEE FILE #         MONTHLY AMT          # OF YEARS *
            040210                    60.79               15
            040218                   177.24                5
            040233                    88.86               10
            040235                   237.94                5
            040237                    72.34               10
            040264                    35.45               15
            040266                   194.13                5
            040271                    39.12               15
            040274                    93.98               10
            040278                   101.48               10
            040288                   252.33                5
            040295                    36.57               15
            040309                    81.35               10
            040329                   325.63                5
            040331                    28.15               15
            040336                    38.74               15
            040349                    87.55               10
            040353                    82.13               10
            040366                   260.41                5
            040367                    82.89               10
            040402                    86.25               15
            040403                    89.40               10
            040419                    38.10               15
            040420                   309.50                5
            040421                    65.29               15
            040422                    54.96               15
            040433                   171.40                5
            040448                    20.78               15
            040474                    88.92               10
            040590                   943.65                2
            040597                   393.02                5
            040622                    82.08               10
            040630                    75.56               10
            040632                   159.99                5
            040636                    34.46               15
            040642                   144.57                5
<PAGE>
         EMPLOYEE FILE #         MONTHLY AMT          # OF YEARS *
            040646                   139.32                5
            040653                    14.09               15
            040654                    21.72               15
            040655                    64.84               10
            040660                    12.92               15
            040661                    12.91               15
            040696                    62.23               10
            040700                    13.74               15
            040716                   130.62                5
            040732                    25.01               15
            050502                   606.78                5
            060604                    38.62               15
            067964                   311.50                5
            068065                   332.57                5
            068310                   204.79               10
            068318                   144.97               10
            068348                   184.65               10
            068564                   278.32                5
            068593                    98.88               10
            068635                   146.86               10
            068636                    92.70               10
            068667                   121.87               10
            068722                   105.81               10
            068949                    45.45               15
            068976                    72.16               15
            069177                    61.91               15
            069279                    50.33               15
            069336                    48.40               15
            069402                    38.48               15
            069508                    74.60               15
            069556                    41.14               15
            069610                    48.41               15
            069836                    87.00               10
            069937                    50.76               15
            069953                    61.08               15
            070065                   118.87               10
<PAGE>
         EMPLOYEE FILE #         MONTHLY AMT          # OF YEARS *
            070086                    44.53               15
            070353                    26.98               15
            070701                   789.41                3
            070703                 1,184.80                1
            070707                   103.57               10
            070708                    28.32               15
            070925                    23.29               15
            071108                    75.04               10
            071192                    27.05               15
            071238                   112.93               10
            072573                   314.91                5
            072579                   135.57               10
            072584                   230.02                5
            080804                   127.19               15
            080810                    67.46               15
            080812                   106.51               15
            085056                    42.95               15
            085132                    56.69               15
            085140                    70.08               15
            085161                    39.48               15
            085215                    55.54               10
            090054                   188.60               10
            101001                   116.46               15
            101002                   574.96                5
            105924                   286.87                5
            107301                   302.71                2
            108530                   514.07                5
            109334                    71.43               15
            109436                    98.44               10
            109703                    40.06               15
            109971                   267.23                5
            130010                    76.34               15
            130180                    85.44               10
            130195                   178.68               10
            130207                   346.42               10
            130224                   213.10                5
<PAGE>
         EMPLOYEE FILE #         MONTHLY AMT          # OF YEARS *
            130249                    74.68               15
            130260                   248.11                5
            130295                    31.91               15
            130313                   182.86               10
            130393                   149.14               10
            130409                   617.33                5
            130489                   512.86               10
            130529                 1,045.09                3
            130562                    14.65               15
            135022                   363.87                5
            135041                   201.01               10
            135067                   531.60                3
            135072                   106.99               10
            135131                    77.51               15
            135138                    80.25               10
            135156                   201.27               15
            135176                    77.01               15
            135189                   168.24               10
            136019                    10.68               15
            137082                    45.13               15
            137091                   163.40                5
            137143                    87.02               10
            140598                   285.76               10
            161602                   169.43               10
            161607                   234.08               10
            167926                   293.87                5
            168540                   121.69               10
            169229                    90.85               15
            169598                    85.79               15
            169704                   155.86               10
            169801                   142.39               15
            170268                    83.37               10
            170884                    35.93               15
            171277                    49.07               10
            171278                    39.40               10
            203699                   348.64                5
<PAGE>
         EMPLOYEE FILE #         MONTHLY AMT          # OF YEARS *
            206970                   339.34                5
            209880                   154.01                5
            209913                   142.95               10
            210029                 1,102.96                1
            215748                   137.97               10
            221001                   109.72               15
            222001                   342.32               10
            230019                   289.16               10
            230144                    40.33               15
            230186                    26.96               15
            230430                    64.82               15
            232001                    44.09               15
            235029                   488.47                5
            235181                   229.14                5
            237050                   117.51               10
            237069                   126.08               10
            237098                    97.96               10
            237184                    28.30               15
            237208                    32.99               15
            237209                    58.03               10
            237212                    99.28               10
            240001                   590.75                5
            240208                   328.81                5
            242002                    68.91               15
            249002                   149.77               10
            250001                   599.09                5
            252001                    31.41               15
            263001                 2,254.02                1
            269020                   698.21               10
            271001                   191.61               10
            271136                    26.63               15
            273001                   122.53               15
            283001                   150.84               10
            286001                   106.53               15
            288001                   168.64               15
            309332                   219.21               10
<PAGE>
         EMPLOYEE FILE #         MONTHLY AMT          # OF YEARS *
            309365                   125.90               10
            309818                   116.10               10
            309933                    86.57               10
            369267                   182.24               10
            369302                    46.92               15
            370389                    60.45               15
            371124                    21.38               15
            409766                   101.54               15
            572001                   257.46               10
            578001                   103.16               10
            578002                   274.38                5
            578004                   267.15                5
            578005                    34.93               15
                                  56,705.36

* Years = Special Contribution Years<PAGE>

                                                                    EXHIBIT 10.1

STATE OF CALIFORNIA

STANDARD AGREEMENT -- APPROVED BY THE                CONTRACT NUMBER     AM. NO.
STD.2(REV.5-91)       ATTORNEY GENERAL               95-23637
                                                     TAXPAYER'S FEDERAL
                                                     EMPLOYER IDENTIFICATION NO.
                                                     33-0342719

THIS AGREEMENT, made and entered into this 2nd day of April, 1996 in the State
  of California, by and between State of California, through its duly elected
  or appointed, qualified and acting

TITLE OF OFFICER ACTING FOR STATE      AGENCY
Chief, Program Support Branch          Department of Health Services,
                                       hereafter called the State, and

CONTRACTOR'S NAME
Molina Medical Centers, hereafter called the Contract:

WTTNESSETH: That the Contractor for and in consideration of the covenants,
conditions, agreements, and stipulations of the State hereinafter express does
hereby agree to furnish to the State services and materials as follows: (Set
forth service to be rendered by Contractor, amount to be paid Contract time for
performance or completion, and attach plans and specifications, if any.)

                              ARTICLE 1 - PREAMBLE

     This Contract is entered into under the provisions of Section 14087.3,
     Welfare and Institutions (W&I) Code.

     WHERE AS, it is the best interest of all parties to enter into this
     Contract,

     NOW THEREFORE, this contract is amended as follows:

                                                                          [SEAL]

CONTINUED ON 125 SHEETS, EACH BEARING NAME OF CONTRACTOR AND CONTRACT NUMBER.

  The provisions on the reverse side hereof constitute a part of this agreement.
IN WITNESS WHEREOF, this agreement has been executed by the parties hereto, upon
the date first above written.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
          STATE OF CALIFORNIA                                              CONTRACTOR
-------------------------------------------------------------------------------------------------------------------------------
<S>                                     <C>
AGENCY                                  CONTRACTOR (If other than an individual, state whether a corporation, partnership, etc.)
  Department of Health Service          Molina Medical Centers
-------------------------------------------------------------------------------------------------------------------------------
BY (AUTHORIZED SIGNATURE)               BY (AUTHORIZED SIGNATURE)
/s/                                     /s/
-------------------------------------------------------------------------------------------------------------------------------
PRINTED NAME OF PERSON SIGNING          PRINTED NAME AND TITLE OF PERSON SIGNING
  Edward E. Stahlberg                   John Molina, J.D. - Chief Administrative Officer
-------------------------------------------------------------------------------------------------------------------------------
TITLE                                   ADDRESS
  Chief, Program Support Branch         One Golden Shore, Long Beach, CA 90802
-------------------------------------------------------------------------------------------------------------------------------
AMOUNT ENCUMBERED BY THIS               PROGRAM/CATEGORY (CODE AND TITLE)        FUND TITLE               Department of General
DOCUMENT                                Section 14157 W&I Code                   Care Deposit               Services Use Only
$ 32,080,630                  ----------------------------------------------------------------------      Exempt From PCC per
------------------------------          (OPTIONAL USE)                                                     W&I Code 14087.4
PRIOR AMOUNT ENCUMBERED FOR             Federal Cat. 93778 4260-101-001 & 890    50% Fed & 50% State
THIS CONTRACT                           ------------------------------------------------------------
$ -0-                                   ITEM                CHAPTER        STATUTE       FISCAL YEAR
------------------------------          4260-601-912          303           1995         1995-96
TOTAL AMOUNT ENCUMBERED TO              ------------------------------------------------------------
$ 32,080,630                            OBJECT OF EXPENDITURE (CODE AND TITLE)
                                                        N/A
----------------------------------------------------------------------------------------------------
I hereby certify upon my own personal   T.B.A. NO.          B.R. NO.
knowledge that budgeted funds are
available for the period and purpose
of the expenditure stated above.
----------------------------------------------------------------------------------------------------
SIGNATURE OF ACCOUNTING OFFICER                             DATE
/s/                                                        4/2/96
----------------------------------------------------------------------------------------------------
</TABLE>

[ ] CONTRACTOR  [ ] STATE AGENCY  [ ] DEPT. OF GEN. SER.  [ ] CONTROLLER   [ ]

<PAGE>

STATE OF CALIFORNIA
STANDARD AGREEMENT
STD. 2 (REV. 5-91) (REVERSE)

     1. The Contractor agrees to indemnify, defend and save harmless the State,
        its officers, agents and employees from any and all claims and losses
        accruing or resulting to any and all contractors, subcontracters
        materialmen, laborers and any other person, firm or corporation
        furnishing or supplying work services, materials or supplies in
        connection with the performance of this contract, and from any and all
        claims losses accruing or resulting to any person, firm or corporation
        who may be injured or damaged by Contractor in the performance of this
        contract

     2. The Contractor, and the agents and employees of Contractor, in the
        performance of the agreement, shall act in an independent capacity and
        not as officers or employees or agents of State of California.

     3. The State may terminate this agreement and be relieved of the payment
        of any consideration to Contractor should Contractor fail to perform
        the covenants herein contained at the time and in the manner herein
        provided. In the event of such termination the State may proceed with
        the work in any manner deemed proper by the State. The cost to the
        State shall be deducted from any sum due the Contractor under this
        agreement, and the balance, if any, shall be paid the Contractor upon
        demand.

     4. Without the written consent of the State, this agreement is not
        assignable by Contractor either in whole or in part.

     5. Time is of the essence in this agreement.

     6. No alteration or variation of the terms of this contract shall be valid
        unless made in writing and signed the parties hereto, and no oral
        understanding or agreement not incorporated herein, shall be binding on
        any of the parties hereto.

     7. The consideration to be paid Contractor, as provided herein, shall be in
        compensation for all of Contractor's expenses incurred in the
        performance hereof, including travel and per diem, unless otherwise
        expressly so provided.

<PAGE>

Molina Medical Centers                                                  95-23637
                                                                     Article  VI

                                TABLE OF CONTENTS

ARTICLE I   -   PREAMBLE                                                   Pg  1

ARTICLE II  -   DEFINITIONS                                                Pg  2

ARTICLE III  GENERAL TERMS AND CONDITIONS                                  Pg 14

     3.1      Delegation of Authority                                      Pg 14
     3.2      Governing Authorities                                        Pg 14
     3.3      Authority of the State                                       Pg 15
     3.4      Fulfillment of Obligations                                   Pg 15
     3.5      Compliance with Protocols                                    Pg 16
     3.6      Equal Opportunity Employer                                   Pg 16
     3.7      Nondiscrimination Clause Compliance                          Pg.16
     3.8      Discrimination Prohibition                                   Pg 17
     3.9      Discrimination Complaints                                    Pg 18
     3.10     Membership Diversity                                         Pg 18
     3.11     Inspection Rights                                            Pg 18
     3.12     Notices                                                      Pg 19
     3.13     Contractor's National Labor Relations Board Declaration      Pg 19
     3.14     Term                                                         Pg 19
     3.15     Contract Extension                                           Pg 20

     3.16     Turnover and Phaseout Requirements                           Pg 20
     3.16.1   Objectives for Turnover and Phaseout Period                  Pg 20
     3.16.2   Turnover Requirements                                        Pg 21
     3.16.3   Phaseout Requirements                                        Pg 21
     3.16.4   Turnover and Phaseout Period                                 Pg 21

     3.17     Termination                                                  Pg 21
     3.17.1   Termination - State or Director                              Pg 21
     3.17.2   Termination - Contractor                                     Pg 22
     3.17.3   Mandatory Termination                                        Pg 22
     3.17.4   Termination of Obligations                                   Pg 23
     3.17.5   Notice to Members of Transfer of Care                        Pg 23

     3.18     Sanctions                                                    pg 23

     3.19     Liquidated Damages Provisions                                Pg 23
     3.19.1   General                                                      Pg 23

                                        i

<PAGE>

Molina Medical Centers                                                  95-23637
                                                                      Article VI

     3.19.2   Liquidated Damages for Violation of Contract Terms
              Regarding the Implementation Period                          Pg 25
     3.19.3   Liquidated Damages for Violation of Contract Terms or
              Regulations Regarding the Operations Period                  Pg 25
     3.19.4   Annual Medical Reviews                                       Pg 26
     3.19.5   Conditions for Termination of Liquidated Damages             Pg 26
     3.19.6   Severability of Individual Liquidated Damages Clauses        Pg 26

     3.20     Assignments                                                  Pg 26

     3.21     Disputes and Appeals                                         Pg 27
     3.21.1   Disputes Resolution by Negotiation                           Pg 27
     3.21.2   Notification of Dispute                                      Pg 27
     3.21.3   Contracting Officers Decision                                Pg 28
     3.21.4   Contractor Duty to Perform                                   Pg 29
     3.21.5   Waiver of Claims                                             Pg 29

     3.22     Enrollment                                                   Pg 29
     3.22.1   Enrollment - General                                         Pg 30
     3.22.2   Enrollment Totals                                            Pg 30
     3.22.3   Coverage                                                     Pg 30
     3.22.4   Enrollment Restriction                                       Pg 30
     3.22.5   Disenrollment                                                Pg 30

     3.23     Standards                                                    Pg 31
     3.24     Pharmaceutical Services and Prescribed Drugs                 Pg 32
     3.25     Facilities                                                   Pg 32
     3.26     Laboratory Certification                                     Pg 32

     3.27     Subcontracts                                                 Pg 33
     3.27.1   Knox-Keene and Regulations                                   Pg 33
     3.27.2   Subcontract Requirements                                     Pg 33
     3.27.3   Departmental Approval - Non-Federally Qualified HMOs         Pg 35
     3.27.4   Departmental Approval - Federally Qualified HMOs             Pg 35
     3.27.5   Compensation                                                 Pg 35
     3.27.6   Federally Qualified Health Centers                           Pg 35
     3.27.7   Public Records                                               Pg 36
     3.27.8   Disclosures                                                  Pg 36
     3.27.9   Payment                                                      Pg 37

                                       ii

<PAGE>

Molina Medical Centers                                                  95-23637
                                                                      Article VI

     3.28     Confidentiality of Data                                      Pg 37
     3.28.1   Confidentiality of Information                               Pg 37
     3.28.2   Contractor's Duties to Maintain Confidentiality              Pg 37
     3.29     Key Personnel (Disclosure Form)                              Pg 38
     3.30     Conflict of Interest - Current and Former State Employees    Pg 38

     3.31     Records Keeping, Audit/Inspection of Records                 Pg 38
     3.31.1   Books and Records                                            Pg 39
     3.31.2   Records Retention                                            Pg 39

     3.32     Amendment of Contract                                        Pg 39
     3.33     Contractor Certifications                                    Pg 39

     3.34     Change Requirements                                          Pg 40
     3.34.1   General Provisions                                           Pg 40
     3.34.2   Contractor's Obligation to Implement                         Pg 40

     3.35     Minority/Women//Disabled Veteran Business Enterprises
              (M/W/DVBE)                                                   Pg 40
     3.36     Drug Free Workplace Act of 1990                              Pg 41

     3.37     Indemnification                                              Pg 41
     3.37.1   Indemnification by Contractor                                Pg 41

     3.38     Americans with Disabilities Act of 1990 Requirements         Pg 41
     3.39     Newborn Child Coverage                                       Pg 41
     3.40     Recovery from Other Sources or Providers                     Pg 41
     3.41     Third-Party Tort Liability                                   Pg 42
     3.42     Obtaining DHS Approval                                       Pg 43
     3.43     Pilot Projects                                               Pg 44

ARTICLE IV      DUTIES OF THE STATE                                        Pg 45

     4.1      Payment for Services                                         Pg 45
     4.2      Medical Reviews                                              Pg 45
     4.3      Facility Inspections                                         Pg 45
     4.4      Enrollment Processing                                        Pg 45
     4.5      Disenrollment Processing                                     Pg 46
     4.6      Testing and Certification of Enrollment Representatives      Pg 46
     4.7      Approval Process                                             Pg 46
     4.8      Program Information                                          Pg 46
     4.9      Sanctions                                                    Pg 46

                                       iii

<PAGE>

Molina Medical Centers                                                  95-23637
                                                                     Article  VI

     4.10     Catastrophic Coverage Limitation                             Pg 46
     4.11     Risk Limitation                                              Pg 47
     4.12     Notice of Termination of Contract                            Pg 47
     4.13     Access Requirements and State's Right to Monitor             Pg 47

ARTICLE V     PAYMENT PROVISIONS                                           Pg 48

     5.0      Payment Provisions                                           Pg 48
     5.1      Contractor Risk in Providing Services                        Pg 48
     5.2      Amounts Payable                                              Pg 48
     5.3      Capitation Rates                                             Pg 49
     5.4      Capitation Rates Constitute Payment in Full                  Pg 49
     5.5      Determination of Rates                                       Pg 50
     5.6      Redetermination of Rates - Obligation Changes                Pg 51
     5.7      Reinsurance                                                  Pg 51
     5.8      Catastrophic Coverage Limitation                             Pg 53
     5.9      Financial Security                                           Pg 53
     5.10     Limitation to Federal Financial Participation                Pg 53
     5.11     Recovery of Capitation Payments                              Pg 54

ARTICLE VI    SCOPE OF WORK                                                Pg 55

     6.0      Organization                                                 Pg 55
     6.1      Legal Capacity                                               Pg 55

     6.2      Administration/Staffing                                      Pg 55
     6.2.1    Contract Performance                                         Pg 55
     6.2.2    Medical Director                                             Pg 55
     6.2.3    Medical Decisions                                            Pg 56
     6.2.4    Medical Director Changes                                     Pg 56
     6.2.5    Administrative Duties/Responsibilities                       Pg 56
     6.2.6    Member Representation                                        Pg 57

     6.3      Financial Information                                        Pg 57
     6.3.1    Financial Viability/Standards Compliance                     Pg 57
     6.3.2    Financial Audit/Reports                                      Pg 57
     6.3.3    Monthly Financial Statements                                 Pg 59
     6.3.4    Compliance with Audit Requirements                           Pg 59
     6.3.5    Submittal of Financial Information                           Pg 59

     6.4      Management Information System                                Pg 59
     6.4.1    Management Information System (MIS) Capability               Pg 59

                                       iv

<PAGE>

Molina Medical Centers                                                  95-23637
                                                                     Article  VI

     6.4.2    Encounter Data Submittal                                     Pg 60
     6.4.3    Access to MIS                                                Pg 60
     6.4.4    Late Reports                                                 Pg 60
     6.4.5    Inaccurate/Insufficient Reports                              Pg 60

     6.5      Quality Improvement System                                   Pg 60
     6.5.1    General Requirement                                          Pg 60
     6.5.1.1  Written Description                                          Pg 61
     6.5.2    QIP Administrative Services                                  Pg 62
     6.5.2.1  Accountability                                               Pg 62
     6.5.2.2  Governing Body                                               Pg 62
     6.5.2.3  Quality Improvement Committee                                Pg 63
     6.5.2.4  Medical Director                                             Pg 63
     6.5.2.5  Provider Participation                                       Pg 63
     6.5.2.6  Delegation of QIP Activities                                 Pg 63
     6.5.2.7  Coordination With Other Management Activities                Pg 64

     6.5.3    Systematic Process of Quality Improvement                    Pg 64
     6.5.3.1  General Requirement                                          Pg 64
     6.5.3.2  Quality of Care Studies                                      Pg 65
     6.5.3.3  Standards and Guidelines                                     Pg 65
     6.5.3.4  Quality Indicators                                           Pg 66
     6.5.3.5  Reports                                                      Pg 67

     6.5.4    Credentialing and Recredentialing                            Pg 68
     6.5.4.1  General Requirements                                         Pg 68
     6.5.4.2  Credentialing                                                Pg 68
     6.5.4.3  Recredentialing                                              Pg 69
     6.5.4.4  Delegated Credentialing                                      Pg 69
     6.5.4.5  Disciplinary Actions                                         Pg 69

     6.5.5    Facility Review                                              Pg 69
     6.5.5.1  General Requirement                                          Pg 69
     6.5.5.2  Facility Review Procedures                                   Pg 70
     6.5.5.3  Number of Sites to be Reviewed Prior to Operation            Pg 71
     6.5.5.4  Number of Sites to be Reviewed After Operations Begin        Pg 71
     6.5.5.5  DHS Facility Inspections                                     Pg 71
     6.5.5.6  Corrective Actions                                           Pg 71
     6.5.5.7  Continuing Oversight                                         Pg 71

     6.5.6    Members Rights and Responsibilities                          Pg 72
     6.5.6.1  General Requirement                                          Pg 72

                                        v

<PAGE>

Molina Medical Centers                                                  95-23637
                                                                     Article  VI

     6.5.6.2  Written Policy: Member's Rights                              Pg 72
     6.5.6.3  Written Policy: Member's Responsibilities                    Pg 72
     6.5.6.4  Member's Grievance System                                    Pg 72
     6.5.6.5  Member's Right to Confidentiality                            Pg 73
     6.5.6.6  Minor's Rights and Services                                  Pg 73
     6.5.6.7  Member Satisfaction Surveys                                  Pg 73

     6.5.7    Availability and Accessibility                               Pg 74
     6.5.7.1  General Requirement                                          Pg 74
     6.5.7.2  Emergency Care                                               Pg 74
     6.5.7.3  Urgent Care                                                  Pg 74
     6.5.7.4  First Prenatal Visit                                         Pg 74
     6.5.7.5  Waiting Times                                                Pg 74
     6.5.7.6  Telephone Procedures                                         Pg 74
     6.5.7.7  After Hours Calls                                            Pg 74
     6.5.7.8  Sensitive Services                                           Pg 75
     6.5.7.9  Access for Disabled Members                                  Pg 75
     6.5.7.10 Unusual Specialty Services                                   Pg 75

     6.5.8    Medical Records                                              Pg 75
     6.5.8.1  General Requirement                                          Pg 75
     6.5.8.2  Medical Records Procedures                                   Pg 75
     6.5.8.3  On-Site Medical Records                                      Pg 76
     6.5.8.4  Member Medical Records                                       Pg 76
     6.5.8.5  Medical Records Review                                       Pg 77

     6.5.9    Utilization Management                                       Pg 77
     6.5.9.1  General Requirement                                          Pg 77
     6.5.9.2  Under and Over-Utilization                                   Pg 77
     6.5.9.3  Pre-Authorization/Review Procedures                          Pg 78
     6.5.9.4  Exceptions to Prior Authorization Requirement                Pg 78
     6.5.9.5  Delegating UM Activities                                     Pg 78

     6.5.10   Continuity of Care and Case Management                       Pg 78
     6.5.10.1 Medical Case Management                                      Pg 78
     6.5.10.2 Initial Health Assessment                                    Pg 78
     6.5.10.3 Referrals and Follow-Up Care                                 Pg 79
     6.5.10.4 Coordination of Care                                         Pg 79
     6.5.10.5 Missed/Broken Appointments                                   Pg 79
     6.5.10.6 Continuity of Care                                           Pg 79

     6.5.11   Inpatient Care                                               Pg 79

                                       vi

<PAGE>

Molina Medical Centers                                                  95-23637
                                                                     Article  VI

     6.5.11.1 General Requirement                                          Pg 79
     6.5.12   Infection Control                                            Pg 79
     6.5.12.1 Infection Control Plan                                       Pg 79
     6.5.12.2 Infection Control Policies & Procedures                      Pg 80
     6.5.12.3 Review of Patient Infections                                 Pg 80
     6.5.12.4 Reporting Procedures                                         Pg 80
     6.5.12.5 Subcontractors                                               Pg 80

     6.6      Provider Network and Geographic Access                       Pg 80
     6.6.1    Time and Distance Standard                                   Pg 80
     6.6.2    Network Capacity                                             Pg 81
     6.6.3    Network Composition                                          Pg 81
     6.6.4    Access Requirements                                          Pg 81
     6.6.5    Specialists                                                  Pg 81
     6.6.6    Provider to Member Ratios                                    Pg 81
     6.6.7    Physician Supervisor to Non-Physician Medical
              Practitioner Ratios                                          Pg 82
     6.6.8    Subcontracts                                                 Pg 82
     6.6.9    Traditional and Safety-Net Provider Participation            Pg 82
     6.6.10   Traditional and Safety-Net Provider Capacity                 Pg 82
     6.6.11   Existing Patient-Physician Relationships                     Pg 82
     6.6.12   Monthly Report                                               Pg 83
     6.6.13   Contract and Employment Terminations                         Pg 83
     6.6.14   Utilization of DSH Hospitals                                 Pg 83
     6.6.15   Adequate Facilities and Personnel                            Pg 83
     6.6.16   Emergency Service Providers                                  Pg 83
     6.6.17   Users Manual and Bulletins                                   Pg 84
     6.6.18   Provider Training                                            Pg 85
     6.6.19   FQHC Services                                                Pg 85
     6.6.20   FQHC Subcontracts                                            Pg 85
     6.6.21   Indian Health Services Facilities                            Pg 86
     6.6.22   Vision Care Services                                         Pg 86
     6.6.23   Subcontractor Services                                       Pg 86
     6.6.24   Emergency Department Protocols                               Pg 86

     6.7      Scope of Services/Medical Standards/ Health Education        Pg 87

     6.7.1    Covered Services                                             Pg 87
     6.7.1.1  General Requirement                                          Pg 87
     6.7.1.2  Referral Services                                            Pg 87

                                       vii

<PAGE>

Molina Medical Centers                                                  95-23637
                                                                     Article  VI

     6.7.2    Excluded Services: Circumstances Under Which Member
              Disenrolled                                                  Pg 87
     6.7.2.1  Major Organ Transplants                                      Pg 88
     6.7.2.2  Waiver Programs                                              Pg 88
     6.7.2.3  Long Term Care (LTC)                                         Pg 89

     6.7.3    Excluded Services: Circumstances Under Which Member
              Enrolled with Service Carve Out                              Pg 89
     6.7.3.1  Miscellaneous Service Carve Outs                             Pg 89
     6.7.3.2  California Children Services                                 Pg 90
     6.7.3.3  Mental Health                                                Pg 90
     6.7.3.4  Alcohol and Drug Treatment                                   Pg 90
     6.7.3.5  Dental                                                       Pg 91
     6.7.3.6  Vision Care - Lenses                                         Pg 91
     6.7.3.7  Direct Observed Therapy (DOT) for Treatment of
              Tuberculosis                                                 Pg 91
     6.7.3.8  Department of Developmental Services Administered
              Medicaid Home and Community Based Services Waiver            Pg 91

     6.7.4    Capitated Services: Services with Special Arrangements
              and/or Payment of Out-Of-Plan Providers                      Pg 92
     6.7.4.1  School Linked CHDP Services: Coordination of Care            Pg 92
     6.7.4.2  School Linked CHDP Services: Cooperative Arrangements        Pg 92
     6.7.4.3  School Linked CHDP Services: Subcontracts                    Pg 93
     6.7.4.4  Early and Periodic Screening, Diagnosis and Treatment
              EPSDT Supplemental Services, Excluding Case Management
              Services                                                     Pg 93
     6.7.4.5  Family Planning: General Requirement                         Pg 93
     6.7.4.6  Family Planning: Informed Consent                            Pg 94
     6.7.4.7  Family Planning: Out-Of-Network Reimbursement                Pg 94
     6.7.4.8  Family Planning: Reimbursement Rate                          Pg 95
     6.7.4.9  Sexually Transmitted Diseases (STD)                          Pg 95
     6.7.4.10 Early Intervention Services                                  Pg 95
     6.7.4.11 Services for Persons with Developmental Disabilities         Pg 95
     6.7.4.12 Confidential HIV Testing                                     Pg 96
     6.7.4.13 Immunizations                                                Pg 96
     6.7.4.14 Nurse Midwife Services                                       Pg 96

     6.7.5    Required Referral Arrangements                               Pg 96
     6.7.5.1  Women, Infants, and Children WIC Supplemental Food

                                      viii

<PAGE>

Molina Medical Centers                                                  95-23637
                                                                     Article  VI

              Program: General Requirements                                Pg 96
     6.7.5.2  WIC Supplemental Food Program: Medical Records               Pg 97

     6.7.6    Medical Standards - Clinical Preventive Service              Pg 97
     6.7.6.1  Initial Health Assessment                                    Pg 97
     6.7.6.2  Children                                                     Pg 97
     6.7.6.3  Pregnant Women: Minimum Standards                            Pg 99
     6.7.6.4  Pregnant Women: Provider Credentialing Standards             Pg 99
     6.7.6.5  Pregnant Women: Risk Assessment                              Pg 99
     6.7.6.6  Pregnant Women: Referrals to Specialists                     Pg 99
     6.7.6.7  Adults                                                      Pg 100
     6.7.6.8  Tuberculosis (Tb)                                           Pg 101

     6.7.7    Health Education                                            Pg 101
     6.7.7.1  General Requirements                                        Pg 101
     6.7.7.2  Health Educator                                             Pg 102
     6.7.7.3  Behavioral Assessments                                      Pg 102
     6.7.7.4  Health Education Policies and Procedures                    Pg 103
     6.7.7.5  Health Education Standards                                  Pg 103
     6.7.7.6  Health Education and QIP                                    Pg 103
     6.7.7.7  Group Needs Assessment                                      Pg 103
     6.7.7.8  Health Education Workplan                                   Pg 103
     6.7.7.9  Health Education Reading Level                              Pg 104

     6.7.8    Local Health Department Coordination                        Pg 104
     6.7.8.1  Subcontract                                                 Pg 104

     6.8      Marketing and Enrollment                                    Pg 105
     6.8.1    Marketing Representatives                                   Pg 105
     6.8.2    Liability                                                   Pg 105
     6.8.3    Certification of Marketing Representatives                  Pg 105
     6.8.4    Enrollment Program                                          Pg 106
     6.8.5    Disenrollment Forms                                         Pg 106
     6.8.6    Marketing Plan                                              Pg 106
     6.8.7    DHS Approval                                                Pg 106

     6.9      Member Services/Grievance System                            Pg 106
     6.9.1    System Capacity                                             Pg 106
     6.9.2    Member Services Employee Training                           Pg 106
     6.9.3    Disclosure Forms                                            Pg 106
     6.9.4    Member Identification Card                                  Pg 107
     6.9.5    Membership Services Guide                                   Pg 107

                                       ix

<PAGE>

Molina Medical Centers                                                  95-23637
                                                                     Article  VI

     6.9.6    Enrollee Information                                        Pg 109
     6.9.7    Distribution of Member Services Information                 Pg 110
     6.9.8    Changes in Availability or Location of Covered Services     Pg 110
     6.9.9    Primary Care Physician Selection                            Pg 110
     6.9.10   Primary Care Physician Assignment                           Pg 110
     6.9.11   Continuity of Care                                          Pg 110
     6.9.12   Disclosure                                                  Pg 110
     6.9.13   Member Compliant/Grievance System                           Pg 110
     6.9.14   Disenrollments                                              Pg 110
     6.9.15   Denial, Deferral or Modifications of Prior Authorization    Pg 111
              Requests

     6.10     Cultural and Linguistic Services Requirement                Pg 112
     6.10.1   Civil Rights Act of 1964                                    Pg 112
     6.10.2   Linguistic Services                                         Pg 112
     6.10.3   Linguistic Capability of Employees                          Pg 113
     6.10.4   Subcontracts                                                Pg 113
     6.10.5   Community Advisory Committee                                Pg 113
     6.10.6   Cultural and Linguistic Services Plan                       Pg 114
     6.10.7   Implementation Workplan                                     Pg 114
     6.10.8   Standards and Performance Requirements                      Pg 114
     6.10.9   Interpreter Coordination                                    Pg 115

     6.11     Implementation Plans                                        Pg 115
     6.11.1   Time Frames                                                 Pg 115
     6.11.2   Implementation Plan Oversight                               Pg 115
     6.11.3   Monthly Progress Reports                                    Pg 115

                                        x

<PAGE>

Molina Medical Centers                                                  95-23637
                                                                     Article  II

                            ARTICLE II - DEFINITIONS

As used in this Contract, unless otherwise expressly provided or the context
otherwise requires, the following definitions of terms will govern the
construction of this Contract:

A.   Administrative Costs means only those costs which arise out of the
     operation of the plan excluding direct and overhead costs incurred in the
     furnishing of health care services which would ordinarily be incurred in
     the provision of these services whether or not through a plan.

B.   Affiliate means an organization or person that directly, or indirectly
     through one or more intermediaries controls or is controlled by, or is
     under control with the Contractor and that provides services to or receives
     services from the Contractor.

C.   Allied Health Personnel means specially trained, licensed, or credentialed
     health workers other than Physicians, podiatrists and Nurses.

D.   Ambulatory Care means the type of health services that are provided on an
     outpatient basis. While many inpatients may be ambulatory, the term,
     "Ambulatory Care" usually implies that the Member has come to a location
     such as a clinic, health center, or Physician's office to receive services
     and has departed the same day.

E.   Beneficiary Identification Card (BIC) means a permanent plastic card issued
     by the State to recipients of entitlement programs which is used by
     contractors to verify health plan eligibility. Files are updated monthly.

F.   California Children Services (CCS) means those services authorized by the
     CCS program for the diagnosis and treatment of the CCS eligible conditions
     of a specific Member.

G.   California Children Services (CCS) Eligible Conditions means a physically
     handicapping condition defined in Title 22, CCR, Section 41800.

H.   California Children Services (CCS) Program means the public health program
     which assures the delivery of specialized diagnostic, treatment, and
     therapy services to financially and medically eligible children under the
     age of 21 years who have CCS eligible conditions.

I.   Claims and Eligibility Real-Time System (CERTS) means the mechanism for
     verifying a recipient's Medi-Cal or County Medical Services Program (CMSP)
     eligibility by computer.

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Molina Medical Centers                                                  95-23637
                                                                     Article  II

J.   Confidential Information means specific facts or documents identified as
     "confidential" by either law, regulations or contractual language.

K.   Contract means this written agreement between DHS and the Contractor.

L.   Contracting Providers means a Physician, Nurse, technician, teacher,
     researcher, hospital, home health agency, nursing home, or any other
     individual or institution that contracts with a health plan to provide
     medical services to plan Members.

M.   Corrective Actions means specific identifiable activities or undertakings
     of the Contractor which address program deficiencies or problems identified
     by formal audits or DHS monitoring activities.

N.   County Department means the County Department of Social Services (DSS), or
     other county agency responsible for determining the initial and continued
     eligibility for the Medi-Cal program.

O.   Covered Services means those services set forth in Title 22, CCR, Division
     3, Subdivision 1, Chapter 3, beginning with Section 51301, and Title 17,
     CCR, Chapter 4, Subchapter 13, Article 4, beginning with Section 6840.
     Covered Services do not include:

     1.   Services for major organ transplants as specified in Section 6.7.2.1.

     2.   Long term care services as specified in Section 6.7.2.3.

     3.   Home and community based services as specified in Section 6.7.3.8

     4.   California Children Services (CCS) as specified in Section 6.7.3.2.

     5.   Mental health services as specified in Section 6.7.3.3.

     6.   Alcohol and drug treatment services as specified in Section 6.7.3.4.

     7.   Fabrication of optical lenses as specified in Section 6.7.3.6.

     8.   Direct observed treatment for tuberculosis as specified in Section
          6.7.3.7.

     9.   Dental services as specified in Title 22, CCR, Section 51307.

     10.  Acupuncture services as specified in Title 22, CCR, Section 51308.5.

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Molina Medical Centers                                                  95-23637
                                                                     Article  II

     11.  Chiropractic services as specified in Title 22, CCR, Section 51308.

     12.  Prayer or spiritual healing as specified in Title 22, CCR, Section
          51312.

     13.  Local Education Agency (LEA) assessment services as specified in Title
          22, CCR, Section 51360(b)(l) provided to a Member who qualifies for
          LEA services based on Title 22, CCR, Section 51190.1(a).

     14.  Any LEA services as specified in Title 22, CCR, Section 51360 provided
          pursuant to an Individualized Education Plan (IEP) as set forth in
          Education Code, Section 56340 et seq. or an Individualized Family
          Service Plan (IFSP) as set forth in Government Code Section 95020.

     15.  Laboratory services provided under the State serum alphafetoprotein
          testing program administered by the Genetic Disease Branch of DHS.

P.   Credentialing means the recognition of professional or technical
     competence. The process involved may include registration, certification,
     licensure and professional association membership.

Q.   DOC means the State Department of Corporations which is responsible for
     administering the Knox-Keene Act of 1975.

R.   DMH means the Department of Mental Health, the State agency, in
     consultation with the California Mental Health Directors Association
     (CMHDA) and California Mental Health Planning Council, which sets policy
     and administers for the delivery of community based public mental health
     services statewide.

S.   DHS means the Department of Health Services single State Department
     responsible for administration of the Medi-Cal, CMSP, CCS, GHPP, CHDP, and
     other health related programs.

T.   DHHS means the Department of Health and Human Services, the federal agency
     responsible for management of the Medicaid program.

U.   Dietitian/Nutritionist means a person who is registered or eligible for
     registration as a Registered Dietitian by the Commission on Dietetic
     Registration (Business and Professions Code, Chapter 5.65, Sections 2585
     and 2586).

V.   Director means the Director of the State of California Department of Health
     Services.

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Molina Medical Centers                                                  95-23637
                                                                     Article  II

W.   Disproportionate Share Hospital (DSH) means a health Facility licensed
     pursuant to Chapter 2, Division 2, Health and Safety Code, to provide acute
     inpatient hospital services, which is eligible to receive payment
     adjustments from the State pursuant to W&I Code, Section 14105.98.

X.   Eligible Beneficiary means any Medi-Cal beneficiary who is residing in the
     Contractor's Service Area with one of the following aid codes: Aid to
     Families with Dependent Children - aid codes 30,32,33,35,38,39,3A,3C,40,
     42,4C,54,59,3P,3R; Medically Needy Family - aid code 34; Public Assistance
     Aged - aid codes 10,16,18; Medically Needy Aged - aid code 14; Public
     Assistance Blind - aid codes 20,26,28,6A; Medically Needy Blind - aid code
     24; Public Assistance Disabled - aid codes 36,60,66,68,6C; Medically Needy
     Disabled - aid code 64; Medically Indigent Child - aid codes 03,04,4K,5K,
     45,82; Medically Indigent Adult - aid code 86; and Refugees - aid codes
     01,02, and 08, with the following exclusions:

     1.   Individuals who have been approved by the Medi-Cal Field Office or the
          California Children Services Program for bone marrow, heart,
          heart-lung, liver, lung, combined liver and kidney, or combined liver
          and small bowel transplants.

     2.   Individuals who elect and are accepted to participate in the following
          Medi-Cal waiver programs: In-Home Medical Care Waiver Program, the
          Skilled Nursing Facility Waiver Program, the Model Waiver Program, the
          Acquired Immune Deficiency (AIDS) and AIDS Related Conditions Waiver
          Program, and the Multipurpose Senior Services Waiver Program.

     3.   Individuals determined by the Medi-Cal Field Office to be in need of
          long term care and residing in a Skilled Nursing Facility (SNF) for 30
          days past the month of admission.

Y.   Emergency Conditions means those medical conditions requiring immediate
     medical care to avoid disability or death.

Z.   Emergency Services means those health services required for alleviation of
     severe pain or immediate diagnosis and treatment of unforeseen medical
     conditions, which if not immediately diagnosed and treated, could lead to
     disability or death.

AA.  Encounter means a single "face-to-face" visit or medically related service
     rendered by (a) provider(s) in an Ambulatory Care setting to a Member
     enrolled in the health plan during the date of service. It includes, but
     not limited to, all services for which the Contractor incurred any
     financial liability.

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Molina Medical Centers                                                  95-23637
                                                                     Article  II

BB.  Enrollment means the process by which an Eligible Beneficiary becomes a
     Member of the Contractor's plan.

CC.  Facility means any premise that is:

     1.   Owned, leased, used or operated directly or indirectly by or for the
          Contractor or its Affiliates for purposes related to this Contract or

     2.   Maintained by a provider to provide services on behalf of the
          Contractor.

DD.  Federal Financial Participation means federal expenditures provided to
     match proper State expenditures made under approved State Medicaid plans.

EE.  Federally Qualified HMO means a prepaid health delivery plan that has
     fulfilled the requirements of the HMO Act, along with its amendments and
     regulations, and has obtained the Federal Government's qualification status
     under Section 1310(d) of the Public Health Service Act (42 USC S300e).

FF.  Fee-For-Service (FFS) means a method of charging based upon billing for a
     specific number of units of services rendered to an Eligible Beneficiary.
     Fee-For-Service is the traditional method of reimbursement used by
     Physicians and payment almost always occurs retrospectively (i.e., after
     the service has been rendered).

GG.  Fee-For-Service Mental Health Services (FFS/MC) means the mental health
     services covered through Fee-For-Service Medi-Cal which include outpatient
     services and acute care inpatient services. These services are provided
     through Primary Care Physicians as well as psychiatrists and psychologists.

HH.  Financial Security means cash or cash equivalents which are immediately
     redeemable upon demand by DHS, in an amount determined by DHS, which shall
     not be less than one full month's capitation. This is required when
     prepayment of capitation is agreed upon by DHS and the Contractor.

II.  Financial Statements means the Financial Statements as defined by Generally
     Accepted Accounting Principles (GAAP) which includes a Balance Sheet,
     Income Statement, Statement of Cash Flows, Statement of Equity and
     accompanying footnotes. All documents are prepared in accordance with GAAP.

JJ.  Fiscal Year (FY) means any 12-month period for which annual accounts are
     kept. The State Fiscal Year is July 1 through June 30, the federal Fiscal
     Year is October 1 through September 30.

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Molina Medical Centers                                                  95-23637
                                                                     Article  II

KK.  Grievance means a complaint filed by either a Member or a provider.

LL.  Health Maintenance Organization (HMO) means an organization that, through
     a coordinated system of health care, provides or assures the delivery of an
     agreed upon set of comprehensive health maintenance and treatment services
     for an enrolled group of persons through a predetermined periodic fixed
     prepayment.

MM.  Indian Health Service (IHS) Facilities means Facilities operated with funds
     from the IHS under the Indian Self-Determination Act and the Indian Health
     Care Improvement Act, through which services are provided, directly or by
     contract, to the eligible Indian population within a defined geographic
     area.

NN.  Intermediate Care Facility (ICF) means a Facility which is licensed as an
     ICF by DHS or a hospital or Skilled Nursing Facility which meets the
     standards specified in Title 22, CCR, Section 51212 and has been certified
     by DHS for participation in the Medi-Cal program.

OO.  Joint Commission On Accreditation of Hospitals (JCAHO) means the
     composition of representatives of the American Hospital Association,
     American Medical Association, American College of Physicians and American
     College of Surgeons, JCAHO establishes guidelines for the operation of
     hospitals and other health Facilities and accreditation programs.

PP.  Knox-Keene Health Care Service Plan Act of 1975 means the law which
     regulates HMOs and is administrated by the Department of Corporations
     (DOC), commencing with Section 1340, Health & Safety Code.

QQ.  Local Authority means a health care organization in which local
     stakeholders share governance responsibility for administrating Medi-Cal
     managed care.

RR.  Marketing means any activity conducted on behalf of the Contractor where
     information regarding the services offered by the Contractor is
     disseminated in order to persuade Eligible Beneficiaries to enroll.
     Marketing also includes any similar activity to secure the endorsement of
     any individual or organization on behalf of the Contractor.

SS.  Marketing Organization means any subcontractor or entity who agrees to
     provide Marketing services for the Contractor.

TT.  Marketing Representative means a person who is engaged in Marketing
     activities on behalf of the Contractor either through direct employment by
     the Contractor or through a Marketing Organization.

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Molina Medical Centers                                                  95-23637
                                                                     Article  II

UU.  Medi-Cal Eligibility Data System (MEDS) means the automated eligibility
     information processing system operated by the State which provides on-line
     access for recipient information, update of recipient eligibility data and
     on-line printing of immediate need beneficiary identification cards. The
     MEDS also produces Beneficiary Identification Cards (BIC) and maintains
     data on federal SSI/SSP and Medicare buy-in beneficiaries.

VV.  Medical Case Management Services means services provided by a Primary Care
     Provider to ensure the coordination of Medically Necessary health care
     services, assuring the provision of preventive services in accordance with
     established standards and periodicity schedules and ensuring continuity of
     care for Medi-Cal enrollees. It includes health risk assessment, treatment
     planning, coordination, referral, follow-up, and monitoring of appropriate
     services and resources required to meet an individual's health care needs.

WW.  Medical Records means written documentary evidence of treatments rendered
     to plan Members.

XX.  Medically Necessary means reasonable and necessary services to protect
     life, to prevent significant illness or significant disability, or to
     alleviate severe pain through the diagnosis or treatment of disease,
     illness, or injury.

YY.  Member means any Eligible Beneficiary who has enrolled in the Contractor's
     plan.

ZZ.  Minor Consent Services means those treatment services of a sensitive nature
     for which minors do not need parental consent to access. Such services
     include pregnancy, abortion, mental health services.

A1.  Newborn Child means a child born to a Member during her membership or the
     month prior to her membership.

B1.  Non-Emergency Medical Transportation means inclusion of services outlined
     in Title 22, CCR, Sections 51231.1 and 51231.2 rendered by licensed
     providers.

C1.  Non-Medical Transportation means transportation of Members to medical
     services by passenger car, taxicabs, or other forms of public or private
     conveyances provided by persons not registered as Medi-Cal providers. Does
     not include the transportation of sick, injured, invalid, convalescent,
     infirm, or otherwise incapacitated Members by ambulances, litter vans, or
     wheelchair vans licensed, operated and equipped in accordance with state
     and local statutes, ordinances or regulations.

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Molina Medical Centers                                                  95-23637
                                                                     Article  II

D1.  Non-Physician Medical Practitioners (Mid-Level Practitioner) means a nurse
     practitioner, certified nurse midwife, or physician assistant authorized to
     provide Primary Care under Physician supervision.

E1.  Nurse means a person licensed by the California Board of Nursing as, at
     least, a Registered Nurse (RN).

F1.  Outpatient Care means treatment provided to an Member who is not confined
     in a health care Facility. Outpatient care is associated with treatment in
     a hospital that does not necessitate an overnight stay, e.g., emergency
     treatment.

G1.  Pediatric Subacute Care means health care services needed by a person under
     21 years of age who uses a medical technology that compensates for the loss
     of vital bodily function. Medical necessity criteria are described in the
     Physician's Manual of Criteria for Medi-Cal Authorization.

H1.  Physician means a person duly licensed as a Physician by the Medical Board
     of California.

I1.  Policy Letter means a document which has been dated, numbered and issued by
     the Medi-Cal Managed Care Division. It clarifies regulatory or contractual
     requirements.

J1.  Prepaid Person means a person entitled to receive health care services from
     the Contractor in consideration of a predetermined periodic, fixed
     subscription premium, or capitation payment.

K1.  Preventive Care means health care designed to prevent disease and /or its
     consequences. There are three levels of Preventive Care; primary, such as
     immunizations, aimed at preventing disease; secondary, such as disease
     screening programs, aimed at early detection of disease; and tertiary, such
     as physical therapy, aimed at restoring function after the disease has
     occurred.

L1.  Primary Care means a basic level of health care usually rendered in
     ambulatory settings by general practitioners, family practitioners,
     internists, obstetricians, pediatricians, and mid-level practitioners. This
     type of care emphasizes caring for the Member's general health needs as
     opposed to specialists focusing on specific needs.

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Molina Medical Centers                                                  95-23637
                                                                     Article  II

M1.  Primary Care Physician means a Physician responsible for supervising,
     coordinating, and providing initial and Primary Care to patients; for
     initiating referrals for specialist care; and for maintaining the
     continuity of patient care. A Primary Care Physician has focused the
     delivery of medicine to general practice or is a board certified or board
     eligible internist, pediatrician, obstetrician/gynecologist, or family
     practitioner.

N1.  Primary Care Provider means a person responsible for supervising,
     coordinating, and providing initial and Primary Care to Members; for
     initiating referrals and for maintaining the continuity of Member care. A
     Primary Care Provider may be a Primary Care Physician or non-physician
     medical practitioner.

O1.  Prior Authorization means the process by which contractors approve, usually
     in advance of the rendering, requested medical services. This is part of
     the Utilization management system.

P1.  Prior Authorization Request means a method by which practitioners seek
     approval from Contractor to render medical services. The Contractor's
     Utilization Review (UR) Coordinator is responsible for granting approval to
     providing specific, non-emergency medical services in advance of rendering
     such services.

Q1.  Quality Assurance (QA) means a formal set of activities to assure the
     quality of clinical and non-clinical services provided. Quality Assurance
     includes quality assessment and Corrective Actions taken to remedy any
     deficiencies identified through the assessment process. Comprehensive
     Quality Assurance includes mechanisms to assess and assure the quality of
     both health services and administrative and support services.

R1.  Quality Improvement (QI) means the result of an effective QA program, which
     objectively and systematically monitors and evaluates the quality and
     appropriateness of care and services to Members through Quality of Care
     studies and other health related activities.

S1.  Quality Improvement Plan (QIP) means consisting of systematic activities to
     monitor and evaluate the medical care delivered to Members according to the
     standards set forth in regulations and Contract language. The plan must
     have processes in place which measure the effectiveness of care, identify
     problems, and implement improvement on a continuing basis.

T1.  Quality of Care means the degree to which health services for individuals
     and populations increase the likelihood of desired health outcomes and are
     consistent with current professional knowledge.

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Molina Medical Centers                                                  95-23637
                                                                     Article  II

U1.  Quality Indicators means the referral to measurable variables relating to a
     specific clinic or health services delivery area which are reviewed over a
     period of time to screen delivered health care and to monitor the process
     or outcome of care delivered in that clinical area.

V1.  Sensitive Services means those services related to:

     1.   Sexual Assault

     2.   Drug or alcohol abuse for children 12 years of age or older.

     3.   Pregnancy

     4.   Family Planning

     5.   Sexually transmitted diseases designated by the Director for children
          12 years of age or older.

W1.  Service Area means the geographic area comprised of those areas designated
     by the U.S. Postal Service ZIP Codes that have been proposed by the
     Contractor and approved in writing by DHS.

X1.  Service Location means any location at which a Member obtains any health
     care service provided by the Contractor under the terms of this Contract.

Y1.  Service Site means the location designated by the Contractor at which
     Members shall receive Primary Care Physician services.

Z1.  Short-Doyle Medi-Cal Mental Health Services (SD/MC) means as defined in
     Title 22, CCR, Section 51341, SD/MC Mental Health Services include: crisis
     intervention, crisis sterilization, inpatient hospital services, crisis
     residential treatment case management, adult residential treatment, day
     treatment intensive, rehabilitation, outpatient therapy, medication and
     support services.

A2.  Short-Doyle Program means as defined in Title 22, CCR, Section 51341, the
     program administered by the Department of Mental Health to provide
     community mental health services and the program administered by the
     Department of Alcohol and Drug Programs to provide drug and alcohol
     treatment services.

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Molina Medical Centers                                                  95-23637
                                                                     Article  II

B2.  Skilled Nursing Facility (SNF) means, as defined in Title 22, CCR, Section
     51121(a), any institution, place, building, or agency which is licensed as
     a Skilled Nursing Facility by DHS or is a distinct part or unit of a
     hospital, meets the standard specified in Section 51215 of these
     regulations (except that the distinct part of a hospital does not need to
     be licensed as a Skilled Nursing Facility) and has been certified by DHS
     for participation as a Skilled Nursing Facility in the Medi-Cal program.
     Section 51121(b) further defines the term "Skilled Nursing Facility" as
     including terms "skilled nursing home", "convalescent hospital", "nursing
     home", or "nursing Facility".

C2.  State means the State of California.

D2.  Subacute Care means, as defined in Title 22, CCR, Section 51124.5, a level
     of care needed by a patient who does not require hospital acute care but
     who requires more intensive licensed skilled nursing care than is provided
     to the majority of patients in a Skilled Nursing Facility (SNF).

E2.  Subcontract means a written agreement entered into by the Contractor with
     any of the following:

     1.   A provider of health care services who agrees to furnish Covered
          Services to Members.

     2.   A Marketing Organization.

     3.   Any other organization or person(s) who agree(s) to perform any
          administrative function or service for the Contractor specifically
          related to fulfilling the Contractor's obligations to DHS under the
          terms of this Contract.

F2.  Sub-Subcontractor means party to an agreement with a subcontractor
     descending from and subordinate to a Subcontract, which is entered into for
     the purpose of providing any goods or services connected with the
     obligations under this Contract.

G2.  Supplemental Security Income (SSI) means the program authorized by Title
     XVI of the Social Security Act for aged, blind, and disabled persons.

H2.  Third Party Liability (TPL) means the responsibility of persons other than
     the Contractor or the Member for payment of claims for injuries or trauma
     sustained by Members. This may be contractual, a legal obligation or as a
     result of or the fault or negligence of third parties (e.g., auto accidents
     or other personal injury casualty claims or work compensation appeals). DHS
     is responsible for follow up and collection of Third Party Liability
     payments where it has paid for related care.

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Molina Medical Centers                                                  95-23637
                                                                     Article  II

I2.  Urgent Care means services required to prevent serious deterioration of
     health following the onset of an unforeseen condition or injury (i.e., sore
     throats, fever, minor lacerations, and some broken bones).

J2.  Utilization means the rate patterns of service usage or types of service
     occurring within a specified time. Inpatient Utilization is generally
     expressed in rates per unit of population-at-risk for a given period; e.g.,
     the number of hospital admissions per 1,000 persons enrolled in an HMO/per
     year.

K2.  Utilization Review means the process of evaluating the necessity,
     appropriateness, and efficiency of the use of medical services, procedures
     and Facilities.

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Molina Medical Centers                                                  95-23637
                                                                     Article III

                   ARTICLE III - GENERAL TERMS AND CONDITIONS

3.1       DELEGATION OF AUTHORITY

     DHS intends to implement this Contract through a single administrator,
     called the "Contracting Officer". The Contracting Officer will be appointed
     by the Director of DHS. The Contracting Officer, on behalf of DHS, will
     make all determinations and take all actions as are appropriate under this
     Contract, subject to the limitations of applicable federal and State laws
     and regulations. The Contracting Officer may delegate his/her authority to
     act to an authorized representative through written notice to the
     Contractor.

     The Contractor will designate a single administrator, hereafter called the
     "Contractor's Representative". The Contractor's Representative, on behalf
     of the Contractor, will make all determinations and take all actions as are
     appropriate to implement this Contract, subject to the limitations of the
     Contract, federal and State laws and regulations. The Contractor's
     Representative may delegate his/her authority to act to an authorized
     representative through written notice to the Contracting Officer. The
     Contractor's Representative will be empowered to legally bind the
     Contractor to all agreements reached with DHS.

     The Contractor's Representive will be designated in writing by the
     Contractor. Such designation will be submitted to the Contracting Officer
     in accordance with Section 3.3, Authority of the State.

3.2       GOVERNING AUTHORITIES

     This Contract will be governed and construed in accordance with:

     Chapter 7 and 8 (commencing with Section 14000), Part 3, Division 9, W&I
     Code;

     Division 3, Title 22, CCR;

     Health and Safety Code Section 1340 et seq.

     Title 10, CCR, Section 1300 et seq.

     Title 42, Code of Federal Regulations (CFR);

     Title 42, United States Code, Section 1396 et seq.;

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Molina Medical Centers                                                  95-23637
                                                                     Article III

     Title 45, CFR, Part 74;

     Subchapter 13 (commencing with Section 6800), Chapter 4, Part 1, Title 17,
     CCR, and;

     All other applicable laws and regulations.

     Any provision of this Contract which is in conflict with the above laws,
     regulations and federal Medicaid statutes is hereby amended to conform to
     the provisions of those laws and regulations. Such amendment of the
     Contract will be effective on the effective date of the statutes or
     regulations necessitating it, and will be binding on the parties even
     though such amendment may not have been reduced to writing and formally
     agreed upon and executed by the parties.

     This amendment will constitute grounds for termination of this Contract in
     accordance with the provisions of Section 3.17.1, Termination by the State,
     and 3.17.2, Termination by the Contractor. The parties will be bound by the
     terms of the amendment until the effective date of the termination.

3.3       AUTHORITY OF THE STATE

     A.   Sole authority to establish, define, or determine the reasonableness,
          the necessity and level and scope of covered benefits under the
          Medi-Cal Managed Care program administered in this Contract or
          coverage for such benefits, or the eligibility of the beneficiaries or
          providers to participate in the Medi-Cal Managed Care Program reside
          with DHS.

     B.   Sole authority to establish or interpret policy and its application
          related to the above areas will reside with DHS.

     C.   The Contractor may not make any limitations, exclusions, or changes in
          benefits or benefit coverage; any changes in definition or
          interpretation of benefits; or any changes in the administration of
          the Contract related to the scope of benefits, allowable coverage for
          those benefits, or eligibility of beneficiaries or providers to
          participate in the program, without the express, written direction or
          approval of the Contracting Officer.

3.4       FULFILLMENT OF OBLIGATIONS

     No covenant, condition, duty, obligation, or undertaking continued or made
     a part of this Contract will be waived except by written agreement of the
     parties hereto, and forbearance or indulgence in any other form or manner
     by either party in any regard

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Molina Medical Centers                                                  95-23637
                                                                     Article III

     whatsoever will not constitute a waiver of the covenant, condition, duty,
     obligation, or undertaking to be kept, performed or discharged by the party
     to which the same may apply; and, until performance or satisfaction of all
     covenants, conditions, duties, obligations, and undertakings is complete,
     the other party will have the right to invoke any remedy available under
     this contract, or under law, notwithstanding such forbearance or
     indulgence.

3.5       COMPLIANCE WITH PROTOCOLS

     The Contractor will develop and comply with all protocols and procedures
     within 30 days of their approval by DHS. All subsequent revisions thereof
     will be approved by DHS and implemented by the Contractor within 30 days of
     such approval. The Contractor will not implement protocols, procedures or
     revisions thereof prior to approval by DHS.

3.6       EQUAL OPPORTUNITY EMPLOYER

     The Contractor will, in all solicitations or advertisements for employees
     placed by or on behalf of the Contractor, state that it is an equal
     opportunity employer, and will send to each labor union or representative
     of workers with which it has a collective bargaining agreement or other
     contract or understanding, a notice to be provided by DHS, advising the
     labor union or workers' representative of the Contract's commitments as an
     equal opportunity employer and will post copies of the notice in
     conspicuous places available to employees and applicants for employment.

3.7       NONDISCRIMINATION CLAUSE COMPLIANCE

     A.   During the performance of this Contract, Contractor and its
          subcontractors will not unlawfully discriminate, harass, or allow
          harassment, against any employee or applicant for employment because
          of sex, race, color, ancestry, religious creed, national origin,
          physical disability (including HIV and AIDS), mental disability,
          medical condition (including Cancer), age (over 40), marital status,
          and denial of family care leave. Contractors and subcontractors will
          insure that the evaluation and treatment of their employees and
          applicants for employment are free from discrimination and
          harassment. Contractor and subcontractors will comply with the
          provisions of the Fair Employment and Housing Act (Government Code,
          Section 12900 et seq.) and the applicable regulations promulgated
          thereunder (California Code of Regulations, Title 2, Section 7285.0
          et seq.). The applicable regulations of the Fair Employment and
          Housing Commission implementing Government Code, Section 12990
          (a-f), set forth in Chapter 5 of Division 4 of Title 2 of the
          California Code of Regulations are incorporated into this Contract
          by reference and made a part

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Molina Medical Centers                                                  95-23637
                                                                     Article III

            hereof as if set forth in full. Contractor and its subcontractors
            will give notice of their obligations under this clause to labor
            organizations with which they have a collective bargaining or other
            agreement.

     B.     The Contractor will include the nondiscrimination and compliance
            provisions of this clause in all Subcontracts to perform work under
            this Contract.

3.8       DISCRIMINATION PROHIBITION

     The Contractor will not discriminate against Members or Eligible
     Beneficiaries because of race, color, creed, religion, ancestry, marital
     status, sexual orientation, national origin, age, sex, or physical or
     mental handicap in accordance with Title VI of the Civil Rights Act of
     1964, 42 USC Section 2000d, rules and regulations promulgated pursuant
     thereto, or as otherwise provided by law or regulations. For the purpose of
     this Contract discriminations on the grounds of race, color, creed,
     religion, ancestry, age, sex, national origin, marital status, sexual
     orientation, or physical or mental handicap include but are not limited to
     the following: denying any Member any Covered Services or availability of a
     Facility; providing to a Member any Covered Service which is different, or
     is provided in a different manner or at a different time from that provided
     to other Members under this Contract except where medically indicated;
     subjecting a Member to segregation or separate treatment in any manner
     related to the receipt of any Covered Service; restricting a Member in any
     way in the enjoyment of any advantage or privilege enjoyed by others
     receiving any Covered Service, treating a Member or Eligible Beneficiary
     differently from others in determining whether he or she satisfies any
     admission, Enrollment, quota, eligibility, membership, or other requirement
     or condition which individuals must meet in order to be provided any
     Covered Service; the assignment of times or places for the provision of
     services on the basis of the race, color, creed, religion, age, sex,
     national origin, ancestry, marital status, sexual orientation, or the
     physical or mental handicap of the participants to be served. The
     Contractor will take affirmative action to ensure that Members are provided
     Covered Services without regard to race, color, creed, religion, sex,
     national origin, ancestry, marital status, sexual orientation, or physical
     or mental handicap, except where medically indicated. For the purposes of
     this section, physical handicap includes the carrying of a gene which may,
     under some circumstances, be associated with disability in that person's
     offspring, but which causes no adverse effects on the carrier. Such genes
     will include, but are not limited to, Tay-Sachs trait, sickle cell trait,
     thalassemia trait, and X-linked hemophilia.

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3.9       DISCRIMINATION COMPLAINTS

     The Contractor agrees that copies of all Grievances alleging discrimination
     against Members or Eligible Beneficiaries because of race, color, creed,
     sex, religion, age, national origin, ancestry, marital status, sexual
     orientation, or physical or mental handicap will be forwarded to DHS for
     review and appropriate action.

3.10      MEMBERSHIP DIVERSITY

     The Contractor agrees to serve a population broadly representative of the
     various age, social, and income groups within the Service Area, and that
     less than 75 percent (75 %) of its Prepaid Person population is of
     individuals receiving benefits under Title XVIII, Social Security Act, and
     individuals receiving benefits under Title XIX, Social Security Act
     (Section 1903(m), SSA).

     DHS on request of the Contractor will apply to the Secretary, United States
     Department of Health and Human Services (DHHS) for a waiver of the 75
     percent (75%) requirement, based on good cause. If that waiver is granted,
     then the 75 percent (75%) requirement under this Contract is waived as of
     the effective date of that federal waiver and for the time period granted
     by the waiver.

3.11      INSPECTION RIGHTS

     The Contractor will allow DHS, DHHS, the Comptroller General of the United
     States, Department of Justice, (DOJ), Bureau of Medi-Cal Fraud, Department
     of Corporations (DOC) and other authorized state agencies, or their duly
     authorized representatives, to inspect or otherwise evaluate the quality,
     appropriateness, and timeliness of services performed under this Contract,
     and to inspect, evaluate, and audit any and all books, records, and
     Facilities maintained by the Contractor and subcontractors pertaining to
     these services at any time during normal business hours. Books and records
     include, but are not limited to, all physical records originated or
     prepared pursuant to the performance under this Contract including working
     papers, reports, financial records, and books of account, Medical Records,
     prescription files, Subcontracts, and any other documentation pertaining to
     medical and nonmedical services for Members. Upon request, at any time
     during the period of this Contract, the Contractor will furnish any record,
     or copy of it, to DHS or DHHS.

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Molina Medical Centers                                                  95-23637
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3.12      NOTICES

     All notices to be given under this Contract will be in writing and will be
     deemed to have been given when mailed to DHS or the Contractor:

     State Department of Health Services       John Molina, J.D.
     Medi-Cal Managed Care Division            Chief Administrative Officer
     714 P Street, Room 650                    Molina Medical Centers, Inc.
     P.O. Box 942732                           One Golden Shore
     Sacramento, CA 94234-7320                 Long Beach, CA 90802
     Attn: Contracting Officer

3.13      CONTRACTOR'S NATIONAL LABOR RELATIONS BOARD (NLRB) DECLARATION

     The Contractor, by signing this agreement, does swear under penalty of
     perjury that, no more than one final unappealable finding of contempt of
     court by a federal court has been issued against Contractor within the
     immediately preceding two-year period because of the Contractor's failure
     to comply with an order of a federal court which orders the Contractor to
     comply with an order of the NLRB.

3.14      TERM

     The Contract will become effective April 2, 1996 and will continue in full
     force and effect through March 31, 2002 subject to the provisions of
     Article V, Sections 5.2 and 5.10 because the State has currently
     appropriated and available for encumbrance only funds to cover costs
     through June 30, 1996.

     The term of the Contract consists of the following three periods: 1) The
     Implementation Period will extend from April 2, 1996; 2) The Operations
     Period will extend from October 2, 1996, subject to the termination
     provisions of Section 3.17, Termination and subject to the limitation
     provisions of Article V, Payment Provisions Section 5.2; and 3) The
     Turnover/Phaseout Period will extend from October 1, 2001 through March 31,
     2002, subject to the provisions of Section 3.15, Contract Extension, in
     which case the Turnover/Phaseout Period will apply to the six (6) month
     period beginning the first day after the end of the Operations Period of
     the extension.

     The Operations Period will commence subject to DHS acceptance of the
     Contractor's readiness to begin the Operations Period.

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3.15      CONTRACT EXTENSION

     DHS will have the exclusive option to extend the term of the Contract
     during the last twelve (12) months of the Contract, as determined by the
     original termination date or by a new termination date if an extension
     option has been exercised. DHS may invoke up to three (3) separate
     extensions of one (1) year each. The Contractor will be given at least nine
     (9) months prior written notice of DHS' decision on whether or not it will
     exercise this option to extend the Contract.

     The Contractor will notify DHS of its intent to accept or reject the
     extension within five (5) State working days of the receipt of the notice
     from DHS.

3.16      TURNOVER AND PHASEOUT REQUIREMENTS

     DHS will withhold an amount equal to 10% or one million dollars
     ($1,000,000), whichever is greater unless provided otherwise by the
     Financial Security agreement, from the capitation payment of the last month
     of the Operations Period until all activities required during the Turnover
     and Phaseout Period are completed.

     If all Turnover and Phaseout activities are completed by the end of the
     Turnover and Phaseout Period, the withhold will be paid to the Contractor.
     If the Contractor fails to meet any requirement(s) by the end of the
     Turnover and Phaseout Period, DHS will deduct the costs of the remaining
     activities proportionately from the withhold amount and continue to
     withhold payment until all activities are completed.

3.16.1         OBJECTIVES FOR TURNOVER AND PHASEOUT PERIOD

     The objective of the Turnover Period is to ensure that, at the termination
     of this Contract, the orderly transfer of necessary data and history
     records is made from the Contractor to DHS or to a successor Contractor.
     The orderly transfer is to ensure the continuity of access and Quality of
     Care to Members.

     The objective of the Phaseout Period is to ensure that, at the termination
     of this Contract, the Contractor completes any and all of its remaining
     contractual obligations under the Contract.

     Given the uncertainties associated with the Turnover and Phaseout Periods
     that will occur at the end of this Contract, the Contractor will be
     flexible to changing requirements.

     If DHS exercises its option(s) to extend this Contract, all Turnover and
     Phaseout activities will be delayed a commensurate period of time.

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Molina Medical Centers                                                  95-23637
                                                                     Article III

3.16.2         TURNOVER REQUIREMENTS

     Prior to the termination or expiration of this Contract and upon request by
     DHS, the Contractor will assist DHS in the orderly transfer of Member
     medical care. In doing this, the Contractor will make available to DHS
     copies of Medical Records, patient files, and any other pertinent
     information, including information maintained by any subcontractor,
     necessary for efficient case management of Members, as determined by the
     Director. Costs of reproduction will be borne by DHS. In no circumstances
     will a Medi-Cal Member be billed for this service.

3.16.3         PHASEOUT REQUIREMENTS

     Phaseout for this Contract will consist of the processing, payment and
     monetary reconciliation(s) necessary regarding claims for payment for
     Covered Services.

     Phaseout for the Contract will consist of the resolution of all financial
     and reporting obligations of the Contractor. The Contractor will remain
     liable for the processing and payment of invoices and other claims for
     payment for Covered Services and other services provided to Members
     pursuant to this Contract prior to the expiration or termination. The
     Contractor will submit to DHS all reports required in Article VI, Scope of
     Work, for the period from the last submitted report through the expiration
     or termination date.

     All data and information provided by the Contractor will be accompanied by
     letter, signed by the responsible authority, certifying, under penalty of
     perjury, to the accuracy and completeness of the materials supplied.

3.16.4         TURNOVER AND PHASEOUT PERIOD

     Turnover and Phaseout Periods will occur during the same six (6) month time
     period and this period will commence on the date the Operations Period of
     the Contract or Contract extension ends. Turnover and Phaseout related
     activities are non-payable items.

3.17      TERMINATION

3.17.1         TERMINATION - STATE OR DIRECTOR

     DHS may terminate performance of work under this Contract in whole, or in
     part, whenever for any reason DHS determines that the termination is in the
     best interest of the State.

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     Notification will be given at least nine (9) months prior to the effective
     date of termination, except in cases where the Director determines the
     health and welfare of Members is jeopardized by continuation of this
     Contract, in which case the Contract will be immediately terminated.
     Notification will state the effective date of, and the reason for, the
     termination.

     In addition to other grounds for termination, failure to comply with any of
     the terms of this Contract will constitute cause for termination.

3.17.2         TERMINATION - CONTRACTOR

     If mutual agreement between DHS and the Contractor cannot be attained on
     capitation rates for rate years subsequent to September 30, 1997, the
     Contractor will retain the right to terminate the Contract, no earlier than
     September 30, 1998, by giving at least nine (9) months written notice to
     DHS to that effect. The effective date of any termination under this
     section will be September 30.

     Grounds for contract termination by a Contractor are limited to its
     unwillingness to accept the capitation rates determined by DHS, or if DHS
     decides to negotiate rates, there is a failure to reach mutual agreement on
     rates.

3.17.3         MANDATORY TERMINATION

     DHS will terminate this Contract in the event that: (1) the Secretary,
     DHHS, determines that the Contractor does not meet the requirements for
     participation in the Medicaid program, Title XIX of the Social Security
     Act, or (2) the Department of Corporations finds that the Contractor no
     longer qualifies for licensure under the Knox-Keene Health Care Service
     Plan Act by giving written notice to the Contractor. Notification will be
     given by DHS at least sixty (60) days prior to the effective date of
     termination, except in cases where the Director determines the health and
     welfare of Members is jeopardized by continuation of the Contract, in which
     case the Contract will be immediately terminated. Notification will state
     the effective date of, and the reason for, the termination.

     Under these circumstances, termination of the Operations period will be
     effective on the last day of the month in which the Secretary, DHHS, or DOC
     makes such determination, provided that DHS provides the Contractor with at
     least 60 days notice of termination. The termination of this Contract will
     be effective on the last day of the second full month from the date of the
     notice of termination. The Contractor agrees that 60 days notice is
     reasonable. Termination under this section does not relieve the Contractor
     of its obligations under the Turnover and Phaseout Requirements, Sections
     3.16.2 and 3.16.3.

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Molina Medical Centers                                                  95-23637
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3.17.4         TERMINATION OF OBLIGATIONS

     All obligations to provide Covered Services under this Contract or Contract
     extension will automatically terminate on the date the Operations Period
     ends.

3.17.5         NOTICE TO MEMBERS OF TRANSFER OF CARE

     No later than sixty (60) days prior to the termination or expiration of the
     Contract, DHS will notify Members about their medical benefits and
     available options.

3.18      SANCTIONS

     In the event DHS finds Contractor non-compliant with the standards and
     requirements prescribed in this Contract, DHS will have the power and
     authority to impose sanctions provided in Welfare and Institutions Code,
     Section 14304 and Title 22, CCR, Section 53350. In addition, DHS may
     require the following:

     The Contractor to ensure providers or subcontractors cease activities which
     include, but are not limited to, referrals, assignment of beneficiaries,
     and reporting, until new activities are approved by DHS and the Contractor
     is again in compliance.

3.19      LIQUIDATED DAMAGES PROVISIONS

3.19.1         GENERAL

     It is agreed by the State and Contractor that:

          A.   If Contractor does not provide or perform the requirements of
               this Contract or applicable laws and regulations, damage to the
               State will result;

          B.   Proving such damages will be costly, difficult, and
               time-consuming;

          C.   Should the State choose to impose liquidated damages, the
               Contractor will pay the State those damages for not providing or
               performing the specified requirements;

          D.   Additional damages may occur in specified areas by prolonged
               periods in which Contractor does not provide or perform
               requirements;

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Molina Medical Centers                                                  95-23637
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          E.   The damage figures listed below represent a good faith effort to
               quantify the range of harm that could reasonably be anticipated
               at the time of the making of the Contract;

          F.   DHS may, at its discretion, offset liquidated damages from
               capitation payments owed to the Contractor;

          G.   Imposition of liquidated damages as specified in Sections 3.19.2,
               3.19.3, and 3.19.4 will follow the administrative processes
               described below;

          H.   DHS will provide the Contractor with written notice specifying
               the Contractor requirement(s), contained in the Contract or as
               required by federal and State law or regulation, not provided or
               performed;

          I.   During the Implementation Period, the Contractor will submit or
               complete the outstanding requirement(s) specified in the written
               notice within five (5) State working days from the date of the
               notice, unless, subject to the Contracting Officer's written
               approval, the Contractor submits a written request for an
               extension. The request must include the following: the
               requirement(s) requiring an extension; the reason for the delay;
               and the proposed date of the submission of the requirement;

          J.   During the Implementation Period, if the Contractor has not
               performed or completed an Implementation Period requirement or
               secured an extension for the submission of the outstanding
               requirement, DHS may impose liquidated damages for the amount
               specified in Section 3.19.2;

          K.   During the Operations Period, the Contractor will demonstrate the
               provision or performance of the Contractor's requirement(s)
               specified in the written notice within a thirty (30) calendar day
               Corrective Action period from the date of the notice, unless a
               request for an extension is submitted to the Contracting Officer,
               subject to DHS' approval, within five (5) days from the end of
               the Corrective Action period. If Contractor has not demonstrated
               the provision or performance of the Contractor's requirement(s)
               specified in the written notice during the Corrective Action
               period, DHS may impose liquidated damages for each day the
               specified Contractor's requirement is not performed or provided
               for the amount specified in Section 3.19.3.

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Molina Medical Centers                                                  95-23637
                                                                     Article III

          L.   During the Operations Period, if the Contractor has not performed
               or provided the Contractor's requirement(s) specified in the
               written notice or secured the written approval for an extension,
               after thirty (30) days from the first day of the imposition of
               liquidated damages, DHS will notify the Contractor in writing of
               the increase of the liquidated damages to the amount specified in
               Section 3.19.3.

     Nothing in this provision will be construed as relieving the Contractor
     from performing any other Contract duty not listed herein, nor is the
     State's right to enforce or to seek other remedies for failure to perform
     any other Contract duty hereby diminished.

3.19.2         LIQUIDATED DAMAGES FOR VIOLATION OF CONTRACT TERMS REGARDING THE
                              IMPLEMENTATION PERIOD

     DHS may impose liquidated damages of $5,000 per requirement specified in
     the written notice for each day of the delay in completion or submission of
     Implementation Period requirements beyond the periods defined in the
     Contract.

     If DHS determines that a delay or other non-performance was caused in part
     by the State, DHS will reduce the liquidated damages proportionately.

3.19.3         LIQUIDATED DAMAGES FOR VIOLATION OF CONTRACT TERMS OR REGULATIONS
                              REGARDING THE OPERATIONS PERIOD

     DHS may impose liquidated damages of $1,000 per Contractor requirement not
     performed or provided during the Operations Period. If after thirty (30)
     days or such longer period as DHS may allow, the Contractor has not
     demonstrated the provision or performance of the Contractor requirement
     specified in the written notice, DHS may issue a written notice that the
     liquidated damages will be increased to $2,000 per day per Contractor
     requirement until the Contractor requirement is performed or provided.

     If DHS determines that delay of the Contractor requirement was caused in
     part by the State, DHS will reduce the liquidated damages proportionately.

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Molina Medical Centers                                                  95-23637
                                                                     Article III

3.19.4         ANNUAL MEDICAL REVIEWS

     DHS may impose liquidated damages of not less than $10,000 and not to
     exceed $50,000 for each major deficiency determined during the annual
     medical review. If, after notice, the Contractor does not correct the
     deficiency to the satisfaction of DHS within thirty (30) days, or longer if
     authorized by DHS in writing, DHS may impose an additional liquidated
     damages of $5,000 per day per major deficiency that the major deficiency is
     not corrected as determined by DHS medical review staff.

     If DHS determines that non-performance of the requirement was caused in
     part by the State, DHS will reduce the liquidated damages proportionately.

3.19.5         CONDITIONS FOR TERMINATION OF LIQUIDATED DAMAGES

     Except as waived by the Contracting Officer, no liquidated damages imposed
     on the Contractor will be terminated or suspended until the Contractor
     issues a written notice of correction to the Contracting Officer
     certifying, under penalty of perjury, the correction of condition(s) for
     which liquidated damages were imposed. Liquidated damages will cease on the
     day of the Contractor's certification only if subsequent verification of
     the correction by DHS establishes that the correction has been made in the
     manner and at the time certified to by the Contractor.

     The Contracting Officer will determine whether the necessary level of
     documentation has been submitted to verify corrections. The Contracting
     Officer will be the sole judge of the sufficiency and accuracy of any
     documentation. Corrections must be sustained for a reasonable period of at
     least ninety (90) days from DHS acceptance; otherwise, liquidated damages
     may be reimposed without a succeeding grace period within which to correct.
     The Contractor's use of resources to correct deficiencies will not be
     allowed to cause other contract compliance problems.

3.19.6         SEVERABILITY OF INDIVIDUAL LIQUIDATED DAMAGES CLAUSES

     If any portion of these liquidated damages provisions is determined to be
     unenforceable, the other portions will remain in full force and effect.

3.20      ASSIGNMENTS

     The Contractor will not assign the Contract, in whole or in part, without
     the prior written approval of DHS.

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Molina Medical Centers                                                  95-23637
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3.21      DISPUTES AND APPEALS

     This Disputes and Appeals section will be used by the Contractor as the
     means of seeking resolution of disputes on contractual issues.

     Filing a dispute will not preclude DHS from recouping the value of the
     amount in dispute from the Contractor or from offsetting this amount from
     subsequent capitation payment(s). If the amount to be recouped exceeds 25
     percent of the capitation payment, amounts of up to 25 percent will be
     withheld from successive capitation payments until the amount in dispute is
     fully recouped. If a recoupment or offset is later found to be
     inappropriate, DHS will repay the Contractor the full amount of recoupment
     or offset, plus interest at the Pooled Money Investment Rate pursuant to
     Government Code Section 16480 et seq.

3.21.1         DISPUTES RESOLUTION BY NEGOTIATION

     DHS and Contractor agree to try to resolve all contractual issues by
     negotiation and mutual agreement at the Contracting Officer level without
     litigation. The parties recognize that the implementation of this policy
     depends on open-mindedness, and the need for both sides to present adequate
     supporting information on matters in question.

     Before issuance of a Contracting Officer's decision, informal discussions
     between the parties by individuals who have not participated substantially
     in the matter in dispute will be considered by the parties in efforts to
     reach mutual agreement.

3.21.2         NOTIFICATION OF DISPUTE

     Within fifteen (15) days of the date the dispute concerning performance of
     this Contract arises or otherwise becomes known to the Contractor, the
     Contractor will notify the Contracting Officer in writing of the dispute,
     describing the conduct (including actions, inactions, and written or oral
     communications) which it is disputing.

     The Contractor's notification will state, on the basis of the most accurate
     information then available to the Contractor, the following:

     A.   That it is a dispute pursuant to this section.

     B.   The date, nature, and circumstances of the conduct which is subject of
          the dispute.

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Molina Medical Centers                                                  95-23637
                                                                     Article III

     C.   The names, phone numbers, function, and activity of each Contractor,
          Subcontractor, DHS/State official or employee involved in or
          knowledgeable about the conduct.

     D.   The identification of any documents and the substances of any oral
          communications involved in the conduct. Copies of all identified
          documents will be attached.

     E.   The reason why the Contractor is disputing the conduct.

     F.   The cost impact to the Contractor directly attributable to the alleged
          conduct, if any.

     G.   The Contractor's desired remedy.

     The required documentation, including cost impact data, will be carefully
     prepared and submitted with substantiating documentation by the Contractor.
     This documentation will serve as the basis for any subsequent appeal.

     Following submission of the required notification, with supporting
     documentation, the Contractor will diligently continue performance of this
     Contract, including matters identified in the Notification of Disputes, to
     the maximum extent possible.

3.21.3         CONTRACTING OFFICERS DECISION

     Any disputes concerning performance of this Contract will be decided by the
     Contracting Officer in a written decision stating the factual basis for the
     decision. The Contracting Officer will serve a copy of the decision on the
     Contractor. The decision of the Contracting Officer will be rendered within
     thirty (30) days of receipt of a Notification of Dispute or any additional
     substantiating documentation requested by the Contracting Officer, unless
     the Contracting Officer provides a written explanation to the Contractor
     why a longer period is necessary. The decision will be final and conclusive
     unless within thirty (30) days from the date of service of that decision
     the Contractor files with the Contracting Officer a written appeal
     addressed to the Director, DHS, State of California.

     The Contracting Officer's decision will:

     A.   Find in favor of the Contractor, in which case the Contracting Officer
          may:

          1.   Countermand the earlier conduct which caused the Contractor to
               file a dispute; or

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Molina Medical Centers                                                  95-23637
                                                                     Article III

          2.   Reaffirm the conduct and, if there is a cost impact sufficient to
               constitute a change in obligations pursuant to the payment
               provisions contained in Article V, direct DHS to comply with that
               section.

     B.   Deny the Contractor's dispute and, where necessary direct the manner
          of future performance; or

     C.   Request additional substantiating documentation in the event the
          information in the Contractor's notification is inadequate to permit a
          decision to be made under A. or B. above, and will advise the
          Contractor as to what additional information is required, and
          establish how that information will be furnished. The Contractor will
          have thirty (30) days to respond to the Contracting Officer's request
          for further information. Upon receipt of this additional requested
          information, the Contracting Officer will have thirty (30) days to
          respond with a decision. Failure to supply additional information
          required by the Contracting Officer within the time period specified
          above will constitute waiver by the Contractor of all claims in
          accordance with Section 3.21.5.

3.21.4         CONTRACTOR DUTY TO PERFORM

     Pending final determination of any dispute hereunder, the Contractor will
     proceed diligently with the performance of this Contract and in accordance
     with the Contracting Officer's decision.

3.21.5         WAIVER OF CLAIMS

     If the Contractor fails to submit a Notification of Dispute, supporting and
     substantiating documentation, or any additionally required information in
     the manner and within the time specified in the Disputes and Appeals
     sections, that failure will constitute a waiver by the Contractor of all
     claims arising out of that conduct, whether direct or consequential in
     nature.

3.22      ENROLLMENT

     The Contractor will accept as Members Medi-Cal beneficiaries in the
     mandatory and voluntary aid categories as defined in Article II, Section X,
     Eligible Beneficiaries, including beneficiaries in Aid Codes who elect to
     enroll with the Contractor or are assigned to the Contractor.

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Molina Medical Centers                                                  95-23637
                                                                     Article III

3.22.1         ENROLLMENT - GENERAL

     Eligible Beneficiaries residing within the Service Area of the Contractor
     may be enrolled at any time during the term of this Contract. Eligible
     Beneficiaries will be accepted by the Contractor up to the limits imposed
     in Section 3.22.2, Enrollment Totals, and without regard to physical or
     mental condition, age, sex, race, religion, creed, color, national origin,
     marital status, sexual orientation or ancestry.

3.22.2         ENROLLMENT TOTALS

     *    Enrollment under this contract in San Bernardino County will not
          exceed 136,332.

     *    Enrollment under this contract in Riverside County will not exceed
          83,038.

     Total Enrollment under this Contract will not exceed 219,370 Members.

3.22.3         COVERAGE

     Member coverage will begin at 12:01 a.m. on the first day of the calendar
     month for which the Eligible Beneficiary's name is added to the approved
     list of Members furnished by DHS to the Contractor. The term of membership
     will continue indefinitely unless this Contract expires, is terminated, or
     the Member is disenrolled under the conditions described in Section 3.22.5.

3.22.4         ENROLLMENT RESTRICTION

     Enrollment may proceed to the plan's maximum total number of Members unless
     restricted by DHS. Such restrictions will be defined in writing and the
     Contractor notified at least 10 days prior to the start of the period of
     restriction. Release of restrictions will be in writing and transmitted to
     the Contractor at least 10 days prior to the date of the release.

3.22.5         DISENROLLMENT

     Disenrollment will take place under the following conditions subject to
     approval by DHS in accordance with the provisions of Title 22, CCR, Section
     53440(b):

     A.   Disenrollment of a Member is mandatory when:

          1.   The Member requests Disenrollment

          2.   The Member's eligibility for Enrollment with the Contractor is

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                                                                     Article III

               terminated or eligibility for Medi-Cal is ended, including the
               death of the Member.

          3.   Enrollment was in violation of Title 22, CCR, Sections 53400 or
               53402, or requirements of this Contract regarding Marketing, and
               DHS or Member requests Disenrollment.

          4.   Disenrollment is requested in accordance with Welfare and
               Institutions Code Sections 14303.1 or 14303.2.

          5.   There is a change of a Member's place of residence to outside the
               Contractor's Service Area.

     B.   Disenrollment is based on the circumstances described in Article VI,
          Section 6.7.2, Excluded Services: Circumstances Under Which Member
          Disenrolled.

          Such Disenrollments will become effective on the first day of the
          second month following authorization for Disenrollment, provided
          Disenrollment was requested at least 30 days prior to that date.

     C.   The Contractor will have the right to recommend to DHS the
          Disenrollment of any Member in the event of a breakdown in the
          "doctor-patient relationship" which makes it impossible for the
          Contractor's providers to render services adequately to a Member.

     D.   Except as provided in subsection B, Membership will cease at midnight
          on the last day of the calendar month in which the Member's
          Disenrollment request is approved by DHS. On the first day of the
          month following the approval of the Disenrollment request, the
          Contractor is relieved of all obligations to provide Covered Services
          to the Member under the terms of this Contract. The Contractor agrees
          in turn to return to DHS any capitation payment forwarded to the
          Contractor for persons no longer enrolled under this Contract.

3.23      STANDARDS

     Each provider who delivers Covered Services to Members will meet applicable
     requirements established under Titles XVIII and XIX of the Social Security
     Act, unless exempted from those provisions; applicable requirements of
     Chapters 3 and 4, Subdivision 1, Division 3, Title 22, CCR; and the
     standards expressed in this Contract. All providers of Covered Services
     must be qualified in accordance with current applicable legal,
     professional, and technical standards and appropriately

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     licensed, certified or registered.

3.24      PHARMACEUTICAL SERVICES AND PRESCRIBED DRUGS

     The Contractor will provide pharmaceutical services and prescribed drugs,
     either directly or through Subcontracts, in accordance with all laws and
     regulations regarding the provision of pharmaceutical services and
     prescription drugs to Medi-Cal beneficiaries, including, but not limited
     to, Title 22, CCR, Section 53214. As a minimum, such pharmaceutical
     services and drugs will be available to Members during Service Site hours.
     When in the course of treatment provided to a Member by a Contractor
     provider under emergency circumstances requires the use of drugs, a
     sufficient quantity of such drugs will be provided to the Member to last
     until the Member can reasonably be expected to have a prescription filled.

3.25      FACILITIES

     Facilities used by the Contractor for providing Covered Services will
     comply with the provisions of Title 22, CCR, Section 53230.

3.26      LABORATORY CERTIFICATION

     A.   To ensure that each laboratory used to perform services under this
          Contract or by Subcontract complies with federal and State law, each
          location at which any test or examination on materials derived from
          the human body for the purpose of providing information for the
          diagnosis, prevention, treatment or assessment of any disease,
          impairment, or health of a human being is performed shall have in
          effect:

          1.   A current, unrevoked or unsuspended certificate, certificate for
               provider-performed microscopy procedures, certificate of
               accreditation, certificate of registration or certificate of
               waiver issued under the requirements of 42 United States Code
               Section 263a and the regulations adopted thereunder and found at
               42 Code of Federal Regulations, Part 493; and, either

               a.   A current, unrevoked or unsuspended license or registration
                    issued under the requirements of Chapter 3 (commencing with
                    Section 1200) of Division 2 of the California Business and
                    Professions Code and the regulations adopted thereunder; or,

               b.   Be operated in conformity with Chapter 7 (commencing with
                    Section 1000) of Division 1 of the California Health and
                    Safety

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                  Code and the regulations adopted thereunder.

     B.   All places used to perform tests or examinations on human biological
          specimens (materials derived from the human body) are, by definition,
          "laboratories" under State and federal law.

     C.   Laboratories may exist, therefore, at Nurses' stations within
          hospitals, clinics, Skilled Nursing Facilities, operating rooms,
          surgical centers, rural health clinics, Physician offices, Planned
          Parenthood clinics, mobile labs, health fairs, and city, county or
          State labs.

     D.   Any laboratory that does not comply with the appropriate federal and
          State law is not eligible for participation in, or reimbursement from,
          the Medicare, Medicaid, or Medi-Cal programs.

3.27      SUBCONTRACTS

     The Contractor may elect to enter into Subcontracts with other entities in
     order to fulfill the obligations of the Contract. In doing so, the
     Contractor will meet the subcontracting requirements as stated in Title 22,
     CCR, Section 53250 and this Contract.

3.27.1         KNOX-KEENE AND REGULATIONS

     All Subcontracts will be in writing, and will be entered into in accordance
     with the requirements of the Knox-Keene Health Care Services Plan Act of
     1975, Health and Safety Code Section 1340 et seq.; Title 10, CCR, Section
     1300 et seq.; W&I Code Section 14200 et seq.; Title 22, CCR, Section 53000
     et seq.; and applicable federal and State laws and regulations.

3.27.2         SUBCONTRACT REQUIREMENTS

     Each Subcontract will contain:

     A.   The subcontractor's agreement to make all of its books and records,
          pertaining to the goods and services furnished under the terms of the
          Subcontract, available for inspection, examination or copying:

          1.   By DHS, DHHS, DOJ, and DOC.

          2.   At all reasonable times at the subcontractor's place of business
               or at such other mutually agreeable location in California.

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          3.   In a form maintained in accordance with the general standards
               applicable to such book or record keeping.

          4.   For a term of at least five years from the close of DHS' fiscal
               year in which the Subcontract was in effect.

          5.   Including all Encounter data for a period of at least five years.

     B.   Full disclosure of the method and amount of compensation or other
          consideration to be received by the subcontractor from the Contractor.

     C.   Subcontractor's agreement to maintain and make available to DHS, upon
          request, copies of all sub-subcontracts and to ensure that all
          sub-subcontracts are in writing and require that the
          Sub-subcontractor:

          1.   Make all applicable books and records available at all reasonable
               times for inspection, examination, or copying by DHS, DHHS, DOJ
               and DOC.

          2.   Retain such books and records for a term of at least five years
               from the close of DHS' fiscal year in which the sub-subcontract
               is in effect.

     D.   Subcontractor's agreement to assist the Contractor in the transfer of
          care pursuant to Section 3.16.2, in the event of Contract termination.

     E.   Subcontractor's agreement to notify DHS in the event the agreement
          with the Contractor is amended or terminated. Notice is considered
          given when properly addressed and deposited in the United States
          Postal Service as first-class registered mail, postage attached.

     F.   Subcontractor's agreement that assignment or delegation of the
          Subcontract will be void unless prior written approval is obtained
          from DHS.

     G.   Subcontractor's agreement to hold harmless both the State and plan
          Members in the event the Contractor cannot or will not pay for
          services performed by the subcontractor pursuant to the Subcontract.

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3.27.3         DEPARTMENTAL APPROVAL - NON-FEDERALLY QUALIFIED HMOs

     Except as provided in Section 3.27.6, Federally Qualified Health Centers, a
     provider or management Subcontract entered into by a Contractor which is
     not a federally qualified HMO will become effective upon approval by DHS in
     writing, or by operation of law where DHS has acknowledged receipt of the
     proposed Subcontract, and has failed to approve or disapprove the proposed
     Subcontract within 60 days of receipt.

     Subcontract amendments will be submitted to DHS for prior approval at least
     30 days before the effective date of any proposed changes governing
     compensation, services, or term. Proposed changes which are neither
     approved or disapproved by DHS, will become effective by operation of law
     30 days after DHS has acknowledged receipt or upon the date specified in
     the Subcontract amendment, whichever is later.

3.27.4         DEPARTMENTAL APPROVAL - FEDERALLY QUALIFIED HMOs

     Except as provided in Section 3.27.6, Subcontracts entered into by a plan
     which is a federally qualified HMO will be:

     A.   Exempt from prior approval by DHS.

     B.   Submitted to DHS upon request.

3.27.5         COMPENSATION

     Contractor will not enter into any Subcontract if the compensation or other
     consideration which the subcontractor will receive under the terms of the
     Subcontract is determined by a percentage of the Contractor's payment from
     DHS. This subsection will not be construed to prohibit Subcontracts in
     which compensation or other consideration is determined on a capitation
     basis.

3.27.6         FEDERALLY QUALIFIED HEALTH CENTERS

     Contractor will not enter into a Subcontract with a Federally Qualified
     Health Center unless DHS approves the provisions regarding rates, which
     will be subject to the standard that they be reasonable, as determined by
     DHS, in relation to the services to be provided. In Subcontracts where the
     Federally Qualified Health Center has made the election to be reimbursed on
     a reasonable cost basis by the State, provisions will be included that
     require the subcontractor to keep a record of the number of visits by plan
     Members separate from Fee-For-Service Medi-Cal beneficiaries, in addition
     to any other data reporting requirements of the Subcontract.

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     Subcontracts with FQHCs will also meet Contract requirements of Article VI,
     Sections 6.6.19 and 6.6.20.

     In Subcontracts where a negotiated capitation rate or Fee-For-Service
     reimbursement rate is agreed to as total payment, a provision that the rate
     constitutes total payment will be explicitly stated in the Subcontract.

3.27.7         PUBLIC RECORDS

     Subcontracts entered into by the Contractor and all information received in
     accordance with this subsection will be public records on file with DHS,
     except as specifically exempted in statute. The names of the officers and
     owners of the subcontractor, stockholders owning more than 10 percent of
     the stock issued by the subcontractor and major creditors holding more than
     5 percent of the debt of the subcontractor will be attached to the
     Subcontract at the time the Subcontract is presented to DHS.

3.27.8         DISCLOSURES

     Each Subcontract will contain at least the elements required by Section
     3.27.2, Subcontract Requirements, and the following:

     A.   Full disclosure of the method and amount of compensation or other
          consideration to be received by the subcontractor from the plan.

     B.   Specification of the services to be provided.

     C.   Specification that the Subcontract will be governed by and construed
          in accordance with all laws, regulations, and contractual obligations
          of the Contractor.

     D.   Specification that the Subcontract or Subcontract amendments will
          become effective only as set forth in Sections 3.27.3 or 3.27.4.

     E.   Specification of the term of the Subcontract including the beginning
          and ending dates as well as methods of extension, renegotiation and
          termination.

     F.   Subcontractor's agreement to submit reports as required by the
          Contractor.

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Molina Medical Centers                                                  95-23637
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3.27.9         PAYMENT

     Contractor will timely pay provider claims within thirty (30) working days
     after receipt, unless the Contractor is a federally qualified health
     maintenance organization, in which case the requirement is forty-five (45)
     working days from receipt. Notice must be provided to providers in the case
     of contested claims within thirty (30) working days after receipt, unless
     the Contractor is a federally qualified health maintenance organization, in
     which case the requirement is forty-five (45) working days from receipt.
     Contractor will have sufficient claims processing/payment systems to timely
     process and pay provider claims and to reasonably determine the status of
     received claims and calculate provisions for Incurred But Not Reported
     Claims.

3.28      CONFIDENTIALITY OF DATA

     The Contractor will perform the following duties and responsibilities with
     respect to confidentiality of information and data.

3.28.1         CONFIDENTIALITY OF INFORMATION

     Notwithstanding any other provision of this Contract, names of persons
     receiving public social services are confidential and are to be protected
     from unauthorized disclosure in accordance with Title 42, CFR, Section
     431.300 et seq., Section 14100.2, W&I Code, and regulations adopted
     thereunder. For the purpose of this Contract, all information, records,
     data, and data elements collected and maintained for the operation of the
     Contract and pertaining to Members will be protected by the Contractor from
     unauthorized disclosure.

     The Contractor may release Medical Records in accordance with applicable
     law pertaining to the release of this type of information.

3.28.2         CONTRACTOR'S DUTIES TO MAINTAIN CONFIDENTIALITY

     With respect to any identifiable information concerning a Member under this
     Contract that is obtained by the Contractor or its subcontractors, the
     Contractor: (1) will not use any such information for any purpose other
     than carrying out the express terms of this Contract, (2) will promptly
     transmit to DHS all requests for disclosure of such information, except
     requests for Medical Records in accordance with applicable law, (3) will
     not disclose except as otherwise specifically permitted by this Contract,
     any such information to any party other than DHS without DHS' prior written
     authorization specifying that the information is releasable under Title 42,
     CFR, Section 431.300 et seq., Section 14100.2, W&I Code, and regulations
     adopted thereunder, and (4) will, at the expiration or termination of this
     Contract, return all

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     such information to DHS or maintain such information according to written
     procedures sent to the Contractor by DHS for this purpose.

3.29      KEY PERSONNEL (DISCLOSURE FORM)

     A.   Contractor will file an annual statement with DHS disclosing any
          purchases or leases of services, equipment, supplies, or real property
          from an entity in which any of the following persons have a
          substantial financial interest:

          1.   Any person also having a substantial financial interest in the
               Contractor.

          2.   Any director, officer, partner, trustee, or employee of the
               Contractor.

          3.   Any member of the immediate family of any person designated in 1
               or 2 above.

     B.   Comply with federal regulations 42 CFR 455.104 (Disclosure by
          providers and fiscal agents: Information on ownership and control), 42
          CFR 455.105 (Disclosure by providers: Information related to business
          transactions), and 42 CFR 455.106.

3.30      CONFLICT OF INTEREST - CURRENT AND FORMER STATE EMPLOYEES

     Contractor will not utilize in the performance of this Contract any State
     officer or employee in the State civil service or other appointed State
     official unless the employment, activity, or enterprise is required as a
     condition of the officer's or employee's regular state employment. Employee
     in the State civil service is defined to be any person legally holding a
     permanent or intermittent position in the State civil service.

3.31      RECORD KEEPING, AUDIT/INSPECTION OF RECORDS

     The Contractor will maintain such books and records necessary to disclose
     how the Contractor discharged its obligations under this Contract. These
     books and records will disclose the quantity of Covered Services provided
     under this contract, the quality of those services, the manner and amount
     of payment made for those services, the persons eligible to receive Covered
     Services, the manner in which the Contractor administered its daily
     business, and the cost thereof.

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Molina Medical Centers                                                  95-23637
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3.31.1         BOOKS AND RECORDS

     These books and records will include, but are not limited to, all physical
     records originated or prepared pursuant to the performance under this
     Contract including working papers; reports submitted to DHS; financial
     records; all Medical Records, medical charts and prescription files; and
     other documentation pertaining to medical and non-medical services rendered
     to Members.

3.31.2         RECORDS RETENTION

     These books and records will be maintained for a minimum of five years from
     the end of the Fiscal Year in which the Contract expires or is terminated,
     or, in the event the Contractor has been duly notified that DHS, DHHS, DOJ,
     or the Comptroller General of the United States, or their duly authorized
     representatives, have commenced an audit or investigation of the Contract,
     until such time as the matter under audit or investigation has been
     resolved, whichever is later.

3.32      AMENDMENT OF CONTRACT

     Should either party during the life of this Contract desire a change in
     this Contract, that change will be proposed in writing to the other party.
     The other party will acknowledge receipt of the proposal within 10 days of
     receipt of the proposal. The party proposing any such change will have the
     right to withdraw the proposal any time prior to acceptance or rejection by
     the other party. Any proposal will set forth a detailed explanation of the
     reason and basis for the proposed change, a complete statement of cost and
     benefits of the proposed change and the text of the desired amendment to
     this Contract which would provide for the change. If the proposal is
     accepted, this Contract will be amended to provide for the change mutually
     agreed to by the parties on the condition that the amendment is approved by
     DHHS, and the State Department of Finance, if necessary.

3.33      CONTRACTOR CERTIFICATIONS

     With respect to any report, invoice, record, papers, documents, books of
     account, or other Contract required data submitted, pursuant to the
     requirements of this Contract, the Contractor's Representative or his/her
     designee will certify, under penalty of perjury, that the report, invoice,
     record, papers, documents, books of account or other Contract required data
     is current, accurate, complete and in full compliance with legal and
     contractual requirements to the best of that individual's knowledge and
     belief, unless the requirement for such certification is expressly waived
     by DHS in writing.

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Molina Medical Centers                                                  95-23637
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3.34      CHANGE REQUIREMENTS

3.34.1         GENERAL PROVISIONS

     The parties recognize that during the life of this Contract, the Medi-Cal
     Managed Care program will be a dynamic program requiring numerous changes
     to its operations and that the scope and complexity of changes will vary
     widely over the life of the Contract. The parties agree that the
     development of a system which has the capability to implement such changes
     in an orderly and timely manner is of considerable importance.

3.34.2         CONTRACTOR'S OBLIGATION TO IMPLEMENT

     The Contractor will make changes mandated by DHS. In the case of mandated
     changes in policy, regulations, statutes, or judicial interpretation, DHS
     may direct the Contractor to immediately begin implementation of any change
     by issuing a Change Order. If DHS issues a Change Order, the Contractor
     will be obligated to implement the required changes while discussions
     relevant to any capitation rate adjustment, if applicable, are taking
     place.

     DHS may, at any time, within the general scope of the Contract, by written
     notice, issue Change Orders to the Contract. This process will make use of
     the following documents:

     Medi-Cal Managed Care Division (MMCD) Policy Letters - This document will
     be utilized to notify the Contractor of clarifications made to the Medi-Cal
     Managed Care Program. This document will include instructions to the
     Contractor regarding implementation. This document will also be used to
     initiate various ongoing changes required of the Contractor throughout the
     Contract, the performance of which falls within the Contract's agreed upon
     capitated rate.

     Change Orders will be used when an Annual Capitation Rate, if applicable,
     is adjusted (See Article V, Payment Provisions). Change Orders may also be
     used to amend the Contractor's responsibilities.

3.35      MINORITY/WOMEN/DISABLED VETERAN BUSINESS ENTERPRISES (M/W/DVBE)

     Contractor will comply with applicable requirements of California law
     relating to Minority/Women/Disabled Veteran Business Enterprises (M/W/DVBE)
     commencing at Section 10115 of the Public Contract Code.

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Molina Medical Centers                                                  95-23637
                                                                     Article III

3.36      DRUG FREE WORKPLACE ACT OF 1990

     Contractor will comply with applicable requirements of the Drug Free
     Workplace Act of 1990 (Government Code Section 8355).

3.37      INDEMNIFICATION

3.37.1         INDEMNIFICATION BY CONTRACTOR

     Contractor agrees to indemnify, defend, and save harmless the State, its
     officers, agents, and employees:

     A.   From any and all claims and losses accruing or resulting to any and
          all Contractors, Subcontractors, materialmen, laborers, and any other
          person, firm, corporation, or other entity furnishing or supplying
          work services, materials, or supplies in connection with the
          performance of this Contract;

     B.   From any and all claims and losses accruing or resulting to any
          person, firm, corporation, or other entity injured or damaged by the
          Contractor, its officers, employees, or Subcontractors in the
          performance of this Contract.

3.38      AMERICANS WITH DISABILITIES ACT OF 1990 REQUIREMENTS

     The Contractor will comply with all applicable federal requirements in
     Section 504 of the Rehabilitation Act of 1973 and the Americans with
     Disabilities Act of 1990 (42 USC, Section 12100 et seq.), Title 45, Code of
     Federal Regulations (CFR), Part 84 and Title 28, CFR, Part 36.

3.39      NEWBORN CHILD COVERAGE

     The Contractor will provide Covered Services to a child born to a Member
     for the month of birth and the following month. For a child born in the
     month immediately preceding the mother's membership, the Contractor will
     provide Covered Services to the child during the mother's first month of
     Enrollment. No additional capitation payment will be made to the Contractor
     by DHS.

3.40      RECOVERY FROM OTHER SOURCES OR PROVIDERS

     Contractor will make reasonable efforts to recover the value of Covered
     Services rendered to Members whenever the Members are covered for the same
     services, either fully or partially, under any other State or federal
     medical care program or under other contractual or legal entitlement
     including, but not limited to, a private

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Molina Medical Centers                                                  95-23637
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     group or indemnification program, but excluding instances of the tort
     liability of a third party. Contractor will coordinate benefits with other
     programs or entitlement, recognizing the other coverage as primary and
     Medi-Cal as the payor of last resort. Such monies recovered are retained by
     the Contractor.

3.41      THIRD-PARTY TORT LIABILITY

     Contractor will make no claim for recovery of the value of Covered Services
     rendered to a Member when such recovery would result from an action
     involving the tort liability of a third party or casualty liability
     insurance including Workers' Compensation awards and uninsured motorists
     coverage. The Contractor will identify and notify DHS of cases in which an
     action by the Medi-Cal Member involving the tort or Workers' Compensation
     liability of a third party could result in recovery by the Member of funds
     to which DHS has lien rights under Article 3.5 (commencing with Section
     14124.70), Part 3, Division 9, Welfare and Institutions Code. Such cases
     will be referred to DHS within 10 days of discovery. To assist DHS in
     exercising its responsibility for such recoveries, Contractor will meet the
     following requirements:

     A.   If DHS requests payment information and/or copies of paid
          invoices/claims for Covered Services to an individual Member,
          Contractor will deliver the requested information within 10-30 days of
          the request. The value of the Covered Services will be calculated as
          the usual, customary and reasonable charge made to the general public
          for similar services or the amount paid to subcontracted providers or
          out of plan providers for similar services.

     B.   Information to be delivered will contain the following data items:

          1.   Member name.

          2.   Full 14 digit Medi-Cal number.

          3.   Social Security Number.

          4.   Date of birth.

          5.   Contractor name.

          6.   Provider name (if different from Contractor).

          7.   Dates of service.

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          8.   Diagnosis code and/or description of illness/injury.

          9.   Procedure code and/or description of services rendered.

          10.  Amount billed by a subcontractor or out of plan provider to
               Contractor (if applicable).

          11.  Amount paid by other health insurance to Contractor or
               subcontractor.

          12.  Amount and date paid by Contractor to subcontractor or out of
               plan provider (if applicable).

          13.  Date of denial and reasons (if applicable).

     C.   Contractor will identify to DHS the name, address and telephone number
          of the person responsible for receiving and complying with requests
          for mandatory and/or optional at-risk service information.

     D.   If Contractor receives any requests by subpoena from attorneys,
          insurers, or beneficiaries for copies of bills, Contractor will
          provide DHS with a copy of any document released as a result of such
          request, and will provide the name and address and telephone number of
          the requesting party.

3.42      OBTAINING DHS APPROVAL

     Contractor will obtain written approval from DHS prior to implementing or
     using the following:

     A.   Providers of Covered Services, except for providers of seldom used or
          unusual services as determined by DHS.

     B.   Facilities.

     C.   Subcontracts and sub-subcontracts with providers or for management
          services if the Contractor is not a federally qualified HMO.

     D.   Marketing activities.

     E.   Marketing materials, promotional materials, and public information
          releases relating to performance under this Contract, Member service
          guides; Member newsletters; and provider claim forms unique to the
          Contract.

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Molina Medical Centers                                                  95-23637
                                                                     Article III

     F.   Member Grievance procedure.

     G.   Member Disenrollment procedure.

     H.   Enrollment, Disenrollment and Grievance forms.

     Revisions to these items must be approved by DHS prior to taking effect.

3.43      PILOT PROJECTS

     DHS, pursuant to W&I Code Section 14094.3(c)(2), may establish pilot
     projects to test alternative managed care models tailored to the special
     health care needs of children under the California Children Services (CCS)
     Program. These pilot projects may affect the Contractor's obligations under
     the Contract in the areas of Covered Services, eligible enrollees, and
     administrative systems. These pilot projects will be implemented through
     Contract amendment pursuant to Section 3.32 and, if necessary, Change Order
     pursuant to Section 3.34. DHS will not require the Contractor to cover CCS
     services under the capitation rate as part of a pilot project unless the
     Contractor is a voluntary participant in the project.

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Molina Medical Centers                                                  95-23637
                                                                      Article IV

                        ARTICLE IV - DUTIES OF THE STATE

     In discharging its obligations under this Contract, the State will perform
     the following duties:

4.1       PAYMENT FOR SERVICES

     Pay the appropriate capitation payments set forth in Article V, Payment
     Provisions, to the Contractor for each eligible Member under this Contract,
     and ensure that such payments are reasonable and do not exceed the amount
     set forth in 42 CFR, Section 447.361. Payments will be made monthly for the
     duration of this Contract.

4.2       MEDICAL REVIEWS

     Conduct medical reviews at least once every 12 months in accordance with
     the provisions of Section 14456, Welfare and Institutions Code, and issue
     medical review reports to the Contractor detailing findings,
     recommendations, Corrective Action and liquidated damages, as appropriate.

4.3       FACILITY INSPECTIONS

     Conduct random on-site inspections, at the discretion of DHS of health
     Facilities and review and approve, in writing, the required Site Inspection
     Forms prior to their use for providing services to Members under the terms
     of this Contract. Inspections for continuing Facility adequacy will be
     conducted periodically thereafter.

4.4       ENROLLMENT PROCESSING

     Review applications for Enrollment submitted timely by the Enrollment
     Contractor, and check the eligibility of applicants for services under this
     Contract. For those applications for Enrollment received prior to the
     specified deadlines, DHS will provide to the Contractor a list of Members
     on a monthly basis, effective the first of the following month.

     Those applications for Enrollment received after the specified submission
     deadlines will become effective the first day of the second month following
     the receipt of the late application.

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Molina Medical Centers                                                  95-23637
                                                                      Article IV

4.5       DISENROLLMENT PROCESSING

     Review and process requests for Disenrollment and notify the Contractor and
     the Member of its decision.

4.6       TESTING AND CERTIFICATION OF MARKETING REPRESENTATIVES

     Test all Contractor Marketing Representatives for knowledge of the program
     prior to their engaging in Marketing or Medi-Cal Managed Care information
     activities on behalf of the Contractor. Certify as qualified Marketing
     Representatives, those persons demonstrating adequate knowledge of the
     program, provided they are of good moral character.

4.7       APPROVAL PROCESS

     Acknowledge in writing, within five working days of receipt, the receipt of
     any material sent to DHS by the Contractor under the provisions of Article
     III, Section 3.42, Obtaining Departmental Approval. Within 60 days of
     receipt, approve in writing the use of such material or provide the
     Contractor with a written explanation why its use is not approved.

4.8       PROGRAM INFORMATION

     Provide the Contractor with complete and current information with respect
     to pertinent policies, procedures, and guidelines affecting the operation
     of this Contract.

4.9       SANCTIONS

     Apply sanctions, in accordance with Title 22, CCR, Section 53350, to the
     Contractor for violations of the terms of this Contract, applicable federal
     and State laws and regulations.

4.10      CATASTROPHIC COVERAGE LIMITATION

     Limit the Contractor's liability to provide or arrange and pay for care for
     illness of, or injury to, Members which results from or is greatly
     aggravated by, a catastrophic occurrence or disaster.

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Molina Medical Centers                                                  95-23637
                                                                      Article IV

4.11      RISK LIMITATION

     Agree,  that there will be no risk limitation and that Contractor will have
full financial liability to provide covered services to enrolled beneficiaries.

4.12      NOTICE OF TERMINATION OF CONTRACT

     Notify Members of their health care benefits and options available upon
     termination or expiration of this Contract.

4.13      ACCESS REQUIREMENTS AND STATE'S RIGHT TO MONITOR

     The State will have the right to monitor all aspects of the Contractor's
     operation for compliance with the provisions of this Contract and
     applicable federal and State laws and regulations. Such monitoring
     activities will include, but are not limited to, inspection and auditing of
     Contractor, subcontractor, and provider Facilities, management systems and
     procedures, and books and records as the Director deems appropriate, at any
     time during the Contractor's or other Facility's normal business hours. The
     monitoring activities will be either announced or unannounced.

     To assure compliance with the Contract and for any other reasonable
     purpose, the State and its authorized representatives and designees will
     have the right to premises access, with or without notice to the
     Contractor. This will include the MIS operations site or such other place
     where duties under the Contract are being performed.

     Staff designated by the State or DHS will have access to all security areas
     and the Contractor will provide, and will require any and all of its
     subcontractors to provide, reasonable facilities, cooperation and
     assistance to State representative(s) in the performance of their duties.
     Access will be undertaken in such a manner as to not unduly delay the work
     of the Contractor and/or the subcontractor(s).

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Molina Medical Centers                                                  95-23637
                                                                       ARTICLE V

                         ARTICLE V - PAYMENT PROVISIONS

5.0       PAYMENT PROVISIONS

5.1       CONTRACTOR RISK IN PROVIDING SERVICES

     Contractor will assume the total risk of providing the Covered Services on
     the basis of the periodic capitation payment for each Member, except as
     otherwise allowed in this Contract. Any monies not expended by the
     Contractor after having fulfilled obligations under this Contract will be
     retained by the Contractor.

5.2       AMOUNTS PAYABLE

     The maximum amount payable for the 1995-96 Fiscal Year ending June 30, 1996
     will not exceed $32,080,630. Any requirement of performance by DHS and the
     Contractor for the period of the Contract subsequent to June 30, 1996 will
     be dependent upon the availability of future appropriations by the
     Legislature for the purpose of this Contract. If funds become available for
     purposes of this Contract from future appropriations by the Legislature,
     the maximum amount payable under this Contract in the 1996-97 Fiscal Year
     ending June 30, 1997 will not exceed $194,472,680. If funds become
     available for purposes of this Contract from future appropriations by the
     Legislature, the maximum amount payable under this Contract in the 1997-98
     Fiscal Year ending June 30, 1998 will not exceed $194,472,680. If funds
     become available for purposes of this Contract from future appropriations
     by the Legislature, the maximum amount payable under this Contract in the
     1998-99 Fiscal Year ending June 30, 1999 will not exceed $194,472,680. If
     funds become available for purposes of this Contract from future
     appropriations by the Legislature, the maximum amount payable under this
     Contract in the 1999-2000 Fiscal Year ending June 30, 2000 will not exceed
     $194,472,680. If funds become available for purposes of this Contract from
     future appropriations by the Legislature, the maximum amount payable under
     this Contract in the 2000-01 Fiscal Year ending June 30, 2001 will not
     exceed $194,472,680. If funds become available for purposes of this
     Contract from future appropriations by the Legislature, the maximum amount
     payable under this Contract in the 2001-02 Fiscal Year ending June 30, 2002
     will not exceed $145,854,520. The maximum amount payable under this
     Contract will not exceed $1,150,298,550.

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5.3       CAPITATION RATES

     DHS will remit to the Contractor a capitation payment each month for each
     Medi-Cal Member that appears on the approved list of Members supplied to
     the Contractor by DHS. The capitation rate shall be the amount specified in
     this Article. The payment period for health care services will commence on
     the first day of operations, as determined by DHS. Capitation payments will
     be made in accordance with the following schedule of capitation payment
     rates:

     AID CODE CATEGORIES

     Family: 01,02,08,30,32,33,34,35,38,39,3A,3C,3P,3R,40,42,4C,4K,54,59,5K;
     Aged : 10,14,16,18; Disabled: 20,24,26,28,36,60,64,66,68,6A,6C;
     Child : 03,04,45,82; Adult : 86

     SAN BERNARDINO COUNTY 7/95 - 5/96       SAN BERNARDINO COUNTY 6/96 - 9/97

     Family           $  70.01               Family           $  71.59
     Child            $  67.91               Child            $  67.17
     Aged             $ 117.66               Aged             $ 121.76
     Disabled         $ 177.15               Disabled         $ 174.45
     Adult            $ 536.02               Adult            $ 554.73

     RIVERSIDE COUNTY 7/95 - 5/96            RIVERSIDE COUNTY 6/96 - 9/97

     Family           $  74.70               Family           $  76.39
     Child            $  68.51               Child            $  67.74
     Aged             $ 110.37               Aged             $ 114.62
     Disabled         $ 181.61               Disabled         $ 178.77
     Adult            $ 492.78               Adult            $ 509.94

5.4       CAPITATION RATES CONSTITUTE PAYMENT IN FULL

     Capitation rates for each rate period, as calculated by DHS, are
     prospective rates and constitute payment in full, subject to any stop loss
     reinsurance provisions, on behalf of a Member for all Covered Services
     required by such Member and for all Administrative Costs incurred by the
     Contractor in providing or arranging for such services, but do not include
     payment for the recoupment of current or previous losses incurred by the
     Contractor. DHS is not responsible for making payments for recoupment of
     losses. The basis for the determination of the capitation payment rates is
     outlined in Attachment I (consisting of 20 pages).

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5.5       DETERMINATION OF RATES

     DHS will determine the capitation rates for the initial period December 1,
     1995, or the Contract effective date of operations if later, through
     September 30, 1997. Subsequent to September 30, 1997 and through the
     duration of the Contract, DHS will make an annual redetermination of rates
     for each rate year defined as the 12 month period from October 1, through
     September 30. DHS reserves the right to redetermine rates on an actuarial
     basis or move to a negotiated rate for each rate year. All payments beyond
     June 1996 and rate adjustments beyond September 1997 are subject to future
     appropriations of funds by the Legislature and the Department of Finance
     approval. Further, all payments are subject to the availability of Federal
     congressional appropriation of funds.

     If DHS redetermines rates on an actuarial basis, DHS will determine whether
     the rates will be increased, decreased, or remain the same. If it is
     determined by DHS that the Contractor's capitation rates will be increased
     or decreased, that increase or decrease will be effectuated through a
     Change Order to this Contract in accordance with the provisions of Article
     III, Section 3.34, Change Requirements, subject to the following
     provisions:

     A.   The Change Order will be effective as of October 1 of each year
          covered by this Contract.

     B.   In the event there is a any delay in a determination to increase or
          decrease capitation rates, so that a Change Order may not be
          processed in time to permit payment of new rates commencing October 1,
          the payment to the Contractor will continue at the rates then in
          effect. Those continued payments will constitute interim payment
          only. Upon final approval of the Change Order providing for the rate
          change, DHS will make adjustments for those months for which interim
          payment was made.

     C.   Notwithstanding paragraph B, payment of the new annual rates will
          commence no later than December 1, provided that a Change Order
          providing for the new annual rates has been issued by DHS. By
          accepting payment of new annual rates prior to full approval by all
          control agencies of the Change Order to this Contract implementing
          such new rates, the Contractor stipulates to a confession of judgment
          for any amounts received in excess of the final approved rate. If the
          final approved rate differs from the rates agreed upon by the
          Contractor and DHS:

          1.   Any underpayment by the State will be paid to the Contractor
               within 30 days after final approval of the new rates.

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          2.   Any overpayment to the Contractor will be recaptured by the
               State's withholding the amount due from the Contractor's next
               capitation check.

               If the amount to be withheld from that capitation check exceeds
               25 percent of the capitation payment for that month, amounts up
               to 25 percent will be withheld from successive capitation
               payments until the overpayment is fully recovered by the State.

5.6       REDETERMINATION OF RATES - OBLIGATION CHANGES

     The Capitation rates may be adjusted during the rate year to provide for a
     change in obligations which results in an increase or decrease of more than
     one percent of cost (as defined in Title 22, CCR, Section 53322) to the
     Contractor. Any adjustments will be effectuated through a Change Order to
     the Contract subject to the following provisions:

     A.   The Change Order will be effective as of the first day of the month in
          which the change in obligations is effective, as determined by DHS.

     B.   In the event DHS is unable to process the Change Order in time to
          permit payment of the adjusted rates as of the month in which the
          change in obligations is effective, payment to Contractor will
          continue at the rates then in effect. Continued payment will
          constitute interim payment only. Upon final approval of the Change
          Order providing for the change in obligations, DHS will make
          adjustments for those months for which interim payment was made.

     If mutual agreement between DHS and the Contractor cannot be attained on
     capitation rates for rate years subsequent to September 30, 1997, the
     Contractor will retain the right to terminate the Contract, but no earlier
     than September 30, 1998. Notification of intent to terminate a Contract
     will be in writing and provided to DHS at least nine months prior to the
     effective date of termination. Contract termination due to an inability to
     reach agreement upon capitation rates is limited to termination at the end
     of each rate year, September 30th. Therefore, Contractor must provide
     termination notification by December 31st of the prior year for an
     effective termination date of September 30th. DHS will pay the capitation
     rates last offered for that rate period until the Contract is terminated.

5.7       REINSURANCE

     A.   The Contractor may obtain reinsurance (stop loss coverage) for the
          cost of providing Covered Services under this Contract. Reinsurance
          will not limit

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          the Contractor's liability below $5,000 per Member for any 12-month
          period as specified by DHS. The Contractor may obtain reinsurance for
          the total cost of services provided to Members by non-contractor
          emergency service providers and for 90 percent of all costs exceeding
          115 percent of its income during any Contractor fiscal year.

     B.   If Contractor selects State reinsurance, Contractor will submit a
          reinsurance claim form along with copies of the actual claims upon
          exceeding the reinsurance threshold. As part of the processing, actual
          claims are priced to appropriate Medi-Cal rates and the appropriate
          amount in excess of the reinsurance threshold is remitted to the
          Contractor by DHS.

     C.   Claims submitted will not be paid by DHS unless received by DHS not
          later than the last day of the sixth month following the end of the
          twelve-month period in which they were incurred.

     D.   The time specified for submission of claims may be extended for a
          period not to exceed one year upon a finding of "good cause" by the
          Director in the following circumstances:

          1.   Where the claim involves health coverage, other than Medi-Cal,
               and the delay is necessary to permit the Contractor to obtain
               payment, partial payment, or proof of non-liability of that other
               health coverage.

          2.   Where the claim submission was delayed due to eligibility
               certification or determination by the State or county.

          3.   Where there was substantial interference with claim submission
               due to damage to or destruction of the Contractor's (or
               subcontractor's) business office or records by a natural
               disaster, including fire, flood or earthquake or other similar
               circumstances.

          4.   Where delay in claims submission was due to other circumstances
               that are clearly beyond the control of the Contractor.
               Circumstances that will not be considered beyond the control of
               the Contractor include, but are not limited to:

               a.   Negligence or delay of the Contractor or Contractor's
                    employees, agents, and subcontractors.

               b.   Misunderstanding of or unfamiliarity with Medi-Cal
                    regulations, or the terms of this Contract.

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               c.   Illness, absence or other incapacity of a Contractor's
                    employee, agent, or subcontractor responsible for
                    preparation and submission of claims.

               d.   Delays caused by the United States Postal Service or any
                    private delivery service.

5.8       CATASTROPHIC COVERAGE LIMITATION

     DHS may limit the Contractor's liability to provide or arrange and pay for
     care for illness of, or injury to, Members which results from or is greatly
     aggravated by, a catastrophic occurrence or disaster.

     Contractor will return a prorated amount of the capitation payment
     following the Director's invocation of the catastrophic coverage
     limitation. The amount returned will be determined by dividing the total
     capitation payment by the number of days in the month. The amount will be
     returned to DHS for each day in the month after the Director has invoked
     the catastrophic coverage limitation clause.

5.9       FINANCIAL SECURITY

     If capitation is prepaid, Contractor will provide satisfactory evidence of
     and maintain Financial Security in an amount equal to at least one month's
     capitation payment, in a manner specified by DHS. The Financial Security
     will remain in effect for at least 90 days following termination or
     expiration of this Contract or until, in the judgment of DHS the
     obligations set forth in this Contract are fulfilled.

5.10      LIMITATION TO FEDERAL FINANCIAL PARTICIPATION

     Limitation to Federal Financial Participation is as follows:

     A.   It is mutually understood between the parties that this Contract may
          have been written before ascertaining the availability of
          congressional appropriation of funds, for the mutual benefit of both
          parties in order to avoid program and fiscal delays which would occur
          if the Contract were executed after that determination was made.

     B.   This Contract is valid and enforceable only if sufficient funds are
          made available to the State by the United States government for each
          Fiscal Year for the purpose of this program. In addition, this
          Contract is subject to any additional restrictions, limitations or
          conditions enacted by the Congress or any statute enacted by the
          Congress which may affect the provisions, terms or

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          funding of this Contract in any manner.

     C.   It is mutually agreed that if Congress does not appropriate sufficient
          funds for the program, this Contract will be amended to reflect any
          reduction in funds.

     D.   DHS has the option to terminate the Contract under the 60 day
          termination clause or to amend the Contract to reflect any reduction
          in funds.

5.11      RECOVERY OF CAPITATION PAYMENTS

     DHS will have the right to recover amounts paid to the Contractor in the
     following circumstances as specified:

     A.   DHS determines that a Member has either been improperly enrolled, or
          should have been disenrolled with an effective date in a prior month.
          DHS may recover the capitation payments made to the Contractor for the
          Member and absolve the Contractor from all financial and other risk
          for the provision of services to the Member under the terms of the
          Contract for the month or months in question.

     B.   As a result of the Contractor's failure to perform contractual
          responsibilities to comply with mandatory federal Medicaid
          requirements, the Department of Health and Human Services (DHHS)
          disallows Federal Financial Participation (FFP) for payments made by
          DHS to the Contractor. DHS may recover the amounts disallowed by DHHS
          by an offset to the capitation payment made to the Contractor. If
          recovery of the full amount at one time imposes a financial hardship
          on the Contractor, DHS at its discretion may grant a Contractor's
          request to repay the recoverable amounts in monthly installments over
          a period of consecutive months not to exceed six (6) months.

     C.   If DHS determines that any other erroneous or improper payment not
          mentioned above has been made to the Contractor, DHS may recover the
          amounts determined by an offset to the capitation payment made to the
          Contractor. If recovery of the full amount at one time imposes a
          financial hardship on the Contractor, DHS, at its discretion, may
          grant a Contractor's request to repay the recoverable amounts in
          monthly installments over a period of consecutive months not to exceed
          six (6) months.

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Molina Medical Centers                                                  95-23637
                                                                      Article VI

                           ARTICLE VI - SCOPE OF WORK

6.0       ORGANIZATION

6.1         LEGAL CAPACITY

     Contractor will maintain the legal capacity to contract with DHS and
     maintain appropriate licensure as a health care service plan in accordance
     with the Knox-Keene Act.

6.2       ADMINISTRATION/STAFFING

6.2.1          CONTRACT PERFORMANCE

     Contractor will maintain the organization and staffing, for implementing
     and operating the Contract. Contractor will ensure the following:

     A.   The organization has an accountable governing body.

     B.   This Contract is a high priority and that the Contractor is committed
          to supplying any necessary resources to assure full performance of the
          Contract.

     C.   If the Contractor is a subsidiary organization, the attestation of the
          parent organization that this Contract will be a high priority to the
          parent organization, and that the parent organization is committed to
          supplying any necessary resources to assure full performance of the
          Contract.

6.2.2          MEDICAL DIRECTOR

     Contractor will maintain a full time Physician as Medical Director who will
     assume the following responsibilities:

     A.   Ensure that medical decisions are rendered by qualified medical
          personnel, unhindered by fiscal or administrative management.

     B.   Ensure that medical care provided meets the standards for acceptable
          medical care.

     C.   Ensure that medical protocols and rules of conduct for plan medical
          personnel are followed.

     D.   Develop and implement medical policy.

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     E.   Resolve medically related Grievances.

     F.   Have a significant role in monitoring, investigating and hearing
          Grievances.

     G.   Have a  significant  role  in  the  Contractor's  Quality  Improvement
          program.

6.2.3          MEDICAL DECISIONS

     Contractor will ensure that medical decisions are not unduly influenced by
     fiscal management.

6.2.4          MEDICAL DIRECTOR CHANGES

     The Contractor will report to DHS any changes in the status of the Medical
     Director within ten (10) days.

6.2.5          ADMINISTRATIVE DUTIES/RESPONSIBILITIES

     The Contractor will maintain the organizational and administrative
     capabilities to carry out its duties and responsibilities under the
     Contract. This will include as a minimum the following:

     A.   Designated persons, qualified by training or experience, to be
          responsible for the Medical Record service.

     B.   Member and Enrollment reporting systems as specified in Section 6.4,
          Management and Information Systems and Section 6.9, Member Services/
          Grievance Systems.

     C.   A Member Grievance procedure, as specified in Section 6.9, Member
          Services/Grievance System.

     D.   Data reporting capabilities sufficient to provide necessary and timely
          reports to DHS, as required by Section 6.4, Management Information
          Systems.

     E.   Financial records and books of account maintained on the accrual
          basis, in accordance with Generally Accepted Accounting Principles,
          which fully disclose the disposition of all Medi-Cal program funds
          received, as specified in Section 6.3, Financial Information.

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Molina Medical Centers                                                  95-23637
                                                                      Article VI

6.2.6          MEMBER REPRESENTATION

     Contractor will ensure that Medi-Cal Members are represented and
     participate in establishing the public policy of the plan, regarding the
     plan's Medi-Cal programs.

6.3       FINANCIAL INFORMATION

6.3.1          FINANCIAL VIABILITY/STANDARDS COMPLIANCE

     The Contractor will demonstrate financial viability/standards compliance to
     DHS' satisfaction for each of the following elements:

     A.   Tangible Net Equity (TNE).

          The Contractor at all times will be in compliance with the TNE
          requirements in accordance with Title 10, CCR, Section 1300.76.

     B.   Administrative Costs.

          Contractor's Administrative Costs will not exceed the guidelines as
          established under Title 10, CCR, Section 1300.78.

     C.   Standards of Organization and Financial Soundness.

          The Contractor will maintain reasonable standards of its organization
          sufficient to conduct the proposed operations and that its financial
          resources are sufficient for sound business operations in accordance
          with Title 10, CCR, Sections 1300.67.3, 1300.75.1, 1300.76, 1300.76.3,
          1300.77.1, 1300.77.2, 1300.77.3, 1300.77.4, 1300.78, and Title 22,
          CCR, Sections 53200, 53251, and 53324.

     D.   Working Capital.

          The Contractor will maintain a working capital ratio of at least 1:1.

6.3.2          FINANCIAL AUDIT/REPORTS

     The Contractor will ensure that an annual audit is performed according to
     Section 14459, W&I Code. Combined Financial Statements will be prepared to
     show the financial position of the overall related health care delivery
     system when delivery of care or other services is dependent upon
     Affiliates. Financial Statements will be presented in a form that clearly
     shows the financial position of the Contractor

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Molina Medical Centers                                                  95-23637
                                                                      Article VI

     separately from the combined totals. Inter-entity transactions and profits
     will eliminated if combined statements are prepared. The Contractor will
     have separate certified Financial Statements prepared if an independent
     accountant decides that preparation of combined statements is
     inappropriate.

     A.   The independent accountant will state in writing reasons for not
          preparing combined Financial Statements.

     B.   The Contractor will provide supplemental schedules that clearly
          reflect all inter-entity transactions and eliminations necessary to
          enable DHS to analyze the overall financial status of the entire
          health care delivery system.

          1.   In addition to annual certified Financial Statements the
               Contractor will complete the entire 1989 HMO Financial Report of
               Affairs and Conditions Format, commonly known as the "Orange
               Blank". The Certified Public Accountant's (CPA) audited Financial
               Statements and the "Orange blank" report will be submitted to DHS
               no later than ninety (90) calendar days after the close of the
               Contractor's Fiscal Year.

          2.   On a quarterly basis the Contractor will submit to DHS forty-five
               (45) calendar days after the end of each quarter under this
               Contract financial reports required by Title 22, CCR, Section
               53324(c). The required quarterly financial reports will be
               prepared on the "Orange Blank" format and will include, at a
               minimum, the following reports/schedules:

               a.   Jurat.

               b.   Report 1A and 1B: Balance Sheet.

               c.   Report 2: Statement of Revenue, Expenses, and Net Worth.

               d.   Statement of Cash Flow, prepared in accordance with
                    Financial Accounting Standards Board Statement Number 96
                    (This statement is prepared in lieu of Report #3: Statement
                    of Changes in Financial Position for Generally Accepted
                    Accounting Principles (GAAP) compliance.

               e.   Report 4: Enrollment and Utilization Table.

               f.   Schedule F: Unpaid Claims Analysis.

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Molina Medical Centers                                                  95-23637
                                                                      Article VI

               g.   Appropriate footnote disclosures in accordance with GAAP.

     C.   The Contractor will authorize the independent accountant to allow
          representatives of DHS, upon written request, to inspect any and all
          working papers related to the preparation of the audit report.

6.3.3               MONTHLY FINANCIAL STATEMENTS

     The Contractor may be required to file monthly Financial Statements at DHS'
     request. If the Contractor is required to file monthly Financial Statements
     with DOC, they will file monthly Financial Statements with DHS.

6.3.4               COMPLIANCE WITH AUDIT REQUIREMENTS

     The Contractor will cooperate with DHS' own independent audits annually or
     as necessary for good cause, at the discretion of DHS. Such audits may be
     waived upon submission of the financial audit for the same period conducted
     by DOC pursuant to Section 1382 of the Health and Safety Code.

6.3.5               SUBMITTAL OF FINANCIAL INFORMATION

     The Contractor will prepare financial information requested in accordance
     with Generally Accepted Accounting Principles (GAAP) and where Financial
     Statements/projections are requested these statements/projections should be
     prepared on the 1989 HMO Reporting Format (commonly known as the "Orange
     Blank"). Where appropriate, reference has been made to the Knox-Keene
     Health Care Service Plan Act of 1975 Rules, found under Title 10, CCR,
     Section 1300.51 et. seq. Information submitted will be based on current
     operations.

6.4            MANAGEMENT INFORMATION SYSTEM

6.4.1               MANAGEMENT INFORMATION SYSTEM (MIS) CAPABILITY

     The Contractor will maintain an MIS that will provide support for all
     functions of the plan's processes and procedures related to the flow and
     use of data within the plan. The MIS must enable the Contractor to meet the
     contractual requirements contained in this Article. It will have the
     capability to capture and utilize various data elements to develop
     information for plan administration.

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6.4.2               ENCOUNTER DATA SUBMITTAL

     The Contractor will submit Encounter data to DHS on a monthly basis 90 days
     following the end of the reporting month in which the Encounter occurred as
     specified in the Managed Care Encounter Data Reporting Manual. Encounter
     data will include the data elements as outlined in Attachment 9.4-B,
     Managed Care Encounter Data Reporting Elements of the RFA.

6.4.3               ACCESS TO MIS

     The Contractor will provide on-line read-only access to DHS to the
     Contractor's MIS.

6.4.4               LATE REPORTS

     The Contractor will ensure that, upon written notice by DHS of a late
     report, that they will submit the report within five (5) working days from
     the date of the post mark, or longer if allowed by DHS.

6.4.5               INACCURATE/INSUFFICIENT REPORTS

     The Contractor will ensure that the reports submitted to DHS shall contain
     complete and accurate information as outlined in Attachment 9.4-B of the
     RFA.

     Upon written notice by DHS that a report is insufficient or inaccurate, the
     Contractor will ensure that a corrected report is submitted to DHS within
     fifteen (15) days, or longer if allowed by DHS.

6.5            QUALITY IMPROVEMENT SYSTEM

6.5.1               GENERAL REQUIREMENT

     The Contractor will monitor, evaluate, and take effective action to address
     any needed improvements in the Quality of Care delivered by all
     practitioners providing services on its behalf in all types of settings:
     ambulatory, impatient or home setting. The Contractor will be accountable
     for the quality of health care delivered whether it be preventive, primary,
     specialty, emergency, or ancillary care services regardless of the number
     of contracting and subcontracting layers between the Contractor and the
     individual practitioner delivering care to the Member.

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Molina Medical Centers                                                  95-23637
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6.5.1.1             WRITTEN DESCRIPTION

     The Contractor will implement and maintain a written description of its QIP
     which will include the following:

     A.   Organizational commitment to deliver quality health care services,
          goals, and objectives including accreditation of its QIP program,
          which are evaluated and updated annually and include a time table for
          implementation and accomplishment.

     B.   Organizational chart showing the key persons, the committees and
          bodies responsible for Quality Improvement, reporting relationships of
          QIP committees within the Contractor's organization, and provisions
          for support staff including reporting relationships.

     C.   Qualifications of staff responsible for Quality Improvement studies
          and activities including appropriate education, experience and
          training.

     D.   The QIP scope of review, which must include:

          1.   Quality of clinical care services including, but not limited to,
               preventive services, prenatal care, and family planning services.

          2.   Quality of nonclinical services including, but not limited to,
               availability, accessibility, coordination and continuity of care.

          3.   Representation of the entire range of care provided by the
               Contractor including all demographic groups, care settings
               (e.g. Emergency Services, inpatient, ambulatory, and home health
               care) and types of services (e.g. preventive, primary, specialty
               and ancillary).

     E.   A description of specific Quality of Care studies and other activities
          to be undertaken over a prescribed period of time, the responsible
          individuals, organizational resources utilized to accomplish them,
          methodologies to be used, including but not limited to those that
          address health outcomes, and mechanisms for tracking issues over time.

     F.   A description of a system for provider review of the QIP which at a
          minimum demonstrates Physicians' and other professionals' involvement
          and provisions for providing feedback to staff and providers regarding
          performance and outcomes.

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     G.   A description of the annual QIP report will include a summary of all
          QIP studies and other activities completed; trending of clinical and
          service indicators and other performance data; areas of deficiency and
          Corrective Actions undertaken; an evaluation of the overall
          effectiveness of the QIP and evidence that activities have contributed
          to significant improvements in care delivered to Members.

6.5.2          QIP ADMINISTRATIVE SERVICES

6.5.2.1             Accountability

     The Contractor will maintain a system of accountability which includes the
     participation of the Governing Body of the Contractor's organization, the
     designation of a Quality Improvement Committee with oversight and
     performance responsibility, the supervision of activities by the Medical
     Director, the inclusion of contracted Physicians and other providers in the
     process of QIP development and performance review.

6.5.2.2             GOVERNING BODY

     The Contractor will implement and maintain policies that specify the
     responsibilities of the Governing Body including at a minimum the
     following:

     A.   Approves the overall QIP and the annual report of the QIP.

     B.   Appoints an accountable entity or entities within the Contractor's
          organization to provide oversight of the QIP.

     C.   Routinely receives written progress reports from the QIP committee
          describing actions taken, progress in meeting QIP objectives, and
          improvements made.

     D.   Formally reviews, (at least annually), a written report on the QIP
          which includes; studies undertaken, results, subsequent actions, and
          aggregate data on Utilization and quality of services rendered; and
          assess the QIP's continuity, effectiveness, and current acceptability.

     E.   Directs the operational QIP to be modified on an ongoing basis, and
          tracks all review findings for follow-up.

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6.5.2.3             QUALITY IMPROVEMENT COMMITTEE

     The Contractor will implement and maintain a Quality Improvement Committee
     designated by, and accountable to the Governing Body. The role, structure,
     function of this committee will be delineated. The committee will meet at
     least quarterly but as frequently as necessary to demonstrate follow-up on
     all findings and required actions. On a scheduled basis the activities,
     findings, recommendations, and actions of the committee are reported to the
     Governing Body in writing. The Contractor will ensure that minutes of
     committee meetings are submitted to DHS quarterly for review.
     Subcontractors, who are representative of the composition of the contracted
     provider network, will actively participate in the Quality Improvement
     Committee. The Contractor will maintain a process to ensure confidentiality
     of QIP discussions as well as avoidance of conflict of interest on the part
     of the reviewer.

6.5.2.4             MEDICAL DIRECTOR

     The Contractor will ensure that the Medical Director will be directly
     involved in the implementation of Quality Improvement activities.

6.5.2.5             PROVIDER PARTICIPATION

     The Contractor will ensure that Physicians and other health care providers
     will be involved as an integral part of the Quality Improvement program.
     The Contractor will maintain and implement appropriate procedures to keep
     providers informed of the written QIP, its activities and outcomes. The
     Contractor will maintain employment agreements and provider contracts which
     include a requirement securing cooperation with the QIP. The Contractor
     will ensure that contracted hospitals and other subcontractors will allow
     the Contractor access to the Medical Records of its Members.

6.5.2.6             DELEGATION OF QIP ACTIVITIES

     The Contractor is accountable for Quality Improvement even when it
     delegates Quality Improvement activities to its subcontractors. The
     Contractor will maintain a system to ensure accountability of delegated QIP
     activities including:

     A.   Maintenance of policies and procedures which describe delegated
          activities, QIP authority, function, and responsibility, how each
          subcontractor will be informed of its scope of QIP responsibilities,
          and the subcontractor's accountability for delegated activities.

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     B.   Establish reporting standards to include findings and actions taken by
          the subcontractor as a result of the QIP activities with the reporting
          frequency to be at least quarterly.

     C.   Maintenance of written procedures and documentation of continuous
          monitoring and evaluation of the delegated functions, evidence that
          the actual Quality of Care being provided meets professionally
          recognized standards.

     D.   Assurance and documentation that the subcontractor has the
          administrative capacity, task experience, and budgetary resources to
          fulfill its responsibilities.

     E.   The Contractor will approve the delegate's QIP, including its policies
          and procedures which will meet standards set forth by the Contractor.

     F.   The Contractor will ensure that the actual Quality of Care being
          provided is being continuously monitored and evaluated.

6.5.2.7             COORDINATION WITH OTHER MANAGEMENT ACTIVITIES

     The Contractor will implement and maintain Quality Improvement channels and
     facilitate coordination with other performance monitoring activities,
     including risk management and resolution and monitoring of Member
     complaints and Grievances. The Contractor's QIP will maintain linkages with
     other management functions such as network changes, medical management
     systems (i.e. pre-certification), practice feedback to Physicians, patient
     education/health education, Member services, and human resources feedback.

6.5.3          SYSTEMATIC PROCESS OF QUALITY IMPROVEMENT

6.5.3.1             GENERAL REQUIREMENTS

     The Contractor's QIP will objectively and systematically monitor and
     evaluate the quality and appropriateness of care and services rendered on
     an ongoing basis. The Contractor will conduct Quality of Care studies that
     address the quality of clinical care as well as the quality of health
     services delivery. The Contractor will ensure that the studies reflect the
     population served in terms of age groups, disease categories and special
     risk status. These studies will continuously monitor care against practice
     guidelines or clinical standards and will use appropriate Quality
     Indicators as measurable variables. The Contractor will ensure that data
     collected will be analyzed by the appropriate health professionals, and
     system issues will be addressed by multi-disciplinary teams. The Contractor
     will undertake Corrective Actions whenever problems are identified. The
     Contractor will maintain a system for tracking the issues

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     over time to ensure that actions for improvement are effective.

6.5.3.2             QUALITY OF CARE STUDIES

     The Contractor will perform eleven (11) focused studies on an ongoing basis
     as listed below:

     A.   Clinical Areas

          1.   Pediatric preventive services: immunizations and health screens.

          2.   Obstetrical care.

          3.   Adult preventive services.

     B.   Health Services Delivery Areas

          1.   Access to care.

          2.   Utilization of services.

          3.   Coordination of care.

          4.   Continuity of care.

          5.   Health Education.

          6.   Emergency Services.

          7.   Member satisfaction surveys.

          8.   Family planning.

6.5.3.3             STANDARDS AND GUIDELINES

     The Contractor will use the following standards and guidelines for
     Preventive Care as designated by DHS. The Contractor will adopt these
     standards and guidelines as a baseline for assessment against which care
     actually delivered can be compared. For Quality of Care studies in the
     health services delivery areas, the Contractor will use the specific
     standards set forth in the pertinent subsections. The Contractor's Quality
     of Care studies may include health services delivery issues other than the
     eleven (11) priority areas identified. For other clinical or health
     services delivery areas where

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     DHS has not specified clinical standards or practice guidelines, the
     Contractor will submit these standards or guidelines to DHS for approval
     six weeks prior to conducting the studies.

     A.   Pediatric:

          Periodic health screen schedule based on recommendations of the
          American Academy of Pediatrics (AAP) as specified in Title 17, CCR,
          Section 6800 et seq. Child Health and Disability Program (CHDP).
          Immunization schedule based on recommendations of either the Advisory
          Committee on Immunization Practices or the AAP will be acceptable.

     B.   Adult:

          Guidelines based on the Report of the United States Preventive
          Services Task Force.

     C.   Obstetric:

          Minimum standards based on recommendations of the American College of
          Obstetrics and Gynecology. Contractors are further required to provide
          risk assessment and interventions consistent with Comprehensive
          Perinatal Services Program (CPSP) requirements as specified in Title
          22, CCR, Sections 51348 and 51348.1.

6.5.3.4             QUALITY INDICATORS

     The Contractor will use the following Quality Indicators for the required
     studies in preventive services indicated in Section 6.5.3.3.

     A.   Pediatric preventive services:

          Medi-Cal children who had received the required number of
          immunizations in the first two years of life.

     B.   Adult preventive services:

          1.   Medi-Cal women aged 52-64 who had at least one mammogram during
               the past two years.

          2.   Medi-Cal women aged 21-64 who had at least one Pap smear during
               the past 3 years.

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          3.   Medi-Cal Members between ages 20 and 64 screened for cholesterol
               at least once in the past five years.

     C.   Pregnant Women

          1.   Medi-Cal pregnant Members who received adequate prenatal care
               based on:

               a.   The month of pregnancy in which the beneficiary became a
                    Member of the health plan.

               b.   The month of pregnancy in which the initial comprehensive
                    medical/OB visit occurred for each pregnant Member.

               c.   The number of pregnancy related medical/OB visits during
                    pregnancy, exclusive of delivery for each pregnant woman.

               d.   The delivery date for each pregnant Member.

          2.   Outcomes:

               a.   Medi-Cal pregnant women who delivered live births (single or
                    multiple), or still born greater than 20 weeks gestation;
                    by age, race/ethnicity, and risk status (high risk vs.
                    others).

               b.   Live born infants greater than or equal to 20 weeks
                    gestation (linked to a Medi-Cal pregnant Member) who weighs:

                    1.   Up to 1499 grams (VLBW).

                    2.   1500 - 2499 grams (LBW).

                    3.   2500 - 4000 grams

                    4.   > 4000 grams

6.5.3.5        REPORTS

     The Contractor will initiate all Quality of Care studies within six months
     of operation and the progress and/or results of these Quality of Care
     studies will be submitted to DHS contract managers six months after
     initiation of the study (due fifteen (15) days after the end of the first
     year of operation) and at least quarterly updates thereafter.

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     Quarterly updates will be due fifteen (15) days after the end of the
     quarter.

6.5.4          CREDENTIALING AND RECREDENTIALING

6.5.4.1             GENERAL REQUIREMENTS

     The Contractor will develop, and maintain written policies and procedures
     which include initial Credentialing, recredentialing, recertification, and
     reappointment of practitioners. Contractor will ensure that policies and
     procedures are reviewed and approved by the Governing Body, or its
     designee. Contractor will ensure that the responsibility for
     recommendations regarding Credentialing decisions will rest with a
     Credentialing committee or other peer review body.

6.5.4.2             CREDENTIALING

     Contractor will ensure that the initial Credentialing process obtains and
     verifies the following information:

     A.   A current valid license, registration or certificate to practice, a
          valid Drug Enforcement Agency registration number as applicable.

     B.   Graduation from a medical school, completion of a residency, Board
          certified or Board eligible as applicable; education as required.

     C.   Clinical privileges in good standing at the hospital designated by the
          practitioner as the primary admitting Facility (this requirement may
          be waived for practices which do not have or do not need access to
          hospitals), includes review of past history of curtailment or
          suspension of medical staff privileges.

     D.   Work history.

     E.   Professional liability claims history.

     F.   Requested information from: National Practitioner Data Bank and the
          Medical Board of California (MBC).

     G.   Any sanctions imposed by Medi-Cal, Medicaid and Medicare.

     H.   A signed statement by the practitioner at time of application
          regarding any physical or mental health problems, any history of
          chemical dependency/substance abuse, history of loss of license and/or
          felony convictions, history of loss or limitation of privileges or
          disciplinary actions.

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     As part of the initial Credentialing procedure, the Contractor will conduct
     site reviews of each potential Primary Care Physician's office.

6.5.4.3             RECREDENTIALING

     The Contractor will develop and maintain policies and procedures
     delineating the process for periodic reverification of clinical
     credentials. The Contractor will ensure that recredentialing occurs at
     least every two years. The Contractor will ensure that the process includes
     a review of all areas reviewed for Credentialing, excluding previously
     researched past history, a performance review which includes data from
     Member complaints, results of quality reviews, Utilization management,
     Member satisfaction surveys, and a site visit to Primary Care Physicians'
     Facilities will also be included in the recredentialing process.

6.5.4.4             DELEGATED CREDENTIALING

     The Contractor will ensure the qualifications of all network practitioners,
     approve new providers and sites, and terminate or suspend individual
     providers. The Contractor may delegate Credentialing and recredentialing
     activities but will monitor the completion and effectiveness of the
     delegated process, If the Contractor delegates Credentialing and
     recredentialing activities, the Contractor will implement and maintain
     policies and procedures which delineate the delegated activities and
     responsibility for these activities.

6.5.4.5             DISCIPLINARY ACTIONS

     The Contractor will implement and maintain a system for the reporting of
     serious quality deficiencies which result in suspension or termination of a
     practitioner to the appropriate authorities. The Contractor will implement
     and maintain policies and procedures for disciplinary actions including,
     reducing, suspending, or terminating a practitioner's privileges.
     Contractor will implement and maintain a provider appeal process. The
     Contractor will ensure that any providers impacted by adverse
     determinations will be provided due process through the Contractor's
     provider appeal process.

6.5.5          FACILITY REVIEW

6.5.5.1             GENERAL REQUIREMENT

     The Contractor will conduct Facility reviews on all Primary Care Provider's
     sites as part of the Credentialing procedures.

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6.5.5.2             REVIEW PROCEDURES

     The Contractor will ensure that its Facility review procedures will be
     submitted to DHS for approval prior to use and will comply with all of DHS
     requirements which include the following categories:

     A.   Front office procedures including:

          1.   Telephone access, triage/advice.

          2.   Appointment scheduling.

          3.   Missed appointment and follow-up.

          4.   Referral appointment and follow-up.

          5.   Referral (consultation) reports, lab and X-ray follow-up.

     B.   Fire and disaster plan.

     C.   Infection control.

     D.   Handling of bio-hazardous wastes.

     E.   Health education.

     F.   Medical emergencies.

     G.   Pharmacy policies (including handling of sample drugs).

     H.   Medical Records storage and filing.

     I.   Medical Records documentation.

     J.   Grievances.

     K.   Laboratory services.

     L.   Radiological services.

     M.   Preventive services for children, adults and pregnant women.

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     N.   Facility access for physically disabled individuals.

     O.   Human sterilization consent procedures.

6.5.5.3             NUMBER OF SITES TO BE REVIEWED PRIOR TO OPERATIONS

     The Contractor will ensure that Facility reviews are completed on at least
     25 % of the total number of Primary Care sites or a minimum of 30 sites
     prior to initiating plan operation or new site expansion. Contractors with
     30 sites or less, will complete Facility reviews on all sites prior to
     initiating operation. The Contractor with NCQA or JCAHO accreditation is
     exempted from this requirement.

6.5.5.4             NUMBER OF SITES TO BE REVIEWED AFTER OPERATIONS BEGIN

     The Contractor, regardless of NCQA or JCAHO accreditation, will complete
     Facility reviews on all (100%) Primary Care sites within 6 months after
     plan operation and will conduct ongoing Facility reviews as part of the
     recredentialing process.

6.5.5.5             DHS FACILITY INSPECTIONS

     Contractor will provide any necessary assistance to DHS in its conduct of
     Facility inspections and medical reviews of the Quality of Care being
     provided to Members. Contractor will ensure correction of deficiencies as
     identified by those inspections and reviews according to the frames
     delineated in the resulting reports.

6.5.5.6             CORRECTIVE ACTIONS

     The Contractor will take Corrective Actions if a DHS inspection finds a
     Primary Care site to be in substantial non-compliance. Contractor will
     ensure that Primary Care sites with major, uncorrected deficiencies are not
     allowed to begin operation.

6.5.5.7             CONTINUING OVERSIGHT

     The Contractor will remain responsible for the oversight and monitoring of
     delegated Facility review activities.

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6.5.6          MEMBERS RIGHTS AND RESPONSIBILITIES

6.5.6.1             GENERAL REQUIREMENT

     The Contractor will develop, implement and maintain written policies that
     address the Member's rights and responsibilities and will communicate these
     to its Members and providers.

6.5.6.2             WRITTEN POLICY: MEMBER'S RIGHTS

     The Contractor's written policy regarding Member rights will include the
     Member's right to be treated with respect, to be provided with information
     about the organization and its services, to be able to choose a Primary
     Care Physician within the Contractor's network, to participate in decision
     making regarding their own health care, to voice Grievances about the
     organization or the care received, to formulate advance directives, to have
     access to family planning services, FQHC, Indian Health, STD services and
     Emergency Services outside the Contractor's network pursuant to the federal
     law, the right to request a fair hearing, to have access to their Medical
     Record, and to disenroll.

6.5.6.3             WRITTEN POLICY: MEMBER'S RESPONSIBILITY

     The Contractor's written policy regarding Member responsibilities will
     include providing accurate information to the professional staff, following
     instructions, and cooperating with the providers.

6.5.6.4             MEMBER'S GRIEVANCE SYSTEM

     The Contractor will implement and maintain procedures to monitor the
     Members' Grievance system which includes:

     A.   Procedure to ensure timely resolution and feedback to complainant. The
          Contractor will acknowledge receipt of the complaint within 5 days and
          resolve the complaint within 30 days or document reasonable efforts to
          resolve the complaint.

     B.   Procedure for systematic aggregation and analysis of the Grievance
          data and use for Quality Improvement.

     C.   Procedure to ensure that the Grievance submitted is reported to an
          appropriate level, i.e., medical issues versus health care delivery
          issues.

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6.5.6.5             MEMBER'S RIGHT TO CONFIDENTIALITY

     The Contractor will implement and maintain policies and procedures to
     ensure the Members' right to confidentiality of medical information.

     A.   The Contractor will ensure that Facilities implement and maintain
          procedures that guard against disclosure of confidential information
          to unauthorized persons inside and outside the network.

     B.   Contractor will counsel Members on their right to confidentiality and
          the Contractor will obtain Member's consent prior to release of
          confidential information.

     C.   The Contractor will implement and maintain procedures to ensure the
          Members' confidentiality when accessing Sensitive Services such as
          family planning, STD, abortion and HIV testing.

6.5.6.6             MINOR'S RIGHTS AND SERVICES

     The Contractor will implement and maintain policies and procedures on
     providing treatment services to minors and their right to access Minor
     Consent Services.

6.5.6.7             MEMBER SATISFACTION SURVEYS

     The Contractor will conduct surveys of Member satisfaction with its
     services, at least annually:

     A.   At a minimum, the surveys will include the following groups of
          Members: Members filing Grievance/complaints, Members requesting
          change of providers or Facilities, groups who speak a primary language
          other than English meeting threshold levels, and Members requesting
          Disenrollment from the Contractor.

     B.   The Contractor's Member survey will identify perceived problems in
          quality, availability and accessibility of care as well as reasons for
          Member's accessing care from an out-of-plan provider, e.g., family
          planning services.

     C.   The Contractor will use the survey to identify sources of
          dissatisfaction, outline action steps to follow up on the findings,
          inform providers of the results, and reevaluate the effects of the
          actions taken.

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6.5.7          AVAILABILITY AND ACCESSIBILITY

6.5.7.1             GENERAL REQUIREMENT

     The Contractor will implement and maintain procedures for Members to obtain
     appointments for routine care, Urgent Care, emergency care, prenatal care,
     CHDP periodic health screens, adult initial health assessments, and
     procedures for obtaining appointments with specialists.

6.5.7.2             EMERGENCY CARE

     The Contractor will ensure that a Member with an Emergency Condition as
     defined in Article II, Definitions, will be seen immediately and Emergency
     Services will be available and accessible within the Service Area 24 hours
     a day. The Contractor will ensure adequate follow-up care for those Members
     who require non-emergent care and who are denied services in the emergency
     room.

6.5.7.3             URGENT CARE

     The Contractor will ensure that a Member needing Urgent Care will be seen
     within 48 hours upon request.

6.5.7.4             FIRST PRENATAL VISIT

     The Contractor will ensure that the first prenatal visit for a pregnant
     Member will be available within a week upon request.

6.5.7.5             WAITING TIMES

     The Contractor will develop, implement, and maintain a procedure to monitor
     waiting times in the providers' offices, telephone calls (to answer and
     return), and in obtaining various types of appointments as indicated in
     Section 6.5.7.1.

6.5.7.6             TELEPHONE PROCEDURES

     The Contractor will maintain a procedure for triaging Members' telephone
     calls and providing telephone medical advice.

6.5.7.7             AFTER HOURS CALLS

     At a minimum, Contractor will ensure that a Physician or a Nurse under his
     (her) supervision will be available for after-hours calls.

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6.5.7.8             SENSITIVE SERVICES

     The Contractor will implement and maintain procedures to ensure ready
     access to Sensitive Services for adult and adolescent Members. Adolescent
     Members will be able to access Sensitive Services without parental consent
     and through a provider other than the Primary Care Physician if so
     requested. Adults will be able to access Sensitive Services in a timely
     manner and without barriers such as Prior Authorization requirements.

6.5.7.9             ACCESS FOR DISABLED MEMBERS

     The Contractor's Facilities will comply with the requirements of Title III
     of the Americans with Disabilities Act of 1990, and will ensure access for
     the disabled which includes, but is not limited to, ramps, elevators,
     restrooms, designated parking spaces, and drinking water provision.

6.5.7.10            UNUSUAL SPECIALTY SERVICES

     The Contractor will arrange for the provision of seldom used or unusual
     specialty services from specialists outside the network when determined
     Medically Necessary.

6.5.8          MEDICAL RECORDS

6.5.8.1             GENERAL REQUIREMENT

     The Contractor will ensure that appropriate Medical Records for the Member
     will be available to health care providers at each Encounter.

6.5.8.2             MEDICAL RECORDS PROCEDURES

     The Contractor will implement and maintain the following:

               A.   Procedures for storage and filing of Medical Records
                    including: collection, processing, maintenance, storage,
                    retrieval identification, and distribution.

               B.   A written policy to ensure that Medical Records are
                    protected and confidential.

               C.   Written procedures for release of information and obtaining
                    consent for treatment.

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               D.   Policies and procedures to ensure maintenance of Medical
                    Records in a legible, current, detailed, organized and
                    comprehensive manner (records may be electronic or hard
                    copy).

6.5.8.3             ON-SITE MEDICAL RECORDS

     The Contractor will ensure that an individual will be delegated the
     responsibility of securing and maintaining Medical Records at each site.

6.5.8.4             MEMBER MEDICAL RECORD

     The Contractor will ensure that a complete Medical Record will be
     maintained for each Member in accordance with Title 22, CCR, Section 53284,
     and it will reflect all aspects of patient care, including ancillary
     services, and at a minimum will include:

     A.   Member identification on each page; personal/biographical data in the
          record.

     B.   All entries dated and author identified; the entries will include at a
          minimum, the subjective complaints, the objective findings, and the
          plan for diagnosis and treatment.

     C.   The record will contain a problem list, a complete record of
          immunizations and health maintenance or preventive services rendered.

     D.   Allergies and adverse reactions are prominently noted in the record.

     E.   All informed consent documentation, including the human sterilization
          consent procedures required by Title 22, CCR, Sections 51305.1
          through 51305.6, if applicable.

     F.   All emergency care provided (directly by the contracted provider or
          through a emergency room) and the hospital discharge summaries for all
          hospital admissions while the patient is enrolled.

     G.   All consultations, referrals, and specialists' reports, and all
          pathology and laboratory reports. Any abnormal results will have an
          explicit notation in the record.

     H.   For Medical Records of adults, documentation of whether the individual
          has been informed and has executed an advanced directive such as a
          Durable Power of Attorney for Health Care.

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     I.   Request or refusal of language/interpretation services.

     J.   Health education behavioral assessment and referrals to health
          education services. For patients 12 years or older, a notation
          concerning use of cigarettes, alcohol, and substance abuse, health
          education or counseling and anticipatory guidance.

6.5.8.5             MEDICAL RECORDS REVIEW

     The Contractor will implement and maintain a system to review records for
     compliance with Medical Records standards, and institute a Corrective
     Action when necessary. The Contractor will ensure that Medical Records will
     be reviewed for:

          A.   Uniformity of forms.

          B.   Legibility (the record is legible to a person other than the
               writer).

          C.   Completeness.

          D.   Quality and appropriateness of services provided.

          E.   Immunizations.

          F.   Preventive health screening.

6.5.9          UTILIZATION MANAGEMENT

6.5.9.1             GENERAL REQUIREMENT

     The Contractor will develop, implement and maintain a Utilization
     Management (UM) program which includes list of services that require Prior
     Authorization, persons responsible for UM and their qualifications,
     procedures to evaluate Medical Necessity, criteria used for approval,
     referral and denial of services, information sources, and the process used
     to review and approve the provision of medical services.

6.5.9.2             UNDER AND OVER-UTILIZATION

     The Contractor will ensure that the UM program has mechanisms to detect
     both under and over-utilization of services.

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6.5.9.3             PRE-AUTHORIZATION/REVIEW PROCEDURES

     The Contractor will ensure that its pre-authorization and concurrent review
     procedures will meet the following minimum requirements:

          A.   Review decisions are supervised by qualified medical
               professionals and all denials will be reviewed by a qualified
               Physician.

          B.   There is a set of written criteria or guidelines for Utilization
               Review that is based on sound medical evidence, is updated
               regularly and consistently applied.

          C.   Reasons for decisions are clearly documented.

          D.   There is a well-publicized appeals procedure for both providers
               and patients.

          E.   Decisions and appeals are made in a timely manner.

6.5.9.4             EXCEPTIONS TO PRIOR AUTHORIZATION REQUIREMENT

     The Contractor will ensure that Prior Authorization requirements are not
     applied to Emergency Services, family planning services, preventive
     services, sensitive and confidential services and basic prenatal care.

6.5.9.5             DELEGATING UM ACTIVITIES

     Contractor will ensure that delegated UM activities to subcontractors are
     approved and regularly evaluated. Contractor will ensure that this process
     is documented.

6.5.10         CONTINUITY OF CARE AND CASE MANAGEMENT

6.5.10.1            MEDICAL CASE MANAGEMENT

     The Contractor will provide basic medical case management to each Member.

6.5.10.2            INITIAL HEALTH ASSESSMENT

     The Contractor will develop, implement, and maintain procedures for the
     performance of initial health assessment for each Member within 120 days of
     Enrollment.

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6.5.10.3            REFERRALS AND FOLLOW-UP CARE

     The Contractor will develop, implement, and maintain an adequate system for
     tracking all referrals and follow-up care.

6.5.10.4            COORDINATION OF CARE

     The Contractor will maintain procedures for monitoring the coordination of
     care provided to the Member, including but not limited to coordination of
     discharge planning from inpatient Facilities, and coordination of all
     Medically Necessary services both within and outside the Contractor's
     provider network.

6.5.10.5            MISSED/BROKEN APPOINTMENTS

     The Contractor will implement and maintain policies and procedures to
     follow-up on missed/broken appointments.

6.5.10.6            CONTINUITY OF CARE

     The Contractor will ensure continuity of care from the Ambulatory Care
     setting to the inpatient care setting.

6.5.11         INPATIENT CARE

6.5.11.1            GENERAL REQUIREMENT

     The Contractor will implement and maintain procedures to monitor Quality of
     Care provided in an inpatient setting to its Members. If the Contractor
     delegates the QI functions to hospitals, the Contractor will maintain
     procedures to monitor the delegated function, including review of services
     provided by its Physicians within the hospital.

6.5.12         INFECTION CONTROL

6.5.12.1            INFECTION CONTROL PLAN

     The Contractor will implement and maintain an effective plan for the
     surveillance, prevention and control of infection. The Contractor will
     ensure that this plan will include the scope (both patient care and support
     services) the persons responsible, the policies and procedures and
     frequency of review (at least every 2 years), the role and responsibilities
     of each service, the monitoring activities, and approval by the Governing
     Body.

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6.5.12.2            INFECTION CONTROL POLICIES AND PROCEDURES

     The Contractor will implement and maintain policies for prevention and
     control of infection transmission in patients and personnel which include:

     A.   Application of universal precaution procedures.

     B.   The availability of adequate infection control devices and supplies in
          the patient areas.

     C.   Infectious or biohazardous waste disposal procedures complying with
          applicable State and federal regulations.

     D.   Isolation precautions and procedures.

     E.   Cleaning and sterilization methods, agents, and schedules; including
          maintenance of autoclave, spore testing, storage of sterile packs,
          etc.

     F.   Training and continuing education of all personnel.

6.5.12.3            REVIEW OF PATIENT INFECTIONS

     The Contractor will ensure the review of patient infections that present
     the potential for prevention or intervention to reduce the risk of future
     occurrence.

6.5.12.4            REPORTING PROCEDURES

     The Contractor will implement and maintain a procedure for reporting
     infectious diseases to public health authorities as required by State law.

6.5.12.5            SUBCONTRACTS

     The Contractor will ensure that its infection control policies are
     communicated to its subcontractors and monitor its subcontractors for
     compliance.

6.6            PROVIDER NETWORK AND GEOGRAPHIC ACCESS

6.6.1               TIME AND DISTANCE STANDARD

     Contractor will maintain a network of Primary Care Physicians which are
     located within thirty (30) minutes or ten (10) miles of a Member's
     residence unless the Contractor has a DHS approved alternative time and
     distance standard.

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6.6.2               NETWORK CAPACITY

     The Contractor will maintain a provider network adequate to serve sixty
     percent (60%) of the Eligible Beneficiaries in the proposed county and
     provide the full scope of benefits. Contractor will increase the capacity
     of the network as necessary to accommodate Enrollment growth beyond the
     sixty percent (60%). However, after the first twelve months of operation,
     if Enrollments do not achieve seventy-five (75%) of the required network
     capacity, the Contractor's total network capacity requirement may be
     renegotiated.

6.6.3               NETWORK COMPOSITION

     The Contractor will maintain an adequate number of inpatient Facilities,
     Service Locations, Service Sites, professional, allied, specialist and
     supportive paramedical personnel within their network to provide Covered
     Services to its Members.

6.6.4               ACCESS REQUIREMENTS

     The Contractor will ensure Members access to all Medically Necessary
     specialists through staffing, subcontracting, or referral. Contractor will
     ensure adequate staff within the Service Area, including Physicians,
     administrative and other support staff directly and/or through
     Subcontracts, sufficient to assure that health services will be provided
     consistent with all specified requirements.

6.6.5               SPECIALISTS

     The Contractor will maintain adequate numbers and types of specialists
     within their network to accommodate the need for specialty care. Contractor
     will provide a recording/tracking mechanism for each authorized, denied, or
     modified referral. In addition, the Contractor will offer second opinions
     by Specialists to any Member upon request.

6.6.6               PROVIDER TO MEMBER RATIOS

     The Contractor will ensure that networks will satisfy the following full
     time equivalent provider to Member ratios:

     A.   Primary Care Physicians               1:2,000
     B.   Total Physicians                      1:1,200
     C.   Non-Physician Medical Practitioner    1:1,000

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6.6.7               PHYSICIAN SUPERVISOR TO NON-PHYSICIAN MEDICAL PRACTITIONER
                    RATIOS

     Contractor will ensure compliance with Title 22, CCR, Sections 51240 and
     51241, and that full time equivalent Physician Supervisor to Non-Physician
     Medical Practitioner ratios do not exceed the following:

     A.   Nurse Practitioners           1:4
     B.   Midwives                      1:3
     C.   Physician Assistants          1:2
     D.   Four (4) Non-Physician Medical Practitioners in any combination that
          does not include more than three nurse midwives or two physician
          assistants and maintains the full time equivalence limits.

6.6.8               SUBCONTRACTS

     The Contractor will execute Subcontracts pursuant to the requirements
     contained in Article III, Section 3.27, Subcontracts and Title 22, CCR,
     Section 53250.

6.6.9               TRADITIONAL AND SAFETY-NET PROVIDERS PARTICIPATION

     The Contractor will ensure the participation and broad representation of
     traditional and safety-net providers within the county. Federally Qualified
     Health Centers meet the definitions of both traditional and safety-net
     providers.

6.6.10              TRADITIONAL AND SAFETY-NET PROVIDER CAPACITY

     The Contractor will maintain the percentage of traditional and safety-net
     provider capacity submitted and approved by DHS.

6.6.11              EXISTING PATIENT-PHYSICIAN RELATIONSHIPS

     The Contractor will ensure that no traditional or safety-net provider, upon
     entry into the Contractor's network, suffers any disruption of existing
     patient-physician relationships, to the maximum extent possible. The
     Contractor will ensure that Members may choose traditional and safety-net
     providers as their Primary Care Physician. Contractor will submit a plan
     that proportionately includes contracting traditional and safety-net
     providers in the assignment process for Members who do not choose a Primary
     Care Physician.

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6.6.12              MONTHLY REPORT

     The Contractor will submit to DHS on a monthly basis, in a format specified
     by DHS, a report summarizing changes in the provider network. The report
     will identify provider deletions and additions and the resulting impact to:
     1) geographic access for the Members; 2) cultural and linguistic services;
     3) the targeted percentage of traditional and safety-net providers; 4) the
     ethnic composition of providers; and 5) the number of Members assigned to
     Primary Care Physicians and the percentage of Members assigned to
     traditional and safety-net providers. The Contractor will submit the report
     thirty (30) days following the end of the reporting month.

6.6.13              CONTRACT AND EMPLOYMENT TERMINATIONS

     Contractor will also ensure that provider contract or employment
     terminations do not adversely affect the ethnic composition of their
     provider network.

6.6.14              UTILIZATION OF DSH HOSPITALS

     The Contractor will increase Utilization of Disproportionate Share
     Hospitals by Members to a level specified by DHS upon notification. DHS
     will only impose this requirement if the Utilization of Disproportionate
     Share Hospitals has decreased in such magnitude as to jeopardize
     disproportionate status of hospitals in the county.

6.6.15              ADEQUATE FACILITIES AND PERSONNEL

     Contractor will demonstrate the continuous availability and accessibility
     of adequate numbers of institutional Facilities, Service Locations, Service
     Sites, and professional, allied, and supportive paramedical personnel to
     provide Covered Services including the provision of all medical care
     necessary under emergency circumstances on a 24-hour-a-day, 7-day-a-week
     basis. The Contractor will ensure that a plan Physician is available 24
     hours a day for timely authorization of Medically Necessary care and to
     coordinate transfer of stabilized Members in the emergency department, if
     necessary. The Contractor will have as a minimum a designated Emergency
     Services Facility, providing care on a 24-hour-a-day, 7-day-a-week basis.
     This designated Emergency Services Facility will have one or more
     Physicians and one Nurse on duty in the Facility at all times.

6.6.16              EMERGENCY SERVICE PROVIDERS

     Contractor will pay for Emergency Services received by a Member from
     non-Contractor providers. Payments to non-Contractor providers will be for
     the treatment of the emergency medical condition including Medically
     Necessary services

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     rendered to a Member until the Member's condition has stabilized
     sufficiently to permit discharge, or referral and transfer in accordance
     with instructions from the Contractor. Emergency Services will not be
     subject to Prior Authorization by the Contractor.

     The Contractor will pay for those services provided by a non-Contractor
     emergency department (ED) that are required to determine whether treatment
     of the Member's condition qualifies as an Emergency Service. At a minimum,
     the Contractor must reimburse the non-Contractor ED and, if applicable, its
     affiliated providers for Physician services at the lowest level of
     evaluation and management CPT (Physician's Current Procedural Terminology)
     codes, unless a higher level is clearly supported by documentation, and for
     the Facility fee and diagnostic services such as laboratory and radiology.

     Payment by the Contractor for properly documented claims for services
     rendered by a non-Contractor provider pursuant to this section will be made
     in accordance with Article III, Section 3.27.9, and will not exceed the
     lower of the following rates applicable at the time the services were
     rendered by the provider:

     A.   The usual charges made to the general public by the provider.

     B.   The maximum Fee-For-Service rates for similar services under the
          Medi-Cal Program.

     Disputed claims may be submitted to DHS for resolution under the provisions
     of Section 14454, W&I Code and Title 22, CCR, Sections 53620 through 53702.
     The Contractor agrees to abide by the findings of DHS in such cases, to
     promptly reimburse the non-Contractor provider within 30 days of the
     effective date of a decision that the Contractor is liable for payment of a
     claim and to provide proof of reimbursement in such form as the Director
     may require. Failure to reimburse the non-Contractor provider and provide
     proof of reimbursement to DHS within 30 days will result in liability
     offsets in accordance with Title 22, CCR, Section 53702.

6.6.17              USERS MANUAL AND BULLETINS

     Contractor will issue a Users Manual and Bulletins (updates) to the
     providers of Medi-Cal services. The manual and bulletins shall serve as a
     source of information to health care providers regarding Medi-Cal services,
     policies and procedures, statutes, regulations, telephone access and
     special requirements.

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6.6.18              PROVIDER TRAINING

     Contractor will ensure that all providers receive training regarding the
     Medi-Cal Managed Care program in order to operate in full compliance with
     the Contract and all applicable Federal and State regulations. Contractor
     will ensure that provider training relates to Medi-Cal Managed Care
     services, policies, procedures and any modifications to existing services,
     policies or procedures. Contractor will conduct training for all providers
     within ten (10) days after the Contractor places a newly contracted
     provider on active status. Contractor will ensure that ongoing training is
     conducted when deemed necessary by either the Contractor or the State.

6.6.19              FQHC SERVICES

     Contractor will meet federal requirements for access and reimbursement for
     FQHC services, including those in 42 United States Code Section 1396 b(m)
     and Medicaid Regional Memorandum 93-13. If FQHC services are not available
     in the provider network of either Medi-Cal managed care contractor in the
     county, the Contractor will reimburse FQHCs for services provided
     out-of-plan to the Contractor's Members at the interim FQHC rate determined
     by DHS.

     For family planning and Emergency Services, the provisions of Sections
     6.6.16 and 6.7.4.5 through 6.7.4.9 apply.

6.6.20              FQHC SUBCONTRACTS

     Any Subcontract with an FQHC will specify reimbursement on the basis of
     reasonable cost or at-risk capitation, and notwithstanding Article III,
     Section 3.27.4, the Contractor will submit it to DHS for approval of the
     reimbursement provision prior to implementation.

     If the Subcontract reimbursement is based on reasonable cost, the
     Contractor will demonstrate that the rate to be paid by the Contractor is a
     reasonable equivalent to the interim FQHC rate determined by DHS. The
     Subcontract will specify that the reimbursement from the Contractor does
     not constitute payment in full to the FQHC and that the FQHC will be
     entitled to cost reconciliation by DHS. The Subcontract will also require
     the FQHC to keep a record of the number of visits by plan Members separate
     from FFS Medi-Cal beneficiaries, in addition to any other data reporting
     requirements. DHS will perform the reconciliation to determine the FQHC's
     reasonable costs and will pay to or recover from the FQHC the difference
     between the amount reimbursed by the Contractor and the FQHC's reasonable
     costs.

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     If the subcontract reimbursement is at-risk capitation, the Subcontract
     must specify that the capitation is total payment. If reimbursement is
     at-risk capitation, DHS will not perform the reconciliation and will not
     pay the FQHC's reasonable costs.

6.6.21              INDIAN HEALTH SERVICES FACILITIES

     The Contractor will reimburse out-of-plan Indian Health Service Facilities
     for services provided to Members who are qualified to receive services from
     an Indian Health Service Facility. The Contractor will reimburse the
     out-of-plan Indian Health Service Facility at the approved Medi-Cal rate
     for that Facility.

     The requirements in Section 6.6.19 apply to any Indian Health Service
     Facility which is also an FQHC.

6.6.22              VISION CARE SERVICES

     Contractor will ensure a vision care services system, consistent with good
     professional practice, which provides that a Member may be seen initially
     by either of the following:

     A.   An optometrist or an ophthalmologist.

     B.   A Primary Care Physician before referral to an optometrist or an
          ophthalmologist.

     Contractor will provide ophthalmic lenses in accordance with Section
     6.7.3.6.

6.6.23              SUBCONTRACTOR SERVICES

     The Contractor will not prohibit any subcontractor from providing services
     to Medi-Cal beneficiaries who are not Members of the Contractor's plan.

6.6.24              EMERGENCY DEPARTMENT PROTOCOLS

     Contractor will develop and maintain protocols for communicating and
     interacting with emergency departments. Protocols will be distributed to
     all emergency departments in the contracted Service Area and will include
     at a minimum the following:

     A.   Description of telephone access, triage and advice systems used by the
          Contractor.

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     B.   A plan contact person responsible for coordinating services that can
          be accessed 24 hours a day.

     C.   Process for rapid interfacing with emergency care systems.

     D.   Referral procedures (including after-hours instruction) which
          emergency department personnel can provide to Medi-Cal Members who
          present at the emergency department for non-emergency services.

     E.   Procedures for emergency departments to report system and/or protocol
          failures and process for ensuring Corrective Action.

6.7            SCOPE OF SERVICES/MEDICAL STANDARDS/HEALTH EDUCATION

6.7.1          COVERED SERVICES

6.7.1.1             GENERAL REQUIREMENTS

     The Contractor will provide or arrange for all Medically Necessary Covered
     Services for Members. Covered Services are those services set forth in
     Title 22, CCR, Chapter 3, Article 4, beginning with Section 51301 and Title
     17, CCR, Division 1, Chapter 4, Subchapter 13, beginning with Section 6840,
     unless otherwise specifically excluded under the terms of this Contract.
     The Contractor will ensure that the medical necessity of Covered Services
     is determined through Utilization control procedures established in
     accordance with Sections 6.5.9.3 and 6.5.9.4, unless specific Utilization
     control requirements are included as a term of the Contract under sections
     applicable to specific services.

6.7.1.2             REFERRAL SERVICES

     The Contractor will arrange for the timely referral and coordination of
     those services to which the Contractor or subcontractor has religious or
     ethical objections to perform or otherwise support and will demonstrate
     ability to arrange, coordinate and ensure provision of services through
     referrals at no additional expense to DHS.

6.7.2          EXCLUDED SERVICES: CIRCUMSTANCES UNDER WHICH MEMBER DISENROLLED

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6.7.2.1             MAJOR ORGAN TRANSPLANTS

     Major organ transplant procedures are not covered under the Contract. These
     procedures are bone marrow transplants, heart transplants, liver
     transplants, lung transplants, heart/lung transplants, combined liver and
     kidney transplants, combined liver and small bowel transplants.

     When a Member is identified as a potential transplant candidate, the
     Contractor will refer the Member to a Medi-Cal approved transplant center.
     If the transplant center Physician considers the Member to be a suitable
     candidate, the Contractor will submit a Prior Authorization Request to
     either the Medi-Cal Field Office (for adults) or the California Children
     Services Program (for children) for approval. The Contractor will initiate
     Disenrollment of the Member when all of the following has occurred:
     referral of the Member to the organ transplant Facility, the Facility's
     evaluation concurred that the Member is a candidate for an organ transplant
     and the transplant is authorized by either DHS' Medi-Cal Field Office (for
     adults) or the California Children Services Program (for children).

     Upon Disenrollment, the Contractor will ensure continuity of care by
     transferring all of the Member's medical documentation to the transplant
     Physician. The effective date of the Disenrollment will be retroactive to
     the beginning of the month in which the transplant is approved. All
     services provided during this month will be billed FFS.

     If the Member is evaluated and determined not to be a candidate for a major
     organ transplant or DHS denies authorization for a transplant, the Member
     will not be disenrolled. The cost of the evaluation and responsibility for
     the continuing treatment of the Member will remain with the Contractor.

6.7.2.2             WAIVER PROGRAMS

     The Contractor will maintain systems for identifying and referring Members
     to the appropriate waiver program. If the agency administering the waiver
     program concurs with the Contractor's assessment of the Member and there is
     available placement in the waiver program, the Contractor will initiate
     Disenrollment for the Member. The Contractor will provide documentation to
     ensure the Member's orderly transfer to the Medi-Cal Fee-For-Service
     program. If the Member does not meet the criteria for the waiver program,
     or if placement is not available, the Contractor will continue to case
     manage and provide all Medically Necessary services to the Member.

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6.7.2.3             LONG TERM CARE (LTC)

     Contractor will ensure that Members, other than Members requesting hospice
     services, in need of nursing Facility services are placed in Facilities
     providing the appropriate level of care commensurate with the Member's
     medical needs. These Facilities include Skilled Nursing Facilities,
     subacute Facilities, pediatric subacute Facilities, and Intermediate Care
     Facilities. The Contractor will base decisions on the appropriate level of
     care on the definitions set forth in Title 22, CCR, Sections 51118, 51120,
     51120.5, 51121, 51124.5, and 51124.6 and the criteria for admission set
     forth in Title 22, CCR, Sections 51335, 51335.5, 51335.6, and 51334 and
     related sections of the Manual of Criteria for Medi-Cal Authorization
     referenced in Title 22, CCR, 51003(e).

     The Contractor will assess the projected length of stay of the Member upon
     admission to an appropriate Facility. If the Member will require long term
     care, care in the Facility for longer than the month of admission plus one
     month, the Contractor will submit a Disenrollment request for the Member
     to DHS for approval. The Contractor will provide all Medically Necessary
     Covered Services to the Member until the Disenrollment is effective. An
     approved Disenrollment request will become effective the first day of the
     second month following the month of the Member's admission to the Facility,
     provided the Contractor submitted the Disenrollment request at least 30
     days prior to that date. If the Contractor submitted the Disenrollment
     request less than 30 days prior to that date, Disenrollment will be
     effective the first day of the month that begins at least 30 days after
     submission of the Disenrollment request. Upon Disenrollment, the
     Contractor will ensure the Member's orderly transfer from the Contractor to
     the Medi-Cal Fee-For-Service program.

     Admission to a nursing Facility of a Member who has elected hospice
     services as described in Title 22, CCR, Section 51349, does not affect the
     Member's eligibility for Enrollment under this Contract. Hospice services
     are Covered Services under this Contract and are not long term care
     services regardless of the Member's expected or actual length of stay in a
     nursing Facility.

6.7.3          EXCLUDED SERVICES: CIRCUMSTANCES UNDER WHICH MEMBER ENROLLED WITH
               SERVICE CARVE OUT

6.7.3.1             MISCELLANEOUS SERVICE CARVE OUTS

     Acupuncture services, adult day health care services, chiropractic
     services, and healing by prayer or spiritual means are not Covered Services
     under this Contract. The Contractor may, upon request, refer Members to
     these services.

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     Local Education Agency (LEA) assessment services provided to any student
     and any LEA services provided pursuant to an Individual Education Plan
     (IEP) or Individual Family Service Plan (IFSP) are not covered under the
     Contract.

6.7.3.2             CALIFORNIA CHILDREN SERVICES (CCS)

     CCS services are not covered under this Contract. The Contractor will
     identify children with CCS eligible conditions, arrange for their referral
     to the local CCS office, and will continue to provide case management of
     the children until eligibility is established with the CCS program. The
     Contractor will provide Primary Care and other services unrelated to the
     CCS eligible condition and will ensure the coordination of services between
     its Primary Care Providers, the CCS specialty providers, and the local CCS
     program.

6.7.3.3             MENTAL HEALTH

     The following mental health services are excluded from the Contract: all of
     SD/MC mental services (inpatient and outpatient); FFS/MC outpatient mental
     health services provided by psychiatrists and psychologists; FFS/MC
     inpatient mental health services. Effective June 1, 1996 all
     psychotherapeutic drugs prescribed by psychiatrists will be excluded.

     The Contractor will provide outpatient mental health services within the
     Primary Care Physician's scope of practice. The Contractor will refer
     Members who need specialty mental health services to the appropriate FFS/MC
     mental health provider or to the appropriate SD/MC provider. The Contractor
     will case manage the physical health of the Member and coordinate services
     with the mental health provider of the Member. Effective June 1, 1996 the
     Contractor will provide all psychotherapeutic drugs prescribed by its
     primary care physicians, but will not longer be responsible for
     psychotherapeutic drugs prescribed by psychiatrists.

6.7.3.4             ALCOHOL AND DRUG TREATMENT SERVICES

     Alcohol and drug treatment services available under the Short-Doyle
     Medi-Cal (SD/MC) program as defined in Title 22, CCR, Section 51341(a) and
     (c) and outpatient heroin detoxification as defined in Title 22, CCR,
     Section 51328 are excluded from this Contract.

     The Contractor will arrange and coordinate Medically Necessary services,
     including referral of Members requiring alcohol and drug treatment to SD/MC
     alcohol and drug treatment programs including outpatient heroin
     detoxification providers. The Contractor will assist Members in locating
     available treatment Service Sites. To the

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     extent that treatment slots are not available within the Contractor's
     geographical Service Area, the Contractor is encouraged to pursue placement
     outside the area.

6.7.3.5             DENTAL

     Dental services are not covered under this Contract. The Contractor will
     perform dental screening for all Members as part of the initial health
     assessment and refer Members to Medi-Cal dental providers. The Contractor
     will ensure referrals to dental providers.

6.7.3.6             VISION CARE - LENSES

     The Contractor will order the fabrication of optical lenses for Members
     from Prison Industry Authority (PIA) optical laboratories. DHS will
     reimburse PIA for these lenses in accordance with the contract between DHS
     and PIA. The Contractor will provide all other Covered Services described
     in Title 22, CCR, Section 51317, including contact lenses and eyeglass
     frames.

6.7.3.7             DIRECT OBSERVED THERAPY (DOT) FOR TREATMENT OF TUBERCULOSIS

     DOT services are not covered under this Contract. DOT services are offered
     by local health departments (LHDs). The Contractor will assess the risk of
     noncompliance for each Member who needs to be placed on anti-TB drugs.
     Members who are determined to be at risk will be referred to the LHD TB
     Control Officer for DOT. The Contractor will follow up and coordinate
     care with the LHD TB Control Officer.

     The Contractor will refer the following groups of Members with active TB
     for DOT: patients with demonstrated multiple drug resistance (defined as
     resistance to Isoniazid and Rifampin), patients whose treatment has failed
     or who have relapsed after completing a prior regimen, children and
     adolescents, and individuals who have demonstrated noncompliance (those who
     failed to keep office appointments).

     The Contractor will assess the following groups of Members for potential
     noncompliance and for consideration for DOT: substance abusers, persons
     with mental illness, the elderly, persons with unmet housing needs, and
     persons with language and/or cultural barriers.

6.7.3.8             DEPARTMENT OF DEVELOPMENTAL SERVICES ADMINISTERED MEDICAID
                    HOME AND COMMUNITY BASED SERVICES WAIVER

     The HCBS waiver services are not covered under this Contract. The
     Contractor will maintain systems for identifying developmentally disabled
     Members who are at risk

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     for institutional placement and refer these Members to the HCBS waiver
     administered by DDS. If DDS concurs with the Contractor's assessment of the
     Member and there is available placement in the waiver program, the Member
     will receive waiver services while enrolled in the plan. The Contractor
     will continue to provide all Primary Care and other Medically Necessary
     Covered Services to a plan Member who is receiving HCBS waiver services. If
     the Member does not meet the criteria for the waiver program, or if
     placement is not available, the Contractor will continue to case manage and
     provide all Medically Necessary Covered Services to the Member.

6.7.4          CAPITATED SERVICES: SERVICES WITH SPECIAL ARRANGEMENTS AND/OR
               PAYMENT OF OUT-OF-PLAN PROVIDERS

6.7.4.1             SCHOOL LINKED CHDP SERVICES: COORDINATION OF CARE

     The Contractor will maintain a "medical home" for the Members and ensure
     the overall coordination of care and case management of Members who obtain
     CHDP services through the local school districts or school sites.

6.7.4.2             SCHOOL LINKED CHDP SERVICES: COOPERATIVE ARRANGEMENTS

     The Contractor will enter into one or a combination of the following
     arrangements with the local school district or school sites:

               A.   Cooperative arrangements (e.g. Subcontracts) with school
                    districts or school sites to directly reimburse schools for
                    the provision of some or all of the CHDP services, including
                    guidelines for sharing of critical medical information. The
                    arrangements will also include guidelines specifying
                    coordination of services, reporting requirements, quality
                    standards, processes to ensure services are not duplicated,
                    and processes for notification to Member/student/parent on
                    where to receive initial and follow up services.

               B.   Cooperative arrangements whereby the Contractor agrees to
                    provide or contribute staff or resources to support the
                    provision of school linked CHDP services.

               C.   Referral protocols/guidelines between the Contractor and
                    the school sites to assure that Members who are identified
                    at school sites as being in need of CHDP services receive
                    those services from the Contractor within the required State
                    and federal time frames. This will include strategies for
                    the Contractor to follow up and document that services

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                    are  provided to the Member.

               D.   Any innovative approach that the Contractor may develop to
                    assure access to CHDP services and coordination with and
                    support for school based health care services.

6.7.4.3             SCHOOL LINKED CHDP SERVICES: SUBCONTRACTS

     The Contractor will ensure that the Subcontracts with the local school
     districts or school sites meet the requirements of Article III, Section
     3.27 and address the following: the population covered, beginning and end
     dates of the agreement, services covered, practitioners covered, outreach,
     information dissemination and educational responsibilities, Utilization
     Review requirements, referral procedures, medical information flows,
     patient information confidentiality, Quality Assurance interface, data
     reporting requirements, Grievances and complaint procedures.

6.7.4.4             EARLY AND PERIODIC SCREENING, DIAGNOSIS AND TREATMENT
                    (EPSDT) SUPPLEMENTAL SERVICES, EXCLUDING CASE MANAGEMENT
                    SERVICES

     For members under the age of 21 years, the Contractor will provide or
     arrange and pay for EPSDT supplemental services as defined in Title 22,
     CCR, Section 51184, excluding EPSDT case management services, except when
     EPSDT supplemental services are provided as CCS services pursuant to
     Section 6.7.3.2. The Contractor will determine the medical necessity of
     EPSDT supplemental services using the criteria established in Title 22,
     CCR, Section 51340.

     For Members under the age of 21 years, who meet the medical necessity
     criteria for EPSDT case management, pursuant to Title 22, CCR, Section
     51340(f), the Contractor will refer the Member to a targeted case
     management (TCM) provider under contract with a local government agency
     pursuant to Welfare and Institutions Code Section 14132.44 or to entities
     and organizations, including Regional Centers, that provide TCM services
     pursuant to Welfare and Institutions Code Section 14132.48. If EPSDT case
     management services are rendered by these referral providers, the
     Contractor is not required to pay for the EPSDT case management services.
     If EPSDT case management services are not available from these referral
     providers, the Contractor will provide or arrange and pay for the EPSDT
     case management services.

6.7.4.5             FAMILY PLANNING: GENERAL REQUIREMENT

     The Contractor will provide the full array of family planning services
     covered under the Contract without Prior Authorization. Medi-Cal Members
     have the right to access

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     family planning services through any family planning provider. The
     Contractor will inform its Members in writing of their right to access any
     qualified family planning provider without Prior Authorization as required
     in Section 6.9.5(P), Membership Services Guide.

6.7.4.6             FAMILY PLANNING: INFORMED CONSENT

     The Contractor will ensure that informed consent will be obtained from
     Medi-Cal enrollees for all contraceptive methods, including sterilization,
     consistent with requirements of Title 22, CCR, Sections 51305.1 and
     51305.3.

6.7.4.7             FAMILY PLANNING: OUT-OF-NETWORK REIMBURSEMENT

     The Contractor will reimburse out-of-network family planning providers for
     the following services provided to Members of childbearing age to
     temporarily or permanently prevent or delay pregnancy:

          A.   Health education and counseling necessary to make informed
               choices and understand contraceptive methods.

          B.   Limited history and physical examination. Comprehensive physicals
               are the responsibility of the Contractor.

          C.   Laboratory tests if medically indicated as part of decision
               making process for choice of contraceptive methods. The
               Contractor will not be required to reimburse out-of-plan
               providers for pap smears if the Contractor has provided pap
               smears to meet the U.S. Preventive Services Task Force
               guidelines.

          D.   Diagnosis and treatment of STDs if medically indicated.

          E.   Screening testing and counseling of at risk individuals for HIV
               and referral for treatment.

          F.   Follow-up care for complications associated with contraceptive
               methods issued by the family planning provider.

          G.   Provision of contraceptive pills, devices, supplies.

          H.   Tubal ligation.

          I.   Vasectomies.

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          J.   Pregnancy testing and counseling.

6.7.4.8             FAMILY PLANNING: REIMBURSEMENT RATE

     The Contractor will reimburse out-of-plan family planning providers at the
     appropriate Medi-Cal FFS rate, unless otherwise negotiated.

6.7.4.9             SEXUALLY TRANSMITTED DISEASES (STDs)

     The Contractor will provide access to STD services without Prior
     Authorization to all Members both within and outside its provider network.
     The reimbursement of out-of-plan STD services is limited to one office
     visit per disease episode for the purposes of: (1) diagnosis and treatment
     of vaginal discharge and urethral discharge, (2) those STDs that are
     amenable to immediate diagnosis and treatment, and this includes syphilis,
     gonorrhea, chlamydia, herpes simplex, chancroid, Trichomoniasis, human
     papilloma virus, non-gonococcal urethritis, lymphogranuloma venereum and
     granuloma inguinale and (3) evaluation and treatment of Pelvic Inflammatory
     Disease (PID). The Contractor will provide follow-up care. The Contractor
     will reimburse STD providers at the Medi-Cal Fee-For-Service (FFS) rate,
     unless otherwise negotiated, and the Contractor will provide reimbursement
     only if STD treatment providers provide treatment records or documentation
     of the Member's refusal to release Medical Records to the Contractor along
     with billing information.

6.7.4.10            EARLY INTERVENTION SERVICES

     The Applicant will refer to the local Early Start program those children in
     need of early intervention services, e.g. those with an established
     condition leading to developmental delay, those in whom a significant
     development delay is suspected, or those whose early health history places
     them at risk for delay. The Contractor will also collaborate with the
     regional center or local Early Start program to provide all Medically
     Necessary diagnostic, preventive and treatment services.

6.7.4.11            SERVICES FOR PERSONS WITH DEVELOPMENTAL DISABILITIES

     The Contractor will provide all screening, preventive, and Medically
     Necessary and therapeutic services covered by the Contract to Members with
     developmental disabilities. The Contractor will coordinate all medical
     services rendered to the Members, including the determination of medical
     necessity. The Contractor will refer enrollees with developmental
     disabilities to the regional centers for those nonmedical services such as
     respite, out-of-home placement, supportive living, etc. for persons with
     substantial disabilities if such services are needed.

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6.7.4.12            CONFIDENTIAL HIV TESTING

     Members may access confidential HIV counseling and testing services through
     the Contractor's provider network and through the out-of-network local
     health department and family planning providers. The Contractor will
     reimburse these providers at the Medi-Cal FFS rate, unless otherwise
     negotiated, for HIV testing and counseling provided that out-of-network
     local health departments and family planning providers make all reasonable
     efforts, consistent with current laws and regulations, to report
     confidential test results to the Contractor.

6.7.4.13            IMMUNIZATIONS

     The Contractor will fully immunize its Members per DHS requirements. The
     Contractor will, upon request, provide updated information on the status of
     Members' immunizations and ensure reimbursement to LHDs for the
     administration fee of immunizations given to Members. However, the
     Contractor will not reimburse the LHD for an immunization provided to a
     Member who was already up to date as required per DHS. The LHD will provide
     immunization records when immunization services are billed to the
     Contractor. Providers other than LHDs will not be reimbursed by the
     Contractor unless they enter into an agreement with the Contractor.

6.7.4.14            NURSE MIDWIFE SERVICES

     The Contractor will meet federal requirements for access and reimbursement
     for Nurse Midwife services as defined in Title 22, CCR, Section 51345.
     Federal guidelines are currently under development. If federal guidelines
     require that Members have a right to go out-of-plan for Nurse Midwife
     services, the Contractor will reimburse Nurse Midwives for services
     provided out-of-plan to the Contractor's Members at the Medi-Cal
     Fee-For-Service rate.

6.7.5          REQUIRED REFERRAL ARRANGEMENTS

6.7.5.1             WOMEN, INFANTS, AND CHILDREN (WIC) SUPPLEMENTAL FOOD
                    PROGRAM: GENERAL REQUIREMENT

     The Contractor, as part of its initial assessment of Members, and as part
     of the initial evaluation of newly pregnant women, will provide and
     document the referral of pregnant, breastfeeding, or postpartum women or a
     parent/guardian of a child under the age of five, as indicated, to the WIC
     program as mandated by Title 42, CFR 431.635(c).

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6.7.5.2             WIC SUPPLEMENTAL FOOD PROGRAM: MEDICAL RECORDS

     The Contractor will conduct the hemoglobin or hematocrit test and use the
     CHDP program Form PM160 to document the laboratory values for eligible
     children and/or a prescription pad written by a Physician to document
     laboratory values for eligible women for referral to the WIC program. The
     Contractor will document such referrals in the Members' Medical Records.

6.7.6          MEDICAL STANDARDS - CLINICAL PREVENTIVE SERVICES

6.7.6.1             INITIAL HEALTH ASSESSMENT

     The Contractor will schedule and provide an initial health assessment
     (complete history and physical examination) to each Member within 120 days
     of the date of Enrollment, unless the Member's Primary Care Physician
     determines that the Member's Medical Record contains complete and current
     information consistent with the assessment requirements stated below. For
     Members age 21 years and older, the assessment will follow the guidelines
     required by Section 6.7.6.7. For Members under the age of 21 years, the
     assessment will follow the requirements of Title 17, CCR, Sections 6846 and
     6847. If the Member fails to keep the scheduled appointment, the Contractor
     will recontact the Member in accordance with the procedures for follow up
     on missed appointments established pursuant to Section 6.5.10.5.

6.7.6.2             CHILDREN

     The Contractor will maintain and operate a system which ensures the
     provision of CHDP services to Members under the age of 21 years in
     accordance with the provisions of the Health and Safety Code, Section 320
     et seq. and Title 17, CCR, Section 6840 through 6850. The system will
     include the following components:

     A.   Initial health assessments as required by Section 6.7.6.1.

     B.   Notification, in writing, of the availability of health assessment
          services, the times and places where these services are available, and
          the method by which appointments for CHDP services may be made will be
          provided upon Enrollment and annually thereafter. Notification may be
          given to the parent(s) or guardian of the Member under the 21 years of
          age, or to the Member directly if the Member is an emancipated minor.

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     C.   Where a request is made for CHDP services by the Member, the Member's
          parent(s) or guardian or through a referral from the local CHDP
          program, an appointment will be made for the Member to be examined
          within two weeks of the request.

     D.   Members under the age of 21 years will be scheduled for periodic
          health assessments in accordance with periodicity schedule recommended
          by the American Academy of Pediatrics and the immunizations will be
          provided following the recommendations of either the Advisory
          Committee on Immunization Practices or the American Academy of
          Pediatrics.

     E.   At each non-emergency Primary Care Encounter with Members under the
          age of 21 years, the Member (if an emancipated minor) or the parent(s)
          or guardian of the Member will be advised of the CHDP services
          available from Contractor, if the Member has not received CHDP
          services in accordance with the CHDP periodicity schedule.
          Documentation will be entered in the Member's Medical Record which
          will indicate the receipt of CHDP services in accordance with the CHDP
          periodicity schedule or proof of voluntary refusal of these services
          in the form of a signed statement by the Member (if an emancipated
          minor) or the parent(s) or guardian of the Member. If the responsible
          party refuses to sign this statement, the refusal will be noted in the
          Member's Medical Record.

     F.   Written notification and explanation of the results of CHDP health
          assessments will be supplied to the Member (if an emancipated minor)
          or the parent(s) or guardian of the Member in a timely manner. Upon
          request by the Member or the parent(s) or the guardian, the Contractor
          will provide for additional discussion or consultation regarding the
          results of the assessment if appropriate.

     G.   Diagnosis and treatment of any medical conditions identified through
          any CHDP assessment will normally be initiated within sixty days of
          the CHDP assessment appointment, consistent with the terms of the
          Contract for the identified services or conditions. Justification for
          delays beyond sixty days will be maintained in the Medical Record.

     H.   The Confidential Screening/Billing Report form, PM 160-PHP, will be
          used to report all CHDP Encounters. The Contractor will submit
          completed forms to DHS and to the local CHDP program within 30 days of
          the end of each month for all Encounters during that month.

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     I.   The Contractor will coordinate its CHDP system with the Local CHDP
          program as required by Section 6.7.8.1.

6.7.6.3             PREGNANT WOMEN: MINIMUM STANDARDS

     The Contractor will follow the American College of Obstetrics and
     Gynecologists (ACOG) standards (currently Seventh edition) as the minimum
     standards for services provided to Medi-Cal pregnant women. Contractor will
     develop and implement standardized risk assessment tools and risk
     intervention protocols which are consistent with CPSP requirements set
     forth in Title 22, CCR, Sections 51348 and 51348.1. Contractor will not
     implement them until they are approved by DHS.

6.7.6.4             PREGNANT WOMEN: PROVIDER CREDENTIALING STANDARDS

     The Contractor will apply its provider Credentialing standards to all
     providers providing perinatal services. These Credentialing standards are
     specified in the Contractor's Quality Improvement document which must be
     approved by DHS. The Contractor's obstetrical providers are exempt from
     the requirement of certification as a Medi-Cal comprehensive perinatal
     services provider.

6.7.6.5             PREGNANT WOMEN: RISK ASSESSMENT

     The Contractor will ensure that an obstetrical record and a comprehensive
     initial risk assessment tool is completed on all pregnant women at the
     initiation of pregnancy-related services. The risk assessment will include
     medical/obstetrical risk assessment; nutritional assessment; psychosocial
     assessment; and health education assessment. Evaluation of the patient's
     risk status will be done at each trimester and at the postpartum visit.
     All identified risk conditions will be followed up by interventions
     designed to ameliorate or remedy the condition or problem in a prioritized
     manner.

6.7.6.6             PREGNANT WOMEN: REFERRALS TO SPECIALISTS

     The Contractor will implement and maintain policies and procedures for
     appropriate referrals of high risk pregnancy women to specialists and have
     procedures for genetic screening and referral, and for admission to the
     appropriate hospitals for delivery.

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6.7.6.7             ADULTS

     Contractor will implement and maintain The Guide to Clinical Preventive
     Services, a report of the U.S. Preventive Service Task Force (USPSTF) as
     the minimum acceptable standard for Adult Preventive Health Services. The
     following are a core set of preventive services that will be provided to
     all asymptomatic, healthy adult Members (age 21 and older): (This is not an
     inclusive list of all appropriate preventive services. The presence of risk
     factors in individual patients will affect the type and quantity of
     preventive services that may be appropriate. A given patient may need
     additional services or core services at more frequent intervals).

     A.   History and physical examination - an initial complete history and
          physical examination will be performed on each adult Member within 120
          days of Enrollment. Targeted history and physical examination focusing
          on the needs and risk factors of each Member will be done every one to
          three years for adults age 21 to 64 years; and annually for
          individuals age 65 and older.

     B.   Blood pressure - persons who are normotensive will have blood pressure
          measurements at least every 2 years.

     C.   Cholesterol - total cholesterol will be measured at least once every 5
          years for adults age 20 and older.

     D.   Clinical breast examination - women over age 40 will have annual
          clinical breast examination.

     E.   Mammogram - all women over age 50 will have a screening mammogram
          every 1 to 2 years, concluding at age 75 unless pathology has been
          demonstrated.

     F.   Pap Smear - beginning at the age of first sexual intercourse, pap
          smears will be performed every one to three years, depending on the
          presence or absence of risk factors.

     G.   Tuberculosis (Tb) screening - all adults will be screened for Tb risk
          factors upon Enrollment and Mantoux skin test will be performed on all
          persons at increased risk of developing Tb.

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6.7.6.8             TUBERCULOSIS (Tb)

     Tb screening, diagnosis, treatment and follow-up are covered under the
     Contract. The Contractor will provide Tb care and treatment in compliance
     with the guidelines recommended by American Thoracic Society and the
     Centers for Disease Control. Following the award, but prior to beginning
     operation, DHS will evaluate the Contractor's capability to deliver Tb
     care. If the Contractor is not capable of providing adequate Tb care, it
     will subcontract for those services. The Contractor will coordinate with
     LHDs in the provision of DOT, contact tracing, and other Tb services.

6.7.7          HEALTH EDUCATION

6.7.7.1             GENERAL REQUIREMENTS

     The Contractor will implement and maintain a system for providing Member
     health education services, clinical preventive services, health education
     and promotion and patient education and counseling. The system will utilize
     one to one and group interventions, written and audio-visual materials. The
     Contractor will ensure that the services are provided directly by the
     Contractor or through Subcontracts or formal agreements with other
     providers specializing in health education services. The Contractor will
     maintain a health education system which includes, at a minimum, the
     following services:

     A.   Member Education

          1.   Use of Clinical Preventive Services.

          2.   Promote Appropriate Use of Managed Care Plan Services.

          3.   Availability of Local Social and Health Care Programs.

     B.   Clinical Preventive Services, Education and Counseling:

          1.   Nutrition

          2.   Tobacco Prevention and Cessation

          3.   HIV/STD Prevention

          4.   Family Planning

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          5.   Exercise

          6.   Dental

          7.   Perinatal

          8.   Age Specific Anticipatory Guidance - EPSDT

          9.   Injury Prevention

          10.  Immunizations

     C.   Patient Education and Clinical Counseling

          1.   Diabetes

          2.   Asthma

          3.   Hypertension

          4.   Substance Abuse

          5.   Tuberculosis

          6.   Inpatient - Condition Specific

          7.   Other Outpatient

6.7.7.2             HEALTH EDUCATOR

     The Contractor will maintain administrative oversight of the program by a
     qualified full time health educator with a masters degree in community or
     public health education (MPH).

6.7.7.3             BEHAVIORAL ASSESSMENTS

     The Contractor will ensure that individual health education behavioral
     assessments are conducted on all Members within 120 days of Enrollment to
     determine health practices, values, behaviors, knowledge, attitudes,
     cultural practices, beliefs, literacy levels, or health education needs.

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6.7.7.4             HEALTH EDUCATION POLICIES AND PROCEDURES

     The Contractor will develop, implement, and maintain standards, policies
     and procedures and ensure provision of the following:

     A.   Member orientation, education regarding health promotion, personal
          health behavior, and patient education and counseling.

     B.   Provider education on health education services.

     C.   Individual health education behavioral assessment, referral, and
          follow-up.

6.7.7.5             HEALTH EDUCATION STANDARDS

     The Contractor will develop and maintain health education services
     standards, policies and procedures, and monitor provider performance to
     ensure the standards for health education services are maintained and
     include methods for formally communicating findings with providers.

6.7.7.6             HEALTH EDUCATION AND QIP

     The Contractor will ensure coordination and integration of the health
     education system with the Quality Improvement program.

6.7.7.7             GROUP NEEDS ASSESSMENT

     The Contractor will conduct a group needs assessment of their Members to
     determine health education needs including literacy level. The Contractor
     will submit to DHS a report summarizing the methodology, findings, proposed
     services, key activities, timeline for implementation and the responsible
     individuals. The Contractor will complete the needs assessment within six
     months after one year of operations under this Contract.

6.7.7.8             HEALTH EDUCATION WORKPLAN

     If the Contractor does not comply with all of the requirements in Sections
     6.7.7.1 through 6.7.7.9 upon implementation of die Contract, the Contractor
     will comply with all of the requirements for the provision of health
     education services except for the requirements in Section 6.7.7.6.
     Contractor will submit for DHS' approval a proposed workplan for meeting
     the full scope of requirements by the end of one year of operations under
     this Contract. Contractor will include in the workplan a description of
     the required activities, a timeline with milestones, and identify the

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     responsible individuals and the individual with overall responsibility. The
     Contractor will entitle the workplan "Health Education Services: Proposed
     Activities".

6.7.7.9             HEALTH EDUCATION READING LEVEL

     The Contractor will ensure that all plan materials used to communicate
     covered benefits are written at the appropriate reading level, as
     determined by the Contractor and approved by DHS.

6.7.8          LOCAL HEALTH DEPARTMENT COORDINATION

6.7.8.1             SUBCONTRACT

     The Contractor will execute a Subcontract for the specified public health
     services with the Local Health Department (LHD) in each county that is
     covered by this Contract. The Subcontract will specify the scope and
     responsibilities of both parties, billing and reimbursements, reporting
     responsibilities, and Medical Record management to ensure coordinated
     health care services. The Subcontract will meet the requirements contained
     in Article III, Sections 3.27 through 3.27.8. The specified public health
     services under the Subcontract are as follows:

     A.   Family Planning Services: as specified in Section 6.7.4.7

     B.   STD services diagnosis and treatment of disease episode of the
          following STDs: syphilis, gonorrhea, chlamydia, herpes simplex,
          chancroid, trichomoniasis, human papilloma virus, non-gonococcal
          urethritis, lymphogranuloma venereum and granuloma inguinale.

     C.   Confidential HIV testing: as specified in Section 6.7.4.12

     D.   Immunizations: as specified in Section 6.7.4.13

     E.   California Children Services (CCS)

     F.   Maternal and Child Health (MCH)

     G.   Child Health and Disability Prevention (CHDP) Program

     H.   Tuberculosis Direct Observed Therapy

     I.   Women, Infants, and Children (WIC) Supplemental Food Program

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     J.   Population based Prevention Programs: collaborate in LHD community
          based prevention programs

     Services A-D require provisions for reimbursement. All services require
     delineation of the roles and responsibilities of the Contractor and the
     local program.

     To the extent that Contractor does not meet this requirement on or before 4
     months after award of this Contract, Contractor will submit documentation
     substantiating reasonable efforts to enter into Subcontracts.

6.8            MARKETING AND ENROLLMENT

6.8.1               MARKETING REPRESENTATIVES

     The Contractor will ensure, in addition to compliance with the requirements
     of Title 22, CCR, Section 53400, that:

     A.   All Marketing Representatives including supervisors, have
          satisfactorily completed the Contractor's Marketing orientation and
          training program and the DHS Marketing Representative Certification
          Examination prior to engaging in Marketing activities on behalf of the
          Contractor.

     B.   A Marketing Representative will not provide Marketing services on
          behalf of more than one Contractor.

     C.   Marketing Representatives do not engage in Marketing practices that
          discriminate against an Eligible Beneficiary because of race, creed,
          age, color, sex, religion, national origin, ancestry, marital
          status, sexual orientation, physical or mental handicap, or health
          status.

6.8.2               LIABILITY

     The Contractor is responsible for all Marketing activity conducted on
     behalf of the Contractor. Contractor will be held liable for any and all
     violations by any Marketing Representatives.

6.8.3               CERTIFICATION OF MARKETING REPRESENTATIVES

     The Contractor will ensure that any office staff of a provider whose
     primary duties are Marketing, are certified as Marketing Representatives.

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6.8.4               ENROLLMENT PROGRAM

     Contractor will cooperate and participate in the DHS Enrollment program and
     will provide to DHS' Enrollment contractor Marketing materials, Evidence of
     Coverage and disclosure forms, Member services guide, list of network
     providers, linguistic and cultural capabilities of the Contractor and other
     information deemed necessary by DHS to assist beneficiaries in making an
     informed choice of health plan.

6.8.5               DISENROLLMENT FORMS

     Contractor will ensure that Disenrollment forms are available at all
     Primary Care sites and that staff at those locations are knowledgeable of
     Enrollment and Disenrollment requirements.

6.8.6               MARKETING PLAN

     Except for door to door Marketing which is prohibited, Contractors will
     implement and maintain a Marketing plan in compliance with MCOB Letter
     93-12.

6.8.7               DHS APPROVAL

     Contractor will not conduct Marketing activities without written approval
     of its Marketing plan from DHS.

6.9            MEMBER SERVICES/GRIEVANCE SYSTEM

6.9.1               SYSTEM CAPACITY

     Contractor will maintain the capability to provide Member services to
     Medi-Cal Members through sufficient assigned staff.

6.9.2               MEMBER SERVICES EMPLOYEE TRAINING

     Contractor will ensure membership services staff are trained on all
     contractually required membership service functions including, policies,
     procedures, and scope of benefits.

6.9.3               DISCLOSURE FORMS

     Contractor will provide to all Members Disclosure Forms and Evidence of
     Coverage materials which constitute a fair disclosure of the provisions of
     the covered health care services.

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6.9.4               MEMBER IDENTIFICATION CARD

     Contractor will provide an identification card to each Member which
     identifies the Member and authorizes the provision of Covered Services to
     the Member. The card will specify that Emergency Services rendered to the
     Member by non-Contracting providers are reimbursable by the Contractor
     without Prior Authorization.

6.9.5               MEMBERSHIP SERVICES GUIDE

     Contractor will develop and distribute a Membership Services Guide that
     includes the following information:

     A.   The name, address and telephone number of the health plan.

     B.   A description of the full scope of Medi-Cal covered benefits and all
          available services including health education, interpretive services,
          and "carve out" services and an explanation of any service limitations
          and exclusions from coverage.

     C.   Procedures for obtaining Covered Services including the address and
          telephone number of each Service Site (locations of hospitals, Primary
          Care Physicians, optometrists, psychologists, pharmacies, Skilled
          Nursing Facilities, Urgent Care Facilities). In the case of a medical
          foundation or independent practice association, the address and
          telephone number of each Physician provider.

          1.   The hours and days when each of these Facilities is open, the
               services and benefits available, and the telephone number to call
               after normal business hours.

     D.   Procedures for selecting or requesting a change in Primary Care
          Physician, including requirements for change in PCP; reasons for which
          a request may be denied; and reasons why a provider may request a
          change.

     E.   The purpose and value of scheduling an initial health assessment
          appointment.

     F.   The appropriate use of health care services in a managed care system.

     G.   The availability and procedures for obtaining after hours services
          (24-hour basis) and care, including the appropriate provider locations
          and telephone numbers.

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      H.  Procedure for obtaining emergency health care both within and outside
          the Contractor's Service Area.

      I.  Process for referral to specialists.

      J.  Procedures for obtaining transportation services if offered by the
          Contractor.

      K.  The causes for which a Member will lose entitlement to receive
          services under this Contract. (See Article III, Section 3.27.5)

      L.  Procedures for filing a complaint/Grievance, including procedures for
          appealing decisions regarding Member's coverage, benefits, or
          relationship to the organization. Include the title, address, and
          telephone number of the person responsible for processing and
          resolving complaints/Grievances.

      M.  Procedures for Disenrollment, including an explanation of the Member's
          right to disenroll without cause at any time.

      N.  Information on the Member's right to the Medi-Cal fair hearing process
          regardless of whether or not a complaint/Grievance has been submitted
          or if the complaint/Grievance has been resolved. The State Department
          of Social Services' Public Inquiry and Response Unit toll free
          telephone number (800) 952-5253.

      O.  Information on the availability of, and procedures for obtaining,
          services at FQHCs and Indian Health Clinics.

      P.  Information on the Member's right to seek family planning services
          from any qualified provider of family planning services such as the
          following statement:

          "Family planning services are provided to Members of child bearing
          age to enable them to determine the number and spacing of children.
          These services include all methods of birth control approved by the
          Federal Food and Drug Administration. As a Member, you pick a doctor
          who is located near you and will give you the services you need. Our
          Primary Care Physicians and OB/GYN specialists are available for
          family planning services. For family planning services, you may also
          pick a doctor or clinic not connected with Molina Medical Centers
          without having to get permission from Molina Medical Centers. Molina
          Medical Centers will pay that doctor or clinic for the family planning
          services you get".

                                       108

<PAGE>

Molina Medical Centers                                                  95-23637
                                                                      Article VI

      Q.  DHS' Office of Family Planning's toll free telephone number
          (1-800-942-1054) providing consultation and referral to family
          planning clinics.

      R.  Any other information determined by DHS to be essential for the proper
          receipt of Covered Services.

6.9.6             ENROLLEE INFORMATION

      The Contractor will provide the following information to the Member or
      Member's family unit either in the form of a cover letter or insert in the
      above prescribed Membership Services Guide:

      A.  Each Member's effective date of Enrollment and term of Enrollment.

      B.  The name, telephone number, and Service Site address of the Primary
          Care Physician chosen by or assigned to the Member.

6.9.7             DISTRIBUTION OF MEMBER SERVICES INFORMATION

      The Contractor will distribute the Member identification card and
      membership services guide to all Members, including family members, no
      later than seven (7) days after the effective date of the Member's
      Enrollment. The Contractor will revise this information, if necessary, and
      distribute it annually to each Member or Member's family unit.

6.9.8             CHANGES IN AVAILABILITY OR LOCATION OF COVERED SERVICES

      Contractor will ensure Medi-Cal Members are notified in writing of
      any changes in the availability or location of Covered Services at least
      thirty (30) days prior to the effective date of such changes, or within
      fourteen (14) days prior to the change in cases of unforeseeable
      circumstances. The notification must be approved by DHS prior to the
      release.

6.9.9             PRIMARY CARE PHYSICIAN SELECTION

      The Contractor will implement and maintain DHS approved procedures to
      ensure that each Member is allowed to select or change a Primary Care
      Physician from the Contractor's network of providers. The Contractor will
      assist Members in making their selection within thirty (30) days of their
      effective date of Enrollment. The Contractor will provide the Member
      sufficient information (verbal and written) in the appropriate language
      and reading level about the selection process and the available

                                       109

<PAGE>

Molina Medical Centers                                                  95-23637
                                                                      Article VI

      providers in the network to ensure their ability to make an informed
      decision.

6.9.10            PRIMARY CARE PHYSICIAN ASSIGNMENT

      If the Member does not select a Primary Care Physician within thirty (30)
      days of the effective date of Enrollment, Contractor will complete the
      assignment of the Member to a Primary Care Provider, notify the Member and
      the assigned Primary Care Physician within forty (40) days from the
      effective date of Enrollment. Contractor will ensure that adverse
      selection does not occur during the assignment process of Members to
      providers.

6.9.11            CONTINUITY OF CARE

      The Contractor will ensure that Members with an established relationship
      with a provider in the network, who have expressed a desire to continue
      their patient/provider relationship, are assigned to their provider
      without disruption in their care.

6.9.12            DISCLOSURE

      The Contractor will disclose to affected Members any reasons for which
      their selection or change in Primary Care Physician could not be made.

6.9.13            MEMBER COMPLAINT/GRIEVANCE SYSTEM

      Contractor will implement and maintain a Member complaint/Grievance system
      in accordance with Title 10, CCR, Section 1300.68, except subsection
      1300.68(g), and Title 22, CCR, Sections 53200 and 53260.

      A.  Contractor will acknowledge receipt of a complaint within 5 days. The
          written acknowledgement will also notify the complainant of a person
          at the plan who may be contacted regarding the complaint. The
          Contractor will resolve the complaint within 30 days.

6.9.14            DISENROLLMENTS

      Contractor will implement and maintain procedures to ensure that requests
      for Disenrollments made under the following circumstances are referred to
      the county Enrollment Contractor immediately and are not processed through
      the Grievance process:

                                       110

<PAGE>

Molina Medical Centers                                                  95-23637
                                                                      Article VI

      A.  The Member's eligibility as a Medi-Cal beneficiary for Enrollment in
          the plan is terminated.

      B.  The Enrollment is in violation of Sections 53400 or 53402.

      C.  The request for Disenrollment is pursuant to Section 53508.

      D.  Change of a Member's place of residence outside the plan's Service
          Area.

6.9.15            DENIAL, DEFERRAL, OR MODIFICATION OF PRIOR AUTHORIZATION
                  REQUESTS

      A.  Contractor will notify Members of denial, deferral, or modification of
          requests for Prior Authorization, in accordance with Title 22, CCR,
          Sections 51014.1 and 53261 by providing written notification to
          Members and/or their authorized representative, regarding any denial,
          deferral or modification of a request for approval to provide a health
          care service. This notification must be provided as specified in Title
          22, CCR, Sections 51014.1 and 53261, when all of the following
          conditions exists:

          1.      The request is made by a health care provider who has a formal
                  arrangement with the Contractor to provide services to
                  Medi-Cal Members.

          2.      The request is made by the provider through the formal Prior
                  Authorization procedures operated by the Contractor.

          3.      The service for which Prior Authorization is requested is a
                  Medi-Cal Covered Service for which the Contractor has
                  established a Prior Authorization requirement.

          4.      The Prior Authorization decision is being made at the ultimate
                  level of responsibility within the Contractor's organization
                  for approving, denying, deferring or modifying the service
                  requested but prior to the point at which the Member must
                  initiate the Contractor's complaint/Grievance procedure.

      B.  Contractor will provide for a written notification to the Member and
          the Member's representative on a standardized form approved by DHS,
          informing the Member of all the following:

          1.      The Member's right to, and method of obtaining, a fair hearing
                  to contest the denial, deferral or modification action.

                                       111

<PAGE>

Molina Medical Centers                                                  95-23637
                                                                      Article VI

          2.      The Member's right to represent himself/herself at the fair
                  hearing or to be represented by legal counsel, friend or other
                  spokesperson.

          3.      The name and address of the Contractor and the State toll-free
                  telephone number for obtaining information on legal service
                  organizations for representation.

      C.  The notice to the Member may inform the Member that the Member may
          file a complaint/Grievance concerning the Contractor's action using
          the Contractor's complaint/Grievance process prior to or concurrent
          with the initiation of the fair hearing process.

      D.  The Contractor will provide required notification to beneficiaries and
          the representatives in accordance with the time frames set forth in
          Title 22, CCR, Sections 51014.1 and 53261.

6.10              CULTURAL AND LINGUISTIC SERVICES REQUIREMENTS

6.10.1                 CIVIL RIGHTS ACT OF 1964

          The Contractor will ensure compliance with Title 6 of the Civil Rights
          Act of 1964 (42 U.S.C. Section 2000d, 45 C.F.R. Part 80) which
          prohibits recipients of federal financial assistance from
          discriminating against persons based on race, color, or national
          origin.

          The Contractor will provide 24 hour access to interpreter services for
          all Members at all provider sites within the Contractor's network
          either through telephone language services or interpreters.

6.10.2                 LINGUISTIC SERVICES

          The Contractor will provide linguistic services to a population group
          of mandatory Medi-Cal eligibles residing in the proposed Service Area
          who indicate their primary language as other than English and who meet
          a numeric threshold of 3,000, or a population group of mandatory
          Medi-Cal eligibles residing in the proposed Service Area who indicate
          their primary language as other than English and who meet the
          concentration standards of 1,000 in a single ZIP code or 1,500 in two
          contiguous ZIP codes.

          The Contractor will provide the following services to those Member
          groups at these key points of contact:

                                       112

<PAGE>

Molina Medical Centers                                                  95-23637
                                                                      Article VI

      A.  Key Points of Contact

          1.      Medical: Advice and Urgent Care telephone, face to face
                   Encounters with providers.

          2.      Non-medical: membership services, orientations, and
                   appointments.

      B.  Types of Services

          1.      Interpreters.

          2.      Translated signage.

          3.      Translated written materials.

          4.      Referrals to culturally and linguistically appropriate
                  community services programs.

6.10.3            LINGUISTIC CAPABILITY OF EMPLOYEES

      The Contractor will assess, identify and report the linguistic capability
      of interpreters or bilingual employed and contracted staff (clinical and
      non-clinical).

6.10.4            SUBCONTRACTS

      The Contractor will document in the Subcontracts with Traditional and
      Safety-Net providers the linguistic services to be provided and the
      individuals who will provide the linguistic services to Members within the
      proposed Service Area.

6.10.5            COMMUNITY ADVISORY COMMITTEE

      Contractor will implement and maintain community linkages through the
      formation of a Community Advisory Committee (CAC) with demonstrated
      participation of consumers, community advocates, and Traditional and
      Safety-Net providers. The Contractor will ensure that the committee
      responsibilities include advisement on educational and operational issues
      affecting groups who speak a primary language other than English and
      cultural competency.

                                       113

<PAGE>

Molina Medical Centers                                                  95-23637
                                                                      Article VI

6.10.6            CULTURAL AND LINGUISTIC SERVICES PLAN

      Contractor will ensure that a group needs assessment is conducted to
      identify the linguistic and cultural needs of the groups who speak a
      primary language other than English. The findings of the assessment will
      be submitted to DHS in the form of a plan entitled "Cultural and
      Linguistic Services Plan" at the end of the first year of operations. In
      the plan, the Contractor will summarize the methodology, findings, and
      outline the proposed services to be implemented, the timeline for
      implementation with milestones, and the responsible individual. The
      Contractor will ensure implementation of the Cultural and Linguistic
      Services Plan within six months after the beginning of year two of
      operations. The Contractor will also identify the individual with overall
      responsibility for the activities to be conducted under the plan. DHS
      approval of the plan is required prior to its implementation.

6.10.7            IMPLEMENTATION PLAN

      If a Contractor does not comply with all of the Cultural and Linguistic
      Services requirements in Sections 6.10 through 6.10.9 upon implementation
      of the Contract, the Contractor will comply with the threshold
      requirements in Sections 6.10.1, 6.10.2, 6.10.2-A through 6.10.2-B(1),
      6.10.2-B(4), 6.10.4 and 6.10.7 for the provision of oral interpretation
      services to the groups who speak a primary language other than English
      meeting the thresholds.

      The Contractor will submit for DHS approval a proposed workplan for
      meeting the full scope of requirements. In the workplan, the Contractor
      will include a description of the required activities, a timeline with
      milestones, and identify the individuals responsible for the activity. The
      Contractor will identify the individual with overall responsibility and
      ensure that the activities identified in the workplan approved by DHS will
      be fully operational within six months of the beginning of year two of
      operations under the Contract. The Contractor will entitle the workplan
      "Cultural and Linguistic Services: Proposed Activities".

6.10.8            STANDARDS AND PERFORMANCE REQUIREMENTS

      Contractor will develop and implement standards and performance
      requirements for the provision of linguistic services, and will monitor
      the performance of the individuals who provide linguistic services.

                                       114

<PAGE>

Molina Medical Centers                                                  95-23637
                                                                      Article VI

6.10.9            INTERPRETER COORDINATION

      Contractor will develop and implement standards for appointment scheduling
      and a system for coordinating interpreters, to ensure continuity in the
      assignment of interpreters to Members when follow-up care is required.

6.11          IMPLEMENTATION PLANS

6.11.1            TIME FRAMES

      The Contractor will submit deliverables within the timeframes specified on
      the Implementation Plan approved by DHS. Compliance with the schedule is
      mandatory unless otherwise approved by DHS. (See Article III, Section
      3.19, Liquidated Damages Provisions). Unless otherwise specified, all
      completion dates listed for the deliverables are calculated from the
      Contract effective date.

6.11.2            IMPLEMENTATION PLAN OVERSIGHT

      The Contractor will identify a single individual to be responsible for
      oversight of the Implementation Plan.

6.11.3            MONTHLY PROGRESS REPORTS

      The Contractor will submit monthly written progress reports to DHS at the
      request of DHS.

      The progress reports will contain the following:

      A.      Any discrepancies with the Implementation Plan.

      B.      Activity number and name the Contractor assigns to each
              deliverable/milestone.

      C.      Description of current activities that have taken place toward
              achieving the deliverable/milestone.

      D.      Summary of activities yet to be accomplished toward completion of
              the deliverable/milestone.

      E.      Due date in the Implementation Plan.

      F.      Current estimated due date.

                                       115

<PAGE>

Molina Medical Centers                                                  95-23637
                                                                      Article VI

      G.  If the estimated due date in later than the Implementation Plan due
          date, then:

          1.  Identify reasons why the activity is not on schedule, and

          2.  Identify actions the Contractor is taking to remedy the activity
              and meet the due date.

                                       116

<PAGE>

Molina Medical Centers                                        Attachment I
                                                              95-23637

Plan Name:    Mainstream                              Base Period:  CY '93
Plan Number:                                          Rate Period:   7/95 - 5/96
County:       San Bernardino
                                              Capitation Payable: End of Month
Aid Code:     Family

<TABLE>
<CAPTION>
                                                       Phys     Pharm        HIP       HOP        LTC      Other      Total
<S>                                                <C>        <C>       <C>        <C>       <C>        <C>        <C>
              Units per 1,000 eligibles               3.816     4.223       .370     2.232       .000      3.330
              Age/sex Adjustment                      1.026      .997      1.040     1.019      1.000      1.010
              Aid Code Adjustment                      .989      .990       .985      .995      1.000       .976
                        Adjusted Units                3.872     4.168       .379     2.263       .000      3.283
              Average Cost Per Unit                   71.93     14.73     880.94     21.79     369.03      28.02
              Area Adjustment                         1.013     1.000      1.000     1.000      1.000      1.000
                        Adjusted Cost              $  72.87   $ 14.73   $ 880.94   $ 21.79   $ 369.03   $  28.02
              Interest Adjustment                      .997     1.000       .994      .997       .997       .997
              Contract Cost per Eligible           $ 281.31   $ 61.39   $ 331.87   $ 49.16   $    .00   $  91.71   $ 815.44

              Benefit Adjustments
                        FY 94/95                      1.003      .852      1.030     1.003      1.042      1.013
                        FY 95/96                      1.000      .724      1.018     1.000      1.020       .975
              Trend Adjustment 7/93 - 1/96            1.027     1.220      1.043      .945      1.000      1.317          *

Annual Cost Per Eligible                           $ 289.77   $ 46.20   $ 362.94   $ 46.60   $    .00   $ 119.42   $ 864.93

Mental Health Adjustment                                1.4%       .0%       6.6%      5.0%       1.5%       4.5%
Eyewear Adjustment                                                                                           1.5%
Cost Excluding Mental Health                       $ 285.71   $ 46.20   $ 338.99   $ 44.27   $    .00   $ 112.34   $ 827.51

Preliminary Monthly Rate                                                                                           $  68.96

Adj. for Fee-for-Service Limitation                              -2.0%                                             $  -1.38

CHDP                                                                                                                   2.43

Final Rate                                                                                                         $  70.01
</TABLE>

                                        1

<PAGE>

                                                              Attachment I

Plan Name:    Mainstream                              Base Period:  CY '93
Plan Number:                                          Rate Period:   7/95 - 5/96
County:       San Bernardino
                                              Capitation Payable: End of Month
Aid Code:     Child

<TABLE>
<CAPTION>
                                                       Phys     Pharm        HIP       HOP        LTC      Other      Total
<S>                                                <C>        <C>       <C>        <C>       <C>        <C>        <C>
              Units per 1,000 eligibles               3.791     3.907       .361     1.620       .000      1.882
              Age/sex Adjustment                      1.184     1.019      1.227     1.087      1.000      1.109
              Aid Code Adjustment                     1.011      .993      1.025     1.010      1.000       .998
                        Adjusted Units                4.538     3.953       .454     1.779       .000      2.083
              Average Cost Per Unit                   69.47     11.05     901.25     22.20        .00      40.13
              Area Adjustment                         1.013     1.000      1.000     1.000      1.000      1.000
                        Adjusted Cost              $  70.37   $ 11.05   $ 901.25   $ 22.20   $    .00   $  40.13
              Interest Adjustment                      .996      .999       .990      .994       .998       .995
              Contract Cost per Eligible           $ 318.06   $ 43.64   $ 405.08   $ 39.26   $    .00   $  83.17   $ 889.21

              Benefit Adjustments
                        FY 94/95                      1.003      .852      1.031     1.003      1.042      1.001
                        FY 95/96                      1.000      .724      1.018     1.000      1.020       .976
              Trend Adjustment 7/93 - 1/96            1.040     1.238       .853      .906      1.000      1.210

Annual Cost Per Eligible                           $ 331.77   $ 33.33   $ 362.66   $ 35.68   $    .00   $  98.32   $ 861.76

Mental Health Adjustment                                1.6%       .0%      13.4%      2.9%       3.4%       3.6%
Eyewear Adjustment                                                                                            .9%
Cost Excluding Mental Health                       $ 326.46   $ 33.33   $ 314.06   $ 34.65   $    .00   $  93.93   $ 802.43

Preliminary Monthly Rate                                                                                           $  66.87

Adj. for Fee-for-Service Limitation                              -2.0%                                             $  -1.34

CHDP                                                                                                                   2.38

Final Rate                                                                                                         $  67.91
</TABLE>

                                        2

<PAGE>

                                                              Attachment I

Plan Name:    Mainstream                              Base Period:  CY '93
Plan Number:                                          Rate Period:   7/95 - 5/96
County:       San Bernardino
                                              Capitation Payable: End of Month
Aid Code:     Aged

<TABLE>
<CAPTION>
                                                     Phys       Pharm        HIP       HOP        LTC      Other        Total
<S>                                              <C>        <C>         <C>        <C>       <C>        <C>        <C>
              Units per 1,000 eligibles             4.280      19.624      1.476     1.310      2.880     14.314
              Age/sex Adjustment                     .986       1.004       .995      .987      1.031      1.005
              Aid Code Adjustment                    .936       1.021       .968      .931      1.007      1.016
                        Adjusted Units              3.950      20.116      1.422     1.204      2.990     14.616
              Average Cost Per Unit                 44.28       28.65     265.64     16.35      76.99       6.95
              Area Adjustment                       1.013       1.000      1.000     1.000      1.000      1.000
                        Adjusted Cost            $  44.86   $   28.65   $ 265.64   $ 16.35   $  76.99   $   6.95
              Interest Adjustment                    .994       1.000       .990      .991       .998       .996
              Contract Cost per Eligible         $ 176.13   $  576.32   $ 373.96   $ 19.51   $ 229.74   $ 101.17   $ 1,476.83

              Benefit Adjustments
                        FY 94/95                    1.003        .852      1.036     1.003      1.042      1.001
                        FY 95/96                    1.000        .724      1.018     1.000      1.020      1.000
              Trend Adjustment 7/93 - 1/96          1.347       1.194       .925     1.091      1.054      1.404

Annual Cost Per Eligible                         $ 237.96   $  424.47   $ 364.82   $ 21.35   $ 257.36   $ 142.18   $ 1,448.14

Mental Health Adjustment                               .3%         .0%        .7%       .9%        .4%        .0%
Eyewear Adjustment                                                                                           2.1%
Cost Excluding Mental Health                     $ 237.25   $  424.47   $ 362.27   $ 21.16   $ 256.33   $ 139.19   $ 1,440.67

Preliminary Monthly Rate                                                                                           $   120.06

Adj. for Fee-for-Service Limitation                              -2.0%                                             $    -2.40

CHDP                                                                                                                      .00

Final Rate                                                                                                         $   117.66
</TABLE>

                                        3

<PAGE>

                                                              Attachment I

Plan Name:    Mainstream                              Base Period:  CY '93
Plan Number:                                          Rate Period:   7/95 - 5/96
County:       San Bernardino
                                              Capitation Payable: End of Month
Aid Code:     Disabled

<TABLE>
<CAPTION>
                                                     Phys       Pharm        HIP       HOP        LTC      Other        Total
<S>                                              <C>        <C>         <C>        <C>       <C>        <C>        <C>
              Units per 1,000 eligibles             7.452      23.494      1.498     4.212      1.440     28.577
              Age/sex Adjustment                    1.005        .979       .990     1.001      1.011      1.008
              Aid Code Adjustment                    .994       1.003       .983      .993       .999      1.004
                        Adjusted Units              7.444      23.070      1.458     4.229      1.454     28.921
              Average Cost Per Unit                 43.31       32.19     511.29     18.05     108.27      10.65
              Area Adjustment                       1.013       1.000      1.000     1.000      1.000      1.000
                        Adjusted Cost            $  43.87   $   32.19   $ 511.29   $ 18.05   $ 108.27   $  10.65
              Interest Adjustment                    .995        .999       .991      .993       .999       .996
              Contract Cost per Eligible         $ 324.94   $  741.88   $ 738.75   $ 75.80   $ 157.27   $ 306.78   $ 2,345.42

              Benefit Adjustments
                        FY 94/95                    1.003        .852      1.036     1.003      1.042      1.001
                        FY 95/96                    1.000        .724      1.018     1.000      1.020      1.000
              Trend Adjustment 7/93 - 1/96          1.115       1.190       .986     1.047       .992      1.233

Annual Cost Per Eligible                         $ 363.40   $  544.58   $ 768.21   $ 79.60   $ 165.82   $ 378.64   $ 2,300.25

Mental Health Adjustment                              7.8%         .0%      11.7%      2.4%       1.3%       1.4%
Eyewear Adjustment                                                                                            .9%
Cost Excluding Mental Health                     $ 335.05   $  544.58   $ 678.33   $ 77.69   $ 163.66   $ 369.98   $ 2,169.29

Preliminary Monthly Rate                                                                                           $   180.77

Adj. for Fee-for-Service Limitation                              -2.0%                                             $    -3.62

CHDP                                                                                                                      .00

Final Rate                                                                                                         $   177.15
</TABLE>

                                        4

<PAGE>

                                                              Attachment I

Plan Name:    Mainstream                              Base Period:  CY '93
Plan Number:                                          Rate Period:   7/95 - 5/96
County:       San Bernardino
                                              Capitation Payable: End of Month
Aid Code:     Adult

<TABLE>
<CAPTION>
                                                     Phys       Pharm          HIP         HOP       LTC        Other        Total
<S>                                            <C>          <C>         <C>          <C>         <C>       <C>          <C>
              Units per 1,000 eligibles            22.752       5.069        3.590       4.465      .000       20.412
              Age/sex Adjustment                    1.000       1.000        1.000       1.000     1.000        1.000
              Aid Code Adjustment                   1.000       1.000        1.000       1.000     1.000        1.000
                        Adjusted Units             22.752       5.069        3.590       4.465      .000       20.412
              Average Cost Per Unit                 59.80       16.00       960.30       20.51       .00        43.66
              Area Adjustment                       1.013       1.000        1.000       1.000     1.000        1.000
                        Adjusted Cost          $    60.58   $   16.00   $   960.30   $   20.51   $   .00   $    43.66
              Interest Adjustment                    .996        .999         .995        .993      .996         .995
              Contract Cost per Eligible       $ 1,372.80   $   81.02   $ 3,430.24   $   90.94   $   .00   $   886.73   $ 5,861.73

              Benefit Adjustments
                        FY 94/95                    1.003        .852        1.035       1.003     1.042        1.013
                        FY 95/96                    1.000        .724        1.018       1.000     1.020        1.000
              Trend Adjustment 7/93 - 1/96          1.076       1.020        1.086       1.122     1.000        1.139

Annual Cost Per Eligible                       $ 1,481.56   $   50.98   $ 3,925.30   $  102.34   $   .00   $ 1,023.12   $ 6,583.03

Mental Health Adjustment                               .1%         .0%          .3%        1.1%       .0%          .1%
Eyewear Adjustment                                                                                                 .4%
Cost Excluding Mental Health                   $ 1,480.08   $   50.98   $ 3,913.25   $  101.21   $   .00   $ 1,018.01   $ 6,563.53

Preliminary Monthly Rate                                                                                                $   546.96

Adj. for Fee-for-Service Limitation                              -2.0%                                                  $   -10.94

CHDP                                                                                                                           .00

Final Rate                                                                                                              $   536.02
</TABLE>

                                        5

<PAGE>

                                                              Attachment I

Plan Name:    Mainstream                              Base Period:  CY '93
Plan Number:                                          Rate Period:   6/96 - 9/97
County:       San Bernardino
                                              Capitation Payable: End of Month
Aid Code:     Family

<TABLE>
<CAPTION>
                                                    Phys       Pharm          HIP         HOP         LTC        Other        Total
<S>                                           <C>          <C>         <C>          <C>         <C>         <C>          <C>
              Units per 1,000 eligibles            3.816       4.223         .370       2.232        .000        3.330
              Age/sex Adjustment                   1.026        .997        1.040       1.019       1.000        1.010
              Aid Code Adjustment                   .989        .990         .985        .995       1.000         .976
                        Adjusted Units             3.872       4.168         .379       2.263        .000        3.283
              Average Cost Per Unit                71.93       14.73       880.94       21.79      369.03        28.02
              Area Adjustment                      1.013       1.000        1.000       1.000       1.000        1.000
                        Adjusted Cost         $    72.87   $   14.73   $   800.94   $   21.79   $  369.03   $    28.02
              Interest Adjustment                   .997       1.000         .994        .997        .997         .997
              Contract Cost per Eligible      $   281.31   $   61.39   $   331.87   $   49.16   $     .00   $    91.71   $   815.44

              Benefit Adjustments
                        FY 94/95                   1.003        .852        1.030       1.003       1.042        1.013
                        FY 95/96                   1.000        .724        1.018       1.000       1.020         .976
              Trend Adjustment 7/93 - 1/97         1.036       1.313        1.060        .925       1.000        1.454

Annual Cost Per Eligible                      $   292.31   $   49.72   $   368.86   $   45.61   $     .00   $   131.84   $   888.34

Mental Health Adjustment                             1.4%        6.0%         6.6%        5.0%        l.5%         4.5%
Eyewear Adjustment                                                                                                 1.5%
Cost Excluding Mental Health                  $   288.22   $   46.74   $   344.52   $   43.33   $     .00   $   124.02   $   846.83

Preliminary Monthly Rate                                                                                                 $    70.57

Adj. for Fee-for-Service Limitation                             -2.0%                                                    $    -1.41

CHDP                                                                                                                           2.43

Final Rate                                                                                                               $    71.59
</TABLE>

                                        6

<PAGE>

                                                                    Attachment I

Plan Name:    Mainstream                            Base Period:  CY '93
Plan Number:                                        Rate Period:   6/96 - 9/97
County:       San Bernardino
                                              Capitation Payable: End of Month
Aid Code:     Child

<TABLE>
<CAPTION>
                                                    Phys       Pharm          HIP         HOP         LTC        Other        Total
<S>                                           <C>          <C>         <C>          <C>         <C>         <C>          <C>
              Units per 1,000 eligibles            3.791       3.907         .361       1.620        .000        1.882
              Age/sex Adjustment                   1.184       1.019        1.227       1.087       1.000        1.109
              Aid Code Adjustment                  1.011        .993        1.025       1.010       1.000         .998
                        Adjusted Units             4.538       3.953         .454       1.779        .000        2.083
              Average Cost Per Unit                69.47       11.05       901.25       22.20         .00        40.13
              Area Adjustment                      1.013       1.000        1.000       1.000       1.000        1.000
                        Adjusted Cost         $    70.37   $   11.05   $   901.25   $   22.20   $     .00   $    40.13
              Interest Adjustment                   .996        .999         .990        .994        .998         .995
              Contract Cost per Eligible      $   318.06   $   43.64   $   405.08   $   39.26   $     .00   $    83.17   $   889.21

              Benefit Adjustments
                        FY 94/95                   1.003        .852        1.031       1.003       1.042        1.001
                        FY 95/96                   1.000        .724        1,018       1.000       1.020         .976
              Trend Adjustment 7/93 - 1/97         1.047       1.330         .807        .878       1.000        1.285

Annual Cost Per Eligible                      $   334.01   $   35.80   $   343.10   $   34.57   $     .00   $   104.41   $   851.89

Mental Health Adjustment                             1.6%        4.6%        13.4%        2.9%        3.4%         3.6%
Eyewear Adjustment                                                                                                  .9%
Cost Excluding Mental Health                  $   328.67   $   34.15   $   297.12   $   33.57   $     .00   $    99.75   $   793.26

Preliminary Monthly Rate                                                                                                 $    66.11

Adj. for Fee-for-Service Limitation                             -2.0%                                                    $    -1.32

CHDP                                                                                                                           2.38

Final Rate                                                                                                               $    67.17
</TABLE>

                                        7

<PAGE>

                                                                    Attachment I

Plan Name:    Mainstream                            Base Period:  CY '93
Plan Number:                                        Rate Period:   6/96 - 9/97
County:       San Bernardino
                                              Capitation Payable: End of Month
Aid Code:     Aged

<TABLE>
<CAPTION>
                                                    Phys       Pharm          HIP         HOP         LTC        Other        Total
<S>                                           <C>          <C>         <C>          <C>         <C>         <C>          <C>
              Units per 1,000 eligibles            4.280      19.624        1.476       1.310       2.880       14.314
              Age/sex Adjustment                    .986       1.004         .995        .987       1.031        1.005
              Aid Code Adjustment                   .936       1.021         .968        .931       1.007        1.016
                        Adjusted Units             3.950      20.116        1.422       1.204       2.990       14.616
              Average Cost Per Unit                44.28       28.65       265.64       16.35       76.99         6.95
              Area Adjustment                      1.013       1.000        1.000       1.000       1.000        1.000
                        Adjusted Cost         $    44.86   $   28.65   $   265.64   $   16.35   $   76.99   $     6.95
              Interest Adjustment                   .994       1.000         .990        .991        .998         .996
              Contract Cost per Eligible      $   176.13   $  576.32   $   373.96   $   19.51   $  229.74   $   101.17   $ 1,476.83

              Benefit Adjustments
                        FY 94/95                   1.003        .852        1.036       1.003       1.042        1.001
                        FY 95/96                   1.000        .724        1.018       1.000       1.020        1.000
              Trend Adjustment 7/93 - 1/97         1.486       1.278         .896       1.127       1.075        1.565

Annual Cost Per Eligible                      $   262.51   $  454.33   $   353.38   $   22.05   $  262.49   $   158.49   $ 1,513.25

Mental Health Adjustment                              .3%        3.2%          .7%         .9%         .4%          .0%
Eyewear Adjustment                                                                                                 2.1%
Cost Excluding Mental Health                  $   261.72   $  439.79   $   350.91   $   21.85   $  261.44   $   155.16   $ 1,490.87

Preliminary Monthly Rate                                                                                                 $   124.24

Adj. for Fee-for-Service Limitation                             -2.0%                                                    $    -2.48

CHDP                                                                                                                            .00

Final Rate                                                                                                               $   121.76
</TABLE>

                                        8

<PAGE>

                                                                    Attachment I

Plan Name:    Mainstream                            Base Period:  CY '93
Plan Number:                                        Rate Period:   6/96 - 9/97
County:       San Bernardino
                                              Capitation Payable: End of Month
Aid Code:     Disabled

<TABLE>
<CAPTION>
                                                    Phys       Pharm          HIP         HOP         LTC        Other        Total
<S>                                           <C>          <C>         <C>          <C>         <C>         <C>          <C>
              Units per 1,000 eligibles            7.452      23.494        1.498       4.212       1.440       28.577
              Age/sex Adjustment                   1.005        .979         .990       1.011       1.011        1.008
              Aid Code Adjustment                   .994       1.003         .983        .993        .999        1.004
                        Adjusted Units             7.444      23.070        1.458       4.229       1.454       28.921
              Average Cost Per Unit                43.31       32.19       511.29       18.05      108.27        10.65
              Area Adjustment                      1.013       1.000        1.000       1.000       1.000        1.000
                        Adjusted Cost         $    43.87   $   32.19   $   511.29   $   18.05   $  108.27   $    10.65
              Interest Adjustment                   .995        .999         .991        .993        .999         .996
              Contract Cost per Eligible      $   324.94   $  741.88   $   738.75   $   75.80   $  157.27   $   306.78   $ 2,345.42

              Benefit Adjustments
                        FY 94/95                   1.003        .852        1.036       1.003       1.042        1.001
                        FY 95/96                   1.000        .724        1.018       1.000       1.020        1.000
              Trend Adjustment 7/93 - 1/97         1.160       1.270         .981       1.065        .991        1.327

Annual Cost Per Eligible                      $   378.06   $  581.19   $   764.32   $   80.97   $  165.65   $   407.50   $ 2,377.69

Mental Health Adjustment                             7.8%       18.8%        11.7%        2.4%        1.3%         1.4%
Eyewear Adjustment                                                                                                  .9%
Cost Excluding Mental Health                  $   348.57   $  471.93   $   674.89   $   79.03   $  163.50   $   398.18   $ 2,136.10

Preliminary Monthly Rate                                                                                                 $   178.01

Adj. for Fee-for-Service Limitation                             -2.0%                                                    $    -3.56

CHDP                                                                                                                            .00

Final Rate                                                                                                               $   174.45
</TABLE>

                                        9

<PAGE>

                                                                    Attachment I

Plan Name:    Mainstream                            Base Period:  CY '93
Plan Number:                                        Rate Period:   6/96 - 9/97
County:       San Bernardino
                                              Capitation Payable: End of Month
Aid Code:     Adult

<TABLE>
<CAPTION>
                                                    Phys       Pharm          HIP         HOP         LTC        Other        Total
<S>                                           <C>          <C>         <C>          <C>         <C>         <C>          <C>
              Units per 1,000 eligibles           22.752       5.069        3.590       4.465        .000       20.412
              Age/sex Adjustment                   1.000       1.000        1.000       1.000       1.000        1.000
              Aid Code Adjustment                  1.000       1.000        1.000       1.000       1.000        1.000
                        Adjusted Units            22.752       5.069        3.590       4.465        .000       20.412
              Average Cost Per Unit                59.80       16.00       960.30       20.51         .00        43.66
              Area Adjustment                      1.013       1.000        1.000       1.000       1.000        1.000
                        Adjusted Cost         $    60.58   $   16.00   $   960.30   $   20.51   $     .00   $    43.66
              Interest Adjustment                   .996        .999         .995        .993        .996         .995
              Contract Cost per Eligible      $ 1,372.80   $   81.02   $ 3,430.24   $   90.94   $     .00   $   886.73   $ 5,861.73

              Benefit Adjustments
                        FY 94/95                   1.003        .852        1.035       1.003       1.042        1.013
                        FY 95/96                   1.000        .724        1.018       1.000       1.020        1.000
              Trend Adjustment 7/93 - 1/97         1.099       1.023        1.126       1.169       1.000        1.195

Annual Cost Per Eligible                      $ 1,513.23   $   51.13   $ 4,069.59   $  106.63   $     .00   $ 1,073.42   $ 6,814.00

Mental Health Adjustment                              .1%        2.2%          .3%        1.1%         .0%          .1%
Eyewear Adjustment                                                                                                  .4%
Cost Excluding Mental Health                  $ 1,511.72   $   50.01   $ 4,057.38   $  105.46   $     .00   $ 1,068.06   $ 6,792.63

Preliminary Monthly Rate                                                                                                 $   566.05

Adj. for Fee-for-Service Limitation                             -2.0%                                                    $   -11.32

CHDP                                                                                                                            .00

Final Rate                                                                                                               $   554.73
</TABLE>

                                       10

<PAGE>

                                                                    Attachment I

Plan Name:    Mainstream                            Base Period:  CY '93
Plan Number:                                        Rate Period:   7/95 - 5/96
County:       Riverside
                                              Capitation Payable: End of Month
Aid Code:     Family

<TABLE>
<CAPTION>
                                                    Phys       Pharm          HIP         HOP         LTC        Other        Total
<S>                                           <C>          <C>         <C>          <C>         <C>         <C>          <C>
              Units per 1,000 eligibles            3.816       4.223         .370       2.232        .000        3.330
              Age/sex Adjustment                   1.062        .994        1.094       1.032       1.000        1.021
              Aid Code Adjustment                  1.029        .998        1.098       1.042       1.000        1.020
                        Adjusted Units             4.170       4.189         .444       2.400        .000        3.468
              Average Cost Per Unit                71.93       14.73       828.49       21.79      369.03        28.02
              Area Adjustment                       .986       1.000        1.000       1.000       1.000        1.000
                        Adjusted Cost         $    70.92   $   14.73   $   828.49   $   21.79   $  369.03   $    28.02
              Interest Adjustment                   .997       1.000         .994        .997        .997         .997
              Contract Cost per Eligible      $   294.85   $   61.70   $   365.64   $   52.14   $     .00   $    96.88   $   871.21

              Benefit Adjustments
                        FY 94/95                   1.003        .852        1.030       1.003       1.042        1.013
                        FY 95/96                   1.000        .724        1.018       1.000       1.020         .976
              Trend Adjustment 7/93 - 1/96         1.027       1.220        1.043        .945       1.000        1.317

Annual Cost Per Eligible                      $   303.72   $   46.43   $   399.87   $   49.42   $     .00   $   126.15   $   925.59

Mental Health Adjustment                             1.4%         .0%         6.6%        5.0%        1.5%         4.5%
Eyewear Adjustment                                                                                                 1.5%
Cost Excluding Mental Health                  $   299.47   $   46.43   $   373.48   $   46.95   $     .00   $   118.67   $   885.00

Preliminary Monthly Rate                                                                                                 $    73.75

Adj. for Fee-for-Service Limitation                             -2.0%                                                    $    -1.48

CHDP                                                                                                                           2.43

Final Rate                                                                                                               $    74.70
</TABLE>

                                       11

<PAGE>

                                                                    Attachment I

Plan Name:    Mainstream                            Base Period:  CY '93
Plan Number:                                        Rate Period:   7/95 - 5/96
County:       Riverside
                                              Capitation Payable: End of Month
Aid Code:     Child

<TABLE>
<CAPTION>
                                                    Phys       Pharm          HIP         HOP         LTC        Other        Total
<S>                                           <C>          <C>         <C>          <C>         <C>         <C>          <C>
              Units per 1,000 eligibles            3.791       3.907         .361       1.620        .000        1.882
              Age/sex Adjustment                   1.193        .991        1.245       1.064       1.000        1.114
              Aid Code Adjustment                  1.020       1.035        1.048       1.013       1.000        1.025
                        Adjusted Units             4.613       4.007         .471       1.746        .000        2.149
              Average Cost Per Unit                69.47       11.05       890.67       22.20         .00        40.13
              Area Adjustment                       .986       1.000        1.000       1.000       1.000        1.000
                        Adjusted Cost         $    68.50   $   11.05   $   890.67   $   22.20   $     .00   $    40.13
              Interest Adjustment                   .996        .999         .990        .994        .998         .995
              Contract Cost per Eligible      $   314.73   $   44.23   $   415.31   $   38.53   $     .00   $    85.81   $   898.61

              Benefit Adjustments
                        FY 94/95                   1.003        .852        1.031       1.003       1.042        1.001
                        FY 95/96                   1.000        .724        1.018       1.000       1.020         .976
              Trend Adjustment 7/93 - 1/96         1.040       1.238         .853        .906       1.000        1.210

Annual Cost Per Eligible                      $   328.30   $   33.78   $   371.82   $   35.01   $     .00   $   101.44   $   870.35

Mental Health Adjustment                             1.6%         .0%        13.4%        2.9%        3.4%         3.6%
Eyewear Adjustment                                                                                                  .9%
Cost Excluding Mental Health                  $   323.05   $   33.78   $   322.00   $   33.99   $     .00   $    96.91   $   809.73

Preliminary Monthly Rate                                                                                                 $    67.48

Adj. for Fee-for-Service Limitation                             -2.0%                                                    $    -1.35

CHDP                                                                                                                           2.38

Final Rate                                                                                                               $    68.51
</TABLE>

                                       12

<PAGE>

                                                                    Attachment I

Plan Name:    Mainstream                            Base Period:  CY '93
Plan Number:                                        Rate Period:   7/95 - 5/96
County:       Riverside
                                              Capitation Payable: End of Month
Aid Code:     Aged

<TABLE>
<CAPTION>
                                                    Phys       Pharm          HIP         HOP         LTC        Other        Total
<S>                                           <C>          <C>         <C>          <C>         <C>         <C>          <C>
              Units per 1,000 eligibles            4.280      19.624        1.476       1.310       2.880       14.314
              Age/sex Adjustment                    .991       1.002        1.000        .991       1.034        1.006
              Aid Code Adjustment                   .941       1.015         .969        .932       1.004        1.003
                        Adjusted Onits             3.991      19.958        1.430       1.210       2.990       14.443
              Average Cost Per Unit                44.28       28.65       205.53       16.35       76.99         6.95
              Area Adjustment                       .986       1.000        1.000       1.000       1.000        1.000
                        Adjusted Cost         $    43.66   $   28.65   $   205.53   $   16.35   $   76.99   $     6.95
              Interest Adjustment                   .994       1.000         .990        .991        .998         .996
              Contract Cost per Eligible      $   173.20   $  571.80   $   290.97   $   19.61   $  229.74   $    99.98   $ 1,385.30

              Benefit Adjustments
                        FY 94/95                   1.003        .852        1.036       1.003       1.042        1.001
                        FY 95/96                   1.000        .724        1.018       1.000       1.020        1.000
              Trend Adjustment 7/93 - 1/96         1.347       1.194         .925       1.091       1.054        1.404

Annual Cost Per Eligible                      $   234.00   $  421.14   $   283.86   $   21.46   $  257.36   $   140.51   $ 1,358.33

Mental Health Adjustment                              .3%         .0%          .7%         .9%         .4%          .0%
Eyewear Adjustment                                                                                                 2.1%
Cost Excluding Mental Health                  $   233.30   $  421.14   $   281.87   $   21.27   $  256.33   $   137.56   $ 1.351.47

Preliminary Monthly Rate                                                                                                 $   112.62

Adj. for Fee-for-Service Limitation                             -2.0%                                                    $    -2.25

CHDP                                                                                                                            .00

Final Rate                                                                                                               $   110.37
</TABLE>

                                       13

<PAGE>

                                                                    Attachment I

Plan Name:    Mainstream                            Base Period:  CY '93
Plan Number:                                        Rate Period:   7/95 - 5/96
County:       Riverside
                                              Capitation Payable: End of Month
Aid Code:     Disabled

<TABLE>
<CAPTION>
                                                    Phys       Pharm          HIP         HOP         LTC        Other        Total
<S>                                           <C>          <C>         <C>          <C>         <C>         <C>          <C>
              Units per 1,000 eligibles            7.452      23.494        1.498       4.212       1.440       28.577
              Age/sex Adjustment                   1.003        .992         .992       1.003       1.012        1.005
              Aid Code Adjustment-                 1.002       1.003        1.018       1.006        .997        1.005
                        Adjusted Units             7.489      23.376        1.513       4.250       1.453       28.863
              Average Cost Per Unit                43.31       32.19       532.47       18.05      108.27        10.65
              Area Adjustment                       .986       1.000        1.000       1.000       1.000        1.000
                        Adjusted Cost         $    42.70   $   32.19   $   532.47   $   18.05   $  108.27   $    10.65
              Interest Adjustment                   .995        .999         .991        .993        .999         .996
              Contract Cost per Eligible      $   318.18   $  751.72   $   798.38   $   76.18   $  157.16   $   306.16   $ 2,407.78

              Benefit Adjustments
                        FY 94/95                   1.003        .852        1.036       1.003       1.042        1.001
                        FY 95/96                   1.000        .724        1.018       1.000       1.020        1.000
              Trend Adjustment 7/93 - 1/96         1.115       1.190         .986       1.047        .992        1.233

Annual Cost Per Eligible                      $   355.84   $  551.80   $   830.22   $   80.00   $  165.70   $   377.87   $ 2,361.43

Mental Health Adjustment                             7.8%         .0%        11.7%        2.4%        1.3%         1.4%
Eyewear Adjustment                                                                                                  .9%
Cost Excluding Mental Health                  $   328.08   $  551.80   $   733.08   $   78.08   $  163.55   $   369.23   $ 2,223.82

Preliminary Monthly Rate                                                                                                 $   185.32

Adj. for Fee-for-Service Limitation                             -2.0%                                                    $    -3.71

CHDP                                                                                                                            .00

Final Rate                                                                                                               $   181.61
</TABLE>

                                       14

<PAGE>

                                                                    Attachment I

Plan Name:    Mainstream                            Base Period:  CY '93
Plan Number:                                        Rate Period:   7/95 - 5/96
County:       Riverside
                                              Capitation Payable: End of Month
Aid Code:     Adult

<TABLE>
<CAPTION>
                                                    Phys       Pharm          HIP         HOP         LTC        Other        Total
<S>                                           <C>          <C>         <C>          <C>         <C>         <C>          <C>
              Units per 1,000 eligibles           22.752       5.069        3.590       4.465        .000       20.412
              Age/sex Adjustment                   1.000       1.000        1.000       1.000       1.000        1.000
              Aid Code Adjustment                  1.000       1.000        1.000       1.000       1.000        1.000
                        Adjusted Units            22.752       5.069        3.590       4.465        .000       20.412
              Average Cost Per Unit                59.80       16.00       840.07       20.51         .00        43.66
              Area Adjustment                       .986       1.000        1.000       1.000       1.000        1.000
                        Adjusted Cost         $    58.96   $   16.00   $   840.07   $   20.51   $     .00   $    43.66
              Interest Adjustment                   .996        .999         .995        .993        .996         .995
              Contract Cost per Eligible      $ 1,336.09   $   81.02   $ 3,000.77   $   90.94   $     .00   $   886.73   $ 5,395.55

              Benefit Adjustments
                        FY 94/95                   1.003        .852        1.035       1.003       1.042        1.013
                        FY 95/96                   1.000        .724        1.018       1.000       1.020        1.000
              Trend Adjustment 7/93 - 1/96         1.076       1.020        1.086       1.122       1.000        1.139

Annual Cost Per Eligible                      $ 1,441.95   $   50.98   $ 3,433.61   $  102.34   $     .00   $ 1,023.12   $ 6,052.00

Mental Health Adjustment                              .1%         .0%          .3%        1.1%         .0%          .1%
Eyewear Adjustment                                                                                                  .4%
Cost Excluding Mental Health                  $ 1.440.51   $   50.98   $ 3,423.31   $  101.21   $     .00   $ 1,018.01   $ 6,034.02

Preliminary Monthly Rate                                                                                                 $   502.84

Adj. for Fee-for-Service Limitation                             -2.0%                                                    $   -10.06

CHDP                                                                                                                            .00

Final Rate                                                                                                               $   492.78
</TABLE>

                                       15

<PAGE>

                                                                    Attachment I

Plan Name:    Mainstream                            Base Period:  CY '93
Plan Number:                                        Rate Period:   6/96 - 9/97
County:       Riverside
                                              Capitation Payable: End of Month
Aid Code:     Family

<TABLE>
<CAPTION>
                                                    Phys       Pharm          HIP         HOP         LTC        Other        Total
<S>                                           <C>          <C>         <C>          <C>         <C>         <C>          <C>
              Units per 1,000 eligibles            8.816       4.223         .370       2.232        .000        3.330
              Age/sex Adjustment                   1.062        .994        1.094       1.032       1.000        1.021
              Aid Code Adjustment                  1.029        .998        1.098       1.042       1.000        1.020
                        Adjusted Units             4.170       4.189         .444       2.400        .000        3.468
              Average Cost Per Unit                71.93       14.73       828.49       21.79      369.03        28.02
              Area Adjustment                       .986       1.000        1.000       1.000       1.000        1.000
                        Adjusted Cost         $    70.92   $   14.73   $   828.49   $   21.79   $  369.03   $    28.02
              Interest Adjustment                   .997       1.000         .994        .997        .997         .997
              Contract Cost per Eligible      $   294.85   $   61.70   $   365.64   $   52.14   $     .00   $    96.88   $   871.21

              Benefit Adjustments
                        FY 94/95                   1.003        .852        1.030       1.003       1.042        1.013
                        FY 95/96                   1.000        .724        1.018       1.000       1.020         .976
              Trend Adjustment 7/93 - 1/97         1.036       1.313        1.060        .925       1.000        1.454

Annual Cost Per Eligible                      $   306.38   $   49.97   $   406.39   $   48.37   $     .00   $   139.27   $   950.38

Mental Health Adjustment                             1.4%        6.0%         6.5%        5.0%        1.5%         4.5%
Eyewear Adjustment                                                                                                 1.5%
Cost Excluding Mental Health                  $   302.09   $   46.97   $   379.57   $   45.95   $     .00   $   131.01   $   905.59

Preliminary Monthly Rate                                                                                                 $    75.47

Adj. for Fee-for-Service Limitation                             -2.0%                                                    $    -1.51

CHDP                                                                                                                           2.43

Final Rate                                                                                                               $    76.39
</TABLE>

                                       16

<PAGE>

                                                                    Attachment I

Plan Name:    Mainstream                            Base Period:  CY '93
Plan Number:                                        Rate Period:   6/96 - 9/97
County:       Riverside
                                              Capitation Payable: End of Month
Aid Code:     Child

<TABLE>
<CAPTION>
                                                    Phys       Pharm          HIP         HOP         LTC        Other        Total
<S>                                           <C>          <C>         <C>          <C>         <C>         <C>          <C>
              Units per 1,000 eligibles            3.791       3.907         .361       1.620        .000        1.882
              Age/sex Adjustment                   1.193        .991        1.245       1.064       1.000        1.114
              Aid Code Adjustment                  1.020       1.035        1.048       1.013       1.000        1.025
                        Adjusted Units             4.613       4.007         .471       1.746        .000        2.149
              Average Cost Per Unit                69.47       11.05       890.67       22.20         .00        40.13
              Area Adjustment                       .986       1.000        1.000       1.000       1.000        1.000
                        Adjusted Cost         $    68.50   $   11.05   $   890.67   $   22.20   $     .00   $    40.13
              Interest Adjustment                   .996        .999         .990        .994        .998         .995
              Contract Cost per Eligible      $   314.73   $   44.23   $   415.31   $   38.53   $     .00   $    85.81   $   898.61

              Benefit Adjustments
                        FY 94/95                   1.003        .852        1.031       1.003       1.042        1.001
                        FY 95/96                   1.000        .724        1.018       1.000       1.020         .976
              Trend Adjustment 7/93 - 1/97         1.047       1.330         .807        .878       1.000        1.285

Annual Cost Per Eligible                      $   330.51   $   36.29   $   351.76   $   33.93   $     .00   $   107.73   $   860.22

Mental Health Adjustment                             1.6%        4.6%        13.4%        2.9%        3.4%         3.6%
Eyewear Adjustment                                                                                                  .9%
Cost Excluding Mental Health                  $   325.22   $   34.62   $   304.62   $   32.95   $     .00   $   102.92   $   800.33

Preliminary Monthly Rate                                                                                                 $    66.69

Adj. for Fee-for-Service Limitation                             -2.0%                                                    $    -1.33

CHDP                                                                                                                           2.38

Final Rate                                                                                                               $    67.74
</TABLE>

                                       17

<PAGE>

                                                                    Attachment I

Plan Name:    Mainstream                            Base Period:  CY '93
Plan Number:                                        Rate Period:   6/96 - 9/97
County:       Riverside
                                              Capitation Payable: End of Month
Aid Code:     Aged

<TABLE>
<CAPTION>
                                                    Phys       Pharm          HIP         HOP         LTC        Other        Total
<S>                                           <C>          <C>         <C>          <C>         <C>         <C>          <C>
              Units per 1.000 eligibles            4.280      19.624        1.476       1.310       2.880       14.314
              Age/sex Adjustment                    .991       1.002        1.000        .991       1.034        1.006
              Aid Code Adjustment                   .941       1.015         .969        .932       1.004        1.003
                        Adjusted Units             3.991      19.958        1.430       1.210       2.990       14.443
              Average Cost Per Unit                44.28       28.65       205.53       16.35       76.99         6.95
              Area Adjustment                       .986       1.000        1.000       1.000       1.000        1.000
                        Adjusted Cost         $    43.66   $   28.65   $   205.53   $   16.35   $   76.99   $     6.95
              Interest Adjustment                   .994       1.000         .990        .991        .998         .996
              Contract Cost per Eligible      $   173.20   $  571.80   $   290.97   $   19.61   $  229.74   $    99.98   $ 1,385.30

              Benefit Adjustments
                        FT 94/95                   1.003        .852        1.036       1.003       1.042        1.001
                        FY 95/96                   1.000        .724        1.018       1.000       1.020        1.000
              Trend Adjustment 7/93 - 1/97         1.486       1.278         .896       1.127       1.075        1.565

Annual Cost Per Eligible                      $   258.15   $  450.77   $   274.96   $   22.17   $  262.49   $   156.63   $ 1,425.17

Mental Health Adjustment                              .3%        3.2%          .7%         .9%         .4%          .0%
Eyewear Adjustment                                                                                                 2.1%
Cost Excluding Mental Health                  $   257.38   $  436.35   $   273.04   $   21.97   $  261.44   $   153.34   $ 1,403.52

Preliminary Monthly Rate                                                                                                 $   116.96

Adj. for Fee-for-Service Limitation                             -2.0%                                                    $    -2.34

CHDP                                                                                                                            .00

Final Rate                                                                                                               $   114.62
</TABLE>

                                       18

<PAGE>

                                                                    Attachment I

Plan Name:    Mainstream                            Base Period:  CY '93
Plan Number:                                        Rate Period:   6/96 - 9/97
County:       Riverside
                                              Capitation Payable: End of Month
Aid Code:     Disabled

<TABLE>
<CAPTION>
                                                    Phys       Pharm          HIP         HOP         LTC        Other        Total
<S>                                           <C>          <C>         <C>          <C>         <C>         <C>          <C>
              Units per 1,000 eligibles            7.452      23.494        1.498       4.212       1.440       28.577
              Age/sex Adjustment                   1.003        .992         .992       1.003       1.012        1.005
              Aid Code Adjustment                  1.002       1.003        1.018       1.006        .997        1.005
                        Adjusted Units             7.489      23.376        1.513       4.250       1.453       28.863
              Average Cost Per Unit                43.31       32.19       532.47       18.05      108.27        10.65
              Area Adjustment                       .986       1.000        1.000       1.000       1.000        1.000
                        Adjusted Cost         $    42.70   $   32.19   $   532.47   $   18.05   $  108.27   $    10.65
              Interest Adjustment                   .995        .999         .991        .993        .999         .996
              Contract Cost per Eligible      $   318.18   $  751.72   $   798.38   $   76.18   $  157.16   $   306.16   $ 2,407.78

              Benefit Adjustments
                        FY 94/95                   1.003        .852        1.036       1.003       1.042        1.001
                        FY 95/96                   1.000        .724        1.018       1.000       1.020        l.000
              Trend Adjustment 7/93 - 1/97         1.160       1.270         .981       1.065        .991        1.327

Annual Cost Per Eligible                      $   370.20   $  588.90   $   826.01   $   81.38   $  165.53   $   406.68   $ 2.438.70

Mental Health Adjustment                             7.8%       18.8%        11.7%        2.4%        1.3%         1.4%
Eyewear Adjustment                                                                                                  .9%
Cost Excluding Mental Health                  $   341.32   $  478.19   $   729.37   $   79.43   $  163.38   $   397.38   $ 2,189.07

Preliminary Monthly Rate                                                                                                 $   182.42

Adj. for Fee-for-Service Limitation                             -2.0%                                                    $    -3.65

CHDP                                                                                                                            .00

Final Rate                                                                                                               $   178.77
</TABLE>

                                       19

<PAGE>

                                                                    Attachment I

Plan Name:    Mainstream                            Base Period:  CY '93
Plan Number:                                        Rate Period:   6/96 - 9/97
County:       Riverside
                                              Capitation Payable: End of Month
Aid Code:     Adult

<TABLE>
<CAPTION>
                                                    Phys       Pharm          HIP         HOP         LTC        Other        Total
<S>                                           <C>          <C>         <C>          <C>         <C>         <C>          <C>
              Units per 1,000 eligibles           22.752   $   5.069        3.590       4.465        .000       20.412
              Age/sex Adjustment                   1.000       1.000        1.000       1.000       1.000        1.000
              Aid Code Adjustment                  1.000       1.000        1.000       1.000       1.000        1.000
                        Adjusted Units            22.752       5.069        3.590       4.465        .000       20.412
              Average Cost Per unit                59.80       16.00       840.07       20.51         .00        43.66
              Area Adjustment                       .986       1.000        1.000       1.000       1.000        1.000
                        Adjusted Cost         $    58.96   $   16.00   $   840.07   $   20.51   $     .00   $    43.66
              Interest Adjustment                   .996        .999         .995        .993        .996         .995
              Contract Cost per Eligible      $ 1,336.09   $   81.02   $ 3,000.77   $   90.94   $     .00   $   886.73   $ 5,395.55

              Benefit Adjustments
                        FY 94/95                   1.003        .852        1.035       1.003       1.042        1.013
                        FY 95/96                   1.000        .724        1.018       1.000       1.020        1.000
              Trend Adjustment 7/93 - 1/97         1.099       1.023        1.126       1.169       1.000        1.195

Annual Cost Per Eligible                      $ 1,472.77   $   51.13   $ 3,560.08   $  106.63   $     .00   $ 1,073.42   $ 6,264.03

Mental Health Adjustment                              .1%        2.2%          .3%        1.1%         .0%          .1%
Eyewear Adjustment                                                                                                  .4%
Cost Excluding Mental Health                  $ 1,471.30   $   50.01   $ 3,549.40   $  105.46   $     .00   $ 1,068.06   $ 6,244.23

Preliminary Monthly Rate                                                                                                 $   520.35

Adj. for Fee-for-Service Limitation                             -2.0%                                                    $   -10.41

CHDP                                                                                                                            .00

Final Rate                                                                                                               $   509.94
</TABLE>

                                       20

<PAGE>

STATE OF CALIFORNIA

STANDARD AGREEMENT -- APPROVED BY THE                CONTRACT NUMBER     AM. NO.
STD.2(REV.5-91)       ATTORNEY GENERAL               95-23637               01
                                                     TAXPAYER'S FEDERAL
                                                     EMPLOYER IDENTIFICATION NO.
                                                     33-0342719

THIS AGREEMENT, made and entered into this 30th day of May, 1997 in the State of
  California, by and between State of California, through its duly elected or
  appointed, qualified and acting

TITLE OF OFFICER ACTING FOR STATE      AGENCY
Chief, Program Support Branch          Department of Health Services,
                                       hereafter called the State, and
CONTRACTOR'S NAME
Molina Medical Centers, hereafter called the Contractor:

WTTNESSETH: That the Contractor for and in consideration of the covenants,
conditions, agreements, and stipulations of the State hereinafter express does
hereby agree to furnish to the State services and materials as follows: (Set
forth service to be rendered by Contractor, amount to be paid Contractor, time
for performance or completion, and attach plans and specifications, if any.)

      Amendment A01 to contract number 95-23637 between Molina Medical Centers
      and the State of California; and

      WHERE AS, the State of California and Molina Medical Centers, entered into
      a contract to provide health care services to Medi-Cal beneficiaries dated
      April 2, 1996; and

      NOW THEREFORE, this contract is amended as follows:

                                                                          [SEAL]

CONTINUED ON 1 SHEETS, EACH BEARING NAME OF CONTRACTOR AND CONTRACT NUMBER.

  The provisions on the reverse side hereof constitute a part of this agreement.
IN WITNESS WHEREOF, this agreement has been executed by the parties hereto, upon
the date first above written.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
          STATE OF CALIFORNIA                                              CONTRACTOR
-------------------------------------------------------------------------------------------------------------------------------
<S>                                     <C>
AGENCY                                  CONTRACTOR (If other than an individual, state whether a corporation, partnership, etc.)
  Department of Health Service          Molina Medical Centers
-------------------------------------------------------------------------------------------------------------------------------
BY (AUTHORIZED SIGNATURE)               BY (AUTHORIZED SIGNATURE)
/s/ Jayna Querin For                     /s/ John Molina For
-------------------------------------------------------------------------------------------------------------------------------
PRINTED NAME OF PERSON SIGNING          PRINTED NAME AND TITLE OF PERSON SIGNING
  Edward E. Stahlberg                   J. Mario Molina, M.D., President
-------------------------------------------------------------------------------------------------------------------------------
TITLE                                   ADDRESS
  Chief, Program Support Branch         One Golden Shore, Long Beach, CA 90802
-------------------------------------------------------------------------------------------------------------------------------
AMOUNT ENCUMBERED BY THIS               PROGRAM/CATEGORY (CODE AND TITLE)        FUND TITLE               Department of General
DOCUMENT                                Loc. Asst. Section 14157 W&I Code        Health Care Deposit        Services Use Only
$ -0-                         ----------------------------------------------------------------------
------------------------------          (OPTIONAL USE)
PRIOR AMOUNT ENCUMBERED FOR
THIS CONTRACT                           ------------------------------------------------------------
$ 226,553,310                           ITEM                CHAPTER        STATUTE       FISCAL YEAR
------------------------------          4260-601-912          162           1996           96/97
TOTAL AMOUNT ENCUMBERED TO              ------------------------------------------------------------
$ 226,553,310                           OBJECT OF EXPENDITURE (CODE AND TITLE)                             Exempt from PCC
                                        Fed. Cat. No. 93778 4260-101-001 & 890                             per W&I Code
----------------------------------------------------------------------------------------------------       Section 14087.4
I hereby certify upon my own personal   T.B.A. NO.          B.R. NO.
knowledge that budgeted funds are
available for the period and purpose
of the expenditure stated above.
----------------------------------------------------------------------------------------------------
SIGNATURE OF ACCOUNTING OFFICER                             DATE
/s/ Roberta Purser                                         6/26/97
----------------------------------------------------------------------------------------------------
</TABLE>

[ ] CONTRACTOR  [ ] STATE AGENCY  [ ] DEPT. OF GEN. SER.  [ ] CONTROLLER   [ ]

<PAGE>

STATE OF CALIFORNIA

STANDARD AGREEMENT
STD 2 (REV.5-01)(REVERSE)

       1. The Contractor agrees to indemnify, defend and save harmless the
          State, its officers, agents and employees from any and all claims and
          losses accruing or resulting to any and all contractors,
          subcontractors, materialmen, laborers and any other person, firm or
          corporation furnishing or supplying work services, materials or
          supplies in connection with the performance of this contract, and
          from any and all claims and losses accruing or resulting to any
          person, firm or corporation who may be injured or damaged by the
          Contractor in the performance of this contract.

       2. The Contractor, and the agents and employees of Contractor, in the
          performance of the agreement, shall act in an independent capacity and
          not as officers or employees or agents of State of California.

       3. The State may terminate this agreement and be relieved of the payment
          of any consideration to Contractor should Contractor fail to perform
          the covenants herein contained at the time and in the manner herein
          provided. In the event of such termination the State may proceed with
          the work in any manner deemed proper by the State. The cost to the
          State shall be deducted from any sum due the Contractor under this
          agreement, and the balance, if any, shall be paid the Contractor upon
          demand.

       4. Without the written consent of the State, this agreement is not
          assignable by Contractor either in whole or in part.

       5. Time is of the essence in this agreement.

       6. No alteration or variation of the terms of this contract shall be
          valid unless made in writing and signed by the parties hereto, and no
          oral understanding or agreement not incorporated herein, shall be
          binding on any of the parties hereto.

       7. The consideration to be paid Contractor, as provided herein, shall be
          in compensation for all of Contractor's expenses incurred in the
          performance hereof, including travel and per diem, unless otherwise
          expressly so provided.

<PAGE>

                               Contract Amendment

     The Department of Health Services ("DHS") and Molina Medical Centers
("Contractor") enter into this contract amendment as follows:

     WHEREAS DHS and Contractor entered into contract number 95-23637 on April
2, 1996 (the "Contract"), identifying Contractor as the mainstream plan for the
Medi-Cal Two Plan Model Program in San Bernardino and Riverside counties, and

     WHEREAS DHS and Contractor desire to modify certain rights and obligations
of the parties as they relate to termination of the Contract,

     DHS and Contractor therefore mutually agree:

1.   Section 3.17.6 is added to the Contract as though fully set forth therein:

     (a)  Notwithstanding any other provision of this Contract and except as
     provided in subsection (b), this Contract shall terminate on November 30,
     1997, unless Contractor can accept enrollment on December 1, 1997, with
     coverage to be effective on December 1, 1997.

     (b)  The termination provisions of subsection (a) above, shall not apply if
     Contractor is unable to accept enrollment on December 1, 1997, as a result
     of (1) conditions, natural or otherwise, beyond the control of Contractor,
     which substantially interfere with normal business operations, or (2)
     legal, regulatory or other obstacles, unrelated to any act or omission of
     Contractor, that prevent, postpone or suspend commencement of the Two Plan
     Model Program in San Bernardino and Riverside counties.

     (c)  In the event of termination of the Contract pursuant to this section
     3.17.6, Contractor waives any further notice and any administrative appeal
     rights otherwise arising from or associated with termination of the
     Contract pursuant to this section 3.17.6.

<TABLE>
<S>                                     <C>
Department of Health Services           Molina Medical Centers

(signature)                             (signature) /s/
__________________________________      _____________________________________

(printed name)                          (printed name)  J. Mario Molina MD
__________________________________      _____________________________________

(title)                                 (title)   President
__________________________________      _____________________________________

(date)                                  (date)    6/9/97
__________________________________      _____________________________________

</TABLE>

<PAGE>

Molina Medical Centers                                              95-23637-A01

1.   Article III, GENERAL TERMS AND CONDITIONS, is amended to add new Section
     3.17.6, Termination-Other Conditions, as follows:

     "3.17.6           Termination-Other Conditions

     (a)   Notwithstanding any other provision of this Contract and except as
           provided in subsection (b), this Contract will terminate on November
           30, 1997, unless Contractor can accept enrollment on December 1,
           1997, with coverage to be effective on December 1, 1997.

     (b)   The termination provisions of subsection (a) above, shall not apply
           if Contractor is unable to accept enrollment on December 1, 1997, as
           a result of (1) conditions, natural or otherwise, beyond the control
           of Contractor, which substantially interfere with normal business
           operations, or (2) legal, regulatory or other obstacles, unrelated to
           any act or omission of Contractor, that prevent, postpone or suspend
           commencement of the Two Plan Model Program in San Bernardino and
           Riverside counties.

     (c)   In the event of termination of the Contract pursuant to this section
           3.17.6, Contractor waives any further notice and any administrative
           appeal rights otherwise arising from or associated with termination
           of the Contract pursuant to this section 3.17.6."

2.   The effective date of this amendment is May 30, 1997.

3.   All other rights, duties, obligations, and liabilities of the parties
     otherwise remain unchanged.

<PAGE>

STATE OF CALIFORNIA                                  CONTRACT NUMBER     AM. NO.
                                                         95-23637          02
STANDARD AGREEMENT -- APPROVED BY THE                TAXPAYER'S FEDERAL
[STD. 2 (REV.5-91)    ATTORNEY GENERAL               EMPLOYER IDENTIFICATION
                                                      NUMBER
                                                     33-0342719

THIS AGREEMENT, made and entered into this 1st day of July, 1997, in the State
of California, by and between State of California, through its duly elected or
appointed, qualified and acting

TITLE OF OFFICER ACTING FOR STATE      AGENCY
Chief, Program Support Branch           Department of Health Services,
                                        hereafter called the State, and
CONTRACTOR'S NAME
 Molina Medical Centers, Inc.,          hereafter called the Contractor.

WITNESSETH: That the Contractor for and in consideration of the covenants,
conditions, agreements, and stipulations of the State hereinafter expressed,
does hereby agree to furnish to the State services and materials as follows:
(Set forth service to be rendered by contractor, amount to be paid contractor,
time for performance or completion, and attach plans and specifications, if
any.)

Amendment A02 to contract number 95-23637 BETWEEN MOLINA MEDICAL CENTERS, INC.
and the STATE OF CALIFORNIA; and

WHERE AS, the State of California and Molina Medical Centers, Inc., entered into
a contract to provide health care services to eligible Medi-Cal beneficiaries,
dated April 2, 1996; and

NOW THEREFORE, this Contract is amended as follows"

[SEAL]

CONTINUED ON 2 SHEETS, EACH BEARING NAME OF CONTRACTOR AND CONTRACT NUMBER.

  The provisions on the reverse side hereof constitute a part of this agreement.
IN WITNESS WHEREOF, this agreement has been executed by the parties hereto, upon
the date first above written.

<TABLE>
<CAPTION>
       STATE OF CALIFORNIA                                                 CONTRACTOR
---------------------------------------------------------------------------------------------------------------------------------
<S>                                     <C>
AGENCY                                   CONTRACTOR (if other than an individual, state whether a corporation, partnership, etc.)
Department of Health Service                Molina Medical Centers, Inc., A CA Corporation
---------------------------------------------------------------------------------------------------------------------------------
BY (AUTHORIZED SIGNATURE)               BY (AUTHORIZED SIGNATURE)
/s/ Jayna Querin for                    /s/
---------------------------------------------------------------------------------------------------------------------------------
PRINTED NAME OF PERSON SIGNING          PRINTED NAME AND TITLE OF PERSON SIGNING
Edward E. Stahlberg                     J. Mario Molina, M.D.
---------------------------------------------------------------------------------------------------------------------------------
TITLE                                   ADDRESS
Chief, Program Support Branch           One Golden Shore, Long Beach, CA 90802
---------------------------------------------------------------------------------------------------------------------------------
AMOUNT ENCUMBERED BY THIS      PROGRAM/CATEGORY (CODE AND TITLE)        FUND TITLE               DEPARTMENT OF GENERAL
DOCUMENT                       Loc. Asst.Sect. 14157 W&I Code           Health Care Deposit        SERVICE USE ONLY
$  194,472,680.00              ------------------------------------------------------------
------------------------------ (OPTIONAL USE)                                                    Exempt From PCC per
                                                                                                 W&I Code Section 14087.4
PRIOR AMOUNT ENCUMBERED FOR
THIS CONTRACT                  ------------------------------------------------------------
$ 226,553,310.00                  ITEM                CHAPTER        STATUTE       FISCAL YEAR
------------------------------ 4260-601-912           Subject to the Budget Act
TOTAL AMOUNT ENCUMBERED TO     ------------------------------------------------------------
DATE                           OBJECT OF EXPENDITURE (CODE AND TITLE)
421,025,990                    Fed.Cat.No.93778 4260-101-001 & 890
-------------------------------------------------------------------------------------------
I hereby certify upon my own personal   T.B.A. NO.          B.R. NO.
knowledge that budgeted funds are
available for the period and purpose
of the expenditure stated above.
-------------------------------------------------------------------------------------------
SIGNATURE OF ACCOUNTING OFFICER                             DATE
/s/ Roberta Purser                                         7.8.97
-------------------------------------------------------------------------------------------
</TABLE>

[ ] CONTRACTOR  [ ] STATE AGENCY  [ ] DEPT. OF GEN. SER.  [ ] CONTROLLER   [ ]

<PAGE>

STATE OF CALIFORNIA
STANDARD AGREEMENT
STD.2 (REV. 5-01) (REVERSE)

        1. The Contractor agrees to indemnify, defend and save harmless the
           state, its officers, agents and employees from any and all claims and
           losses accruing or resulting to any and all contractors,
           subcontractors, materialmen, laborers and any other person, firm or
           corporation furnishing or supplying work services, materials or
           supplies in connection with the performance of this contract, and
           from any and all claims and losses accruing or resulting to any
           person, firm or corporation who may be injured or damaged by the
           Contractor in the performance of this contract.

        2. The Contractor, and the agents and employees of Contractor, in the
           performance of the agreement, shall act in an independent capacity
           and not as officers or employees or agents of State of California.

        3. The State may terminate this agreement and be relieved of the payment
           of any consideration to Contractor should Contractor fail to perform
           the covenants herein contained at the time and in the manner herein
           provided. In the event of such termination the State may proceed with
           the work in any manner deemed proper by the State. The cost to the
           State shall be deducted from any sum due the Contractor under this
           agreement, and the balance, if any, shall be paid the Contractor upon
           demand.

        4. Without the written consent of the State, this agreement is not
           assignable by Contractor either in whole or in part.

        5. Time is of the essence in this agreement.

        6. No alteration or variation of the terms of this contract shall be
           valid unless made in writing and signed by the parties hereto, and no
           oral understanding or agreement not incorporated herein, shall be
           binding on any of the parties hereto.

        7. The consideration to be paid Contractor, as provided herein, shall be
           in compensation for all of Contractor's expenses incurred in the
           performance hereof, including travel and per diem, unless otherwise
           expressly so provided.

<PAGE>

Molina Medical Centers, Inc.                                         95-23637-02

1,   Article II, DEFINITIONS, Section O, Covered Services, is amended to add a
     new subparagraph 16, to read:

     "16. HTV and AIDS drugs listed in Attachment II (consisting of one page),
          and HIV and AIDS drugs classified as Nucleoside Analogs, Protease
          Inhibitors, and Non-Nucleoside Reverse Transcriptase Inhibitors,
          approved by the federal Food and Drug Administration (FDA) after July
          1, 1997."

2.   Article V, PAYMENT PROVISIONS, Section 5.3, Capitation Rates, is amended to
     read as follows:

     "5.3      CAPITATION RATES

          DHS will remit to the Contractor a capitation payment each month for
          each Medi-Cal Member that appears on the approved list of Members
          supplied to the Contractor by DHS. The capitation rate shall be the
          amount specified in this Article. The payment period for health care
          services will commence on the first day of operations, as determined
          by DHS. Capitation payments will be made in accordance with the
          following schedule of capitation payment rates:

          Aid Code Categories

          Family: 01, 02, 08, 30, 32, 33, 34, 35, 38, 39, 3A, 3C, 3P, 3R, 40,
          42, 4C, 4K, 54, 59, 5K; Aged: 10, 14, 16, 18; Disabled: 20 24, 26, 28,
          36, 60, 64, 66, 68, 6A, 6C; Child: 03, 04, 45, 82; Adult: 86

          For the Period 6/96 - 9/97
          Riverside County                          San Bernardino County

          Family           $  76.81                Family          $  72.12
          Aged             $ 123.58                Aged            $ 130.50
          Disabled         $ 190.62                Disabled        $ 186.32
          Child            $  68.08                Child           $  67.51
          Adult            $ 496.01                Adult           $ 538.82"

                                        2

<PAGE>

Molina Medical Centers, Inc.                                         95-23637-02

3.   Article VI, SCOPE OF WORK, Section 6.5.7.8, Sensitive Services, is amended
     to add a new paragraph, to read:

     "The Contractor will develop, implement and maintain policies and
     procedures for the treatment of HIV infection and AIDS. These policies and
     procedures will be submitted to DHS no later than October 1, 1997. The
     Contractor will submit any changes in these policies and procedures to DHS
     at least 30 days prior to their implementation."

4.   Article VI, SCOPE OF WORK, Section 6.7.3.3, Mental Health, is amended to
     read:

     "The following mental health services are excluded from the Contract: all
     of SD/MC mental health services (inpatient and outpatient); FFS/MC
     outpatient mental health services provided by psychiatrists and
     psychologists; FFS/MC inpatient mental health services.

     The Contractor will provide outpatient mental health services within the
     Primary Care Physician's scope of practice. The Contractor will refer
     Members who need specialty mental health services to the appropriate
     FFS/MC mental health provider or to the appropriate SD/MC provider. The
     Contractor will case manage the physical health of the Member and
     coordinate services with the mental health referral provider. The
     Contractor will ensure the provision of all psychotherapeutic drugs for
     Members. Reimbursement to pharmacies for those psychotherapeutic drugs
     listed in Attachment III (consisting of one page), and psychotherapeutic
     drugs classified as Anti-Psychotics and approved by the FDA after July 1,
     1997, will be made by DHS through the Medi-Cal FFS program, whether these
     drugs are provided by a pharmacy contracting with the Contractor or by an
     out-of-plan pharmacy provider. To qualify for reimbursement under this
     provision, a pharmacy must be enrolled as a Medi-Cal provider in the
     Medi-Cal FFS program."

5.   The effective date of this amendment will be July 1, 1997.

6.   All other rights, duties, obligations and liabilities of the parties hereto
     otherwise remain unchanged.

<PAGE>

Molina Medical Centers, Inc.                                         95-23637-02

                                  ATTACHMENT II

                EXCLUDED DRUGS FOR THE TREATMENT OF HIV AND AIDS

                                    CRIXIVAN

                                     EPIVIR

                                    INVIRASE

                                     NORVIR

                                    VIRACEPT

                                    VIRAMUNE

                                   RESCRIPTOR

                                      ZERIT

<PAGE>

MOLINA MEDICAL CENTERS, INC.                                         95-23637-02

                                  ATTACHMENT III

                        EXCLUDED PSYCHOTHERAPEUTIC DRUGS

                                  GENERIC NAME

        Benztropine Mesylate                            Biperiden HCL
        Biperiden Lactate                               Procyclidine HCL
        Trihexphenidyl HCL                              Amantadine HCL
        Lithium Carbonate                               Lithium Citrate
        Chloroprothixene                                Clozapine
        Haloperidol                                     Haloperidol Deconoate
        Haloperidol Lactate                             Loxapine HCL
        Loxapine Succinate                              Molindone HCL
        Olanzapine                                      Pimozide
        Risperidone                                     Thiothixene
        Thiothixene HCL                                 Chlorpromazine HCL
        Fluphanazine Decanoate                          Fluphanazine Enanthate
        Fluphanazine HCL                                Mesoridazine Besylate
        Perphenazine                                    Promazine HCL
        Thioridazine HCL                                Trifluoperazine HCL
        Triflupromazine HCL                             Isocarboxazid
        Phenelzine Sulfate                              Tranylcypromine Sulfate

<PAGE>

MOLINA MEDICAL CENTERS, INC.                                         95-23637-02

Plan Name       Molina Medical Center                   Date:        6/24/1997
Plan Number         355                                 Base Period: CY '93
County          Riverside                               Rate Period: 6/96 - 9/97

Aid Code Group  Family

<TABLE>
<CAPTION>
                                          Phys      Pharm        HIP         HOP         LTC      Other       Total
<S>                                  <C>        <C>        <C>          <C>         <C>       <C>         <C>
1.   Base Units per Eligible             3.816      4.223       .370       2.232        .000      3.330
2.   Aid Code Adjustment                 1.029       .998      1.098       1.042       1.000      1.020
3.   Age/sex Adjustment                  1.062       .994      1.094       1.032       1.000      1.021
        Adjusted Units                   4.170      4.189       .444       2.400        .000      3.468
4.   Average Cost Per Unit               71.93      14.73     828.49       21.79      369.03      28.02
5.   Area Adjustment                      .986      1.000      1.000       1.000       1.000      1.000
        Adjusted Cost                $   70.92  $   14.73  $  828.49    $  21.79    $ 369.03  $   28.02
6.   Interest Adjustment                  .993       .996       .990        .993        .993       .993
        Contract Cost per Eligible   $  293.67  $   61.46  $  364.17    $  51.93    $    .00  $   96.49   $  867.72

7.   Benefit Adjustments
               FY 94/95                  1.021       .926      1.002       1.002       1.042      1.025
               FY 95/96                  1.001       .850      1.000       1.000        .999       .991

8.   Trend Adjustment 7/93-1/97          1.036      1.313      1.060        .925       1.000      1.454

      Annual Cost Per Eligible       $  310.94  $   63.52  $  386.79    $  48.13    $    .00  $  142.51   $  951.89

9.   Mental Health Adjustment              1.4%        .6%       6.6%        5.0%        l.5%       4.5%
10.  Lenses Adjustment                                                                              1.5%

     Cost Excl. MH/Lenses            $  306.59  $   63.14  $  361.26    $  45.72    $    .00  $  134.06   $  910.77

        Preliminary Monthly Rate                                                                          $   75.90

11.  Stop Loss Reinsurance - All
      Services                                          0                                 .0%                   .00

12.  Adjustment for FFS Limitation                                                        -2%                 (1.52)

13.  CHDP                                                                                                      2.43

14.  FQHC Incremental Amount                                                                                    .00

       Final Monthly Rate - Capitation Payments at Beginning of Month                                     $   76.81
</TABLE>

                                        1

<PAGE>

MOLINA MEDICAL CENTERS,  INC.                                        95-23637-02

Plan Name       Molina Medical Center                   Date:        6/24/1997
Plan Number       355                                   Base Period: CY '93
County          Riverside                               Rate Period: 6/96 - 9/97

Aid Code Group  Aged

<TABLE>
<CAPTION>
                                        Phys      Pharm      HIP           HOP        LTC       Other       Total
<S>                                  <C>        <C>        <C>          <C>         <C>       <C>         <C>
 1.  Base Units per Eligible            4. 280     19.624      1.476       1.310       2.880     14.314
 2.  Aid Code Adjustment                  .941      l.015       .969        .932       1.004      1.003
 3.  Age/sex Adjustment                   .991      1.002      1.000        .991       1.034      1.006
        Adjusted Units                   3.991     19.958      1.430       1.210       2.990     14.443
 4.  Average Cost Per Unit               44.28      28.65     205.53       16.35       76.99       6.95
 5.  Area Adjustment                      .986      1.000      1.000       1.000       1.000      1.000
        Adjusted Cost                $   43.66  $   28.65  $  205.53    $  16.35    $  76.99  $    6.95
 6.  Interest Adjustment                  .991       .996       .986        .988        .994       .992
        Contract Cost per Eligible   $  172.68  $  569.51  $  289.79    $  19.55    $ 228.82  $   99.58   $ 1,379.93

 7.  Benefit Adjustments
               FY 94/95                  1.002       .926      1.008       1.002       1.042      1.000
               FY 95/96                  1.000       .850      l.000       1.000        .989      1.000

 8.  Trend Adjustment 7/93-1/97          1.486      1.278       .896       1.127       1.075      1.565

      Annual Cost Per Eligible       $  257.12  $  572.88  $  261.73    $  22.08    $ 253.49  $  155.84   $ 1,523.14

 9.  Mental Health Adjustment               .3%        .5%        .7%         .9%         .4%        .0%
10.  Lenses Adjustment                                                                              2.1%

     Cost Excl. MH/Lenses            $  256.35  $  570.02  $  259.90    $  21.88    $ 252.48  $  152.57   $ 1,513.20

       Preliminary Monthly Rate                                                                           $   126.10

11.  Stop Loss Reinsurance - All
      Services                                          0                                 .0%                    .00

12.  Adjustment for FFS Limitation                                                        -2%                  (2.52)

13.  CHDP                                                                                                        .00

14.  FQHC Incremental Amount                                                                                     .00

       Final Monthly Rate - Capitation Payments at Beginning of Month                                     $   123.58
</TABLE>

                                        2

<PAGE>

MOLINA MEDICAL CENTERS,  INC.                                        95-23637-02

Plan Name       Molina Medical Center                   Date:        6/24/1997
Plan Number          355                                Base Period: CY '93
County          Riverside                               Rate Period: 6/96 - 9/97

Aid Code Group  Disabled

<TABLE>
<CAPTION>
                                       Phys      Pharm         HIP        HOP        LTC        Other       Total
<S>                                  <C>        <C>        <C>          <C>         <C>       <C>         <C>
 1.  Base Units per Eligible             7.452     23.494      1.498       4.212       1.440     28.577
 2.  Aid Code Adjustment                 1.002      1.003      1.018       1.006        .997      l.005
 3.  Age/sex Adjustment                  1.003       .992       .992       1.003       1.012      l.005
        Adjusted Units                   7.489     23.376      1.513       4.250       1.453     28.863
 4.  Average Cost Per Unit               43.31      32.19     532.47       18.O5      108.27      10.65
 5.  Area Adjustment                      .986      1.000      1.000       1.000       1.000      1.000
        Adjusted Cost                $   42.70  $   32.19  $  532.47    $  18.05    $ 108.27  $   10.65
 6.  Interest Adjustment                  .992       .996       .998        .990        .995       .992
        Contract Cost per Eligible   $  317.22  $  749.46  $  795.96    $  75.95    $ 156.53  $  304.93   $ 2,400.05

 7.  Benefit Adjustments
              FY 94/95                   1.002       .926      1.005       1.002       1.042      1.000
              FY 95/96                   1.000       .850      1.000       1.000        .989      1.000

 8.  Trend Adjustment 7/93-1/97          1.160      1.270       .981       1.065        .991      1.327

      Annual Cost Per Eligible       $  368.71  $  749.17  $  784.74    $  81.05    $ 159.86  $  404.64   $ 2,548.17

 9.  Mental Health Adjustment              7.8%      10.7%      11.7%        2.4%        1.3%       1.4%
10.  Lenses Adjustment                                                                               .9%

     Cost Excl. MH/Lenses            $  339.95  $  669.01  $  692.93    $  79.10    $ 157.78  $  395.38   $ 2,334.15

        Preliminary Monthly Rate                                                                          $   194.51

11.  Stop Loss Reinsurance - All
      Services                                          0                                 .0%                    .00

12.  Adjustment for FFS Limitation                                                        -2%                  (3.89)

13.  CHDP                                                                                                        .00

14.  FQHC Incremental Amount                                                                                     .00

       Final Monthly Rate - capitation Payments at Beginning of Month                                     $   190.62
</TABLE>

                                        3

<PAGE>

MOLINA MEDICAL CENTERS, INC.                                         95-23637-02

Plan Name       Molina Medical Center                   Date:        6/24/1997
Plan Number         355                                 Base Period: CY '93
County          Riverside                               Rate Period: 6/96 - 9/97

Aid Code Group  Child

<TABLE>
<CAPTION>
                                                Phys          Pharm       HIP       HOP        LTC       Other     Total
<S>                                         <C>           <C>        <C>        <C>        <C>       <C>        <C>
 1. Base Units per Eligible                    3.791          3.907      .361     1.620       .000      1.882
 2. Aid Code Adjustment                        1.020          1.035     1.048     1.013      1.000      1.025
 3. Age/sex Adjustment                         1.193           .992     1.245     1.064      1.000      1.114
       Adjusted Units                          4.613          4.007      .471     1.746       .000      2.149
 4. Average Cost Per Unit                      69.47          11.05    890.67     22.20        .00      40.13
 5. Area Adjustment                             .986          1.000     1.000     1.000      1.000      1.000
       Adjusted Cost                        $  68.50      $   ll.05  $ 890.67   $ 22.20    $   .00   $  40.13
 6. Interest Adjustment                         .992           .995      .987      .990       .994       .992
       Contract Cost per Eligible           $ 313.46      $   44.06  $ 414.05   $ 38.37    $   .00   $  85.55   $ 895.49

 7. Benefit Adjustments
             FY 94/95                          1.021           .926     1.002     1.002      1.042      1.019
             FY 95/96                          1.001           .850     1.000     1.000       .989       .991

 8. Trend Adjustment 7/93-1/97                 1.047          1.330      .807      .878      1.000      1.285

     Annual Cost Per Eligible               $ 336.42      $   46.12  $ 334.81   $ 33.76    $   .00   $ 111.01   $ 861.12

 9. Mental Health Adjustment                     1.6%           1.1%     13.4%      2.9%       3.4%       3.6%
10. Lenses Adjustment                                                                                      .9%

    Cost Excl. MH/Lenses                    $ 330.05      $   45.61  $ 289.95   $ 32.78    $   .00   $ 106.05   $ 804.44

      Preliminary Monthly Rate                                                                                  $  67.04

11. Stop Loss Reinsurance - All Services                          0                             .0%                  .00

12. Adjustment for FFS Limitation                                                               -2%                (1.34)

13. CHDP                                                                                                            2.38

14. FQHC Incremental Amount                                                                                          .00

       Final Monthly Rate - Capitation Payments at Beginning of Month                                           $  68.08
</TABLE>

                                        4

<PAGE>

MOLINA MEDICAL CENTERS, INC.                                         95-23637-02

Plan Name       Molina Medical Center                   Date:        6/24/1997
Plan Number         355                                 Base Period: CY '93
County          Riverside                               Rate Period: 6/96 - 9/97

Aid Code Group  Adult

<TABLE>
<CAPTION>
                                            Phys        Pharm        HIP        HOP         LTC        Other      Total
<S>                                       <C>         <C>        <C>          <C>          <C>      <C>
 1.  Base Units per Eligible                  22.752     5.069        3.590      4.465        .000      20.412
 2.  Aid Code Adjustment                       1.000     1.000        1.000      1.000       1.000       1.000
 3.  Age/sex Adjustment                        1.000     1.000        1.000      1.000       1.000       1.000
        Adjusted Units                        22.752     5.069        3.590      4.465        .000      20.412
 4.  Average Cost Per Unit                     59.80     16.00       840.07      20.51         .00       43.66
 5.  Area Adjustment                            .986     1.000        1.000      1.000       1.000       1.000
        Adjusted Cost                     $    58.96  $  16.00   $   840.07   $  20.51     $   .00  $    43.66
 6.  Interest Adjustment                        .993      .996         .991       .989        .993        .991
        Contract Cost per Eligible        $ 1,332.07  $  80.78   $ 2,988.71   $  90.57     $   .00  $   883.17  $ 5,375.30

 7.  Benefit Adjustments
               FY 94/95                        1.002      .926        1.008      1.002       1.042       1.006
               PY 95/96                        1.000      .850        1.000      1.000        .985       1.000

 8.  Trend Adjustment 7/93-1/97                1.099     1.023        1.126      1.169       1.000       1.195

      Annual Cost Per Eligible            $ 1,466.87  $  65.04   $ 3,392.21   $ 106.09     $   .00  $ 1,061.72  $ 6,091.93

 9.  Mental Health Adjustment                     .1%       .4%          .3%       1.1%         .0%         .1%
10.  Lenses Adjustment                                                                                      .4%

     Cost Excl.MH/Lenses                  $ 1,465.40  $  64.78   $ 3,382.03   $ 104.92     $   .00  $ 1,056.42  $ 6,073.55

        Preliminary Monthly Rate                                                                                $   506.13

11.  Stop Loss Reinsurance - All Services                    0                                  .0%                    .00

12.  Adjustment for FFS Limitation                                                              -2%                 (10.12)

13.  CHDP                                                                                                              .00

14.  FQHC Incremental Amount                                                                                           .00

        Final Monthly Rate - Capitation Payments at Beginning of Month                                          $   496.01
</TABLE>

                                        5

<PAGE>

MOLINA MEDICAL CENTERS, INC.                                         95-23637-02

Plan Name       Molina Medical Center                   Date:        6/24/1997
Plan Number         356                                 Base Period: CY '93
County          San Bernardino                          Rate Period: 6/96 - 9/97

Aid Code Group  Family

<TABLE>
<CAPTION>
                                             Phys           Pharm      HIP            HOP      LTC      Other       Total
<S>                                       <C>              <C>      <C>            <C>       <C>       <C>         <C>
 1.  Base Units per Eligible                 3.816           4.223      .370          2.232      .000      3.330
 2.  Aid Code Adjustment                      .989            .990      .985           .995     1.000       .976
 3.  Age/sex Adjustment                      1.026            .997     1.040          1.019     1.000      1.010
        Adjusted Units                       3.872           4.168      .379          2.263      .000      3.283
 4.  Average Cost Per Unit                   71.93           14.73    880.94          21.79    369.03      28.02
 5.  Area Adjustment                         1.013           1.000     1.000          1.000     l.000      1.000
        Adjusted Cost                     $  72.87         $ 14.73  $ 880.94       $  21.79  $ 369.03  $   28.02
 6.  Interest Adjustment                      .993            .996      .990           .993      .993       .993
        Contract Cost per Eligible        $ 280.18         $ 61.15  $ 330.54       $  48.97  $    .00  $   91.35   $ 812.19

 7.  Benefit Adjustments
              FY 94/95                       1.021            .926     1.002          1.002     1.042      1.025
              FY 95/96                       1.001            .850     1.000          1.000      .989       .991

 8.  Trend Adjustment 7/93-1/97              1.036           1.313     1.060           .926     1.000      1.454

      Annual Cost Per Eligible            $ 296.66         $ 63.20  $ 351.07       $  45.39  $    .00  $  134.92   $ 891.24

 9.  Mental Health Adjustment                  1.4%             .6%      6.6%           5.0%      1.5%       4.5%
10.  Lenses Adjustment                                                                                       1.5%

     Cost Excl. MH/Lenses                 $ 292.51         $ 62.82  $ 327.90       $  43.12  $    .00  $  126.92   $ 853.27

        Preliminary Monthly Rate                                                                                   $  71.11

11.  Stop Loss Reinsurance - All Services                        0                                 .0%                  .00

12.  Adjustment for FFS Limitation                                                                 -2%                (1.42)

13.  CHDP                                                                                                              2.43

14.  FQHC Incremental Amount                                                                                            .00

        Final Monthly Rate - Capitation Payments at Beginning of Month                                             $  72.12
</TABLE>

                                        6

<PAGE>

MOLINA MEDICAL CENTERS, INC.                                         95-23637-02

Plan Name       Molina Medical Center                   Date:        6/24/1997
Plan Number         356                                 Base Period: CY '93
County          San Bernardino                          Rate Period: 6/96 - 9/97

Aid Code Group  Aged

<TABLE>
<CAPTION>
                                            Phys      Pharm        HIP        HOP         LTC      Other       Total
<S>                                       <C>        <C>        <C>         <C>        <C>        <C>        <C>
 1.  Base Units per Eligible                 4.280     19.624      1.476      1.310       2.880     14.314
 2.  Aid Code Adjustment                      .936      1.021       .968       .931       1.007      1.016
 3.  Age/sex Adjustment                       .986      1.004       .995       .987       1.031      l.005
        Adjusted Units                       3.950     20.116      1.422      1.204       2.990     14.616
 4.  Average Cost Per Unit                   44.28      28.65     265.64      16.35       76.99       6.95
 5.  Area Adjustment                         1.013      1.000      1.000      1.000       1.000      1.000
        Adjusted Cost                     $  44.86   $  28.65   $ 265.64    $ 16.35    $  76.99   $   6.95
 6.  Interest Adjustment                      .991       .996       .986       .988        .994       .992
        Contract Cost per Eligible        $ 175.60   $ 574.02   $ 372.45    $ 19.45    $ 228.82   $ 100.77   $ 1,471.11

 7.  Benefit Adjustments
               FY 94/95                      1.002       .926      1.008      l.002       1.042      1.000
               FY 95/96                      1.000       .850      1.000      1.000        .989      1.000

 8.  Trend Adjustment 7/93-1/97              1.486      1.278       .896      1.127       1.075      1.565

      Annual Cost Per Eligible            $ 261.46   $ 577.41   $ 336.38    $ 21.96    $ 253.49   $ 157.71   $ 1,608.41

 9.  Mental Health Adjustment                   .3%        .5%        .7%        .9%         .4%        .0%

10.  Lenses Adjustment                                                                                 2.1%

     Cost Excl. MH/Lenses                 $ 260.68   $ 574.52   $ 334.03    $ 21.76    $ 252.48   $ 154.40   $ 1,597.87

        Preliminary Monthly Rate                                                                             $   133.16

11.  Stop Loss Reinsurance - All Services                   0                                .0%                    .00

12.  Adjustment for FFS Limitation                                                           -2%                  (2.66)

13.  CHDP                                                                                                           .00

14.  FQHC Incremental Amount                                                                                        .00

        Final Monthly Rate - Capitation Payments at Beginning of Month                                       $   130.50
</TABLE>

                                        7

<PAGE>

MOLINA MEDICAL CENTERS, INC.                                         95-23637-02

Plan Name       Molina Medical Center                  Date:         6/24/1997
Plan Number         356                                Base Period:  CY '93
County          San Bernardino                         Rate Period:  6/96 - 9/97

Aid Code Group  Disabled

<TABLE>
<CAPTION>
                                            Phys       Pharm       HIP         HOP        LTC      Other      Total
<S>                                       <C>        <C>        <C>         <C>        <C>        <C>        <C>
 1.  Base Units per Eligible                 7.452     23.494      1.498      4.212       1.440     28.577
 2.  Aid Code Adjustment                      .994      1.003       .983       .993        .999      1.004
 3.  Age/sex Adjustment                      l.005       .979       .990      1.011       1.011      1.008
        Adjusted Units                       7.444     23.070      1.458      4.229       1.454     28.921
 4.  Average Cost Per Unit                   43.31      32.19     511.29      18.05      108.27      10.65
 5.  Area Adjustment                         1.013      1.000      1.000      1.000       1.000      1.000
        Adjusted Cost                     $  43.87   $  32.19   $ 511.29    $ 18.05    $ 108.27   $  10.65
 6.  Interest Adjustment                      .992       .996       .988       .990        .995       .992
        Contract Cost per Eligible        $ 323.96   $ 739.65   $ 736.52    $ 75.57    $ 156.64   $ 305.54   $ 2,337.88

 7.  Benefit Adjustments
               FY 94/95                      1.002       .926      l.005      1.002       1.042      1.000
               FY 95/96                      1.000       .850      1.000      1.000        .989      1.000

 8.  Trend Adjustment 7/93-1/97              1.160      1.270       .981      1.065        .991      1.327

      Annual Cost Per Eligible            $ 376.55   $ 739.37   $ 726.14    $ 80.64    $ 159.97   $ 405.45   $ 2,488.12

 9.  Mental Health Adjustment                  7.8%      10.7%      11.7%       2.4%        1.3%       1.4%
10.  Lenses Adjustment                                                                                  .9%

     Cost Excl. MH/Lenses                 $ 347.18   $ 660.26   $ 641.18    $ 78.70    $ 157.89   $ 396.18   $ 2,281.39

         Preliminary Monthly Rate                                                                            $   190.12

11.  Stop Loss Reinsurance - All Services                   0                                .0%                    .00

12.  Adjustment for FFS Limitation                                                           -2%                  (3.80)

13.  CHDP                                                                                                           .00

14.  FQHC Incremental Amount                                                                                        .00

        Final Monthly Rate - Capitation Payments at Beginning of Month                                       $   186.32
</TABLE>

                                        8

<PAGE>

MOLINA MEDICAL CENTERS, INC.                                         95-23637-02

Plan Name       Molina Medical Center                   Date:        6/24/1997
Plan Number        356                                  Base Period: CY '93
County          San Bernardino                          Rate Period: 6/96 - 9/97

Aid Code Group  Child

<TABLE>
<CAPTION>
                                            Phys      Pharm         HIP        HOP         LTC        Other       Total
<S>                                       <C>        <C>        <C>         <C>          <C>       <C>          <C>
 1.   Base Units per Eligible                3.791      3.907       .361       l.620        .000      1.882
 2.   Aid Code Adjustment                    1.011       .993      1.025       1.010       1.000       .998
 3.   Age/sex Adjustment                     1.184      1.019      1.227       1.087       1.000      1.109
         Adjusted Units                      4.538      3.953       .454       1.779        .000      2.083
 4.   Average Cost Per Unit                  69.47      11.05     901.25       22.20         .00      40.13
 5.   Area Adjustment                        1.013      1.000      1.000       1.000       1.000      1.000
         Adjusted Cost                    $  70.37   $  11.05   $ 901.25    $  22.20     $   .00   $  40.13
 6.   Interest Adjustment                     .992       .995       .987        .990        .994       .992
         Contract Cost per Eligible       $ 316.78   $  43.46   $ 403.85    $  39.10     $   .00   $  82.92     $  886.11

 7.   Benefit Adjustments
               FY 94/95                      1.021       .926      1.002       1.002       1.042      1.019
               FY 95/96                      1.001       .850      1.000       1.000        .989       .991

 8.   Trend Adjustment 7/93-1/97             1.047      1.330       .807        .878       1.000      1.285

       Annual Cost Per Eligible           $ 338.97   $  45.50   $ 326.56    $  34.40     $   .00   $ 107.60     $  853.03

 9.   Mental Health Adjustment                 1.6%       1.1%      13.4%        2.9%        3.4%       3.6%
10.   Lenses Adjustment                                                                                  .9%

      Cost Excl. MH/Lenses                $ 333.55   $  45.00   $ 282.80    $  33.40     $   .00   $ 102.79     $  797.54

        Preliminary Monthly Rate                                                                                $   66.46

11.   Stop Loss Reinsurance - All Services                  0                                 .0%                     .00

12.   Adjustment for FFS Limitation                                                           -2%                   (1.33)

13.   CHDP                                                                                                           2.38

14.   FQHC Incremental Amount                                                                                         .00

        Final Monthly Rate - Capitation Payments at Beginning of Month                                          $   67.51
</TABLE>

                                        9

<PAGE>

MOLINA MEDICAL CENTERS, INC.                                        95-23637-02

Plan Name       Molina Medical Center                   Date:        6/24/1997
Plan Number         356                                 Base Period: CY '93
County          San Bernardino                          Rate Period: 6/96 - 9/97
Aid Code Group  Adult

<TABLE>
<CAPTION>
                                            Phys      Pharm         HIP        HOP         LTC      Other         Total
<S>                                     <C>          <C>       <C>           <C>          <C>      <C>           <C>
 1.   Base Units per Eligible               22.752      5.069       3.590       4.465        .000      20.412
 2.   Aid Code Adjustment                    1.000      1.000       1.000       1.000       1.000       1.000
 3.   Age/sex Adjustment                     1.000      1.000       1.000       1.000       1.000       1.000
         Adjusted Units                     22.752      5.069       3.590       4.465        .000      20.412
 4.   Average Cost Per Unit                  59.80      16.00      960.30       20.51         .00       43.66
 5.   Area Adjustment                        1.013      1.000       1.000       1.000       1.000       1.000
         Adjusted Cost                  $    60.58   $  16.00  $   960.30    $  20.51     $   .00  $    43.66
 6.   Interest Adjustment                     .993       .996        .991        .989        .993        .991
         Contract Cost per Eligible     $ 1,368.67   $  80.78  $ 3,416.45    $  90.57     $   .00  $   883.17    $ 5,839.64

 7.   Benefit Adjustments
               FY 94/95                      1.002       .926       1.008       1.002       1.042       1.006
               FY 95/96                      1.000       .850       1.000       1.000        .989       1.000

 8.   Trend Adjustment 7/93-1/97             1.099      1.023       1.126       1.169       1.000       1.195

       Annual Cost per Eligible         $ 1,507.18   $  65.04  $ 3,877.70    $ 106.09     $   .00  $ 1,061.72    $ 6,617.73

 9.   Mental Health Adjustment                  .1%        .4%         .3%        1.1%         .0%         .1%
10.   Lenses Adjustment                                                                                    .4%

      Cost  Excl. MH/Lenses             $ 1,505.67   $  64.78  $ 3.866.07    $ 104.92     $   .00  $ 1,056.42    $ 6,597.86

        Preliminary Monthly Rate                                                                                 $   549.82

11.     Stop Loss Reinsurance - All
         Services                                           0                                  .0%                      .00

12.     Adjustment for FFS Limitation                                                          -2%                   (11.00)

13.     CHDP                                                                                                            .00

14.     FQHC Incremental Amount                                                                                         .00

           Final Monthly Rate - Capitation Payments at Beginning of Month                                        $   538.82
</TABLE>

                                       10

<PAGE>

STATE OF CALIFORNIA                               CONTRACT NUMBER     AM. NO.
                                                  95-23637              03
STANDARD AGREEMENT -- APPROVED BY THE             TAXPAYER'S FEDERAL
(REV.5-91)            ATTORNEY GENERAL            EMPLOYER IDENTIFICATION NUMBER
                                                  33-0342719

THIS AGREEMENT, made and entered into this 1st day of October, 1998, in the
State of California, by and between State of California, through its duly
elected or appointed, qualified and acting

TITLE Of OFFICER ACTING FOR STATE      AGENCY
Chief, Program Support Branch          Department of Health Services,
                                       hereafter called the State, and
CONTRACTORS NAME
Molina Medical Centers, Inc.,          hereafter called the Contractor

WITNESSETH: That the Contractor for and in consideration of the covenants,
conditions, agreements, and stipulations of the State hereinafter expressed does
hereby agree to furnish to the State services and materials as follows: (Set
forth service to be rendered by Contractor, amount to be paid Contractor time
for performance or completion, and attach plans and specifications, if any.)

          Amendment A03 to Contract no. 95-23637 BETWEEN MOLINA MEDICAL CENTERS,
          INC., and the STATE OF CALIFORNIA,

          WHEREAS, the State of California and Molina Medical Centers, Inc.,
          entered into a contract to provide health care services to Medi-Cal
          beneficiaries dated April 2, 1996; and

          NOW THEREFORE, this Contract is amended as follows:

[SEAL]

CONTINUED ON 98 SHEETS, EACH BEARING NAME OF CONTRACTOR AND CONTRACT NUMBER.

 The provisions on the reverse side hereof constitutes a part of this agreement.
IN WITNESS WHEREOF, this agreement has been executed by the parties hereto, upon
the date first above written.

<TABLE>
<CAPTION>
================================================================================================================================
     STATE OF CALIFORNIA                                                       CONTRACTOR
--------------------------------------------------------------------------------------------------------------------------------
<S>                                     <C>
AGENCY                                  CONTRACTOR (IF other than an individual, state whether a corporation, partnership, etc.)
Department of Health Services           Molina Medical Centers, Inc.
--------------------------------------------------------------------------------------------------------------------------------
BY (AUTHORIZED SIGNATURE)               BY (AUTHORIZED SIGNATURE)
/s/ Jayne Querin for                    /s/
--------------------------------------------------------------------------------------------------------------------------------
PRINTED NAME OF PERSON SIGNING          PRINTED NAME AND TITLE OF PERSON SIGNING
Edward E. Stahlberg                     J. Mario Molina, M.D.
--------------------------------------------------------------------------------------------------------------------------------
TITLE                                   ADDRESS
Chief, Program Support Branch           One Golden Shore, Long Beach, CA 90802
--------------------------------------------------------------------------------------------------------------------------------
AMOUNT ENCUMBERED BY THIS      PROGRAM/CATEGORY (CODE AND TITLE)        FUND TITLE               Department of General Services
DOCUMENT                       Loc. Asst.Section 14157 W&I Code         Health Care Deposit                 Use Only
$ [187,972,680] 97/98          ------------------------------------------------------------
$ [114,472,680] 98/99          (OPTIONAL USE)                                                    Exempt From PCC per W&I Code
------------------------------                                                                   Section 14087.4
PRIOR AMOUNT ENCUMBERED FOR
THIS CONTRACT                  ------------------------------------------------------------
$ 615,498,670                     ITEM             CHAPTER        STATUTE       FISCAL YEAR
                                                     282           1997            97/98
------------------------------ 4260-601-912          324           1998            98/99
TOTAL AMOUNT ENCUMBERED TO     ------------------------------------------------------------
DATE                           OBJECT OF EXPENDITURE (CODE AND TITLE)
3,058,310                      9912-705-95915
-------------------------------------------------------------------------------------------
I hereby certify upon my own personal   T.B.A. NO.          B.R. NO.
knowledge that budgeted funds are
available for the period and purpose
of the expenditure stated above.
-------------------------------------------------------------------------------------------
SIGNATURE OF ACCOUNTING OFFICER                             DATE
/s/ Sharon Flaherty                                        11.19.98
-------------------------------------------------------------------------------------------
</TABLE>

[ ] CONTRACTOR  [ ] STATE AGENCY  [ ] DEPT. OF GEN. SER.  [ ] CONTROLLER   [ ]

<PAGE>

STATE OF CALIFORNIA
STANDARD AGREEMENT
STD. 2 (REV. 5-91) (REVERSE)

          1.   The contractor agrees to indemnify, defend and save harmless the
               State, its officers, agents and employees from any and are claims
               and losses accruing or resulting to any and all contractors,
               subcontractors, materialmen, laborers and any other person, firm
               or corporation furnishing or supplying work services, materials
               or supplies in connection with the performance of this contract,
               and from any and all claims and losses accruing or resulting to
               any person, firm or corporation who may be injured or damaged by
               the Contractor in the performance of this contract.

          2.   The Contractor, and the agents and employees of Contractor, in
               the performance of the agreement, shall act in an independent
               capacity and not as officers or employees or agents of State of
               California.

          3.   The State may terminate this agreement and be relieved of the
               payment of any consideration to Contractor should Contractor fail
               to perform the covenants herein contained at the time and in the
               manner herein provided. In the event of such termination the
               State may proceed with the work in any manner deemed proper by
               the State. The cost to the state shall be deducted from any sum
               due the Contractor under this agreement, and the balance, if any,
               shall be paid the Contractor upon demand.

          4.   Without the written consent of the State, this agreement is not
               assignable by Contractor either in whole or in part.

          5.   Time is the essence of this agreement.

          6.   No alteration or variation of the terms of this contract shall be
               valid unless made in writing and signed by the parties hereto,
               and no oral understanding or agreement not incorporated herein,
               shall be binding on any of the parties hereto.

          7.   The consideration to be paid Contractor, as provided herein,
               shall be in compensation for all of Contractor's expenses
               incurred in the performance hereof, including travel and per
               diem, unless otherwise expressly so provided.

<PAGE>

MOLINA MEDICAL CENTERS, INC.                                        95-23637-A03

                                TABLE OF CONTENTS
<TABLE>
<S>               <C>                                                                                     <C>
ARTICLE II        DEFINITIONS                                                                             Pg  2

ARTICLE III       GENERAL TERMS AND CONDITIONS                                                            Pg 11

3.1               INTERPRETATION OF CONTRACT                                                              Pg 11
3.2               ENTIRE AGREEMENT                                                                        Pg 11
3.4               CHANGES IN STATUTES OR REGULATIONS                                                      Pg 12
3.12              INSPECTION RIGHTS                                                                       Pg 13
3.18.2            Termination-Contractor                                                                  Pg 14
3.19              Sanctions                                                                               Pg 15
3.20.1            General                                                                                 Pg 16
3.22.3            Contracting Officer's or Alternate Dispute Officer's Decision                           Pg 18
3.22.4            Appeal of Contracting Officer's or Alternate Dispute Officer's Decision                 Pg 19
3.22.5            Contractor Duty to Perform                                                              Pg 20
3.22.6            Waiver of Claims                                                                        Pg 20
3.23.1            Enrollment-General                                                                      Pg 20
3.23.3            Coverage                                                                                Pg 21
3.23.5            Disenrollment                                                                           Pg 21
3.26              FACILITIES                                                                              Pg 24
3.28.1            Knox-Keene and Regulations                                                              Pg 25
3.28.3            Departmental Approval-Non-Federally Qualified HMOs                                      Pg 25
3.28.4            Departmental Approval-Federally Qualified HMOs                                          Pg 26
3.28.6            Federally Qualified Health Centers/Rural Health Clinics                                 Pg 26
3.28.8            Disclosures                                                                             Pg 27
3.28.9            Payment                                                                                 Pg 27
3.28.10           Electronic Billing Capability                                                           Pg 28
3.28.11           Physician Incentive Plan Requirements                                                   Pg 29
3.33              AMENDMENT OF CONTRACT                                                                   Pg 29
3.41              COST AVOIDANCE AND POST-PAYMENT RECOVERY OF OTHER                                       Pg 30
                  HEALTH COVERAGE SOURCES
3.42              THIRD PARTY TORT LIABILITY/ESTATE RECOVERY                                              Pg 32
3.43              OBTAINING DHS APPROVAL                                                                  Pg 34
3.44              PILOT PROJECT                                                                           Pg 35
3.45              RECORDS RELATED TO RECOVERY FOR TOBACCO RELATED                                         Pg 35
                  ILLNESSES
3.45.1            Records                                                                                 Pg 35
3.45.2            Payment for Records                                                                     Pg 36
3.46              FRAUD AND ABUSE REPORTING                                                               Pg 37

ARTICLE IV
4.3               FACILITY INSPECTIONS                                                                    Pg 37
4.4               ENROLLMENT PROCESSING                                                                   Pg 37
4.4.1             General                                                                                 Pg 37
4.4.2             Definition                                                                              Pg 38
4.4 3             DHS Enrollment Obligations                                                              Pg 39
4.4.4             Disputes Concerning DHS Enrollment Obligations                                          Pg 40
4.6               TESTING AND CERTIFICATION OF MARKETING REPRESENTATIVES                                  Pg 42
4.7               APPROVAL PROCESS                                                                        Pg 42
4.8               PROGRAM INFORMATION                                                                     Pg 43
4.9               SANCTIONS                                                                               Pg 43
</TABLE>

                                        1

<PAGE>

MOLINA MEDICAL CENTERS, INC.                                        95-23637-A03

<TABLE>
<S>               <C>                                                                                     <C>
ARTICLE V
5.2               AMOUNTS PAYABLE                                                                         Pg 43
5.4               CAPITATION RATES CONSTITUTE PAYMENT IN FULL                                             Pg 45
5.5               DETERMINATION OF RATES                                                                  Pg 46
5.6               REDETERMINATION OF RATES-OBLIGATION CHANGES                                             Pg 48
5.9               FINANCIAL PERFORMANCE GUARANTEE                                                         Pg 49
5.11              RECOVERY OF CAPITATION PAYMENTS                                                         Pg 49
5.12              DATA REPORTING PERFORMANCE INCENTIVES                                                   Pg 50
5.12.1            Definitions                                                                             Pg 50
5.12.2            Payment Provisions                                                                      Pg 52
5.12.3            Performance Incentive Standards                                                         Pg 54
5.13              FQHC/RHC RISK CORRIDOR PAYMENTS                                                         Pg 61
5.14              PAYMENT OF AIDS BENEFICIARY RATES                                                       Pg 61

ARTICLE VI        Scope of Work
6.3.1             Financial Viability/Standards Compliance                                                Pg 63
6.3.2             Financial Audit/Reports                                                                 Pg 64
6.3.6             Submittal of FQHC and RHC Payment Information                                           Pg 66
6.3.7             Submittal of In-Patient Days Information                                                Pg 66
6.4.1             Management Information System (MIS) Capability                                          Pg 67
6.4.2             Encounter Data Submittal                                                                Pg 67
6.4.3             MIS/Data Correspondence                                                                 Pg 68
6.4.4             Timely, Complete and Accurate Data Submission                                           Pg 68
6.5.3.4           Quality Indicators                                                                      Pg 68
6.5.5.2           Review Procedures                                                                       Pg 69
6.5.5.3           Number of Sites to be Reviewed Prior to Operations                                      Pg 69
6.5.5.5           Facility Inspections                                                                    Pg 69
6.5.5.6           Corrective Actions                                                                      Pg 70
6.5.10.7          Targeted Case Management Services                                                       Pg 71
6.6.6             Provider to Member Ratios                                                               Pg 71
6.6.8             Subcontracts                                                                            Pg 71
6.6.13            Quarterly Report                                                                        Pg 72
6.6.14            Contract and Employment Terminations                                                    Pg 72
6.6.15            Utilization of DSH Hospitals                                                            Pg 72
6.6.17            Emergency Service Providers                                                             Pg 73
6.6.20            FQHC Services                                                                           Pg 75
6.6.21            FQHC and Rural Health Clinics (RHC) Contracts                                           Pg 75
6.6.22            Indian Health Services Facilities                                                       Pg 76
6.7.1.1           General Requirements                                                                    Pg 76
6.7.2.2           Waiver Programs                                                                         Pg 77
6.7.3.1           Miscellaneous Service Carve Outs                                                        Pg 77
6.7.3.2           California Children Services (CCS)                                                      Pg 78
6.7.3.3           Mental Health                                                                           Pg 80
6.7.3.5           Dental                                                                                  Pg 83
6.7.3.7           Directly Observed Therapy (DOT) for Treatment of Tuberculosis                           Pg 83
6.7.4.3           School Linked CHDP Services: Subcontracts                                               Pg 84
6.7.4.4           Early and Periodic Screening, Diagnosis and Treatment (EPSDT) Supplemental
                  Services, Including Case Management Services                                            Pg 84
6.7.4.7           Family Planning: Out-of-Network Reimbursement                                           Pg 85
6.7.4.8           Family Planning: Reimbursement Rate                                                     Pg 86
</TABLE>

                                        2

<PAGE>

MOLINA MEDICAL CENTERS, INC.                                        95-23637-A03

<TABLE>

<S>               <C>                                                                                     <C>
6.7.4.9           Sexually Transmitted Diseases (STDs)                                                    Pg 86
6.7.4.14          Nurse Midwife and Nurse Practitioner Services                                           Pg 87
6.7.7.3           Individual Health Education Behavioral Assessments                                      Pg 88
6.7.7.7           Group Needs Assessment                                                                  Pg 88
6.7.9             LOCAL MENTAL HEALTH PLAN COORDINATION                                                   Pg 89
6.7.9.1           Memorandum of Understanding                                                             Pg 89
6.8.6             Marketing Plan                                                                          Pg 91
6.9.3             Disclosure Forms                                                                        Pg 91
6.9.5             Membership Services Guide                                                               Pg 91
6.9.9             Primary Care Physician Selection                                                        Pg 94
6.9.10            Primary Care Physician Assignment                                                       Pg 95
6.9.11            Continuity of Care                                                                      Pg 95
6.9.13            Member Compliant/Grievance Systems                                                      Pg 95
6.9.15            Denial, Deferral, or Modification of Prior Authorization Requests                       Pg 96
6.10.6            Cultural and Linguistics Services Plan                                                  Pg 97
6.11.1            Time Frames                                                                             Pg 98
</TABLE>

                                        3

<PAGE>

MOLINA MEDICAL CENTERS, INC.                                        95-23637-A03

1.   Article II, DEFINITIONS, is amended by adding a new Section I, Catastrophic
     Coverage Limitation, to read:

     I.   Catastrophic Coverage Limitation means the date beyond which
          Contractor is not at risk, as determined by the Director, to provide
          or make reimbursement for illness of or injury to beneficiaries which
          results from or is greatly aggravated by a catastrophic occurrence or
          disaster, including, but not limited to, an act of war, declared or
          undeclared, and which occurs subsequent to enrollment.

2.   Article II, DEFINITIONS, is amended by relettering old Sections I through
     LL as new Sections J through MM.

3.   Article II, DEFINITIONS, relettered Section P, Covered Services, is amended
     to read:

     P.   Covered Services means Medical Case Management and those services set
          forth in Title 22, CCR, Division 3, Subdivision 1, Chapter 3,
          beginning with Section 51301, and Title 17, CCR, Chapter 4, Subchapter
          13, Article 4, beginning with Section 6840. Covered Services do not
          include:

          1.   Services for major organ transplants as specified in Section
               6.7.2.1, Major Organ Transplants.

          2.   Long term care services as specified in Section 6.7.2.3, Long
               Term Care, (LTC).

          3.   Home and community based services (HCBS) as specified in Sections
               6.7.2.2, Waiver Programs, and 6.7.3.8, Department of
               Developmental Services Administered Medicaid Home and Community
               Based Services Waiver. HCBS do not include any service that is
               available as an EPSDT service, including EPSDT supplemental
               services, as described in Title 22, CCR, Sections 51184, 51340
               and 51340.1. EPSDT supplemental services are covered under this
               Contract, as specified in Article VI, Section 6.7.4.4, Early and
               Periodic Screening, Diagnosis and Treatment (EPSDT) Supplemental
               Services, Including Case Management Services.

          4.   California Children Services (CCS) as specified in Section
               6.7.3.2, CCS Services.

          5.   Mental health services as specified in Section 6.7.3.3, Mental
               Health.

                                        2

<PAGE>

MOLINA MEDICAL CENTERS, INC.                                        95-23637-A03

          6.   Alcohol and drug treatment services and outpatient heroin
               detoxification as specified in Section 6.7.3.4, Alcohol and Drug
               Treatment Services.

          7.   Fabrication of optical lenses as specified in Section 6.7.3.6,
               Vision Care - Lenses.

          8.   Directly observed therapy for tuberculosis as specified in
               Section 6.7.3.7, Directly Observed Therapy (DOT) for Treatment of
               Tuberculosis.

          9.   Dental services as specified in Title 22, CCR, Section 51307 and
               EPSDT supplemental dental services as described in Title 22, CCR,
               Section 51340.1(a). However, Contractor is responsible for all
               Covered Services as specified in Article VI, Section 6.7.3.5,
               Dental.

          10.  Acupuncture services as specified in Title 22, CCR, Section
               51308.5.

          11.  Chiropractic services as specified in Title 22, CCR, Section
               51308.

          12.  Prayer or spiritual healing as specified in Title 22, CCR,
               Section 51312.

          13.  Local Education Agency (LEA) assessment services as specified in
               Title 22, CCR, Section 51360(b)(1) provided to a Member who
               qualifies for LEA services based on Title 22, CCR, Section
               51190.1(a).

          14.  Any LEA services as specified in Title 22, CCR, Section 51360
               provided pursuant to an Individualized Education Plan (IEP) as
               set forth in Education Code, Section 56340 et seq. or an
               Individualized Family Service Plan (IFSP) as set forth in
               Government Code Section 95020, or LEA services provided under an
               Individualized Health and Support Plan (IHSP), as described in
               Title 22, CCR, Section 51360.

          15.  Laboratory services provided under the State serum
               alphafetoprotein- testing program administered by the Genetic
               Disease Branch of DHS.

          16.  Adult Day Health Care.

          17.  Targeted case management services as specified in Title 22, CCR,
               Sections 51185(h) and 51351, and as described in Article VI,
               Section 6.5.10.7, Targeted Case Management Services.

                                        3

<PAGE>

MOLINA MEDICAL CENTERS, INC.                                        95-23637-A03

          18.  Childhood lead poisoning case management provided by County
               health departments.

          19.  HIV and AIDS drugs listed in Attachment II (consisting of one
               page), and HIV and AIDS drugs classified as Nucleoside Analogs,
               Protease Inhibitors, and Non-Nucleoside Reverse Transcriptase
               Inhibitors, approved by the federal Food and Drug Administration
               (FDA) after July 1, 1997.

4.   Article II, DEFINITIONS, relettered Section Y, Eligible Beneficiary, is
     amended to read:

     Y.   Eligible Beneficiary means any Medi-Cal beneficiary who is residing in
          Contractor's Service Area with one of the following aid codes:
          CalWORKS/Public Assistance Family - aid codes 30, 32, 3G, 33, 3H, 35,
          38, 39, 3A, 3C, 40, 42, 54, 59, 3P, 3R, 3N, 3U, 7X; 3E, 3L, 3M;
          Medically Needy Family - aid code 34; Public Assistance Aged - aid
          codes 10, 16, 18; Medically Needy Aged - aid code 14; Public
          Assistance Blind - aid codes 20, 26, 28, 6A; Medically Needy Blind -
          aid code 24; Public Assistance Disabled - aid codes 36, 60, 66, 68,
          6C, 6N, 6P, 6R; Medically Needy Disabled - aid code 64; Medically
          Indigent Child - aid codes 03, 04, 45, 4C, 4K, 5K, 82; Medically
          Indigent Adult - aid code 86; and Refugees - aid codes 01, 0A, 02, and
          08, with the following exclusions:

          1.   Individuals who have been approved by the Medi-Cal Field Office
               or the California Children Services Program for bone marrow,
               heart, heart-lung, liver, lung, combined liver and kidney, or
               combined liver and small bowel transplants.

          2.   Individuals who elect and are accepted to participate in the
               following Medi-Cal waiver programs: In-Home Medical Care Waiver
               Program, the Skilled Nursing Facility Waiver Program, the Model
               Waiver Program, the Acquired Immune Deficiency (AIDS) and AIDS
               Related Conditions Waiver Program, and the Multipurpose Senior
               Services Waiver Program.

          3.   Individuals determined by the Medi-Cal Field Office to be in need
               of long term care and residing in a Skilled Nursing Facility
               (SNF) for 30 days past the month of admission.

                                        4

<PAGE>

MOLINA MEDICAL CENTERS, INC.                                        95-23637-A03

          4.   Individuals who have commercial or Medicare HMO coverage, unless
               the Medicare HMO is a provider under this Contract and DHS has
               agreed, as a term of the HMO's Contract, that these individuals
               may be enrolled, and DHS and the Medicare HMO have negotiated an
               appropriate rate for these individuals. Individuals with Medicare
               fee-for-service coverage are not excluded from enrolling under
               this Contract.

5.   Article II, DEFINITIONS, relettered Section Z, Emergency Conditions, is
     amended to read:

     Z.   Emergency Medical Condition means a medical condition which is
          manifested by acute symptoms of sufficient severity (including severe
          pain), such that a prudent lay person, who possesses an average
          knowledge of health and medicine, could reasonably expect the absence
          of immediate medical attention to result in:

          1.   placing the health of the individual (or, in the case of a
               pregnant woman, the health of the woman or her unborn child) in
               serious jeopardy,

          2.   serious impairment to bodily function, or

          3.   serious dysfunction of any bodily organ or part.

6.   Article II, DEFINITIONS, relettered Section AA, Emergency Services, is
     amended to read:

     AA.  Emergency Services means those health services needed to evaluate or
          stabilize an Emergency Medical Condition.

7.   Article II, DEFINITIONS, relettered Section HH, Fee-For-Service Mental
     Health Services (FFS/MC), is amended to read:

     HH.  Fee-For-Service Medi-Cal Mental Health Services (FFS/MC) means the
          mental health services covered through Fee-For-Service Medi-Cal which
          include outpatient services and acute care inpatient services. These
          services are provided through Primary Care Physicians as well as
          psychiatrists and psychologists.

                                        5

<PAGE>

MOLINA MEDICAL CENTERS, INC.                                        95-23637-A03

8.   Article II, DEFINITIONS, relettered Section II, Financial Security, is
     amended to read:

     II.  Financial Performance Guarantee means cash or cash equivalents which
          are immediately redeemable upon demand by DHS, in an amount determined
          by DHS, which shall not be less than one full month's capitation.

9.   Article II, DEFINITIONS, is amended by adding a new Section NN, Health Plan
     Employer Data and Information Set, to read:

     NN.  Health Plan Employer Data and Information Set (HEDIS) means the set of
          standardized performance measures developed by the National Committee
          for Quality Assurance (NCQA), a not-for-profit organization. HEDIS is
          designed to ensure that the public has the information it needs to
          reliably compare the performance of managed health care plans.

10.  Article II, DEFINITIONS, is amended by relettering old Sections MM through
     K2 as new Sections OO through M2.

11.  Article II, DEFINITIONS, relettered Section QQ, Joint Commission on
     Accreditation of Hospitals (JCAHCO), is amended to read:

     QQ.  Joint Commission on the Accreditation of Health Care Organizations
          (JCAHCO) means the organization composed of representatives of the
          American Hospital Association, the American Medical Association, the
          American College of Physicians, the American College of Surgeons, and
          the American Dental Association. JCAHCO provides health care
          accreditation and related services that support performance
          improvement in health care organizations.

12.  Article II, DEFINITIONS, relettered Section B1, Minor Consent Services, is
     amended to read:

     B1.  Minor Consent Services means those Covered Services of a sensitive
          nature which minors do not need parental consent to access related to:

          1.   Sexual assault, including rape.

          2.   Drug or alcohol abuse for children 12 years of age or older.

          3.   Pregnancy.

                                        6

<PAGE>

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          4.   Family planning.

          5.   Sexually transmitted diseases (STDs), designated by the Director,
               in children 12 years of age or older.

          6.   Outpatient mental health care for children 12 years of age or
               older who are mature enough to participate intelligently and
               where either (1) there is a danger of serious physical or mental
               harm to the minor or others or (2) the children are the alleged
               victims of incest or child abuse.

          State law provides minors the right to obtain an abortion without
          parental consent.

13.  Article II, DEFINITIONS, relettered Section P1, Primary Care Provider, is
     amended to read:

     P1.  Primary Care Provider means a person responsible for supervising,
          coordinating, and providing initial and Primary Care to Members; for
          initiating referrals and for maintaining the continuity of Member
          care. A Primary Care Provider may be a Primary Care Physician or
          Non-Physician Medical Practitioner.

14.  Article II, DEFINITIONS, relettered Section X1, Sensitive Services, is
     amended to read:

     X1.  Sensitive Services means those services related to:

          1.   Family planning.

          2.   Sexually transmitted diseases (STDs).

          3.   Abortion.

          4.   HIV testing.

15.  Article II, DEFINITIONS, relettered Section B2, Short-Doyle Medi-Cal Mental
     Health Services (SD/MC), is amended to read:

     B2.  Short-Doyle Medi-Cal Mental Health Services (SD/MC) means those
          services defined in Title 22, CCR, Section 51341. SD/MC Mental Health
          Services include: crisis intervention, crisis stabilization, inpatient
          hospital services, crisis residential treatment case management, adult
          residential treatment, day treatment intensive, rehabilitation,
          outpatient therapy, medication and support services.

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MOLINA MEDICAL CENTERS, INC.                                        95-23637-A03

16.  Article II, DEFINITIONS, relettered Section J2, Third Party Liability
     (TPL), is amended to read:

     J2.  Third Party Tort Liability (TPTL) means the responsibility of an
          individual or entity other than Contractor or the Member for the
          payment of claims for injuries or trauma sustained by a Member. This
          responsibility may be contractual, a legal obligation, or as a result
          of, or the fault or negligence of, third parties (e.g., auto accidents
          or other personal injury casualty claims or Workers' Compensation
          appeals).

17.  Article II, DEFINITIONS, is amended by adding a new subsection N2 to read:

     N2.  Physician Incentive Plan means any compensation arrangement between
          Contractor and a Physician or a Physician group that may directly or
          indirectly have the effect of reducing or limiting services provided
          to Members under this Contract.

18.  Article II, DEFINITIONS, is amended by adding a new subsection O2 to read:

     O2.  Rural Health Clinic (RHC) means an entity defined in Title 22, CCR,
          Section 51115.5.

19.  Article II, DEFINITIONS, is amended by adding a new subsection P2 to read:

     P2.  Beneficiary Assignment means the act of DHS or DHS' enrollment
          contractor of notifying a beneficiary in writing of the health plan in
          which the beneficiary shall be enrolled if the beneficiary fails to
          timely choose a health plan. If, at any time, the beneficiary notifies
          DHS or DHS' enrollment contractor of the beneficiaries health plan
          choice, such choice shall override the beneficiary assignment and be
          effective as provided in Article III, Section 3.23.3, Coverage.

20.  Article II, DEFINITIONS, is amended by adding a new subsection Q2 to read:

     Q2.  AIDS Beneficiary means a Member for whom a Diagnosis of Acquired
          Immunodeficiency Syndrome (AIDS) has been made by a treating
          Physician.

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MOLINA MEDICAL CENTERS, INC.                                        95-23637-A03

21.  Article II, DEFINITIONS, is amended by adding a new subsection R2 to read:

     R2.  Diagnosis of AIDS means a clinical diagnosis of AIDS that meets the
          most recent communicable disease surveillance case definition of AIDS
          established by the federal Centers for Disease Control and Prevention
          (CDC), United States Department of Health and Human Services and
          published in the Morbidity and Mortality Weekly Report (MMWR) or its
          supplements, in effect for the month in which the clinical diagnosis
          is made.

22.  Article II, DEFINITIONS, is amended by adding a new subsection S2 to read:

     S2.  Other Healthcare Coverage Sources (OHCS) means the responsibility of
          an individual or entity, other than Contractor or the Member, for the
          payment of the reasonable value of all or part of the healthcare
          benefits provided to a Member. Such OHCS may originate under any other
          State, federal, or local medical care program or under other
          contractual or legal entitlement, including, but not limited to, a
          private group or indemnification program. This responsibility may
          result from a health insurance policy or other contractual agreement
          or legal obligation, excluding tort liability.

23.  Article II, DEFINITIONS, is amended by adding a new subsection T2 to read:

     T2.  Cost Avoid means Contractor requires a provider to bill all liable
          third parties and receive payment or proof of denial of coverage from
          such third parties prior to Contractor paying the provider for the
          services rendered.

24.  Article II, DEFINITIONS, is amended by adding a new subsection U2 to read:

     U2.  Post-Payment Recovery means Contractor pays the provider for the
          services rendered and then uses all reasonable efforts to recover the
          cost of the services from all liable third parties.

25.  Article II, DEFINITIONS, is amended by adding a new subsection V2 to read:

     V2.  Word Usage. Unless the context of this Contract clearly requires
          otherwise, (a) the plural and singular numbers shall each be deemed to
          include the other; (b) the masculine, feminine, and neuter genders
          shall each be deemed to include the others; (c) "shall," "will,"
          "must," or "agrees" are mandatory, and "may" is permissive; (d) "or"
          is not exclusive; and (e) "includes" and "including" are not limiting.

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 MOLINA MEDICAL CENTERS, INC.                                       95-23637-A03

26.  Article II, DEFINITIONS, is amended by adding a new section W2 to read:

     W2.  Specialty Mental Health Provider means a person or entity who is
          licensed, certified or otherwise recognized or authorized under State
          law governing the healing arts to provide Specialty Mental Health
          Services and who meets the standards for participation in the Medi-Cal
          program. Specialty Mental Health Providers include clinics, hospital
          outpatient departments, certified residential treatment facilities,
          skilled nursing facilities, psychiatric health facilities, hospitals,
          and licensed mental health professionals, including psychiatrists,
          psychologists, licensed clinical social workers, marriage, family and
          child counselors, and registered nurses authorized to provide
          Specialty Mental Health Services.

27.  Article II, DEFINITIONS, is amended by adding a new section X2 to read:

     X2.  Specialty Mental Health Service means:

          1.   Rehabilitative services, which includes mental health services,
               medication support services, day treatment intensive, day
               rehabilitation, crisis intervention, crisis stabilization, adult
               residential treatment services, crisis residential services, and
               psychiatric health facility services;

          2.   Psychiatric inpatient hospital services;

          3.   Targeted Case Management;

          4.   Psychiatrist services;

          5.   Psychologist services; and

          6.   EPSDT supplemental specialty mental health services.

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MOLINA MEDICAL CENTERS, INC.                                        95-23637-A03

28.  Article III, GENERAL TERMS AND CONDITIONS, is amended by adding new
     Sections 3.1 and 3.2 to read:

     3.1       INTERPRETATION OF CONTRACT

     If it is necessary to interpret this Contract, all applicable laws may be
     used as aids in interpreting the Contract. However, the parties agree that
     any such applicable laws shall not be interpreted to create contractual
     obligations upon DHS or Contractor, unless such applicable laws are
     expressly incorporated into this Contract in some section other than this
     Section 3.1, Interpretation of Contract. Except for Section 3.19, Sanctions
     and Section 3.20, Liquidated Damages Provision, the parties agree that any
     remedies for DHS' or Contractor's non-compliance with laws not expressly
     incorporated into this Contract, or any covenants implied to be part of
     this Contract, shall not include money damages, but may include equitable
     remedies such as injunctive relief or specific performance. In the event
     any provision of this Contract is held invalid by a court, the remainder of
     this Contract shall not be affected. This Contract is the product of mutual
     negotiation, and if any ambiguities should arise in the interpretation of
     this Contract, both parties shall be deemed authors of this Contract.

     3.2       ENTIRE AGREEMENT

     This written Contract and any amendments shall constitute the entire
     agreement between the parties. No oral representations shall be binding on
     either party unless such representations are reduced to writing and made an
     amendment to the Contract.

29.  Article III, GENERAL TERMS AND CONDITIONS, is amended by renumbering old
     Section 3.1, Delegation of Authority, as Section 3.3 and amending paragraph
     three to read:

     Contractor's Representative shall be designated in writing by Contractor.
     Such designation shall be submitted to the Contracting Officer in
     accordance with Section 3.5, Authority of the State.

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MOLINA MEDICAL CENTERS, INC.                                        95-23637-A03

30.  Article III, GENERAL TERMS AND CONDITIONS, is amended by deleting old
     Section 3.2, Governing Authorities, and replacing it with a new Section
     3.4, Changes in Statutes or Regulations, to read:

     3.4       CHANGES IN STATUTES OR REGULATIONS

     The parties recognize that during the life of this Contract, the Medi-Cal
     Managed Care Program shall be a dynamic program requiring numerous changes
     to its operations and

     that the scope and complexity of these changes shall vary widely over the
     life of the Contract. The parties agree that the development of a system
     that has the capability to implement such changes in an orderly and timely
     manner is of considerable importance.

     Any provision of this Contract which is in conflict with current or future
     applicable federal or State laws or regulations is hereby amended to
     conform to the provisions of those laws and regulations. Such amendment of
     the Contract shall be effective on the effective date of the statutes or
     regulations necessitating it, and shall be binding on the parties even
     though such amendment may not have been reduced to writing and formally
     agreed upon and executed by the parties.

     Such amendment shall constitute grounds for termination of this Contract in
     accordance with the procedures and provisions of Section 3.18.2,
     Termination - Contractor. The parties shall be bound by the terms of the
     amendment until the effective date of the termination.

31.  Article III, GENERAL TERMS AND CONDITIONS, is amended by renumbering old
     Sections 3.3 through 3.9, as Sections 3.5 through 3.11.

32.  Article III, GENERAL TERMS AND CONDITIONS, renumbered Section 3.7,
     Compliance with Protocols, sentence one, is amended to read:

     Contractor shall develop the protocols and procedures specified in this
     Contract and shall comply with them within 30 days of their approval by
     DHS.

33.  Article III, GENERAL TERMS AND CONDITIONS, is amended by deleting old
     Section 3.10, Membership Diversity.

34.  Article III, GENERAL TERMS AND CONDITIONS, is amended by renumbering old
     Sections 3.11 through 3.43 as Sections 3.12 through 3.44.

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MOLINA MEDICAL CENTERS, INC.                                        95-23637-A03

35.  Article III, GENERAL TERMS AND CONDITIONS, renumbered Section 3.12,
     Inspection Rights, is amended to read:

     3.12      INSPECTION RIGHTS

     Through the end of the records retention period specified in Section
     3.32.2, Records Retention, Contractor shall allow DHS, DHHS, the
     Comptroller General of the United States, Department of Justice (DOJ)
     Bureau of Medi-Cal Fraud, Department of Corporations (DOC), and other
     authorized State agencies, or their duly authorized representatives,
     including DHS' external quality review organization contractor, to inspect,
     monitor or otherwise evaluate the quality, appropriateness, and timeliness
     of services performed under this Contract, and to inspect, evaluate, and
     audit any and all books, records, and Facilities maintained by Contractor
     and subcontractors pertaining to these services at any time during normal
     business hours.

     Books and records include, but are not limited to, all physical records
     originated or prepared pursuant to the performance under this Contract,
     including working papers, reports, financial records, and books of account,
     Medical Records, prescription files, laboratory results, Subcontracts,
     information systems and procedures, and any other documentation pertaining
     to medical and non-medical services rendered to Members. Upon request,
     through the end of the records retention period specified in Section
     3.32.2, Records Retention, Contractor shall furnish any record, or copy of
     it, to DHS or any other entity listed in this section, at Contractor's sole
     expense.

36.  Article III, GENERAL TERMS AND CONDITIONS, renumbered Section 3.15, Term,
     paragraph two, is amended to read:

     The term of the Contract consists of the following three periods: 1) The
     Implementation Period shall extend from March 1, 1996 to June 1,1996; 2)
     The Operations Period shall extend from June 1, 1996 to March 1,2001,
     subject to the termination provisions of Sections 3.18, Termination, and
     3.19, Sanctions, and subject to the limitation provisions of Article V,
     Payment Provisions, Section 5.2, Amounts Payable; and 3) The
     Turnover/Phaseout Period shall extend for six (6) months from the end of
     the Operations Period, subject to the provisions of Section 3.16, Contract
     Extension, in which case the Turnover/Phaseout Period shall apply to the
     six (6) month period beginning the first day after the end of the
     Operations Period, as extended.

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MOLINA MEDICAL CENTERS, INC.                                        95-23637-A03

37.  Article III, GENERAL TERMS AND CONDITIONS, renumbered Section 3.17,
     Turnover and Phaseout Requirements, paragraph one, is amended to read:

     DHS shall retain an amount equal to 10% or one million dollars
     ($1,000,000), whichever is greater unless provided otherwise by the
     Financial Performance Guarantee, from the capitation payment of the last
     month of the Operations Period until all activities required during the
     Turnover and Phaseout Period are fully completed to the satisfaction of
     DHS, in it sole discretion.

38.  Article III, GENERAL TERMS AND CONDITIONS, renumbered Section 3.18.1,
     Termination - State or Director, paragraph two, is amended to read:

     Notification shall be given at least nine (9) months prior to the effective
     date of termination, except in cases where the Director determines the
     health and welfare of Members is jeopardized by continuation of this
     Contract, in which case the Contract shall be immediately terminated.
     Notification shall state the effective date of, and the reason for the
     termination. DHS and Contractor may negotiate an earlier termination date.

39.  Article III, GENERAL TERMS AND CONDITIONS, renumbered Section 3.18.2,
     Termination - Contractor, is amended to read:

     3.18.2    TERMINATION - CONTRACTOR

     If mutual agreement between DHS and Contractor cannot be attained on
     capitation rates for rate years subsequent to September 30,1997, Contractor
     shall retain the right to terminate the Contract, no earlier than September
     30,1998, by giving at least nine (9) months written notice to DHS to that
     effect. The effective date of any termination under this section shall be
     September 30.

     Grounds under which Contractor may terminate this Contract are limited to:
     (1) Unwillingness to accept the capitation rates determined by DHS, or if
     DHS decides to negotiate rates, failure to reach mutual agreement on rates;
     or (2) When a change in contractual obligations is created by a State or
     federal change in the Medi-Cal program, or a lawsuit, that substantially
     alters the financial assumptions and conditions under which Contractor
     entered into this Contract, such that Contractor can demonstrate to the
     satisfaction of DHS that it cannot remain financially solvent through the
     term of the Contract.

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MOLINA MEDICAL CENTERS, INC.                                        95-23637-A03

     If Contractor invokes ground number 2, Contractor shall submit a detailed
     written financial analysis to DHS supporting its conclusions that it cannot
     remain financially solvent. At the request of DHS, Contractor shall submit
     or otherwise make conveniently available to DHS, all of Contractor's
     financial work papers, financial reports, financial books and other
     records, bank statements, computer records, and any other information
     required by DHS to evaluate Contractor's financial analysis.

     Based on the above two grounds, Contractor may terminate the Contract, no
     earlier than September 30, 1998, by giving at least nine (9) months written
     notice to DHS to that effect. The effective date of any termination under
     this section shall be September 30.

     DHS and Contractor may negotiate an earlier termination date if Contractor
     can demonstrate to the satisfaction of DHS that it cannot remain
     financially solvent until the termination date that would otherwise be
     established under this section. Termination under these circumstances shall
     not relieve Contractor from performing the Turnover and Phaseout
     activities, as described in Section 3.17.

40.  Article III, GENERAL TERMS AND CONDITIONS, renumbered Section 3.18.3,
     Mandatory Termination, paragraph 2, is amended to read:

     Under these circumstances, termination of the Contract shall be effective
     on the last day of the month in which the Secretary, DHHS, or DOC makes
     such determination, provided that DHS provides Contractor with at least 60
     days notice of termination. The termination of this Contract shall be
     effective on the last day of the second full month from the date of the
     notice of termination. Contractor agrees that 60 days notice is reasonable.
     Termination under this section does not relieve Contractor of its
     obligations under the Turnover and Phaseout Requirements, Sections 3.17
     through 3.17.4, except that these requirements may be performed after
     Contract termination.

41.  Article III, GENERAL TERMS AND CONDITIONS, renumbered Section 3.19,
     Sanctions, is amended to read:

     3.19      SANCTIONS

     In the event DHS finds Contractor non-compliant with any provisions of this
     Contract, applicable statutes or regulations, or for good cause shown, DHS
     may impose sanctions provided in Welfare and Institutions Code, Section
     14304 and Title 22, CCR, Section 53872. Good cause includes, but is not
     limited to, three repeated and uncorrected findings of serious deficiencies
     that have the potential to endanger patient care identified in the medical
     audits conducted by DHS.

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MOLINA MEDICAL CENTERS, INC.                                        95-23637-A03

     If required by DHS, Contractor shall ensure subcontractors cease specified
     activities which may include, but are not limited to, referrals, assignment
     of beneficiaries, and reporting, until DHS determines that Contractor is
     again in compliance.

42.  Article III, GENERAL TERMS AND CONDITIONS, renumbered Section 3.20.1,
     General, is amended to read:

     3.20.1    GENERAL

     It is agreed by the State and Contractor that:

     A.   If Contractor does not provide or perform the requirements of this
          Contract or applicable laws and regulations, damage to the State shall
          result;

     B.   Proving such damages shall be costly, difficult, and time-consuming;

     C.   Should the State choose to impose liquidated damages, Contractor shall
          pay the State those damages for not providing or performing the
          specified requirements;

     D.   Additional damages may occur in specified areas by prolonged periods
          in which Contractor does not provide or perform requirements;

     E.   The damage figures listed below represent a good faith effort to
          quantify the range of harm that could reasonably be anticipated at the
          time of the making of the Contract;

     F.   DHS may, at its discretion, offset liquidated damages from capitation
          payments owed to Contractor;

     G.   Imposition of liquidated damages as specified in Sections 3.20.2,
          Liquidated Damages for Violation of Contract Terms Regarding the
          Implementation Period, 3.20.3, Liquidated Damages for Violation of
          Contract Terms or Regulations Regarding the Operations Period, and
          3.20.4, Annual Medical Reviews, shall follow the administrative
          processes described below;

     H.   DHS shall provide Contractor with written notice specifying Contractor
          requirement(s), contained in the Contract or as required by federal
          and State law or regulation, not provided or performed;

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MOLINA MEDICAL CENTERS, INC.                                        95-23637-A03

     I.   During the Implementation Period, Contractor shall submit or complete
          the outstanding requirement(s) specified in the written notice within
          five (5) State working days from the date of the notice, unless,
          subject to the Contracting Officer's written approval, Contractor
          submits a written request for an extension. The request must include
          the following: the requirement(s) requiring an extension; the reason
          for the delay; and the proposed date of the submission of the
          requirement.

     J.   During the Implementation Period, if Contractor has not performed or
          completed an Implementation Period requirement or secured an extension
          for the submission of the outstanding requirement, DHS may impose
          liquidated damages for the amount specified in Section 3.20.2,
          Liquidated Damages for Violation of Contract Terms Regarding the
          Implementation Period.

     K.   During the Operations Period, Contractor shall demonstrate the
          provision or performance of Contractor's requirement(s) specified in
          the written notice within a thirty (30) calendar day Corrective
          Action period from the date of the notice, unless within five (5) days
          from the end of the Corrective Action period a request for an
          extension is submitted to the Contracting Officer. If Contractor has
          not demonstrated the provision or performance of Contractor's
          requirement(s) specified in the written notice by the end of the
          Corrective Action period, DHS may impose liquidated damages for each
          day the specified Contractor's requirement is not performed or
          provided for, in the amount specified in Section 3.20.3, Liquidated
          Damages for Violation of Contract Terms or Regulations Regarding the
          Operations Period.

     L.   During the Operations Period, if Contractor has not performed or
          provided Contractor's requirement(s) specified in the written notice
          or secured the written approval for an extension, after thirty (30)
          days from the first day of the imposition of liquidated damages, DHS
          shall notify Contractor in writing of the increase of the liquidated
          damages to the amount specified in Section 3.20.3, Liquidated Damages
          for Violation of Contract Terms or Regulations Regarding the
          Operations Period.

     Nothing in this provision shall be construed as relieving Contractor from
     performing any other Contract duty not listed herein, nor is the State's
     right to enforce or to seek other remedies for failure to perform any other
     Contract duty hereby diminished.

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MOLINA MEDICAL CENTERS, INC.                                        95-23637-A03

43.  Article III, GENERAL TERMS AND CONDITIONS, renumbered Section 3.20.4,
     Annual Medical Reviews, paragraph one, sentence two, is amended to read:

     If, after notice, Contractor does not correct the deficiency to the
     satisfaction of DHS within thirty (30) days, or longer if authorized by DHS
     in writing, DHS may impose an additional liquidated damages of $5,000 per
     day per major uncorrected deficiency as determined by DHS medical review
     staff.

44.  Article III, GENERAL TERMS AND CONDITIONS, renumbered Section 3.22.3,
     Contracting Officer's Decision, is amended to read:

     3.22.3    CONTRACTING OFFICER'S OR ALTERNATE DISPUTE OFFICER'S DECISION

     Pursuant to a request by Contractor, the Contracting Officer may provide
     for a dispute to be decided by an alternate dispute officer designated by
     DHS, who is not the Contracting Officer and is not directly involved in the
     Medi-Cal Managed Care Program. Any disputes concerning performance of this
     Contract shall be decided by the Contracting Officer or the alternate
     dispute officer in a written decision stating the factual basis for the
     decision. Within thirty (30) days of receipt of a Notification of Dispute,
     the Contracting Officer or the alternate dispute officer shall either
     render a decision or shall request from Contractor, which in the opinion of
     the Contracting Officer or alternate dispute officer is sufficient to allow
     the rendering of a decision. Within thirty (30) days of receipt of the
     additional substantiating documentation requested, a decision shall be
     rendered. A copy of the decision shall be served on Contractor.

     The Contracting Officer's or alternate dispute officer's decision shall:

     A.   Find in favor of Contractor, in which case the Contracting Officer or
          alternate dispute officer may:

          1.   Countermand the earlier conduct which caused Contractor to file a
               dispute; or

          2.   Reaffirm the conduct and, if there is a cost impact sufficient to
               constitute a change in obligations pursuant to the payment
               provisions contained in Article V, direct DHS to comply with that
               section.

     B.   Deny Contractor's dispute and, where necessary, direct the manner of
          future performance; or

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MOLINA MEDICAL CENTERS, INC.                                        95-23637-A03

     C.   Request additional substantiating documentation in the event the
          information in Contractor's notification is inadequate to permit a
          decision to be made under A. or B. above, and shall advise Contractor
          as to what additional information is required, and establish how that
          information shall be furnished. Contractor shall have thirty (30) days
          to respond to the Contracting Officer's or alternate dispute officer's
          request for further information. Upon receipt of this additional
          requested information, the Contracting Officer or alternate dispute
          officer shall have thirty (30) days to respond with a decision.
          Failure to supply additional information required by the Contracting
          Officer or alternate dispute officer within the time period specified
          above shall constitute waiver by Contractor of all claims in
          accordance with Section 3.22.6, Waiver of Claims.

45.  Article III, GENERAL TERMS AND CONDITIONS, is amended by adding a new
     Section 3.22.4, to read:

     3.22.4    APPEAL OF CONTRACTING OFFICER'S OR ALTERNATE DISPUTE OFFICER'S
               DECISION

     Contractor shall have thirty (30) calendar days following the receipt of
     the decision to file an appeal of the decision to the Director. All appeals
     shall be governed by Health and Safety Code Section 100171, except for
     those provisions of Section 100171(d)(1) relating to accusations,
     statements of issues, statement to respondent, and notice of defense. All
     appeals shall be in writing and shall be filed with DHS' Office of
     Administrative Hearings and Appeals. An appeal shall be deemed filed on the
     date it is received by the Office of Administrative Hearings and Appeals.
     An appeal shall specifically set forth each issue in dispute, and include
     Contractor's contentions as to those issues. However, Contractor's appeal
     shall be limited to those issues raised in its Notice of Dispute filed
     pursuant to Section 3.22.2, Notification of Dispute. Failure to timely
     appeal the decision shall constitute a waiver by Contractor of all claims
     arising out of that conduct, in accordance with Section 3.22.6, Waiver of
     Claims. Contractor shall exhaust all procedures provided for in Section
     3.22, Disputes and Appeals, prior to initiating any other action to enforce
     this Contract.

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MOLINA MEDICAL CENTERS, INC.                                        95-23637-A03

46.  Article III, GENERAL TERMS AND CONDITIONS, old Section 3.21.4, Contractor
     Duty to Perform, is amended to read:

     3.22.5    CONTRACTOR DUTY TO PERFORM

     Pending final determination of any dispute hereunder, Contractor shall
     proceed diligently with the performance of this Contract and in accordance
     with the Contracting Officer's or alternate dispute officer's decision.

     If, pursuant to an appeal under Section 3.22.4, Appeal of Contracting
     Officer's or Alternate Dispute Officer's Decision, the Contracting
     Officer's or alternate dispute officer's decision is reversed, the effect
     of the decision pursuant to Section 3.22.4 shall be retroactive to the date
     of the Contracting Officer's or alternate dispute officer's decision, and
     Contractor shall promptly receive any benefits of such decision. DHS shall
     not pay any interest on any amounts paid pursuant to a Contracting
     Officer's or alternate dispute officer's decision or any appeal of such
     decision.

47.  Article III, GENERAL TERMS AND CONDITIONS, old Section 3.21.5, Waiver of
     Claims, is amended to read:

     3.22.6    WAIVER OF CLAIMS

     If Contractor fails to submit a Notification of Dispute, supporting and
     substantiating documentation, any additionally required information, or an
     appeal of the Contracting Officer's or alternate dispute officer's
     decision, in the manner and within the time specified in the Disputes and
     Appeals sections, that failure shall constitute a waiver by Contractor of
     all claims arising out of that conduct, whether direct or consequential in
     nature.

48.  Article III, GENERAL TERMS AND CONDITIONS, renumbered Section 3.23.1,
     Enrollment - General, is amended to read:

     3.23.1    ENROLLMENT - GENERAL

     Eligible Beneficiaries residing within the Service Area of Contractor may
     be enrolled at any time during the term of this Contract. Eligible
     Beneficiaries shall be accepted by Contractor up to the limits imposed in
     Section 3.23.2, Enrollment Totals, and without regard to physical or mental
     condition, age, sex, race, religion, creed, color, national origin, marital
     status, sexual orientation or ancestry.

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MOLINA MEDICAL CENTERS, INC.                                        95-23637-A03

49.  Article III, GENERAL TERMS AND CONDITIONS, renumbered Section 3.23.3,
     Coverage, is amended to read:

     3.23.3    COVERAGE

     Member coverage shall begin at 12:01 a.m. on the first day of the calendar
     month for which the Eligible Beneficiary's name is added to the approved
     list of Members furnished by DHS to Contractor. The term of membership
     shall continue indefinitely unless this Contract expires, is terminated, or
     the Member is disenrolled under the conditions described in Section 3.23.5,
     Disenrollment.

50.  Article III, GENERAL TERMS AND CONDITIONS, renumbered Section 3.23.5,
     Disenrollment, is amended to read:

     3.23.5    DISENROLLMENT

     The enrollment contractor shall process a Member Disenrollment under the
     following conditions, subject to approval by DHS, in accordance with the
     provisions of Title 22, CCR, Section 53891:

     A.   Disenrollment of a Member is mandatory when:

          1.   The Member requests Disenrollment, subject to any lock-in
               restrictions on Disenrollment under the federal lock-in option,
               if applicable.

          2.   The Member's eligibility for Enrollment with Contractor is
               terminated or eligibility for Medi-Cal is ended, including the
               death of the Member.

          3.   Enrollment was in violation of Title 22, CCR, Section 53891
               (a)(2), or requirements of this Contract regarding Marketing, and
               DHS or Member requests Disenrollment.

          4.   Disenrollment is requested in accordance with Welfare and
               Institutions Code, Sections 14303.1 or 14303.2.

          5.   There is a change of a Member's place of residence to outside
               Contractor's Service Area.

          6.   It is determined that the Member is enrolled as a commercial or
               Medicare member of an HMO other than Contractor.

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          7.   Disenrollment is based on the circumstances described in Article
               VI, Section 6.7.2, Excluded Services: Circumstances Under Which
               Member Disenrolled.

          Such Disenrollment shall become effective on the first day of the
          second month following receipt by DHS of all documentation necessary,
          as determined by DHS, to process the Disenrollment, provided
          Disenrollment was requested at least 30 days prior to that date,
          except for Disenrollments pursuant to Article VI, Section 6.7.2.1,
          Major Organ Transplants, for which Disenrollment shall be effective
          the beginning of the month in which the transplant is approved.

     B.   Contractor shall recommend to DHS the Disenrollment of any Member in
          the event of a breakdown in the "Contractor/Member relationship" which
          makes it impossible for Contractor's providers to render services
          adequately to a Member. Except in cases of violent behavior or fraud,
          Contractor shall make significant efforts to resolve the problem with
          the Member through avenues such as reassignment of Primary Care
          Physician, education, or referral to services (such as mental health
          or substance abuse programs), before requesting a Contractor-initiated
          Disenrollment. In cases of Contractor-initiated Disenrollment of a
          Member, Contractor must submit to DHS a written request with
          supporting documentation for Disenrollment based on the breakdown of
          the "Contractor/Member relationship." Contractor-initiated
          disenrollments must be prior approved by DHS and shall be considered
          only under the following circumstances:

          1.   Member is repeatedly verbally abusive to Contractor providers,
               ancillary or administrative staff, subcontractor staff, or to
               other plan Members.

          2.   Member physically assaults a Contractor provider or staff person,
               subcontractor staff person, or other Member, or threatens another
               individual with a weapon on Contractor premises. In this
               instance, Contractor or subcontractor shall file a police report
               and file charges against the Member.

          3.   Member is disruptive to Contractor operations, in general.

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          4.   Member habitually uses providers not affiliated with Contractor
               for non-Emergency Services without required authorizations
               (causing Contractor to be subjected to repeated provider demands
               for payment for those services or other demonstrable degradation
               in Contractor's relations with community providers).

          5.   Member has allowed the fraudulent use of Medi-Cal coverage under
               the plan, which includes allowing others to use the Member's plan
               membership card to receive services from Contractor.

     C.   A Member's failure to follow prescribed treatment (including failure
          to keep established medical appointments) shall not, in and of itself,
          be good cause for the approval by DHS of a Contractor-initiated
          Disenrollment request unless Contractor can demonstrate to DHS that,
          as a result of the failure, Contractor is exposed to a substantially
          greater and unforeseeable risk than that otherwise contemplated under
          the Contract and rate-setting assumptions.

     D.   The problem resolution attempted prior to a Contractor-initiated
          Disenrollment described in subsection B, must be documented by
          Contractor. A formal procedure for Contractor-initiated Disenrollments
          shall be established by Contractor and approved by DHS. As part of the
          procedure, the Member shall be notified in writing by Contractor of
          the intent to disenroll the Member for cause and allowed a period of
          no less that twenty (20) days to respond to the proposed action.

          1.   Contractor must submit a written request for Disenrollment and
               the documentation supporting the request to DHS for approval. The
               supporting documentation must establish the pattern of behavior
               and Contractor's efforts to resolve the problem. DHS shall review
               the request and render a decision in writing within ten(10)
               State working days of receipt of a Contractor request and
               necessary documentation. If the Contractor-initiated request for
               Disenrollment is approved by DHS, DHS shall submit the
               Disenrollment request to the enrollment contractor for
               processing. Contractor shall be notified by DHS of the decision,
               and if the request is granted, shall be notified by the
               enrollment contractor of the effective date of the Disenrollment.
               Contractor shall notify the Member of the Disenrollment for cause
               if DHS grants the Contractor-initiated request for Disenrollment.

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          2.   Contractor shall continue to provide Covered Services to the
               Member until the effective date of the Disenrollment.

     E.   Except as provided in subsection A.7, Membership shall cease no later
          than midnight on the last day of the second calendar month after the
          Member's Disenrollment request and all required supporting
          documentation are received by DHS. On the first day after membership
          ceases, Contractor is relieved of all obligations to provide Covered
          Services to the Member under the terms of this Contract. Contractor
          agrees in turn to return to DHS any capitation payment forwarded to
          Contractor for persons no longer enrolled under this Contract.

     F.   Contractor shall implement and maintain procedures to ensure that all
          Members requesting Disenrollment or information regarding the
          Disenrollment process are immediately referred to the enrollment
          contractor.

51.  Article III, GENERAL TERMS AND CONDITIONS, renumbered Section 3.25,
     Pharmaceutical Services and Prescribed Drugs, sentence one, is amended to
     read:

     Contractor shall provide pharmaceutical services and prescribed drugs,
     either directly or through Subcontracts, in accordance with all laws and
     regulations regarding the provision of pharmaceutical services and
     prescription drugs to Medi-Cal beneficiaries, including, but not limited
     to, Title 22, CCR, Section 53854.

52.  Article III, GENERAL TERMS AND CONDITIONS, renumbered Section 3.26,
     Facilities, is amended to read:

     3.26      FACILITIES

     Facilities used by Contractor for providing Covered Services shall comply
     with the provisions of Title 22, CCR, Section 53856.

53.  Article III, GENERAL TERMS AND CONDITIONS, renumbered Section 3.28,
     Subcontracts, sentence two, is amended to read:

     In doing so, Contractor shall meet the subcontracting requirements as
     stated in Title 22, CCR, Section 53867 and this Contract.

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54.  Article III, GENERAL TERMS AND CONDITIONS, renumbered Section 3.28.1,
     Knox-Keene and Regulations, is amended to read:

     3.28.1    KNOX-KEENE AND REGULATIONS

     All Subcontracts shall be in writing, and shall be entered into in
     accordance with the requirements of the Knox-Keene Health Care Services
     Plan Act of 1975, Health and Safety Code Section 1340 et seq.; Title 10,
     CCR, Section 1300 et seq.; W&I Code Section 14200 et seq.; Title 22, CCR,
     Section 53800 et seq.; and applicable federal and State laws and
     regulations.

55.  Article III, GENERAL TERMS AND CONDITIONS, renumbered Section 3.28.2,
     Subcontract Requirements, Subsection D, is amended to read:

     D.   Subcontractor's agreement to assist Contractor in the transfer of care
          pursuant to Section 3.17.2, Turnover Requirements, in the event of
          Contract termination.

56.  Article III, GENERAL TERMS AND CONDITIONS, is amended by adding a new
     subsection H, to renumbered Section 3.28.2, Subcontract Requirements, to
     read:

     H.   Subcontractor's agreement to timely gather, preserve and provide to
          DHS, any records in the Subcontractor's possession, in accordance with
          Section 3.45, Records Related to Recovery for Tobacco Related
          Illnesses.

57.  Article III, GENERAL TERMS AND CONDITIONS, renumbered Section 3.28.3,
     Departmental Approval - Non-Federally Qualified HMOs, is amended to read:

     3.28.3    DEPARTMENTAL APPROVAL - NON-FEDERALLY QUALIFIED HMOS

     Except as provided in Section 3.28.6, Federally Qualified Health
     Centers/Rural Health Clinics, a provider or management Subcontract entered
     into by a Contractor which is not a federally qualified HMO shall become
     effective upon approval by DHS in writing, or by operation of law where DHS
     has acknowledged receipt of the proposed Subcontract, and has failed to
     approve or disapprove the proposed Subcontract within sixty (60) days of
     receipt. Within five (5) State working days of receipt, DHS shall
     acknowledge in writing the receipt of any material sent to DHS by
     Contractor for approval.

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     Subcontract amendments shall be submitted to DHS for prior approval at
     least thirty (30) days before the effective date of any proposed changes
     governing compensation, services, or term. Proposed changes which are
     neither approved or disapproved by DHS, shall become effective by operation
     of law 30 days after DHS has acknowledged receipt or upon the date
     specified in the Subcontract amendment, whichever is later.

58.  Article III, GENERAL TERMS AND CONDITIONS, renumbered Section 3.28.4,
     Departmental Approval - Federally Qualified HMOs, is amended to read:

     3.28.4    DEPARTMENTAL APPROVAL - FEDERALLY QUALIFIED HMOS

     Except as provided in Section 3.28.6, Federally Qualified Health Centers/
     Rural Health Clinics, Subcontracts entered into by a plan which is a
     federally qualified HMO shall be:

     A.   Exempt from prior approval by DHS.

     B.   Submitted to DHS upon request.

59.  Article III, GENERAL TERMS AND CONDITIONS, renumbered Section 3.28.6,
     Federally Qualified Health Centers, is amended to read:

     3.28.6    FEDERALLY QUALIFIED HEALTH CENTERS/RURAL HEALTH CLINICS

     Contractor shall not enter into a Subcontract with a Federally Qualified
     Health Center (FQHC) or a Rural Health Clinic (RHC) unless DHS approves the
     provisions regarding rates, which shall be subject to the standard that
     they be reasonable, as determined by DHS, in relation to the services to be
     provided in accordance with Article VI, Section 6.6.21, FQHC and RHC
     Contracts. In Subcontracts where the FQHC or RHC has made the election to
     be reimbursed on a reasonable cost basis by the State, provisions shall be
     included that require the subcontractor to keep a record of the number of
     visits by plan Members separate from Fee-For-Service Medi-Cal
     beneficiaries, in addition to any other data reporting requirements of the
     Subcontract.

     Subcontracts with FQHCs shall also meet Contract requirements of Article
     VI, Sections 6.6.20, FQHC Services, and 6.6.21, FQHC and RHC Contracts.
     Subcontracts with RHCs shall also meet Contract requirements of Article VI,
     Section 6.6.21.

     In Subcontracts where a negotiated reimbursement rate is agreed to as total
     payment, a provision that such rate constitutes total payment shall be
     included in the Subcontract.

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60.  Article III, GENERAL TERMS AND CONDITIONS, renumbered Section 3.28.8,
     Disclosures, is amended to read:

     3.28.8    DISCLOSURES

     Each Subcontract shall contain at least the elements required by Section
     3.28.2, Subcontract Requirements, and the following:

     A.   Full disclosure of the method and amount of compensation or other
          consideration to be received by the subcontractor from the plan.

     B.   Specification of the services to be provided by the subcontractor.

     C.   Specification that the Subcontract shall be governed by and construed
          in accordance with the contractual obligations of Contractor.

     D.   Specification that the Subcontract or Subcontract amendments shall
          become effective only as set forth in Sections 3.28.3, Departmental
          Approval - Non-Federally Qualified HMOs, or 3.28.4, Departmental
          Approval - Federally Qualified HMOs.

     E.   Specification of the term of the Subcontract including the beginning
          and ending dates as well as methods of extension, renegotiation and
          termination.

     F.   Subcontractor's agreement to submit reports as required by Contractor.

61.  Article III, GENERAL TERMS AND CONDITIONS, renumbered Section 3.28.9,
     Payment, is amended to read:

     3.28.9    PAYMENT

     Contractor shall pay all claims submitted by subcontracting providers in
     accordance with this section, unless the subcontracting provider and
     Contractor have agreed in writing to an alternate payment schedule.

     A.   Contractor shall comply with Section 1932(f), Title XIX, Social
          Security Act (42 U.S.C. Section 1396u-2(f)), and Health and Safety
          Code, Section 1371, subject to the following:

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          1.   Contractor shall pay or deny 90% of claims for payment submitted
               by providers for which no further written documentation or
               substantiation is required within 30 calendar days of receipt by
               Contractor. Written notice must be given to providers of
               contested claims within thirty (30) calendar days after receipt
               of the claim by Contractor. Such notice shall state the reason(s)
               for contesting the claim. Contractor agrees that failure to
               provide timely notification to a provider of a contested claim
               means that the claim is not being contested and is subject to the
               requirements for paying uncontested claims.

          2.   Contractor shall ensure that 100% of claims for payment submitted
               by providers for which no further written documentation or
               substantiation is required are paid or denied within forty-five
               (45) State working days after receipt.

     B.   Contractor shall maintain procedures for prepayment and postpayment
          claims review, including review of data related to provider, Member
          and Covered Services for which payment is claimed.

     C.   Contractor shall maintain sufficient claims
          processing/tracking/payment systems capability to: comply with
          applicable state and federal law, regulations and Contract
          requirements, determine the status of received claims, and calculate
          the estimate for incurred and unreported claims, as specified by Title
          10, CCR, Sections 1300.77.1 and 1300.77.2.

62.  Article III, GENERAL TERMS AND CONDITIONS, is amended by adding a new
     Section 3.28.10 to read:

     3.28.10   ELECTRONIC BILLING CAPABILITY

     No later than April 1, 1999, Contractor shall submit to DHS a written
     report detailing Contractor's actual or planned capability to accept
     provider claims electronically. The report shall describe Contractor's
     electronic capability for accepting claims from the following types of
     providers:

     A.   Pharmacy;

     B.   Hospital;

     C.   Physician, including Emergency room Physician; and

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     D.   Allied health providers.

          The report shall include a timetable for implementation of the
          necessary electronic capability for each type of provider claim that
          Contractor plans to install. For each type of provider claim that
          Contractor has no plans to accept electronically, the report shall
          include a supporting statement, which shall include a cost-benefit
          analysis, any infrastructure limitations, and any other circumstances
          that could preclude acceptance of those claims electronically. DHS
          shall submit any questions regarding Contractor's report within sixty
          (60) days of DHS' receipt of the report. Contractor shall respond to
          any questions from DHS within 60 (sixty) days after Contractor's
          receipt of the questions.

63.  Article III, GENERAL TERMS AND CONDITIONS, is amended by adding a new
     Section 3.28.11 to read:

     3.28.11   PHYSICIAN INCENTIVE PLAN REQUIREMENTS

     Contractor may implement and maintain a Physician Incentive Plan only if:

     A.   No specific payment is made directly or indirectly under the incentive
          plan to a Physician or Physician group as an inducement to reduce or
          limit Medically Necessary Covered Services provided to an individual
          Member; and

     B.   The stop-loss protection (reinsurance), beneficiary survey, and
          disclosure requirements of 42 CFR 417.479 are met by Contractor.

64.  Article III, GENERAL TERMS AND CONDITIONS, renumbered Section 3.33,
     Amendment of Contract, is amended to read:

     3.33      AMENDMENT OF CONTRACT

     Should either party during the life of this Contract desire a change in
     this Contract, that change shall be proposed in writing to the other party.
     The other party shall acknowledge receipt of the proposal within 10 days of
     receipt of the proposal. The party proposing any such change shall have the
     right to withdraw the proposal any time prior to acceptance or rejection by
     the other party. Any proposal shall set forth an explanation of the reason
     and basis for the proposed change and the text of the desired amendment to
     this Contract which would provide for the change. If the proposal is
     accepted, this Contract shall be amended to provide for the change mutually
     agreed to by the parties on the condition that the amendment is approved by
     DHHS, and the State Department of Finance, if necessary.

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65.  Article III, GENERAL TERMS AND CONDITIONS, renumbered Section 3.41,
     Recovery From Other Sources or Providers, is amended to read:

     3.41      COST AVOIDANCE AND POST-PAYMENT RECOVERY OF OTHER HEALTH COVERAGE
               SOURCES

     A.   Contractor shall Cost Avoid or make a Post-Payment Recovery for the
          reasonable value of services paid for by Contractor and rendered to a
          Member whenever a Member's OHCS covers the same services, either fully
          or partially. However, in no event shall Contractor Cost Avoid or seek
          Post-Payment Recovery for the reasonable value of services from a TPTL
          action or make a claim against the estates of deceased Members.

     B.   All monies recovered by Contractor are retained by Contractor.

     C.   Contractor shall coordinate benefits with other coverage programs or
          entitlements, recognizing the OHCS as primary and the Medi-Cal program
          as the payor of last resort.

     D.   Cost Avoidance

          1.   If Contractor reimburses the provider on a fee-for-service basis,
               Contractor shall not pay claims for services provided to a Member
               whose Medi-Cal eligibility record indicates third party coverage,
               designated by a Other Health Coverage (OHC) code or Medicare
               coverage, without proof that the provider has first exhausted all
               sources of other payments. Contractor shall have written
               procedures implementing this requirement. Contractor shall submit
               these procedures to DHS for review and comment.

          2.   Proof of third party billing is not required prior to payment for
               services provided to Members with OHC codes A, M, X, Y, or Z.

     E.   Post-Payment Recovery

          1.   If Contractor reimburses the provider on a fee-for-service basis,
               Contractor shall pay the provider's claim and then seek to
               recover the cost of the claim by billing the liable third
               parties:

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               a.   For services provided to Members with OHC codes A, M, X, Y,
                    or Z;

               b.   For services defined by DHS as prenatal or preventive
                    pediatric services; or

               c.   In child-support enforcement cases, identifiable by
                    Contractor. If Contractor does not have access to sufficient
                    information to determine whether or not the OHC coverage is
                    the result of a child support enforcement case, Contractor
                    shall follow the procedures for Cost Avoidance.

          2.   In instances where Contractor does not reimburse the provider on
               a fee-for-service basis, Contractor shall pay for services
               provided to a Member whose eligibility record indicates third
               party coverage, designated by a OHC code or Medicare coverage,
               and then shall bill the liable third parties for the cost of
               actual services rendered.

          3.   Contractor shall also bill the liable third parties for the cost
               of services provided to Members who are retroactively identified
               by Contractor or DHS as having OHC.

          4.   Contractor shall have written procedures implementing the above
               requirements. Contractor shall submit these procedures to DHS for
               review and comment.

     F.   Contractor shall initiate a Disenrollment for all Members whose
          eligibility record indicates OHC codes K, C, P, or F, within three (3)
          State working days after Contractor becomes aware of the OHC code.
          Until the Member is disenrolled, Contractor shall Cost Avoid or seek
          Post-Payment Recovery as specified in subsections D and E above.

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     G.   Reporting Requirements

          1.   Contractor shall submit monthly reports to DHS, in a format
               prescribed by DHS, displaying claims counts and dollar amounts of
               costs avoided and the amount of Post-Payment Recoveries, by aid
               category, as well as the amount of outstanding recovery claims
               (accounts receivable) by age of account. The report shall display
               separate claim counts and dollar amounts for Medicare Part A and
               Part B. Reports shall be sent to the Department of Health
               Services, Third Party Liability Branch, Cost Avoidance Unit,
               P.O. Box 2471, Sacramento, CA 95812-2471.

          2.   When Contractor identifies OHC unknown to DHS, Contractor shall
               report this information to DHS within ten (10) days of discovery
               in automated format as prescribed by DHS. This information shall
               be sent to the Department of Health Services, Third Party
               Liability Branch, Health Identification Unit, P.O. Box 2471,
               Sacramento, CA 95812-2471.

          3.   Contractor shall demonstrate to DHS that where Contractor does
               not Cost Avoid or perform Post-Payment Recovery, that the
               aggregate cost of this activity exceeds the total revenues
               Contractor projects it would receive from such activity.

66.  Article III, GENERAL TERMS AND CONDITIONS, renumbered Section 3.42, Third
     Party Tort Liability, is amended to read:

     3.42      THIRD PARTY TORT LIABILITY/ESTATE RECOVERY

     Contractor shall identify and notify DHS' Third Party Liability Branch of
     all instances or cases in which Contractor believes that an action by the
     Medi-Cal Member involving the tort or Workers' Compensation liability of a
     third party or estate recovery could result in recovery by the Member of
     funds to which DHS has lien rights under Article 3.5 (commencing with
     Section 14124.70), Part 3, Division 9, Welfare and Institutions Code.
     Contractor shall make no claim for recovery of the value of Covered
     Services rendered to a Member in such cases or instances and shall refer
     all such cases or instances to DHS' Third Party Liability Branch within ten
     (10) days of discovery. To assist DHS in exercising its responsibility for
     such recoveries, Contractor shall meet the following requirements:

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     A.   If DHS requests service information and/or copies of paid
          invoices/claims for Covered Services to an individual Member,
          Contractor shall deliver the requested information within thirty (30)
          days of the request. Service information includes subcontractor and
          out-of-plan provider data. The value of the Covered Services shall be
          calculated as the usual, customary and reasonable charge made to the
          general public for similar services or the amount paid to
          subcontracted providers or out-of-plan providers for similar services.

     B.   Information to be delivered shall contain the following data items:

          1.   Member name.

          2.   Full 14-digit Medi-Cal number.

          3.   Social Security Number.

          4.   Date of birth.

          5.   Contractor name.

          6.   Provider name (if different from Contractor).

          7.   Dates of service.

          8.   Diagnosis code and description of illness/injury.

          9.   Procedure code and/or description of services rendered.

          10.  Amount billed by a subcontractor or out-of-plan provider to
               Contractor (if applicable).

          11.  Amount paid by other health insurance to Contractor or
               subcontractor (if applicable).

          12.  Amounts and dates of claims paid by Contractor to subcontractor
               or out-of-plan provider (if applicable).

          13.  Date of denial and reasons for denial of claims (if applicable).

          14.  Date of death (if applicable).

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     C.   Contractor shall identify to DHS' Third Party Liability Branch the
          name, address and telephone number of the person responsible for
          receiving and complying with requests for mandatory and/or optional
          at-risk service information.

     D.   If Contractor receives any requests from attorneys, insurers, or
          beneficiaries for copies of bills, Contractor shall provide DHS' Third
          Party Liability Branch with a copy of any document released as a
          result of such request, and shall provide the name and address and
          telephone number of the requesting party.

     E.   Information submitted to DHS under this section shall be sent to
          Department of Health Services, Third Party Liability Branch, Recovery
          Section, P.O. Box 2471, Sacramento, CA 95812-2471.

67.  Article III, GENERAL TERMS AND CONDITIONS, renumbered Section 3.43,
     Obtaining DHS Approval, is amended to read:

     3.43      OBTAINING DHS APPROVAL

     Contractor shall obtain written approval from DHS, as provided in Section
     4.7, Approval Process, prior to implementing or using any of the following,
     including revisions to any of the items listed:

     A.   Providers of Covered Services, except for providers of seldom used or
          unusual services as determined by DHS.

     B.   Facilities.

     C.   Marketing activities.

     D.   Marketing materials, promotional materials, and public information
          releases relating to performance under this Contract, Member service
          guides; Member newsletters; and provider claim forms unique to the
          Contract.

     E.   Member Grievance procedure.

     F.   Member Disenrollment procedure.

     G.   Grievance forms.

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     H.   Any other protocol, policy or procedure otherwise requiring approval
          under this Contract.

68.  Article III, GENERAL TERMS AND CONDITIONS, renumbered Section 3.44, Pilot
     Projects, is amended to read:

     3.44      PILOT PROJECTS

     DHS, pursuant to W&I Code Section 14094.3(c)(2), may establish pilot
     projects to test alternative managed care models tailored to the special
     health care needs of children under the California Children Services (CCS)
     Program. These pilot projects may affect Contractor's obligations under the
     Contract in the areas of Covered Services, eligible enrollees, and
     administrative systems. These pilot projects shall be implemented through
     Contract amendment pursuant to Section 3.33, Amendment of Contract, and, if
     necessary, Change Order pursuant to Section 3.35, Change Requirements. DHS
     shall not require Contractor to cover CCS services under the capitation
     rate as part of a pilot project unless Contractor is a voluntary
     participant in the project.

69.  Article III, GENERAL TERMS AND CONDITIONS, is amended by adding a new
     Section 3.45, to read:

     3.45      RECORDS RELATED TO RECOVERY FOR TOBACCO RELATED ILLNESSES

     3.45.1    RECORDS

     DHS has filed a lawsuit for the recovery of medical expenses paid for the
     treatment of tobacco related illnesses, (People of the State of California
     ex rel. Daniel E. Lungren, Attorney General of the State of California; S.
     Kimberly Belshe, Director of Health Services of the State of California v.
     Philip Morris, Inc.; R.J. Reynolds Tobacco Company; Brown & Williamson
     Tobacco Corporation; B.A.T. Industries P.L.C.; Lorillard Tobacco Company,
     Inc.; American Tobacco Company, Inc.; United States Tobacco Company; Hill &
     Knowlton, Inc.; The Council for Tobacco Research-U.S.A., Inc.; Tobacco
     Institute, Inc.; Smokeless Tobacco Council, Inc. and Does 1 through 200,
     inclusive) (hereafter the "Tobacco Lawsuit"). Upon request by DHS,
     Contractor shall timely gather, preserve and provide to DHS, in the form
     and manner specified by DHS, any information specified by DHS, subject to
     any lawful privileges, in Contractor's or its subcontractors' possession,
     relating to the Tobacco Lawsuit. (If Contractor asserts that any requested
     documents are covered by a privilege, Contractor shall: 1) identify such
     privileged documents with sufficient particularity to reasonably identify
     the document

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        while retaining the privilege; and 2) state the privilege being claimed
        that supports withholding production of the document.) Such request
        shall include, but is not limited to, a response to a request for
        documents submitted by any defendant in the Tobacco Lawsuit. Contractor
        acknowledges that time may be of the essence in responding to some
        requests. Contractor shall use all reasonable efforts to immediately
        notify DHS of any subpoenas, document production requests, or requests
        for records, received by Contractor or its subcontractors related to
        tobacco related illnesses or the incidence of disease associated with
        the use of tobacco products.

        3.45.2      PAYMENT FOR RECORDS

        In addition to the payments provided for in Article V, DHS agrees to pay
        Contractor for complying with Section 3.45.1, Records, above, as
        follows:

        A.   DHS shall reimburse Contractor amounts paid by Contractor to third
             parties for services necessary to comply with Section 3.45.1. Any
             third party assisting Contractor with compliance with Section
             3.45.1 shall comply with all applicable confidentiality
             requirements. Amounts paid by Contractor to any third party for
             assisting Contractor in complying with Section 3.45.1 shall not
             exceed normal and customary charges for similar services and such
             charges and supporting documentation shall be subject to review by
             DHS.

        B.   If Contractor uses existing personnel and resources to comply with
             Section 3.45.1, DHS shall reimburse Contractor as specified below.
             Contractor shall maintain and provide to DHS time reports
             supporting the time spent by each employee as a condition of
             reimbursement. Reimbursement claims and supporting documentation
             shall be subject to review by DHS.

             1.     Compensation and payroll taxes and benefits, on a prorated
                    basis, for the employees' time devoted directly to compiling
                    information pursuant to Section 3.45.1.

             2.     Costs for copies of all documentation submitted to DHS
                    pursuant to Section 3.45.1, subject to a maximum
                    reimbursement of ten (10) cents per copied page.

        C.   Contractor shall submit to DHS all information needed by DHS to
             determine reimbursement to Contractor under this section,
             including, but not limited to, copies of invoices from third
             parties and payroll records.

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70.     Article III, GENERAL TERMS AND CONDITIONS, is amended by adding a new
        Section 3.46 to read:

        3.46        FRAUD AND ABUSE REPORTING

        Contractor shall report to the Contracting Officer all cases of
        suspected fraud and/or abuse, as defined in 42 Code of Federal
        Regulations, Section 455.2, where there is reason to believe that an
        incident of fraud and/or abuse has occurred, by subcontractors, Members,
        providers, or employees within ten (10) State working days of the date
        when Contractor first becomes aware of or is on notice of such activity.
        Contractor shall establish policies and procedures for identifying,
        investigating and taking appropriate corrective action against fraud
        and/or abuse in the provision of health care services under the Medi-Cal
        program. Contractor shall notify DHS prior to conducting any
        investigations, based upon Contractor's finding that there is reason to
        believe that an incident of fraud and/or abuse has occurred, and, upon
        the request of DHS, consult with DHS prior to conducting such
        investigations. Without waiving any privileges of Contractor, Contractor
        shall report investigation results within ten (10) State working days
        of conclusion of any fraud and/or abuse investigation.

71.     Article IV, DUTIES OF THE STATE, Section 4.3, Facility Inspections, is
        amended to read:

        4.3         FACILITY INSPECTIONS

        Conduct unannounced validation reviews on a number of Contractor's
        Primary Care sites, selected at DHS' discretion, to verify compliance of
        these sites with DHS requirements.

72.     Article IV, DUTIES OF THE STATE, Section 4.4, Enrollment Processing, is
        amended to read:

        4.4         ENROLLMENT PROCESSING

        4.4.1       GENERAL

        The parties to this Contract agree that the primary purpose of DHS'
        Medi-Cal managed care system is to improve quality and access to care
        for Medi-Cal beneficiaries. The parties acknowledge that the Medi-Cal
        eligibility process and the managed care enrollment system are dynamic
        and complex programs. The parties also acknowledge that it is
        impractical to ensure that every beneficiary eligible for enrollment in
        the Contractor's plan will be enrolled in a timely manner. Furthermore,
        the parties recognize

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        that for a variety of reasons some Eligible Beneficiaries will not be
        enrolled in Contractor's plan and will receive Covered Services in the
        Medi-Cal Fee-for-Service system. These reasons include, but are not
        limited to, the exclusion of some beneficiaries from participating in
        Medi-Cal managed care, the time it takes to enroll beneficiaries,
        changes in laws and policies, the loss and subsequent regaining of
        eligibility by beneficiaries, retroactive periods of eligibility for
        some beneficiaries, and the lack of a current valid address for some
        beneficiaries. The parties desire to work together in a cooperative
        manner so that Eligible Beneficiaries who choose to or should be
        assigned to Contractor's plan are enrolled in Contractor's plan pursuant
        to the requirements of Section 4.4. The parties agree that to accomplish
        this goal it is necessary to be reasonably flexible with regard to the
        enrollment process.

        4.4.2       DEFINITIONS

        For purposes of Section 4.4, Enrollment Processing, the following
        definitions shall apply:

        A.   Fully Converted County means a county in which the following
             circumstances - exist, except for those Medi-Cal beneficiaries
             covered by Title 22, CCR, Section 53887,:

             1.     Eligible Beneficiaries who meet the mandatory enrollment
                    criteria contained in Tide 22, CCR, Section 53845(a) may no
                    longer choose to receive Covered Services on a
                    Fee-for-Service basis; and

             2.     All new Eligible Beneficiaries who meet the mandatory
                    enrollment criteria contained in Title 22, CCR, Section
                    53845(a) must now choose a managed care plan or they will be
                    assigned to a managed care plan; and

             3.     All Eligible Beneficiaries listed in MEDS as meeting the
                    mandatory enrollment criteria contained in Title 22, CCR,
                    Section 53845(a) on the last date that both 1. and 2. above
                    occur:

                    (i)     have been notified of the requirement to choose a
                            managed care plan and informed that if they fail to
                            choose a plan they will be assigned to a managed
                            care plan; and

                    (ii)    those beneficiaries still eligible for Medi-Cal and
                            enrollment into a managed care plan at the time
                            their plan enrollment is processed in MEDS have been
                            enrolled into a managed care plan.

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        B.   Mandatory Plan Beneficiary means:

             1.     A new Eligible Beneficiary who meets the mandatory
                    enrollment criteria contained in Title 22, CCR, Section
                    53845(a) both at the time her/his plan enrollment is
                    processed by the DHS Enrollment Contractor and by MEDS; or

             2.     An Eligible Beneficiary previously receiving Covered
                    Services in a county without mandatory managed care
                    enrollment who now resides in a county where mandatory
                    enrollment is in effect and who meets the mandatory
                    enrollment criteria contained in Title 22, CCR, Section
                    53845(a); or

             3.     An Eligible Beneficiary meeting the criteria of Title 22,
                    CCR, Section 53845(b) prior to October 1, 1998, and who
                    subsequently meets the criteria of Title 22, CCR, Section
                    53845(a).

        C.   Mandatory Plan Beneficiary shall not include any Eligible
             Beneficiary who:

                    (i)     is eligible to receive Covered Services on a
                            Fee-for-Service basis because her/his MEDS
                            eligibility for managed care plan enrollment is
                            interrupted due to aid code, ZIP code or county code
                            changes; or

                    (ii)    becomes eligible for enrollment in a managed care
                            plan on a retroactive basis.

        4.4.3       DHS ENROLLMENT OBLIGATIONS

        A.   DHS shall receive applications for enrollment from its enrollment
             contractor and shall verify the current eligibility of applicants
             for enrollment in Contractor's plan under this Contract. If the
             Contractor has the capacity to accept new enrollees, DHS or its
             enrollment contractor shall enroll or assign eligible applicants in
             Contractor's plan when selected by the applicant or when the
             applicant fails to timely select a plan. Of those to be enrolled or
             assigned in Contractor's plan, DHS will ensure that in a Fully
             Converted County a Mandatory Plan Beneficiary will receive an
             effective date of plan enrollment that is no later than 90 days
             from the date that MEDS lists such an individual as meeting the
             enrollment criteria contained in Title 22, CCR, Section 53845(a),
             if all changes to MEDS have been made to allow for the enrollment
             of the individual and all changes necessary to this Contract to
             accommodate such enrollment, including, but not limited to rate

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             changes and aid code changes, have been executed. DHS will use due
             diligence in making any changes to MEDS and to this Contract. DHS
             will provide Contractor a list of Members on a monthly basis.

        B.   DHS or its enrollment contractor shall assign Eligible
             Beneficiaries meeting the enrollment criteria contained in Title
             22, CCR, Section 53845(a) to plans in accordance with Title 22,
             CCR, Section 53884.

        C.   Notwithstanding any other provision in this Contract, A. and B.
             above shall not apply to:

             1.     Eligible Beneficiaries previously eligible to receive
                    Medi-Cal services from a Prepaid Health Plan or Primary Care
                    Case Management plan and such plan's contract with DHS
                    expires, terminates, or is assigned or transferred to
                    Contractor;

             2.     Members who are enrolled into another managed care plan on
                    account of assignment, assumption, termination, or
                    expiration of this Contract;

             3.     Eligible Beneficiaries covered by a new mandatory aid code,
                    added to this Contract after October 1, 1998;

             4.     Eligible Beneficiaries meeting the criteria of Title 22,
                    CCR, Section 53845(b) prior to October 1, 1998, who
                    subsequently meet the criteria of Title 22, CCR 53845(a) due
                    solely to DHS designating a prior voluntary aid code as a
                    new mandatory aid code;

             5.     Eligible Beneficiaries residing in a County that is not a
                    Fully Converted County; or

             6.     Eligible Beneficiaries without a current valid deliverable
                    address or with an address designated as a County post
                    office box for homeless beneficiaries.

        4.4.4       DISPUTES CONCERNING DHS ENROLLMENT OBLIGATIONS

        A.   Pursuant to the requirements and procedures contained in Section
             3.20, Disputes and Appeals, Contractor shall notify DHS of DHS'
             noncompliance with Section 4.4, Enrollment Processing.

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        B.   DHS shall have 120 days from the date of DHS' receipt of
             Contractor's notice (the "Cure Period") to cure any noncompliance
             with Section 4.4, Enrollment Processing, identified in Contractor's
             notice, without incurring any financial liability to Contractor.
             For purposes of this section, DHS shall be deemed to have cured any
             noncompliance with Section 4.4, Enrollment Processing, identified
             in Contractor's notice if within the Cure Period any of the
             following occurs:

             1.     Mandatory Plan Beneficiaries receive an effective date of
                    plan enrollment that is within the Cure Period, or

             2.     DHS corrects enrollment that failed to comply with Section
                    4.4, Enrollment Processing, by redirecting enrollment from
                    one Contractor to another within the Cure Period in order to
                    comply with Section 4.4, Enrollment Processing, or

             3.     Within the Cure Period, DHS changes the distribution of
                    beneficiary Assignment (subject to the requirements of Title
                    22, CCR, Section 53884(b)(l) through (b)(4)), to the maximum
                    extent new beneficiaries are available to be assigned, to
                    make up the number of incorrectly assigned beneficiaries as
                    soon as possible.

        C.   If it is necessary to redirect enrollment or change the
             distribution of beneficiary Assignment due to noncompliance with
             Section 4.4, Enrollment Processing, and such change varies from the
             requirements of Title 22, CCR, Section 53884(b)(5) or (b)(6),
             Contractor agrees it will neither seek legal nor equitable relief
             for such variance or the results of such variance if DHS resumes
             assignment consistent with Sections 53884 (b)(5) or (b)(6) after
             correcting a noncompliance with Section 4.4, Enrollment Processing.

        D.   Notwithstanding Section 3.1 or any other provision of this
             Contract, if DHS fails to cure a noncompliance with Section 4.4,
             Enrollment Processing, within the Cure Period, DHS will be
             financially liable for such noncompliance as follows:

             DHS will be financially liable for Contractor's demonstrated actual
             reasonable losses as a result of the noncompliance, beginning with
             DHS' first failure to comply with its enrollment obligation set
             forth herein. DHS' financial liability shall not exceed 15 percent
             of Contractor's monthly capitation payment calculated as if
             noncompliance with Section 4.4 did not occur, for each month in
             which DHS has not cured noncompliance pursuant to subparagraph
             4.4.4.B, beginning with DHS' first failure to comply with its
             enrollment obligation set forth herein.

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        E.   Notwithstanding Section 4.4.4.D above, DHS shall not be financially
             liable to Contractor for any noncompliance with Section 4.4,
             Enrollment Processing, in an affected county (on a county-by-county
             basis) if Contractor's loss of Mandatory Plan Beneficiaries, in a
             month in which any noncompliance occurs, is less than five percent
             of Contractor's total Members in that affected county in the month
             in which the noncompliance occurs. The parties acknowledge that the
             above-referenced five-percent threshold shall apply on a
             county-by-county basis, not in the aggregate.

73.     Article IV, DUTIES OF THE STATE, Section 4.6, Testing and Certification
        of Marketing Representatives, is amended to read:

        4.6         TESTING AND CERTIFICATION OF MARKETING
                    REPRESENTATIVES

        Test all Contractor Marketing Representatives for knowledge of the
        program prior to their engaging in Marketing or Medi-Cal Managed Care
        information activities on behalf of Contractor. Certify as qualified
        Marketing Representatives, those persons demonstrating adequate
        knowledge of the program, provided they are of good moral character.
        Contractor may be permitted, subject to approval and oversight by DHS,
        to perform such testing on behalf of DHS, provided that Contractor has
        never been sanctioned for Marketing violations or abuses. With respect
        to evidence of good moral character, Contractor shall be permitted to
        rely on the Marketing Representative's written statements. DHS reserves
        the right to rescind approval for Contractor testing at any time.

74.     Article IV, DUTIES OF THE STATE, Section 4.7, Approval Process, is
        amended to read:

        4.7         APPROVAL PROCESS

        A.   Within five (5) State working days of receipt, DHS shall
             acknowledge in writing the receipt of any material sent to DHS by
             Contractor pursuant to Article III, Section 3.3, Obtaining DHS
             Approval.

        B.   Within sixty (60) days of receipt, DHS shall make all reasonable
             efforts to approve in writing the use of such material provided to
             DHS pursuant to Article III, Section 3.43, Obtaining DHS Approval,
             provide Contractor with a written explanation why its use is not
             approved, or provide a written estimated date of completion of DHS'
             review process. If DHS does not complete its review of submitted
             material within sixty (60) days of receipt, or within the estimated
             date

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             of completion of DHS review, Contractor may elect to implement or
             use the material at Contractor's sole risk and subject to possible
             subsequent disapproval by DHS. This subsection shall not be
             construed to imply DHS approval of any material that has not
             received written DHS approval. This subsection shall not apply to
             Subcontracts or sub-subcontracts subject to DHS approval in
             accordance with Section 3.28.3, Departmental Approval -
             Non-Federally Qualified HMOs, or Section 3.28.4, Departmental
             Approval - Federally Qualified HMOs.

75.     Article IV, DUTIES OF THE STATE, Section 4.8, Program Information, is
        amended to read:

        4.8         PROGRAM INFORMATION

        Provide Contractor with complete and current information with respect to
        pertinent policies, procedures, and guidelines affecting the operation
        of this Contract, within thirty (30) days of receipt of Contractor's
        written request for information, to the extent that the information is
        readily available. If the requested information is not available, DHS
        shall notify Contractor within thirty (30) days, in writing, of the
        reason for the delay and when Contractor may expect the information.

76.     Article IV, DUTIES OF THE STATE, Section 4.9, Sanctions, is amended to
        read:

        4.9         SANCTIONS

        Apply sanctions, in accordance with Welfare and Institutions Code,
        Section 14304, and Title 22, CCR, Section 53872, to Contractor for
        violations of the terms of this Contract, applicable federal and State
        laws and regulations.

77.     Article V, PAYMENT PROVISIONS, Section 5.2, Amounts Payable, is amended
        to read:

        5.2         AMOUNTS PAYABLE

        The maximum amount payable for the 1995-96 Fiscal Year ending June 30,
        1996 will not exceed $32,080,630; the maximum amount payable for the
        1996-97 Fiscal Year ending June 30, 1997 will not exceed $194,472,680;
        the maximum amount payable for the 1997-98 Fiscal Year ending June 30,
        1998 will not exceed $6,500,000; the maximum amount payable for the
        1998-99 Fiscal Year ending June 30, 1999 will not exceed $80,000,000.
        Any requirement for performance by DHS and the Contractor for the period
        of the Contract subsequent to June 30, 1999, will be dependent upon the

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        availability of future appropriations by the Legislature for the purpose
        of this Contract. If funds become available for purposes of this
        Contract from future appropriations by the Legislature, the maximum
        amount payable for the 1999-2000 Fiscal Year ending June 30, 2000 will
        not exceed $107,000,000; the maximum amount payable for the 2000-2001
        Fiscal Year ending June 30, 2001 will not exceed $107,000,000; the
        maximum amount payable for the 2001-2002 Fiscal Year ending June 30,
        2002 will not exceed $80,000,000. The maximum amount payable under this
        Contract will not exceed $607,053,310.

78.     Article V, PAYMENT PROVISIONS, Section 5.3, Capitation Rates, is amended
        to read:

        DHS shall remit to Contractor a capitation payment each month for each
        Medi-Cal Member that appears on the approved list of Members supplied to
        Contractor by DHS. The capitation rate shall be the amount specified in
        this Article. The payment period for health care services shall commence
        on the first day of operations, as determined by DHS. Capitation
        payments shall be made in accordance with the following schedule of
        capitation payment rates:

        AID CODE CATEGORIES

        Family: 01, 02, 08, 30, 32, 33, 34, 35, 38, 39, 3A, 3C, 3P, 3R, 40, 42,
        4C, 4K, 54, 59, 5K; Aged: 10, 14, 16, 18; Disabled: 20, 24, 26, 28, 36,
        60, 64, 66, 68, 6A, 6C; Child 03, 04, 45, 82; Adult 86

        SAN BERNARDINO COUNTY 7/95 - 5/96      SAN BERNARDINO COUNTY 6/96 - 9/97

        Family                   $  70.01      Family                   $  71.59

        Child                    $  67.91      Child                    $  67.17
        Aged                     $ 117.66      Aged                     $ 121.76
        Disabled                 $ 177.15      Disabled                 $ 174.45
        Adult                    $ 536.02      Adult                    $ 554.73

        RIVERSIDE COUNTY 7/95-5/96             RIVERSIDE COUNTY 6/96 - 9/97

        Family                   $  74.70      Family                   $  76.39
        Child                    $  68.51      Child                    $  67.74
        Aged                     $ 110.37      Aged                     $ 114.62
        Disabled                 $ 181.61      Disabled                 $ 178.77

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        Adult                    $ 492.78      Adult                    $ 509.94

        AID CODE CATAGORIES

        Family: 01, OA, 02, 08, 30, 32, 3G, 33, 3H, 34, 35, 38, 39, 3A, 3C, 3N,
        3U, 3P, 3R, 40, 42, 54, 59, 7X; CalWORKS: 3E, 3L, 3M; Aged: 10, 14, 16,
        18; Disabled: 20, 24, 26, 28, 36, 60, 64, 66, 68, 6A, 6C, 6N, 6P, 6R;
        Child: 03, 04, 45, 4C, 4K, 5K, 82; Adult: 86

        For the Period      10/97 - 09/30/98

        RIVERSIDE COUNTY                                 SAN BERNARDINO

        Family                   $   75.91     Family                  $   74.04
        Aged                     $  162.29     Aged                    $  167.25
        Disabled                 $  204.96     Disabled                $  217.87
        Child                    $   79.33     Child                   $   79.42
        Adult                    $  515.67     Adult                   $  531.42
        AIDS Beneficiary Rate    $ 1021.49     Aids                    $ 1072.78

        In the future, DHS expects to activate aid codes 3N, 3U, 7X, 3E, 3L, 3M,
        6N, 6P, and 6R, listed above by aid code rate category. If DHS activates
        these new aid codes, Contractor agrees to accept Eligible Beneficiaries
        with these aid codes as Members and to provide Covered Services to these
        Members at the monthly capitation rate specified for each rate category
        in this section.

79.     Article V, PAYMENT PROVISIONS, Section 5.4, Capitation Rates Constitute
        Payment In Full, is amended to read:

        5.4         CAPITATION RATES CONSTITUTE PAYMENT IN FULL

        Capitation rates for each rate period, as calculated by DHS, are
        prospective rates and constitute payment in full, subject to any stop
        loss reinsurance provisions, on behalf of a Member for all Covered
        Services required by such Member and for all Administrative Costs
        incurred by Contractor in providing or arranging for such services, and
        subject to adjustments for federally qualified health centers in
        accordance with Section 5.13, but do not include payment for the
        recoupment of current or previous losses incurred by Contractor. DHS is
        not responsible for making payment for recoupment of losses. The
        actuarial basis for the determination of the capitation payment rates is
        outlined in Attachment 1 (consisting of twelve (12) pages).

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80.     Article V, PAYMENT PROVISIONS, Section 5.5, Determination of Rates, is
        amended to read:

        5.5         DETERMINATION OF RATES

        DHS shall determine the capitation rates for the initial period December
        1, 1995, or the Contract effective date of operations if later, through
        September 30, 1997. Subsequent to September 30, 1997 and through the
        duration of the Contract, DHS shall make an annual redetermination of
        rates for each rate year defined as the 12-month period from October 1,
        through September 30. DHS reserves the right to redetermine rates on an
        actuarial basis or move to a negotiated rate for each rate year. All
        payments beyond June 1996 and rate adjustments beyond September 1997 are
        subject to future appropriations of funds by the Legislature and the
        Department of Finance approval. Further, all payments are subject to
        Title 42, CFR 447.361 and the availability of Federal congressional
        appropriation of funds.

        If DHS redetermines rates on an actuarial basis, DHS shall determine
        whether the rates shall be increased, decreased, or remain the same. If
        it is determined by DHS that Contractor's capitation rates shall be
        increased or decreased, that increase or decrease shall be effectuated
        through a Change Order to this Contract in accordance with the
        provisions of Article III, Section 3.35, Change Requirements, subject to
        the following provisions:

        A.   The Change Order shall be effective as of October 1 of each year
             covered by this Contract.

        B.   In the event there is any delay in a determination to increase or
             decrease capitation rates, so that a Change Order may not be
             processed in time to permit payment of new rates commencing October
             1, the payment to Contractor shall continue at the rates then in
             effect. Those continued payments shall constitute interim payment
             only. Upon final approval of the Change Order providing for the
             rate change, DHS shall make adjustments for those months for which
             interim payment was made.

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        C.   Notwithstanding paragraph B, payment of the new annual rates shall
             commence no later than December 1, provided that a Change Order
             providing for the new annual rates has been issued by DHS. By
             accepting payment of new annual rates prior to full approval by all
             control agencies of the Change Order to this Contract implementing
             such new rates, Contractor stipulates to a confession of judgment
             for any amounts received in excess of the final approved rate. If
             the final approved rate differs from the rates agreed upon by
             Contractor and DHS:

             1.     Any underpayment by the State shall be paid to Contractor
                    within 30 days after final approval of the new rates.

             2.     Any overpayment to Contractor shall be recaptured by the
                    State's withholding the amount due from Contractor's next
                    capitation check.

                    If the amount to be withheld from that capitation check
                    exceeds 25 percent of the capitation payment for that month,
                    amounts up to 25 percent shall be withheld from successive
                    capitation payments until the overpayment is fully recovered
                    by the State.

             D.     If mutual agreement between DHS and Contractor cannot be
                    attained on capitation rates for rate years subsequent to
                    September 30, 1997 (resulting from a rate change pursuant to
                    Section 5.5 or 5.6), Contractor shall retain the right to
                    terminate the Contract, but no earlier than September 30,
                    1998. Notification of intent to terminate a Contract shall
                    be in writing and provided to DHS at least nine (9) months
                    prior to the effective date of termination, subject to any
                    earlier termination date negotiated in accordance with
                    Article III, Section 3.18.2, Termination - Contractor. DHS
                    shall pay the capitation rates last offered for that rate
                    period until the Contract is terminated.

             E.     DHS shall make every effort to notify and consult with
                    Contractor regarding proposed redetermination of rates
                    pursuant to this section or Section 5.6 at the earliest
                    possible time prior to implementation of the new rate.

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81.     Article V, PAYMENT PROVISIONS, Section 5.6, Redetermination of Rates -
        Obligation Changes, is amended to read:

        5.6         REDETERMINATION OF RATES - OBLIGATION CHANGES

        The Capitation rates may be adjusted during the rate year to provide for
        a change in obligations which results in an increase or decrease of more
        than one percent of cost (as defined in Title 22, CCR, Section 53869) to
        Contractor. Any adjustments shall be effectuated through a Change Order
        to the Contract subject to the following provisions:

        A.   The Change Order shall be effective as of the first day of the
             month in which the change in obligations is effective, as
             determined by DHS.

        B.   In the event DHS is unable to process the Change Order in time to
             permit payment of the adjusted rates as of the month in which the
             change in obligations is effective, payment to Contractor shall
             continue at the rates then in effect. Continued payment shall
             constitute interim payment only. Upon final approval of the Change
             Order providing for the change in obligations, DHS shall make
             adjustments for those months for which interim payment was made.

        C.   DHS and Contractor may negotiate an earlier termination date,
             pursuant to Article III, Section 3.18.2, Termination - Contractor,
             if a change in contractual obligations is created by a State or
             federal change in the Medi-Cal program, or a lawsuit, that
             substantially alters the financial assumptions and conditions under
             which Contractor entered into this Contract, such that Contractor
             can demonstrate to the satisfaction of DHS that it cannot remain
             financially solvent until the termination date that would otherwise
             be established under this section.

82.     Article V, PAYMENT PROVISIONS, Section 5.7, Reinsurance, subsection (A),
        sentence one, is amended to read:

        Contractor may obtain reinsurance (stop loss coverage) through DHS or
        other insurers or may self-insure upon approval by DHS to ensure
        maintenance of adequate capital by Contractor, for the cost of providing
        Covered Services under this Contract.

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83.     Article V, PAYMENT PROVISIONS, Section 5.9, Financial Security, is
        amended to read:

        5.9         FINANCIAL PERFORMANCE GUARANTEE

        Contractor shall provide satisfactory evidence of and maintain Financial
        Performance Guarantee in an amount equal to at least one month's
        capitation payment, in a manner specified by DHS. At Contractor's
        request and with DHS approval, Contractor may establish a phase-in
        schedule to accumulate the required Financial Performance Guarantee.
        Contractor may elect to satisfy the Financial Performance Guarantee
        requirement by receiving payment on a post payment basis. The Financial
        Performance Guarantee shall remain in effect for a period not exceeding
        90 days following termination or expiration of this Contract, unless DHS
        has a financial claim against Contractor.

84.     Article V, PAYMENT PROVISIONS, Section 5.11, Recovery of Capitation
        Payments, is amended to read:

        5.11        RECOVERY OF CAPITATION PAYMENTS

        DHS shall have the right to recover amounts paid to Contractor in the
        following circumstances as specified:

        A.   DHS determines that a Member has either been improperly enrolled,
             due to ineligibility of the Member to enroll in Contractor's plan,
             residence outside of Contractor's Service Area, or pursuant to
             Title 22, Section 53891(a)(2), or should have been disenrolled with
             an effective date in a prior month. DHS may recover or, upon
             request by Contractor, DHS shall recover the capitation payments
             made to Contractor for the Member and absolve Contractor from all
             financial and other risk for the provision of services to the
             Member under the terms of the Contract for the month or months in
             question. In such event, Contractor shall have the authority to
             recover any payments made to providers for Covered Services
             rendered for the month or months in question. Contractor shall
             inform providers that claims for services provided to Members
             during the month or months in question shall be paid by DHS' fiscal
             intermediary, if the Member is determined eligible for the Medi-Cal
             program.

                                       49

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MOLINA MEDICAL CENTERS, INC.                                        95-23637-A03

             Upon request by Contractor, DHS may allow Contractor to retain the
             capitation payments made for Members that are eligible to enroll in
             Contractor's plan, but should have been retroactively disenrolled
             pursuant to Article VI, Section 6.7.2, Excluded Services:
             Circumstances Under Which Member Disenrolled, or under other
             circumstances as approved by DHS. If Contractor retains the
             capitation payments, Contractor shall provide or arrange and pay
             for all Medically Necessary Covered Services for the Member, until
             the Member is disenrolled on a nonretroactive basis pursuant to
             Article III, Section 3.23.5, Disenrollment.

        B.   As a result of Contractor's failure to perform contractual
             responsibilities to comply with federal Medicaid requirements, the
             Department of Health and Human Services (DHHS) disallows Federal
             Financial Participation (FFP) for payments made by DHS to
             Contractor. DHS may recover the amounts disallowed by DHHS by an
             offset to the capitation payments made to Contractor. If recovery
             of the full amount at one time imposes a financial hardship on
             Contractor, DHS at its discretion may grant a Contractor's request
             to repay the recoverable amounts in monthly installments over a
             period of consecutive months not to exceed six (6) months.

        C.   If DHS determines that any other erroneous or improper payment not
             mentioned above has been made to Contractor, DHS may recover the
             amounts determined by an offset to the capitation payments made to
             Contractor. If recovery of the full amount at one time imposes a
             financial hardship on Contractor, DHS, at its discretion, may grant
             a Contractor's request to repay the recoverable amounts in monthly
             installments over a period of consecutive months not to exceed six
             (6) months. At least thirty (30) days prior to seeking any such
             recovery, DHS shall notify Contractor to explain the improper or
             erroneous nature of the payment and to describe the recovery
             process.

85.     Article V, PAYMENT PROVISIONS is amended by adding a new section 5.12 to
        read:

        5.12        DATA REPORTING PERFORMANCE INCENTIVES

                    5.12.1      DEFINITIONS

                    For purposes of Section 5.12 Data Reporting Performance
                    Incentives, the following definitions shall apply:

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MOLINA MEDICAL CENTERS, INC.                                        95-23637-A03

        A.   Financial Performance Incentive means the funds retained by DHS and
             paid to the Contractor upon Contractor's achieving the data
             reporting performance incentive standards contained in Section
             5.12.3, Performance Incentive Standards.

        B.   Reporting Year means the twelve-month period beginning July 1, 1998
             and ending June 30, 1999, and each subsequent twelve-month period
             beginning July 1 and ending June 30.

        C.   Services Reporting Period means the period during which Contractor
             provides the services counted to determine Contractor's compliance
             with the Children Served and Outpatient and Emergency Department
             Services standards, contained in Section 5.12.3, Performance
             Incentive Standards. The first Services Reporting Period shall
             consist of the first three months of the Reporting Year; the second
             Services Reporting Period shall consist of the first six months of
             the Reporting Year; the third Services Reporting Period shall
             consist of the first nine months of the Reporting Year, and the
             fourth Services Reporting Period shall consist of the entire 12
             months of the Reporting Year.

        D.   Timeliness Reporting Period means the period during which
             Contractor reports data counted to determine Contractor's
             compliance with the Timeliness of Data Reporting Standards,
             contained in Section 5.12.3, Performance Incentive Standards. The
             first Timeliness Reporting Period shall consist of the first three
             months of the Reporting Year; the second timeliness Reporting
             Period shall consist of the first six months of the Reporting
             Years; the third Timeliness Reporting Period shall consist of the
             first nine months of the Reporting Year; and the fourth Timeliness
             Reporting Period shall consist of the entire 12 months of the
             Reporting Year.

        E.   Claim Run-Out Period means the period beginning on the first day of
             each Services Reporting Period of Timeliness Reporting Period and
             ending ninety (90) days after the last day of each Services
             Reporting Period or Timeliness Reporting Period.

        F.   Data Processing Period means the period beginning on the first day
             of each Services Reporting Period of Timeliness Reporting Period
             and ending ninety (90) days after the last day of each Claim
             Run-Out Period.

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MOLINA MEDICAL CENTERS, INC.                                        95-23637-A03

        G.   Evaluation Period means the ninety (90) day period beginning on the
             day after the last day of each Data Processing Period.

        H.   PM-160 Information Only Data means Child Health and Disability
             Prevention (CHDP) Encounter information contained on the
             Confidential Screening/Billing Report form used by the Contractor
             to report all CHDP Encounters to DHS and to the local CHDP program.

        I.   Encounter Record means an individual data entry, which follows the
             format code contained in the Managed Care Data Element Dictionary,
             reported to DHS for services provided to a Member during an
             Encounter.

        5.12.2      PAYMENT PROVISIONS

        For purposes of this Section 5.12, Data Reporting Performance
        Incentives, the following payment provisions shall apply:

        A.   Commencing with the monthly capitation payment for services
             provided by Contractor to Members during the month of April 1999,
             and for each subsequent monthly capitation payment, DHS shall
             retain and reserve one percent (1%) of each capitation payment for
             each county services by Contractor; however, in no event shall more
             than $100,000 per month be retained by DHS for a Contractor serving
             more than 150,000 Members. The retained funds reserved by DHS shall
             be allocated to each performance incentive standard as specified in
             Section 5.12.3, Performance Incentive Standards.

        B.   DHS shall pay Contractor the reserved Financial Performance
             Incentive funds allocated to each performance incentive standard,
             as provided in Section 5.12.3, Performance Incentive Standards,
             upon Contractor's achieving the standard, in a county serviced by
             Contractor under this Contract. If Contractor is providing services
             in multiple counties under this Contract, a Financial Performance
             Incentive payment shall only be paid for the county or counties in
             which Contractor achieves the specific performance incentive
             standard. If Contractor achieves a performance incentive standard
             in one county, this shall not affect the payment or nonpayment to
             Contractor for the same performance incentive standard in another
             county served under this Contract.

                                       52

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MOLINA MEDICAL CENTERS, INC.                                        95-23637-A03

        C.   The funds available to each Financial Performance Incentive payment
             shall be the sum of all funds reserved by DHS for each performance
             incentive standard, as provided in Section 5.12.3, Performance
             Incentive Standards, for the Services Reporting Period or the
             Timeliness Reporting period under review, less any funds already
             paid to Contractor for achieving the standard in a previous
             Services Reporting Period or Timeliness Reporting Period in the
             same reporting year.

        D.   All Financial Performance incentive calculations for the percent of
             compliance with the standards described in Section 5.12.3,
             Financial Performance Standards, achieved by Contractor shall be
             rounded to the nearest whole number according to the following: all
             percentages shall be carried out to two (2) decimal places and
             those ending with 0.49 or less shall be rounded down to the next
             lower whole number, and all percentages ending with 0.50 or more
             shall be rounded up to the next higher whole number.

        E.   DHS shall notify Contractor of the results of its determination of
             Contractor's compliance with each performance incentive standard
             not later than ten (10) working days after the end of the
             Evaluation Period for the Services Reporting Period or Timeliness
             Reporting Period under review. The Financial Performance Incentive
             payment shall be included in Contractor's monthly capitation
             payment, no later than the second month after the last day of the
             Evaluation Period.

        F.   Payments to Contractor for achieving a performance incentive
             standard shall be subject to verification reviews, including but
             not limited to review of Member medical records, by DHS. If, based
             upon such review, Contractor did not achieve compliance with a
             performance incentive standard, DHS shall recover any Financial
             Performance Incentive payments made to Contractor for achieving the
             standard. Contract shall timely and fully cooperate with DHS, and
             required timely and full cooperation of all entities subcontracting
             with Contractor, in the conduct of verification reviews and the
             furnishing of all records and information requested by DHS to
             complete the reviews. Contractor shall not be compensated,
             including but not limited to compensation for copies of
             information, for cooperating in such reviews. Contractor's failure
             to cooperate in verification reviews, as determined by DHS in its
             sole discretion, shall be grounds for DHS' recovery of any payments
             made for achieving a performance incentive standard.

                                       53

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MOLINA MEDICAL CENTERS, INC.                                        95-23637-A03

        G.   If DHS fails to determine Contractor's compliance with a
             performance incentive standard and mail notification to Contractor
             of the results of such determination within ten (10) working days
             after the end of the Evaluation Period for the Services Reporting
             Period or Timeliness reporting Period under review, DHS shall pay
             Contractor the Financial Performance Incentive allocated to the
             standard for which DHS failed to timely determine compliance. Such
             payment shall be included in Contractor's monthly capitation
             payment, no later than the second month after the last day of the
             Evaluation Period.

        H.   Contractor may dispute any determination of compliance with
             performance incentive standards made by DHS under Section 5.12,
             Data Reporting Performance Incentives, by filing a notice of
             dispute pursuant to Section 3.xx, Disputes and Appeals. Contractor
             shall comply with all provisions of Section 3.xx, Dispute and
             Appeals, in disputing any determination of compliance with
             performance incentive standards made by DHS pursuant to Section
             5.12, Data Reporting Performance Incentives. Contract shall exhaust
             all procedures provided for in Section 3.xx, Dispute and Appeals,
             prior to initiating any other action to enforce Section 5.12 Data
             Reporting Performance Incentives.

        I.   DHS shall pay interest to Contractor for funds reserved from or
             subsequently paid to Contractor, under Section 5.12, Data Reporting
             Performance Incentives.

5.12.3       PERFORMANCE INCENTIVE STANDARDS

Contractor shall be eligible for payment of Financial Performance Incentive
payments as set forth in Section 5.12, Data Reporting Performance Incentives,
upon compliance with the following standards:

A.      Children Served

        1.   PM-160 Information Only Data submitted by Contractor, that meets
             the requirements in paragraph 3 below, shall demonstrate compliance
             with the applicable county rte specified in Table 1 below, for the
             applicable Services Reporting Period. Contractor's failure to
             achieve the required standard for any Services Reporting Period,
             shall not prevent Contractor from receiving payment of the
             Financial Performance Incentive payment for such Services Reporting
             Period, if in a subsequent Services Reporting Period, within the
             same Reporting

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MOLINA MEDICAL CENTERS, INC.                                        95-23637-A03

             Year, Contractor achieves the standard required for the subsequent
             Services Reporting Period.

 Table 1: Required % of Member Children Served to Qualify for Incentive Payments

<TABLE>
<CAPTION>
County            By End of Reporting Period 1    By End of Reporting Period 2    By End of Reporting Period 3
==============================================================================================================
<S>                         <C>                             <C>                             <C>
Alameda                     ****8%                          ****16%                         ****24%
--------------------------------------------------------------------------------------------------------------
Contra Costa                ****7                           ****14                          ****21
--------------------------------------------------------------------------------------------------------------
Fresno                      ****8                           ****16                          ****24
--------------------------------------------------------------------------------------------------------------
Kern                        ****8                           ****16                          ****24
--------------------------------------------------------------------------------------------------------------
Los Angeles                 ****8                           ****16                          ****24
--------------------------------------------------------------------------------------------------------------
Riverside                   ****6                           ****12                          ****18
--------------------------------------------------------------------------------------------------------------
San Bernardino              ****7                           ****14                          ****21
--------------------------------------------------------------------------------------------------------------
San Francisco               ****7                           ****14                          ****21
--------------------------------------------------------------------------------------------------------------
San Joaquin                 ****8                           ****16                          ****24
--------------------------------------------------------------------------------------------------------------
Santa Clara                 ****7                           ****14                          ****21
--------------------------------------------------------------------------------------------------------------
Stanislaus                  ****6                           ****12                          ****18
--------------------------------------------------------------------------------------------------------------
Tulare                      ****6                           ****12                          ****18
========================================================================================================------

<CAPTION>
==============================================
County            By End of Reporting Period 4
----------------------------------------------
<S>                         <C>
Alameda                     ****32%
----------------------------------------------
Contra Costa                ****28
----------------------------------------------
Fresno                      ****31
----------------------------------------------
Kern                        ****30
----------------------------------------------
Los Angeles                 ****30
----------------------------------------------
Riverside                   ****24
----------------------------------------------
San Bernardino              ****27
----------------------------------------------
San Francisco               ****26
----------------------------------------------
San Joaquin                 ****30
----------------------------------------------
Santa Clara                 ****29
----------------------------------------------
Stanislaus                  ****25
----------------------------------------------
Tulare                      ****23
============================================--
</TABLE>

----------
**** - Greater than or Equal to

        2.   Compliance with the Children Services standard shall be based on
             the unduplicated count of Member children, who were enrolled in
             Contractor's plan for at least one month during the Services
             Reporting Period and who were at least four (4) months of age, but
             less than six (6) years of age during the month in which a reported
             pediatric preventive service encounter occurred. Information may be
             reported in hard copy or via computer media claiming, to the extent
             such arrangements are available to Contractor. This shall not be
             construed as creating any obligation on DHS to make available to
             Contractor or condition Contractor performance under this section
             on the availability of computer medial claiming submission.

        3.   DHS' determination as to whether Contractor has achieved the
             performance incentive standard for Children Served shall be based
             solely on evaluation of PM-160 Information Only Data:

             a.     Documenting CHDP services rendered to Members with a date of
                    service during the Services Reporting Period;

             b.     Submitted to DHS by Contractor no later than the last day of
                    the Claims Run-Out Period for the Services Reporting Period
                    under review; and

             c.     Accepted by DHS' fiscal intermediary for processing.

                                       55

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MOLINA MEDICAL CENTERS, INC.                                        95-23637-A03

        4.   PM-160 Information Only Data submitted by Contractor during a Claim
             Run-Out Period that is rejected by DHS' fiscal intermediary shall
             not be included in DHS' evaluation for the purposes of this section
             unless it is resubmitted by Contractor and meets the requirements
             in paragraph 3 above. However, solely for purposes of evaluation
             contractor's eligibility to receive Financial Performance Incentive
             payments, PM-160 Information Only Data resubmitted after the end of
             the Claims Run-Out Period and accepted for processing by DHS'
             fiscal intermediary shall be included in DHS' evaluation for
             subsequent Services Reporting Periods within the same Reporting
             Year if such data is received by DHS no later than the last day of
             the Claims Run-Out Period for the last Services Reporting Period of
             the Reporting Year. The provisions of subsection 5.12.3.A.4 apply
             only to evaluating Contractor's compliance with the performance
             incentive standards and do not relieve Contractor of the obligation
             to report CHDP Encounters in compliance with Article VI, Section
             6.7.6.2, Children, nor shall this section be construed to limit
             DHS' right to imposed all appropriate sanctions for Contractor's
             failure to comply with Article VI, Section 6.7.6.2, Children.

        5.   Thirty-five percent (35%) of the funds reserved by DHS each month,
             for each county in which contractor provides services under this
             Contract, shall be allocated to the Children Served performance
             incentive standard.

        6.   DHS shall pay Contractor for achieving the performance incentive
             standard for Children Serviced based upon the graduated payment
             schedule shown in Table 2 below. Each Financial Performance
             Incentive payment shall be the sum of all funds reserved by DHS for
             the Children Serviced standard for the Services Reporting Period
             under review, minus any funds already paid to Contractor for
             compliance with the Children Served standard in a previous Services
             Reporting Period in the same Reporting Year, multiplied by the
             amount of Financial Incentive Payment shown in Table 2 that was
             achieved by Contractor for the Children Served performance
             incentive standard.

            Table 2: PM-160 Payment Criteria for Children Served and
  Outpatient and Emergency Department Services Performance Incentive Standards

<TABLE>
<CAPTION>
             =========================================================================================
              % of Compliance Standard Achieved      Amount of Financial Incentive Payment
             -----------------------------------------------------------------------------------------
              <S>                                    <C>
                100%                                 100% of funds reserved for the relevant standard
             -----------------------------------------------------------------------------------------
              76-99%                                 75% of funds reserved for the relevant standard
             -----------------------------------------------------------------------------------------
              51-75%                                 50% of funds reserved for the relevant standard
             -----------------------------------------------------------------------------------------
              26-50%                                 25% of funds reserved for the relevant standard
             -----------------------------------------------------------------------------------------
               0-25%                                 0% of funds reserved for the relevant standard
             =========================================================================================
</TABLE>

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MOLINA MEDICAL CENTERS, INC.                                        95-23637-A03

B.      Outpatient and Emergency Department Service Encounters

        1.   For each county in which Contractor operates under this Contract,
             Contractor shall demonstrate compliance with the applicable
             utilization rate per 1,000 Members specified in Table 3 below, for
             each Services Reporting Period, and based upon Contractor's length
             of operations. Contractor's failure to achieve the required
             standard for any Services Reporting Period, shall not prevent
             Contractor from receiving payment of the Financial Performance
             Incentive for such Services Reporting Period, if in a subsequent
             Services Reporting Period, within the same Reporting Year,
             Contractor achieves the standard required for the subsequent
             Services Reporting Period.

                   Table 3: Utilization Rate Per 1,000 Members

<TABLE>
<CAPTION>
================================================================================================================================
 Length of Operations Under Two-Plan Model Contract   Outpatient and Emergency Department Utilization Rate Per 1,000
                                                      Members Required to Qualify for Financial Incentive Payment (based
                                                      on an annualized rate of 2,760 encounters per 1,000 members)
                                                      --------------------------------------------------------------------------
                                                                           Services Reporting Period
--------------------------------------------------------------------------------------------------------------------------------
                                                            1                  2                    3                    4
--------------------------------------------------------------------------------------------------------------------------------
 <S>                                                  <C>              <C>              <C>                <C>
 Less than 12 months                                  ****207/1,000      ****414/1,000        ****621/1,000        ****828/1,000
--------------------------------------------------------------------------------------------------------------------------------
 More than 12 months, but less than 24 months         ****345/1,000      ****690/1,000      ****1,035/1,000      ****1,380/1,000
--------------------------------------------------------------------------------------------------------------------------------
 More than 24 months                                  ****455/1,000      ****910/1,000      ****1,365/1,000      ****1,822/1,000
================================================================================================================================
</TABLE>

----------
**** - Greater than or equal to

        2.   Contractor's length of operations under this Section 5.12, Data
             Reporting Performance Incentives, shall be determined based upon
             the amount of time Contractor has been providing Covered Services
             under this Contract as of the last day of each Services Reporting
             Period. However, if Contractor's length of operations category
             changes after the last day of the ninth month of the Reporting
             Year, DHS shall use the Contractor's previous length of operations
             category to evaluate Contractor's compliance with the Outpatient
             and Emergency Department Services standard for the entire Reporting
             Year.

        3.   Compliance with the Outpatient and Emergency Department Service
             Encounters standard shall be based on the outpatient and emergency
             department services Encounters, exclusive of PM-160 Information
             Only Data, reported by Contractor to DHS as provided to Members in
             each county in which the Contractor operations with a data of
             service during the Services Reporting Period. Contractor
             performance shall be determined using an unduplicated count of
             Members, who were enrolled in Contractor's plan in each county for
             at least one month during the Services Reporting Period under
             review.

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MOLINA MEDICAL CENTERS, INC.                                        95-23637-A03

        4.   DHS' determination as to whether Contractor has met the standard
             for Outpatient and Emergency Department Service Encounters shall be
             based solely on evaluation of the Encounter data, exclusive of
             PM-160 Information Only Data, for outpatient and emergency
             department services, as described in HEDIS 3.0, Ambulatory Care,
             rendered to Members with a data of service during the Services
             Reporting Period under review, and that Contractor has submitted to
             DHS no later than the last day of the Claim Run-Out Period for the
             Services Reporting Period under review and has been accepted for
             processing by DHS' fiscal intermediary. Encounter data submitted by
             Contractor during a Claim Run-Out Period that is rejected by DHS'
             fiscal intermediary shall not be included in DHS' evaluation for
             the purposes of this section unless it is resubmitted no later than
             the last day of the Claim Run-Out Period and accepted for
             processing by DHS' fiscal intermediary. However, solely for the
             purposes of evaluating Contractor's eligibility to receive
             financial Performance Incentive payments, non-PM 160 Encounter data
             submitted or resubmitted after the end of the claims Run-Out Period
             and accepted for processing DHS' fiscal intermediary shall be
             included in DHS' evaluation for subsequent Services Reporting
             Periods within the same Reporting Year if such data is received by
             DHS no later than the last day of the claim Run-Out Period for the
             last Services Reporting Period of the reporting Year. The
             provisions of this subsection 5.12.3.B.4 apply only to evaluating
             Contractor's compliance with the Outpatient and Emergency
             Department Services Encounters performance incentive standard and
             do not relieve Contractor of the obligation to report Encounter
             data in compliance with Article VI, Section 6.4, Management
             Information System.

        5.   Thirty-five percent (35%) of the total funds reserved by DHS for
             each month shall be allocated to the Outpatient and Emergency
             Department Service Encounters performance incentive standard.

        6.   DHS shall pay Contractor for achieving the performance incentive
             standard for Outpatient and Emergency Department Service Encounters
             according to the graduated payment schedule provided in Table 2 of
             Section 5.12.3, Performance Incentive Standards, paragraph A.5.
             Each Financial Performance Incentive payment shall be the sum of
             all funds reserved by DHS for the Outpatient and Emergency
             Department Encounter standard for the Services Reporting Period
             under review, less any funds already paid to Contractor for
             compliance with the Outpatient and Emergency Department Service
             Encounter standard in a previous Services Reporting Period in the
             same Reporting Year, multiplied by the amount of Financial
             Incentive Payment shown in able 3 that was achieved by Contractor
             for the Outpatient and Emergency Department Service Encounter
             performance incentive standard.

                                       58

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MOLINA MEDICAL CENTERS, INC.                                        95-23637-A03

C.      Timeliness of Data Reporting

        1.   Timeliness of PM-160 Information Only Data Reporting: To receive a
             Financial Performance Incentive payment for Timeliness of PM-160
             Information Only Data reporting, for any Timeliness Reporting
             Period, Contractor shall meet or exceed:

             a.     Seventy-five period (75%) of the applicable standard for
                    Children Served for the Timeliness Reporting Period under
                    review, and

             b.     Seventy-five percent (75%) of all PM-160 Information Only
                    Data submitted by Contractor during the Timeliness Reporting
                    Period under review, shall be submitted within thirty (30)
                    days of the end of the month in which the PM-160 Encounter
                    occurred, in accordance with Article VI, Section 6.7.6.2,
                    Children, subsection H, and accepted for processing by DHS'
                    fiscal intermediary no later than the last day of the
                    Timeliness Reporting Period. PM-160 Information Only Data
                    originally submitted during the Timeliness Reporting
                    Period under review, but rejected for processing by DHS'
                    fiscal intermediary, resubmitted after the Timeliness
                    Reporting Period under review and accepted by DHS' fiscal
                    intermediary no later than the last day of the subsequent
                    Timeliness Reporting Period shall be included in DHS'
                    evaluation for the subsequent Timeliness Reporting Period.
                    Notwithstanding the above, only PM-160 Information Only Data
                    received by DHS and accepted for processing by DHS' fiscal
                    intermediary no later than June 30 of the Reporting Year
                    under review shall be considered for Contractor's compliance
                    with the Timeliness of PM-160 Information Only Data
                    Reporting standard for that Reporting Year.

        2.   Timeliness of Encounter Data Reporting: To receive a Financial
             Performance Incentive payment for timeliness of Encounter data
             reporting, for any Timeliness Reporting Period, Contractor shall
             meet or exceed:

             a.     Seventy-five percent (75%) of the applicable standard for
                    Outpatient and Emergency Department Service Encounters for
                    the Timeliness Reporting Period under review; and

                                       59

<PAGE>

MOLINA MEDICAL CENTERS, INC.                                        95-23637-A03

             b.     Seventy percent (70%) of all Encounter Records submitted by
                    Contractor during the Timeliness Reporting Period under
                    review, shall be submitted within ninety (90) days of the
                    end of the month in which the Encounter occurred, and
                    accepted for processing by DHS' fiscal intermediary and DHS
                    no later than the last day of the Timeliness Reporting
                    Period. Encounter Records originally submitted to DHS during
                    the Timeliness Reporting Period under review, but rejected
                    for processing by DHS' fiscal intermediary or DHS,
                    resubmitted after the Timeliness Reporting Period under
                    review and accepted for processing by DHS' fiscal
                    intermediary and DHS no later than the last day of the
                    subsequent Timeliness Reporting Period shall be included
                    in DHS' evaluation for the subsequent Timeliness Reporting
                    Period. Notwithstanding the above, only Encounter Records
                    received by DHS and accepted for processing by DHS' fiscal
                    intermediary and DHS no later than June 30 of the Reporting
                    Year under review shall be considered for Contractor's
                    compliance with the Timeliness of Encounter Data Reporting
                    standard for that Reporting Year.

        3.   Fifteen percent (15%) of the total funds reserved by DHS for each
             month shall be allocated to the Timeliness of PM-160 Information
             Only Data Reporting standard, and fifteen percent (15%) of the
             total funds reserved by DHS for each month shall be allocated to
             the Timeliness of Encounter Data reporting standard.

        4.   Each Financial Performance Incentive payment shall be the sum of
             all funds reserved by DHS for the Timeliness of PM-160 Information
             Only Data Reporting standard for the Timeliness Reporting Period
             under review, less any funds already paid to Contractor for
             compliance with such Timeliness standard in a previous Timeliness
             Reporting Period in the same Reporting Year.

        5.   Each Financial Performance Incentive payment shall be the sum of
             all funds reserved by DHS for the Timeliness of Encounter Data
             Reporting standard for the Timeliness Reporting Period under
             review, less any funds already paid to Contractor for compliance
             with such Timeliness standard in a previous Timeliness Reporting
             Period in the same Reporting Year.

                                       60

<PAGE>

MOLINA MEDICAL CENTERS, INC.                                        95-23637-A03

86.     Article V, PAYMENT PROVISIONS is amended by adding a new Section 5.13,
        FQHC/RHC Risk Corridor Payments, to read:

        5.13        FQHC/RHC RISK CORRIDOR PAYMENTS

        Beginning October 1, 1997 and through September 30, 2000, provided that
        Contractor annually submits, within four months after the last day of
        each fiscal year, required expenditure data to DHS in the form and
        manner specified by DHS, DHS shall perform reconciliations to determine
        the variance between the funds that have been paid to Contractor in its
        capitation rates to reflect the dollar value of FQHC and RHC interim
        rate payments made to these entities in the Medi-Cal FFS program and the
        amount that Contractor has paid to subcontracting FQHCs and RHCs.

        For each annual reconciliation, if, pursuant to subcontracts with FQHCs
        and RHCs that have been reviewed and approved in writing by DHS,
        Contractor has paid subcontracting FQHCs and RHCs in the aggregate an
        amount greater than 110 percent of the dollar value of FQHC and RHC
        interim rate payments included in Contractor's capitation rates, DHS
        shall pay Contractor the amount in excess of 110 percent.

        For each annual reconciliation, if, pursuant to subcontracts with FQHCs
        and RHCs that have been reviewed and approved in writing by DHS,
        Contractor has paid subcontracting FQHCs and RHCs in the aggregate an
        amount less than 90 percent of the dollar value of FQHC and RHC interim
        rate payments included in Contractor's capitation rates, Contractor
        shall refund the amount below 90 percent to DHS. DHS may recover amounts
        owed by Contractor pursuant to this section through an offset to the
        capitation payments made to Contractor, pursuant to Section 5.11(C),
        Recovery of Capitation Payments.

        All reconciliations shall be subject to an annual reconciliation audit
        at which time payments to or recoupments from Contractor shall be
        finalized.

87.     Article V, PAYMENT PROVISIONS, is amended by adding a new Section 5.14,
        Payment of AIDS Beneficiary Rates, to read:

        5.14        PAYMENT OF AIDS BENEFICIARY RATES

        Subject to Contractor's compliance with the requirements contained in
        subsection A below, Contractor shall be eligible to receive compensation
        at the AIDS Beneficiary Rate (ABR) for AIDS Beneficiaries. Compensation
        to Contractor at the ABR for each AIDS Beneficiary shall consist of
        payment at the ABR less the capitation rate initially paid for the AIDS
        beneficiary.

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        A.   Compensation at the ABR shall be subject to the conditions listed
             below. Contractor's failure to comply with any of the conditions
             listed below for any request for compensation at the ABR on behalf
             of an individual AIDS Beneficiary for a specific month of
             Enrollment shall result in DHS' denial of Contractor's claim for
             compensation at the ABR for that individual AIDS Beneficiary for
             that specific month of Enrollment. Contractor may submit a
             corrected claim, within the timeframes specified in paragraph 4
             below, that complies with all the conditions listed below and DHS
             shall reimburse Contractor at the ABR.

             1.     The ABR shall be in lieu of any other compensation for an
                    AIDS Beneficiary in any month.

             2.     For AIDS Beneficiaries, Contractor shall be eligible to
                    receive compensation at the ABR commencing in the month in
                    which a Diagnosis of AIDS is made and recorded, dated and
                    signed by the treating physician in the AIDS Beneficiary's
                    Medical Record.

             3.     Contractor shall submit an invoice to DHS by the 25th day of
                    each month for claims for compensation at the ABR for AIDS
                    Beneficiaries. The invoice shall include the following:

                    a.      A list of all AIDS Beneficiaries identified by
                            Medi-Cal numbers only for whom Contractor is
                            claiming compensation at the ABR Member names shall
                            not be used.

                    b.      The month(s) and year(s) for which compensation at
                            the ABR is being claimed for each AIDS Beneficiary
                            listed, sorted by month and year of service.

                    c.      The capitation rate initially paid for the AIDS
                            Beneficiary for each month being claimed by
                            Contractor, the ABR being claimed, and the
                            difference between the ABR and the capitation rate
                            initially paid for the AIDS Beneficiary.

                    d.      The total amount being claimed on the invoice.

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             4.     Invoices, containing originally submitted claims or
                    corrected claims, for compensation at the ABR for any month
                    of eligibility during the rate year beginning October 1,
                    1997 and ending September 30, 1998, or any rate year
                    thereafter beginning October 1 and ending September 30, must
                    be submitted by Contractor to DHS no later than six (6)
                    months following the end of the subject rate year.

        B.   Contractor shall confirm Medi-Cal eligibility of AIDS Beneficiaries
             prior to submission of the monthly invoice to DHS. DHS may verify
             the Medi-Cal eligibility of each Member for whom the ABR is claimed
             and adjust the invoiced amounts to reflect any capitation payments
             which have been previously made to Contractor for each Member prior
             to submission of the invoice required under subsection A(3).

        C.   If DHS determines that a Member for whom compensation has been paid
             at the ABR did not meet the definition of an AIDS Beneficiary, in a
             month for which the ABR was paid, DHS shall recover any amount
             improperly paid, by an offset to Contractor's capitation payment,
             in accordance with Section 5.11(C), Recovery of Capitation
             Payments. DHS shall give Contractor thirty (30) days prior written
             notice of any such offset.

88.     Article VI, SCOPE OF WORK, Section 6.2.5, Administrative
        Duties/Responsibilities, subsection (B), is amended to read:

        B.   Member and Enrollment reporting systems as specified in Section
             6.4, Management Information Systems (MIS), and Section 6.9, Member
             Services/Grievance Systems.

89.     Article VI, SCOPE OF WORK, Section 6.3.1, Financial Viability/Standards
        Compliance, is amended to read:

        6.3.1       FINANCIAL VIABILITY/STANDARDS COMPLIANCE

        Contractor shall demonstrate financial viability/standards compliance to
        DHS' satisfaction for each of the following elements:

        A.   Tangible Net Equity (TNE).

             Contractor at all times shall be in compliance with the TNE
             requirements in accordance with Title 10, CCR, Section 1300.76.

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        B.   Administrative Costs.

             Contractor's Administrative Costs shall not exceed the guidelines
             as established under Title 10, CCR, Section 1300.78.

        C.   Standards of Organization and Financial Soundness.

             Contractor shall maintain an organizational structure sufficient to
             conduct the proposed operations and ensure that its financial
             resources are sufficient for sound business operations in
             accordance with Title 10, CCR, Sections 1300.67.3, 1300.75.1,
             1300.76, 1300.76.3, 1300.77.1, 1300.77.2, 1300.77.3, 1300.77.4,
             1300.78, and Title 22, CCR, Sections 53851, 53863, and 53864.

        D.   Working capital and current ratio of one of the following:

             1.     Contractor shall maintain a working capital ratio of at
                    least 1:1; or

             2.     Contractor shall demonstrate to DHS that Contractor is now
                    meeting financial obligations on a timely basis and has been
                    doing so for at least the preceding two years; or

             3.     Contractor shall provide evidence that sufficient noncurrent
                    assets, which are readily convertible to cash, are available
                    to achieve an equivalent working capital ratio of 1:1, if
                    the noncurrent assets are considered current.

90.     Article VI, SCOPE OF WORK, Section 6.3.2, Financial Audit/Reports, is
        amended to read:

        6.3.2       FINANCIAL AUDIT/REPORTS

        Contractor shall ensure that an annual audit is performed according to
        Section 14459, W&I Code. Combined Financial Statements shall be prepared
        to show the financial position of the overall related health care
        delivery system when delivery of care or other services is dependent
        upon Affiliates. Financial Statements shall be presented in a form that
        clearly shows the financial position of Contractor separately from the
        combined totals. Inter-entity transactions and profits shall be
        eliminated if combined statements are prepared. Contractor shall have
        separate certified Financial Statements prepared if an independent
        accountant decides that preparation of combined statements is
        inappropriate.

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        A.   The independent accountant shall state in writing reasons for not
             preparing combined Financial Statements.

        B.   Contractor shall provide supplemental schedules that clearly
             reflect all inter-entity transactions and eliminations necessary to
             enable DHS to analyze the overall financial status of the entire
             health care delivery system.

             1.     In addition to annual certified Financial Statements
                    Contractor shall complete the entire 1989 HMO Financial
                    Report of Affairs and Conditions Format, commonly known as
                    the "Orange Blank". The Certified Public Accountant's (CPA)
                    audited Financial Statements and the "Orange Blank" report
                    shall be submitted to DHS no later than 120 calendar days
                    after the close of Contractor's Fiscal Year.

             2.     Contractor shall submit to DHS within forty-five (45)
                    calendar days after the close of Contractor's fiscal quarter
                    financial reports required by Title 22, CCR, Section
                    53862(b)(l). The required quarterly financial reports shall
                    be prepared on the "Orange Blank" format and shall include,
                    at a minimum, the following reports/schedules:

                    a.      Jurat.

                    b.      Report 1A and 1B: Balance Sheet.

                    c.      Report 2: Statement of Revenue, Expenses, and Net
                            Worth.

                    d.      Statement of Cash Flow, prepared in accordance with
                            Financial Accounting Standards Board Statement
                            Number 95 (This statement is prepared in lieu of
                            Report #3: Statement of Changes in Financial
                            Position for Generally Accepted Accounting
                            Principles (GAAP) compliance.)

                    e.      Report 4: Enrollment and Utilization Table.

                    f.      Schedule F: Unpaid Claims Analysis.

                    g.      Appropriate footnote disclosures in accordance with
                            GAAP.

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             C.     Contractor shall authorize the independent accountant to
                    allow representatives of DHS, upon written request, to
                    inspect any and all working papers related to the
                    preparation of the audit report.

             D.     Contractor shall submit to DHS all financial reports
                    relevant to Affiliates as specified in Title 22, CCR,
                    Section 53862(c)(4).

             E.     Contractor shall submit to DHS copies of any financial
                    reports submitted to other public or private organizations
                    as specified in Title 22, CCR, Section 53862(c)(5).

91.     Article VI, SCOPE OF WORK, is amended by adding a new Section 6.3.6,
        Submittal of FQHC and RHC Payment Information, to read:

        6.3.6       SUBMITTAL OF FQHC AND RHC PAYMENT INFORMATION

        Effective with the October 1997 month of service, Contractor shall keep
        a record of the number of visits by plan Members to each FQHC and RHC
        contracting with Contractor and related payment information, and shall
        submit this information to DHS in the frequency, format, and manner
        specified by DHS. This requirement shall remain in effect through the
        September 1999 month of service.

92.     Article VI, SCOPE OF WORK, is amended by adding a new Section 6.3.7,
        Submittal of Inpatient Days Information, to read:

        6.3.7       SUBMITTAL OF INPATIENT DAYS INFORMATION

        Upon DHS' written request, Contractor shall report inpatient days to DHS
        as required by W&I Code, Section 14105.985(b)(2) for the time period and
        in the form and manner specified in DHS' request, within thirty (30)
        days of receipt of the request. Contractor shall submit additional
        reports to DHS, as requested, for the administration of the
        Disproportionate Share Hospital program.

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93.     Article VI, SCOPE OF WORK, Section 6.4, Management Information System,
        is amended to read:

        6.4.1       MANAGEMENT INFORMATION SYSTEM (MIS) CAPABILITY

        Contractor shall have and maintain an MIS that provides, at a minimum:

        A.   All Medi-Cal eligibility data,

        B.   Members enrolled in Contractor's plan,

        C.   Provider claims status and payment data,

        D.   Encounter-level health care services delivery data,

        E.   Provider network information, and

        F.   Financial information as specified in Section 6.2.5(E),
             Administrative Duties/Responsibilities.

        6.4.2       ENCOUNTER DATA SUBMITTAL

        Contractor shall implement policies and procedures for ensuring the
        complete, accurate, and timely submission of Encounter-level data for
        all services for which Contractor has incurred any financial liability,
        whether directly or through Subcontracts or other arrangements. As a
        condition of payment, Contractor may require subcontractors and
        out-of-plan providers to provide Encounter-level data to Contractor that
        meets the same standards required for Contractor to comply with this
        section. Contractor shall submit

        Encounter-level data to DHS on a monthly basis, no later than ninety
        (90) days following the end of the reporting month in which the
        Encounter occurred, in the form and manner specified in DHS' most recent
        Managed Care Data Element Dictionary. Encounter-level data received and
        processed by Contractor too late to be submitted timely, shall be
        submitted to DHS with the next monthly submission. Encounter-level data
        shall include data elements specified in DHS' most recent Managed Care
        Data Element Dictionary.

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        6.4.3       MIS/DATA CORRESPONDENCE

        Contractor shall ensure, that upon written notice by DHS of any problems
        related to the submittal of data or any changes or clarifications
        related to Contractor's MIS system, that Contractor shall submit to DHS
        a Corrective Action Plan with measurable benchmarks within thirty (30)
        calendar days from the date of the postmark of DHS' written notice to
        Contractor. Within thirty (30) days of DHS' receipt of Contractor's
        Corrective Action Plan, DHS shall approve the Corrective Action Plan or
        request revisions. Within fifteen (15) days after receipt of a request
        for revisions to the Corrective Action Plan, Contractor shall submit a
        revised Corrective Action Plan for DHS approval.

        6.4.4       TIMELY, COMPLETE AND ACCURATE DATA SUBMISSION

        Contractor shall ensure that the Encounter-level data submitted to DHS
        are complete, accurate, and timely and in compliance with the
        requirements of DHS' most recent Managed Care Data Element Dictionary.

        Upon written notice by DHS that Encounter-level data is insufficient or
        inaccurate, Contractor shall ensure that corrected data is resubmitted
        within fifteen (15) days of receipt of DHS' notice. Upon Contractor's
        written request, DHS may provide a written extension of the time to
        resubmit corrected Encounter-level data.

94.     Article VI, SCOPE OF WORK, Section 6.5.3.3, Standards and Guidelines,
        subsection A, is amended to read:

        A.   Pediatric:

             Periodic health screen schedule based on the most recent
             recommendations of the American Academy of Pediatrics (AAP).
             Immunization schedule based on recommendations of either the
             Advisory Committee on Immunization Practices or the AAP shall be
             acceptable.

95.     Article VI, SCOPE OF WORK, Section 6.5.3.4, Quality Indicators, is
        amended to read:

        6.5.3.4     QUALITY INDICATORS

        To the extent feasible and appropriate, Contractor shall use the most
        recent HEDIS indicators for the required Quality of Care studies
        indicated in Section 6.5.3.2, Quality of Care Studies. The HEDIS
        indicators selected for use by Contractor shall be approved by DHS.

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96.     Article VI, SCOPE OF WORK, Section 6.5.5.2, Facility Review Procedures,
        subsection O, is amended to read:

        6.5.5.2     REVIEW PROCEDURES

        O.   Informed consent procedures.

97.     Article VI, SCOPE OF WORK, Section 6.5.5.3, Number of Sites to be
        Reviewed Prior to Operations, is amended to read:

        6.5.5.3     NUMBER OF SITES TO BE REVIEWED PRIOR TO OPERATIONS

        Contractor shall ensure that Facility reviews are completed on thirty
        (30) sites or a five (5) percent sample of the total number of Primary
        Care sites, whichever is less, prior to initiating plan operation or new
        site expansion. Contractors with 30 sites or less, or who are expanding
        by 30 sites or less, shall complete Facility reviews on all sites prior
        to initiating operation. A Contractor with NCQA accreditation is
        exempted from this requirement.

        Contractor shall submit the results of pre-operational and expansion
        site reviews to DHS at least six (6) weeks prior to plan or site
        operation. For pre-operational site reviews, Contractor shall submit the
        Primary Care Facility Identification form, the facility checklist, and
        any corrective actions and follow-up. For expansion site reviews,
        Contractor shall submit an aggregate report of the review results
        without the Primary Care Facility Identification form or facility
        checklist.

98.     Article VI, SCOPE OF WORK, Section 6.5.5.5, DHS Facility Inspections, is
        amended to read:

        6.5.5.5     FACILITY INSPECTIONS

        Contractor shall provide any necessary assistance to DHS in its conduct
        of Facility inspections and medical reviews of the Quality of Care being
        provided to Members. Contractor shall ensure correction of deficiencies
        as identified by those inspections and reviews according to the
        timeframes delineated by DHS in the resulting reports.

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99.     Article VI, SCOPE OF WORK, Section 6.5.5.6, Corrective Actions, is
        amended to read:

        6.5.5.6     CORRECTIVE ACTIONS

        Contractor shall ensure that Primary Care sites with major, uncorrected
        deficiencies are not allowed to begin operation. In the event a Primary
        Care site develops such deficiencies subsequent to the commencement of
        operations, Contractor shall require such site to cease providing
        services to Members; provided that such site may not be required to
        cease providing services in the event DHS and Contractor agree to a plan
        of corrective action to be implemented by the site, and such plan is
        being implemented to the satisfaction of DHS.

100.    Article VI, SCOPE OF WORK, Section 6.5.6.5, Member's Right to
        Confidentiality, subsection (B), is amended to read:

        B.   Contractor shall counsel Members on their right to confidentiality
             and Contractor shall obtain Member's consent prior to release of
             confidential information, unless such consent is not required
             pursuant to Title 22, CCR, Section 51009.

101.    Article VI, SCOPE OF WORK, Section 6.5.7.8, Sensitive Services,
        paragraph one, is amended to read:

        Contractor shall implement and maintain procedures to ensure
        confidentiality and ready access to Sensitive Services for all Members,
        including minors. Members shall be able to access Sensitive Services in
        a timely manner and without barriers such as Prior Authorization
        requirements. Access to abortion services for Members who are minors
        shall be subject to applicable state and federal law.

102.    Article VI, SCOPE OF WORK, Section 6.5.8.4, Member Medical Record,
        sentence one, is amended to read:

        Contractor shall ensure that a complete Medical Record shall be
        maintained for each Member in accordance with Title 22, CCR, Section
        53861, and it shall reflect all aspects of patient care, including
        ancillary services, and at a minimum shall include:

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103.    Article VI, SCOPE OF WORK, is amended by adding a new Section 6.5.10.7,
        Targeted Case Management Services, to read as follows:

        6.5.10.7    TARGETED CASE MANAGEMENT SERVICES

        If a Member is receiving targeted case management services as defined in
        Title 22, CCR, Section 51185(h) and as specified in Title 22, CCR,
        Section 51351, Contractor shall be responsible for coordinating the
        Member's health care with the targeted case management provider and for
        determining the medical necessity of diagnostic and treatment services
        recommended by the targeted case management provider that are Covered
        Services under the Contract.

104.    Article VI, SCOPE OF WORK, Section 6.6.6, Provider to Member Ratios, is
        amended to read:

        6.6.6       PROVIDER TO MEMBER RATIOS

        A.   Contractor shall ensure that networks continuously satisfy the
             following full time equivalent provider to Member ratios:

             1.     Primary Care Physicians             1:2,000
             2.     Total Physicians                    1:1,200

        B.   If Non-Physician Medical Practitioners are included in Contractor's
             provider network, each individual Non-Physician Medical
             Practitioner shall not exceed a full-time equivalent
             provider/patient caseload of one provider per 1,000 patients.

105.    Article VI, SCOPE OF WORK, Section 6.6.7, Physician Supervisor to
        Non-Physician Medical Practitioner Ratios, subsection (D), is amended to
        read:

        D.   Four (4) Non-Physician Medical Practitioners in any combination
             that does not include more than three nurse midwives or two
             physician assistants.

106.    Article VI, SCOPE OF WORK, Section 6.6.8, Subcontracts, is amended to
        read:

        6.6.8       SUBCONTRACTS

        Contractor shall execute Subcontracts pursuant to the requirements
        contained in Article III, Section 3.28, Subcontracts and Title 22, CCR,
        Section 53867.

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107.    Article VI, SCOPE OF WORK, Section 6.6.13, Monthly Report, is amended to
        read:

6.6.13       QUARTERLY REPORT

        Contractor shall submit to DHS on a quarterly basis, in a format
        specified by DHS, a report summarizing changes in the provider network.
        The report shall identify provider deletions and additions and the
        resulting impact to: 1) geographic access for the Members; 2) cultural
        and linguistic services; 3) the targeted percentage of traditional and
        safety-net providers; 4) the ethnic composition of providers; and 5) the
        number of Members assigned to Primary Care Physicians and the percentage
        of Members assigned to traditional and safety-net providers. Contractor
        shall submit the report thirty (30) days following the end of the
        reporting quarter.

108.    Article VI, SCOPE OF WORK, Section 6.6.14, Contract and Employment
        Terminations, is amended to read:

        6.6.14      CONTRACT AND EMPLOYMENT TERMINATIONS

        Contractor shall ensure that the composition of Contractor's provider
        network meets the ethnic, cultural, and linguistic needs of Contractor's
        Members on a continuous basis.

109.    Article VI, SCOPE OF WORK, Section 6.6.15, Utilization of DSH Hospitals,
        is amended to read:

        6.6.15      UTILIZATION OF DSH HOSPITALS

        Contractor shall increase Utilization of Disproportionate Share
        Hospitals (DSH) by Members to a level specified by DHS upon
        notification. DHS shall only impose this requirement if the Utilization
        of DSH has decreased in such magnitude as to jeopardize DSH supplemental
        payments in the county.

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110.    Article VI, SCOPE OF WORK, Section 6.6.17, Emergency Service Providers,
        is amended to read:

        6.6.17      EMERGENCY SERVICE PROVIDERS

        A.   Contractor shall pay for Emergency Services received by a Member
             from non-Contractor providers. Payments to non-Contractor
             providers shall be for the treatment of the Emergency Medical
             Condition including Medically Necessary services rendered to a
             Member until the Member's condition has stabilized sufficiently to
             permit discharge, or referral and transfer in accordance with
             instructions from Contractor. Emergency Services shall not be
             subject to Prior Authorization by Contractor.

        B.   Contractor shall pay for those services provided by a
             non-Contractor emergency department (ED) that are required to
             determine whether treatment of the Member's condition qualifies as
             an Emergency Service, including, at a minimum, a medical screening
             examination to determine the presence or absence of an Emergency
             Medical Condition. At a minimum, Contractor must reimburse the
             non-Contractor ED and, if applicable, its affiliated providers for
             Physician services at the lowest level of evaluation and management
             CPT (Physician's Current Procedural Terminology) codes, unless a
             higher level is clearly supported by documentation, and for the
             Facility fee and diagnostic services such as laboratory and
             radiology.

        C.   Payment by Contractor, or by a subcontractor who is at risk for
             out-of-plan Emergency Services, for properly documented claims for
             services rendered by a non-Contractor provider pursuant to this
             section shall be made in accordance with Article III, Section
             3.28.9, Payment, and shall not exceed the lower of the following
             rates applicable at the time the services were rendered by the
             provider:

             1.     The usual charges made to the general public by the
                    provider.

             2.     The maximum Fee-For-Service rates for similar services under
                    the Medi-Cal program.

             3.     The rate agreed to by Contractor and the provider.

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        D.   For inpatient services, reimbursement by Contractor, or by a
             subcontractor that is at risk for out-of-plan Emergency Services,
             to an out-of-plan Emergency Services provider shall be the lower of
             the following rates applicable to the provider at the time the
             services were rendered by the provider:

             1.     For a provider not contracting with the State under the
                    Selected Provider Contracting Program, the lower of:

                    a.      The Medi-Cal Fee-For-Service rate that would be
                            received by the provider if the service were
                            provided for a beneficiary under the Medi-Cal
                            Fee-For-Service program; or

                    b.      The inpatient rate negotiated by Contractor or
                            subcontractor with the provider.

             2.     For a provider contracting with the State under the Selected
                    Provider Contracting Program, the lower of:

                    a.      The average California Medical Assistance Commission
                            (CMAC) rate for the geographic region, referred to
                            as Standard Consolidated Statistical Area, in which
                            the provider is located, for the last year reported,
                            as published in the most recent CMAC Annual Report
                            to the Legislature; or

                    b.      The inpatient rate negotiated by Contractor or
                            subcontractor with the provider.

        E.   Disputed Emergency Services claims may be submitted to DHS for
             resolution under the provisions of Section 14454, W&I Code and
             Title 22, CCR, Section 53875. Contractor agrees to abide by the
             findings of DHS in such cases, to promptly reimburse the
             non-Contractor provider within 30 days of the effective date of a
             decision that Contractor is liable for payment of a claim and to
             provide proof of reimbursement in such form as the Director may
             require. Failure to reimburse the non-Contractor provider and
             provide proof of reimbursement to DHS within 30 days shall result
             in liability offsets in accordance with Title 22, CCR, Section
             53875.

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111.    Article VI, SCOPE OF WORK, Section 6.6.20, FQHC Services, paragraph one,
        is amended to read as follows:

        6.6.20      FQHC SERVICES

        Contractor shall meet federal requirements for access and reimbursement
        for FQHC services, including those in 42 United States Code Section 1396
        b(m) and Medicaid Regional Memorandum 93-13. If FQHC services are not
        available in the provider network of either Medi-Cal managed care
        contractor in the county, Contractor shall reimburse FQHCs for services
        provided out-of-plan to Contractor's Members at the interim FQHC rate
        determined by DHS. If FQHC services are not available in Contractor's
        provider network, but are available within DHS' time and distance
        standards for access to Primary Care for Contractor's Members in the
        other Medi-Cal managed care contractor's provider network in the county,
        Contractor shall not be obligated to reimburse FQHCs for services
        provided out-of-plan to Members (unless authorized by Contractor).

112.    Article VI, SCOPE OF WORK, Section 6.6.21, FQHC Subcontracts is amended
        to read:

        6.6.21      FQHC AND RURAL HEALTH CLINICS (RHC) CONTRACTS

        A.   Notwithstanding Article III, Section 3.28.4, Department Approval -
             Federally Qualified HMOs, Contractor shall not enter into any
             contract with an FQHC or RHC for provision of Covered Services to
             Members without prior written approval by DHS. All contracts with
             FQHCs or RHCs shall provide reimbursement to the FQHC or RHC on the
             basis of each center's or clinic's Medi-Cal interim per visit rate,
             applicable on the date the reimbursable services were provided, as
             established by DHS, unless:

             1.     DHS has approved in writing an alternate reimbursement
                    methodology; or

             2.     The FQHC or RHC agrees to be reimbursed on an at-risk basis
                    and such agreement is contained in the contract with the
                    center or clinic. In contracts where a negotiated rate is
                    agreed to as total payment, the contract shall state that
                    such payment constitutes total payment to the entity.

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        B.   To the extent that Indian Health Service facilities qualify as
             FQHCs or RHCs, the same reimbursement requirements shall apply to
             contracts with Indian Health Service facilities.

113.    Article VI, SCOPE OF WORK, Section 6.6.22, Indian Health Service
        Facilities, is amended to read:

        6.6.22      INDIAN HEALTH SERVICES FACILITIES

        Contractor shall reimburse out-of-plan Indian Health Service Facilities
        for services provided to Members who are qualified to receive services
        from an Indian Health Service Facility. Contractor shall reimburse the
        out-of-plan Indian Health Service Facility at the approved Medi-Cal rate
        for that Facility.

        The contract requirements in Section 6.6.21, FQHC and Rural Health
        Clinic Contracts, shall apply to any Indian Health Service Facility
        which is also an FQHC or RHC.

114.    Article VI, SCOPE OF WORK, Section 6.7.1.1, General Requirements, is
        amended to read:

        6.7.1.1     GENERAL REQUIREMENTS

        Contractor shall provide or arrange for all Medically Necessary Covered
        Services for Members. Covered Services are those services set forth in
        Title 22, CCR, Chapter 3, Article 4, beginning with Section 51301, and
        Title 17, CCR, Division 1, Chapter 4, Subchapter 13, beginning with
        Section 6840, unless otherwise specifically excluded under the terms of
        this Contract. Contractor shall ensure that the medical necessity of
        Covered Services is determined through Utilization control procedures
        established in accordance with Sections 6.5.9.3,
        Pre-Authorization/Review Procedures, and 6.5.9.4, Exceptions to Prior
        Authorization Requirement, unless specific Utilization control
        requirements are included as terms of the Contract under sections
        applicable to specific services. However, no Utilization control
        procedure, or any other policy or procedure used by Contractor, shall
        limit services Contractor is required to provide under this Contract.

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115.    Article VI, SCOPE OF SERVICES, Section 6.7.2.2, Waiver Programs, is
        amended to read:

        6.7.2.2     WAIVER PROGRAMS

        Contractor shall maintain systems for identifying and referring Members
        to the appropriate waiver program, including the In-Home Medical Care
        Waiver Program, the Skilled Nursing Facility Waiver Program, the Model
        Waiver Program, the Acquired Immune Deficiency (AIDS) and AIDS Related
        Conditions Waiver Program, and the Multipurpose Senior Services Waiver
        Program. If the agency administering the waiver program concurs with
        Contractor's assessment of the Member and there is available placement
        in the waiver program, Contractor shall initiate Disenrollment for the
        Member. Contractor shall provide documentation to ensure the Member's
        orderly transfer to the Medi-Cal Fee-For-Service program. If the Member
        does not meet the criteria for the waiver program, or if placement is
        not available, Contractor shall continue to case manage and provide all
        Medically Necessary Covered Sservices to the Member.

116.    Article VI, SCOPE OF WORK, Section 6.7.3.1, Miscellaneous Service Carve
        Outs, is amended to read:

        6.7.3.1     MISCELLANEOUS SERVICE CARVE OUTS

        Acupuncture services, adult day health care services, chiropractic
        services, and healing by prayer or spiritual means are not Covered
        Services under this Contract. Contractor may, upon request, refer
        Members to these services.

        Local Education Agency (LEA) assessment services provided to any student
        and any LEA services provided pursuant to an Individual Education Plan
        (IEP) or Individual Family Service Plan (IFSP) or Individualized Health
        and Support Plan (IHSP) are not covered under the Contract.

        Childhood lead poisoning case management is not a Covered Service under
        this Contract. Laboratories subcontracting with Contractor shall refer
        Members with elevated blood lead levels to the Childhood Lead Poisoning
        Prevention Branch of DHS which, in turn, shall provide this information
        to the Local Health Department. The Local Health Department shall
        coordinate case information and care with the Primary Care Physician.

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117.    Article VI, SCOPE OF WORK, Section 6.7.3.2, CCS Services, is amended to
        read:

        6.7.3.2     CALIFORNIA CHILDREN SERVICES (CCS)

        A.   Contractor shall develop and implement written policies and
             procedures for identifying and referring children with CCS-eligible
             conditions to the local CCS program. The policies and procedures
             shall include, but not be limited to:

             1.     Policies and operational controls that assure that
                    Contractor's providers perform appropriate baseline health
                    assessments and diagnostic evaluations that provide
                    sufficient clinical detail to establish, or raise a
                    reasonable suspicion, that a Member child has a CCS-eligible
                    medical condition;

             2.     Procedures for assuring that Contracting Providers are
                    informed about CCS-paneled providers and CCS-approved
                    hospitals within Contractor's network; and

             3.     Procedures for initial referrals of Member children with
                    CCS-eligible conditions to the local CCS program by
                    telephone, same-day mail or FAX, if available. The initial
                    referral shall be followed by submission of supporting
                    medical documentation sufficient to allow for eligibility
                    determination by the local CCS program.

             4.     Procedures that provide for continuity of care between
                    Contractor's providers and CCS providers for Member children
                    determined eligible for the CCS program.

        B.   Contractor shall consult and coordinate CCS referral activities
             with the local CCS program in accordance with the agreement reached
             under a Memorandum of Agreement (MOA) between Contractor and LHD
             for coordination of CCS services.

        C.   Contractor shall continue to provide all Medically Necessary
             Covered Services and case management services for Member children
             referred to CCS until eligibility for the CCS program is
             established. Eligibility for the CCS program includes confirmation
             by the local CCS program of a Member child's CCS-eligible condition
             and agreement by the local CCS program to assume case management
             responsibilities for the Member child.

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        D.   Once eligibility for the CCS program is established for a Member
             child:

             1.     Contractor shall continue to provide Primary Care and other
                    Medically Necessary Covered Services unrelated to the
                    CCS-eligible condition and will ensure the coordination of
                    services between its Primary Care providers, the CCS
                    specialty providers, and the local CCS program.

             2.     The CCS program shall authorize Medi-Cal payments to
                    Contractor network physicians who currently are members of
                    the CCS panel and to other providers who provided
                    CCS-covered services to the Member child during the
                    CCS-eligibility determination period and are determined to
                    meet the CCS standards in accordance with subsection E.
                    Authorization for payment shall be retroactive to the date
                    the CCS program was informed about the Member child through
                    an initial referral by Contractor or a Contractor network
                    physician, via telephone, FAX, or mail. In an emergency
                    admission, Contractor or Contractor network physician shall
                    be allowed until the next business day to inform the CCS
                    program about the Member child. Authorization shall be
                    issued upon confirmation of panel status or completion of
                    the process described in subsection E. Payment shall be
                    dependent on the submittal of appropriately completed and
                    timely claims to the local CCS program, which authorizes
                    care. Claims authorized by the local CCS program shall be
                    forwarded to the Medi-Cal Fee-For-Service program fiscal
                    intermediary for payment.

        E    A board-certified physician who is a member of Contractor's
             provider network shall be determined to meet the CCS standards for
             participation as a CCS provider and shall be added to the CCS panel
             when all the following conditions are met:

             1.     The physician has successfully met Contractor's
                    Credentialing standards;

             2.     The physician meets the CCS certification standards in
                    accordance with Title 22, CCR, Sections 42320, 42321, 42336;

             3.     Contractor has submitted to the CCS program either a
                    completed provider Credentialing application form used by
                    Contractor or the information continued in lines one through
                    five of the CCS Panel Application Form, extracted from
                    Contractor's provider Credentialing application form for the
                    physician;

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             4.     Contractor has submitted to the CCS program a signed and
                    dated CCS Panel Application Form with the Medi-Cal provider
                    number for the physician.

        For a physician who is board-eligible at the time of completion of
        Contractor's Credentialing application, Contractor must submit a
        completed provider Credentialing application form and a signed and dated
        CCS Panel Application Form, including the provider's Medi-Cal number.

        The application of such a physician to the CCS panel will be retroactive
        to the extent necessary to enable the physician to receive payment for
        services on or after the date the CCS program was informed about the
        Member child, as provided in subsection D.2.

118.    Article VI, SCOPE OF WORK, Section 6.7.3.3, Mental Health, is amended to
        read:

        6.7.3.3     MENTAL HEALTH

        All Specialty Mental Health Services (inpatient and outpatient) are
        excluded from the Contract.

        A.   Contractor shall provide outpatient mental health services within
             the Primary Care Physician's scope of practice. Contractor shall
             provide assistance to Members needing Specialty Mental Health
             Services by referring such Members, whose mental health diagnosis
             is covered by the local Medi-Cal mental health plan or whose
             diagnosis is uncertain, to the local Medi-Cal mental health plan,
             if operational. If the Medi-Cal mental health plan is not
             operational or if the Member's diagnosis is not covered by the
             local Medi-Cal mental health plan, Contractor shall refer such
             Members to an appropriate fee-for-service Medi-Cal mental health
             provider accepting Medi-Cal patients, if known to the Contractor,
             or shall refer such Members to the County Mental Health Department,
             or other community resources that may be able to assist the Member
             to locate mental health services, including the local CHDP program,
             regional centers for the developmentally disabled, and provider
             referral services.

        B.   Contractor shall provide Medical Case Management and cover and pay
             for all Medically Necessary Covered Services for the Member,
             including the services listed below, and coordinate services with
             the Specialty Mental Health Provider.

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             1.     Emergency room professional services as described in Title
                    22, CCR, Section 53855, except psychiatrists, psychologists,
                    licensed clinical social workers, marriage, family and child
                    counselors, or other Specialty Mental Health Providers;

             2.     Facility charges for emergency room visits which do not
                    result in a psychiatric admission;

             3.     All laboratory, radiological and radioisotope services when
                    these services are necessary for the diagnosis, monitoring,
                    or treatment of a Member's mental health condition.

             4.     Emergency medical transportation services necessary to
                    provide access to all Medi-Cal covered services, including
                    emergency mental health services, as described in Title 22,
                    CCR, Section 51323.

             5.     All non-emergency medical transportation services, as
                    provided for in Title 22, CCR, Section 51323, required by
                    Members to access Medi-Cal covered mental health services,
                    subject to a written prescription by a Medi-Cal Specialty
                    Mental Health Provider, except when the transportation is
                    required to transfer the Member from one facility to
                    another, for the purpose of reducing the local Medi-Cal
                    mental health plan's cost of providing services.

             6.     Medically Necessary Covered Services for Members admitted to
                    a psychiatric inpatient hospital, including the initial
                    health history and physical assessment required upon
                    admission and any consultations related to Medically
                    Necessary Covered Services. However, notwithstanding this
                    requirement, Contractor shall not be responsible for room
                    and board charges for psychiatric inpatient hospital stays
                    by Members.

             7.     All Medically Necessary Medi-Cal covered psychotherapeutic
                    drugs for Members not otherwise excluded under this
                    Contract.

                    a.      This includes reimbursement for covered
                            psychotherapeutic drugs prescribed by out-of-plan
                            psychiatrists for Members.

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                    b.      If Contractor requires that covered prescriptions
                            written by out-of-plan psychiatrists be filled by
                            pharmacies in Contractor's provider network,
                            Contractor shall ensure that drugs prescribed by
                            out-of-plan psychiatrists are no less accessible to
                            Members than drugs prescribed by network providers.

                    c.      Reimbursement to pharmacies for those
                            psychotherapeutic drugs listed in Attachment III
                            (consisting of one page), and psychotherapeutic
                            drugs classified as Anti-Psychotics and approved by
                            the FDA after July 1, 1997, shall be made by DHS
                            through the Medi-Cal FFS program, whether these
                            drugs are provided by a pharmacy contracting with
                            Contractor or by an out-of-plan pharmacy provider.
                            To qualify for reimbursement under this provision, a
                            pharmacy must be enrolled as a Medi-Cal provider in
                            the Medi-Cal FFS program.

             8.     Paragraphs 3,5, and 6 shall not be construed to preclude
                    Contractor from: a) requiring that Covered Services be
                    provided through Contractor's provider network or b)
                    applying Utilization controls for these services, including
                    Prior Authorization, consistent with Contractor's obligation
                    to provide Covered Services under this Contract.

        C.   Contractor shall execute a Memorandum of Understanding (MOU), in
             accordance with Section 6.7.9, Local Mental Health Plan
             Coordination, for coordination of Specialty Mental Health Services
             with the local Medi-Cal mental health plan in each county that is
             covered by this Contract.

        D.   Disputes between Contractor and the local Medi-Cal mental health
             plan regarding this section shall be resolved pursuant to Title 9,
             CCR, Section 1850.505. Any decision rendered by DHS and the
             California Department of Mental Health regarding a dispute between
             Contractor and the local Medi-Cal mental health plan concerning
             provision of mental health services or Covered Services required
             under this Contract shall not be subject to the Disputes and
             Appeals procedures specified in Article III, Section 3.22.

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119.    Article VI, SCOPE OF WORK, Section 6.7.3.4, Alcohol and Drug Treatment
        Services, sentence one, is amended to read:

        Alcohol and drug treatment services available under the Short-Doyle Drug
        Medi-Cal program as defined in Title 22, CCR, Section 51341.1 and
        outpatient heroin detoxification as defined in Title 22, CCR, Section
        51328 are excluded from this Contract.

120.    Article VI, SCOPE OF WORK, Section 6.7.3.5, Dental, is amended to read:

        6.7.3.5     DENTAL

        Dental services are not covered under this Contract. Contractor shall
        perform dental screening for all Members as a part of the initial health
        assessment and refer Members to Medi-Cal dental providers. Dental
        screenings for Members under twenty-one (21) years of age shall be
        performed in accordance with the most recent recommendations of the
        American Academy of Pediatrics, as part of the initial health
        assessment. Contractor shall ensure referrals to dental providers.

        Services related to dental services that are covered medical services
        and are not provided by dentists or dental anesthetists, are the
        responsibility of Contractor. Covered medical services include:
        prescription drugs, laboratory services, pre-admission physical
        examinations required for admission to a facility, anesthesia services,
        out-patient surgical center services and in-patient hospitalization
        services required for a dental procedure. Contractor may require Prior
        Authorization for medical services required in support of dental
        procedures.

        Contractor shall develop referral and Prior Authorization policies and
        procedures to implement the above requirements. Contractor shall submit
        these policies and procedures to DHS for review and approval.

121.    Article VI, SCOPE OF WORK, Section 6.7.3.7, Direct Observed Therapy
        (DOT) for Treatment of Tuberculosis, section title only, is amended to
        read:

        6.7.3.7     DIRECTLY OBSERVED THERAPY (DOT) FOR TREATMENT OF
                    TUBERCULOSIS

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122.    Article VI, SCOPE OF WORK, Section 6.7.4.3, School Linked CHDP Services:
        Subcontracts, is amended to read:

        6.7.4.3     SCHOOL LINKED CHDP SERVICES: SUBCONTRACTS

        Contractor shall ensure that the Subcontracts with the local school
        districts or school sites meet the requirements of Article III, Section
        3.28, Subcontracts, and address the following: the population covered,
        beginning and end dates of the agreement, services covered,
        practitioners covered, outreach, information dissemination and
        educational responsibilities, Utilization Review requirements, referral
        procedures, medical information flows, patient information
        confidentiality, Quality Assurance interface, data reporting
        requirements, Grievances and complaint procedures.

123.    Article VI, SCOPE OF WORK, Section 6.7.4.4, Early and Periodic
        Screening, Diagnosis and Treatment (EPSDT) Supplemental Services,
        Excluding Case Management Services, is amended to read:

        6.7.4.4     EARLY AND PERIODIC SCREENING, DIAGNOSIS AND TREATMENT
                    (EPSDT) SUPPLEMENTAL SERVICES, INCLUDING CASE MANAGEMENT
                    SERVICES

        For Members under the age of 21 years, Contractor shall provide or
        arrange and pay for EPSDT supplemental services as defined in Title 22,
        CCR, Section 51184, except when EPSDT supplemental services are provided
        as CCS services pursuant to Section 6.7.3.2, CCS Services, or as mental
        health services pursuant to Section 6.7.3.3, Mental Health. Contractor
        shall determine the medical necessity of EPSDT supplemental services
        using the criteria established in Title 22, CCR, Sections 51340 and
        51340.1.

        For Members under the age of 21 years, who meet the medical necessity
        criteria for EPSDT case management, pursuant to Title 22, CCR, Section
        51340(f), Contractor shall refer the Member to a targeted case
        management (TCM) provider under contract with a local government agency
        pursuant to Welfare and Institutions Code Section 14132.44 or to
        entities and organizations, including Regional Centers, that provide TCM
        services pursuant to Welfare and Institutions Code Section 14132.48. If
        EPSDT case management services are rendered by these referral providers,
        Contractor is not required to pay for the EPSDT case management
        services. If EPSDT case management services are not available from these
        referral providers, Contractor shall provide or arrange and pay for the
        EPSDT case management services.

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124.    Article VI, SCOPE OF WORK, Section 6.7.4.7, Family Planning:
        Out-of-Network Reimbursement, is amended to read:

        6.7.4.7     FAMILY PLANNING: OUT-OF-NETWORK REIMBURSEMENT

        Contractor shall reimburse out-of-network family planning providers for
        the following services provided to Members of childbearing age to
        temporarily or permanently prevent or delay pregnancy:

        A.   Health education and counseling necessary to make informed choices
             and understand contraceptive methods.

        B.   Limited history and physical examination.

        C.   Laboratory tests if medically indicated as part of decision making
             process for choice of contraceptive methods. Contractor shall not
             be required to reimburse out-of-plan providers for pap smears if
             Contractor has provided pap smears to meet the U.S. Preventive
             Services Task Force guidelines.

        D.   Diagnosis and treatment of STD disease episode, as defined by DHS
             for each STD, if medically indicated.

        E.   Screening, testing and counseling of at risk individuals for HIV
             and referral for treatment.

        F.   Follow-up care for complications associated with contraceptive
             methods provided or prescribed by the family planning provider.

        G.   Provision of contraceptive pills, devices, supplies.

        H.   Tubal ligation.

        I.   Vasectomies.

        J.   Pregnancy testing and counseling.

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125.      Article VI, SCOPE OF WORK, Section 6.7.4.8, Family Planning:
          Reimbursement Rate, is amended to read:

          6.7.4.8   FAMILY PLANNING: REIMBURSEMENT RATE

          Contractor shall reimburse out-of-plan family planning providers at
          the appropriate Medi-Cal FFS rate, unless otherwise negotiated with
          the out-of-plan family planning provider.

126.      Article VI, SCOPE OF WORK, Section 6.7.4.9, Sexually Transmitted
          Diseases (STDs), is amended to read:

          6.7.4.9   SEXUALLY TRANSMITTED DISEASES (STDS)

          Contractor shall provide access to STD services without Prior
          Authorization to all Members both within and outside its provider
          network. Members may access out-of-plan STD services through local
          health department (LHD) clinics, family planning clinics, or- through
          other community STD service providers. LHD and family planning
          providers shall be reimbursed for STD services pursuant to Sections
          6.7.8.1, Subcontract, and 6.7.4.7, Family Planning: Out-Of-Network
          Reimbursement. For community providers other than LHD and family
          planning providers, the reimbursement of out-of-plan STD services is
          limited to one office visit per disease episode for the purposes of:
          (1) diagnosis and treatment of vaginal discharge and urethral
          discharge, (2) those STDs that are amenable to immediate diagnosis and
          treatment, and this includes syphilis, gonorrhea, chlamydia, herpes
          simplex, chancroid, Trichomoniasis, human papilloma virus, non-
          gonococcal urethritis, lymphogranuloma venereum and granuloma
          inguinale and (3) evaluation and treatment of Pelvic Inflammatory
          Disease (PID). Contractor shall provide follow-up care. Contractor
          shall reimburse STD providers at the Medi-Cal Fee-For-Service (FFS)
          rate, unless otherwise negotiated, and Contractor shall provide
          reimbursement only if STD treatment providers provide treatment
          records or documentation of the Member's refusal to release Medical
          Records to Contractor along with billing information.

127.      Article VI, SCOPE OF WORK, Section 6.7.4.10, Early Intervention
          Services, sentence one, is amended to read:

          Contractor shall refer to the local Early Start program those children
          in need of early intervention services, e.g., those with an
          established condition leading to developmental delay, those in whom a
          significant developmental delay is suspected, or those whose early
          health history places them at risk for delay.

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128.      Article VI, SCOPE OF WORK, Section 6.7.4.14, Nurse Midwife Services,
          is amended to read:

          6.7.4.14  NURSE MIDWIFE AND NURSE PRACTITIONER SERVICES

          Contractor shall meet federal requirements for access and
          reimbursement for Certified Nurse Midwife (CNM) services as defined in
          Title 22, CCR, Section 51345 and Certified Nurse Practitioner (CNP)
          services as defined in Title 22, CCR, Section 51345.1. If Members do
          not have access to CNM or CNP services within the provider network of
          either Medi-Cal managed care contractor in the county, Contractor
          shall inform Members that they have a right to obtain out-of-plan CNM
          or CNP services, and Contractor shall reimburse CNMs or CNPs for
          services provided out-of-plan to Members at the applicable Medi-Cal
          Fee-For-Service rates. If CNM services are unavailable in Contractor's
          provider network, but are available within DHS' time and distance
          standards for access to Primary Care in the other Medi-Cal managed
          care contractor's provider network in the county, Contractor shall not
          be obligated to reimburse CNMs for services provided out-of-plan to
          Members (unless authorized by Contractor). (This provision shall apply
          equally to CNP services.)

          Notwithstanding the above paragraph, for Emergency Services and family
          planning, the provisions of Sections 6.6.16, Emergency Service
          Providers, 6.7.4.5, Family Planning: General Requirement, and 6.7.4.8,
          Family Planning: Reimbursement Rate, shall apply.

129.      Article VI, SCOPE OF WORK, Section 6.7.6.1, Initial Health Assessment,
          sentence three, is amended to read:

          For Members under the age of 21 years, the assessment shall follow the
          applicable requirements of Health and Safety Code, Section 124025, et
          seq., and Title 17, Sections 6840 through 6850, except that Contractor
          shall follow the most recent periodicity schedule recommended by the
          American Academy of Pediatrics.

130.      Article VI, SCOPE OF WORK, Section 6.7.6.2, Children, paragraph one,
          is amended to read:

          Contractor shall maintain and operate a system which ensures the
          provision of CHDP services to Members under the age of 21 years in
          accordance with the applicable provisions of the Health and Safety
          Code, Section 124025, et seq., and Title 17, CCR, Sections 6840
          through 6850. The system shall include the following components:

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131.      Article VI, SCOPE OF WORK, Section 6.7.6.3, Pregnant Women: Minimum
          Standards, sentence two, is amended to read:

          Contractor shall develop and implement standardized risk assessment
          tools which are consistent with Comprehensive Perinatal Services
          Program (CPSP) requirements set forth in Title 22, CCR, Sections 51348
          and 51348.1.

132.      Article VI, SCOPE OF WORK, Section 6.7.7.3, Behavioral Assessments, is
          amended to read:

          6.7.7.3   INDIVIDUAL HEALTH EDUCATION BEHAVIORAL ASSESSMENTS

          Contractor shall ensure that individual health education behavioral
          assessments are conducted on all Members within 120 days of Enrollment
          to determine health practices, values, behaviors, knowledge,
          attitudes, cultural practices, beliefs, literacy levels, and health
          education needs. Upon Contractor's written request, DHS may, at its
          discretion, delay Contractor implementation of this requirement. DHS
          shall approve any such request in writing. DHS may terminate any
          approved delay in implementation thirty (30) days after DHS' notice to
          Contractor of intent to terminate.

133.      Article VI, SCOPE OF WORK, Section 6.7.7.7, Group Needs Assessment, is
          amended to read:

          6.7.7.7   GROUP NEEDS ASSESSMENT

          Contractor shall conduct a group needs assessment of its Members to
          determine health education needs, including literacy level. Contractor
          shall submit to DHS a report summarizing the methodology, findings,
          proposed services, key activities, timeline for implementation, and
          the responsible individuals. Contractor shall complete the needs
          assessment and submit the report to DHS between twelve (12) and
          eighteen (18) months after the commencement of operations under this
          Contract.

134.      Article VI, SCOPE OF WORK, Section 6.7.8.1, Subcontract, paragraph 1,
          is amended to read:

          Contractor shall execute a Subcontract for the specified public health
          services with the Local Health Department (LHD) in each county that is
          covered by this Contract. The Subcontract shall specify the scope and
          responsibilities of both parties, billing and reimbursements,
          reporting responsibilities, and Medical Record management to ensure
          coordinated health care services. The Subcontract shall meet the
          requirements contained

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          in Article III, Sections 3.28, Subcontracts, through 3.28.8,
          Disclosures. The specified public health services under the
          Subcontract are as follows:

135.      Article VI, SCOPE OF WORK, Section 6.7.8.1, Subcontracts, subsection
          (B), is amended to read:

          B.   STD services for the disease episode, as defined by DHS for each
               STD, including diagnosis and treatment of the following STDs:
               syphilis, gonorrhea, chlamydia, herpes simplex, chancroid,
               trichomoniasis, human papilloma virus, non-gonococcal urethritis,
               lymphogranuloma venereum and granuloma inguinale.

136.      Article VI, SCOPE OF WORK, Section 6.7.8.1, Subcontracts, subsection
          (H), is amended to read:

          H.   Tuberculosis Directly Observed Therapy

137.      Article VI, SCOPE OF WORK, is amended by adding a new Section 6.7.9 to
          read:

          6.7.9.    LOCAL MENTAL HEALTH PLAN COORDINATION

          6.7.9.1   MEMORANDUM OF UNDERSTANDING

          A.   Contractor shall negotiate in good faith and execute a Memorandum
               of Understanding (MOU) with the local mental health plan (MHP).
               The MOU shall specify, consistent with this Contract, the
               respective responsibilities of Contractor and the MHP in
               delivering Medically Necessary Covered Services and Specialty
               Mental Health Services to Members. The MOU shall address:

               1.   Protocols and procedures for referrals between Contractor
                    and the MHP;

               2.   Protocols for the delivery of Specialty Mental Health
                    Services, including the MHP's provision of clinical
                    consultation to Contractor for Members being treated by
                    Contractor for mental illness;

               3.   Protocols for the delivery of mental health services within
                    the Primary Care Physician's scope of practice;

               4.   Protocols and procedures for the exchange of Medical Records
                    information, including procedures for maintaining the
                    confidentiality of Medical Records;

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               5.   Procedures for the delivery of Medically Necessary Covered
                    Services to Members who require Specialty Mental Health
                    Services, including:

                    a.   Pharmaceutical services and prescription drugs;

                    b.   Laboratory, radiological and radioisotope services;

                    c.   Emergency room facility charges and professional
                         services;

                    d.   Emergency and non-emergency medical transportation;

                    e.   Home health services;

                    f.   Medically Necessary Covered Services to Members who are
                         patients in psychiatric inpatient hospitals.

               6.   Procedures for transfers between inpatient psychiatric
                    services and inpatient medical services to address changes
                    in a Member's medical or mental health condition.

               7.   Procedures to resolve disputes between Contractor and the
                    MHP.

          B.   To the extent Contractor does not execute an MOU within four (4)
               months after implementation of the Medi-Cal Specialty Mental
               Health Services Consolidation program in the area being served by
               this Contract, Contractor shall submit documentation
               substantiating its good faith efforts to enter into an MOU. Until
               such time as an MOU is executed, Contractor shall submit monthly
               reports to DHS documenting its continuing good faith efforts to
               execute an MOU and the justifications why such an MOU has not
               been executed.

138.      Article VI, SCOPE OF WORK, Section 6.8.1, Marketing Representatives,
          paragraph one, sentence one, is amended to read:

          Contractor shall ensure, in addition to compliance with the
          requirements of Title 22, CCR, Section 53880, that:

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139.      Article VI, SCOPE OF WORK, Section 6.8.6, Marketing Plan, is amended
          to read:

          6.8.6     MARKETING PLAN

          Contractor shall implement and maintain a Marketing plan approved by
          DHS. Door to door Marketing is prohibited.

140.      Article VI, SCOPE OF WORK, Section 6.9.3, Disclosure Forms, is amended
          to read:

          6.9.3     DISCLOSURE FORMS

          Contractor shall provide to all Members the Evidence of Coverage and
          Disclosure Form materials which constitute a fair disclosure of the
          provisions of the covered health care services.

141.      Article VI, SCOPE OF WORK, Section 6.9.5, Membership Services Guide,
          is amended to read:

          6.9.5     MEMBERSHIP SERVICES GUIDE

          Contractor shall develop and distribute a Membership Services Guide
          that includes the following information:

          A.   The name, address and telephone number of the health plan.

          B.   A description of the full scope of Medi-Cal covered benefits and
               all available services including health education, interpretive
               services, and "carve out" services and an explanation of any
               service limitations and exclusions from coverage or charges for
               services.

          C.   Procedures for obtaining Covered Services including the address
               and telephone number of each Service Site (locations of
               hospitals, Primary Care Physicians, optometrists, psychologists,
               pharmacies, Skilled Nursing Facilities, Urgent Care Facilities).
               In the case of a medical foundation or independent practice
               association, the address and telephone number of each Physician
               provider.

               1.   The hours and days when each of these Facilities is open,
                    the services and benefits available, and the telephone
                    number to call after normal business hours.

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MOLINA MEDICAL CENTERS, INC.                                        95-23637-A03

          D.   Procedures for selecting or requesting a change in Primary Care
               Physician, including requirements for a change in PCP; reasons
               for which a request may be denied; and reasons why a provider may
               request a change.

          E.   The purpose and value of scheduling an initial health assessment
               appointment.

          F.   The appropriate use of health care services in a managed care
               system.

          G.   The availability and procedures for obtaining after hours
               services (24-hour basis) and care, including the appropriate
               provider locations and telephone numbers.

          H.   Procedure for obtaining emergency health care both within and
               outside Contractor's Service Area.

          I.   Process for referral to specialists.

          J.   Procedures for obtaining any non-medical transportation services
               offered by Contractor and through the local CHDP programs, and
               how to obtain such services.

          K.   The causes for which a Member shall lose entitlement to receive
               services under this Contract. (See Article III, Section 3.23.5,
               Disenrollment)

          L.   Procedures for filing a complaint/Grievance, including procedures
               for appealing decisions regarding Member's coverage, benefits, or
               relationship to the organization. Include the title, address, and
               telephone number of the person responsible for processing and
               resolving complaints/Grievances.

          M.   Procedures for Disenrollment, including an explanation of the
               Member's right to disenroll without cause at any time, subject to
               any restricted disenrollment period.

          N.   Information on the Member's right to the Medi-Cal fair hearing
               process, regardless of whether or not a complaint/Grievance has
               been submitted or if the complaint/Grievance has been resolved,
               pursuant to Title 22, CCR, Section 53452, when a health care
               service requested by the Member or provider has been denied,
               deferred or modified. The State Department of Social Services'
               Public Inquiry and Response Unit toll free telephone number (800)
               952-5253.

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MOLINA MEDICAL CENTERS, INC.                                        95-23637-A03

          O.   Information on the availability of, and procedures for obtaining,
               services at FQHCs and Indian Health Clinics.

          P.   Information on the Member's right to seek family planning
               services from any qualified provider of family planning services
               under the Medi-Cal program, including providers outside
               Contractor's provider network, and a description of those
               services, such as the following statement:

               " Family planning services are provided to Members of child
               bearing age to enable them to determine the number and spacing of
               children. These services include all methods of birth control
               approved by the Federal Food and Drug Administration. As a
               Member, you pick a doctor who is located near you and will give
               you the services you need. Our Primary Care Physicians and OB/GYN
               specialists are available for family planning services. For
               family planning services, you may also pick a doctor or clinic
               not connected with Molina Medical Centers, Inc. without having to
               get permission from Molina Medical Centers, Inc. Molina Medical
               Centers, Inc. shall pay that doctor or clinic for the family
               planning services you get".

          Q.   DHS' Office of Family Planning's toll free telephone number
               (1-800-942-1054) providing consultation and referral to family
               planning clinics.

          R.   Any other information determined by DHS to be essential for the
               proper receipt of Covered Services.

          S.   Information on the availability of, and procedures for obtaining,
               Certified Nurse Midwife and Certified Nurse Practitioner
               services, pursuant to Section 6.7.4.14, Nurse Midwife and Nurse
               Practitioner Services.

          T.   Information on the availability of transitional Medi-Cal
               eligibility and how the Member may apply for this program.
               Contractor shall include this information with all Membership
               Service Guides sent to Members after the date such information is
               furnished to Contractor by DHS.

          U.   Information on how to access State resources for investigation
               and resolution of Member complaints, including the DHS Medi-Cal
               Managed Care Ombudsman toll-free telephone number
               (1-888-452-8609) and the DOC HMO Consumer Service toll-free
               telephone number (1-800-400-0815).

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MOLINA MEDICAL CENTERS, INC.                                        95-23637-A03

          V.   Information concerning the provision and availability of services
               covered under the CCS program from providers outside Contractor's
               provider network and how to access these services.

          W.   An explanation of the expedited disenrollment process for
               children receiving services under the Foster Care or Adoption
               Assistance Programs; Members with special health care needs,
               including, but not limited to major organ transplants; and
               Members already enrolled in another Medi-Cal, Medicare or
               commercial managed care plan.

          X.   Information on how to obtain Minor Consent Services through
               Contractor's plan, and an explanation of those services.

          Y.   A brief explanation on how to use the fee-for-service system when
               Medi-Cal covered services are excluded or limited under this
               Contract and how to obtain additional information.

          Z.   An explanation of an American Indian Member's right to access
               Indian Health Service facilities and to disenroll from
               Contractor's plan at any time, without cause.

          AA.  Subsections S through Z above, except subsection T, shall be
               included in Contractor's Membership Services Guide by April
               1,1999, or upon the next reprinting of Contractor's Membership
               Services Guide, whichever is sooner.

142.      Article VI SCOPE OF WORK, Section 6.9.9, Primary Care Physician
          Selection, is amended to read:

          6.9.9     PRIMARY CARE PHYSICIAN SELECTION

          Contractor shall implement and maintain DHS approved procedures to
          ensure that each new Member has an appropriate and available Primary
          Care Physician. Contractor shall provide each new Member an
          opportunity to select a Primary Care Physician within the first thirty
          (30) days of Enrollment. If Contractor's provider network includes
          nurse practitioners or certified nurse midwives, the Member may select
          a nurse practitioner or certified nurse midwife within thirty (30)
          days of enrollment to provide Primary Care services. Contractor shall
          ensure that Members are allowed to change a Primary Care Physician,
          nurse practitioner or certified nurse midwife, upon request, by
          selecting a different Primary Care Provider from Contractor's network
          of providers. Contractor shall

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MOLINA MEDICAL CENTERS, INC.                                        95-23637-A03

          provide the Member sufficient information (verbal and written) in the
          appropriate language and reading level about the selection process and
          the available providers in the network, including certified nurse
          midwives and certified nurse practitioners, to ensure their ability to
          make an informed decision.

143.      Article VI, SCOPE OF WORK, Section 6.9.10, Primary Care Physician
          Assignment, is amended to read:

          6.9.10    PRIMARY CARE PHYSICIAN ASSIGNMENT

          If the Member does not select a Primary Care Physician, nurse
          practitioner, or certified nurse midwife within thirty (30) days of
          the effective date of Enrollment, Contractor shall assign that Member
          to a Primary Care Physician and notify the Member and the assigned
          Primary Care Physician no later than forty (40) days after the
          Member's Enrollment. In all cases where a nurse practitioner or a
          certified nurse midwife is a Member's selected Primary Care Provider,
          Contractor shall assure that an individual Primary Care Physician is
          responsible for the overall coordination of the Member's health care,
          consistent with applicable State and federal laws and regulations.
          Contractor shall ensure that adverse selection does not occur during
          the assignment process of Members to providers.

144.      Article VI, SCOPE OF WORK, Section 6.9.11, Continuity of Care, is
          amended to read:

          6.9.11    CONTINUITY OF CARE

          Contractor shall ensure that Members with an established relationship
          with a provider in Contractor's network, who have expressed a desire
          to continue their patient/provider relationship, are assigned to that
          provider without disruption in their care.

145.      Article VI, SCOPE OF WORK, Section 6.9.13, Member Complaint/Grievance
          System, is amended to read:

          6.9.13    MEMBER COMPLAINT/GRIEVANCE SYSTEM

          Contractor shall implement and maintain a Member complaint/Grievance
          system in accordance with Title 10, CCR, Section 1300.68, except
          subsection 1300.68(g), and Title 22, CCR, Section 53858.

          A.   Contractor shall acknowledge receipt of a complaint within 5
               days. The written acknowledgement shall also notify the
               complainant of a person at the plan who may be contacted
               regarding the complaint.

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MOLINA MEDICAL CENTERS, INC.                                        95-23637-A03

          B.   Contractor shall resolve the complaint within 30 days of receipt
               or document reasonable efforts to resolve the complaint within
               thirty (30) days of receipt.

146.      Article VI, SCOPE OF WORK, Section 6.9.14, Disenrollments, is deleted.

147.      Article VI, SCOPE OF WORK, Section 6.9.15, Denial, Deferral, or
          Modification of Prior Authorization Requests, is renumbered and
          amended to read:

          6.9.15    DENIAL, DEFERRAL, OR MODIFICATION OF PRIOR AUTHORIZATION
                    REQUESTS

          A.   Contractor shall notify Members of denial, deferral, or
               modification of requests for Prior Authorization, in accordance
               with Title 22, CCR, Sections 51014.1 and 53894 by providing
               written notification to Members and/or their authorized
               representative, regarding any denial, deferral or modification of
               a request for approval to provide a health care service. This
               notification must be provided as specified in Title 22, CCR,
               Sections 51014.1, 51014.2, and 53894.

          B.   Contractor shall provide for a written notification to the Member
               and the Member's representative on a standardized form approved
               by DHS, informing the Member of all the following:

               1.   The Member's right to, and method of obtaining, a fair
                    hearing to contest the denial, deferral or modification
                    action.

               2.   The Member's right to represent himself/herself at the fair
                    hearing or to be represented by legal counsel, friend or
                    other spokesperson.

               3.   The name and address of Contractor and the State toll-free
                    telephone number for obtaining information on legal service
                    organizations for representation.

          C.   The notice to the Member may inform the Member that the Member
               may file a complaint/Grievance concerning Contractor's action
               using Contractor's complaint/Grievance process prior to or
               concurrent with the initiation of the fair hearing process.

          D.   Contractor shall provide required notification to beneficiaries
               and the representatives in accordance with the time frames set
               forth in Title 22, CCR, Sections 51014.1 and 53894.

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MOLINA MEDICAL CENTERS, INC.                                        95-23637-A03

148.      Article VI, SCOPE OF WORK, Section 6.10.2, Linguistic Services,
          subsection (B), paragraph (3), is amended to read:

          3.   Translated written materials, including the Membership Services
               Guide, enrollee information, welcome packets, and marketing
               information.

149.      Article VI, SCOPE OF WORK, Section 6.10.6, Cultural and Linguistics
          Services Plan, is amended to read:

          6.10.6    CULTURAL AND LINGUISTICS SERVICES PLAN

          Contractor shall ensure that a group needs assessment of Members is
          completed between twelve (12) and eighteen (18) months after the
          commencement of operations under this Contract. This group needs
          assessment shall be conducted in conjunction with the health education
          group needs assessment, described in Section 6.7.7.7, Group Needs
          Assessment, and shall include identification of linguistic and
          cultural needs of the groups which speak a primary language other than
          English.

          The findings of the assessment shall be submitted to DHS in the form
          of a plan entitled "Cultural and Linguistic Services Plan" between
          twelve (12) and eighteen (18) months after commencement of operations
          under this Contract. In the plan, Contractor shall summarize the
          methodology, and findings of the group needs assessment of cultural
          and linguistic needs of non-English-speaking groups, and outline the
          proposed services to be implemented to address the findings of
          cultural and linguistic needs of non-English-speaking Members, the
          timeline for implementation with milestones, and the responsible
          individual.

          Contractor shall ensure implementation of the Cultural and Linguistic
          Services Plan between twelve (12) and eighteen (18) months after the
          commencement of operations under this Contract. Contractor shall also
          identify the individual with overall responsibility for the activities
          to be conducted under the plan. DHS approval of the plan is required
          prior to its implementation.

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MOLINA MEDICAL CENTERS, INC.                                        95-23637-A03

150.      Article VI, SCOPE OF WORK, Section 6.11.1, Time Frames, is amended to
          read:

          6.11.1    TIME FRAMES

          Contractor shall submit deliverables within the timeframes specified
          on the Implementation Plan approved by DHS. Compliance with the
          schedule is mandatory unless otherwise approved in writing by DHS.
          (See Article III, Section 3.18, Liquidated Damages Provisions). Unless
          otherwise specified, all completion dates listed for the deliverables
          are calculated from the Contract effective date.

151.      Attachment 1 is amended by adding the following language to the
          capitation rate sheets:

          The State is entering into this capitated Contract as an alternative
          means of paying for medical care for members of the eligible Medi-Cal
          population. The traditional payment method, called Fee-For-Service,
          requires Medi-Cal beneficiaries to find an authorized Medi-Cal
          provider when they are in need of health care. The State reimburses
          these Medi-Cal providers for services rendered, according to an
          established schedule of fees.  Under this capitated Contract, the
          State pays Contractor a monthly fee for each Medi-Cal beneficiary
          enrolled in its prepaid health plan, and Contractor is then
          responsible for providing all medically necessary health care services
          to the beneficiary as required by the Contract.

          The rate development process for this Contract consists of two
          separate calculations. First, a Fee-For-Service equivalent (FFSE) is
          determined for the entire group of Medi-Cal eligibles. Second, rates
          are calculated for each Contract by beneficiary aid code using
          historical Medi-Cal managed care data. The name given this latter
          method is an experienced based methodology. Both the FFSE and
          experience based methodologies use factors which directly influence
          the cost of providing health care to Medi-Cal beneficiaries. These
          factors are age, sex, geographic area with price indices, Medi-Cal aid
          code, and eligibility for Medicare. The rate methodologies also employ
          adjustments for changes that are likely to occur during the term of
          the Contract. These adjustments include fee, benefit, or policy
          changes to reflect changes to the Medi-Cal program that are mandated
          each year by the State Legislature and the use of a trend factor to
          project costs to the term of the Contract.

          Actuaries employed by the Department of Health Services conduct the
          rate development process for this Contract. This attachment presents
          the methodology and calculation of the capitation rates for this
          Contract.

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MOLINA MEDICAL CENTERS, INC.                                        95-23637-A03

152.      The effective date of the following amendments shall be the date of
          approval by the Department of Finance of this amendment package: 28,
          41, 56, 59, 62, 64, 66, 67, 69, 70, 72, 75, 89, 90, 91, 106, 113, 116,
          117, 119, 122, 127, 131, 136, 138, 140, 141, 147.

153.      The effective date of the following amendments is January 1, 1999: 61,
          65, 84, 92, 109.

154.      The effective date of the all other amendments in this package shall
          be October 1, 1997.

155.      The effective date of the rate adjustment shall be October 1,1997.

156.      All rights, duties, obligations and liabilities of the parties hereto
          otherwise remain unchanged.

                                       99

<PAGE>

             Plan Name: Molina Medical Center                Date: 12-Aug-98
           Plan Number: 355
             Plan Type: Commercial Plan                   Base Period: FY 95/96
                County: Riverside
     Aid Code Grouping: Family

The Rate Period is October 1, 1997 to September 30, 1998
Capitation Payments at the Beginning of the Month
Stop Loss Reinsurance has not been elected
CCS indicated claims are not covered
Eye appliances are provided by PIA
The plan is not responsible for Mental Health services
The plan is responsible for Long Term Care Services in the month of admission
and the next month only
The plan provides CHDP Services

<TABLE>
<CAPTION>
                                                            Hospital     Hospital   Long Term
                                  Physician    Pharmacy    Inpatient   Outpatient        Care       Other       FQHC        Total
<S>                               <C>          <C>         <C>          <C>         <C>          <C>        <C>        <C>
1. Base Units per Eligible            4.127       4.686        0.263        2.139       0.002       3.495      0.120
2. Eligibility Adjustment             1.014       0.998        1.045        1.026       1.000       0.995      1.000
3. Age/sex Adjustment                 1.028       0.987        1.045        1.012       1.000       1.006      1.000
Adjusted Units                        4.302       4.616        0.287        2.221       0.002       3.498      0.120
4. Average Cost Per Unit          $   67.40    $  16.48       940.29    $   17.95   $  115.00    $  22.23   $  64.52   $ 1,243.87
5. Area Adjustment                    1.048       1.000        1.000        1.000       1.000       1.000      1.000
Adjusted Cost                     $   70.64    $  16.48    $  940.29    $   17.95   $  115.00    $  22.23   $  64.52   $ 1,247.11
6. Contract Adjustments
   a.Mental Health                    0.978       0.995        1.000        0.955       0.994       0.919      0.949
   b.Long Term Care                   1.000       1.000        1.000        1.000       0.335       1.000      1.000
   c.Procedure Adjs.                  0.999       1.000        1.000        1.000       1.000       0.913      1.000
   d.                                 1.000       1.000        1.000        1.000       1.000       1.000      1.000
7. Interest Adjustment                0.995       0.995        0.995        0.995       0.995       0.995      0.995
Contract Cost per Eligible        $  295.43    $  75.31    $  268.51    $   37.88   $    0.08    $  64.92   $   7.31   $   749.44
8. Legislative Adjustment             1.026       1.052        0.993        1.004       1.038       1.027      1.027
9. Trend Adjustments
   a.Cost per Unit                    1.036       1.146        1.048        0.967       1.123       1.046      1.000
   b.Units per Eligible               0.950       1.100        0.998        1.045       1.000       1.050      1.000
Projected Cost per Eligible       $  298.32    $  99.87    $  278.87    $   38.43   $    0.09    $  73.23   $   7.51   $   796.32
Preliminary Monthly Rate                                                                                               $    66.36
10. Stop Loss Reinsurance                                  $       0                                  0.0%                   0.00
11. CHDP                                                                                                                     4.60
12.                                                                                                                          0.00
13. Fee-for-Service Adjustment                                                                        6.6%                   4.69
14. FQHC County Cost Differential                                                                                            0.26
Capitation Rate                                                                                                        $    75.91
</TABLE>

<PAGE>

             Plan Name: Molina Medical Center                Date: 12-Aug-98
           Plan Number: 355
             Plan Type: Commercial Plan                   Base Period: FY 95/96
                County: Riverside
     Aid Code Grouping: Aged

The Rate Period is October 1, 1997 to September 30, 1998
Capitation Payments at the Beginning of the Month
Stop Loss Reinsurance has not been elected
CCS indicated claims are not covered
Eye appliances are provided by PIA
The plan is not responsible for Mental Health services
The plan is responsible for Long Term Care Services in the month of admission
 and the next month only
The plan provides CHDP Services

<TABLE>
<CAPTION>
                                                            Hospital     Hospital   Long Term
                                  Physician    Pharmacy    Inpatient   Outpatient        Care       Other       FQHC        Total
<S>                               <C>          <C>         <C>          <C>         <C>          <C>        <C>        <C>
1. Base Units per Eligible            3.770      19.658        0.982        2.464       0.554      13.308      0.120
2. Eligibility Adjustment             0.960       1.017        0.959        0.979       1.002       1.021      1.000
3. Age/sex Adjustment                 0.989       1.002        1.005        0.990       1.043       1.008      1.000
Adjusted Units                        3.579      20.032        0.946        2.388       0.579      13.696      0.120
4. Average Cost Per Unit          $   47.81    $  30.45       889.66    $   10.85   $   69.41    $   5.85   $  43.50   $ 1,097.53
5. Area Adjustment                    1.048       1.000        1.000        1.000       1.000       1.000      1.000
Adjusted Cost                     $   50.10    $  30.45    $  889.66    $   10.85   $   69.41    $   5.85   $  43.50   $ 1,099.82
6. Contract Adjustments
   a.Mental Health                    0.991       0.996        1.000        0.986       0.996       0.958      0.989
   b.Long Term Care                   1.000       1.000        1.000        1.000       0.196       1.000      1.000
   c.Procedure Adjs.                  0.990       1.000        1.000        1.000       1.000       0.799      1.000
   d.                                 1.000       1.000        1.000        1.000       1.000       1.000      1.000
7. Interest Adjustment                0.995       0.995        0.995        0.995       0.995       0.995      0.995
Contract Cost per Eligible        $  175.04    $ 604.50    $  837.41    $   25.42   $    7.81    $  61.02   $   5.14   $ 1,716.34
8. Legislative Adjustment             1.004       1.033        0.907        0.917       1.038       1.001      1.001
9. Trend Adjustments
   a.Cost per Unit                    0.865       1.105        1.079        1.036       1.034       1.049      1.000
   b.Units per Eligible               0.950       1.050        1.050        1.100       1.000       1.045      1.000
Projected Cost per Eligible       $  144.41    $ 724.52    $  860.51    $   26.56   $    8.38    $  66.96   $   5.15   $ 1,836.49
Preliminary Monthly Rate                                                                                               $   153.04
10. Stop Loss Reinsurance                                  $       0                                  0.0%                   0.00
11. CHDP                                                                                                                     0.00
12.                                                                                                                          0.00
13. Fee-for-Service Adjustment                                                                        6.0%                   9.18
14. FQHC County Cost Differential                                                                                            0.07
Capitation Rate                                                                                                        $   162.29
</TABLE>

<PAGE>

             Plan Name: Molina Medical Center                Date: 12-Aug-98
           Plan Number: 355
             Plan Type: Commercial Plan                   Base Period: FY 95/96
                County: Riverside
     Aid Code Grouping: Disabled

The Rate Period is October 1, 1997 to September 30, 1998
Capitation Payments at the Beginning of the Month
Stop Loss Reinsurance has not been elected
CCS indicated claims are not covered
Eye appliances are provided by PIA
The plan is not responsible for Mental Health services
The plan is responsible for Long Term Care Services in the month of admission
and the next month only
The plan provides CHDP Services

<TABLE>
<CAPTION>
                                                            Hospital     Hospital   Long Term
                                  Physician    Pharmacy    Inpatient   Outpatient        Care       Other       FQHC        Total
<S>                               <C>          <C>         <C>          <C>         <C>          <C>        <C>        <C>
1. Base Units per Eligible            6.559      24.089        1.155        4.742       0.176      20.858      0.240
2. Eligibility Adjustment             0.996       1.005        1.000        0.999       0.996       1.007      1.000
3. Age/sex Adjustment                 0.995       0.989        0.985        0.999       1.009       0.996      1.000
Adjusted Units                        6.500      23.943        1.138        4.733       0.177      20.920      0.240
4. Average Cost Per Unit          $   45.69    $  35.66       867.73    $   13.05   $  100.13    $   9.33   $  72.26   $ 1,143.85
5. Area Adjustment                    1.048       1.000        1.000        1.000       1.000       1.000      1.000
Adjusted Cost                     $   47.88    $  35.66    $  867.73    $   13.05   $  100.13    $   9.33   $  72.26   $ 1,146.04
6. Contract Adjustments
   a.Mental Health                    0.894       0.882        1.000        0.972       0.994       0.949      0.909
   b.Long Term Care                   1.000       1.000        1.000        1.000       0.099       1.000      1.000
   c.Procedure Adjs.                  0.998       0.997        1.000        1.000       1.000       0.918      1.000
   d.                                 1.000       1.000        1.000        1.000       1.000       1.000      1.000
7. Interest Adjustment                0.995       0.995        0.995        0.995       0.995       0.995      0.995
Contract Cost per Eligible        $  276.29    $ 747.04    $  982.54    $   59.74   $    1.74    $ 169.19   $  15.69   $ 2,252.23
8. Legislative Adjustment             1.010       1.034        0.908        0.918       1.039       1.007      1.007
9. Trend Adjustments
   a.Cost per Unit                    0.954       1.161        1.032        0.977       1.042       1.032      1.000
   b.Units per Eligible               0.950       1.050        0.950        1.050       1.000       0.998      1.000
Projected Cost per Eligible       $  252.91    $ 941.64    $  874.66    $   56.26   $    1.88    $ 175.47   $  15.80   $ 2,318.62
Preliminary Monthly Rate                                                                                               $   193.22
10. Stop Loss Reinsurance                                  $       0                                  0.0%                   0.00
11. CHDP                                                                                                                     0.00
12.                                                                                                                          0.00
13. Fee-for-Service Adjustment                                                                        6.0%                  11.59
14. FQHC County Cost Differential                                                                                            0.15
Capitation Rate                                                                                                        $   204.96
</TABLE>

<PAGE>

             Plan Name: Molina Medical Center                Date: 12-Aug-98
           Plan Number: 355
             Plan Type: Commercial Plan                   Base Period: FY 95/96
                County: Riverside
     Aid Code Grouping: Child

The Rate Period is October 1, 1997 to September 30, 1998
Capitation Payments at the Beginning of the Month
Stop Loss Reinsurance has not been elected
CCS indicated claims are not covered
Eye appliances are provided by PIA
The plan is not responsible for Mental Health services
The plan is responsible for Long Term Care Services in the month of admission
and the next month only
The plan provides CHDP Services

<TABLE>
<CAPTION>
                                                            Hospital     Hospital   Long Term
                                  Physician    Pharmacy    Inpatient   Outpatient        Care       Other       FQHC        Total
<S>                               <C>          <C>         <C>          <C>         <C>          <C>        <C>        <C>
1. Base Units per Eligible            3.962       3.669        0.332        1.521       0.000       2.012      0.120
2. Eligibility Adjustment             1.005       1.017        1.021        1.020       1.000       1.077      1.000
3. Age/sex Adjustment                 1.201       0.992        1.294        1.101       1.000       1.112      1.000
Adjusted Units                        4.782       3.702        0.439        1.708       0.000       2.410      0.120
4. Average Cost Per Unit          $   65.30    $  11.46       965.53    $   17.74   $    0.00    $  24.55   $  60.59   $ 1,145.17
5. Area Adjustment                    1.048       1.000        1.000        1.000       1.000       1.000      1.000
Adjusted Cost                     $   68.43    $  11.46    $  965.53    $   17.74   $    0.00    $  24.55   $  60.59   $ 1,148.30
6. Contract Adjustments
   a.Mental Health                    0.976       0.989        1.000        0.974       0.993       0.911      0.982
   b.Long Term Care                   1.000       1.000        1.000        1.000       0.140       1.000      1.000
   c.Procedure Adjs.                  0.999       1.000        1.000        1.000       1.000       0.917      1.000
   d.                                 1.000       1.000        1.000        1.000       1.000       1.000      1.000
7. Interest Adjustment                0.995       0.995        0.995        0.995       0.995       0.995      0.995
Contract Cost per Eligible        $  317.46    $  41.75    $  421.75    $   29.36   $    0.00    $  49.18   $   7.10   $   866.60
8. Legislative Adjustment             1.026       1.052        0.993        1.004       1.038       1.023      1.023
9. Trend Adjustments
   a.Cost per Unit                    0.967       1.085        1.024        0.933       1.178       1.091      1.000
   b.Units per Eligible               0.950       1.050        0.950        1.045       1.000       1.100      1.000
Projected Cost per Eligible       $  299.22    $  50.04    $  407.41    $   28.74   $    0.00    $  60.38   $   7.26   $   853.05
Preliminary Monthly Rate                                                                                               $    71.09
10. Stop Loss Reinsurance                                  $       0                                  0.0%                   0.00
11. CHDP                                                                                                                     3.46
12.                                                                                                                          0.00
13. Fee-for-Service Adjustment                                                                        6.0%                   4.47
14. FQHC County Cost Differential                                                                                            0.31
Capitation Rate                                                                                                        $    79.33
</TABLE>

<PAGE>

             Plan Name: Molina Medical Center                Date: 12-Aug-98
           Plan Number: 355
             Plan Type: Commercial Plan                   Base Period: FY 95/96
                County: Riverside
     Aid Code Grouping: Adult

The Rate Period is October 1, 1997 to September 30, 1998
Capitation Payments at the Beginning of the Month
Stop Loss Reinsurance has not been elected
CCS indicated claims are not covered
Eye appliances are provided by PIA
The plan is not responsible for Mental Health services
The plan is responsible for Long Term Care Services in the month of admission
and the next month only
The plan provides CHDP Services

<TABLE>
<CAPTION>
                                                            Hospital     Hospital   Long Term
                                  Physician    Pharmacy    Inpatient   Outpatient        Care       Other       FQHC        Total
<S>                              <C>           <C>        <C>           <C>         <C>          <C>        <C>        <C>
1. Base Units per Eligible           21.372       5.536        3.082        4.726       0.000      12.855      0.240
2. Eligibility Adjustment             1.000       1.000        1.000        1.000       1.000       1.000      1.000
3. Age/sex Adjustment                 1.000       1.000        1.000        1.000       1.000       1.000      1.000
Adjusted Units                       21.372       5.536        3.082        4.726       0.000      12.855      0.240
4. Average Cost Per Unit         $   100.08    $  16.10       998.85    $   15.92   $    0.00    $  37.45   $  54.29   $ 1,222.69
5. Area Adjustment                    1.048       1.000        1.000        1.000       1.000       1.000      1.000
Adjusted Cost                    $   104.88    $  16.10   $   998.85    $   15.92   $    0.00    $  37.45   $  54.29   $ 1,227.49
6. Contract Adjustments
   a.Mental Health                    0.999       0.999        1.000        0.991       1.000       0.997      0.996
   b.Long Term Care                   1.000       1.000        1.000        1.000       1.000       1.000      1.000
   c.Procedure Adjs.                  1.000       1.000        1.000        1.000       1.000       0.867      1.000
   d.                                 1.000       1.000        1.000        1.000       1.000       1.000      1.000
7. Interest Adjustment                0.995       0.995        0.995        0.995       0.995       0.995      0.995
Contract Cost per Eligible       $ 2,228.06    $  88.60   $ 3,063.06    $   74.19   $    0.00    $ 414.06   $  12.91   $ 5,880.88
8. Legislative Adjustment             1.022       1.052        0.993        1.004       1.038       1.023      1.023
9. Trend Adjustments
   a.Cost per Unit                    0.961       1.162        1.023        0.886       1.015       1.096      1.000
   b.Units per Eligible               0.950       0.998        1.000        1.155       1.000       0.950      1.000
Projected Cost per Eligible      $ 2,078.86    $ 108.09   $ 3,111.58    $   76.22   $    0.00    $ 441.03   $  13.21   $ 5,828.99
Preliminary Monthly Rate                                                                                               $   485.75
10. Stop Loss Reinsurance                                 $        0                                  0.0%                   0.00
11. CHDP                                                                                                                     0.00
12.                                                                                                                          0.00
13. Fee-for-Service Adjustment                                                                        6.0%                  29.15
14. FQHC County Cost Differential                                                                                            0.77
Capitation Rate                                                                                                        $   515.67
</TABLE>

<PAGE>

             Plan Name: Molina Medical Center                Date: 12-Aug-98
           Plan Number: 355
             Plan Type: Commercial Plan                   Base Period: FY 95/96
                County: Riverside
     Aid Code Grouping: AIDS

The Rate Period is October 1, 1997 to September 30, 1998
Capitation Payments at the Beginning of the Month
Stop Loss Reinsurance has not been elected
CCS indicated claims are not covered
Eye appliances are provided by PIA
The plan is not responsible for Mental Health services
The plan is responsible for Long Term Care Services in the month of admission
and the next month only
The plan provides CHDP Services

<TABLE>
<CAPTION>
                                                            Hospital     Hospital   Long Term
                                  Physician    Pharmacy    Inpatient   Outpatient        Care       Other       FQHC         Total
<S>                              <C>         <C>          <C>           <C>         <C>        <C>          <C>        <C>
1. Base Units per Eligible           22.646      65.596        3.118        7.972       0.000      39.287      0.360
2. Eligibility Adjustment             1.000       1.000        1.000        1.000       1.000       1.000      1.000
3. Age/sex Adjustment                 1.000       1.000        1.000        1.000       1.000       1.000      1.000
Adjusted Units                       22.646      65.596        3.118        7.972       0.000      39.287      0.360
4. Average Cost Per Unit         $    31.10  $    92.80       867.73    $   19.90   $    0.00  $    50.87   $  72.26   $  1,134.66
5. Area Adjustment                    1.048       1.000        1.000        1.000       1.000       1.000      1.000
Adjusted Cost                    $    32.59  $    92.80   $   867.73    $   19.90   $    0.00  $    50.87   $  72.26   $  1,136.15
6. Contract Adjustments
   a.Mental Health                    0.934       0.990        1.000        0.993       1.000       0.988      0.959
   b.Long Term Care                   1.000       1.000        1.000        1.000       0.456       1.000      1.000
   c.Procedure Adjs.                  1.000       0.819        1.000        1.000       1.000       0.592      1.000
   d.Viral Testing                    1.000       1.082        1.000        1.000       1.000       1.000      1.000
7. Interest Adjustment                0.995       0.995        0.995        0.995       0.995       0.995      0.995
Contract Cost per Eligible       $   685.88  $ 5,313.67   $ 2,692.05    $  156.74   $    0.00  $ 1,163.09   $  24.82   $ 10,036.25
8. Legislative Adjustment             1.004       1.073        0.993        1.004       1.038       1.001      1.001
9. Trend Adjustments
   a.Cost per Unit                    0.954       1.161        1.032        0.977       1.042       1.032      1.000
   b.Units per Eligible               0.903       1.045        0.950        0.950       1.000       1.045      1.000
Projected Cost per Eligible      $   593.22  $ 6,917.40   $ 2,620.81    $  146.06   $    0.00  $ 1,255.58   $  24.84   $ 11,557.91
Preliminary Monthly Rate                                                                                               $    963.16
10. Stop Loss Reinsurance                                 $        0                                  0.0%                    0.00
11. CHDP                                                                                                                      0.00
12.                                                                                                                           0.00
13. Fee-for-Service Adjustment                                                                        6.0%                   57.79
14. FQHC County Cost Differential                                                                                             0.54
Capitation Rate                                                                                                        $  1,021.49
</TABLE>

<PAGE>

             Plan Name: Molina Medical Center                Date: 12-Aug-98
           Plan Number: 356
             Plan Type: Commercial Plan                   Base Period: FY 95/96
                County: San Bernardino
     Aid Code Grouping: Family

The Rate Period is October 1, 1997 to September 30, 1998
Capitation Payments at the Beginning of the Month
Stop Loss Reinsurance has not been elected
CCS indicated claims are not covered
Eye appliances are provided by PIA
The plan is not responsible for Mental Health services
The plan is responsible for Long Term Care Services in the month of admission
and the next month only
The plan provides CHDP Services

<TABLE>
<CAPTION>
                                                            Hospital     Hospital   Long Term
                                  Physician    Pharmacy    Inpatient   Outpatient        Care       Other       FQHC         Total
<S>                              <C>         <C>          <C>           <C>         <C>        <C>          <C>        <C>
1. Base Units per Eligible            4.127       4.686        0.263        2.139       0.002       3.495      0.120
2. Eligibility Adjustment             0.987       0.994        0.967        0.985       1.000       0.982      1.000
3. Age/sex Adjustment                 1.016       0.995        1.026        1.010       1.000       1.005      1.000
Adjusted Units                        4.139       4.635        0.261        2.128       0.002       3.449      0.120
4. Average Cost Per Unit         $    67.40  $    16.48     1,023.54    $   17.95   $  115.00  $    22.23   $  64.52   $  1,327.12
5. Area Adjustment                    1.048       1.000        1.000        1.000       1.000       1.000      1.000
Adjusted Cost                    $    70.64  $    16.48   $ 1,023.54    $   17.95   $  115.00  $    22.23   $  64.52   $  1,330.36
6. Contract Adjustments
   a.Mental Health                    0.978       0.995        1.000        0.955       0.994       0.919      0.949
   b.Long Term Care                   1.000       1.000        1.000        1.000       0.335       1.000      1.000
   c.Procedure Adjs.                  0.999       1.000        1.000        1.000       1.000       0.913      1.000
   d.                                 1.000       1.000        1.000        1.000       1.000       1.000      1.000
7. Interest Adjustment                0.995       0.995        0.995        0.995       0.995       0.995      0.995
Contract Cost per Eligible       $   284.23  $    75.62   $   265.81    $   36.30   $    0.08  $    64.01   $   7.31   $    733.36
8. Legislative Adjustment             1.026       1.052        0.993        1.004       1.038       1.027      1.027
9. Trend Adjustments
   a.Cost per Unit                    1.036       1.146        1.048        0.967       1.123       1.046      1.000
   b.Units per Eligible               0.950       1.100        0.998        1.045       1.000       1.050      1.000
Projected Cost per Eligible      $   287.01  $   100.28   $   276.07    $   36.83   $    0.09  $    72.20   $   7.51   $    779.99
Preliminary Monthly Rate                                                                                               $     65.00
10. Stop Loss Reinsurance                                 $        0                                  0.0%                    0.00
11. CHDP                                                                                                                      4.60
12.                                                                                                                           0.00
13. Fee-for-Service Adjustment                                                                        6.0%                    4.18
14. FQHC County Cost Differential                                                                                             0.26
Capitation Rate                                                                                                        $     74.04
</TABLE>

<PAGE>

             Plan Name: Molina Medical Center                Date: 12-Aug-98
           Plan Number: 356
             Plan Type: Commercial Plan                   Base Period: FY 95/96
                County: San Bernardino
     Aid Code Grouping: Aged

The Rate Period is October 1, 1997 to September 30, 1998
Capitation Payments at the Beginning of the Month
Stop Loss Reinsurance has not been elected
CCS indicated claims are not covered
Eye appliances are provided by PIA
The plan is not responsible for Mental Health services
The plan is responsible for Long Term Care Services in the month of admission
and the next month only
The plan provides CHDP Services

<TABLE>
<CAPTION>
                                                            Hospital     Hospital   Long Term
                                  Physician    Pharmacy    Inpatient   Outpatient        Care       Other        FQHC        Total
<S>                              <C>         <C>          <C>           <C>         <C>        <C>          <C>        <C>
1. Base Units per Eligible            3.770      19.658        0.982        2.464       0.554      13.308      0.120
2. Eligibility Adjustment             0.969       1.014        0.965        0.985       1.000       1.015      1.000
3. Age/sex Adjustment                 0.987       1.002        0.995        0.990       1.032       1.005      1.000
Adjusted Units                        3.606      19.973        0.943        2.403       0.572      13.575      0.120
4. Average Cost Per Unit         $    47.81  $    30.45       952.39    $   10.85   $   69.41  $     5.85   $  43.50   $  1,160.26
5. Area Adjustment                    1.048       1.000        1.000        1.000       1.000       1.000      1.000
Adjusted Cost                    $    50.10  $    30.45   $   952.39    $   10.85   $   69.41  $     5.85   $  43.50   $  1,162.55
6. Contract Adjustments
   a.Mental Health                    0.991       0.996        1.000        0.986       0.996       0.958      0.989
   b.Long Term Care                   1.000       1.000        1.000        1.000       0.196       1.000      1.000
   c.Procedure Adjs.                  0.990       1.000        1.000        1.000       1.000       0.799      1.000
   d.                                 1.000       1.000        1.000        1.000       1.000       1.000      1.000
7. Interest Adjustment                0.995       0.995        0.995        0.995       0.995       0.995      0.995
Contract Cost per Eligible       $   176.36  $   602.72   $   893.61    $   25.58   $    7.71  $    60.48   $   5.14   $  1,771.60
8. Legislative Adjustment             1.004       1.033        0.907        0.917       1.038       1.001      1.001
9. Trend Adjustments
   a.Cost per Unit                    0.865       1.105        1.079        1.036       1.034       1.049      1.000
   b.Units per Eligible               0.950       1.050        1.050        1.100       1.000       1.045      1.000
Projected Cost per Eligible      $   145.50  $   722.38   $   918.26    $   26.73   $    8.28  $    66.36   $   5.15   $  1,892.66
Preliminary Monthly Rate                                                                                               $    157.72
10. Stop Loss Reinsurance                                 $        0                                  0.0%                    0.00
11. CHDP                                                                                                                      0.00
12.                                                                                                                           0.00
13. Fee-for-Service Adjustment                                                                        6.0%                    9.46
14. FQHC County Cost Differential                                                                                             0.07
Capitation Rate                                                                                                        $    167.25
</TABLE>

<PAGE>

             Plan Name: Molina Medical Center                Date: 12-Aug-98
           Plan Number: 356
             Plan Type: Commercial Plan                   Base Period: FY 95/96
                County: San Bernardino
     Aid Code Grouping: Disabled

The Rate Period is October 1, 1997 to September 30, 1998
Capitation Payments at the Beginning of the Month
Stop Loss Reinsurance has not been elected
CCS indicated claims are not covered
Eye appliances are provided by PIA
The plan is not responsible for Mental Health services
The plan is responsible for Long Term Care Services in the month of admission
and the next month only
The plan provides CHDP Services

<TABLE>
<CAPTION>
                                                            Hospital     Hospital   Long Term
                                  Physician    Pharmacy    Inpatient   Outpatient        Care       Other       FQHC         Total
<S>                              <C>         <C>          <C>           <C>         <C>        <C>          <C>        <C>
1. Base Units per Eligible            6.679      24.089        1.155        4.742       0.176      20.858      0.120
2. Eligibility Adjustment             0.995       1.001        0.976        0.991       0.999       0.996      1.000
3. Age/sex Adjustment                 0.998       0.976        0.981        1.006       1.003       0.993      1.000
Adjusted Units                        6.632      23.534        1.106        4.728       0.176      20.629      0.120
4. Average Cost Per Unit         $    45.69  $    35.66     1,064.73    $   13.05   $  100.13  $     9.33   $  72.26   $  1,340.85
5. Area Adjustment                    1.048       1.000        1.000        1.000       1.000       1.000      1.000
Adjusted Cost                    $    47.88  $    35.66   $ 1,064.73    $   13.05   $  100.13  $     9.33   $  72.26   $  1,343.04
6. Contract Adjustments
   a.Mental Health                    0.894       0.882        1.000        0.972       0.994       0.949      0.909
   b.Long Term Care                   1.000       1.000        1.000        1.000       0.099       1.000      1.000
   c.Procedure Adjs.                  0.998       0.997        1.000        1.000       1.000       0.918      1.000
   d.                                 1.000       1.000        1.000        1.000       1.000       1.000      1.000
7. Interest Adjustment                0.995       0.995        0.995        0.995       0.995       0.995      0.995
Contract Cost per Eligible       $   281.90  $   734.28   $ 1,171.70    $   59.67   $    1.73  $   166.84   $   7.84   $  2,423.96
8. Legislative Adjustment             1.010       1.034        0.908        0.918       1.039       1.007      1.007
9. Trend Adjustments
   a.Cost per Unit                    0.954       1.161        1.032        0.977       1.042       1.032      1.000
   b.Units per Eligible               0.950       1.050        0.950        1.050       1.000       0.998      1.000
Projected Cost per Eligible      $   258.04  $   925.56   $ 1,043.05    $   56.19   $    1.87  $   173.04   $   7.89   $  2,465.64
Preliminary Monthly Rate                                                                                               $    205.47
10. Stop Loss Reinsurance                                 $        0                                 0.0%                     0.00
11. CHDP                                                                                                                      0.00
12.                                                                                                                           0.00
13. Fee-for-Service Adjustment                                                                        6.0%                   12.33
14. FQHC County Cost Differential                                                                                             0.07
Capitation Rate                                                                                                        $    217.87
</TABLE>

<PAGE>

             Plan Name: Molina Medical Center                Date: 12-Aug-98
           Plan Number: 356
             Plan Type: Commercial Plan                   Base Period: FY 95/96
                County: San Bernardino
     Aid Code Grouping: Child

The Rate Period is October 1, 1997 to September 30, 1998
Capitation Payments at the Beginning of the Month
Stop Loss Reinsurance has not been elected
CCS indicated claims are not covered
Eye appliances are provided by PIA
The plan is not responsible for Mental Health services
The plan is responsible for Long Term Care Services in the month of admission
and the next month only
The plan provides CHDP Services

<TABLE>
<CAPTION>
                                                            Hospital     Hospital   Long Term
                                  Physician    Pharmacy    Inpatient   Outpatient        Care       Other       FQHC         Total
<S>                              <C>         <C>          <C>           <C>         <C>        <C>          <C>        <C>
1. Base Units per Eligible            3.962       3.669        0.332        1.521       0.000       2.012      0.120
2. Eligibility Adjustment             1.019       1.003        1.034        1.026       1.000       1.021      1.000
3. Age/sex Adjustment                 1.168       1.009        1.237        1.095       1.000       1.072      1.000
Adjusted Units                        4.716       3.713        0.425        1.709       0.000       2.202      0.120
4. Average Cost Per Unit         $    65.30  $    11.46     1,022.12    $   17.74   $    0.00  $    24.55   $  60.59   $  1,201.76
5. Area Adjustment                    1.048       1.000        1.000        1.000       1.000       1.000      1.000
Adjusted Cost                    $    68.43  $    11.46   $ 1,022.12    $   17.74   $    0.00  $    24.55   $  60.59   $  1,204.89
6. Contract Adjustments
   a.Mental Health                    0.976       0.989        1.000        0.974       0.993       0.911      0.982
   b.Long Term Care                   1.000       1.000        1.000        1.000       0.140       1.000      1.000
   c.Procedure Adjs.                  0.999       1.000        1.000        1.000       1.000       0.917      1.000
   d.                                 1.000       1.000        1.000        1.000       1.000       1.000      1.000
7. Interest Adjustment                0.995       0.995        0.995        0.995       0.995       0.995      0.995
Contract Cost per Eligible       $   313.08  $    41.87   $   432.23    $   29.38   $    0.00  $    44.93   $   7.10   $    868.59
8. Legislative Adjustment             1.026       1.052        0.993        1.004       1.038       1.023      1.023
9. Trend Adjustments
   a.Cost per Unit                    0.967       1.085        1.024        0.933       1.178       1.091      1.000
   b.Units per Eligible               0.950       1.050        0.950        1.045       1.000       1.100      1.000
Projected Cost per Eligible      $   295.09  $    50.18   $   417.53    $   28.76   $    0.00  $    55.16   $   7.26   $    853.98
Preliminary Monthly Rate                                                                                               $     71.17
10. Stop Loss Reinsurance                                 $        0                                  0.0%                   00.00
11. CHDP                                                                                                                      3.46
12.                                                                                                                           0.00
13. Fee-for-Service Adjustment                                                                        6.0%                    4.48
14. FQHC County Cost Differential                                                                                             0.31
Capitation Rate                                                                                                        $     79.42
</TABLE>

<PAGE>

             Plan Name: Molina Medical Center                Date: 12-Aug-98
           Plan Number: 356
             Plan Type: Commercial Plan                   Base Period: FY 95/96
                County: San Bernardino
     Aid Code Grouping: Adult

The Rate Period is October 1, 1997 to September 30, 1998
Capitation Payments at the Beginning of the Month
Stop Loss Reinsurance has not been elected
CCS indicated claims are not covered
Eye appliances are provided by PIA
The plan is not responsible for Mental Health services
The plan is responsible for Long Term Care Services in the month of admission
and the next month only
The plan provides CHDP Services

<TABLE>
<CAPTION>
                                                            Hospital     Hospital   Long Term
                                  Physician    Pharmacy    Inpatient   Outpatient        Care       Other       FQHC         Total
<S>                              <C>         <C>          <C>           <C>         <C>        <C>          <C>        <C>
1. Base Units per Eligible           21.492       5.536        3.082        4.726       0.000      12.855      0.120
2. Eligibility Adjustment             1.000       1.000        1.000        1.000       1.000       1.000      1.000
3. Age/sex Adjustment                 1.000       1.000        1.000        1.000       1.000       1.000      1.000
Adjusted Units                       21.492       5.536        3.082        4.726       0.000      12.855      0.120
4. Average Cost Per Unit         $   100.08  $    16.10     1,055.89    $   15.92   $    0.00  $    37.45   $  54.29   $  1,279.73
5. Area Adjustment                    1.048       1.000        1.000        1.000       1.000       1.000      1.000
Adjusted Cost                    $   104.88  $    16.10   $ 1,055.89    $   15.92   $    0.00  $    37.45   $  54.29   $  1,284.53
6. Contract Adjustments
   a.Mental Health                    0.999       0.999        1.000        0.991       1.000       0.997      0.996
   b.Long Term Care                   1.000       1.000        1.000        1.000       1.000       1.000      1.000
   c.Procedure Adjs.                  1.000       1.000        1.000        1.000       1.000       0.867      1.000
   d.                                 1.000       1.000        1.000        1.000       1.000       1.000      1.000
7. Interest Adjustment                0.995       0.995        0.995        0.995       0.995       0.995      0.995
Contract Cost per Eligible       $ 2,240.57  $    88.60   $ 3,237.98    $   74.19   $    0.00  $   414.06   $   6.46   $  6,061.86
8. Legislative Adjustment             1.022       1.052        0.993        1.004       1.038       1.023      1.023
9. Trend Adjustments
   a.Cost per Unit                    0.961       1.162        1.023        0.886       1.015       1.096      1.000
   b.Units per Eligible               0.950       0.998        1.000        1.155       1.000       0.950      1.000
Projected Cost per Eligible      $ 2,090.53  $   108.09   $ 3,289.27    $   76.22   $    0.00  $   441.03   $   6.61   $  6,011.75
Preliminary Monthly Rate                                                                                               $    500.98
10. Stop Loss Reinsurance                                 $        0                                  0.0%                    0.00
11. CHDP                                                                                                                      0.00
12.                                                                                                                           0.00
13. Fee-for-Service Adjustment                                                                        6.0%                   30.06
14. FQHC County Cost Differential                                                                                             0.38
Capitation Rate                                                                                                        $    531.42
</TABLE>

<PAGE>

             Plan Name: Molina Medical Center                Date: 12-Aug-98
           Plan Number: 356
             Plan Type: Commercial Plan                   Base Period: FY 95/96
                County: San Bernardino
     Aid Code Grouping: AIDS

The Rate Period is October 1, 1997 to September 30, 1998
Capitation Payments at the Beginning of the Month
Stop Loss Reinsurance has not been elected
CCS indicated claims are not covered
Eye appliances are provided by PIA
The plan is not responsible for Mental Health services
The plan is responsible for Long Term Care Services in the month of admission
and the next month only
The plan provides CHDP Services

<TABLE>
<CAPTION>
                                                            Hospital     Hospital   Long Term
                                  Physician    Pharmacy    Inpatient   Outpatient        Care       Other       FQHC         Total
<S>                              <C>         <C>          <C>           <C>         <C>        <C>          <C>        <C>
1. Base Units per Eligible           22.886      65.596        3.118        7.972       0.000      39.287      0.120
2. Eligibility Adjustment             1.000       1.000        1.000        1.000       1.000       1.000      1.000
3. Age/sex Adjustment                 1.000       1.000        1.000        1.000       1.000       1.000      1.000
Adjusted Units                       22.886      65.596        3.118        7.972       0.000      39.287      0.120
4. Average Cost Per Unit         $    31.10  $    92.80     1,064.73    $   19.90   $    0.00  $    50.87   $  72.26   $  1,331.66
5. Area Adjustment                    1.048       1.000        1.000        1.000       1.000       1.000      1.000
Adjusted Cost                    $    32.59  $    92.80   $ 1,064.73    $   19.90   $    0.00  $    50.87   $  72.26   $  1,333.15
6. Contract Adjustments
   a.Mental Health                    0.934       0.990        1.000        0.993       1.000       0.988      0.959
   b.Long Term Care                   1.000       1.000        1.000        1.000       0.456       1.000      1.000
   c.Procedure Adjs.                  1.000       0.819        1.000        1.000       1.000       0.592      1.000
   d.Viral Testing                    1.000       1.082        1.000        1.000       1.000       1.000      1.000
7. Interest Adjustment                0.995       0.995        0.995        0.995       0.995       0.995      0.995
Contract Cost per Eligible       $   693.15  $ 5,313.67   $ 3,303.23    $  156.74   $    0.00  $ 1,163.09   $   8.27   $ 10,638.15
8. Legislative Adjustment             1.004       1.073        0.993        1.004       1.038       1.001      1.001
9. Trend Adjustments
   a.Cost per Unit                    0.954       1.161        1.032        0.977       1.042       1.032      1.000
   b.Units per Eligible               0.903       1.045        0.950        0.950       1.000       1.045      1.000
Projected Cost per Eligible      $   599.51  $ 6,917.40   $ 3,215.82    $  146.06   $    0.00  $ 1,255.58   $   8.28   $ 12,142.65
Preliminary Monthly Rate                                                                                              $  1,011.89
10. Stop Loss Reinsurance                                 $        0                                  0.0%                    0.00
11. CHDP                                                                                                                      0.00
12.                                                                                                                           0.00
13. Fee-for-Service Adjustment                                                                        6.0%                   60.71
14. FQHC County Cost Differential                                                                                             0.18
Capitation Rate                                                                                                        $  1,072.78
</TABLE>

<PAGE>

STATE OF CALIFORNIA                                  CONTRACT NUMBER     AM. NO.
                                                     95-23637            04
STANDARD AGREEMENT -- APPROVED BY THE                TAXPAYER'S FEDERAL ID NO.
STD. 2(REV 5-91)      ATTORNEY GENERAL               33-0342719

THIS AGREEMENT, made and entered into this 15th day of August, 1999 in the
State of California, by and between State of California, through its duly
elected or appointed, qualified and acting

TITLE OF OFFICER ACTING FOR STATE     AGENCY
Chief, Program Support Branch         Department of Health Services,
                                      hereafter called the State, and
CONTRACTOR'S NAME
MOLINA, hereafter called the Contractor.

WTTNESSETH: That the Contractor for and in consideration of the covenants,
conditions, agreements, and stipulations of the State hereinafter expressed,
Does hereby agree to furnish to the State services and materials as follows:
(Set forth services to be rendered by Contractor, amount to be paid Contractor,
Time for performance or completion, and attach plans and specifications, if
any.)

                              ARTICLE I - PREAMBLE

Amendment A04 to Contract No.95-23637 BETWEEN MOLINA MEDICAL CENTERS, INC., AND
THE STATE OF CALIFORNIA;

WHEREAS, the State of California and Molina Medical Centers, Inc., entered into
a contract to provide health care services to Medi-Cal beneficiaries dated April
2, 1996; and

NOW THEREFORE, this Contract is amended as follows:

CONTINUED ON 1 SHEETS, EACH BEARING NAME OF CONTRACTOR AND CONTRACT NUMBER.

  The provisions on the reverse side hereof constitute a part of this agreement.
IN WITNESS WHEREOF, this agreement has been executed by the parties hereto, upon
the date first above written.

<TABLE>
<CAPTION>
====================================================================================================================================
       STATE OF CALIFORNIA                                                      CONTRACTOR
------------------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>
AGENCY                                      CONTRACTOR (if other than an individual, state whether a corporation, partnership, etc.)
Department of Health Services               Molina
------------------------------------------------------------------------------------------------------------------------------------
BY (AUTHORIZED SIGNATURE)                   BY (AUTHORIZED SIGNATURE)
/s/ Jayna Querin                   for      /s/
------------------------------------------------------------------------------------------------------------------------------------
PRINTED NAME OF PERSON SIGNING              PRINTED NAME OF AND TITLE OF PERSON SIGNING
Edward E. Stahlberg JAYNA QUERIN CHIEF      George Goldstein, President
                   CONTRACT MANAGEMENT UNIT
------------------------------------------------------------------------------------------------------------------------------------
TITLE                                       ADDRESS
Chief, Program Support Branch               One Golden Shore, Long Beach, CA 90802
------------------------------------------------------------------------------------------------------------------------------------
AMOUNT ENCUMBERED BY THIS                   PROGRAM/CATEGORY (CODE AND TITLE)        FUND TITLE             Department of General
DOCUMENT                                    Loc.Asst.Section 14157, W&I Code         Health Care Deposit      Services Use Only
$ 0                                         ----------------------------------------------------------------------------------------
------------------------------              (OPTIONAL USE)
PRIOR AMOUNT ENCUMBERED FOR

THIS CONTRACT                               ----------------------------------------------------------------------------------------
$ 420,053,310                               ITEM                CHAPTER        STATUTE       FISCAL YEAR
------------------------------              4260-601-912          50           1999          99/00         Exempt From PCC per
TOTAL AMOUNT ENCUMBERED TO                  ---------------------------------------------------------------W&I Code Section
DATE                                        OBJECT OF EXPENDITURE (CODE AND TITLE)
$ 420,053,310                               9912-705-95915                                                 14087.4
-----------------------------------------------------------------------------------------------------------
I hereby certify upon my own personal          T.B.A. NO.          I.R. NO.
knowledge that budgeted funds are
available for the period and purpose
of the expenditure stated above.
-----------------------------------------------------------------------------------------------------------
SIGNATURE OF ACCOUNTING OFFICER                             DATE
/s/ Sharon Flaherty                                       08/30/99
===========================================================================================================
</TABLE>

[ ] CONTRACTOR  [ ] STATE AGENCY  [ ] DEPT. OF GEN. SER.  [ ] CONTROLLER   [ ]

<PAGE>

STATE OF CALIFORNIA
STANDARD AGREEMENT
STD. 2 (REV. 5-91)(REVERSE)

1.   The contractor agrees to indemnify, defend and save harmless the State, its
     officers, agents and employees from any and all claims and losses accruing
     or resulting to any and all contractors, subcontractors, materialmen,
     laborers and any other person, firm or corporation furnishing or supplying
     work services, materials or supplies in connection with the performance of
     this contract, and from any and all claims and losses accruing or resulting
     to any person, firm or corporation who may be injured or damaged by the
     Contractor in the performance of this contract.

2.   The Contractor, and the agents and employees of Contractor, in the
     performance of the agreement, shall act in an independent capacity and not
     as officers or employees or agents of State of California.

3.   The State may terminate this agreement and be relieved of the payment of
     any consideration to Contractor should Contractor fail to perform the
     covenants herein contained at the time and in the manner herein provided.
     In the event of such termination, the State may proceed with the work in
     any manner deemed proper by the State. The cost to the state shall be
     deducted from any sum due the Contractor under this agreement, and the
     balance, if any, shall be paid the Contractor upon demand.

4.   Without the written consent of the State, this agreement is not assignable
     by Contractor either in whole or in part.

5.   Time is of the essence in this agreement.

6.   No alteration or variation of the terms of this contract shall be valid
     unless made in writing and signed by the parties hereto, and no oral
     understanding or agreement not incorporated herein, shall be binding on any
     of the parties hereto.

7.   The consideration to be paid Contractor, as provided herein, shall be in
     compensation for all of Contractor's expenses incurred in the performance
     hereof, including travel and per diem, unless otherwise expressly so
     provided.

<PAGE>

MOLINA                                                              95-23637-A04

1.   ARTICLE III - GENERAL TERMS AND CONDITIONS, Section 3.15 Term, paragraph
     two, is amended to read:

     3.15    TERM

     The term of the Contract consists of the following three periods: 1) The
     Implementation Period shall extend from March 1,1996 to June 1,1996; 2) The
     Operations Period shall extend from June 1,1996 to March 1,2002, subject to
     the termination provisions of Sections 3.18, Termination and 3.19,
     Sanctions, and subject to the limitation provisions of Article V, Payment
     Provisions, Section 5.2, Amounts Payable; and 3) The Turnover/Phaseout
     Period shall extend for six (6) months from the end of the Operations
     Period, subject to the provisions of Section 3.16, Contract Extension, in
     which case the Turnover/Phaseout shall apply to the six (6) month period
     beginning the first day after the end of the Operations Period, as
     extended.

2.   The Contractor name, Molina Medical Centers, Inc., has been changed to
     Molina. Therefore, all references in this Contract to Molina Medical
     Centers, Inc shall be retitled as Molina.

3.   The effective date of this Amendment shall be August 15,1999.

4.   All rights, obligations, duties and Liabilities of the parties hereto
     otherwise remain unchanged.

                                        2

<PAGE>

                                                    CONTRACT NUMBER     AM. NO.
                                                    95-23637            05
STANDARD AGREEMENT -- APPROVED BY THE               TAXPAYER'S FEDERAL ID NUMBER
STD. 2(REV.5-91)      ATTORNEY GENERAL              33-0342719

THIS AGREEMENT, made and entered into this 1 day of September, 2000 in the
State of California, by and between State of California, through its duly
elected or appointed, qualified and acting

TITLE Of OFFICER ACTING FOR STATE     AGENCY
Chief, Program Support Branch         Department of Health Services,
                                      hereafter called the State, and
CONTRACTOR'S NAME
Molina, hereafter called the Contractor.

WITNESSETH: That the Contractor for and in consideration of the covenants,
conditions, agreements, and stipulations of the State hereinafter expressed does
hereby agree to furnish to the State services and materials as follows: (Set
forth services to be rendered by Contractor, amount to be paid Contractor, time
for performance or completion, and attach plans and specifications, if any.)

AMENDMENT A-05 TO CONTRACT NUMBER 95-23637 BETWEEN MOLINA AND THE STATE OF
CALIFORNIA; AND

WHEREAS, the State of California and Molina entered into a Contract to provide
health care services to Medi-Cal beneficiaries dated April 1, 1996, and;

NOW THEREFORE, this Contract is amended as follows:

CONTINUED ON 7 SHEETS, EACH BEARING NAME OF CONTRACTOR AND CONTRACT NUMBER.

  The provisions on the reverse side hereof constitute a part of this agreement.
IN WITNESS WHEREOF, this agreement has been executed by the parties hereto, upon
the date first above written.

<TABLE>
<CAPTION>
================================================================================================================================
               STATE OF CALIFORNIA                                              CONTRACTOR
--------------------------------------------------------------------------------------------------------------------------------
<S>                                          <C>
AGENCY                                       CONTRACTOR (if other than an individual, state whether a corporation, partnership,
Department of Health Services                etc.)
                                             Molina
-------------------------------------------------------------------------------------------------------------------------------
BY (AUTHORIZED SIGNATURE)                    BY (AUTHORIZED SIGNATURE)
/s/ Nadine Fujita Roh       for              /s/
-------------------------------------------------------------------------------------------------------------------------------
PRINTED NAME OF PERSON SIGNING               PRINTED NAME OF AND TITLE OF PERSON SIGNING
Edward Stahlberg  Nadine Fujita Roh, Chief   George Goldstein, President
                    CMU PRoduction
-------------------------------------------------------------------------------------------------------------------------------
TITLE                                        ADDRESS
Chief, Program Support Branch                One Golden Shore, Long Beach, CA 90802

-------------------------------------------------------------------------------------------------------------------------------
AMOUNT ENCUMBERED BY THIS               PROGRAM/CATEGORY (CODE AND TITLE)        FUND TITLE
DOCUMENT                                Loc.Asst.Section 14157 W&I               Health Care Deposit
$ -0-                                   ------------------------------------------------------------
------------------------------          (OPTIONAL USE)
PRIOR AMOUNT ENCUMBERED FOR
THIS CONTRACT                           ------------------------------------------------------------
$ 527,053,310                           ITEM                CHAPTER        STATUTE       FISCAL YEAR
------------------------------          4260-601-912        51             2000          00/01              Exempt From PCC per
TOTAL AMOUNT ENCUMBERED TO              ------------------------------------------------------------        W&I Code Section
DATE                                    OBJECT OF EXPENDITURE (CODE AND TITLE)                              14087.4
$ 527,053,310                           9912-705-95915
----------------------------------------------------------------------------------------------------
I hereby certify upon my own personal   T.B.A. NO.          B.R. NO.
knowledge that budgeted funds are
available for the period and purpose
of the expenditure stated above.
----------------------------------------------------------------------------------------------------
SIGNATURE OF ACCOUNTING OFFICER                             DATE
/s/                                                        11-14-00
====================================================================================================
</TABLE>

[ ] CONTRACTOR  [ ] STATE AGENCY  [ ] DEPT. OF GEN. SER.  [ ] CONTROLLER   [ ]

<PAGE>

STATE OF CALIFORNIA
STANDARD AGREEMENT
STD. 2 (REV. 5-91)(REVERSE)

1.   The Contractor agrees to indemnify, defend and save harmless the State, its
     officers, agents and employees from any and all claims and losses accruing
     or resulting to any and all contractors, subcontractors, materialmen,
     laborers and any other person, firm or corporation furnishing or supplying
     work services, materials or supplies in connection with the performance of
     this contract, and from any and all claims and losses accruing or resulting
     to any person, firm or corporation who may be injured or damaged by the
     Contractor in the performance of this contract.

2.   The Contractor, and the agents and employees of Contractor, in the
     performance of the agreement, shall act in an independent capacity and not
     as officers or employees or agents of State of California.

3.   The State may terminate this agreement and be relieved of the payment of
     any consideration to Contractor should Contractor fail to perform the
     covenants herein contained at the time and in the manner herein provided.
     In the event of such termination, the State may proceed with the work in
     any manner deemed proper by the State. The cost to the State shall be
     deducted from any sum due the Contractor under this agreement, and the
     balance, if any, shall be paid the Contractor upon demand.

4.   Without the written consent of the State, this agreement is not assignable
     by Contractor either in whole or in part.

5.   Time is of the essence in this agreement.

6.   No alteration or variation of the terms of this contract shall be valid
     unless made in writing and signed by the parties hereto, and no oral
     understanding or agreement not incorporated herein, shall be binding on any
     of the parties hereto.

7.   The consideration to be paid Contractor, as provided herein, shall be in
     compensation for all of Contractor's expenses incurred in the performance
     hereof, including travel and per diem, unless otherwise expressly so
     provided.

<PAGE>

Molina.                                                             95-23637-A05

                                TABLE OF CONTENTS

ARTICLE II         DEFINITIONS                                      Pg 2

ARTICLE III        GENERAL TERMS AND CONDITIONS                     Pg 11

3.12               Inspection Rights                                Pg 2
3.18.3             Mandatory Termination                            Pg 3
3.28.2             Subcontract Requirements                         Pg 3

ARTICLE VI         SCOPE OF WORK
6.3.3              Monthly Financial Statement                      Pg 5
6.3.4              Compliance with Audit Requirements               Pg 5
6.9.5              Membership Services Guide                        Pg 5

                                        1

<PAGE>

Molina.                                                            95-23637 A-05

1.   ARTICLE II, DEFINITIONS, SECTION Q, DMHC IS AMENDED TO READ:

     Q.        DMHC means the State Department of Managed Health Care, which is
               responsible for administering the Knox-Keene Act of 1975.

2.   ARTICLE II, DEFINITIONS, SECTION PP, DMHC IS AMENDED TO READ:

     PP.       Knox-Keene Health Care Service Plan Act of 1975 means the law,
               which regulates HMOs and is administrated by the Department of
               Managed Health Care (DMHC), commencing with Section 1340, Health
               and Safety Code.

3.   ARTICLE III, GENERAL TERMS AND CONDITIONS, SECTION 3.11 INSPECTION RIGHTS,
     IS AMENDED TO READ:

     3.11      INSPECTION RIGHTS

               Through the end of the records retention period specified in
               Section 3.32.2, Records Retention, Contractor shall allow DHS,
               DHHS, the Comptroller General of the United States, Department of
               Justice (DOJ), Bureau of Medi-Cal Fraud, Department of Managed
               Health Care (DMHC), and other authorized State agencies, or their
               duly authorized representative, including DHS' external quality
               review organization contractor, to inspect, monitor or otherwise
               evaluate the quality, appropriateness, and timeliness of services
               performed under this Contract, and to inspect, evaluate, and
               audit any and all books, records, and Facilities maintained by
               Contractor and subcontractors pertaining to these services at any
               time during normal business hours.

               Books and records include, but are not limited to, all physical
               records originated or prepared pursuant to the performance under
               this Contract, including working papers, reports, financial
               records, and books of account, Medical Records, prescription
               files, laboratory results, Subcontracts, information systems and
               procedures, and any other documentation pertaining to medical and
               non-medical services rendered to Members. Upon request, through
               the end of the records retention period specified in Section
               3.32.2, Records Retention, Contractor shall furnish any record,
               or copy of it, to DHS or any other entity in this section, at
               Contractor's sole expense.

                                        2

<PAGE>

Molina.                                                             95-23637-A05

4.   ARTICLE III, GENERAL TERMS AND CONDITIONS, SECTION 3.18.3, MANDATORY
     TERMINATION, IS AMENDED TO READ:

     3.18.3    MANDATORY TERMINATION

               DHS will terminate this Contract in the event that: (1) the
               Secretary, DHHS, determines that the Contractor does not meet the
               requirements for participation in the Medicaid program, Title XIX
               of the Social Security Act, or (2) the Department of Managed
               Health Care finds that the Contractor no longer qualifies for
               licensure under the Knox-Keene Health Care Service Plan Act by
               giving written notice to the Contractor. Notification will be
               given by DHS at least sixty (60) days prior to the effective date
               of termination, except in cases where the Director determines the
               health and welfare of Members is jeopardized by continuation of
               the Contract, in which case the Contract will be immediately
               terminated. Notification will state the effective date of, and
               the reason for, the termination.

               Under these circumstances, termination of the Contract will be
               effective on the last day of the month in which the Secretary,
               DHHS, or the DMHC makes such determination, provided that DHS
               provides the Contractor with at least 60 days notice of
               termination. The termination of this Contract will be effective
               on the last day of the second full month from the date of the
               notice of termination. Contractor agrees that 60 days notice is
               reasonable. Termination under this section does not relieve the
               Contractor of its obligations under the Turnover and Phaseout
               Requirements, Section 3.17 through 3.17.4, except that these
               requirements may be performed after Contract termination.

5.   ARTICLE III, GENERAL TERMS AND CONDITIONS, SECTION 3.27.2, SUBCONTRACT
     REQUIREMENTS, IS AMENDED TO READ:

     3.27.2    SUBCONTRACT REQUIREMENTS

               Each Subcontract will contain:

               A.   The subcontractor's agreement to make all of its books and
                    records, pertaining to the goods and services furnished
                    under the terms of the Subcontract, available for
                    inspection, examination or copying:

                    1.   By DHS, DHHS, DOJ, DMHC

                    2.   At all reasonable times at the subcontractor's place of
                         business or at such other mutually agreeable location
                         in California.

                                        3

<PAGE>

Molina.                                                            95-23637 A-05

                    3.   In a form maintained in accordance with the general
                         standards applicable to such book or record keeping

                    4.   For a term of at least five years from the close of DHS
                         fiscal year in which the Subcontract was in effect.

                    5.   Including all Encounter data for a period of at least
                         five years.

               B.   Full disclosure of the method and amount of compensation or
                    other consideration to be received by the subcontractor from
                    the Contractor.

               C.   Subcontractor's agreement to maintain and make available to
                    DHS, upon request, copies of all sub-subcontracts and to
                    ensure that all sub-subcontracts are in writing and require
                    that the sub-contractor:

                    1.   Make all applicable books and records available at all
                         reasonable times for inspection, examination, or
                         copying by DHS, DHHS, DOJ and DMHC.

                    2.   Retain such books and records for a term of at least
                         five years from the close of DHS' fiscal year in which
                         the sub-contract is in effect.

               D.   Subcontractor's agreement to assist Contractor in the
                    transfer of care pursuant to Section 3.17.2, Turnover
                    Requirements, in the event of Contract termination.

               E.   Subcontractor's agreement to notify DHS in the event the
                    agreement with the Contractor is amended or terminated.
                    Notice is considered given when properly addressed and
                    deposited in the United States Postal Service as first class
                    registered mail, postage attached.

               F.   Subcontractor's agreement that assignment or delegation of
                    the Subcontract will be void unless prior written approval
                    is obtained from DHS.

               G.   Subcontractor's agreement to hold harmless both the State
                    and plan Members in the event the Contractor cannot or will
                    not pay for services performed by the subcontractor pursuant
                    to the Subcontract.

               H.   Subcontractor's agreement to provide Contractor with
                    Encounter level data in the manner consistent with DHS
                    requirements.

                                        4

<PAGE>

Molina.                                                           95-23637 A-05

               I.   Subcontracts with safety-net providers will include
                    Contractor and subcontractor's agreement to notify DHS upon
                    termination of the subcontract.

               J.   Subcontractor's agreement to timely gather, preserve and
                    provide to DHS, any records in the Subcontractor's
                    possession, in accordance with Section 3.45, Records Related
                    to Recovery for Tobacco Related Illnesses.

6.   ARTICLE VI, SCOPE OF WORK, SECTION 6.3.3, MONTHLY FINANCIAL STATEMENT, IS
     AMENDED TO READ:

     6.3.3     MONTHLY FINANCIAL STATEMENT

               The Contractor may be required to file monthly Financial
               Statements at DHS' request. If the Contractor is required to file
               monthly Financial Statements with DMHC, they will file monthly
               Financial Statements with DHS.

7.   ARTICLE VI, SCOPE OF WORK, SECTION 6.3.4, COMPLIANCE WITH AUDIT
     REQUIREMENTS, IS AMENDED TO READ:

     6.3.4     COMPLIANCE WITH AUDIT REQUIREMENTS

               The Contractor will cooperate with DHS' own independent audits
               annually or as necessary for good cause, at the discretion of
               DHS. Such audits may be waived upon submission of the financial
               audit for the same period conducted by DMHC pursuant to Section
               1382 of the Health and Safety Code.

8.   ARTICLE VI, SCOPE OF WORK, SECTION 6.9.5, MEMBERSHIP SERVICES GUIDE, IS
     AMENDED TO READ:

     6.9.5     MEMBERSHIP SERVICES GUIDE

               Contractor shall develop and distribute a Membership Services
               Guide that includes the following information:

               A.   The name address and telephone number of the health plan.

               B.   A description of the full scope of Medi-Cal covered benefits
                    and all available services including health education,
                    interpretive services, and "carve out" services and an
                    explanation of any service limitations and exclusions from
                    coverage or charges for services.

                                        5

<PAGE>

Molina.                                                           95-23637 A-05

               C.   Procedures for obtaining Covered Services including the
                    address and telephone number of each Service Site (locations
                    of hospital, Primary Care Physicians, optometrists,
                    psychologists, pharmacies, Skilled Nursing Facilities,
                    Urgent Care Facilities). In the case of a medical foundation
                    or independent practice association, the address and
                    telephone number of each Physician provider.

                    1.   The hours and days when each of these facilities is
                         open, the services and benefits available, and the
                         telephone number to call after normal business hours.

               D.   Procedures for selecting or requesting a change in Primary
                    Care Physician, including requirements for a change in PCP,
                    reasons for which a request may be denied, and reasons why a
                    provider may request a change.

               E.   The purpose and value of scheduling an initial health
                    assessment appointment.

               F.   The appropriate use of health care services in a managed
                    care system.

               G.   The availability and procedures for obtaining after hours
                    services (24 hour basis) and care, including the appropriate
                    provider locations and telephone numbers.

               H.   Procedure for obtaining emergency health care both within
                    and outside Contractor's Service Area.

               I.   Process for referral to specialists.

               J.   Procedures for obtaining any non-medical transportation
                    services offered by Contractor and through the local CHDP
                    programs, and how to obtain such services.

               K.   The causes for which a Member shall lose entitlement re
                    receive services under this Contract.

               L.   Procedures for filing a complaint/Grievance, including
                    procedures for appealing decisions regarding Members'
                    coverage, benefits, or relationship to the organization.
                    Include the title, address, and telephone number of the
                    person responsible for processing and resolving
                    complaints/Grievances.

                                        6

<PAGE>

Molina.                                                            95-23637 A-05

               M.   Procedures for Disenrollment, including an explanation of
                    the Member's right to disenroll without cause at any time,
                    subject to any restricted disenrollment period.

               N.   Information on the Member's right to the Medi-Cal fair
                    hearing process regardless of whether or not a
                    complaint/Grievance has been submitted or if the
                    complaint/Grievance has been resolved, pursuant to Title 22,
                    CCR, Section 53452, when a health care service requested by
                    the Member or provider has been denied, deferred or
                    modified. The State Department of Social Services' Public
                    Inquiry and Response Unit toll free telephone number (800)
                    952-5253.

               O.   Information on the availability of, and procedures for
                    obtaining, services at FQHCs and Indian Health Clinics.

               P.   Information on the Member's right to seek family planning
                    services from any qualified provider of family planning
                    services, under the Medi-Cal program, including providers
                    outside Contractor's provider network, and a description of
                    those services, such as the following statement:

                    "Family planning services are provided to Members of child
                    bearing age to enable them to determine the number and
                    spacing of children. These services include all methods of
                    birth control approved by the Federal Food and Drug
                    Administration. As a Member, you pick a doctor who is
                    located near you and will give you the services you need.
                    Our Primary Care Physicians and OB/GYN specialists are
                    available for family planning services. For family planning
                    services, you may also pick a doctor or clinic not connected
                    with Molina without having to get permission from Molina.
                    Molina shall pay that doctor or clinic for the family
                    planning services you get."

               Q.   The DHS' Office of Family Planning's toll free telephone
                    number (1-800-942-1054) providing consultation and referral
                    to family planning clinics.

               R.   Any other information determined by the DHS to be essential
                    for the proper receipt of Covered Services.

               S.   Information on the availability of, and procedures for
                    obtaining, Certified Nurse Midwife and Certified Nurse
                    Practitioner services, pursuant to Section 6.7.4.14, Nurse
                    Midwife and Nurse Practitioner Services.

                                        7

<PAGE>

Molina.                                                            95-23637 A-05

               T.   Information on the availability of transitional Medi-Cal
                    eligibility and how the Member may apply for this program.
                    Contractor shall include this information with all
                    membership Services Guides sent to Members after the date
                    such information is furnished to Contractor by DHS.

               U.   Information on how to access State resources for
                    investigation and resolution of Member complaints, including
                    the DHS Medi-Cal Managed Care Ombudsman and toll-free
                    telephone number (1-888-452-8609) and the DMHC HMO Consumer
                    Service toll-free telephone Number (1-800-400-0815).

               V.   Information concerning the provision and availability of
                    services covered under the CCS program from providers
                    outside Contractor's provider network and how to access
                    these services.

               W.   An explanation of the expedited disenrollment process for
                    children receiving services under the Foster Care or
                    Adoption Assistance Programs; Members with special health
                    care needs, including, but not limited to major organ
                    transplants; and Members already enrolled in another
                    Medi-Cal, Medicare or commercial managed care plan.

               X.   Information how to obtain Minor Consent Services through
                    Contractor's plan, and an explanation of those services.

               Y.   A brief explanation on how to use the fee-for-service system
                    when Medi-Cal covered services are excluded or limited under
                    this Contract and how to obtain additional information.

               Z.   An explanation of an American Indian Member's right to
                    access Indian Health Service Facilities and to disenroll
                    from Contractor's plan at any time, without cause.

               AA.  Subsections S through Z above, except subsections T, shall
                    be included in Contractor's Membership Services Guide by
                    April 1, 1999, or upon the next reprinting of Contractor's
                    Membership Services Guide, whichever is sooner.

9.   The effective date of this Amendment is September 1, 2000.

10.  All rights duties, liabilities, and obligations of the parties hereto
     otherwise remain unchanged.

                                        8

<PAGE>

STATE OF CALIFORNIA                                 CONTRACT NUMBER     AM. NO.
                                                    95-23637            6
STANDARD AGREEMENT -- APPROVED BY THE               TAXPAYER'S FEDERAL ID NUMBER
STD. 2(REV.5-91)      ATTORNEY GENERAL              33-0342719

THIS AGREEMENT, made and entered into this 1st day of July, 2001 in the
State of California, by and between State of California, through its duly
elected or appointed, qualified and acting

TITLE OF OFFICER ACTING FOR STATE     AGENCY
Chief, Program Support Branch         Department of Health Services,
                                      hereafter called the State, and
CONTRACTOR'S NAME
Molina Healthcare of California dba: Molina, hereafter called the Contractor:

WITNESSETH: That the Contractor for and in consideration of the covenants,
conditions, agreements, and stipulations of the State hereinafter expressed does
hereby agree to furnish to the State services and materials as follows: (Set
forth services to be rendered by Contractor, amount to be paid contractor. time
for performance or completion, and attach plans and specifications, if any.)

AMENDMENT A-6 TO CONTRACT NO.95-23637 BETWEEN MOLINA HEALTHCARE OF CALIFORNIA,
dba: MOLINA AND THE STATE OF CALIFORNIA; AND

WHEREAS, the State of California and Molina Healthcare of California, dba:
Molina entered into a Contract to provide health care services to Medi-Cal
beneficiaries dated April 2, 1996, and;

NOW THEREFORE, this Contract is amended as follows:

CONTINUED ON 5 SHEETS, EACH BEARING NAME OF CONTRACTOR AND CONTRACT NUMBER.

  The provisions on the reverse side hereof constitute a part of this agreement.
IN WITNESS WHEREOF, this agreement has been executed by the parties hereto, upon
the date first above written.

<TABLE>
<CAPTION>
===============================================================================================================================
STATE OF CALIFORNIA                                                        CONTRACTOR
-------------------------------------------------------------------------------------------------------------------------------
<S>                                           <C>
AGENCY                                        CONTRACTOR (If other than an individual, state whether a corporation, partnership,
                                               etc.)
Department of Health Services                 Molina Healthcare of California, dba: Molina
-------------------------------------------------------------------------------------------------------------------------------
BY (AUTHORIZED SIGNATURE)                     BY (AUTHORIZED SIGNATURE)
/s/                                 for       /s/
-------------------------------------------------------------------------------------------------------------------------------
PRINTED NAME OF PERSON SIGNING                PRINTED NAME OF AND TITLE OF PERSON SIGNING
Edward Stahlberg     Nadine Fujita Roh, Chief J. Mario Molina, CEO
                     CMU Production
-------------------------------------------------------------------------------------------------------------------------------
TITLE                                         ADDRESS
Chief, Program Support Branch                 One Golden Shore Drive, Long Beach, CA 90802
-------------------------------------------------------------------------------------------------------------------------------
AMOUNT ENCUMBERED BY THIS                     PROGRAM/CATEGORY (CODE AND TITLE)        FUND TITLE
DOCUMENT                                      Loc.Asst.Section 14157 W&I               Health Care Deposit
$ -0-                                         ------------------------------------------------------------
------------------------------                (OPTIONAL USE)
PRIOR AMOUNT ENCUMBERED FOR
THIS CONTRACT                                 ------------------------------------------------------------
$ 527,053,310                                 ITEM                CHAPTER        STATUTE       FISCAL YEAR
------------------------------                4260-601-912        52             2000          00/01        Exempt From PCC per
TOTAL AMOUNT ENCUMBERED TO                    ------------------------------------------------------------  W&I Code Section
DATE                                          OBJECT OF EXPENDITURE (CODE AND TITLE)
$ 527,053,310                                 9912-705-95915                                                14087.4
----------------------------------------------------------------------------------------------------------
I hereby certify upon my own personal         T.B.A. NO.          B.R. NO.
knowledge that budgeted funds are
available for the period and purpose
of the expenditure stated above.
----------------------------------------------------------------------------------------------------------
SIGNATURE OF ACCOUNTING OFFICER                             DATE
/s/                                                       5/24/01
==========================================================================================================
</TABLE>

[ ] CONTRACTOR  [ ] STATE AGENCY  [ ] DEPT. OF GEN. SER.  [ ] CONTROLLER   [ ]

<PAGE>

STATE OF CALIFORNIA
STANDARD AGREEMENT
STD. 2 (REV. 5-91) (REVERSE)

1.   The contractor agrees to indemnify, defend and save harmless the State, its
     officers, agents and employees from any and all claims and losses accruing
     or resulting to any and all contractors, subcontractors, materialmen,
     laborers and any other person, firm or corporation furnishing or supplying
     work services, materials or supplies in connection with the performance of
     this contract, and from any and all claims and losses accruing or resulting
     to any person, firm or corporation who may be injured or damaged by the
     Contractor in the performance of this contract.

2.   The Contractor, and the agents and employees of Contractor, in the
     performance of the agreement, shall act in an independent capacity and not
     as officers or employees or agents of State of California.

3.   The State may terminate this agreement and be relieved of the payment of
     any consideration to Contractor should Contractor fail to perform the
     covenants herein contained at the time and in the manner herein provided.
     In the event of such termination the State may proceed with the work in
     any manner deemed proper by the State. The cost to the state shall be
     deducted from any sum due the Contractor under this agreement, and the
     balance, if any, shall be paid the Contractor upon demand.

4.   Without the written consent of the State, this agreement is not assignable
     by Contractor either in whole or in part.

5.   Time is of the essence in this agreement.

6.   No alteration or variation of the terms of this contract shall be valid
     unless made in writing and signed by the parties hereto, and no oral
     understanding or agreement not incorporated herein, shall be binding on any
     of the parties hereto.

7.   The consideration to be paid Contractor, as provided herein, shall be in
     compensation for all of Contractor's expenses incurred in the performance
     hereof, including travel and per diem, unless otherwise expressly so
     provided.

<PAGE>

MOLINA HEALTHCARE OF CALIFORNIA                                    95-23637 A-06
DBA: MOLINA

1.   ARTICLE II - DEFINITIONS, SECTION Y, ELIGIBLE BENEFICIARY IS AMENDED TO
     READ:

          "Y.  Eligible Beneficiary means any Medi-Cal beneficiary who is
               residing in Contractor's Service Area with one of the following
               aid codes: Family: 01,OA, 02, 08, 30, 32, 33, 34, 35, 38, 39, 40,
               42, 47, 54, 59, 72, 3A, 3C, 3E, 3G, 3H, 3L, 3M, 3N, 3P, 3R, 3U,
               4F, 4G, 5X, 7X, 8P; Aged: 1H, 10, 14, 16, 18; Disabled: 20, 24,
               26, 28, 36, 60, 64, 66, 68, 6A, 6C, 6H, 6N, 6P, 6R; Child: 03,
               04, 4A, 4C, 4K, 5K, 45, 7A, 7J, 8R, 82; Adult: 86; with the
               following exclusions:

               1.   Individuals who have been approved by the Medi-Cal Field
                    Office or the California Children Services Program for bone
                    marrow, heart, heart-lung, liver, lung, combined liver, and
                    kidney, or combined liver and small bowel transplants.

               2.   Individuals who elect and are accepted to participate in the
                    following Medi-Cal waiver programs: In-Home Medical Care
                    Waiver Program, the Skilled Nursing Facility Waiver Program,
                    the Model Waiver Program, the Acquired Immune Deficiency
                    (AIDS) and AIDS Related Conditions Waiver Program, and the
                    Multipurpose Senior Services Waiver Program.

               3.   Individuals determined by the Medi-Cal Field Office to be in
                    need of long term care and residing in a Skilled Nursing
                    Facility (SNF) for 30 days past the month of admission.

               4.   Individuals who have commercial or Medicare HMO coverage,
                    unless the Medicare HMO is a provider under this Contract
                    and DHS has agreed, as a term of the HMO's Contract, that
                    these individuals may be enrolled, and DHS and the Medicare
                    HMO have negotiated an appropriate rate for these
                    individuals. Individuals with Medicare fee-for-service
                    coverage are not excluded from enrolling under this
                    Contract."

2.   ARTICLE III ~ GENERAL TERMS AND CONDITIONS, SECTION 3.49, PROHIBITED USE OF
     STATE FUNDS FOR UNION ORGANIZING IS BEING ADDED TO YOUR CONTRACT TO READ:

     "3.49 Prohibited Use of State Funds for Union Organizing

           Contractor by signing this agreement hereby acknowledges the
           applicability of Government Code Section 16645 through Section
           16649 to this agreement.

                                        2

<PAGE>

MOLINA HEALTHCARE OF CALIFORNIA                                    95-23637 A-06
DBA: MOLINA

               1.   Contractor will not assist, promote, or deter union
                    organizing by employees performing work on a state service
                    contract, including a public works contract.

               2.   No state funds received under this agreement will be used to
                    assist, promote, or deter union organizing.

               3.   Contractor will not, for any business conducted under this
                    agreement, use any state property to hold meetings with
                    employees or supervisors, if the purpose of such meetings is
                    to assist, promote or deter union organizing, unless the
                    state property is equally available to the general public
                    for holding meetings.

               4.   If Contractor incurs costs, or makes expenditures to assist,
                    promote or deter union organizing, Contractor will maintain
                    records sufficient to show that no reimbursement from state
                    funds has been sought for these costs, and that Contractor
                    shall provide those records to the Attorney General upon
                    request."

3.   ARTICLE III -- GENERAL TERMS AND CONDITIONS, SECTION 3.50, DEBARMENT AND
     SUSPENSION CERTIFICATION, IS BEING ADDED TO YOUR CONTRACT TO READ:

     "3.50 Debarment and Suspension Certifications

          By signing this agreement, the Contractor/Grantee agrees to comply
          with the applicable federal suspension and debarment regulations, and
          certifies the following:

          A.   The Contractor/Grantee certifies to the best of its knowledge and
               belief, that it and its principals:

               1.   Are not presently debarred, suspended, proposed for
                    debarment, declared ineligible, or voluntarily excluded from
                    participation in a federally sponsored project by any
                    federal department or agency;

               2.   Have not within a three-year period preceding this agreement
                    been convicted of or had a civil judgement rendered against
                    them for commission of fraud or a criminal offense in
                    connection with obtaining, attempting to obtain, or
                    performing a public (Federal, State or local) transaction or
                    contract under public transaction; violation of Federal or
                    State antitrust statutes or commission of embezzlement,
                    theft, forgery, bribery, falsification or destruction of
                    records, making false statements, or receiving stolen
                    property;

                                        3

<PAGE>

MOLINA HEALTHCARE OF CALIFORNIA                                    95-23637 A-06
DBA: MOLINA

               3.   Are not presently indicted for or otherwise criminally or
                    civilly charged by a governmental entity (Federal, State or
                    Local) with commission of any of the offenses enumerated in
                    the foregoing paragraph of this certification; and

               4.   Have not within a three-year period preceding this agreement
                    had one or more public transactions (Federal, State or
                    local) terminated for cause or default.

               5.   Contractor/Grantee shall not knowingly enter into any lower
                    tier covered transaction with a person or firm that is
                    proposed for debarment under federal regulations, debarred,
                    suspended, declared ineligible, or voluntarily excluded from
                    participation in such transactions, unless authorized by the
                    State. The Contractor/Grantee may rely on the certification
                    of a prospective participant in a lower tier covered
                    transaction unless it knows that the certification is
                    erroneous. The Contractor/Grantee may, but is not required
                    to, check the Procurement and Nonprocurement List issued by
                    U.S. General Service Administration at the following
                    Internet site: http://epls.arnet.gov/.

               6.   Contractor/Grantee will include a clause entitled,
                    "Debarment and Suspension Certification" that essentially
                    sets forth the provisions herein, in all lower tier covered
                    transactions and in all solicitations for lower tier covered
                    transactions.

          B.   If the Contractor/Grantee is unable to certify to any of the
               statements in this certification, the Contractor/Grantee shall
               submit an explanation to the DHS program funding this agreement.

          C.   The terms and definitions herein have the meanings set out in the
               Definitions and Coverage sections of the rules implementing
               Federal Executive Order 12549.

          D.   If the Contractor/Grantee knowingly violates this certification,
               in addition to other remedies available to the Federal
               Government, DHS may terminate this agreement for cause or
               default."

                                        4

<PAGE>

MOLINA HEALTHCARE OF CALIFORNIA                                    95-23637 A-06
DBA: MOLINA

4.   ARTICLE V - PAYMENT PROVISIONS, SECTION 5.3, CAPITATION RATES, IS AMENDED
     TO READ:

     "5.3 Capitation Rates

          DHS shall remit to Contractor a capitation payment each month for each
          Medi-Cal Member that appears on the approved list of Members supplied
          to Contractor by DHS. The capitation rate shall be the amount
          specified in this Article. The payment period for health care services
          shall commence on the first day of operations, as determined by DHS.
          Capitation payments shall be made in accordance with the following
          schedule of capitation payment rates:

<TABLE>
<CAPTION>
          FOR THE PERIOD OF 10/01/00 - 9/30/01                                 RIVERSIDE
          ------------------------------------------------------------------------------
           GROUPS              AID CODES                                          RATES
          ------------------------------------------------------------------------------
           <S>                 <C>                                                <C>
           Family              01, 0A, 02, 08, 30, 32, 33, 34, 35,               $ 86.14
                               38, 39, 40, 42, 47, 54, 59, 72, 3A, 3C, 3E, 3G,
                               3H, 3L, 3M, 3N, 3P, 3R, 3U, 4F, 4G, 5X, 7X, 8P
          ------------------------------------------------------------------------------
           Disabled            20, 24, 26, 28, 36, 60, 64, 66, 68,               $223.64
                               6A, 6C, 6H, 6N, 6P, 6R
          ------------------------------------------------------------------------------
           Aged                1H, 10, 14, 16, 18                                $160.60
          ------------------------------------------------------------------------------
           Child               03, 04, 4A, 4C, 4K, 5K, 45, 7A,                   $ 89.04
                               7J, 8R, 82
          ------------------------------------------------------------------------------
           Adult               86                                                $843.25
          ------------------------------------------------------------------------------
           Aids Beneficiary                                                      $847.95
          ------------------------------------------------------------------------------

<CAPTION>
          FOR THE PERIOD OF 10/01/00 - 9/30/01                            SAN BERNARDINO
          ------------------------------------------------------------------------------
           GROUPS              AID CODES                                          RATES
          ------------------------------------------------------------------------------
           <S>                 <C>                                                <C>
           Family              01, 0A, 02, 08, 30, 32, 33, 34, 35,               $ 82.56
                               38, 39, 40, 42, 47, 54, 59, 72, 3A,
                               3C, 3E, 3G, 3H, 3L, 3M, 3N, 3P,
                               3R, 3U, 4F, 4G, 5X, 7X, 8P
          ------------------------------------------------------------------------------
           Disabled            20, 24, 26, 28, 36, 60, 64, 66, 68,               $223.41
                               6A, 6C, 6H, 6N, 6P, 6R
          ------------------------------------------------------------------------------
           Aged                1H, 10, 14, 16, 18                                $151.60
          ------------------------------------------------------------------------------
           Child               03, 04, 4A, 4C, 4K, 5K, 45, 7A,                   $ 93.48
                               7J, 8R, 82
          ------------------------------------------------------------------------------
          Adult                86                                                $922.71
          ------------------------------------------------------------------------------
          Aids Beneficiary                                                       $891.15
          ------------------------------------------------------------------------------
</TABLE>

                                        5

<PAGE>

MOLINA HEALTHCARE OF CALIFORNIA                                    95-23637 A-06
DBA: MOLINA

          If DHS creates a new aid code that is split or derived from an
          existing aid code covered under this Contract, and the aid code has a
          neutral revenue effect for the Contractor, then the split aid code
          will automatically be included in the same aid code category as is the
          original aid code covered under this Contract. Contractor agrees to
          continue providing covered services to the Members at the monthly
          capitation rate specified for the original aid code. DHS shall confirm
          all aid code splits, and the rates of payment for such new aid codes,
          in writing to Contractor as soon as practicable after such aid code
          splits occur.

5.   The effective date of this Amendment is July 1, 2001.

6.   The effective date of 1H and 6H is May 1, 2001

7.   All rights duties, liabilities, and obligations of the parties hereto
     otherwise remain unchanged.

                                        6

<PAGE>

                                                                     Enclosure I

The purpose of this enclosure to Molina Healthcare of California, dba Molina,
amendment 6, Contract Number 95-23637 is to provide you the Contractor with an
explanation for the amendment.

This amendment adds an Aid Code 7J to your existing contract, which is result of
recent legislation that allows certain categories of Children under the age of
19, to have their eligibility continued for one more year. This aid code was
added to the child category with no increase in rate.

This amendment adds Aid Code 1H to the Aged category and 6H to the Disabled
category.

This amendment also adds two (2) new Sections to your existing Contract.

The first is Section 3.47, Prohibition of the use of State funds for Union
Organizing. This section is mandated by Legislative Bill AB1839 and must be
included in all contracts, which are initiated by the State. This section
prohibits the use of state funds to assist, promote, or deter union organizing
by employees performing work on a state contract or use state property to hold
meetings if the purpose of the meeting is to assist, promote or deter union
organizing.

The second is Section 3.48, Debarment and Suspension. This section requires
language of a certification by contractor that contractor principals are not
presently debarred, suspended, proposed for debarment, declared ineligible, or
voluntarily excluded from participation in a federally qualified project by any
federal department or agency. Have not within the last three years been
convicted or had civil judgement rendered against them. This section is required
by federal law and must be included in any state contract receiving federal
funding of $50,000 dollars or more.

<PAGE>

STATE OF CALIFORNIA
                        APPROVED BY THE       ----------------------------------
STANDARD AGREEMENT  --  ATTORNEY GENERAL      CONTRACT NUMBER        AM. NO.
 STD. 2 (REV. 5-91)                           95-23637                  7
                                              ----------------------------------
                                              TAXPAYER'S FEDERAL ID. NUMBER
                                              33-0342719
                                              ----------------------------------

THIS AGREEMENT, made and entered into this 1st day of June, 2001 in the
State of California, by and between State of California, through its duly
elected or appointed, qualified and acting

TITLE OF OFFICER ACTING FOR STATE     AGENCY

Chief, Program Support Branch         Department of Health Services, hereafter
                                      called the State, and

CONTRACTOR'S NAME

Molina Healthcare of California dba Molina, hereafter called the Contractor.

WITNESSETH: That the Contractor for and in consideration of the covenants,
conditions, agreements, and stipulations of the State hereinafter expressed,
does hereby agree to furnish to the State services and materials as follows:
(Set forth services to be rendered by Contractor, amount to be paid Contractor,
time for performance or completion, and attach plans and specifications, if
any.)

Amendment A07 to Contract No. 95-23637 BETWEEN MOLINA HEALTHCARE OF CALIFORNIA
dba MOLINA AND THE STATE OF CALIFORNIA;

WHEREAS, the State of California and Molina Healthcare of California dba Molina
entered into this Contract to provide healthcare services to Medi-Cal
beneficiaries, under the provisions of Welfare and Institution Code Section
14087.4, dated Ap 1, 1996, and subsquently amended;

NOW THEREFORE, this Contract is amended as follows:

CONTINUED ON 1 SHEETS, EACH BEARING NAME OF CONTRACTOR AND CONTRACT NUMBER.
================================================================================
     The  provisions on the reverse side hereof constitute a part of this
agreement.
IN WITNESS WHEREOF, this agreement has been executed by the parties hereto, upon
the date first above written.
================================================================================

<TABLE>
<CAPTION>
====================================================================================================================================
            STATE OF CALIFORNIA                          CONTRACTOR
------------------------------------------------------------------------------------------------------------------------------------
<S>                                           <C>
AGENCY                                        CONTRACTOR (if other than an individual, state whether a corporation, partnership.
                                               etc.)
Department of Health Services                 Molina Healthcare of California dba Molina

------------------------------------------------------------------------------------------------------------------------------------
BY Nadine Fujita Roh      For                 BY
------------------------------------------------------------------------------------------------------------------------------------
PRINTED NAME OF PERSON SIGNING                PRINTED NAME OF AND TITLE OF PERSON SIGNING
Edward Stahlberg   Nadine Fujita Roh. Chief   George S. Goldstein, Ph.D
                       CMU Production
------------------------------------------------------------------------------------------------------------------------------------
TITLE                                         ADDRESS
Chief, Program Support Branch                 One Golden Shore Drive, Long Beach, CA 90802
------------------------------------------------------------------------------------------------------------------------------------

AMOUNT ENCUMBERED BY THIS       PROGRAM/CATEGORY (CODE AND TITLE)    FUND TITLE                Department of General
DOCUMENT                        Loc.Asst.Section 14157 W&I Code      Health CareDeposit          Services Use Only
                                -------------------------------------------------------
$ 27,000,000                    (OPTIONAL USE)
--------------------------------
PRIOR AMOUNT ENCUMBERED FOR
THIS CONTRACT
                                =======================================================
                                ITEM            CHAPTER    STATUTE    FISCAL YEAR          Exempt per W&I Code  14087.4
$ 607,053,310                   4260-601-912    106        2001      2001/2002
---------------------------------------------------------------------------------------
TOTAL AMOUNT ENCUMBERED FOR     OBJECT OF EXPENDITURE (CODE AND TITLE)
DATE
$ 634,053,310                   9912-705-95915
---------------------------------------------------------------------------------------
I hereby certify upon my own personal knowledge         T.B.A. NO.      B.R.NO.
that budgeted funds are available for the period
and purpose of the expenditure stated above.
---------------------------------------------------------------------------------------
SIGNATURE OF ACCOUNTING OFFICER                              DATE
                                                             11/7/01
=======================================================================================
[ ] CONTRACTOR  [ ] STATE AGENCY  [ ]DEPT. OF GEN.SER.  [ ] CONTROLLER [ ]
</TABLE>

<PAGE>

STATE OF CALFORNIA
STANDARD AGREEMENT
STD. 2 (REV. 5-91) (REVERSE)

1.   The contractor agrees to indemnify, defend and save harmless the State, its
     officers, agents and employees from any and all claims and losses accruing
     or resulting to any and all contractors, subcontractors materialmen,
     laborers and any other person, firm or corporation furnishing or supplying
     work services materials or supplies in connection with the performance of
     this contract, and from any and all claims and losses accruing or resulting
     to any person, firm or corporation who may be injured or damaged by the
     Contractor in the performance of this contract.

2.   The Contractor, and the agents and employees of Contractor, in the
     performance of the agreement, shall act in an independent capacity and not
     as officers or employees or agents of State of California.

3.   The State may terminate this agreement and be relieved of the payment of
     any consideration to Contractor, should Contractor fail to perform the
     covenants herein contained at the time and in the manner herein provided.
     In the event of such termination, the State may proceed with the work in
     any manner deemed proper by the State. The cost to the state shall be
     deducted from any sum due the Contractor under this agreement, and the
     balance, if any, shall be paid the Contractor upon demand.

4.   Without the written consent of the State, this agreement is not assignable
     by Contractor either in whole or in part.

5.   Time is the essence of this agreement.

6.   No alteration or variation of the terms of this contract shall be valid
     unless made in writing and signed the parties hereto, and no oral
     understanding or agreement not incorporated herein, shall be binding on any
     of the parties hereto.

7.   The consideration to be paid Contractor, as provided herein, shall be in
     compensation for all of Contractor's expenses incurred in the performance
     hereof, including travel and per diem, unless otherwise expressly so
     provided.

<PAGE>

MOLINA HEALTHCARE OF CALIFORNIA                                    95-23637-A07
DBA MOLINA

1.   ARTICLE III, GENERAL TERMS AND CONDITIONS, Section 3.14, Term, paragraph 1
     is amended to read:

     3.14 TERM

          This Contract will become effective April 2, 1996 and will continue in
          full force and effect through March 31, 2003, subject to the
          provisions of Article V, Sections 5.2 and 5.10 because the State has
          currently appropriated and available for encumbrance only funds to
          cover costs through June 30, 2001.

          All other provisions of this Section remain unchanged.

2.   ARTICLE V, PAYMENT PROVISIONS, Section 5.2, Amounts Payable, is amended to
     read:

     5.2  AMOUNTS PAYABLE

          The maximum amount payable for the 1995-96 Fiscal Year ending June 30,
          1996 will not exceed $32,080,630; the maximum amount payable for the
          Fiscal Year 1996-97 Fiscal Year ending June 30, 1997 will not exceed
          $194,472,680; the maximum amount payable for the 1997-98 Fiscal Year
          ending June 30,1998 will not exceed $6,500,000; the maximum amount
          payable for the 1998-99 Fiscal Year ending June 30,1999 will not
          exceed $80,000,000; the maximum amount payable for the 1999-2000
          Fiscal Year ending June 30, 2000 will not exceed $107,000,000; the
          maximum amount payable for the 2000-2001 Fiscal Year ending June 30,
          2001 will not exceed $107,000,000. Any requirement for performance by
          DHS and Contractor for the period of the Contract subsequent to June
          30, 2001, will be dependent upon the availability of future
          appropriations by the Legislature for the purpose of this Contract. If
          funds become available for purposes of this Contract from future
          appropriations by the Legislature, the maximum amount payable for the
          2001-2002 Fiscal Year ending June 30, 2002 will not exceed
          $107,000,000; the maximum amount payable for the 2002-2003 Fiscal Year
          ending June 30, 2003 will not exceed $80,000,000. The maximum amount
          payable for this Contract will not exceed $714,053,310.

3.   The effective date of this Amendment is June 1, 2001.

4.   All rights, duties, liabilities and obligations of the parties hereto
     otherwise remain unchanged.

                                        2

<PAGE>

                                                                     Enclosure 1

          The purpose of this enclosure to Molina's amendment 07 to Contract
          Number 96-23637 is to provide you the Contractor with an explanation
          for the amendment.

          This amendment extends the term of your contract to March 31, 2003.

          This amendment also changes the amounts payable under your contract to
          add additional dollars into the 2001-2002 Fiscal Year, and for the
          additional 2002- 2003 Fiscal Year, to allow payment for that fiscal
          year, as a result of the increase in the term of the contract.

<PAGE>

 STATE Of CALIFORNIA
 STANDARD AGREEMENT AMENDMENT
 STD. 213 A (NEW 02/98)

                                    AGREEMENT NUMBER        AMENDMENT NUMBER
                                    95-23637                8

     This Agreement is entered into between the State Agency and Contractor
     named below:
    ---------------------------------------------------------------------------
     STATE AGENCY'S NAME
     California Department of Health Services
    ----------------------------------------------------------------------------
     CONTRACTOR'S NAME
     Molina Healthcare of California, dba: Molina
--------------------------------------------------------------------------------
2.   The term of this
     Agreement is            4-2-96       through     3-31-02
--------------------------------------------------------------------------------
3.   The maximum amount      $714,053,310
     of this Agreement is:   Seven hundred and fourteen million, fifth-three
                             thousand, three hundred ten
--------------------------------------------------------------------------------
4.   The parties mutually agree to this amendment as follows. All actions noted
     below are by this reference made a part of the Agreement and incorporated
     herein:
--------------------------------------------------------------------------------
5.   Article II - Definitions, Section Y, Eligible Beneficiary, is amended to
     add two new Aid Codes: 4M to category Family and 6V to category Disabled,
     to read as in page 2 of this amendment.
--------------------------------------------------------------------------------
6.   Article V - Payment Provision, Section 5.3, Capitation Rates, is amended to
     add two new Aid Codes: 4M to category Family and 6V to category Disabled,
     to read as in page 3 of this amendment.

     All other terms and conditions shall remain the same.

IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto.
--------------------------------------------------------------------------------
                     CONTRACTOR                                 CALIFORNIA
---------------------------------------------------------  Department of General
CONTRACTOR'S NAME (If other than an individual, state            Services
whether a corporation, partnership, etc.)                        Use Only
Molina Healthcare of California, dba: Molina
---------------------------------------------------------
BY (Authorized Signature)       DATE SIGNED (Do not type)
/s/
---------------------------------------------------------
PRINTED NAME AND TITLE OF PERSON SIGNING
George S. Goldstein
---------------------------------------------------------
ADDRESS
One Golden Shore Drive, Long Beach, CA 90802
---------------------------------------------------------
                 STATE OF CALIFORNIA
---------------------------------------------------------
AGENCY NAME
California Department of Health Services
---------------------------------------------------------
BY (Authorized Signature) for   DATE SIGNED (Do not type)
/s/ Nadine Fujita Roh      for   04/05/02
---------------------------------------------------------
PRINTED NAME AND TITLE OF PERSON SIGNING
Edward Stahlberg, Chief, Program Support Branch
---------------------------------------------------------
ADDRESS
1800 3rd. Street, Rm. 455, P.O. Box 942732, Sacramento,    X Exempt per: 14087.4
CA 94234-7320
================================================================================

<PAGE>

STATE OF CALIFORNIA
STANDARD AGREEMENT
STD. 2 (REV. 5-91) (REVERSE)

     1.   The Contractor agrees to indemnify, defend and save harmless the
          State, its officers, agents and emp1oyees from any and all claims and
          losses accruing or resulting to any and all contractors,
          subcontractors, materialmen, laborers and any other person, firm or
          corporation furnishing or supplying work services materials or
          supplies in connection with the performance of this contract, and from
          any and all claims losses accruing or resulting to any person, firm or
          corporation who may be injured or damaged by Contractor in the
          performance of this contract.

     2.   The Contractor, and the agents and employees of Contractor, in the
          performance of the agreement, shall act in an independent capacity and
          not as officers or employees or agents of State of California.

     3.   The State may terminate this agreement and be relieved of the payment
          of any consideration to Contractor should Contractor fail to perform
          the covenants herein contained at the time and in the manner herein
          provided. In the event of such termination the State may proceed with
          the work in any manner deemed proper by the State. The cost to the
          State shall be deducted from any sum due the Contractor under this
          agreement, and the balance, if any, shall be paid the Contractor upon
          demand.

     4.   Without the written consent of the State, this agreement is not
          assignable by Contractor either in whole or in part.

     5.   Time is of the essence in this agreement.

     6.   No alteration or variation of the terms of this contract shall be
          valid unless made in writing and signed by the parties hereto, and no
          oral understanding or agreement not incorporated herein, shall be
          binding on any of the parties hereto.

     7.   The consideration to be paid Contractor, as provided herein, shall be
          in compensation for all of Contractor's expenses incurred in the
          performance hereof, including travel and per diem, unless otherwise
          expressly so provided.

<PAGE>

                                                MOLINA HEALTHCARE OF CALIFORNIA,
                                                  DBA: MOLINA
                                                 95-23637 A-08

1.   Article II - Definitions, Section Y, Eligible Beneficiary, is amended to
     read:

     "Y.  Eligible Beneficiary means any Medical beneficiary who is residing in
          Contractor's Service Area with one of the following aid codes: Family
          - aid codes 01, 0A, 02, 08, 30, 32, 33, 34, 35, 38, 39, 40, 42, 47,
          54, 59, 72, 3A, 3C, 3E, 3G, 3H, 3L, 3M, 3N, 3P, 3R, 3U, 4F, 4G, 4M,
          5X, 7X, 8P; Aged - aid codes 10, 14, 16, 18, 1H; Disabled - aid codes
          20, 24, 26, 28, 36, 60, 64, 66, 68, 6A, 6C, 6H, 6N, 6P, 6R, 6V; Child
          - aid codes 03, 04, 45, 82, 4A, 4C, 4K, 5K, 7A, 7J, 8R; Adult- aid
          code 86 with the following exclusions:

          1.   Individuals who have been approved by the Medi-Cal Field Office
               or the California Children Services Program for bone marrow,
               heart, heart-lung, liver, lung, combined liver, and kidney, or
               combined liver and small bowel transplants.

          2.   Individuals who elect and are accepted to participate in the
               following Medi-Cal waiver programs: In-Home Medical Care Waiver
               Program, the Skilled Nursing Facility Waiver Program, the Model
               Waiver Program, the Acquired Immune Deficiency (AIDS) and AIDS
               Related Conditions Waiver Program, and the Multipurpose Senior
               Services Waiver Program.

          3.   Individuals determined by the Medi-Cal Field Office to be in need
               of long term care and residing in a Skilled Nursing Facility
               (SNF) for 30 days past the month of admission.

          4.   Individuals who have commercial or Medicare HMO coverage, unless
               the Medicare HMO is a provider under this Contract and DHS has
               agreed, as a term of the HMO's Contract, that these individuals
               may be enrolled, and DHS and the Medicare HMO have negotiated an
               appropriate rate for these individuals. Individuals with Medicare
               fee-for-service coverage are not excluded from enrolling under
               this Contract."

                                        2

<PAGE>

                                                MOLINA HEALTHCARE OF CALIFORNIA,
                                                  DBA: MOLINA
                                                 95-23637 A-08

2.   Article V - Payment Provision, Section 5.3, Capitation Rates, is amended to
     read:

     "5.3 Capitation Rates

          DHS shall remit to Contractor a capitation payment each month for each
          Medi-Cal Member that appears on the approved list of Members supplied
          to Contractor by DHS. The capitation rate shall be the amount
          specified in this Article. The payment period for health care services
          shall commence on the first day of operations, as determined by DHS.
          Capitation payments shall be made in accordance with the following
          schedule of capitation payment rates:

          For the period 10/01/00 - 9/30/01                        Riverside
          ----------------------------------------------------------------------
          Groups           Aid Codes                           Rate
          ----------------------------------------------------------------------
          Family           01, 0A, 02, 08, 30, 32, 33,         $  86.14
                           34, 35, 38, 39, 40, 42, 47,
                           54, 59, 72, 3A, 3C, 3E, 3G,
                           3H, 3L, 3M, 3N, 3P, 3R, 3U,
                           4F, 4G, 4M, 5X, 7X, 8P
          ----------------------------------------------------------------------
          Disabled         20, 24, 26, 28, 36, 60, 64,         $ 223.64
                           66, 68, 6A, 6C, 6N, 6P, 6R,
                           6V, 6H
          ----------------------------------------------------------------------
          Aged             10,14,16,18, 1H                     $ 160.60
          ----------------------------------------------------------------------
          Child            03, 04, 4A, 4C, 4K, 5K, 45,         $  89.04
                           82, 7A, 7J, 8R
          ----------------------------------------------------------------------
          Adult            86                                  $ 843.25
          ----------------------------------------------------------------------
          Aids                                                 $ 847.95
          Beneficiary
          ----------------------------------------------------------------------

                                        3

<PAGE>

                                                MOLINA HEALTHCARE OF CALIFORNIA,
                                                  DBA: MOLINA
                                                 95-23637 A-08

          For the period 10/01/00 - 9/30/01                 San Bernardino
          ----------------------------------------------------------------------
          Groups          Aid Codes                            Rate
          ----------------------------------------------------------------------
          Family          01, OA, 02, 08, 30, 32, 33,          $  82.56
                          34, 35, 38, 39, 40, 42, 47,
                          54, 59, 72, 3A, 3C, 3E, 3G,
                          3H, 3L, 3M, 3N, 3P, 3R,
                          3U, 4F, 4G, 4M, 5X, 7X, 8P
          ----------------------------------------------------------------------
          Disabled        20, 24, 26, 28, 36, 60, 64,          $ 223.41
                          66, 68, 6A, 6C, 6N, 6P, 6R,
                          6V, 6H
          ----------------------------------------------------------------------
          Aged            10, 14, 16, 18, 1H                   $ 151.60
          ----------------------------------------------------------------------
          Child           03, 04, 4A, 4C, 4K, 5K, 45,          $  93.48
                          82, 7A, 7J, 8R
          ----------------------------------------------------------------------
          Adult           86                                   $ 922.71
          ----------------------------------------------------------------------
          Aids                                                 $ 891.15
          Beneficiary
          ----------------------------------------------------------------------

          If DHS creates a new aid code that is split or derived from an
          existing aid code covered under this Contract, and the aid code has a
          neutral revenue effect for the Contractor, then the split aid code
          will automatically be included in the same aid code category as is the
          original aid code covered under this Contract. Contractor agrees to
          continue providing covered service to the Members at the monthly
          capitation rate specified for the original aid code. DHS shall confirm
          all aid code splits, and the rates of payment for such new aid codes,
          in writing to Contractor as soon as practicable after such aid code
          splits occur."

3.   The effective date of this amendment is September 1, 2001.

                                        4

<PAGE>

STATE OF CALIFORNIA
STANDARD AGREEMENT AMENDMENT
TO [ILLEGIBLE] A (REV [ILLEGIBLE])

<TABLE>
<S>                                                   <C>                 <C>
[X] CHECK HERE IF ADDITIONAL PAGES ARE ATTACHED 1 Pages   AGREEMENT NUMBER   AMENDMENT NUMBER
                                                -         95-23637           9
=============================================================================================
</TABLE>

1.   This Agreement is entered into between the State Agency and Contractor
     named below:

--------------------------------------------------------------------------------
     STATE AGENCY'S NAME

     California Department of Health Services
--------------------------------------------------------------------------------
     CONTRACTOR'S NAME

     Molina Healthcare of California, dba: Molina
--------------------------------------------------------------------------------
2.   The term of this
     Agreement is  4-2-96 through 3-31-04
--------------------------------------------------------------------------------
3.   The maximum amount     $794,653,310
     of this Agreement is:  Seven hundred ninety-four million, six hundred
                            fifty-three thousand, three hundred ten
--------------------------------------------------------------------------------
4.   The parties mutually agree to this amendment as follows. All actions noted
     below are by this reference made a part of the Agreement and incorporated
     herein:

     I.   The effective date of this Amendment is September 1, 2002.

    II.   The purpose of this amendment is to extend the term of the contract
          for one-year, adjust the encumbrance accordingly, add language, and
          update the list of drugs carved-out.

   III.   Article III - GENERAL TERMS AND CONDITIONS, Section 3.14, Term is
          amended to extend the term.

    IV.   Article V - PAYMENT PROVISIONS, Section 5.2 Amounts Payable, is
          amended to adjust the encumbrance.

     V.   Article VI - SCOPE OF WORK, Section 6.6.23, Subcontractor Services to
          Non-Plan Medi-Cal Beneficiaries, is amended to address subcontractors
          are not prohibited from Knox-Keene licensed health services plans.

    VI.   Attachments II and III, Excluded Drugs, is amended to add
          Psychotherapeutic and HIV & AIDS drugs.

          All other terms and conditions shall remain the same.

IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto.
<TABLE>
<S>                                                                               <C>
-------------------------------------------------------------------------------------------------------------------------
                                   CONTRACTOR                                                      CONTRACTOR
--------------------------------------------------------------------------------       Department of General Services
CONTRACTOR'S NAME (if other than an individual, state whether a corporation,                         Use Only
                  partnership, etc.)

Molina Healthcare of California, dba: Molina
--------------------------------------------------------------------------------
BY (Authorized Signature)                              DATE SIGNED (Do not type)

/s/                                                           8/2/02
--------------------------------------------------------------------------------
PRINTED NAME AND TITLE OF PERSON SIGNING
George Goldstein, President/CEO
--------------------------------------------------------------------------------
ADDRESS
One Golden Shore Dr., Long Beach, CA 90802
--------------------------------------------------------------------------------
                              STATE OF CALIFORNIA
--------------------------------------------------------------------------------
AGENCY NAME
California Department of Health Services
--------------------------------------------------------------------------------
BY (Authorized Signature)                            DATE SIGNED (Do not type)
/s/ NADINE FUJITA ROH for                                   09/06/02
--------------------------------------------------------------------------------
PRINTED NAME AND TITLE OF PERSON SIGNING              Nadine Fujita Roh, Chief         X  Exempt per W&I Code 14087.4
Edward Stahlberg, Chief, Program Support Branch           CMU Production
--------------------------------------------------------------------------------
ADDRESS
[ILLEGIBLE] 3rd. Street, Rm. 455, P.O. Box 942732, Sacramento, CA 94234-7320
========================================================================================================================
</TABLE>

<PAGE>

                                                Molina Healthcare of California,
                                                                     dba: Molina
                                                                    95-23637 A-9

1.   Article III - GENERAL TERMS AND CONDITIONS, Section 3.14, Term, is amended
     to read:

     "3.14 Term

          This Contract will become effective October 1, 1996, and will
          continue in full force and effect through March 31, 2004, subject
          to the provision of Article V, Section 5.2 and 5.10, because the State
          has currently appropriated and available for encumbrance only funs to
          cover cost through June 30, 2002."

2.   Article V - PAYMENT PROVISIONS, Section 5.2 Amounts Payable, is amended to
     read:

     "5.2 Amounts Payable

          The maximum amount payable for the 1995-96 Fiscal Year ending June 30,
          1996, will not exceed $32,080,630; the maximum amount payable for the
          1996-97 Fiscal Year ending June 30, 1997, will not exceed
          $194,472,680; the maximum amount payable for the 1997-98 Fiscal Year
          ending June 30, 1998, will not exceed $6,500,000; the maximum amount
          payable for the 1998-99 Fiscal Year ending June 30, 1999, will not
          exceed $80,000,000; the maximum amount payable for the 1999-00 Fiscal
          Year ending June 30, 2000, will not exceed $107,000,000; the maximum
          amount payable for the 2000-01 Fiscal Year ending June 30, 2001, will
          not exceed $107,000,000; the maximum amount payable for the 2001-02
          Fiscal Year ending June 30, 2002, will not exceed $107,000,000. Any
          requirement for performance by DHS and Contractor for the period of
          the Contract subsequent to June 30, 2002 will be dependent upon the
          purposes of this Contract. If funds become available for purposes of
          this Contract for future appropriations by the Legislature, the
          maximum amount payable for the 2002-03 Fiscal Year ending June 30,
          2003, will not exceed $90,200,000; the maximum amount payable for the
          2003-04 Fiscal Year ending June 30, 2004, will not exceed $70,400,000.
          The maximum amount payable for this Contract will not exceed
          $794,653,310."

                                       2

<PAGE>
                                                Molina Healthcare of California,
                                                                     dba: Molina
                                                                    95-23637 A-9

3.   Article VI - SCOPE OF WORK, Section 6.6.23, Subcontractor Services to
     Non-Plan Medi-Cal Beneficiaries, is amended to read:

     "6.6.23 Subcontractor Services to Non-Plan Medi-Cal Beneficiaries

          The Contractor will not prohibit any subcontractor from providing
          services to Medi-Cal beneficiaries who are not Members of Contractor's
          plan. Exclusivity requirements are not prohibited for subcontracting
          Knox-Keene Licensed health services plans."

<PAGE>

                                                Molina Healthcare of California,
                                                                     dba: Molina
                                                                    95-23627 A-9

Under Article II, DEFINITIONS, Section P, Covered Services, Subparagraph 19,
Attachment II, is amended to read:

                                  ATTACHMENT II

                EXCLUDED DRUGS FOR THE TREATMENT OF HIV AND AIDS

Generic Name
------------
Abacavir Sulfate
Abacavir Sulfate/Lamivudine/Zidovudine
Amprenavir
Indinavir Sulfate
Efavirenz
Lamivudine
Saquinavir
Lopinavir/Ritonavir
Ritonavir
Delavirdine Mesyiate
Saquinavir Mesyiate
Tenofovir Disoproxil Fumarate
Nelfinavir Mesyiate
Nevirapine
Stavudine
Zidovudine/Lamivudine

<PAGE>

                                                Molina Healthcare of California,
                                                                     dba: Molina
                                                                    95-23627 A-9

Under Article VI, SCOPE OF WORK, Section 6.7.3.3, Mental Health, Attachment III,
is amended to read:

                                  ATTACHMENT III

                        EXCLUDED PSYCHOTHERAPEUTIC DRUGS

Generic Name
------------

Amantadine HCL
Benztropine Mesylate
Biperiden HCL
Biperiden Lactate
Chlorpromazine HCL
Chlorprothixene
Clozapine
Fluphanazine Decanoate
Fluphanazine Enanthate
Fluphanazine HCL
Haloperidol
Haloperidol Deconoate
Haloperiodol Lactate
Isocarboxazid
Lithium Carbonate
Lithium Citrate
Lozapine HCL
Loxapine Succinate
Mesoridazine Besylate
Molindone HCL
Olanzapine
Perphenazine
Phenelzine Sulfate
Pimozide
Procyclidine HCL
Promazine HCL
Quetiapine
Risperidone
Thioridazine HCL
Thiothixene
Thiothixene HCL
Tranylcypromine Sulfate
Trifluoperazine HCL
Triflupromazine HCL
Trihexphenidyl HCL
Ziprasidone

<PAGE>

[LETTERHEAD OF DEPARTMENT OF HEALTH SERVICES]

                                   May 7, 1999                            [SEAL]

     John Molina, M.D.
     Molina Medical Centers, Inc.
     One Golden Shore
     Long Beach, CA 90802

     Dear Mr. Molina:

               In accordance with Article V, Section 5.5 of your Contract, the
     enclosed Change Order transmits Molina Medical Centers, Inc., annual
     capitation rates for the period October 1, 1998 to September 30,1999. The
     new rates will appear in your capitation rate beginning June 1999. A check
     for the difference between the old Contract rates and the new Contract
     rates, for the period October 1, 1998 until the new rates are reflected in
     your capitation payments will be mailed in approximately six (6) to eight
     (8) weeks.

               If you have any questions, please contact you contract manager.

                                                  Sincerely,

                                                  /s/ [illegible]     for
                                                  ------------------------------
                                                  Susanne M. Hughes
                                                  Acting Chief
                                                  Medi-Cal Managed Care Division

     Enclosures

<PAGE>

[LETTERHEAD OF DEPARTMENT OF HEALTH SERVICES]

     CHANGE ORDER NUMBER C1 to CONTRACT No. 95-23637: ADJUSTING THE ANNUAL
     CAPITATION RATE FOR THE PERIOD OCTOBER 1,1998 TO SEPTEMBER 30, 1999, BY
     CHANGING CONTRACT SECTIONS 5.3 CAPITATION RATES AND 5.4 CAPITATION RATES
     CONSTITUTE PAYMENT IN FULL. Issued May 7, 1999.

     1.   5.3  CAPITATION RATES

        RIVERSIDE COUNTY

        FOR THE PERIOD 07/01/95 - 05/31/96

        ------------------------------------------------------------------------
              GROUP                 AID CODES                            RATE
        ------------------------------------------------------------------------
         Family              01, 02, 08, 30, 32, 33, 35, 38, 39,      $  74.70
                             3A, 3C, 3P, 3R, 40, 42, 4C, 4K, 54,
                             59, 5K
        ------------------------------------------------------------------------
         Disabled            20, 24, 26, 28, 36, 60, 64, 66,          $ 181.61
                             68, 6A, 6C.
        ------------------------------------------------------------------------
         Aged                10, 14, 16, 18,                          $ 110.37
        ------------------------------------------------------------------------
         Child               03, 04, 45, 82                           $  68.51
        ------------------------------------------------------------------------
         Adult               86                                       $ 492.78
        ------------------------------------------------------------------------

        RIVERSIDE COUNTY

        FOR THE PERIOD 06/01/96 - 09/30/97

        ------------------------------------------------------------------------
              GROUP                 AID CODES                            RATE
        ------------------------------------------------------------------------
         Family              01, 02, 08, 30, 32, 33, 34, 35, 38, 39,  $   76.39
                             3A, 3C, 3P, 3R, 40, 42, 4C, 4K, 54,
                             59, 5K
        ------------------------------------------------------------------------
         Disabled            20, 24, 26, 28, 36, 60, 64, 66, 68,      $  178.77
                             6A, 6C,
        ------------------------------------------------------------------------
         Aged                10, 14, 16, 18,                          $  114.62
        ------------------------------------------------------------------------
         Child               03, 04, 45, 82                           $   67.74
        ------------------------------------------------------------------------
         Adult               86                                       $  509.94
        ------------------------------------------------------------------------

                                     1 of 4

<PAGE>

CHANGE ORDER C1
TO CONTRACT NO. 95-23637

        SAN BERNARDINO COUNTY

        FOR THE PERIOD 07/01/95 - 05/31/96

        ----------------------------------------------------------------------
              GROUP                 AID CODES                          RATE
        ----------------------------------------------------------------------
         Family              01, 02, 08, 30, 32, 33, 34, 35, 38,    $   70.01
                             39, 3A, 3C, 3P, 3R, 40, 42, 4C, 4K,
                             54, 59, 5K
        ----------------------------------------------------------------------
         Disabled            20, 24, 26, 28, 36, 60, 64, 66, 68,    $  177.15
                             6A, 6C.
        ----------------------------------------------------------------------
         Aged                10, 14, 16, 18,                        $  117.66
        ----------------------------------------------------------------------
         Child               03, 04, 45, 82                         $   67.91
        ----------------------------------------------------------------------
         Adult               86                                     $  536.02
        ----------------------------------------------------------------------

        SAN BERNARDINO COUNTY

        FOR THE PERIOD 06/01/96 - 09/30/97

        ----------------------------------------------------------------------
              GROUP                 AID CODES                          RATE
        ----------------------------------------------------------------------
         Family              01, 02, 08, 30, 32, 33, 34, 35, 38,    $   71.59
                             39, 3A, 3C, 3P, 3R, 40, 42, 4C, 4K,
                             54, 59, 5K
        ----------------------------------------------------------------------
         Disabled            20, 24, 26, 28, 36, 60, 64, 66, 68,    $  174.45
                             6A, 6C.
        ----------------------------------------------------------------------
         Aged                10, 14, 16, 18,                        $  121.76
        ----------------------------------------------------------------------
         Child               03, 04, 45, 82                         $   67.17
        ----------------------------------------------------------------------
         Adult               86                                     $  554.73
        ----------------------------------------------------------------------

        RIVERSIDE COUNTY

        FOR THE PERIOD 10/01/97 - 09/30/98

        ----------------------------------------------------------------------
              GROUP                 AID CODES                          RATE
        ----------------------------------------------------------------------
         Family              01, 0A, 02, 08, 30, 32, 3G, 33, 3H,    $   75.91
                             34, 35, 38, 39, 3A, 3C, 3N, 3P, 3R,
                             3U, 3R, 40, 42, 54, 59, 7X;
                             CalWORKS: 3E, 3L, 3M
        ----------------------------------------------------------------------
         Disabled            20, 24, 26, 28, 36, 60, 64, 66,        $  204.96
                             68, 6A, 6C, 6N, 6P, 6R
        ----------------------------------------------------------------------
         Aged                10, 14, 16, 18.                        $  162.29
        ----------------------------------------------------------------------
         Child               03, 04, 45, 4C, 4K, 5K, 82             $   79.33
        ----------------------------------------------------------------------
         Adult               86                                     $  515.67
        ----------------------------------------------------------------------
         AIDS Beneficiary Rate                                      $ 1021.49
        ----------------------------------------------------------------------

                                     2 of 4

<PAGE>

CHANGE ORDER C1
TO CONTRACT NO. 95-23637

    SAN BERNARDINO COUNTY

    For the Period 10/01/97 - 09/30/98

<TABLE>
<CAPTION>
         GROUP                                     AID CODES                          RATE
    -----------------------------------------------------------------------------------------
    <S>                                     <C>                                     <C>
    Family                                   01, OA, 02, 08, 30, 32, 3G, 33, 3H,    $   74.04
                                             34, 35, 38, 39, 3A, 3C, 3N, 3P, 3R,
                                             3U, 3R, 40, 42, 54, 59, 7X;
                                             CalWORKS: 3E, 3L, 3M
    -----------------------------------------------------------------------------------------
    Disabled                                 20, 24, 26, 28, 36, 60, 64, 66, 68,    $  217.87
                                             6A, 6C, 6N, 6P, 6R
    -----------------------------------------------------------------------------------------
    Aged                                     10, 14, 16, 18,                        $  167.25

    -----------------------------------------------------------------------------------------
    Child                                    03, 04, 45, 4C, 4K, 5K, 82             $   79.42

    -----------------------------------------------------------------------------------------
    Adult                                    86                                     $  531.42
    -----------------------------------------------------------------------------------------
    AIDS Beneficiary Rate                                                           $ 1072.78
    -----------------------------------------------------------------------------------------
</TABLE>

    RIVERSIDE COUNTY

    For the Period 10/01/98 - 09/30/99

<TABLE>
<CAPTION>
          GROUP                                     AID CODES                         RATE
    -----------------------------------------------------------------------------------------
    <S>                                     <C>                                     <C>
    Family                                   01, OA, 02, 08, 30, 32, 3G, 33, 3H,    $   78.73
                                             34, 35, 38, 39, 3A, 3C, 3N, 3P, 3R,
                                             3U, 3R, 40, 54, 59, 7X;
                                             CalWORKS: 3E, 3L, 3M
    -----------------------------------------------------------------------------------------
    Disabled                                 20, 24, 26, 28, 36, 60, 64, 66,68,     $  222.61
                                             6A, 6C, 6N, 6P, 6R
    -----------------------------------------------------------------------------------------
    Aged                                     10, 14, 16, 18,                        $  160.47

    -----------------------------------------------------------------------------------------
    Child                                    03, 04, 45, 4C, 4K, 5K, 82             $   93.09

    -----------------------------------------------------------------------------------------
    Adult                                    86                                     $  706.77
    -----------------------------------------------------------------------------------------
    AIDS Beneficiary Rate                                                           $  962.42
    -----------------------------------------------------------------------------------------
</TABLE>

    SAN BERNARDINO COUNTY

    For the Period 10/01/98 - 09/30/99

<TABLE>
<CAPTION>
           GROUP                                     AID CODES                        RATE
    -----------------------------------------------------------------------------------------
     <S>                                     <C>                                     <C>
     Family                                  01, OA, 02, 08, 30, 32, 3G, 33, 3H,    $   80.48
                                             34, 35, 38, 39, 3A, 3C, 3N, 3P, 3R,
                                             3U, 3R, 40, 54, 59, 7X:
                                             CalWORKS: 3E, 3L, 3M
    -----------------------------------------------------------------------------------------
     Disabled                                20, 24, 26, 28, 36, 60, 64, 66, 68,    $  233.49
                                             6A, 6C, 6N, 6P, 6R
    -----------------------------------------------------------------------------------------
     Aged                                    10, 14, 16, 18,                        $  163.77
    -----------------------------------------------------------------------------------------
     Child                                   03, 04, 45, 4C, 4K, 5K, 82             $  106.43

    -----------------------------------------------------------------------------------------
     Adult                                   86                                     $  790.89
    -----------------------------------------------------------------------------------------
     AIDS Beneficiary Rate                                                          $  995.00
    -----------------------------------------------------------------------------------------
</TABLE>

                                     3 of 4

<PAGE>

CHANGE ORDER C1
TO CONTRACT NO. 95-23637

    In the future, DHS may be splitting existing aid codes into new aid codes.
    The new split aid codes will be in the same aid code group category as the
    original aid code. If DHS establishes new aid codes by splitting existing
    aid codes, Contractor agrees to accept Eligible Beneficiaries with these
    new aid codes as Members and to provide covered services to these Members
    at the monthly capitation rate specified for the original aid code. The
    Department shall confirm all aid code splits, and the rates of payment for
    such new aid codes, in writing to Contractors as soon as practicable after
    such aid code splits occur.

    All other terms, conditions, and provisions contained in Section 5.3 remain
    unchanged.

3.  5.4 CAPITATION RATES CONSTITUTE PAYMENT IN FULL.

    The actuarial basis for the determination of the capitation payment rates is
    outlined in Attachment 1 (consisting of 12 pages).

    All other terms, conditions, and provisions contained in Section 5.4 remain
    unchanged.

                                     4 of 4

<PAGE>

<TABLE>
<S>                         <C>                                 <C>          <C>                 <C>                <C>
Plan Name:                  Molina Medical Center               Plan #:      355                 Date:              04-May-99
County:                     Riverside                           Plan Type:   Commercial Plan     Base Period:       FY 96/97
Aid Code Grouping:          Family
</TABLE>

<TABLE>
<S>                                                          <C>                                                 <C>
                                                                                                                 CI for 95-23637
The Rate Period is October 1, 1998 to September 30, 1999     Capitation Payments at the Beginning of the Month   Attachment 1
</TABLE>

 Coverages
--------------------------------------------------------------------------------
   CCS Indicated Claims                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Outpatient Services                  NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Pharmacy Costs                       NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Hospital Inpatient Services          NOT Covered by the Plan
--------------------------------------------------------------------------------
   Eyewear                                            NOT Covered by the Plan
--------------------------------------------------------------------------------
   Heroin Detoxification                              NOT Covered by the Plan
--------------------------------------------------------------------------------
   AIDS Waiver Services                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   Adult Day Health Care                              NOT Covered by the Plan
--------------------------------------------------------------------------------
   Chiropractor/Acupuncture                           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Local Education Authority                          NOT Covered by the Plan
--------------------------------------------------------------------------------
   Alphafeto Protein Testing                          NOT Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care for month of entry plus one         Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care after month of entry plus one       NOT Covered by the Plan
--------------------------------------------------------------------------------
   Special AIDS drugs                                 NOT Covered by the Plan
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                              Hospital     Hospital    Long Term
Rate Calculation                      Physician   Pharmacy   Inpatient   Outpatient         Care
<S>                                    <C>        <C>         <C>         <C>           <C>
1.   Average Cost Per Unit             $  69.46   $  19.88    $ 864.71    $   16.16     $ 812.04
2.   Units per Eligible                   4.014      4.683       0.373        2.146        0.004
3.   Addt'l Capitation Amts.           $   0.37   $   0.05    $   4.62    $    0.01     $   0.00
     Cost per Elig. per Mo.            $  23.60   $   7.81    $  31.50         2.90     $   0.27
 Adjustments
     a. Demographics                      1.004      0.976       1.023        1.002        1.000
     b. Area                              1.043      1.000       1.000        1.000        1.000
     c. Coverages                         0.975      0.992       0.968        0.956        0.995
     d. Interest                          0.995      0.995       0.995        0.995        0.995
Adjusted Base Cost                     $  23.97   $   7.52    $  31.04    $    2.76     $   0.27
3.   Legislative Adjs.                    1.053      1.053       0.998        1.023        1.141
4.   Trend Adjustments
     a. Cost per Unit                     1.000      1.100       1.050        1.000        1.000
     b. Units per Eligible                0.950      1.000       1.050        0.950        1.050
Projected Cost per Eligible            $  23.98   $   8.71    $  34.15    $    2.68     $   0.32
5.   Stop Loss Reins.                              Amount     $      0                    Rate
6.   CHDP
7.   Fee-for-Service Adj.
Capitation Rate With FQHC Increment               $  78.73                $   78.41
                                                  /Without
<CAPTION>

                                                       FQHC
Rate Calculation                        Other      FFSE   Increment     Total
<S>                                   <C>       <C>         <C>       <C>
1.   Average Cost Per Unit            $ 20.09   $ 68.39     $ 24.41
2.   Units per Eligible                 3.532     0.168       0.168
3.   Addt'l Capitation Amts.          $  0.00   $  0.00     $  0.00
     Cost per Elig. per Mo.           $  5.91   $  0.96     $  0.34   $ 73.29
 Adjustments
     a. Demographics                    0.985     0.994       0.994
     b. Area                            1.000     1.000       1.000
     c. Coverages                       0.833     0.935       0.935
     d. Interest                        0.995     0.995       0.995
Adjusted Base Cost                    $  4.82   $  0.89     $  0.31   $ 71.58
3.   Legislative Adjs.                  1.046     1 027       1.027
4.   Trend Adjustments
     a. Cost per Unit                   0.950     1.000       1.000
     b. Units per Eligible              1.050     1.000       1.000
Projected Cost per Eligible           $  5.03   $  0.91     $  0.32   $ 76.10
5.   Stop Loss Reins.                     0.0%             Premium       0.00
6.   CHDP                                                                5.06
7.   Fee-for-Service Adj.                 3.0%                          (2.43)
Capitation Rate With FQHC Increment
</TABLE>

                                    Page 1 of 12

<PAGE>

<TABLE>
<S>                         <C>                                 <C>          <C>                 <C>                <C>
Plan Name:                  Molina Medical Center               Plan #:      355                 Date:              04-May-99
County:                     Riverside                           Plan Type:   Commercial Plan     Base Period:       FY 96/97
Aid Code Grouping:          Aged
</TABLE>

<TABLE>
<S>                                                          <C>                                                 <C>
                                                                                                                 CI for 95-23637
The Rate Period is October 1, 1998 to September 30, 1999     Capitation Payments at the Beginning of the Month   Attachment 1
</TABLE>

Coverages
-----------------------------------------------------------------------------
   CCS Indicated Claims                               NOT Covered by the Plan
-----------------------------------------------------------------------------
   Mental Health Outpatient Services                  NOT Covered by the Plan
-----------------------------------------------------------------------------
   Mental Health Pharmacy Costs                       NOT Covered by the Plan
-----------------------------------------------------------------------------
   Mental Health Hospital Inpatient Services          NOT Covered by the Plan
-----------------------------------------------------------------------------
   Eyewear                                            NOT Covered by the Plan
-----------------------------------------------------------------------------
   Heroin Detoxification                              NOT Covered by the Plan
-----------------------------------------------------------------------------
   AIDS Waiver Services                               NOT Covered by the Plan
-----------------------------------------------------------------------------
   Adult Day Health Care                              NOT Covered by the Plan
-----------------------------------------------------------------------------
   Chiropractor/Acupuncture                           NOT Covered by the Plan
-----------------------------------------------------------------------------
   Local Education Authority                          NOT Covered by the Plan
-----------------------------------------------------------------------------
   Alphafeto Protein Testing                          NOT Covered by the Plan
-----------------------------------------------------------------------------
   Long Term Care for month of entry plus one         Covered by the Plan
-----------------------------------------------------------------------------
   Long Term Care after month of entry plus one       NOT Covered by the Plan
-----------------------------------------------------------------------------
   Special AIDS drugs                                 NOT Covered by the Plan
-----------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                Hospital     Hospital   Long Term
 Rate Calculation                      Physician    Pharmacy   Inpatient   Outpatient        Care
<S>                                      <C>        <C>        <C>          <C>          <C>
1.   Average Cost Per Unit               $ 48.90    $  32.71   $  287.24    $   10.02    $  77.33
2.   Units per Eligible                    4.472      21.914       1.265        3.306       2.016
3.   Addt'l Capitation Amts.             $  1.29    $   0.00   $    7.41    $    0.02    $   0.00
     Cost per Elig. per Mo.              $ 19.51    $  59.73   $   37.69    $    2.78    $  12.99
Adjustments
     a. Demographics                       0.955       1.019       0.957        0.970       1.039
     b. Area                               1.043       1.000       1.000        1.000       1.000
     c. Coverages                          0.981       0.996       0.997        0.986       0.997
     d. Interest                           0.995       0.995       0.995        0.995       0.995
Adjusted Base Cost                       $ 18.97    $  60.32   $   35.78    $    2.65    $  13.39
3.   Legislative Adjs.                     0.939       1.049       0.926        0.931       1.140
4.   Trend Adjustments
     a. Cost per Unit                      1.100       1.100       1.100        1.050       1.000
     b. Units per Eligible                 1.100       1.155       1.100        1.100       1.000
Projected Cost per Eligible              $ 21.55    $  80.39   $   40.09    $    2.85    $  15.26
5    Stop Loss Reins.                                 Amount   $       0                     Rate
6.   CHDP
7.   Fee for Service Adj.
Capitation Rate With FQHC Increment                 $ 160.47                $  160.47
                                                    /Without

<CAPTION>
 Rate Calculation                                       FQHC
                                         Other      FFSE   Increment      Total
<S>                                   <C>        <C>        <C>        <C>
1.   Average Cost Per Unit            $   6.41   $ 28.59    $  0.00
2.   Units per Eligible                 12.862     0.132      0.132
3.   Addt'l Capitation Amts.          $   0.00   $  0.00    $  0.00
     Cost per Elig. per Mo.           $   6.87   $  0.31    $  0.00    $ 139.88
Adjustments
     a. Demographics                     1,025     0.970      0.970
     b. Area                             1.000     1.000      1.000
     c. Coverages                        0.791     0.603      0.603
     d. Interest                         0.995     0.995      0.995
Adjusted Base Cost                    $   5.54   $  0.18    $  0.00    $ 136.83
3.   Legislative                         0.927     0.926      0.926
4.   Trend Adjustments
     a. Cost per Unit                    1.050     1.000      1.000
     b. Units per Eligible               0.950     1.000      1.000
Projected Cost per Eligible           $   5.12   $  0.17    $  0.00    $ 165.43
5    Stop Loss Reins.                      0.0%             Premium        0.00
6.   CHDP                                                                  0.00
7.   Fee for Service Adj.                 -3.0%                           (4.96)
Capitation Rate With FQHC Increment
</TABLE>

                                   Page 2 of 12

<PAGE>

<TABLE>
<S>                         <C>                                 <C>          <C>                 <C>                <C>
Plan Name:                  Molina Medical Center               Plan #:      355                 Date:              04-May-99
County:                     Riverside                           Plan Type:   Commercial Plan     Base Period:       FY 96/97
Aid Code Grouping:          Disabled
</TABLE>

<TABLE>
<S>                                                          <C>                                                 <C>
                                                                                                                 CI for 95-23637
The Rate Period is October 1, 1998 to September 30, 1999     Capitation Payments at the Beginning of the Month   Attachment 1
</TABLE>

Coverages
----------------------------------------------------------------------------
   CCS Indicated Claims                             NOT Covered by the Plan
----------------------------------------------------------------------------
   Menial Health Outpatient Services                NOT Covered by the Plan
----------------------------------------------------------------------------
   Mental Health Pharmacy Costs                     NOT Covered by the Plan
----------------------------------------------------------------------------
   Mental Health Hospital Inpatient Services        NOT Covered by the Plan
----------------------------------------------------------------------------
   Eyewear                                          NOT Covered by the Plan
----------------------------------------------------------------------------
   Heroin Detoxification                            NOT Covered by the Plan
----------------------------------------------------------------------------
   AIDS Waiver Services                             NOT Covered by the Plan
----------------------------------------------------------------------------
   Adult Day Health Care                            NOT Covered by the Plan
----------------------------------------------------------------------------
   Chiropractor/Acupuncture                         NOT Covered by the Plan
----------------------------------------------------------------------------
   Local Education Authority                        NOT Covered by the Plan
----------------------------------------------------------------------------
   Alphafeto Protein Testing                        NOT Covered by the Plan
----------------------------------------------------------------------------
   Long Term Care for month of entry plus one       Covered by the Plan
----------------------------------------------------------------------------
   Long Term Care after month of entry plus one     NOT Covered by the Plan
----------------------------------------------------------------------------
   Special AIDS drugs                               NOT Covered by the Plan
----------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                Hospital     Hospital    Long Term
Rate Calculation                      Physician     Pharmacy   Inpatient   Outpatient         Care
<S>                                   <C>           <C>        <C>         <C>           <C>
1.   Average Cost Per Unit            $   46.41     $  39.70   $  485.15   $   12.37     $  139.87
2.   Units per Eligible                   6.873       26.861       1.556       5.050         0.459
3.   Addt'l Capitation Amts.          $    2.96     $   0.09   $    9.89   $    0.02     $    0.00
     Cost per Elig. per Mo.           $   29.54     $  88.96   $   72.80   $    5.23     $    5.35
Adjustments
     a. Demographics                      0.983        0.989       0.981       0.998         1.000
     b. Area                              1.043        1.000       1.000       1.000         1.000
     c. Coverages                         0.900        0.875       0.920       0.973         0.995
     d. Interest                          0.995        0.995       0.995       0.995         0.995
Adjusted Base Cost                    $   27.12     $  76.60   $   65.37   $    5.05     $    5.30
3.   Legislative Adjs.                    0.941        1.043       0.919       0.931         1.130
4.   Trend Adjustments
     a. Cost per Unit                     1.000        1.100       1.050       1.000         1.100
     b. Units per Eligible                1.100        1.210       1.050       1.045         0.950
Projected Cost per Eligible           $   28.07     $ 106.34   $   66.23   $    4.91     $    6.26
5    Stop Loss Reins.                                Amount    $       0                    Rate
6    CHDP
7.   Fee-for-Service Adj.
Capitation Rate With FQHC Increment                 $ 222.61               $  222.61
                                                    /Without

<CAPTION>
                                                        FQHC
Rate Calculation                         Other       FFSE  Increment      Total
<S>                                   <C>         <C>      <C>         <C>
1.   Average Cost Per Unit            $  10.16    $ 66.52  $    0.00
2.   Units per Eligible                 21.959      0.216      0.216
3.   Addt'l Capitation Amts.          $   0.00    $  0.00  $    0.00
     Cost per Elig. per Mo.           $  18.59    $  1.20  $    0.00   $ 221.67
Adjustments
     a. Demographics                     1.015      0.987      0.987
     b. Area                             1.000      1.000      1.000
     c. Coverages                        0.878      0.863      0.883
     d. Interest                         0.995      0.995      0.995
Adjusted Base Cost                    $  16.48    $  1.02  $    0.00   $ 196.94

3.   Legislative Adjs.                   0.923      0.932      0.932
4.   Trend Adjustments
     a. Cost per Unit                    1.100      1.000      1.000
     b. Units per Eligible               1.000      1.000      1.000
Projected Cost per Eligible           $  16.73    $  0.95  $    0.00   $ 229.49
5    Stop Loss                             0.0%             Premium        0.00
6    CHDP                                                                  0.00
7.   Fee for Service Adj.                 -3.0%                           (6.88)
Capitation Rate With FQHC Increment
</TABLE>

                                   Page 3 of 12

<PAGE>

<TABLE>
<S>                         <C>                                 <C>          <C>                 <C>                <C>
Plan Name:                  Molina Medical Center               Plan #:      355                 Date:              04-May-99
County:                     Riverside                           Plan Type:   Commercial Plan     Base Period:       FY 96/97
Aid Code Grouping:          Child
</TABLE>

<TABLE>
<S>                                                         <C>                                                  <C>
                                                                                                                 CI for 95-23637
The Rate Period is October 1,1998 to September 30, 1999     Capitation Payments at the Beginning of the Month    Attachment 1
</TABLE>

Coverages
-------------------------------------------------------------------------------
   CCS Indicated Claims                             NOT Covered by the Plan
-------------------------------------------------------------------------------
   Menial Health Outpatient Services                NOT Covered by the Plan
-------------------------------------------------------------------------------
   Mental Hearth Pharmacy Costs                     NOT Covered by the Plan
-------------------------------------------------------------------------------
   Mental Health Hospital Inpatient Services        NOT Covered by the Plan
-------------------------------------------------------------------------------
   Eyewear                                          NOT Covered by the Plan
-------------------------------------------------------------------------------
   Heroin Detoxification                            NOT Covered by the Plan
-------------------------------------------------------------------------------
   AIDS Waiver Services                             NOT Covered by the Plan
-------------------------------------------------------------------------------
   Adult Day Health Care                            NOT Covered by the Plan
-------------------------------------------------------------------------------
   Chiropractor/Acupuncture                         NOT Covered by the Plan
-------------------------------------------------------------------------------
   Local Education Authority                        NOT Covered by the Plan
-------------------------------------------------------------------------------
   Alphafeto Protein Testing                        NOT Covered by the Plan
-------------------------------------------------------------------------------
   Long Term Care for month of entry plus one       Covered by the Plan
-------------------------------------------------------------------------------
   Long Term Care after month of entry plus one     NOT Covered by the Plan
-------------------------------------------------------------------------------
   Special AIDS drugs                               NOT Covered by the Plan
-------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Rate Calculation                                              Hospital     Hospital    Long Term
                                      Physician   Pharmacy   Inpatient   Outpatient         Care

<S>                                     <C>       <C>        <C>           <C>          <C>
1.   Average Cost Per Unit              $ 67.42   $  13.64   $  889.41     $  16.21     $ 469.38
2.   Units per Eligible                   3.999      3.411       0.465        1.516        0.007
3.   Addt'l Capitation Amts.            $  0.23   $   0.03   $    2.90     $   0.00     $   0.00
     Cost per Elig. per Mo.             $ 22.70   $   3.91   $   37.36     $   2.05     $   0.27
Adjustments
     a. Demographics                      1.181      1.019       1.321        1.114        1.000
     b. Area                              1.043      1.000       1.000        1.000        1.000
     c. Coverages                         0.974      0.984       0.952        0.973        0.996
     d. Interest                          0.995      0.995       0.995        0.995        0.995
Adjusted Base Cost                      $ 27.10   $   3.90   $   46.75     $   2.21     $   0.27
3.   Legislative Adjs.                    1.076      1.047       0.999        1.024        1.134
4.   Trend Adjustments
     a. Cost per Unit                     1.000      1.100       1.050        1.000        1.000
     b. Units per Eligible                0.950      1.000       1.050        0.950        1.050
Projected Cost per Eligible             $ 27.70   $   4.49   $   51.49     $   2.15     $   0.32
5.   Stop Loss Reins.                              Amount    $       0                    Rate
6.   CHDP
7.   Fee-for-Service Adj.
Capitation Rate With FQHC Increment               $  93.09                 $  92.75
                                                  /Without
<CAPTION>
Rate Calculation                                      FQHC
                                         Other       FFSE    Increment    Total
<S>                                    <C>         <C>         <C>       <C>
1.   Average Cost Per Unit            $  20.69    $ 68.39      $ 24.41
2.   Units per Eligible                  1.958      0.168        0.168
3.   Addt'l Capitation Amts.          $   0.00    $  0.00      $  0.00
     Cost per Elig. per Mo.           $   3.38    $  0.96      $  0.34   $  70.97
Adjustments
     a. Demographics                     1.165      1.003        1.003
     b. Area                             1.000      1.000        1.000
     c. Coverages                        0.815      0.970        0.970
     d. Interest                         0.995      0.995        0.995
Adjusted Base Cost                    $   3.19    $  0.93      $  0.33   $  84.68
3.   Legislative Adjs.                   1.090      1.031        1.031
4.   Trend Adjustments
     a. Cost per Unit                    0.950      1.000        1.000
     b. Units per Eligible               1.050      1.000        1.000
Projected Cost per Eligible           $   3.47    $  0.96      $  0.34   $  90.92
5.   Stop Loss Reins.                      0.0%               Premium        0.00
6.   CHDP                                                                $   5.04
7.   Fee-for-Service Adj.                 -3.0%                             (2.87)
Capitation Rate With FQHC Increment
</TABLE>

                                    Page 4 of 12

<PAGE>

<TABLE>
<S>                         <C>                                 <C>          <C>                 <C>                <C>
Plan Name:                  Molina Medical Center               Plan #:      355                 Date:              04-May-99
County:                     Riverside                           Plan Type:   Commercial Plan     Base Period:       FY 96/97
Aid Code Grouping:          Adult
</TABLE>

<TABLE>
<S>                                                         <C>                                                  <C>
                                                                                                                 CI for 95-23637
The Rate Period is October 1,1998 to September 30, 1999     Capitation Payments at the Beginning of the Month    Attachment 1

</TABLE>

Coverages
--------------------------------------------------------------------------------
   CCS Indicated Claims                             NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Outpatient Services                NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Pharmacy Costs                     NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Hospital Inpatient Services        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Eyewear                                          NOT Covered by the Plan
--------------------------------------------------------------------------------
   Heroin Detoxification                            NOT Covered by the Plan
--------------------------------------------------------------------------------
   AIDS Waiver Services                             NOT Covered by the Plan
--------------------------------------------------------------------------------
   Adult Day Health Care                            NOT Covered by the Plan
--------------------------------------------------------------------------------
   Chiropractor/Acupuncture                         NOT Covered by the Plan
--------------------------------------------------------------------------------
   Local Education Authority                        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Alphafeto Protein Testing                        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care for month of entry plus one       Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care after month of entry plus one     NOT Covered by the Plan
--------------------------------------------------------------------------------
   Special AIDS drugs                               NOT Covered by the Plan
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Rate Calculation                                                Hospital     Hospital    Long Term
                                      Physician     Pharmacy   Inpatient   Outpatient         Care
<S>                                   <C>           <C>        <C>         <C>           <C>
1.   Average Cost Per Unit            $   90.48     $  17.11   $  964.66   $    15.76    $  812.04
2.   Units per Eligible                  21.383        5.818       5.446        4.679        0.000
3.   Addt'l Capitation Amts.          $    0.37     $   0.06   $   35.62   $     0.08    $    0.00
     Cost per Elig. per Mo.           $  161.60     $   8.36   $  473.41   $     6.23    $    0.00
Adjustments
     a. Demographics                      1.000        1.000       1.000        1.000        1.000
     b. Area                              1.043        1.000       1.000        1.000        1.000
     c. Coverages                         0.999        0.999       0.999        0.989        1.000
     d. Interest                          0.995        0.995       0.995        0.995        0.995
Adjusted Base Cost                    $  167.54     $   8.31   $  470.57   $     6.13    $    0.00
3    Legislative Adjs.                    1.029        1.054       1.000        1.022        1.102
4.   Trend Adjustments
     a. Cost per Unit                     1.000        1.100       1.050        1.000        1.000
     b. Units per Eligible                0.950        1.000       1.050        0.950        1.050
Projected Cost per Eligible           $  163.78     $   9.63   $  518.60   $     5.95    $    0.00
5.   Stop Loss Reins.                                Amount    $       0                    Rate
6.   CHDP
7.   Fee-for-Service Adj.
Capitation Rate With FQHC Increment                 $ 706.77               $   705.26
                                                    /Without
<CAPTION>
Rate Calculation                                           FQHC
                                            Other       FFSE   Increment      Total
<S>                                      <C>        <C>          <C>       <C>
1.   Average Cost Per Unit               $  36.13   $  68.39     $ 24.41
2.   Units per Eligible                    10.172      0.735       0.735
3.   Addt'l Capitation Amts.             $   0.00   $   0.00     $  0.00
     Cost per Elig. per Mo.              $  30.63   $   4.19     $  1.50   $ 685.92
Adjustments
     a. Demographics                        1.000      1.000       1.000
     b. Area                                1.000      1.000       1.000
     c. Coverages                           0.809      0.995       0.995
     d. Interest                            0.995      0.995       0.995
Adjusted Base Cost                       $  24.66   $   4.15     $  1.49   $ 682.85
3    Legislative Adjs.                      1.004      1.015       1.015
4.   Trend Adjustments
     a. Cost per Unit                       0.950      1.000       1.000
     b. Units per Eligible                  1.050      1.000       1.000
Projected Cost per Eligible              $  24.70   $   4.21     $  1.51   $ 728.58
5.   Stop Loss Reins.                         0.0%              Premium        0.00
6.   CHDP                                                                      0.00
7.   Fee-for-Service Adj.                    -3.0%                           (21.81)
Capitation Rate With FQHC Increment
</TABLE>

                                   Page 5 of 12

<PAGE>
<TABLE>
<S>                         <C>                                 <C>          <C>                 <C>                <C>
Plan Name:                  Molina Medical Center               Plan #:      355                 Date:              04-May-99
County:                     Riverside                           Plan Type:   Commercial Plan     Base Period:       FY 96/97
Aid Code Grouping:          AIDS
</TABLE>

<TABLE>
<S>                                                         <C>                                                  <C>
                                                                                                                 CI for 95-23637
The Rate Period is October 1,1998 to September 30, 1999     Capitation Payments at the Beginning of the Month    Attachment 1
</TABLE>

Coverages
--------------------------------------------------------------------------------
   CCS Indicated Claims                            NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Outpatient Services               NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Pharmacy Costs                    NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Hospital Inpatient Services       NOT Covered by the Plan
--------------------------------------------------------------------------------
   Eyewear                                         NOT Covered by the Plan
--------------------------------------------------------------------------------
   Heroin Detoxification                           NOT Covered by the Plan
--------------------------------------------------------------------------------
   AIDS Waiver Services                            NOT Covered by the Plan
--------------------------------------------------------------------------------
   Adult Day Health Care                           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Chiropractor/Acupuncture                        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Local Education Authority                       NOT Covered by the Plan
--------------------------------------------------------------------------------
   Alphafeto Protein Testing                       NOT Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care for month of entry plus one      Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care after month of entry plus one    NOT Covered by the Plan
--------------------------------------------------------------------------------
   Special AIDS drugs                              NOT Covered by the Plan
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                               Hospital     Hospital    Long Term
Rate Calculation                      Physician    Pharmacy   Inpatient   Outpatient         Care
<S>                                   <C>          <C>        <C>         <C>           <C>
1    Average Cost Per Unit            $   32.67    $ 126.04   $  485.15   $    13.79    $  139.87
2.   Units per Eligible                  26.305      74.792       3.169        9.882        0.000
3.   Addt'l Capitation Amts.          $    2.96    $   0.09   $    9.89   $     0.02    $    0.00
     Cost per Elig. per Mo.           $   74.57    $ 785.68   $  138.01   $    11.38    $    0.00
Adjustments
     a. Demographics                      1.000       1.000       1.000        1.000        1.000
     b. Area                              1.043       1.000       1.000        1.000        1.000
     c. Coverages                         0.918       0.648       0.957        0.992        0.998
     d. Interest                          0.995       0.995       0.995        0.995        0.995
Adjusted Base Cost                    $   71.04    $ 506.56   $  131.42   $    11.23    $    0.00
3.   Legislative Adjs.                    0.963       1.006       0.977        0.982        1.186
4.   Trend Adjustments
     a. Cost per Unit                     1.000       1.100       1.050        1.000        1.100
     b. Units per Eligible                1.100       1.210       1.050        1.045        0.950
Projected Cost per Eligible           $   75.25    $ 678.28   $  141.56   $    11.52    $    0.00
5    Stop Loss Reins.                               Amount    $       0                    Rate
6.   CHDP
7.   Fee-for-Service Adj.
Capitation Rate With FQHC Increment                $ 962.42               $   962.42
                                                   /Without
<CAPTION>
                                                          FQHC
Rate Calculation                            Other      FFSE   Increment        Total
<S>                                      <C>        <C>       <C>         <C>
1    Average Cost Per Unit               $  42.30   $ 66.52   $  0.00
2.   Units per Eligible                    36.392     0.628     0.628
3.   Addt'l Capitation Amts.             $   0.00   $  0.00   $  0.00
     Cost per Elig. per Mo.              $ 128.28   $  3.46   $  0.00     $ 1,141.38
Adjustments
     a. Demographics                        1.000     1.000     1.000
     b. Area                                1.000     1.000     1.000
     c. Coverages                           0.599     0.951     0.951
     d. Interest                            0.995     0.995     0.995
Adjusted Base Cost                       $  76.46   $  3.29   $  0.00     $   800.00
3.   Legislative Adjs.                      0.979     0.984     0.984
4.   Trend Adjustments
     a. Cost per Unit                       1.100     1.000     1.000
     b. Units per Eligible                  1.000     1.000     1.000
Projected Cost per Eligible              $  82.34   $  3.24   $  0.00     $   992.19
5    Stop Loss Reins.                         0.0%             Premium          0.00
6.   CHdP                                                                       0.00
7.   Fee-for-Service Adj.                    -3.0%                             29.77
Capitation Rate With FQHC Increment
</TABLE>

                                  Page 6 of 12

<PAGE>

<TABLE>
<S>                         <C>                                 <C>           <C>                <C>                <C>
Plan Name:                  Molina Medical Center               Plan #:       356                Date:              04-May-99
County:                     San Bernardino                      Plan Type:    Commercial Plan    Base Period:       FY 96/97
Aid Code Grouping:          Family
</TABLE>

<TABLE>
<S>                                                         <C>                                                  <C>
                                                                                                                 CI for 95-23637
The Rate Period is October 1,1998 to September 30, 1999     Capitation Payments at the Beginning of the Month    Attachment 1
</TABLE>

Coverages
--------------------------------------------------------------------------------
   CCS Indicated Claims                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Outpatient Services                  NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Pharmacy Costs                       NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Hospital Inpatient Services          NOT Covered by the Plan
--------------------------------------------------------------------------------
   Eyewear                                            NOT Covered by the Plan
--------------------------------------------------------------------------------
   Heroin Detoxification                              NOT Covered by the Plan
--------------------------------------------------------------------------------
   AIDS Waiver Services                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   Adult Day Health Care                              NOT Covered by the Plan
--------------------------------------------------------------------------------
   Chiropractor/Acupuncture                           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Local Education Authority                          NOT Covered by the Plan
--------------------------------------------------------------------------------
   Alphafeto Protein Testing                          NOT Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care for month of entry plus one         Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care after month of entry plus one       NOT Covered by the Plan
--------------------------------------------------------------------------------
   Special AIDS drugs                                 NOT Covered by the Plan
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                          Hospital     Hospital    Long Term
Rate Calculation                 Physician    Pharmacy   Inpatient   Outpatient         Care
<S>                              <C>          <C>        <C>          <C>          <C>
1.   Average Cost Per Unit       $   69.46    $  19.88   $  978.02    $   16.16    $  812.04
2.   Units per Eligible              4.050       4.683       0.373        2.146        0.004
3.   Addt'l Capitation Amts.     $    0.37    $   0.05   $    4.62    $    0.01    $    0.00
     Cost per Elig. per Mo.      $   23.81    $   7.81   $   35.02    $    2.90    $    0.27
Adjustments
     a. Demographics                 0.997       0.993       0.977        0.987        1.000
     b. Area                         1.043       1.000       1.000        1.000        1.000
     c. Coverages                    0.975       0.992       0.968        0.956        0.995
     d. Interest                     0.995       0.995       0.995        0.995        0.995
Adjusted Base Cost               $   24.02    $   7.65   $   32.95    $    2.72    $    0.27
3.   Legislative Adjs.               1.053       1.053       0.998        1.023        1.141
4.   Trend Adjustments
     a. Cost per Unit                1.000       1.100       1.050        1.000        1.000
     b. Units per Eligible           0.950       1.000       1.050        0.950        1.050
Projected Cost per Eligible      $   24.03    $   8.86   $   36.25    $    2.64    $    0.32
5.   Stop Loss Reins.                          Amount    $       0                    Rate
6.   CHDP
7.   Fee-for-Service Adj.
Capitation Rate With FQHC
 Increment                                    $  80.48                $   80.41
                                              /Without
<CAPTION>
                                                   FQHC
Rate Calculation                      Other     FFSE   Increment       Total
<S>                                <C>       <C>       <C>         <C>
1.   Average Cost Per Unit         $  20.09  $ 68.10   $  7.33
2.   Units per Eligible               3.532    0.132     0.132
3.   Addt'l Capitation Amts.       $   0.00  $  0.00   $  0.00
     Cost per Elig. per Mo.        $   5.91  $  0.75   $  0.08     $   76.55
Adjustments
     a. Demographics                  0.985    0.992     0.992
     b. Area                          1.000    1.000     1.000
     c. Coverages                     0.833    0.935     0.935
     d. Interest                      0.995    0.995     0.995
Adjusted Base Cost                 $   4.82  $  0.69   $  0.07     $   73.19
3.   Legislative Adjs.                1.046    1.027     1.027
4.   Trend Adjustments
     a. Cost per Unit                 0.950    1.000     1.000
     b. Units per Eligible            1.050    1.000     1.000
Projected Cost per Eligible        $   5.03  $  0.71   $  0.07     $   77.91
5.   Stop Loss Reins.                   0.0%            Premium         0.00
6.   CHDP                                                               5.06
7.   Fee-for-Service Adj.              -3.0%                           (2.49)
Capitation Rate With FQHC
 Increment
</TABLE>

                                    Page 7 of 12

<PAGE>

<TABLE>
<S>                         <C>                                 <C>           <C>                <C>                <C>
Plan Name:                  Molina Medical Center               Plan #:       356                Date:              04-May-99
County:                     San Bernardino                      Plan Type:    Commercial Plan    Base Period:       FY 96/97
Aid Code Grouping:          Aged
</TABLE>

<TABLE>
<S>                                                         <C>                                                  <C>
                                                                                                                 CI for 95-23637
The Rate Period is October 1,1998 to September 30, 1999     Capitation Payments at the Beginning of the Month    Attachment 1
</TABLE>

Coverages
-------------------------------------------------------------------------------
   CCS Indicated Claims                                NOT Covered by the Plan
-------------------------------------------------------------------------------
   Mental Health Outpatient Services                   NOT Covered by the Plan
-------------------------------------------------------------------------------
   Mental Health Pharmacy Costs                        NOT Covered by the Plan
-------------------------------------------------------------------------------
   Mental Health Hospital Inpatient Services           NOT Covered by the Plan
-------------------------------------------------------------------------------
   Eyewear                                             NOT Covered by the Plan
-------------------------------------------------------------------------------
   Heroin Detoxification                               NOT Covered by the Plan
-------------------------------------------------------------------------------
   AIDS Waiver Services                                NOT Covered by the Plan
-------------------------------------------------------------------------------
   Adult Day Health Care                               NOT Covered by the Plan
-------------------------------------------------------------------------------
   Chiropractor/Acupuncture                            NOT Covered by the Plan
-------------------------------------------------------------------------------
   Local Education Authority                           NOT Covered by the Plan
-------------------------------------------------------------------------------
   Alphafeto Protein Testing                           NOT Covered by the Plan
-------------------------------------------------------------------------------
   Long Term Care for month of entry plus one          Covered by the Plan
-------------------------------------------------------------------------------
   Long Term Care after month of entry plus one        NOT Covered by the Plan
-------------------------------------------------------------------------------
   Special AIDS drugs                                  NOT Covered by the Plan
-------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                          Hospital     Hospital    Long Term
Rate Calculation                 Physician    Pharmacy   Inpatient   Outpatient        Care
<S>                              <C>          <C>        <C>          <C>         <C>
1.   Average Cost Per Unit       $   48.90    $  32.71   $  316.16    $   10.02   $   77.33
2.   Units per Eligible              4.580      21.914       1.265        3.306       2.016
3.   Addt'l Capitation Amts.     $    1.29    $   0.00   $    7.41    $    0.02   $    0.00
     Cost per Elig. per Mo.      $   19.95    $  59.73   $   40.74    $    2.78   $   12.99
Adjustments
     a. Demographics                 0.963       1.014       0.962        0.975       1.027
     b. Area                         1.043       1.000       1.000        1.000       1.000
     c. Coverages                    0.981       0.996       0.997        0.986       0.997
     d. Interest                     0.995       0.995       0.995        0.995       0.995
Adjusted Base Cost               $   19.56    $  60.02   $   38.88    $    2.66   $   13.23
3.   Legislative Adjs.               0.939       1 049       0.926        0.931       1.140
4.   Trend Adjustments
     a. Cost per Unit                1.100       1.100       1.100        1.050       1.000
     b. Units per Eligible           1.100       1.155       1.100        1.100       1 000
     Projected Cost per          $   22.22    $  79.99   $   43.56    $    2.86   $   15.08
5.   Stop Loss Reins.                          Amount    $       0                    Rate
6.   CHDP
7.   Fee-for-Service Adj.
Capitation Rate With FQHC
 Increment                                    $ 163.77                $  163.77
                                              /Without
<CAPTION>
                                                   FQHC
Rate Calculation                    Other      FFSE    Increment       Total
<S>                              <C>        <C>          <C>        <C>
1.   Average Cost Per Unit       $   6.41   $ 50.63      $  0.00
2.   Units per Eligible            12.862     0.024        0.024
3.   Addt'l Capitation Amts.     $   0.00   $  0.00      $  0.00
     Cost per Elig. per Mo.      $   6.87   $  0.10      $  0.00    $ 143.16
Adjustments
     a. Demographics                1.013     0.979        0.979
     b. Area                        1.000     1.000        1.000
     c. Coverages                   0.791     0.603        0.603
     d. Interest                    0.995     0.995        0.995
Adjusted Base Cost               $   5.48   $  0.06      $  0.00    $ 139.89
3.   Legislative Adjs.              0.927     0.926        0.926
4.   Trend Adjustments
     a. Cost per Unit              1. 050     1.000        1.000
     b. Units per Eligible          0.950     1.000        1.000
Projected Cost per               $   5.07   $  0.06      $  0.00    $ 168.84
5.   Stop Loss Reins.                 0.0%              Premium         0.00
6.   CHDP                                                               0.00
7.   Fee-for-Service Adj.
Capitation Rate With FQHC            -3.0%                             (5.07)
 Increment
</TABLE>
                                    Page 8 of 12

<PAGE>

<TABLE>
<S>                         <C>                                 <C>           <C>                <C>                <C>
Plan Name:                  Molina Medical Center               Plan #:       356                Date:              04-May-99
County:                     San Bernardino                      Plan Type:    Commercial Plan    Base Period:       FY 96/97
Aid Code Grouping:          Disabled
</TABLE>

<TABLE>
<S>                                                         <C>                                                  <C>
                                                                                                                 CI for 95-23637
The Rate Period is October 1,1998 to September 30, 1999     Capitation Payments at the Beginning of the Month    Attachment 1
</TABLE>

Coverages
-----------------------------------------------------------------------------
   CCS Indicated Claims                               NOT Covered by the Plan
-----------------------------------------------------------------------------
   Mental Health Outpatient Services                  NOT Covered by the Plan
-----------------------------------------------------------------------------
   Mental Health Pharmacy Costs                       NOT Covered by the Plan
-----------------------------------------------------------------------------
   Mental Health Hospital Inpatient Services          NOT Covered by the Plan
-----------------------------------------------------------------------------
   Eyewear                                            NOT Covered by (he Plan
-----------------------------------------------------------------------------
   Heroin Detoxification                              NOT Covered by the Plan
-----------------------------------------------------------------------------
   AIDS Waiver Services                               NOT Covered by the Plan
-----------------------------------------------------------------------------
   Adult Day Health Care                              NOT Covered by the Plan
-----------------------------------------------------------------------------
   Chiropractor/Acupuncture                           NOT Covered by the Plan
-----------------------------------------------------------------------------
   Local Education Authority                          NOT Covered by the Plan
-----------------------------------------------------------------------------
   Alphafeto Protein Testing                          NOT Covered by the Plan
-----------------------------------------------------------------------------
   Long Term Care for month of entry plus one         Covered by the Plan
-----------------------------------------------------------------------------
   Long Term Care after month of entry plus one       NOT Covered by the Plan
-----------------------------------------------------------------------------
   Special AIDS drugs                                 NOT Covered by the Plan
-----------------------------------------------------------------------------

<TABLE>
<CAPTION>
Rate Calculation                                          Hospital     Hospital   Long Term
                                 Physician    Pharmacy   Inpatient   Outpatient        Care
<S>                              <C>          <C>        <C>         <C>          <C>
1.   Average Cost Per Unit       $   46.41    $  39.70   $  611.26   $   12.37    $  139.87
2.   Units per Eligible              6.969      26.861       1.556       5.050        0.459
3.   Addl'l Capitation Amts.     $    2.96    $   0.09   $    9.89   $    0.02    $    0.00
     Cost per Elig. per Mo.      $   29.91    $  88.96   $   89.15   $    5.23    $    5.35
Adjustments
     a. Demographics                 0.980       0.973       0.961       0.998        0.996
     b. Area                         1.043       1.000       1.000       1.000        1.000
     c. Coverages                    0.900       0.875       0.920       0.973        0.995
     d. Interest                     0.995       0.995       0.995       0.995        0.995
Adjusted Base Cost               $   27.38    $  75.36   $   78.43   $    5.05    $    5.28
3.   Legislative Adjs.               0.941       1.043       0.919       0.931        1.130
4.   Trend Adjustments
     a. Cost per Unit                1.000       1.100       1.050       1.000        1.100
     b. Units per Eligible           1.100       1.210       1.050       1.045        0.950
Projected Cost per Eligible      $   28.34    $ 104.62   $   79.47   $    4.91    $    6.23
5.   Stop Loss Reins.                          Amount    $       0                   Rate
6.   CHDP
7.Fee-for-Service Adj.
Capitation Rate With FQHC
 Increment                                    $ 233.49               $   233.49
                                              /Without
<CAPTION>
Rate Calculation                                   FQHC
                                  Other        FFSE   Increment      Total
<S>                              <C>        <C>        <C>        <C>
1.   Average Cost Per Unit       $  10.16   $ 69.96     $  0.00
2.   Units per Eligible            21.959     0.120       0.120
3.   Addl't Capitation Amts.     $   0.00   $  0.00     $  0.00
     Cost per Elig. per Mo.      $  18.59   $  0.70     $  0.00   $ 237.89
Adjustments
     a. Demographics                1.006     0.989       0.989
     b. Area                        1.000     1.000       1.000
     c. Coverages                   0.878     0.863       0.863
     d. Interest                    0.995     0.995       0.995
Adjusted Base Cost               $  16.34   $  0.59     $  0.00   $ 208.43
3.   Legislative Adjs.              0.923     0.932       0.932
4.   Trend Adjustments
     a. Cost per Unit               1.100     1.000       1.000
     b. Units per Eligible          1.000     1.000       1.000
Projected Cost per Eligible      $  16.59   $  0.55     $  0.00   $ 240.71
5.   Stop Loss Reins.                 0.0%             Premium        0.00
6.   CHDP                                                             0.00
7.Fee-for-Service Adj.               -3.0%                           (7.22)
Capitation Rate With FQHC
 Increment
</TABLE>

                                    Page 9 of 12

<PAGE>

<TABLE>
<S>                         <C>                                 <C>           <C>                <C>                <C>
Plan Name:                  Molina Medical Center               Plan #:       356                Date:              04-May-99
County:                     San Bernardino                      Plan Type:    Commercial Plan    Base Period:       FY 96/97
Aid Code Grouping:          Child
</TABLE>

<TABLE>
<S>                                                         <C>                                                  <C>
                                                                                                                 CI for 95-23637
The Rate Period is October 1,1998 to September 30, 1999     Capitation Payments at the Beginning of the Month    Attachment 1
</TABLE>

Coverages
--------------------------------------------------------------------------------
   CCS Indicated Claims                               NOT Covered by the Plan
-------------------------------------------------------------------------------
   Mental Health Outpatient Services                  NOT Covered by the Plan
-------------------------------------------------------------------------------
   Mental Health Pharmacy Costs                       NOT Covered by the Plan
-------------------------------------------------------------------------------
   Mental Health Hospital Inpatient Services          NOT Covered by the Plan
-------------------------------------------------------------------------------
   Eyewear                                            NOT Covered by the Plan
-------------------------------------------------------------------------------
   Heroin Detoxification                              NOT Covered by the Plan
-------------------------------------------------------------------------------
   AIDS Waiver Services                               NOT Covered by the Plan
-------------------------------------------------------------------------------
   Adult Day Health Care                              NOT Covered by the Plan
-------------------------------------------------------------------------------
   Chiropractor/Acupuncture                           NOT Covered by the Plan
-------------------------------------------------------------------------------
   Local Education Authority                          NOT Covered by the Plan
-------------------------------------------------------------------------------
   Alphafeto Protein Testing                          NOT Covered by the Plan
-------------------------------------------------------------------------------
   Long Term Care for month of entry plus one         Covered by the Plan
-------------------------------------------------------------------------------
   Long Term Care after month of entry plus one       NOT Covered by the Plan
-------------------------------------------------------------------------------
   Special AIDS drugs                                 NOT Covered by the Plan
-------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                           Hospital     Hospital   Long Term
Rate Calculation                 Physician    Pharmacy    Inpatient   Outpatient        Care
<S>                               <C>         <C>        <C>          <C>           <C>
1.   Average Cost Per Unit        $  67.42    $  13.64   $ 1,120.53   $    16.21    $ 469.38
2.   Units per Eligible              4.035       3.411        0.465        1.518       0.007
3.   Addt'l Capitation Amts.      $   0.23    $   0.03   $     2.90   $     0.00    $   0.00
     Cost per Elig. per Mo.       $  22.90    $   3.91   $    46.32   $     2.05    $   0.27
Adjustments
     a. Demographics                 1.212       1.021        1.342        1.157       1.000
     b. Area                         1.043       1.000        1.000        1.000       1.000
     c. Coverages                    0.974       0.984        0.952        0.973       0.996
     d. Interest                     0.995       0.995        0.995        0.995       0.995
Adjusted Base Cost                $  28.05    $   3.91   $    58.88   $     2.30    $   0.27
3   Legislative Adjs                 1.076       1.047        0.999        1.024       1.134
4.   Trend Adjustments
     a. Cost per Unit                1.000       1.100        1.050        1.000       1.000
     b. Units per Eligible           0.950       1.000        1.050        0.950       1.050
Projected Cost per Eligible       $  28.67    $   4.50   $    64.85   $     2.24    $   0.32
5.   Stop Loss Reins.                          Amount    $        0                   Rate
6.   CHDP
7.Fee-for-Service Adj.
Capitation Rate With FQHC
 Increment                                    $ 106.43                $    106.35
                                              /Without
<CAPTION>
                                                  FQHC
Rate Calculation                   Other      FFSE   Increment      Total
<S>                              <C>        <C>         <C>      <C>
1.   Average Cost Per Unit       $ 20.69   $ 68.10     $  7.33
2.   Units per Eligible            1.958     0.132       0.132
3.   Addt'l Capitation Amts.     $  0.00   $  0.00     $  0.00
     Cost per Elig. per Mo.      $  3.38   $  0.75     $  0.08   $  79.68
Adjustments
     a. Demographics               1.080     1.084       1.084
     b. Area                       1.000     1.000       1.000
     c. Coverages                  0.815     0.970       0.970
     d. Interest                   0.995     0.995       0.995
Adjusted Base Cost               $  2.96   $  0.78     $  0.08   $  97.23
3   Legislative Adjs               1.090     1.031       1.031
4.   Trend Adjustments
     a. Cost per Unit              0.950     1.000       1.000
     b. Units per Eligible         1.050     1.000       1.000
Projected Cost per Eligible      $  3.22   $  0.80     $  0.08   $ 104.68
5.   Stop Loss Reins.                0.0%             Premium        0.00
6.   CHDP                                                            5.04
7.Fee-for-Service Adj.              -3.0%                           (3.29)
Capitation Rate With FQHC
 Increment
</TABLE>

                                     Page 10 of 12

<PAGE>

<TABLE>
<S>                         <C>                                 <C>           <C>                <C>                <C>
Plan Name:                  Molina Medical Center               Plan #:       356                Date:              04-May-99
County:                     Riverside                           Plan Type:    Commercial Plan    Base Period:       FY 96/97
Aid Code Grouping:          Adult
</TABLE>

<TABLE>
<S>                                                         <C>                                                  <C>
                                                                                                                 CI for 95-23637
The Rate Period is October 1,1998 to September 30, 1999     Capitation Payments at the Beginning of the Month    Attachment 1
</TABLE>

Coverages
--------------------------------------------------------------------------------
   CCS Indicated Claims                                NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Outpatient Services                   NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Pharmacy Costs                        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Hospital Inpatient Services           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Eyewear                                             NOT Covered by the Plan
--------------------------------------------------------------------------------
   Heroin Detoxification                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   AIDS Waiver Services                                NOT Covered by the Plan
--------------------------------------------------------------------------------
   Adult Day Health Care                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   Chiropractor/Acupuncture                            NOT Covered by the Plan
--------------------------------------------------------------------------------
   Local Education Authority                           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Alphafeto Protein Testing                           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care for month of entry plus one          Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care after month of entry plus one        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Special AIDS drugs                                  NOT Covered by the Plan
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                           Hospital     Hospital   Long Term
Rate Calculation                 Physician    Pharmacy    Inpatient   Outpatient        Care
<S>                              <C>          <C>        <C>          <C>          <C>
1.   Average Cost Per Unit       $   90.48    $  17.11   $ 1,140.81   $    15.76   $  812.04
2.   Units per Eligible             21.541       5.818        5.446        4.679       0.000
3.   Addt'l Capitation Amts.     $    0.37    $   0.06   $    35.62   $     0.08   $    0.00
     Cost per Elig. per Mo.      $  162.79    $   8.36   $   553.36   $     6.23   $    0.00
Adjustments
     a. Demographics                 1.000       1.000        1.000        1.000       1.000
     b. Area                         1.043       1.000        1.000        1.000       1.000
     c. Coverages                    0.999       0.999        0.999        0.989       1.000
     d. Interest                     0.995       0.995        0.995        0.995       0.995
Adjusted Base Cost               $  168.77    $   8.31   $   550.04   $     6.13   $    0.00
3.   Legislative Adjs.               1.029       1.054        1.000        1.022       1.102
4.   Trend Adjustments
     a. Cost per Unit                1.000       1.100        1.050        1.000       1.000
     b. Units per Eligible           0.950       1.000        1.050        0.950       1.050
Projected Cost per Eligible      $  164.98    $   9.63   $   606.42   $     5.95   $    0.00
5.   Stop Loss Reins.                          Amount    $        0                   Rate
6.   CHDP
7.Fee-for-Service Adj.
Capitation Rate With FQHC
 Increment                                    $ 790.89                $   790.53
                                              /Without
<CAPTION>
Rate Calculation                                   FQHC
                                    Other      FFSE   Increment      Total
<S>                              <C>        <C>         <C>       <C>
1.   Average Cost Per Unit       $  36.13   $ 68.10     $  7.33
2.   Units per Eligible            10.172     0.577       0.577
3.   Addt'l Capitation Amts.     $   0.00   $  0.00     $  0.00
     Cost per Elig. per Mo.      $  30.63   $  3.28     $  0.35   $ 765.00
Adjustments
     a. Demographics                1.000     1.000       1.000
     b. Area                        1.000     1.000       1.000
     c. Coverages                   0.809     0.995       0.995
     d. Interest                    0.995     0.995       0.995
Adjusted Base Cost               $  24.66   $  3.25     $  0.35   $ 761.51
3.   Legislative Adjs.              1.004     1.015       1.015
4.   Trend Adjustments
     a. Cost per Unit               0.950     1.000       1.000
     b. Units per Eligible          1.050     1.000       1.000
Projected Cost per Eligible      $  24.70   $  3.30     $  0.36   $ 815.34
5.   Stop Loss Reins.                 0.0%             Premium        0.00
6.   CHDP                                                             0.00
7.Fee-for-Service Adj.               -3.0%                          (24.45)
Capitation Rate With FQHC
 Increment
</TABLE>

                                   Page 11 of 12

<PAGE>

<TABLE>
<S>                         <C>                                 <C>           <C>                <C>                <C>
Plan Name:                  Molina Medical Center               Plan #:       356                Date:              04-May-99
County:                     San Bernardino                      Plan Type:    Commercial Plan    Base Period:       FY 96/97
Aid Code Grouping:          AIDS
</TABLE>

<TABLE>
<S>                                                         <C>                                                  <C>
                                                                                                                 CI for 95-23637
The Rate Period Is October 1,1998 to September 30, 1999     Capitation Payments at the Beginning of the Month    Attachment 1
</TABLE>

Coverages
--------------------------------------------------------------------------------
   CCS Indicated Claims                                NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Outpatient Services                   NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Pharmacy Costs                        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Hospital Inpatient Services           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Eyewear                                             NOT Covered by the Plan
--------------------------------------------------------------------------------
   Heroin Detoxification                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   AIDS Waiver Services                                NOT Covered by the Plan
--------------------------------------------------------------------------------
   Adult Day Health Care                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   Chiropractor/Acupuncture                            NOT Covered by the Plan
--------------------------------------------------------------------------------
   Local Education Authority                           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Ajphafeto Protein Testing                           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care for month of entry plus one          Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care after month of entry plus one        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Special AIDS drugs                                  NOT Covered by the Plan
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                          Hospital      Hospital   Long Term
Rate Calculation                 Physician    Pharmacy   Inpatient    Outpatient        Care
<S>                              <C>          <C>        <C>            <C>        <C>
1.   Average Cost Per Unit       $   32.67    $ 126.04   $  611.26      $  13.79   $  139.87
2.   Units per Eligible             26.584      74.792       3.169         9.882       0.000
3.   Addt'l Capitation Amts.     $    2.96    $   0.09   $    9.89      $   0.02   $    0.00
     Cost per Elig. per Mo.      $   75.33    $ 785.66   $  171.31      $  11.38   $    0.00
Adjustments
     a. Demographics                 1.000       1.000       1.000         1.000       1.000
     b. Area                         1 043       1.000       1.000         1.000       1.000
     c. Coverages                    0.918       0.648       0.957         0.992       0.998
     d. Interest                     0.995       0.995       0.995         0.995       0.995
Adjusted Base Cost               $   71.77    $ 506.56   $  163.12      $  11.23   $    0.00
3.   Legislative Adjs.               0.963       1.006       0.977         0.982       1.186
4.  Trend Adjustments
     a. Cost per Unit                1.000       1.100       1.050         1.000       1.100
     b. Units per Eligible           1.100       1.210       1.050         1.045       0.950
Projected Cost per Eligible      $   76.03    $ 678.28   $  175.70      $  11.52   $    0.00
5.   Stop Loss Reins.                          Amount    $       0                    Rate
6.   CHDP
7.Fee-for-Service Adj.
Capitation Rate With FQHC
 Increment                                    $ 995.00                  $ 995.00
                                              /Without
<CAPTION>
Rate Calculation                                     FQHC
                                      Other      FFSE   Increment       Total
<S>                                <C>        <C>       <C>        <C>
1.   Average Cost Per Unit         $  42.30   $ 69.96   $   0.00
2.   Units per Eligible              36.392     0.349      0.349
3.   Addt'l Capitation Amts.       $   0.00   $  0.00   $   0.00
     Cost per Elig. per Mo.        $ 128.28   $  2.04   $   0.00   $ 1.174.00
Adjustments
     a. Demographics                  1.000     1.000      1.000
     b. Area                          1.000     1.000      1.000
     c. Coverages                     0.599     0.951      0.951
     d. Interest                      0.995     0.995      0.995
Adjusted Base Cost                 $  76.46   $  1.93   $   0.00   $   831.07
3.   Legislative Adjs.                0.979     0.984      0.984
4.  Trend Adjustments
     a. Cost per Unit                 1.100     1.000      1.000
     b. Units per Eligible            1.000     1.000      1.000
Projected Cost per Eligible        $  82.34   $  1.90   $   0.00   $ 1.025.77
5.   Stop Loss Reins.                   0.0%         Premium             0.00
6.   CHDP                                                                0.00
7.Fee-for-Service Adj.                  3.0                            (30.77)
Capitation Rate With FQHC Increment
</TABLE>

                                   Page 12 of 12

<PAGE>

[LETTER HEAD OF  DEPARTMENT OF HEALTH SERVICES]

                                  June 1, 1999

     John Molina, M.D.
     Molina Medical Centers, Inc.
     One Golden Shore
     Long Beach, CA 90802

     Dear Dr. Molina :

          In accordance with Article III, Section 3.34.2 of your Contract, the
     enclosed Change Order authorizes the coverage of aid codes 7A, 47, and 72
     and transmits Molina Medical Center, Inc., capitation rates for these aid
     codes for the period April 1, 1999, to September 30, 1999. The new rates
     will be effective April 1, 1999.

          If you have any questions, please contact your contract manager.

                                                Sincerely,

                                                /s/
                                                --------------------------------
                                                Susanne M. Hughes
                                                Acting Chief
                                                Medi-Cal Managed Care Division

     Enclosures

<PAGE>

[LETTER HEAD OF  DEPARTMENT OF HEALTH SERVICES]

          CHANGE ORDER NUMBER C2 to CONTRACT No. 95-23637 ADDING AID CODES 7A,
          47, AND 72 AND CAPITATION RATES FOR THE PERIOD APRIL 1, 1999 TO
          SEPTEMBER 30, 1999, BY ADDING ADDITIONAL LANGUAGE TO ARTICLE II,
          SECTION Y, ELIGIBLE BENEFICIARY AND ARTICLE V, SECTIONS 5.3 CAPITATION
          RATES; AND 5.4 CAPITATION RATES CONSTITUTE PAYMENT IN FULL, Issued May
          21, 1999.

1.        Article II, Section Y, Eligible Beneficiary, following the words
          "Medically Indigent Adult - aid code 86", the following words are
          added "Percent of Poverty - aid codes 7A, 47, and 72."

          All other terms, conditions, and provisions contained in Article II,
          Section Y remain unchanged.

2.        5.3  CAPITATION RATES

            FOR THE PERIOD 04/01/99 - 09/30/99

                 GROUP                    AID CODES                  RATE
            ----------------------------------------------------------------
            Percent of Poverty          7A                         $   54.11
            ----------------------------------------------------------------
            Percent of Poverty          47/72                      $   60.05
            ----------------------------------------------------------------

          In the future, DHS may be splitting existing aid codes into new aid
          codes. The new split aid codes will be in the same aid code group
          category as the original aid code. If DHS establishes new aid codes by
          splitting existing aid codes, Contractor agrees to accept Eligible
          Beneficiaries with these new aid codes as Members and to provide
          covered services to these Members at the monthly capitation rate
          specified for the original aid code group category. The Department
          shall confirm all aid code splits, and the rates of payment for such
          new aid codes, in writing to Contractor as soon as practicable after
          such aid code splits occur.

          All other terms, conditions, and provisions contained in Section 5.3
          remain unchanged.

3.        5.4 CAPITATION RATES CONSTITUTE PAYMENT IN FULL.

          The actuarial basis for the determination of the capitation payment
          rates for Aid Codes 7A, 47, and 72 is outlined in Attachment 1
          (consisting of 2 pages).

4.        All other terms, conditions, and provisions contained in Section 5.4
          remain unchanged.

<PAGE>

Id Group  Poverty - 7A        Base:           Statewide Family Age Adjusted
                              Base Period:    FY 96/97
Payments at End of Month

<TABLE>
<CAPTION>
          Services==>                                               Hospital     Hospital    Nursing
                                          Physician    Pharmacy    Inpatient   Outpatient   Facility    Other

<S>                                        <C>        <C>         <C>           <C>         <C>       <C>
1. Base Cost                               $  10.40   $    6.74   $    13.64    $    3.91   $   0.24  $  8.30
2. Age/Sex Adjustments                        1.000       1.000        1.000        1.000      1.000    1.000
3. Eligibility Adjustments                    1.000       1.000        1.000        1.000      1.000    1.000
4. Coverage Adjustments                       0.997       0.997        0.999        0.964      1.000    0.891
5. Interest Offset                            0.995       1.001        0.991        0.993      0.998    0.995

Contract Cost FY 96/97                     $  10.32   $    6.73   $    13.50    $    3.74   $   0.24  $  7.36

6. Legislative Adjustments                    1.044       0.740        0.985        1.021      1.061    1.150
7. Trend Adjustments
          a. Cost per Unit                    1.000       1.308        1.055        0.970      1.000    1.445
          b. Utilization                      1.000       1.027        1.050        1.000      1.107    1.000

Projeced Cost 10/98-9/99                   $  10.77   $    6.69   $    14.73    $    3.70   $   0.28  $ 12.23

8. CHDP

9. Administrative Allowance                                                                      1.6%

Fee-for-Service Equivalent Cost

Fee-for-Service Adj.                                                                              94%

Capitation Rate with FQHC increment

Capitation Rate without FQHC increment

<CAPTION>
          Services==>                               FQHC
                                                FFSE    Increment     Total

<S>                                        <C>         <C>          <C>
1. Base Cost                               $    2,98   $     1.21   $ 47.42
2. Age/Sex Adjustments                         1.000        1.000
3. Eligibility Adjustments                     1.000        1.000
4. Coverage Adjustments                        0.991        0.991
5. Interest Offset                             0.998        0.998

Contract Cost FY 96/97                     $    2.94   $     1.20   $ 46.03

6. Legislative Adjustments                     1.024        1.024
7. Trend Adjustments
          a. Cost per Unit                     1.071        1.071
          b. utilization                       1.265        1.265

Projeced Cost 10/98-9/99                   $    4.08   $     1.66   $ 54.14

8. CHDP                                                             $  2.54

9. Administrative Allowance                                         $  0.88

Fee-for-Service Equivalent Cost                                     $ 57.56

Fee-for-Service Adj.                                                  (3.45)

Capitation Rate with FQHC increment                                 $ 54.11

Capitation Rate without FQHC increment                              $ 52.55
</TABLE>

                                     1 of 2

<PAGE>

Id Group  Poverty - 47/72
                                          Base:           Statewide
                                          Base Period:    FY 96/97

Payments at End of Month
<TABLE>
<CAPTION>
                                                                     Hospital    Hospital    Nursing
        Services ==>                       Physician    Pharmacy    Inpatient   Outpatient   Facility    Other

<S>                                          <C>         <C>          <C>          <C>       <C>       <C>
1. Base Cost                                 $ 10.66     $  7.27      $ 20.52      $  5.31   $   0.14  $  2.92
2. Age/Sex Adjustments                         1.000       1.000        1.000        1.000      1.000    1.000
3. Eligibility Adjustments                     1.000       1.000        1.000        1.000      1.000    1.000
4. Coverage Adjustments                        0.997       0.997        0.999        0.964      1.000    0.891
5. Interest Offset                             0.995       1.001        0.991        0.993      0.998    0.995

Contract Cost FY 96/97                       $ 10.57     $  7.25      $ 20.32      $  5.09   $   0.14  $  2.59

6. Legislative Adjustments                     1.044       0.740        0.985        1.021      1.061    1.150
7. Trend Adjustments
          a. Cost per Unit                     1.000       1.306        1.055        0.970      1.000    1.445
          b. Utilization                       1.000       1.027        1.050        1.000      1.107    1.000

Project Cost 10/98-9/99                      $ 11.04     $  7.21      $ 22.17      $  5.04   $   0.16  $  4.30

8. CHDP

9. Administrative Allowance                                                                       1.6%

Fee-for-Service Equivalent Cost

Fee-for-Service Adj.                                                                               94%

Capitation Rate with FQHC increment

Capitation Rate without FQHC increment

Payments at End of Month
<CAPTION>
                                                    FQHC
        Services==>                             FFSE   Increment     Total

<S>                                        <C>         <C>         <C>
1. Base Cost                               $    5.42   $    2.21   $ 54.45
2. Age/Sex Adjustments                         1.000       1.000
3. Eligibility Adjustments                     1.000       1.000
4. Coverage Adjustments                        0.991       0.991
5. Interest Offset                             0.998       0.998

Contract Cost FY 96/97                     $    5.36   $    2.18   $ 53.50

6. Legislative Adjustments                      1024
7. Trend Adjustments
          a. Cost per Unit                     1.071       1.071
          b. Utilization                       1.265       1.265

Project Cost 10/98-9/99                    $    7.44   $    3.02   $ 60.38

8. CHDP                                                            $  2.54

9. Administrative Allowance                                        $  0.96

Fee-for-Service Equivalent Cost                                    $ 63.88

Fee-for-Service Adj.                                                 (3.83)

Capitation Rate with FQHC increment                                $ 60.05

Capitation Rate without FQHC increment                             $ 57.21

</TABLE>

                                     2 of 2

<PAGE>

[LETTER HEAD OF DEPARTMENT OF HEALTH SERVICES]

                                  July 1, 1999
John Molina, M.D.
Molina Medical Centers, Inc.
One Golden Share
Long Beach, CA 90802

Dear Dr. Molina:

     In accordance with Article III, Section 3.34.2 of your Contract, the
enclosed Change Order authorizes the change in rates for FQHC and RHC
subcontracts and transmits Molina Medical Centers, Inc. rates for the period
July 1, 1999 through September 30, 1999. This Change Order also changes contract
Sections 3.27.6, Federally Qualified Health Centers/Rural Health Clinics; 5.3
Capitation Rates; 5.4 Capitation Rates Constitute Payment in Full; 5.13 FQHC and
RHC Risk Corridor Payments; 6.3.6 Submittal of FQHC and RHC payment information
and 6.6.21 FQHC and RHC Contracts. The new rates will appear in your capitation
rate beginning July 1, 1999.

     If you have any questions, please contact your contract manager.

                                               Sincerely,

                                               /s/
                                               Susanne M. Hughes
                                               Acting Chief
                                               Medi-Cal Managed Care Division

Enclosures

<PAGE>

[LETTER HEAD OF DEPARTMENT OF HEALTH SERVICES]

CHANGE ORDER NUMBER C3 TO CONTRACT NO. 95-23637 BY CHANGING CONTRACT SECTIONS
3.27.6 FEDERALLY QUALIFIED HEALTH CENTERS/RURAL HEALTH CLINICS; 5.3 CAPITATION
RATES; 5.4 CAPITATION RATES CONSTITUTE PAYMENT IN FULL; 5.13 FQHC/RHC RISK
CORRIDOR PAYMENTS; 6.3.6 SUBMITTAL OF FQHC AND RHC PAYMENT INFORMATION AND
6.6.21 FQHC AND RURAL HEALTH CLINIC (RHC) CONTRACTS. Issued July 1,1999.

1.   3.27.6      FEDERALLY QUALIFIED HEALTH CENTERS/RURAL HEALTH CLINICS

     A.   Contractor shall not enter into a Subcontract with a Federally
          Qualified Health Center (FQHC) or a Rural Health Clinic (RHC) unless
          DHS approves the provisions regarding rates, which shall be subject to
          the standard that they be reasonable, as determined by DHS, in
          relation to the services to be provided, in accordance with Article
          VI, Section 6.6.21 FQHC and RHC Contracts. In Subcontracts where the
          FQHC or RHC has made the election to be reimbursed on a reasonable
          cost basis by the State, provisions shall be included that require the
          subcontractor to keep a record of the number of visits by plan Members
          separate from Fee-For-Service Medi-Cal beneficiaries, in addition to
          any other data reporting requirements of the Subcontract. The
          provisions of this section shall end June 30, 1999.

     B.   The provisions of this section shall apply beginning July 1, 1999.
          Contractor shall submit to DHS, within 30 days of a request and in the
          form and manner specified by DHS, for each of Contractor's FQHC and
          RHC Subcontracts the services provided and the reimbursement level and
          amount. Further, Contractor shall certify to DHS that pursuant to
          Welfare and Institutions Code, Section 14087.325(b) and (d), as
          amended by Chapter 894/Statutes of 1998, that FQHC and RHC Subcontract
          terms and conditions are the same as offered to other Subcontractors
          providing similar scope of service and that reimbursement is not less
          than the level and amount of payment that Contractor makes for the
          same scope of services furnished by a provider that is not a FQHC or
          RHC. Effective July 1, 1999, Contractor shall not be required to pay
          FQHCs and RHCs at the Medi-Cal interim per visit rate described in
          Section 6.6.22. Rather, Contractor shall be required to pay its FQHC
          and RHC Subcontractors reimbursement that is

                                     1 of 4

<PAGE>

CHANGE ORDER C3
CONTRACT NO. 95-23637

          not less than the level and amount of payment that Contractor makes
          for the same scope of services furnished by a provider that is not a
          FQHC or RHC. Effective July 1, 1999, Contractor capitation rates will
          be reduced to reflect the removal of the requirement to pay FQHCs and
          RHCs the Medi-Cal interim per visit rate. DHS reserves the right to
          review and audit Contractor's FQHC and RHC reimbursement at its
          discretion to ensure compliance with the state and federal law and
          shall approve all FQHC and RHC Subcontracts consistent with the
          provisions of Welfare and Institutions Code, Section 14087.325(h).

     C.   Subcontracts with FQHCs shall also meet Contract requirements of
          Article VI, Sections 6.6.20, FQHC services and 6.6.21, FQHC and Rural
          Health Clinic Subcontracts. Subcontracts with RHCs shall also meet
          Contract requirements of Article VI, Section 6.6.21

     D.   In Subcontracts where a negotiated reimbursement rate is agreed to as
          total payment, a provision that such rate constitutes total payment
          shall be included in the Subcontract.

2.   5.3         CAPITATION RATES

     FOR THE PERIOD 7/1/99 - 9/30/99                            RIVERSIDE COUNTY
     ---------------------------------------------------------------------------
            GROUPS                   AID CODES                           RATE
     ---------------------------------------------------------------------------
     Fami1y                01, 0A, 02, 08, 30, 32, 3G, 33,             $   78.41
                           3H, 34, 35, 38, 39, 3A, 3C,
                           3N, 3P, 3R, 3U, 3R, 40, 54,
                           59, 7X; CalWORKS: 3E, 3L,
                           3M
     ---------------------------------------------------------------------------
     Disabled              20, 24, 26, 28, 36, 60, 64, 66,             $  222.61
                           68, 6A, 6C, 6N, 6P, 6R
     ---------------------------------------------------------------------------
     Aged                  10, 14, 16, 18                              $  160.47
     ---------------------------------------------------------------------------
     Child                 03, 04, 45, 4C, 4K, 5K, 82                  $   92.75
     ---------------------------------------------------------------------------
     Adult                 86                                          $  705.26
     ---------------------------------------------------------------------------
     AIDS Beneficiary                                                  $  962.42
     ---------------------------------------------------------------------------
     Percent of Poverty    7A                                          $   52.55
     ---------------------------------------------------------------------------
     Percent of Poverty    47.72                                       $   57.21
     ---------------------------------------------------------------------------

                                     2 of 4

<PAGE>

Change order c3
contract no. 95-23637

     For the period 7/1/99 - 9/30/99                       SAN BERNARDINO COUNTY
     ---------------------------------------------------------------------------
            GROUPS                    AID CODES                        RATE
     ---------------------------------------------------------------------------
     Family                01, 0A, 02, 08, 30, 32, 3G, 33,            $    80.41
                           3H, 34, 35, 38, 39, 3A, 3C,
                           3N, 3P, 3R, 3U, 40, 54, 59,
                           7X; Cal WORKS: 3E, 3L, 3M
     ---------------------------------------------------------------------------
     Disabled              20, 24, 26, 28, 36, 60, 64, 66,            $   233.49
                           68, 6A, 6C, 6N, 6P, 6R
     ---------------------------------------------------------------------------
     Aged                  10, 14, 16, 18                             $   163.77
     ---------------------------------------------------------------------------
     Child                 03, 04, 45, 4C, 4K, 5K, 82                 $   106.35
     ---------------------------------------------------------------------------
     Adult                 86                                         $   790.53
     ---------------------------------------------------------------------------
     AIDS Beneficiary                                                 $   995.00
     ---------------------------------------------------------------------------
     Percent of Poverty    7A                                         $    52.55
     ---------------------------------------------------------------------------
     Percent of Poverty    47,72                                      $    57.21
     ---------------------------------------------------------------------------

3.   5.4         CAPITATION RATES CONSTITUTE PAYMENT IN FULL

     The actuarial basis for the determination of the capitation payment rates
     is outlined in Attachment 1 (consisting of 16 pages).

     All other terms, conditions, and provisions contained in Section 5.4 remain
     unchanged.

4.   5.13        FQHC/RHC RISK CORRIDOR PAYMENTS

     For service periods beginning October 1, 1997 and through June 30, 1999
     provided that Contractor has submitted expenditure data to DHS in the form
     and manner specified by DHS, DHS shall perform reconciliations to determine
     the variance between the contractor's actual FQHC/RHC expenses and the
     amount they were paid through capitation rates for FQHC/RHC services.

     For each annual reconciliation, if, pursuant to subcontracts with FQHCs and
     RHCs that have been reviewed and approved in writing by DHS, Contractor has
     paid subcontracting FQHCs and RHCs in the aggregate interim rate payments
     an amount greater than 110 percent of the dollar value of FQHC and RHC
     interim rate payments included in Contractor's capitation rates, DHS shall
     pay Contractor the amount in excess of 110 percent.

     For each annual reconciliation, if, pursuant to subcontracts with FQHCs and
     RHCs that have been reviewed and approved in writing by DHS, Contractor has
     paid subcontracting FQHCs and RHCs in the aggregate an amount less than 90
     percent of the dollar value of FQHC and RHC interim rate payments included
     in Contractor's capitation rates,

                                     3 of 4

<PAGE>

CHANGE ORDER C3
CONTRACT NO. 95-23637

     Contractor shall refund the amount below 90 percent to DHS. DHS may recover
     amounts owed by Contractor pursuant to this section through an offset to
     the capitation payments made to Contractor, pursuant to Section 5.11(C),
     Recovery of Capitation Payments.

     All reconciliations shall be subject to an annual reconciliation audit at
     which time payments to or recoupments from Contractor shall be finalized.

5.   6.3.6       SUBMITTAL OF FQHC AND RHC PAYMENT INFORMATION

     Effective with the October 1997 month of service, Contractor shall keep a
     record of the number of visits by plan Members to each FQHC and RHC
     contracting with Contractor and related payment information, and shall
     submit this information to DHS in the frequency, format, and manner
     specified by DHS. This requirement shall remain in effect for service
     periods through the June 30, 1999.

6.   6.6.21      FQHC AND RURAL HEALTH CLINIC (RHC) CONTRACTS

     A.   This requirement shall remain in effect for service periods through
          June 30, 1999. Notwithstanding Article III, Section 3.26.4,
          Departmental Approval - Federally Qualified HMOs, Contractor shall not
          enter into any contract with an FQHC or RHC for provision of Covered
          Services to Members without prior approval by DHS. All contracts with
          FQHCs or RHCs shall provide reimbursement to the FQHC or RHC on the
          basis of each center's or clinic's Medi-Cal interim per visit rate,
          applicable on the date the reimbursable services were provided, as
          established by DHS, unless:

          1.   DHS has approved in writing an alternate reimbursement
               methodology; or

          2.   The FQHC or RHC agrees to be reimbursed on an at-risk basis and
               such agreement is contained in the contract with the center or
               clinic. In contracts where the negotiated rate is agreed to as
               total payment, the contract shall state that such payment
               constitutes total payment to the entity.

     B.   To the extent that Indian Health Service facilities qualify as FQHCs
          or RHCs, the same reimbursement requirements shall apply to contracts
          with Indian Health Service facilities.

7.   All other terms, conditions, and provisions contained in Section 5.4 remain
     unchanged.

                                     4 of 4

<PAGE>

<TABLE>
<S>                       <C>                           <C>                                  <C>
Plan Name:                Molina Medical Center         Plan #:     355                      Date:         04-May-99
County:                   Riverside                     Plan Type:  Commercial Plan          Base Period:  FY 96/97
Aid Code Grouping:        Family
</TABLE>

The Rate Period is October 1, 1998 to September 30,1999

Capitation Payments at the Beginning of the Month        C3 to Contract 95-23637
                                                         Attachment 1
                                                         Page 1 of 16

 Coverages
 -----------------------------------------------------------------------------
     CCS Indicated Claims                              NOT Covered by the Plan
 -----------------------------------------------------------------------------
     Mental Health Outpatient Services                 NOT Covered by the Plan
 -----------------------------------------------------------------------------
     Mental Health Pharmacy Costs                      NOT Covered by the Plan
     -------------------------------------------------------------------------
     Mental Health Hospital Inpatient Services         NOT Covered by the Plan
 -----------------------------------------------------------------------------
     Eyewear                                           NOT Covered by the Plan
 -----------------------------------------------------------------------------
     Heroin Detoxification                             NOT Covered by the Plan
 -----------------------------------------------------------------------------
     AIDS Waiver Services                              NOT Covered by the Plan
 -----------------------------------------------------------------------------
     Adult Day Health Care                             NOT Covered by the Plan
 -----------------------------------------------------------------------------
     Chiropractor/Acupuncture                          NOT Covered by the Plan
 -----------------------------------------------------------------------------
     Local Education Authority                         NOT Covered by the Plan
 -----------------------------------------------------------------------------
     Alphafeto Protein Testing                         NOT Covered by the Plan
 -----------------------------------------------------------------------------
     Long Term Care for month of entry plus one        Covered by the Plan
 -----------------------------------------------------------------------------
     Long Term Care after month of entry plus one      NOT Covered by the Plan
 -----------------------------------------------------------------------------
     Special AIDS drugs                                NOT Covered by the Plan
 -----------------------------------------------------------------------------

<TABLE>
<CAPTION>
   Rate Calculation
                                                                   Hospital       Hospital       Long Term
                                    Physician       Pharmacy      Inpatient     Outpatient            Care          Other
<S>                              <C>            <C>            <C>            <C>             <C>            <C>
1. Average Cost Per Unit         $      69.46   $      19.88   $     864.71   $      16.16    $     812.04   $      20.09
2. Units per Eligible                   4.014          4.683          0.373          2.146           0.004          3.532
3. Addt'l Capitation Amts.       $       0.37   $       0.05   $       4.62   $       0.01    $       0.00   $       0.00
   Cost per Elig. per Mo.        $      23.60   $       7.81   $      31.50   $       2.90    $       0.27   $       5.91
Adjustments
   a. Demographics                      1.004          0.976          1.023          1.002           1.000          0.985
   b. Area                              1.043          1.000          1.000          1.000           1.000          1.000
   c. Coverages                         0.975          0.992          0.968          0.956           0.995          0.833
   d. Interest                          0.995          0.995          0.995          0.995           0.995          0.995
Adjusted Base Cost               $      23.97   $       7.52   $      31.04   $       2.76    $       0.27   $       4.82
3. Legislative Adjs.                    1.053          1.053          0.998          1.023           1.141          1.046
4. Trend Adjustments
   a. Cost per Unit                     1.000          1.100          1.050          1.000           1.000          0.950
   b. Units per Eligible                0.950          1.000          1.050          0.950           1.050          1.050
Projected Cost per Eligible      $      23.98   $       8.71   $      34.15   $       2.68    $       0.32   $       5.03
5. Stop Loss Reins.                         Amount             $          0               Rate                        0.0%
6. CHDP
7. Fee-for-Service Adj.                                                                                              -3.0%
Capitation Rate with FQHC
 Increment                                      $      78.73 / Without        $      78.41

<CAPTION>
   Rate Calculation                        FQHC
                                         FFSE      Increment          Total
<S>                              <C>            <C>            <C>
1. Average Cost Per Unit         $      68.39   $      24.41
2. Units per Eligible                   0.168          0.168
3. Addt'l Capitation Amts.       $       0.00   $       0.00
   Cost per Elig. per Mo.        $       0.96   $       0.34   $      73.29
Adjustments
   a. Demographics                      0.994          0.994
   b. Area                              1.000          1.000
   c. Coverages                         0.935          0.935
   d. Interest                          0.995          0.995
Adjusted Base Cost               $       0.89   $       0.31   $      71.58
3. Legislative Adjs.                    1.027          1.027
4. Trend Adjustments
   a. Cost per Unit                     1.000          1.000
   b. Units per Eligible                1.000          1.000
Projected Cost per Eligible      $       0.91   $       0.32   $      76.10
5. Stop Loss Reins                          Premium                    0.00
6. CHDP                                                                5.06
7. Fee-for-Service Adj.                                               (2.43)
Capitation Rate with FQHC
 Increment
</TABLE>

<PAGE>

<TABLE>
<S>                     <C>                         <C>                                <C>                        <C>
Plan Name:              Molina Medical Center       Plan #:     355                    Date:         04-May-99    C3 to Contract
County:                 Riverside                   Plan Type:  Commercial Plan        Base Period:  FY 96/97      95-23637
Aid Code Grouping:      Aged                                                                                      Attachment 1
                                                                                                                  Page 2 of 16
</TABLE>

<TABLE>
<S>                                                         <C>
The Rate Period is October 1, 1998 to September 30, 1999    Capitation Payments at the Beginning of the Month

</TABLE>

Coverages
--------------------------------------------------------------------------------
   CCS Indicated Claims                              NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Outpatient Services                 NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Pharmacy Costs                      NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Hospital Inpatient Services         NOT Covered by the Plan
--------------------------------------------------------------------------------
   Eyewear                                           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Heroin Detoxification                             NOT Covered by the Plan
--------------------------------------------------------------------------------
   AIDS Waiver Services                              NOT Covered by the Plan
--------------------------------------------------------------------------------
   Adult Day Health Care                             NOT Covered by the Plan
--------------------------------------------------------------------------------
   Chiropractor/Acupuncture                          NOT Covered by the Plan
--------------------------------------------------------------------------------
   Local Education Authority                         NOT Covered by the Plan
--------------------------------------------------------------------------------
   Alphafeto Protein Testing                         NOT Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care for month of entry plus one        Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care after month of entry plus one      NOT Covered by the Plan
--------------------------------------------------------------------------------
   Special AIDS drugs                                NOT Covered by the Plan
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
 Rate Calculation                                               Hospital      Hospital      Long Term
                                   Physician      Pharmacy     Inpatient    Outpatient           Care         Other
<S>                                  <C>          <C>           <C>           <C>             <C>          <C>
1. Average Cost Per Unit             $ 48.90      $  32.71      $ 287.24      $  10.02        $ 77.33      $   6.41
2. Units per Eligible                  4.472        21.914         1.265         3.306          2.016        12.862
3. Addt'l Capitation Amts.           $  1.29      $   0.00      $   7.41      $   0.02        $  0.00      $   0.00
   Cost per Ellg. per Mo.            $ 19.51      $  59.73      $  37.69      $   2.78        $ 12.99      $   6.87
Adjustments
     a. Demographics                   0.955         1.019         0.957         0.970          1.039         1.025
     b. Area                           1.043         1.000         1.000         1.000          1.000         1.000
     c. Coverages                      0.981         0.996         0.997         0.986          0.997         0.791
     d. Interest                       0.995         0.995         0.995         0.995          0.995         0.995
Adjusted Base Cost                   $ 18.97      $  60.32      $  35.78      $   2.65        $ 13.39      $   5.54
3. Legislative Adjs.                   0.939         1.049         0.926         0.931          1.140         0.927
4. Trend Adjustments
   a. Cost per Unit                    1.100         1.100         1.100         1.050          1.000         1.050
   b. Units per Eligible               1.100         1.155         1.100         1.100          1.000         0.950
Projected Cost per Eligible          $ 21.55      $  80.39      $  40.09      $   2.85        $ 15.26      $   5.12
5. Stop Loss Reins.                          Amount             $      0                Rate                    0.0%
6. CHDP
7. Fee-for-Service Adj.                                                                                        -3.0%
Capitation Rate With FQHC Increment               $ 160.47 / Without          $ 160.47

<CAPTION>
 Rate Calculation                              FQHC
                                          FFSE     Increment           Total

<S>                                    <C>         <C>              <C>
1. Average Cost Per Unit               $ 28.59     $    0.00
2. Units per Eligible                    0.132         0.132
3. Addt'l Capitation Amts.             $  0.00     $    0.00
   Cost per Elig. per Mo.              $  0.31     $    0.00        $ 139.88
Adjustments
     a. Demographics                     0.970         0.970
     b. Area                             1.000         1.000
     c. Coverages                        0.603         0.603
     d. Interest                         0.995         0.995
Adjusted Base Cost                     $  0.18     $    0.00        $ 136.83
3. Legislative Adjs.                     0.926         0.926
4. Trend Adjustments
   a. Cost per Unit                      1.000         1.000
   b. Units per Eligible                 1.000         1.000
Projected Cost per Eligible            $  0.17     $    0.00        $ 165.43
5. Stop Loss Reins.                           Premium                   0.00
6. CHDP                                                                 0.00
7. Fee-for-Service Adj.                                                (4.96)
Capitation Rate With FQHC Increment
</TABLE>

<PAGE>

<TABLE>
<S>                     <C>                         <C>                                <C>                         <C>
Plan Name:              Molina Medical Center       Plan #:    355                     Date:           04-May-99   C3 to Contract
County:                 Riverside                   Plan Type: Commercial Plan         Base Period:    FY 96/97    95-23637
Aid Code Grouping:      Disabled                                                                                   Attachment 1
                                                                                                                   Page 3 of 16
</TABLE>

<TABLE>
<S>                                                         <C>
The Rate Period is October 1, 1998 to September 30, 1999    Capitation Payments at the Beginning of the Month

</TABLE>

Coverages
--------------------------------------------------------------------------------
   CCS Indicated Claims                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Outpatient Services                  NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Pharmacy Costs                       NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Hospital Inpatient Services          NOT Covered by the Plan
--------------------------------------------------------------------------------
   Eyewear                                            NOT Covered by the Plan
--------------------------------------------------------------------------------
   Heroin Detoxification                              NOT Covered by the Plan
--------------------------------------------------------------------------------
   AIDS Waiver Services                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   Adult Day Health Care                              NOT Covered by the Plan
--------------------------------------------------------------------------------
   Chiropractor/Acupuncture                           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Local Education Authority                          NOT Covered by the Plan
--------------------------------------------------------------------------------
   Alphafeto Protein Testing                          NOT Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care for month of entry plus one         Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care after month of entry plus one       NOT Covered by the Plan
--------------------------------------------------------------------------------
   Special AIDS drugs                                 NOT Covered by the Plan
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Rate Calculation                                                Hospital      Hospital      Long Term
                                   Physician      Pharmacy     Inpatient    Outpatient           Care         Other
<S>                                  <C>          <C>           <C>           <C>           <C>           <C>
1. Average Cost Per Unit             $ 46.41      $  39.70      $ 485.15      $  12.37      $ 139.87      $  10.16
2. Units per Eligible                  6.873        26.861         1.556         5.050         0.459        21.959
3. Addt'l Capitation Amts.           $  2.96      $   0.09      $   9.89      $   0.02      $   0.00      $   0.00
   Cost per Elig. per Mo.            $ 29.54      $  88.96      $  72.80      $   5.23      $   5.35      $  18.59
Adjustments
    a. Demographics                    0.983         0.989         0.981         0.998         1 000         1.015
    b. Area                            1.043         1.000         1.000         1.000         1.000         1.000
    c. Coverages                       0.900         0.875         0.920         0.973         0.995         0.878
    d. Interest                        0.995         0.995         0.995         0.995         0.995         0.995
Adjusted Base Cost                   $ 27.12      $  76.60      $  65.37      $   5.05      $   5.30       $ 16.48
3. Legislative Adjs.                   0.941         1.043         0.919         0.931         1.130         0.923
4. Trend Adjustments
    a. Cost per Unit                   1.000         1.100         1.050         1.000         1.100         1.100
    b. Units per Eligible              1.100         1.210         1.050         1.045         0.950         1.000
Projected Cost per Eligible          $ 28.07      $ 106.34      $  66.23      $   4.91      $   6.26      $  16.73
5. Stop Loss Reins.                          Amount             $      0               Rate                    0.0%
6. CHDP
7. Fee-for-Service Adj.                                                                                       -3.0%
Capitation Rate With FQHC Increment               $ 222.61 / Without          $ 222.61

<CAPTION>
Rate Calculation                            FQHC
                                        FFSE     Increment         Total
<S>                                  <C>         <C>             <C>
1. Average Cost Per Unit             $ 66.52     $   0.00
2. Units per Eligible                  0.216        0.216
3. Addt'l Capitation Amts.           $  0.00     $   0.00
   Cost per Elig. per Mo.            $  1.20     $   0.00        $ 221.67
Adjustments
    a. Demographics                    0.987        0.987
    b. Area                            1.000        1.000
    c. Coverages                       0.863        0.863
    d. Interest                        0.995        0.995
Adjusted Base Cost                   $  1.02     $   0.00        $ 196.94
3. Legislative Adjs.                   0.932        0.932
4. Trend Adjustments
    a. Cost per Unit                   1.000        1.000
    b. Units per Eligible              1.000        1.000
Projected Cost per Eligible          $  0.95     $   0.00        $ 229.49
5. Stop Loss Reins.                        Premium                   0.00
6. CHDP                                                              0.00
7. Fee-for-Service Adj.                                             (6.88)
Capitation Rate With FQHC Increment
</TABLE>

<PAGE>

<TABLE>
<S>                                              <C>                          <C>                          <C>
Plan Name:              Molina Medical Center    Plan #:    355               Date:           04-May-99    C3 to Contract
County:                 Riverside                Plan Type: Commercial Plan   Base Period:    FY 96/97     95-23637
Aid Code Grouping:      Child                                                                              Attachment 1
                                                                                                           Page 4 of 16
</TABLE>

<TABLE>
<S>                                                         <C>
The Rate Period is October 1, 1998 to September 30, 1999    Capitation Payments at the Beginning of the Month

</TABLE>

Coverages
--------------------------------------------------------------------------------
   CCS Indicated Claims                              NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Oulpatient Services                 NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Pharmacy Costs                      NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Hospital Inpatient Services         NOT Covered by the Plan
--------------------------------------------------------------------------------
   Eyewear                                           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Heroin Detoxification                             NOT Covered by the Plan
--------------------------------------------------------------------------------
   AIDS Waiver Services                              NOT Covered by the Plan
--------------------------------------------------------------------------------
   Adult Day Health Care                             NOT Covered by the Plan
--------------------------------------------------------------------------------
   Chiropractor/Acupuncture                          NOT Covered by the Plan
--------------------------------------------------------------------------------
   Local Education Authority                         NOT Covered by the Plan
--------------------------------------------------------------------------------
   Alphafeto Protein Testing                         MOT Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care for month of entry plus one        Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care after month of entry plus one      NOT Covered by the Plan
--------------------------------------------------------------------------------
   Special AIDS drugs                                NOT Covered by the Plan
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Rate Calculation                                               Hospital       Hospital      Long Term
                                    Physician    Pharmacy      Inpatient     Outpatient          Care         Other
<S>                                  <C>         <C>           <C>            <C>           <C>            <C>
1. Average Cost Per Unit             $ 67.42     $ 13.64       $ 889.41       $  16.21      $ 469.38       $ 20.69
2. Units per Eligible                  3.999       3.411          0.465          1.516         0.007         1.958
3. Addt'l Capitation Amts.           $  0.23     $  0.03       $   2.90       $   0.00      $   0.00       $  0.00
   Cost per Elig. per Mo.            $ 22.70     $  3.91       $  37.36       $   2.05      $   0.27       $  3.38
Adjustments
    a. Demographics                    1.181       1.019          1.321          1.114         1.000         1.165
    b. Area                            1.043       1.000          1.000          1.000         1.000         1.000
    c. Coverages                       0.974       0.984          0.952          0.973         0.996         0.815
    d. Interest                        0.995       0.995          0.995          0.995         0.995         0.995
Adjusted Base Cost                   $ 27.10     $  3.90       $  46.75       $   2.21      $   0.27       $  3.19
3. Legislative Adjs.                   1.076       1.047          0.999          1.024         1.134         1.090
4. Trend Adjustments
   a. Cost per Unit                    1 000       1.100          1.050          1.000         1.000         0.950
   b. Units per Eligible               0.950       1.000          1.050          0.950         1.050         1.050
Projected Cost per Eligible          $ 27.70     $  4.49       $  51.49       $   2.15      $   0.32       $  3.47
5. Stop Loss Reins.                         Amount             $      0                Rate                    0.0%
6. CHDP
7. Fee-for-Service Adj.                                                                                       -3.0%
Capitation Rate With FQHC Increment            $93.09 / Without               $  92.75

<CAPTION>
Rate Calculation                              FQHC
                                        FFSE     Increment         Total

<S>                                     <C>        <C>              <C>
1. Average Cost Per Unit                $ 68.39    $   24.41
2. Units per Eligible                     0.168        0.168
3. Addt'l Capitation Amts.              $  0.00    $    0.00
   Cost per Etlg. per Mo.               $  0.96    $    0.34        $  70.97
Adjustments
    a. Demographics                       1.003        1.003
    b. Area                               1.000        1.000
    c. Coverages                          0.970        0.970
    d. Interest                           0.995        0.995
Adjusted Base Cost                      $  0.93    $    0.33        $  84.68
3. Legislative Adjs.                      1.031        1.031
4. Trend Adjustments
   a. Cost per Unit                       1.000        1.000
   b. Units per Eligible                  1.000        1.000
Projected Cost per Eligible             $  0.96    $    0.34        $  90.92
5. Stop Loss Reins.                              Premium                0.00
6. CHDP                                                                 5.04
7. Fee-for-Service Adj.                                               (2.87)
Capitation Rate With FQHC Increment
</TABLE>

<PAGE>

<TABLE>
<S>                                              <C>                          <C>                            <C>
Plan Name:              Molina Medical Center    Plan #:    355               Date:           04-May-99      C3 to Contract
County:                 Riverside                Plan Type: Commercial Plan   Base Period:    FY 96/97       95-23637
Aid Code Grouping:      Adult                                                                                Attachment 1
                                                                                                             Page 5 of 16
</TABLE>

<TABLE>
<S>                                                         <C>
The Rate Period is October 1, 1998 to September 30, 1999    Capitation Payments at the Beginning of the Month

</TABLE>

Coverages
--------------------------------------------------------------------------------
   CCS Indicated Claims                              NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Oulpatient Services                 NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Pharmacy Costs                      NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Hospital Inpatient Services         NOT Covered by the Plan
--------------------------------------------------------------------------------
   Eyewear                                           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Heroin Detoxification                             NOT Covered by the Plan
--------------------------------------------------------------------------------
   AIDS Waiver Services                              NOT Covered by the Plan
--------------------------------------------------------------------------------
   Adult Day Health Care                             NOT Covered by the Plan
--------------------------------------------------------------------------------
   Chiropractor/Acupuncture                          NOT Covered by the Plan
--------------------------------------------------------------------------------
   Local Education Authority                         NOT Covered by the Plan
--------------------------------------------------------------------------------
   Alphafeto Protein Testing                         NOT Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care for month of entry plus one        Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care after month of entry plus one      NOT Covered by the Plan
--------------------------------------------------------------------------------
   Special AIDS drugs                                NOT Covered by the Plan
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Rate Calculation                                                Hospital      Hospital      Long Term
                                   Physician      Pharmacy     Inpatient    Oulpatient           Care         Other
<S>                                 <C>          <C>            <C>            <C>           <C>            <C>
1. Average Cost Per Unit            $  90.48     $  17.11       $ 964.66       $  15.76      $ 812.04       $ 36.13
2. Units per Eligible                 21.383        5.818          5.446          4.679         0.000        10.172
3. Addt'l Capitation Amts.          $   0.37     $   0.06       $  35.62       $   0.08      $   0.00       $  0.00
   Cost per Elig. per Mo.           $ 161.60     $   8.36       $ 473.41       $   6.23      $   0.00       $ 30.63
Adjustments
    a. Demographics                    1.000        1.000          1.000          1.000         1.000         1 000
    b. Area                            1.043        1.000          1.000          1.000         1 000         1.000
    c. Coverages                       0.999        0.999          0.999          0.989         1.000         0.809
    d. Interest                        0.995        0.995          0.995          0.995         0.995         0.995
Adjusted Base Cost                  $ 167.54     $   8.31       $ 470.57       $   6.13      $   0.00       $ 24.66
3. Legislative Adjs.                   1.029        1.054          1.000          1.022         1.102         1.004
4. Trend Adjustments
   a. Cost per Unit                    1.000        1.100          1.050          1.000         1.000         0.950
   b. Units per Eligible               0.950        1.000          1.050          0.950         1.050         1.050
Projected Cost per Eligible         $ 163.78     $   9.63       $ 518.80       $   5.95      $   0.00       $ 24.70
5. Stop Loss Reins.                        Amount               $      0                Rate                    0.0%
6. CHDP
7. Fee-for-Service Adj.                                                                                        -3.0%
Capitation Rate With FQHC Increment              $ 706.77 /  Without             $ 705.26

<CAPTION>
Rate Calculation                              FQHC
                                           FFSE    Increment           Total
<S>                                     <C>        <C>              <C>
1. Average Cost Per Unit                $ 68.39    $   24.41
2. Units per Eligible                     0.735        0.735
3. Addt'l Capitation Amts.              $  0.00    $    0.00
   Cost per Elig. per Mo.               $  4.19    $    1.50        $ 685.92
Adjustments
    a. Demographics                       1.000        1.000
    b. Area                               1.000        1.000
    c. Coverages                          0.995        0.995
    d. Interest                           0.995        0.995
Adjusted Base Cost                      $  4.15    $    1.49        $ 682.85
3. Legislative Adjs.                      1.015        1.015
4. Trend Adjustments
   a. Cost per Unit                       1.000        1.000
   b. Units per Eligible                  1.000        1.000
Projected Cost per Eligible             $  4.21    $    1.51        $ 728.58
5. Stop Loss Reins.                              Premium                0.00
6. CHDP                                                                 0.00
7. Fee-for-Service Adj.                                               (21.81)
Capitation Rate With FQHC Increment
</TABLE>

<PAGE>

<TABLE>
<S>                                              <C>                          <C>                            <C>
Plan Name:              Molina Medical Center    Plan #:    355               Date:           04-May-99      C3 to Contract
County:                 Riverside                Plan Type: Commercial Plan   Base Period:    FY 96/97       95-23637
Aid Code Grouping:      AIDS                                                                                 Attachment 1
                                                                                                             Page 6 of 16
</TABLE>

<TABLE>
<S>                                                         <C>
The Rate Period is October 1, 1998 to September 30, 1999    Capitation Payments at the Beginning of the Month

</TABLE>

Coverages
--------------------------------------------------------------------------------
   CCS Indicated Claims                              NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Outpatient Services                 NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Pharmacy Costs                      NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Hospital Inpaitient Services        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Eyewear                                           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Heroin Detoxification                             NOT Covered by the Plan
--------------------------------------------------------------------------------
   AIDS Waiver Services                              NOT Covered by the Plan
--------------------------------------------------------------------------------
   Adult Day Health Care                             NOT Covered by the Plan
--------------------------------------------------------------------------------
   Chiropractor/Acupuncture                          NOT Covered by the Plan
--------------------------------------------------------------------------------
   Local Education Authority                         NOT Covered by the Plan
--------------------------------------------------------------------------------
   Alphafeto Protein Testing                         NOT Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care for month of entry plus one        Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care after month of entry plus one      NOT Covered by the Plan
--------------------------------------------------------------------------------
   Special AIDS drugs                                NOT Covered by the Plan
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Rate Calculation                                                Hospital      Hospital      Long Term
                                   Physician      Pharmacy     Inpatient    Outpatient           Care         Other
<S>                                <C>            <C>          <C>            <C>            <C>           <C>
1. Average Cost Per Unit           $   32.67      $ 126.04     $  485.15      $  13.79       $ 139.87      $  42.30
2. Units per Eligible                 26.305        74.792         3.169         9.882          0.000        36.392
3. Addt'l Capitation Arms.         $    2.96      $   0.09     $    9.89      $   0.02       $   0.00      $   0.00
     Cost per Elig. per Mo.        $   74.57      $ 785.66     $  138.01      $  11.38       $   0.00      $ 128.28
Adjustments
    a. Demographics                    1.000         1.000         1.000         1.000          1.000         1.000
    b. Area                            1 043         1.000         1.000         1.000          1.000         1.000
    c. Coverages                       0.918         0.648         0.957         0.992          0.998         0.599
    d. Interest                        0.995         0.995         0.995         0.995          0.995         0.995
Adjusted Base Cost                 $   71.04      $ 506.56     $  131.42      $  11.23       $   0.00      $  76.46
3. Legislative Adjs.                   0.963         1.006         0.977         0.982          1.186         0.979
4. Trend Adjustments
   a. Cost par Unit                    1.000         1.100         1.050         1.000          1.100         1.100
   b. Units per Eligible               1.100         1.210         1.050         1.045          0.950         1.000
Projected Cost per Eligible        $   75.25      $ 678.28     $  141.56      $  11.52       $   0.00      $  82.34
5. Stop Loss Reins.                       Amount               $       0                Rate                    0.0%
6. CHDP
7. Fee-for-Service Adj.                                                                                        -3.0%
Capitation Rate With FQHC Increment               $ 962.42 / Without          $ 962.42

<CAPTION>
Rule    Calculation                          FQHC
                                          FFSE    Increment            Total
<S>                                    <C>        <C>               <C>
1. Average Cost Per Unit               $ 66.52    $    0.00
2. Units per Eligible                    0.628        0.628
3. Addt'l Capitation Arms.             $  0.00    $    0.00
     Cost per Elig. per Mo.            $  3.48    $    0.00         $ 1.141.38
Adjustments
    a. Demographics                      1.000        1.000
    b. Area                              1.000        1.000
    c. Coverages                         0.951        0.951
    d. Interest                          0.995        0.995
Adjusted Base Cost                     $  3.29    $    0.00         $   800.00
3. Legislative Adjs.                     0.984        0.984
4. Trend Adjustments
   a. Cost per Unit                      1.000        1.000
   b. Units per Eligible                 1.000        1.000
Projected Cost per Eligible            $  3.24    $    0.00         $   992.19
5. Stop Loss Reins.                              Premium                  0.00
6. CHDP                                                                   0.00
7. Fee-for-Service Adj.
Capitation Rate With FQHC Increment                                      29.77
</TABLE>

<PAGE>

Aid Group Poverty - 7A                 Base:      Statewide Family Age Adjusted
                                    Base Period : FY 96/97
Payments at End of Month

<TABLE>
<CAPTION>
                                                               Hospital   Hospital     Nursing                         FQHC
             Services ==>              Physician  Pharmacy    Inpatient Outpatient    Facility   Other       FFSE Increment    Total
<S>                                      <C>        <C>        <C>        <C>         <C>        <C>      <C>       <C>      <C>
1. Base Cost                             $ 10.40    $ 6.74     $  13.64   $   3.91     $  0.24   $  8.30   $ 2.98    $ 1.21  $47.42
2. Age/Sex Adjustments                     1.000     1.000        1.000      1.000       1.000     1.000    1.000     1.000
3. Eligibility Adjustments                 1.000     1.000        1.000      1.000       1.000     1.000    1.000     1.000
4. Coverage Adjustments                    0.997     0.997        0.999      0.964       1.000     0.891    0.991     0.991
5. Interest Offset                         0.995     1.001        0.991      0.993       0.998     0.995    0.998     0.998

Contract Cost FY 96/97                   $ 10.32    $ 6.73     $  13.50   $   3.74    $   0.24   $  7.36   $ 2.94    $ 1.20  $46.03

6. Legislative Adjustments                 1.044     0.740        0.985      1.021       1.061     1.150    1.024     1.024
7. Trend Adjustments
           a. Cost per Unit                1.000     1.308        1.055      0.970       1.000     1.445    1.071     1.071
           b. Utilization                  1.000     1.027        1.050      1.000       1.107     1.000    1.265     1.265
Projected Cost 10/98-9/99                $ 10.77    $ 6.69     $  14.73   $   3.70    $   0.28   $ 12.23   $ 4.08    $ 1.66  $54.14

8. CHDP                                                                                                                      $ 2.54

9. Adiministrative Allowance                                                                         1.5%                    $ 0.88

Fee-for-Service Equivalent Cost                                                                                              $57.56

Fee-for-Services Adj.                                                                                  94%                    (3.45)

Capitation Rate with FQHC increment                                                                                          $54.11

Capitation Rate without FQHC increment                                                                                       $52.55
</TABLE>

                                                       C3 to Contract 95-23637
                                                       Attachment 1
                                                       Page 7 of 16

<PAGE>

Aid Group Poverty - 47/72                                 Base:  Statewide
                                                   Base Period:  FY 96/97
Payments at End of Month

<TABLE>
<CAPTION>
                                                      Hospital     Hospital    Nursing                   FQHC
         Services ==>         Physician   Pharmacy   Inpatient   Outpatient   Facility   Other      FFSE   Increment    Totals

<S>                           <C>         <C>        <C>         <C>          <C>        <C>      <C>        <C>
1. Base Cost                  $   10.66   $   7.27   $   20.52   $     5.31   $   0.14   $ 2.92   $ 5.42     $  2.21   $  54.45
2. Age/Sex Adjustments            1.000      1.000       1.000        1.000      1.000    1.000    1.000       1.000
3. Eligibility Adjustments        1.000      1.000       1.000        1.000      1.000    1.000    1.000       1.000
4. Coverage Adjustments           0.997      0.997       0.999        0.964      1.000    0.891    0.991       0.991
5. Interest Offset                0.995      1.001       0.991        0.993      0.998    0.995    0.998       0.998

Contract Cost FY 96/97        $   10.57   $   7.25   $   20.32   $     5.09   $   0.14   $ 2.59   $ 5.36     $  2.18   $  53.50

6. Legislative Adjustments        1.044      0.740       0.985        1.021      1.061    1.150    1.024       1.024
7. Trend Adjustments
        a. Cost per Unit          1.000      1.308       1.055        0.970      1.000    1.445    1.071       1.071
        b. Utilization            1.000      1.027       1.050        1.000      1.107    1.000    1.265       1.265

Projected Cost 10/98-9/99     $   11.04   $   7.21   $   22.17   $     5.04   $   0.16   $ 4.30   $ 7.44     $  3.02   $  60.38

8. CHDP                                                                                                                $   2.54

9. Administrative Allowance                                                                 1.6%                       $   0.96

Fee-for-Service Equivalent
 Cost                                                                                                                  $  63.88

Fee-for-Service Adj.                                                                         94%                          (3.83)

Capitation Rate with FQHC
 increment                                                                                                             $  60.05

Capitation Rate without
 FQHC increment                                                                                                        $  57.21
</TABLE>

                                                        C3 to Contract 95-23637
                                                        Attachment 1
                                                        Page 8 of 16

<PAGE>

<TABLE>
<S>                                              <C>                            <C>                             <C>
Plan Name:              Molina Medical Center    Plan #:    356                 Date:           04-May-99       C3 to Contract
County:                 San Bernardino           Plan Type: Commercial Plan     Base Period:    FY 96/97        95-23637
Aid Code Grouping:      Family                                                                                  Attachment 1
                                                                                                                Page 9 of 16
</TABLE>

<TABLE>
<S>                                                         <C>
The Rate Period is October 1, 1998 to September 30, 1999    Capitation Payments at the Beginning of the Month

</TABLE>
Coverages
--------------------------------------------------------------------------------
   CCS Indicated Claims                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Outpatient Services                  NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Pharmacy Costs                       NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Hospital Inpatient Services          NOT Covered by the Plun
--------------------------------------------------------------------------------
   Eyewear                                            NOT Covered by the Plan
--------------------------------------------------------------------------------
   Heroin Detoxification                              NOT Covered by the Plan
--------------------------------------------------------------------------------
   AIDS Waiver Services                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   Adult Day Health Care                              NOT Covered by the Plan
--------------------------------------------------------------------------------
   Chiropractor/Acupuncture                           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Local Education Authority                          NOT Covered by the Plan
--------------------------------------------------------------------------------
   Alphafelo Protein Testing                          NOT Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care for month of entry plus one         Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care alter month of entry plus one       NOT Covered by the Plan
--------------------------------------------------------------------------------
   Special AIDS drugs                                 NOT Covered by the Plan
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Rate Calculation                                              Hospital       Hospital    Long Term
                                 Physician      Pharmacy     Inpatient     Outpatient         Care         Other
<S>                                <C>          <C>           <C>           <C>           <C>           <C>
1. Average Cost Per Unit           $ 69.46      $  19.88      $ 978.02      $  16.16      $ 812.04      $  20.09
2. Units per Eligible                4.050         4.683         0.373         2.146         0.004         3.532
3. Addt'l Capitation Amts.         $  0.37      $   0.05      $   4.62      $   0.01      $   0.00      $   0.00
   Cost per Elig. per Mo.          $ 23.81      $   7.81      $  35.02      $   2.90      $   0.27      $   5.91
Adjustments
   a. Demographics                   0.997         0.993         0.977         0.987         1.000         0.985
   b. Area                           1.043         1.000         1.000         1.000         1.000         1.000
   c. Coverages                      0.975         0.992         0.968         0.956         0.995         0.833
   d. Interest                       0.995         0.995         0.995         0.995         0.995         0.995
Adjusted Base Cost                 $ 24.02      $   7.65      $  32.95      $   2.72      $   0.27      $   4.82
3. Legislative Adjs.                 1.053         1.053         0.998         1.023         1.141         1.046
4. Trend Adjustments
   a. Cost per Unit                  1.000         1.100         1.050         1.000         1.000         0.950
   b. Units per Eligible             0.950         1.000         1.050         0.950         1.050         1.050
Projected Cost per Eligible        $ 24.03      $   8.86      $  36.25      $   2.64      $   0.32      $   5.03
5. Stop Loss Reins.                        Amount             $      0               Rate                    0.0%
6. CHDP
7. Fee-for-Service Adj.                                                                                     -3.0%
Capitation Rate With FQHC
 Increment                                      $  80.48 / Without          $  80.41

<CAPTION>
Rate Calculation                          FQHC
                                      FFSE    Increment           Total
<S>                                <C>         <C>             <C>
1. Average Cost Per Unit           $ 68.10     $   7.33
2. Units per Eligible                0.132        0.132
3. Addt'l Capitation Amts.         $  0.00     $   0.00
   Cost per Elig. per Mo.          $  0.75     $   0.08        $  76.55
Adjustments
   a. Demographics                   0.992        0.992
   b. Area                           1.000        1.000
   c. Coverages                      0.935        0.935
   d. Interest                       0.995        0.995
Adjusted Base Cost                 $  0.69     $   0.07        $  73.19
3. Legislative Adj.                  1.027        1.027
4. Trend Adjustments
   a. Cost per Unit                  1.000        1.000
   b. Units per Eligible             1.000        1.000
Projected Cost per Eligible        $  0.71     $   0.07        $  77.91
5. Stop Loss Reins.                      Premium                   0.00
6. CHDP                                                            5.06
7. Fee-for-Service Adj.                                           (2.49)
Capitation Rate With FQHC Increment
</TABLE>

<PAGE>

<TABLE>
<S>                                              <C>                            <C>                           <C>
Plan Name:              Molina Medical Center    Plan #:    356                 Date:           04-May-99     C3 to Contract
County:                 San Bernardino           Plan Type: Commercial Plan     Base Period:    FY 96/97      95-23637
Aid Code Grouping:      Disabled                                                                              Attachment 1
                                                                                                              Page 10 of 16
</TABLE>

<TABLE>
<S>                                                         <C>
The Rate Period is October 1, 1998 to September 30, 1999    Capitation Payments at the Beginning of the Month

</TABLE>

Coverages
--------------------------------------------------------------------------------
   CCS Indicated Claims                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Outpatient Services                  NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Pharmacy Costs                       NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Hospital Inpatient Services          NOT Covered by the Plan
--------------------------------------------------------------------------------
   Eyewear                                            NOT Covered by the Plan
--------------------------------------------------------------------------------
   Heroin Detoxification                              NOT Covered by the Plan
--------------------------------------------------------------------------------
   AIDS Waiver Services                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   Adult Day Health Care                              NOT Covered by the Plan
--------------------------------------------------------------------------------
   Chiropractor/Acupuncture                           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Local Education Authority                          NOT Covered by the Plan
--------------------------------------------------------------------------------
   Alphafelo Protein Testing                          NOT Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care for month of entry plus one         Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care after month of entry plus one       NOT Covered by the Plan
--------------------------------------------------------------------------------
   Special AIDS drugs                                 NOT Covered by the Plan
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Rate Calculation                                              Hospital       Hospital    Long Term
                                 Physician      Pharmacy     Inpatient     Outpatient         Care         Other
<S>                                <C>          <C>           <C>           <C>           <C>           <C>
1. Average Cost Per Unit           $ 46.41      $  39.70      $ 611.26      $  12.37      $ 139.87      $  10.16
2. Units per Eligible                6.969        26.861         1.556         5.050         0.459        21.959
3. Addt'l Capitation Amts.         $  2.96      $   0.09      $   9.89      $   0.02      $   0.00      $   0.00
   Cost per Elig. per Mo.          $ 29.91      $  88.96      $  89.15      $   5.23      $   5.35      $  18.59
Adjustments
   a. Demographics                   0.980         0.973         0.961         0.998         0.996         1.006
   b. Area                           1.043         1.000         1.000         1.000         1.000         1.000
   c. Coverages                      0.900         0.875         0.920         0.973         0.995         0.878
   d. Interest                       0.995         0.995         0.995         0.995         0.995         0.995
Adjusted Base Cost                 $ 27.38      $  75.36      $  78.43      $   5.05      $   5.28      $  16.34
3. Legislative Adjs.                 0.941         1.043         0.919         0.931         1.130         0.923
4. Trend Adjustments
   a. Cost per Unit                  1.000         1.100         1.050         1.000         1.100         1.100
   b. Units per Eligible             1.100         1.210         1.050         1.045         0.950         1.000
Projected Cost per Eligible        $ 28.34      $ 104.62      $  79.47      $   4.91      $   6.23      $  16.59
5. Stop Loss Reins.                        Amount             $      0               Rate                    0.0%
6. CHDP
7. Fee-for-Service Adj.                                                                                     -3.0%
Capitation Rate With FQHC
 Increment                                      $ 233.49 / Without          $ 233.49

<CAPTION>
Rate Calculation                          FQHC
                                      FFSE    Increment          Total
<S>                                <C>         <C>             <C>
1. Average Cost Per Unit           $ 69.96     $   0.00
2. Units per Eligible                0.120        0.120
3. Addt'l Capitation Amts.         $  0.00     $   0.00
   Cost per Elig. per Mo.          $  0.70     $   0.00        $ 237.89
Adjustments
   a. Demographics                   0.989        0.989
   b. Area                           1.000        1.000
   c. Coverages                      0.863        0.863
   d. Interest                       0.995        0.995
Adjusted Base Cost                 $  0.59     $   0.00        $ 208.43
3. Legislative Adjs.                 0.932        0.932
4. Trend Adjustments
   a. Cost per Unit                  1.000        1.000
   b. Units per Eligible             1.000        1.000
Projected Cost per Eligible        $  0.55     $   0.00        $ 240.71
5. Stop Loss Reins.                      Premium                   0.00
6. CHDP                                                            0.00
7. Fee-for-Service Adj.                                           (7.22)
Capitation Rate With FQHC Increment
</TABLE>

<PAGE>

<TABLE>
<S>                                              <C>                            <C>
Plan Name:              Molina Medical Center    Plan #:    356                 Date:           04-May-99
County:                 San Bernardino           Plan Type: Commercial Plan     Base Period:    FY 96/97
Aid Code Grouping:      Aged
</TABLE>

<TABLE>
<S>                                                         <C>
The Rate Period is October 1, 1998 to September 30, 1999    Capitation Payments at the Beginning of the Month
                                                            C3 to Contract 95-23637
                                                            Attachment 1
                                                            Page 11 of 16

</TABLE>

Coverages
--------------------------------------------------------------------------------
   CCS Indicated Claims                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Outpatient Services                  NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Pharmacy Costs                       NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Hospital Inpatient Services          NOT Covered by the Plan
--------------------------------------------------------------------------------
   Eyewear                                            NOT Covered by the Plan
--------------------------------------------------------------------------------
   Heroin Detoxification                              NOT Covered by the Plan
--------------------------------------------------------------------------------
   AIDS Waiver Services                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   Adult Day Health Care                              NOT Covered by the Plan
--------------------------------------------------------------------------------
   Chiropractor/Acupuncture                           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Local Education Authority                          NOT Covered by the Plan
--------------------------------------------------------------------------------
   Alphafeto Protein Testing                          NOT Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care for month of entry plus one         Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care after month of entry plus one       NOT Covered by the Plan
--------------------------------------------------------------------------------
   Special AIDS drugs                                 NOT Covered by the Plan
--------------------------------------------------------------------------------

C3 to Contract
95-23637
Attachment 1
Page 11 of 16

<TABLE>
<CAPTION>
Rate Calculation                                              Hospital      Hospital     Long Term
                                 Physician      Pharmacy     Inpatient    Outpatient          Care         Other
<S>                                <C>          <C>           <C>           <C>           <C>           <C>
1. Average Cost Per Unit           $ 48.90      $  32.71      $ 316.16      $  10.02      $  77.33      $   6.41
2. Units per Eligible                4.580        21.914         1.265         3.306         2.016        12.862
3. Addt'l Capitation Amts.         $  1.29      $   0.00      $   7.41      $   0.02      $   0.00      $   0.00
   Cost per Elig. per Mo.          $ 19.95      $  59.73      $  40.74      $   2.78      $  12.99      $   6.87
Adjustments
   a. Demographics                   0.963         1.014         0.962         0.975         1.027         1.013
   b. Area                           1.043         1 000         1.000         1.000         1.000         1.000
   c. Coverages                      0.981         0.996         0.997         0.986         0.997         0.791
   d. Interest                       0.995         0.995         0.995         0.995         0.995         0.995
Adjusted Base Cost                 $ 19.56      $  60.02      $  38.88      $   2.66      $  13.23      $   5.48
3. Legislative Adjs.                 0.939         1.049         0.926         0.931         1.140         0.927
4. Trend Adjustments
   a. Cost per Unit                  1.100         1.100         1.100         1.050         1.000         1.050
   b. Units per Eligble             1.100         1.155         1.100         1.100         1.000         0.950
Projected Cost per Eligible        $ 22.22      $  79.99      $  43.56      $   2.86      $  15.08      $   5.07
5. Stop Loss Reins.                        Amount             $      0               Rate                    0.0%
6. CHDP
7. Fee-for-Service Adj.                                                                                     -3.0%
Capitation Rate With FQHC
 Increment                                      $ 163.77 / Without          $ 163.77

<CAPTION>
Rate Calculation                          FQHC
                                      FFSE    Increment          Total
<S>                                <C>         <C>             <C>
1. Average Cost Per Unit           $ 50.63     $   0.00
2. Units per Eligible                0.024        0.024
3. Addt'l Capitation Amis.         $  0.00     $   0.00
   Cost per Elig. per Mo.          $  0.10     $   0.00        $ 143.16
Adjustments
   a. Demographics                   0.979        0.979
   b. Area                           1.000        1.000
   c. Coverages                      0.603        0.603
   d. Interest                       0.995        0.995
Adjusted Base Cost                 $  0.06     $   0.00        $ 139.89
3. Legislative Adjs.                 0.926        0.926
4. Trend Adjustments
   a. Cost per Unit                  1.000        1.000
   b. Units per Eligible             1.000        1.000
Projected Cost per Eligible        $  0.06     $   0.00        $ 168.84
5. Stop Loss Reins.                      Premium                   0.00
6. CHDP                                                            0.00
7. Fee-for-Service Adj.                                           (5.07)
Capitation Rate With FQHC Increment
</TABLE>

<PAGE>

<TABLE>
<S>                                              <C>                            <C>                              <C>
Plan Name:              Molina Medical Center    Plan #:    356                 Date:           04-May-99        C3 to Contract
County:                 San Bernardino           Plan Type: Commercial Plan     Base Period:    FY 96/97         95-23637
Aid Code Grouping:      Child                                                                                    Attachment 1
                                                                                                                 Page 12 of 16
</TABLE>

<TABLE>
<S>                                                         <C>
The Rate Period is October 1, 1998 to September 30, 1999    Capitation Payments at the Beginning of the Month

</TABLE>

Coverages
--------------------------------------------------------------------------------
   CCS Indicated Claims                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Outpatient Services                  NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Pharmacy Costs                       NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Hospital Inpatient Services          NOT Covered by the Plan
--------------------------------------------------------------------------------
   Eyewear                                            NOT Covered by the Plan
--------------------------------------------------------------------------------
   Heroin Detoxification                              NOT Covered by the  Plan
--------------------------------------------------------------------------------
   AIDS Waiver Services                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   Adult Day Health Care                              NOT Covered by the Plan
--------------------------------------------------------------------------------
   Chiropractor/Acupuncture                           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Local Education Authority                          NOT Covered by the Plan
--------------------------------------------------------------------------------
   Alphafelo Protein Testing                          NOT Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care for month of entry plus one         Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care alter month of entry plus one       NOT Covered by the Plan
--------------------------------------------------------------------------------
   Special AIDS drugs                                 NOT Covered by the Plan
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Rate Calculation                                               Hospital     Hospital      Long Term
                                 Physician      Pharmacy      Inpatient    Outpatient          Care        Other
<S>                                <C>          <C>          <C>             <C>           <C>           <C>
1. Average Cost Per Unit           $ 67.42      $  13.64     $ 1,120.53      $  16.21      $ 469.38      $  20.69
2. Units per Eligible                4.035         3.411          0.465         1.516         0.007         1.958
3. Addt'l Capitation Amts.         $  0.23      $   0.03     $     2.90      $   0.00      $   0.00      $   0.00
   Cost per Elig. per Mo.          $ 22.90      $   3.91     $    46.32      $   2.05      $   0.27      $   3.38
Adjustments
   a. Demographics                   1.212         1.021          1.342         1.157         1.000         1.080
   b. Area                           1.043         1.000          1.000         1.000         1.000         1.000
   c. Coverages                      0.974         0.984          0.952         0.973         0.996         0.815
   d. Interest                       0.995         0.995          0.995         0.995         0.995         0.995
Adjusted Base Cost                 $ 28.05      $   3.91     $    58.88      $   2.30      $   0.27      $   2.96
3. Legislative Adjs.                 1.076         1.047          0.999         1.024         1.134         1.090
4. Trend Adjustments
   a. Cost per Unit                  1.000         1.100          1.050         1.000         1.000         0.950
   b. Units per Eligible             0.950         1.000          1.050         0.950         1.050         1.050
Projected Cost per Eligible        $ 28.67      $   4.50     $    64.85      $   2.24      $   0.32      $   3.22
5. Stop Loss Reins.                        Amount            $        0               Rate                    0.0%
6. CHDP
7. Fee-for-Service Adj.                                                                                      -3.0%
Capitation Rate With FQHC
 Increment                                      $ 106.43 / Without           $ 106.35

<CAPTION>
Rate Calculation                          FQHC
                                     FFSE     Increment          Total
<S>                                <C>         <C>             <C>
1. Average Cost Per Unit           $ 68.10     $   7.33
2. Units per Eligible                0.132        0.132
3. Addt'l Capitation Amts.         $  0.00     $   0.00
   Cost per Elig. per Mo.          $  0.75     $   0.08        $  79.66
Adjustments
   a. Demographics                   1.084        1.084
   b. Area                           1.000        1.000
   c. Coverages                      0.970        0.970
   d. Interest                       0.995        0.995
Adjusted Base Cost                 $  0.78     $   0.08        $  97.23
3. Legislative Adjs.                 1.031        1.031
4. Trend Adjustments
   a. Cost per Unit                  1.000        1.000
   b. Units per Eligible             1.000        1.000
Projected Cost per Eligible        $  0.80     $   0.08        $ 104.88
5. Stop Loss Reins.                      Premium                   0.00
6. CHDP                                                            5.04
7. Fee-for-Service Adj.                                           (3.29)
Capitation Rate With FQHC Increment
</TABLE>

<PAGE>

<TABLE>
<S>                                              <C>                            <C>                           <C>
Plan Name:              Molina Medical Center    Plan #:    356                 Date:           04-May-99     C3 to Contract
County:                 San Bernardino           Plan Type: Commercial Plan     Base Period:    FY 96/97      95-23637
Aid Code Grouping:      Adult                                                                                 Attachment 1
                                                                                                              Page 13 of 16
</TABLE>

<TABLE>
<S>                                                         <C>
The Rate Period is October 1, 1998 to September 30, 1999    Capitation Payments at the Beginning of the Month

</TABLE>

Coverages
--------------------------------------------------------------------------------
   CCS Indicated Claims                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Outpatient Services                  NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Pharmacy Costs                       NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Hospital Inpatient Services          NOT Covered by the Plan
--------------------------------------------------------------------------------
   Eyewear                                            NOT Covered by the Plan
--------------------------------------------------------------------------------
   Heroin Detoxification                              NOT Covered by the Plan
--------------------------------------------------------------------------------
   AIDS Waiver Services                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   Adult Day Health Care                              NOT Covered by the Plan
--------------------------------------------------------------------------------
   Chiropractor/Acupuncture                           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Local Education Authority                          NOT Covered by the Plan
--------------------------------------------------------------------------------
   Alphafeto Protein Testing                          NOT Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care for month of entry plus one         Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care after month of entry plus one       NOT Covered by the Plan
--------------------------------------------------------------------------------
   Special AIDS drugs                                 NOT Covered by the Plan
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Rate Calculation                                              Hospital       Hospital     Long Term
                                 Physician      Pharmacy     Inpatient     Outpatient          Care        Other
<S>                               <C>           <C>          <C>             <C>           <C>           <C>
1. Average Cost Per Unit          $  90.48      $  17.11     $ 1,140.81      $  15.76      $ 812.04      $  36.13
2. Units per Eligible               21.541         5.818          5.446         4.679         0.000        10.172
3. Addt'l Capitation Amts.        $   0.37      $   0.06     $    35.62      $   0.08      $   0.00      $   0.00
   Cost per Elig. per Mo.         $ 162.79      $   8.36     $   553.36      $   6.23      $   0.00      $  30.63
Adjustments
   a. Demographics                   1.000         1.000          1.000         1.000         1.000         1.000
   b. Area                           1.043         1.000          1.000         1.000         1.000         1.000
   c. Coverages                      0.999         0.999          0.999         0.989         1.000         0.809
   d. Interest                       0.995         0.995          0.995         0.995         0.995         0.995
Adjusted Base Cost                $ 168.77      $   8.31     $   550.04      $   6.13      $   0.00      $  24.66
3. Legislative Adjs.                 1.029         1.054          1.000         1.022         1.102         1.004
4. Trend Adjustments
   a. Cost per Unit                  1.000         1.100          1.050         1.000         1.000         0.950
   b. Units per Eligble              0.950         1.000          1.050         0.950         1.050         1.050
Projected Cost per Eligible       $ 164.98      $   9.63     $   606.42      $   5.95      $   0.00      $  24.70
5. Stop Loss Reins.                        Amount            $        0               Rate                    0.0%
6. CHDP
7. Fee-for-Service Adj.                                                                                      -3.0%
Capitation Rate With FQHC
 Increment                                      $ 790.89 / Without          $ 790.53

<CAPTION>
Rate Calculation                          FQHC
                                     FFSE     Increment          Total
<S>                                <C>         <C>             <C>
1. Average Cost Per Unit           $ 68.10     $   7.33
2. Units per Eligible                0.577        0.577
3. Addt'l Capitation Amts.         $  0.00     $   0.00
   Cost per Elig. per Mo.          $  3.28     $   0.35        $ 765.00
Adjustments
   a. Demographics                   1.000        1.000
   b. Area                           1.000        1.000
   c. Coverages                      0.995        0.995
   d. Interest                       0.995        0.995
Adjusted Base Cost                 $  3.25     $   0.35        $ 761.51
3. Legislative Adjs.                 1.015        1.015
4. Trend Adjustments
   a. Cost per Unit                  1.000        1.000
   b. Units per Eligble              1.000        1.000
Projected Cost per Eligible        $  3.30     $   0.36        $ 815.34
5. Stop Loss Reins.                      Premium                   0.00
6. CHDP                                                            0.00
7. Fee-for-Service Adj.                                          (24.45)
Capitation Rate With FQHC Increment
</TABLE>

<PAGE>

<TABLE>
<S>                                              <C>                            <C>                            <C>
Plan Name:              Molina Medical Center    Plan #:    356                 Date:           04-May-99      C3 to Contract
County:                 San Bernardino           Plan Type: Commercial Plan     Base Period:    FY 96/97       95-23637
Aid Code Grouping:      AIDS                                                                                   Attachment 1
                                                                                                               Page 14 of 16
</TABLE>

<TABLE>
<S>                                                         <C>
The Rate Period is October 1, 1998 to September 30, 1999    Capitation Payments at the Beginning of the Month

</TABLE>

Coverages
--------------------------------------------------------------------------------
   CCS Indicated Claims                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Outpatient Services                  NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Pharmacy Costs                       NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Hospital Inpatient Services          NOT Covered by the Plan
--------------------------------------------------------------------------------
   Eyewear                                            NOT Covered by the Plan
--------------------------------------------------------------------------------
   Heroin Detoxification                              NOT Covered by the Plan
--------------------------------------------------------------------------------
   AIDS Waiver Services                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   Adult Day Health Care                              NOT Covered by the Plan
--------------------------------------------------------------------------------
   Chiropractor/Acupuncture                           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Local Education Authority                          NOT Covered by the Plan
--------------------------------------------------------------------------------
   Alphafeto Protein Testing                          NOT Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care for month of entry plus one         Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care after month of entry plus one       NOT Covered by the Plan
--------------------------------------------------------------------------------
   Special AIDS drugs                                 NOT Covered by the Plan
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Rate Calculation                                              Hospital      Hospital     Long Term
                                 Physician      Pharmacy     Inpatient     Outpatient       Care         Other
<S>                               <C>           <C>          <C>            <C>           <C>           <C>
1. Average Cost Per Unit          $  32.67      $ 126.04     $   611.26     $  13.79      $ 139.87      $  42.30
2. Units per Eligible               26.584        74.792          3.169        9.882         0.000        36.392
3. Addt'l Capitation Amts.        $   2.96      $   0.09     $     9.89     $   0.02      $   0.00      $   0.00
   Cost per Elig. per Mo.         $  75.33      $ 785.66     $   171.31     $  11.38      $   0.00      $ 128.28
Adjustments
   a. Demographics                   1.000         1.000          1.000        1.000         1.000         1.000
   b. Area                           1.043         1.000          1.000        1.000         1.000         1.000
   c. Coverages                      0.918         0.648          0.957        0.992         0.998         0.599
   d. Interest                       0.995         0.995          0.995        0.995         0.995         0.995
Adjusted Base Cost                $  71.77      $ 506.56     $   163.12     $  11.23      $   0.00      $  76.46
3. Legislative Adjs.                 0.963         1.006          0.977        0.982         1.186         0.979
4. Trend Adjustments
   a. Cost per Unit                  1.000         1.100          1.050        1.000         1.100         1.100
   b. Units per Eligble              1.100         1.210          1.050        1.045         0.950         1.000
Projected Cost per Eligible       $  76.03      $ 678.28     $   175.70     $  11.52      $   0.00      $  82.34
5. Stop Loss Reins.                        Amount            $        0              Rate                    0.0%
6. CHDP
7. Fee-for-Service Adj.                                                                                     -3.0%
Capitation Rate With FQHC
 Increment                                      $ 995.00 / Without          $ 995.00

<CAPTION>
Rate Calculation                          FQHC
                                     FFSE     Increment          Total
<S>                                <C>         <C>            <C>
1. Average Cost Per Unit           $ 69.96     $   0.00
2. Units per Eligible                0.349        0.349
3. Addt'l Capitation Amts.         $  0.00     $   0.00
   Cost per Elig. per Mo.          $  2.04     $   0.00       $ 1,174.00
Adjustments
   a. Demographics                   1.000        1.000
   b. Area                           1.000        1.000
   c. Coverages                      0.951        0.951
   d. Interest                       0.995        0.995
Adjusted Base Cost                 $  1.93     $   0.00       $   831.07
3. Legislative Adjs.                 0.984        0.984
4. Trend Adjustments
   a. Cost per Unit                  1.000        1.000
   b. Units per Eligible             1.000        1.000
Projected Cost per Eligible        $  1.90     $   0.00       $ 1,025.77
5. Stop Loss Reins.                      Premium                    0.00
6. CHDP                                                             0.00
7. Fee-for-Service Adj.                                            (30.77)
Capitation Rate With FQHC Increment
</TABLE>

<PAGE>

Aid Group Poverty - 7A                 Base:      Statewide Family Age Adjusted
                                    Base Period : FY 96/97
Payments at End of Month

<TABLE>
<CAPTION>
                                                             Hospital   Hospital    Nursing                   FQHC
         Services ==>>                Physician   Pharmacy   Inpatient Outpatient   Facility    Other    FFSE     Increment Total
<S>                                    <C>        <C>        <C>        <C>         <C>        <C>      <C>        <C>      <C>
1. Base Cost                           $ 10.40    $  6.74    $  13.64   $   3.91     $  0.24   $  8.30   $ 2.98    $  1.21  $ 47.42
2. Age/Sex Adjustments                   1.000      1.000       1.000      1.000       1.000     1.000    1.000      1.000
3. Eligibility Adjustments               1.000      1.000       1.000      1.000       1.000     1.000    1.000      1.000
4. Coverage Adjustments                  0.997      0.997       0.999      0.964       1.000     0.891    0.991      0.991
5. Interest Offset                       0.995      1.001       0.991      0.993       0.998     0.995    0.998      0.998

Contract Cost FY 96/97                 $ 10.32    $  6.73    $  13.50     $ 3.74    $   0.24   $  7.36   $ 2.94    $  1.20  $ 46.03

6. Legislative Adjustments               1.044      0.740       0.985      1.021       1.061     1.150    1.024      1.024
7. Trend Adjustments
           a. Cost per Unit              1.000      1.308       1.055      0.970       1.000     1.445    1.071      1.071
           b. Utilization                1.000      1.027       1.050      1.000       1.107     1.0OO    1.265      1.265

Projected Cost 10/98-9/99              $ 10.77    $  6.69    $  14.73   $   3.70    $   0.28   $ 12.23   $ 4.08    $  1.66  $ 54.14

8. CHDP                                                                                                                     $  2.54

9. Adiministrative Allowance                                                                      1.6%                      $  0.88

Fee-for-Service Equivalent Cost                                                                                             $ 57.56

Fee-for-Service Adj.                                                                               94%                        (3.45)

Capition Rate with FQHC increment                                                                                           $ 54.11

Capition Rate without FQHC increment                                                                                        $ 52.55
</TABLE>

                                        C3 to Contract 95-23637
                                        Attachment 1
                                        Page 15 of 16

<PAGE>

Aid Group Poverty - 47/72              Base:      Statewide Family Age Adjusted
                                    Base Period : FY 96/97
Payments at End of Month

<TABLE>
<CAPTION>
                                                              Hospital   Hospital   Nursing                  FQHC
         Services ==>>               Physician   Pharmacy    Inpatient  Outpatient  Facility    Other    FFSE     Increment  Total
<S>                                   <C>        <C>         <C>        <C>        <C>        <C>      <C>        <C>      <C>
1. Base Cost                          $ 10.66    $  7.27     $  20.52   $   5.31   $  0.14    $  2.92  $  5.42    $  2.21  $  54.45
2. Age/Sex Adjustments                  1.000      1.000        1.000      1.000      1.000     1.000    1.000      1.000
3. Eligibility Adjustments              1.000      1.000        1.000      1.000      1.000     1.000    1.000      1.000
4. Coverage Adjustments                 0.997      0.997        0.999      0.964      1.000     0.891    0.991      0.991
5. Interest Offset                      0.995      1.001        0.991      0.993      0.998     0.995    0.998      0.998

Contract Cost FY 96/97                $ 10.57    $  7.25     $  20.32   $   5.09   $   0.14   $  2.59  $  5.36    $  2.18  $  53.50

6. Legislative Adjustments              1.044      0.740        0.985      1.021      1.061     1.150    1.024      1.024
7. Trend Adjustments
           a. Cost per Unit             1.000      1.308        1.055      0.970      1.000     1.445    1.071      1.071
           b. Utilization               1.000      1.027        1.050      1.000      1.107     1.0OO    1.265      1.265

Projected Cost 10/98-9/99             $ 11.04    $  7.21     $  22.17   $   5.04   $   0.16   $  4.30  $  7.44    $  3.02  $  60.38

8. CHDP                                                                                                                    $  12.54

9. Adiministrative Allowance                                                                     1.5%                      $   0.96

Fee-for-Service Equivalent Cost                                                                                            $  63.88

Fee-for-Service Adj.                                                                              94%                         (3.83)

Capition Rate with FQHC increment                                                                                          $  60.05

Capition Rate without FQHC increment                                                                                       $  57.21
</TABLE>

                                        C3 to Contract 95-23637
                                        Attachment 1
                                        Page 16 of 16

<PAGE>

[LETTERHEAD OF DEPARTMENT OF HEALTH SERVICES]

DEPARTMENT OF HEALTH SERVICES
714/744 P Street
P. O. Box 942732
Sacramonto, CA 94234-7320
(916) 654-8076

          December 23, 1999

          George Goldstein, President
          Molina Medical Centers
          One Golden Shore
          Long Beach, CA 90802

          Dear Mr. Goldstein:

          The enclosed Change Order No. C4 to Contract No. 95-23637 adds Section
          3.47 to Article III of your Contract, relating to Year 2000 compliance
          requirements. The text of the Change Order contains the State
          Department of General Services Year 2000 warranty language. The Change
          Order will be effective immediately. Alternative text is not
          permitted.

          If you have any questions, please contact your contract manager.

          Sincerely,

          /s/
          -------------------
              Susanne M. Hughes
              Acting Chief
              Medi-Cal Managed Care Division

          Enclosures

<PAGE>

[LETTERHEAD OF DEPARTMENT OF HEALTH SERVICES]

DEPARTMENT OF HEALTH SERVICES
 714/744 P Street
 P. O. Box 942732
 Sacramento. CA 94234-7320
 (916) 654-8076

         CHANGE ORDER No. C4 to CONTRACT No. 95-23637: AMEND ARTICLE III,
         GENERAL TERMS AND CONDITIONS BY ADDING SECTION 3.47, YEAR 2000
         COMPLIANCE REQUIREMENTS. Issued December 17, 1999.

         3.47 YEAR 2000 COMPLIANCE REQUIREMENTS

                  The Contractor warrants and represents that the goods or
                  services sold, leased, or licensed to the State of California,
                  its agencies, or its political subdivisions, pursuant to this
                  contract are "Year 2000 compliant." For purposes of this
                  contract, a good or service is Year 2000 compliant If it will
                  continue to fully function before, at, and after the Year 2000
                  without interruption and if applicable, with full ability to
                  accurately and unambiguously process, display, compare,
                  calculate, manipulate, and otherwise utilize date information.
                  This warranty and representation supersedes all warranty
                  disclaimers and all limitations on liability provided by or
                  through the Contractor.

<PAGE>

[GRAPHIC APPEARS HERE]

 DEPARTMENT OF HEALTH SERVICES
 714/744 P Street
 P.O. Box 42732
 Sacramento, CA 94234-7320
 (916) 654-8076

          February 7, 2000

                                                                          [SEAL]

          George Goldstein
          Molina Medical Centers, Inc.
          One Golden Shore
          Long Beach, CA 90802

          Dear Mr., Goldstein:

          On July 1, 1999, the Department of Health Services (Department) sent
          you Change Order No. 03 to Contract No. 95-23637. After further
          analysis, the Department determined that Change Order No. 03 did not
          completely express its intent regarding Federally Qualified Health
          Centers (FQHCs) and Rural Health Centers (RHCs). In addition, this
          Change Order adds several new aid codes that became effective during
          1999. These aid codes are split aid codes from existing aid codes you
          are already capitated for, including 5X split from 59, 8R split from
          7A, and 8P spirt from 72. Therefore, the Department is sending you
          this enclosed Change Order (No. 05) to replace and supersede Change
          Order No. 03.

          In accordance with Article III, Section 3.34.2 of your Contract, the
          enclosed Change Order authorizes the change in rates for FQHC and RHC
          subcontracts and transmits (Molina Medical Centers, Inc.) rates for
          the period July 1, 1999 through September 30, 1 999. This Change
          Order also changes Contract Sections 3.28.6 Federally Qualified Health
          Centers/Rural Health Clinics; 5.3 Capitation Rates; 5.4 Capitation
          Rates Constitute Payment in Full; 5.13 FQHC and RHC Risk Corridor
          Payments; 6.3,6 Submittal of FQHC and RHC Payment Information and
          6.6.21 FQHC and RHC Contracts. These rates appeared in your capitation
          rates beginning July 1, 1999.

          If you have any questions, please contact your contract manager.

          Sincerely,

          /s/
          -------------------
              Susanne M. Hughes
              Acting Chief
              Medi-Cal Managed Care Division

          Enclosures

<PAGE>

[LETTERHEAD OF DEPARTMENT OF HEALTH SERVICES]

 DEPARTMENT OF HEALTH SERVICES
 714/744 P Street
 P. O. Box 942732
 Sacramento, CA 94234-7320
 (916)654-8076

         CHANGE ORDER NUMBER C5 TO CONTRACT NO.95-23637: CHANGING CONTRACT
         SECTIONS 3.28.6 FEDERALLY QUALIFIED HEALTH CENTERS/RURAL HEALTH
         CLINICS; 5.3 CAPITATION RATES; 5.4 CAPITATION RATES CONSTITUTE PAYMENT
         IN FULL; 5.13 FQHC/RHC RISK CORRIDOR PAYMENTS; 6.3.6 SUBMITTAL OF FQHC
         AND RHC PAYMENT INFORMATION AND 6.6.21 FQHC AND RURAL HEALTH CLINIC
         (RHC) CONTRACTS TO READ AS STATED BELOW. This Change Order is effective
         July 1,1999.

         1.  3.28.6 FEDERALLY QUALIFIED HEALTH CENTERS/RURAL HEALTH
                    CLINICS

             A.     For service periods from the effective date of this contract
                    through June 30,1999, Contractor shall not enter into a
                    Subcontract with a Federally Qualified Health Center (FQHC)
                    or a Rural Health Clinic (RHC) unless DHS approves the
                    provisions regarding rates, which shall be subject to the
                    standard that they be reasonable, as determined by DHS, in
                    relation to the services to be provided in accordance with
                    Article VI, Section 6.6.21, FQHC and RHC Contracts. In
                    Subcontracts where the FQHC or RHC has made the election to
                    be reimbursed on a reasonable cost basis by the State,
                    provisions shall be included that require the subcontractor
                    to keep a record of the number of visits by plan Members
                    separate from Fee-For-Service Medi-Cal beneficiaries, in
                    addition to any other data reporting requirements of the
                    Subcontract

             B.     For service periods beginning July 1,1999, Contractor shall
                    submit to DHS, within 30 days of a request and in the form
                    and manner specified by DHS, the services provided and the
                    reimbursement level and amount for each of Contractor's FQHC
                    and RHC Subcontracts. For service periods beginning July
                    1,1999, Contractor shall certify in writing to DHS within 30
                    days of DHS's written request, that pursuant to Welfare and
                    Institutions Code, Section 14087.325(b) and (d), as amended
                    by Chapter 894/Statutes of 1998, FQHC and RHC Subcontract
                    terms and conditions are the same as offered to other
                    Subcontractors providing a similar scope of service and that
                    reimbursement is not less than the level and amount of
                    payment that Contractor makes for the same scope of services
                    furnished by a provider that is not a FQHC or RHC. For FQHC
                    or RHC services provided on or after July 1,1999, Contractor
                    is not required to pay FQHCs and RHCs the Medi-Cal interim
                    per visit rate described in Section 6.6.21. At its
                    discretion, DHS reserves the right to review and audit
                    Contractor's FQHC and RHC reimbursement to ensure compliance
                    with state and federal law and shall approve all FQHC and
                    RHC Subcontracts consistent with the provisions of Welfare
                    and Institutions Code Section 14087.325(h).

                                     1 of 5

<PAGE>

             C.     Subcontracts with FQHCs shall also meet Contract
                    requirements of Article VI, Sections 6.6.20, FQHC Services,
                    and 6.6.21, FQHC and Rural Health Clinic Contracts.
                    Subcontracts with RHCs shall also meet Contract requirements
                    of Article VI, Section 6.6.21.

             D.     In Subcontracts where a negotiated reimbursement rate is
                    agreed to as total payment, a provision that such rate
                    constitutes total payment shall be included in the
                    Subcontract

2.           5.3    CAPITATION RATES

             For the period 7/1/99-9/30/99                     Riverside County

<TABLE>
<CAPTION>
             ----------------------------------------------------------------------------------------------------------
                        GROUPS                                AID CODES                              RATE
             ----------------------------------------------------------------------------------------------------------
             <S>                                           <C>                                       <C>
             Family                                        01, OA, 02, 08,                           $  78.41
                                                           30, 32, 33, 34, 35, 38, 39, 40,
                                                           42, 54, 59, 3A, 3C, 3E, 3G, 3H, 3L
                                                           3M, 3N, 3P, 3R, 3U, 5X, 7X,
             ----------------------------------------------------------------------------------------------------------
             Disabled                                      20, 24, 26, 28, 36,                       $ 222.61
                                                           60, 64, 66, 68,
                                                           6A, 6C, 6N, 6P,
                                                           6R
             ----------------------------------------------------------------------------------------------------------
             Aged                                          10,14,16,18                               $ 160.47
             ----------------------------------------------------------------------------------------------------------
             Child                                         03,04,4C,4K,                              $  92.75
                                                           5K, 45, 82
             ----------------------------------------------------------------------------------------------------------
             Adult                                         86                                        $ 705.26
             ----------------------------------------------------------------------------------------------------------
             AIDS Beneficiary                              .                                         $ 962.42
             ----------------------------------------------------------------------------------------------------------
             Percent of Poverty                            7A, 8R                                    $  52.55
             ----------------------------------------------------------------------------------------------------------
             Percent of Poverty                            47, 72, 8P                                $  57.21
             ----------------------------------------------------------------------------------------------------------
</TABLE>

                                     2 of 5

<PAGE>

             For the period 7/1/99 -9/30/99               San Bernardino County

<TABLE>
<CAPTION>
             ---------------------------------------------------------------------------------------------------------
                       GROUPS                                 AID CODES                             RATE
             ---------------------------------------------------------------------------------------------------------
            <S>                                           <C>                                      <C>
             Family                                       01,OA,02,08,                             $   80.41
                                                          30, 32, 33, 34, 35, 38, 39, 40,
                                                          42, 54, 59, 3A, 3C, 3E, 3G, 3H,
                                                          3L, 3M, 3N, 3P, 3R, 3U, 5X, 7X,
             ---------------------------------------------------------------------------------------------------------
             Disabled                                     20, 24, 26, 28, 36,                      $  233.49
                                                          60, 64, 66, 68,
                                                          6A, 6C, 6N, 6P,
                                                          6R
             ---------------------------------------------------------------------------------------------------------
             Aged                                         10, 14, 16, 18                           $  163.77
             ---------------------------------------------------------------------------------------------------------
             Child                                        03, 04, 4C, 4K,                          $  106.35
                                                          5K, 45, 82
             ---------------------------------------------------------------------------------------------------------
             Adult                                        86                                       $  790.53
             ---------------------------------------------------------------------------------------------------------
             AIDS Beneficiary                                                                      $  995.00
             ---------------------------------------------------------------------------------------------------------
             Percent of Poverty                           7A, 8R                                   $   52.55
             ---------------------------------------------------------------------------------------------------------
             Percent of Poverty                           47, 72, 8P                               $   57.21
             ---------------------------------------------------------------------------------------------------------
</TABLE>

All other terms, conditions, and provisions contained in Section 5.3 remain
unchanged.

      3.  5.4   CAPITATION RATES CONSTITUTE PAYMENT IN FULL

          Capitation rates for each rate period, as calculated by DHS, are
          prospective rates and constitute payment in full, subject to any stop
          loss reinsurance provisions, on behalf of a Member for all Covered
          Services required by such Member and for all Administrative Costs
          incurred by the Contractor in providing or arranging for such
          services, and subject to adjustments for federally qualified health
          centers in accordance with Section 5.13, but do not include payment
          for the recoupment of current or previous losses incurred by
          Contractor. DHS is not responsible for making payments for recoupment
          of losses. The actuarial basis for the determination of the capitation
          payment rates is outlined in Attachment 1 (consisting of 16 pages).

      4.  5.13   FQHC/RHC RISK CORRIDOR PAYMENTS

          For FQHCs/RHCs service periods beginning October 1,1997, and
          continuing through June 30,1999, provided that Contractor has
          submitted expenditure data to DHS in the form and manner specified by
          DHS, DHS shall perform reconciliations to determine the variance
          between the funds that have been paid to the Contractor in its
          capitation rates to reflect the dollar value of FQHC/RHC interim rate
          payments made to these entities in the

                                      3 of 5

<PAGE>

          Medi-Cal fee-for-service program, and the amount that the Contractor
          has paid to subcontracting FQHCs/RHCs.

          For the initial reconciliation and for each reconciliation thereafter,
          if, pursuant to subcontracts with FQHCs and RHCs that have been
          reviewed and approved by DHS, Contractor has paid subcontracting FQHCs
          and RHCs in the aggregate an amount greater than 110 percent of the
          dollar value of FQHC and RHC interim rate payments included in
          Contractor's capitation rates, DHS shall pay Contractor the amount in
          excess of 110 percent.

          For the initial reconciliation and for each reconciliation thereafter,
          if, pursuant to subcontracts with FQHCs and RHCs that have been
          reviewed and approved by DHS, Contractor has paid subcontracting FQHCs
          and RHCs in the aggregate an amount less than 90 percent of the dollar
          value of FQHC and RHC interim rate payments included in Contractor's
          capitation rates, Contractor shall refund the amount below 90 percent
          to DHS. DHS may recover amounts owed by Contractor pursuant to this
          section through an offset to the capitation payments made to
          Contractor, pursuant to Section 5.11(C), Recovery of Capitation
          Payments.

          All reconciliations shall be subject to an annual reconciliation audit
          at which time payments to or recoupment from Contractor shall be
          finalized.

      5.  6.3.6 SUBMITTAL OF FQHC AND RHC PAYMENT INFORMATION

          Effective with the October 1997 month of service. Contractor shall
          keep a record of the number of visits by plan Members to each FQHC and
          RHC contracting with Contractor and related payment information, and
          shall submit this information to DHS in the frequency, format, and
          manner specified by DHS. -This requirement shall remain in effect for
          service periods through the September 2000 month of service.

      6.  6.6.21 FQHO AND RURAL HEALTH CLINIC (RHC) CONTRACTS

          A.     For service periods beginning October 1,1997, and continuing
                 through June 30,1999, notwithstanding Article III, Section
                 3.26.4, Departmental Approval - Federally Qualified HMOs,
                 Contractor shall not enter into any contract with an FQHC or
                 RHC for provision of Covered Services to Members without prior
                 written approval by DHS. All contracts with FQHCs or RHCs shall
                 provide reimbursement to the FQHC or RHC on the basis of each
                 center's or clinic's Medi-Cal interim per visit rate,
                 applicable on the date the reimbursable services were provided,
                 as established by DHS, unless:

                 1. DHS has approved in writing an alternate reimbursement
                    methodology, or

                                     4 of 5

<PAGE>

                 2. The FQHC or RHC agrees to be reimbursed on an at-risk basis
                    and such agreement is contained in the contract with the
                    center or clinic. In contracts where a negotiated rate is
                    agreed to as total payment, the contract shall state that
                    such payment' constitutes total payment to the entity.

          B.     To the extent that Indian Health Service facilities qualify as
                 FQHCs or RHCs, the same reimbursement requirements shall apply
                 to contracts with Indian Health Service facilities.

                                     5 of 5

<PAGE>

                                                         C5 to Contract 95-23637
<TABLE>
<S>                                              <C>                            <C>             <C>         <C>
Plan Name:              Molina Medical Center    Plan #:    355                 Date:           04-May-99   Attachment 1
County:                 Riverside                Plan Type: Commercial Plan     Base Period:    FY 96/97    Page 1 of 16
</TABLE>

<TABLE>
<S>                                                         <C>
The Rate Period is October 1, 1998 to September 30, 1999    Capitation Payments at the Beginning of the Month
</TABLE>

Coverages
--------------------------------------------------------------------------------
   CCS Indicated Claims                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Outpatient Services                  NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Pharmacy Costs                       NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Hospital Inpatient Services          NOT Covered by the Plan
--------------------------------------------------------------------------------
   Eyewear                                            NOT Covered by the Plan
--------------------------------------------------------------------------------
   Heroin Deloxification                              NOT Covered by the Plan
--------------------------------------------------------------------------------
   AIDS Waiver Services                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   Adult Day Health Care                              NOT Covered by the Plan
--------------------------------------------------------------------------------
   Chiropractor/Acupuncture                           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Local Education Authority                          NOT Covered by the Plan
--------------------------------------------------------------------------------
   Alphafelo Protein Testing                          NOT Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care for month of entry plus one         Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care after month of entry plus one       NOT Covered by the Plan
--------------------------------------------------------------------------------
   Special AIDS drugs                                 NOT Covered by the Plan
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Rate Calculation                                               Hospital      Hospital     Long Term
                                 Physician      Pharmacy      Inpatient    Outpatient          Care         Other
<S>                                <C>          <C>          <C>             <C>           <C>           <C>
1. Average Cost Per Unit           $ 69.46      $  19.88     $   864.71      $  16.16      $ 812.04      $  20.09
2. Units per Eligible                4.014         4.683          0.373         2.146         0.004         3.532
3. Addt'l Capitation Amts.         $  0.37      $   0.05     $     4.62      $   0.01      $   0.00      $   0.00
   Cost per Elig. per Mo.          $ 23.60      $   7.81     $    31.50      $   2.90      $   0.27      $   5.91
Adjustments
   a. Demographics                   1.004         0.976          1.023         1.002         1.000         0.085
   b. Area                           1.043         1.000          1.000         1.000         1.000         1.000
   c. Coverages                      0.975         0.992          0.968         0.956         0.995         0.833
   d. Interest                       0.995         0.995          0.995         0.995         0.995         0.995
Adjusted Base Cost                 $ 23.97      $   7.52     $    31.04      $   2.76      $   0.27      $   4.82
3. Legislative Adjs.                 1.053         1.053          0.998         1.023         1.141         1.046
4. Trend Adjustments
   a. Cost per Unit                  1.000         1.100          1.050         1.000         1.000         0.950
   b. Units per Eligible             0.050         1.000          1.050         0.950         1.050         1.050
Projected Cost per Eligible        $ 23.98      $   8.71     $    34.15      $   2.68      $   0.32      $   5.03
5. Stop Loss Reins.                        Amount            $        0               Rate                    0.0%
6. CHDP
7. Fee-for-Service Adj.                                                                                      -3.0%
Capitation Rate With FQHC
 Increment                                      $  78.73 / Without          $  78.41

<CAPTION>
Rate Calculation                          FQHC
                                     FFSE      Increment         Total
<S>                                <C>         <C>             <C>
1. Average Cost Per Unit           $ 68.39     $  24.41
2. Units per Eligible                0.168        0.168
3. Addt'l Capitation Amts.         $  0.00     $   0.00
   Cost per Elig. per Mo.          $  0.96     $   0.34        $  73.29
Adjustments
   a. Demographics                   0.994        0.994
   b. Area                           1.000        1.000
   c. Coverages                      0.935        0.935
   d. Interest                       0.995        0.995
Adjusted Base Cost                 $  0.89     $   0.31        $  71.58
3. Legislative Adjs.                 1.027        1.027
4. Trend Adjustments
   a. Cost per Unit                  1.000        1.000
   b. Units per Eligible             1.000        1.000
Projected Cost per Eligible        $  0.91     $   0.32        $  76.10
5. Stop Loss Reins.                      Premium                   0.00
6. CHDP                                                            5.06
7. Fee-for-Service Adj.                                           (2.43)
Capitation Rate With FQHC Increment
</TABLE>

<PAGE>

<TABLE>
<S>                                              <C>                            <C>
Plan Name:              Molina Medical Center    Plan #:    355                 Date:           04-May-99
County:                 Riverside                Plan Type: Commercial Plan     Base Period:    FY 96/97
Aid Code Grouping:      Disabled
</TABLE>

<TABLE>
<S>                                                         <C>
The Rate Period is October 1, 1998 to September 30, 1999    Capitation Payments at the Beginning of the Month

C5 to Contract 95-23637
Attachment 1
Page 2 of 16

</TABLE>

Coverages
--------------------------------------------------------------------------------
   CCS Indicated Claims                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Outpatient Services                  NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Pharmacy Costs                       NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Hospital Inpatient Services          NOT Covered by the Plan
--------------------------------------------------------------------------------
   Eyewcar                                            NOT Covered by the Plan
--------------------------------------------------------------------------------
   Heroin Detoxification                              NOT Covered by the Plan
--------------------------------------------------------------------------------
   AIDS Waiver Services                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   Adult Day Health Care                              NOT Covered by the Plan
--------------------------------------------------------------------------------
   Chiropractor/Acupuncture                           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Local Education Authority                          NOT Covered by the Plan
--------------------------------------------------------------------------------
   Alphafelo Protein Testing                          NOT Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care for month of entry plus one         Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care after month of entry plus one       NOT Covered by the Plan
--------------------------------------------------------------------------------
   Special AIDS drugs                                 NOT Covered by the Plan
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Rate Calculation                                               Hospital      Hospital     Long Term
                                  Physician     Pharmacy      Inpatient     Outpatient       Care         Other
<S>                                <C>          <C>          <C>             <C>           <C>           <C>
1. Average Cost Per Unit           $ 46.41      $  39.70     $   485.15      $  12.37      $ 139.87      $  10.16
2. Units per Eligible                6.873        26.861          1.556         5.050         0.459        21.959
3. Addt'l Capitation Amts.         $  2.96      $   0.09     $     9.89      $   0.02      $   0.00      $   0.00
   Cost per Elig. per Mo.          $ 29.54      $  88.96     $    72.80      $   5.23      $   5.35      $  18.59
Adjustments
   a. Demographics                   0.983         0.989          0.981         0.998         1.000         1.015
   b. Area                           1.043         1.000          1.000         1.000         1.000         1.000
   c. Coverages                      0.900         0.875          0.920         0.973         0.995         0.878
   d. Interest                       0.995         0.995          0.995         0.995         0.995         0.995
Adjusted Base Cost                 $ 27.12      $  76.60     $    65.37      $   5.05      $   5.30      $  16.48
3. Legislative Adjs.                 0.941         1.043          0.919         0.931         1.130         0.923
4. Trend Adjustments
   a. Cost per Unit                  1.000         1.100          1.050         1.000         1.100         1.100
   b. Units per Eligible             1.100         1.210          1.050         1.045         0.950         1.000
Projected Cost per Eligible        $ 28.07      $ 106.34     $    66.23      $   4.91      $   6.26      $  16.73
5. Stop Loss Reins.                        Amount            $        0               Rate                    0.0%
6. CHDP
7. Fee-for-Service Adj.                                                                                      -3.0%
Capitation Rate With FQHC
 Increment                                      $ 222.61 / Without          $ 222.61

<CAPTION>
Rate Calculation                          FQHC
                                     FFSE     Increment          Total
<S>                                <C>         <C>             <C>
1. Average Cost Per Unit           $ 66.52     $   0.00
2. Units per Eligible                0.216        0.216
3. Addt'l Capitation Amts.         $  0.00     $   0.00
   Cost per Elig. per Mo.          $  1.20     $   0.00        $ 221.67
Adjustments
   a. Demographics                   0.987        0.987
   b. Area                           1.000        1.000
   c. Coverages                      0.863        0.863
   d. Interest                       0.995        0.995
Adjusted Base Cost                 $  1.02     $   0.00        $ 196.94
3. Legislative Adjs.                 0.932        0.932
4. Trend Adjustments
   a. Cost per Unit                  1.000        1.000
   b. Units per Eligble              1.000        1.000
Projected Cost per Eligible        $  0.95     $   0.00        $ 229.49
5. Stop Loss Reins.                      Premium                   0.00
6. CHDP                                                            0.00
7. Fee-for-Service Adj.                                           (8.88)
Capitation Rate With FQHC Increment
</TABLE>

<PAGE>

                                                         C5 to Contract 95-23637
<TABLE>
<S>                                              <C>                            <C>             <C>
Attachment 1
Page 3 of 16

Plan Name:              Molina Medical Center    Plan #:    355                 Date:           04-May-99
County:                 Riverside                Plan Type: Commercial Plan     Base Period:    FY 96/97
Aid Code Grouping:      Aged
</TABLE>

<TABLE>
<S>                                                         <C>
The Rate Period is October 1, 1998 to September 30, 1999    Capitation Payments at the Beginning of the Month
</TABLE>

Coverages
--------------------------------------------------------------------------------
   CCS Indicated Claims                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Outpatient Services                  NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Pharmacy Costs                       NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Hospital Inpatient Services          NOT Covered by the Plan
--------------------------------------------------------------------------------
   Eyewear                                            NOT Covered by the Plan
--------------------------------------------------------------------------------
   Heroin Detoxification                             NOT Covered by the Plan
--------------------------------------------------------------------------------
   AIDS Waiver Services                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   Adult Day Health Care                              NOT Covered by the Plan
--------------------------------------------------------------------------------
   Chiropractor/Acupuncture                           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Local Education Authority                          NOT Covered by the Plan
--------------------------------------------------------------------------------
   Alphafelo Protein Testing                          NOT Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care for month of entry plus one         Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care alter month of entry plus one       NOT Covered by the Plan
--------------------------------------------------------------------------------
   Special AIDS drugs                                 NOT Covered by the Plan
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Rate Calculation                                               Hospital      Hospital     Long Term
                                  Physician     Pharmacy      Inpatient     Outpatient       Care         Other
<S>                                <C>          <C>          <C>             <C>           <C>           <C>
1. Average Cost Per Unit           $ 48.90      $  32.71     $   287.24      $  10.02      $  77.33      $   6.41
2. Units per Eligible                4.472        21.014          1.265         3.306         2.016        12.862
3. Addt'l Capitation Amts.         $  1.29      $   0.00     $     7.41      $   0.02      $   0.00      $   0.00
   Cost per Elig. per Mo.          $ 19.51      $  59.73     $    37.69      $   2.78      $  12.99      $   6.87
Adjustments
   a. Demographics                   0.955         1.019          0.957         0.970         1.039         1.025
   b. Area                           1.043         1.000          1.000         1.000         1.000         1.000
   c. Coverages                      0.981         0.996          0.997         0.986         0.997         0.791
   d. Interest                       0.995         0.995          0.995         0.995         0.995         0.995
Adjusted Base Cost                 $ 18.97      $  60.32     $    35.78      $   2.65      $  13.39      $   5.54
3. Legislative Adjs.                 0.939         1.049          0.926         0.931         1.140         0.927
4. Trend Adjustments
   a. Cost per Unit                  1.100         1.100          1.100         1.050         1.000         1.050
   b. Units per Eligible             1.100         1.155          1.100         1.100         1.000         0.950
Projected Cost per Eligible        $ 21.55      $  80.39     $    40.09      $   2.85      $  15.28      $   5.12
5. Stop Loss Reins.                        Amount            $        0               Rate                    0.0%
6. CHDP
7. Fee-for-Service Adj.                                                                                      -3.0%
Capitation Rate With FQHC
 Increment                                      $ 160.47 / Without           $ 160.47

<CAPTION>
Rate Calculation                          FQHC
                                     FFSE     Increment          Total
<S>                                <C>         <C>             <C>
1. Average Cost Per Unit           $ 28.59     $   0.00
2. Units per Eligible                0.132        0.132
3. Addt'l Capitation Amts.         $  0.00     $   0.00
   Cost per Elig. per Mo.          $  0.31     $   0.00        $ 139.88
Adjustments
   a. Demographics                   0.970        0.970
   b. Area                           1.000        1.000
   c. Coverages                      0.603        0.603
   d. Interest                       0.995        0.995
Adjusted Base Cost                 $  0.18     $   0.00        $ 136.83
3. Legislative Adjs.                 0.926        0.926
4. Trend Adjustments
   a. Cost per Unit                  1.000        1.000
   b. Units per Eligible             1.000        1.000
Projected Cost per Eligible        $  0.17     $   0.00        $ 165.43
5. Stop Loss Reins.                      Premium                   0.00
6. CHDP                                                            0.00
7. Fee-for-Service Adj.                                           (4.96)
Capitation Rate With FQHC Increment
</TABLE>

<PAGE>

<TABLE>
<S>                                            <C>                              <C>
Plan Name:           Molina Medical Center     Plan#:      355                  Date:           04-May-00
County:              Riverside                 Plan Type:  Commercial Plan      Base Period:    FY 96/97
Ald Code Grouping:   Child
</TABLE>

The Rale Period is October 1,1998               Capitation Payments at the
to September 30, 1999                           Beginning of the Month

  Coverages

   CCS Indicated Claims                             NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Outpatient Services                NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Pharmacy Costs                     NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Hospital Inpatient Services        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Eyewear                                          NOT Covered by the Plan
--------------------------------------------------------------------------------
   Heroin Detoxification                            NOT Covered by the Plan
--------------------------------------------------------------------------------
   AIDS Waiver Services                             NOT Covered by the Plan
--------------------------------------------------------------------------------
   Adult Day Health Care                            NOT Covered by the Plan
--------------------------------------------------------------------------------
   Chiropractor/Acupuncture                         NOT Covered by the Plan
--------------------------------------------------------------------------------
   Local Education Authority                        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Alphateto Protein Testing                        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care for month of entry plus one       Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care after month of entry plus one     NOT Covered by the Plan
--------------------------------------------------------------------------------
   Special AIDS drugs                               NOT Covered by the Plan
--------------------------------------------------------------------------------

C5 to Contract 95-23637
Attachment 1
Page 4 of 16

<TABLE>
<CAPTION>
Rate Calculation                                                  Hospital     Hospital    Long Term
                                        Physician    Pharmacy    Inpatient    Outpatient     Care
<S>                                    <C>          <C>          <C>          <C>          <C>
1. Average Cost Per Unit               $    67.42   $    13.64   $   889.41   $    16.21   $   469.38
2. Units per Eligible                       3.999        3.411        0.465        1.516        0.007
3. Addt'l Capitation Amts.             $     0.23   $     0.03   $     2.90   $     0.00   $     0.00
   Cost per Elig. per Mo.              $    22.70   $     3.91   $    37.86   $     2.05   $     0.27
Adjustments
   a. Demographics                          1.181        1.019        1.321        1.114        1.000
   b. Area                                  1.043        1.000        1.000        1.000        1.000
   c. Coverages                             0.974        0.984        0.952        0.973        0.996
   d. Interest                              0.995        0.995        0.995        0.995        0.995
Adjusted Base Cost                     $    27.10   $     3.90   $    46.75   $     2.21   $     0.27
3. Legislative Adjs.                        1.076        1.047        0.999        1.024        1.134
4. Trend Adjustments
   a. Cost per Unit                         1.000        1.100        1.050        1.000        1.000
   b. Units per Eligible                    0.950        1.000        1.050        0.950        1.050
Projected Cost per Eligible            $    27.70   $     4.49   $    51.49   $     2.15   $     0.32
5. Stop Loss Reins                              Amount           $        0
6. CHDP
7. Fee-for-Service Adj.
Capitation Rate With FQHC Increment                 $    93.09 / Without      $    92.75

<CAPTION>
Rate Calculation                                                           FQHC
                                                       Other        FFSE      Increment       Total
<S>                                                 <C>          <C>          <C>           <C>
1. Average Cost Per Unit                            $    20.69   $    68.39   $    24.41
2. Units per Eligible                                    1.958        0.168        0.168
3. Addt'l Capitation Amts.                          $     0.00   $     0.00   $     0.00
   Cost per Elig. per Mo.                           $     3.38   $     0.96   $     0.34    $   70.97
Adjustments
   a. Demographics                                       1.165        1.003        1.003
   b. Area                                               1.000        1.000        1.000
   c. Coverages                                          0.815        0.970        0.970
   d. Interest                                           0.995        0.995        0.995
Adjusted Base Cost                                  $     3.19   $     0.93   $     0.33    $   84.68
3. Legislative Adjs.                                     1.090        1.031        1.031
4. Trend Adjustments
   a. Cost per Unit                                      0.950        1.000        1.000
   b. Units per Eligible                                 1.050        1.000        1.000
Projected Cost per Eligible                         $     3.47   $     0.96   $     0.34    $   90.92
5. Stop Loss Reins.                          Rate          0.0%      Premium                     0.00
6. CHDP                                                                                          5.04
7. Fee-for-Service Adj.                                   -3.0%                                 (2.87)
Capitation Rate With FQHC Increment
</TABLE>

<PAGE>

<TABLE>
<S>                                            <C>                              <C>
Plan Name:           Molina Medical Center     Plan#:      355                  Date:           04-May-00
County:              Riverside                 Plan Type:  Commercial Plan      Base Period:    FY 96/97
Ald Code Grouping:   Adult
</TABLE>

The Rate Period is October 1,1998               Capitation Payments at the
to September 30, 1999                           Beginning of the Month

  Coverages

   CCS Indicated Claims                             NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Outpatient Services                NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Pharmacy Costs                     NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Hospital Inpatient Services        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Eyewear                                          NOT Covered by the Plan
--------------------------------------------------------------------------------
   Heroin Detoxification                            NOT Covered by the Plan
--------------------------------------------------------------------------------
   AIDS Waiver Services                             NOT Covered by the Plan
--------------------------------------------------------------------------------
   Adult Day Health Care                            NOT Covered by the Plan
--------------------------------------------------------------------------------
   Chiropractor/Acupuncture                         NOT Covered by the Plan
--------------------------------------------------------------------------------
   Local Education Authority                        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Alphateto Protein Testing                        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care for month of entry plus one       Covered-by the Plan
--------------------------------------------------------------------------------
   Long Term Care after month of entry plus one     NOT Covered by the Plan
--------------------------------------------------------------------------------
   Special AIDS drugs                               NOT Covered by the Plan
--------------------------------------------------------------------------------

C5 to Contract 95-23637
Attachment 1
Page 5 of 16

<TABLE>
<CAPTION>
Rate Calculation                                                  Hospital     Hospital    Long Term
                                        Physician    Pharmacy    Inpatient    Outpatient     Care
<S>                                    <C>          <C>          <C>          <C>          <C>
1. Average Cost Per Unit               $    90.48   $    17.11   $   964.66   $    15.76   $   812.04
2. Units per Eligible                      21.383        5.818        5.446        4.679        0.000
3. Addt'l Capitation Amts.             $     0.37   $     0.06   $    35.62   $     0.08   $     0.00
   Cost per Elig. per Mo.              $   161.60   $     8.36   $   473.41   $     6.23   $     0.00
Adjustments
   a. Demographics                          1.000        1.000        1.000        1.000        1.000
   b. Area                                  1.043        1.000        1.000        1.000        1.000
   c. Coverages                             0.999        0.999        0.999        0.989        1.000
   d. Interest                              0.995        0.995        0.995        0.995        0.995
Adjusted Base Cost                     $   167.54   $     8.31   $   470.57   $     6.13   $     0.00
3. Legislative Adjs.                        1.029        1.054        1.000        1.022        1.102
4. Trend Adjustments
   a. Cost per Unit                         1.000        1.100        1.050        1.000        1.000
   b. Units per Eligible                    0.950        1.000        1.050        0.950        1.050
Projected Cost per Eligible            $   163.76   $     9.63   $   518.80   $     5.95   $     0.00
5. Stop Loss Reins                              Amount           $        0
6. CHDP
7. Fee-for-Service Adj.
Capitation Rale With FQHC Increment                  $  706.77 / Without      $   705.26

<CAPTION>
Rate Calculation                                                           FQHC
                                                       Other        FFSE      Increment       Total
<S>                                                 <C>          <C>          <C>           <C>
1. Average Cost Per Unit                            $    36.13   $    66.39   $    24.41
2. Units per Eligible                                   10.172        0.735        0.735
3. Addt'l Capitation Amts.                          $     0.00   $     0.00   $     0.00
   Cost per Elig. per Mo.                           $    30.63   $     4.19   $     1.50    $  685.92
Adjustments
   a. Demographics                                       1.000        1.000        1.000
   b. Area                                               1.000        1.000        1.000
   c. Coverages                                          0.809        0.995        0.995
   d. Interest                                           0.995        0.995        0.995
Adjusted Base Cost                                  $    24.66   $     4.15   $     1.49    $  682.85
3. Legislative Adjs                                      1.004        1.015        1.015
4. Trend Adjustments
   a. Cost per Unit                                      0.950        1.000        1.000
   b. Units per Eligible                                 1.050        1.000        1.000
Projected Cost per Eligible                         $    24.70   $     4.21   $     1.51    $  728.58
5. Stop Loss Reins                           Rate          0.0%      Premium                     0.00
6. CHDP                                                                                          0.00
7. Fee-for-Service Adj.                                   -3.0%                                (21.81)
Capitation Rate With FQHC Increment
</TABLE>

<PAGE>

<TABLE>
<S>                                            <C>                              <C>
Plan Name:           Molina Medical Center     Plan#:      355                  Date:           04-May-OO
County:              Riverside                 Plan Type:  Commercial Plan      Base Period:    FY 96/97
Ald Code Grouping:   AIDS

</TABLE>

The Rate Period Is October 1,1998               Capitation Payments at the
to September 3D, 1999                           Beginning of the Month

  Coverages

   CCS Indicated Claims                             NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Outpatient Services                NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Pharmacy Costs                     NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Hospital Inpatient Services        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Eyewear                                          NOT Covered by the Plan
--------------------------------------------------------------------------------
   Heroin Detoxification                            NOT Covered by the Plan
--------------------------------------------------------------------------------
   AIDS Waiver Services                             NOT Covered by the Plan
--------------------------------------------------------------------------------
   Adult Day Health Care                            NOT Covered by the Plan
--------------------------------------------------------------------------------
   Chiropractor/Acupuncture                         NOT Covered by the Plan
--------------------------------------------------------------------------------
   Local Education Authority                        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Alphateto Protein Testing                        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care for month of entry plus one       Covered-by the Plan
--------------------------------------------------------------------------------
   Long Term Care after month of entry plus one     NOT Covered by the Plan
--------------------------------------------------------------------------------
   Special AIDS drugs                               NOT Covered by the Plan
--------------------------------------------------------------------------------

C5 to Contract 95-23637
Attachment 1
Page 6 of 16

<TABLE>
<CAPTION>
Rate Calculation                                                  Hospital     Hospital    Long Term
                                        Physician    Pharmacy    Inpatient    Outpatient     Care
<S>                                    <C>          <C>          <C>          <C>          <C>
1. Average Cost Per Unit              $    32.67   $   126.04   $   485.15   $    13.79   $   139.87
2. Units per Eligible                     26.305       74.792        3.169        9.882        0.000
3. Addt'l Capitation Amts             $     2.96   $     0.09   $     9.89   $     0.02   $     0.00
   Cost per Ellg. per Mo              $    74.57   $   785.66   $   138.01   $    11.38   $     0.00
Adjustments
   a. Demographics                         1.000        1.000        1.000        1.000        1.000
   b. Area                                 1.043        1.000        1.000        1.000        1.000
   c. Coverages                            0.918        0.648        0.957        0.992        0.998
   d. Interest                             0.995        0.995        0.995        0.995        0.995
Adjusted Base Cost                    $    71.04   $   506.56   $   131.42  $     11.23   $     0.00
3. Legislative Adjs                        0.963        1.006        0.977        0.982        1.186
4. Trend Adjustments
   a. Cost per Unit                        1.000        1.100        1.050        1.000        1.100
   b. Units per Eligible                   1.100        1.210        1.050        1.045        0.950
Projected Cost per Eligible           $    75.25   $   678.28   $   141.56   $    11.52   $     0.00
5. Slop Loss Reins                              Amount          $        0
6. CHDP
7. Fee-for-Service Adj.
Capitation Rale With FQHC Increment                 $   962.42 / Without      $   962.42

<CAPTION>
Rate Calculation                                                       FQHC
                                                       Other        FFSE      Increment       Total
<S>                                                 <C>          <C>          <C>           <C>
1. Average Cost Per Unit                            $    42.30   $    66.52   $     0.00
2. Units per Eligible                                   36.392        0.628        0.628
3. Addt'l Capitation Amts                           $     0.00   $     0.00   $     0.00
   Cost per Ellg. per Mo                            $   128.28   $     3.48   $     0.00   $ 1.141.30
Adjustments
   a. Demographics                                       1.000        1.000        1.000
   b. Area                                               1.000        1.000        1.000
   c. Coverages                                          0.599        0.951        0.951
   d. Interest                                           0.995        0.995        0.995
Adjusted Base Cost                                  $    76.46   $     3.29   $     0.00   $   800.00
3. Legislative Adjs                                      0.979        0.984        0.984
4. Trend Adjustments
   a. Cost per Unit                                      1.100        1.000        1.000
   b. Units per Eligible                                 1.000        1.000        1.000
Projected Cost per Eligible                         $    82.34   $     3.24   $     0.00   $   992.19
5. Slop Loss Reins                           Rate          0,0%            Premium               0.00
6. CHDP                                                                                          0.04
7. Fee-for-Service Adj.                                   -3.0%                                (29.77)
Capitation Rale With FQHC Increment
</TABLE>

<PAGE>

Aid Group Poverty-7A                         Base: Statewide Family Age Adjusted
                                           Base Period:  FY 96/97

 Payments at Beginning of Month

<TABLE>
<CAPTION>
                                                           Hospital   Hospital  Nursing                       FQHC
 Services ==>                       Physician   Pharmacy   Inpatient Outpatient Facility    Other      FFSE Increment       Totals

<S>                                  <C>        <C>        <C>        <C>       <C>        <C>       <C>        <C>        <C>
1. Base Cost                         $  10.40   $   6.74   $  13.64   $   3.91  $  0.24    $   8.30  $  2.98    $   1.21   $  47.42
2. Age/5ex Adjustments                  1.000      1.000      1.000      1.000    1.000       1.000    1.000       1.000
3. Eligibility Adjustments              1.000      1.000      1.000      1.000    1.000       1.000    1.000       1.000
4. Coverage Adjustments                 0.997      0.997      0.999      0.964    1.000       0.891    0.991       0.991
5. Interest Offset                      0.990      0.996      0.987      0.989    0.993       0.990    0.994       0.994

 Contract Cost FY 96/37              $  10.27   $   6.69   $  13.45   $   3.73  $  0.24    $   7.32  $  2.93    $   1.20   $  45.83

6. Legislative Adjustments              1.044      0.740      0.985     1.021     1.061       1.150    1.024       1.024
7. Trend Adjustments
           a. Cost per Unit             1.000      1.308      1.055      0.970    1.000       1.445    1.071       1.071
           b. Utilization               1.000      1.027      1.050      1.000    1.107       1.000    1.265       1.265

Projected Cost 10/98-9/99            $  10.72   $   6.65   $   14.68  $   3.69  $  0.28    $  12.16  $  4.06    $   1.66   $  53.90

8.CHDP                                                                                                                     $   2.54

9. Administrative Allowance                                                                     1.6%                       $   0.88

Fee-for-Service Equivalent Cost                                                                                            $  57.32

Fee-for-Service Adj.                                                                             94%                          (3.44)

Capitation Rate with FQHC Increment                                                                                        $  53.88

Capitation Rate without FQHC Increment                                                                                     $  52.32
</TABLE>

C5 to Contract 95-23637
Attachment 1
Page 7 of 16

<PAGE>

Aid Group Poverty-47/72                      Base: Statewide
                                           Base Period:  FY 96/97

Payments at Beginning of Month

<TABLE>
<CAPTION>
                                                           Hospital   Hospital  Nursing                       FQHC
 Services ==>                       Physician   Pharmacy   Inpatient Outpatient Facility    Other      FFSE Increment       Totals

<S>                                  <C>        <C>        <C>        <C>       <C>        <C>       <C>        <C>        <C>
1. Base Cost                         $  10.66   $   7.27   $  20.52   $   5.31  $  0.14    $   2.92  $  5.42    $  2.21    $ 54.45
2. Age/5ex Adjustments                  1.000      1.000      1.000      1.000    1.000       1.000    1.000      1.000
3. Eligibility Adjustments              1.000      1.000      1.000      1,000    1.000       1.000    1.000      1.000
4. Coverage Adjustments                 0.997      0.997      0.999      0.964    1.000       0.891    0.991      0.991
5. Interest Offset                      0.990      0.996      0.987.     0.989    0.993       0.990    0.994      0.994

 Contract Cost FY 96/37              $  10.52   $   7.22   $  20.24   $   5.07  $  0.14    $   2.57  $  5.34    $  2.18    $ 53.28

6. Legislative Adjustments              1.044      0.740      0.985     1.021     1.061       1.150    1.024      1.024
7. Trend Adjustments
           a. Cost per Unit             1.000      1.308      1.055      0.970    1.000       1.445    1.071      1.071
           b. Utilization               1.000      1.027      1.050      1.000    1.107       1.000    1.265      1.265

Projected Cost 10/98-9/99            $  10.98   $   7.18   $  22.08   $   5.02  $  0.16    $   4.27  $  7.41    $  3.02    $  60.12

8.CHOP                                                                                                                     $   2.54

9. Administrative Allowance                                                                     1.6%                       $   0.95

Fee-for-Service Equivalent Cost                                                                                            $  63.61

Fee-for-Service Adj.                                                                             94%                          (3.82)

Capitation Rate with FQHC Increment                                                                                        $  59.79

Capitation Rate without FQHC Increment                                                                                     $  56.95
</TABLE>

C5 to Contract 95-23637
Attachment 1
Page 8 of 16

<PAGE>

<TABLE>

<S>                                            <C>                              <C>
Plan Name:           Molina Medical Center     Plan#:      356                  Date:           01-Dec-99
County:              San Bernardino            Plan Type:  Commercial Plan      Base Period:    FY 96/97
Ald Code Grouping:   Family
</TABLE>

The Rate Period Is October 1,1998               Capitation Payments at the
to September 3D, 1999                           Beginning of the Month

  Coverages

   CCS Indicated Claims                             NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Outpatient Services                NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Pharmacy Costs                     NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Hospital Inpatient Services        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Eyewear                                          NOT Covered by the Plan
--------------------------------------------------------------------------------
   Heroin Detoxification                            NOT Covered by the Plan
--------------------------------------------------------------------------------
   AIDS Waiver Services                             NOT Covered by the Plan
--------------------------------------------------------------------------------
   Adult Day Health Care                            NOT Covered by the Plan
--------------------------------------------------------------------------------
   Chiropractor/Acupuncture                         NOT Covered by the Plan
--------------------------------------------------------------------------------
   Local Education Authority                        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Alphateto Protein Testing                        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care for month of entry plus one       Covered-by the Plan
--------------------------------------------------------------------------------
   Long Term Care after month of entry plus one     NOT Covered by the Plan
--------------------------------------------------------------------------------
   Special AIDS drugs                               NOT Covered by the Plan
--------------------------------------------------------------------------------

C5 to Contract 95-23637
Attachment 1
Page 9 of 16

<TABLE>
<CAPTION>
Rate Calculation                                                  Hospital     Hospital    Long Term
                                        Physician    Pharmacy    Inpatient    Outpatient     Care
<S>                                   <C>          <C>          <C>          <C>          <C>
1. Average Cost Per Unit              $    69.46   $    19.88   $   978.02   $    16.16   $   812.04
2. Units per Eligible                      4.050        4.683        0.373        2.146        0.004
3. Add'l Capitation Amis              $     0.37        $0.05   $     4.62   $     0.01   $     0.00
   Cost per Ellg. per Mo              $    23.81   $     7.81   $    35.02   $     2.90   $     0.27
Adjustments
   a. Demographics                         0.997        0.993        0.977        0.987        1.000
   b. Area                                 1.043        1.000        1.000        1.000        1.000
   c. Coverages                            0.975        0.992        0.968        0.956        0.995
   d. Interest                             1.000        1.000        1.000        1.000        1.000
Adjusted Base Cost                    $    24.14   $     7.69   $    33.12   $     2.74   $     0.27
3. Legislative Adjs,                       1.053        1.053        0.998        1.023        1.141
4. Trend Adjustments
   a. Cost per Unit                        1.000        1.100        1.050        1.000        1.000
   b. Units per Eligible                   0.950        1.000        1.050        0.950        1.050
Projected Cost per Eligible           $    24.15   $     8.91   $    36.44       $ 2.66   $     0.32
5.  Slop Loss Reins                                   Amount    $        0
6.   CHOP
7.  Fee-for-Sarvice Adj.
Capitation Rate With FQHC  Increment               $    80.89 /Without           $80.82

<CAPTION>
Rate Calculation                                          FQHC
                                                      Other        FFSE      Increment       Total
<S>                                                <C>          <C>          <C>
1. Average Cost Per Unit                           $    20.09   $    68.10   $     7.33
2. Units per Eligible                                   3.532        0.132        0.132
3. Add'l Capitation Amis                           $     0.00   $     0.00   $     0.00
   Cost per Ellg. per Mo                                $5.91   $     0.75   $     0.08     $ 76.55
Adjustments
   a. Demographics                                      0.985        0.992        0.992
   b. Area                                              1.000        1.000        1.000
   c. Coverages                                         0.833        0.935        0.935
   d. Interest                                          1.000        1.000        1.000
Adjusted Base Cost                                 $     4.85   $     0.70   $     0.07     $ 73.58
3. Legislative Adjs,                                    1.046        1.027        1.027
4. Trend Adjustments
   a. Cost per Unit                                     0.950        1.000        1.000
   b. Units per Eligible                                1.050        1.000        1.000
Projected Cost per Eligible                        $     5.06   $     0.72   $     0.07     $ 78.33
5.  Slop Loss Reins                          Rate         0,0%      Premium                    0.00
6.   CHOP                                                                                      5.06
7.  Fee-for-Sarvice Adj.                                 -3.0%                                (2.50)
</TABLE>

<PAGE>

<TABLE>

<S>                                            <C>                              <C>
Plan Name:           Molina Medical Center     Plan#:      356                  Date:           01-Dec-99
County:              San Bernardino            Plan Type:  Commercial Plan      Base Period:    FY 96/97
Ald Code Grouping:   Disabled
</TABLE>

The Rate Period Is October 1,1998               Capitation Payments at the
to September 30, 1999                           Beginning of the Month

  Coverages

   CCS Indicated Claims                             NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Outpatient Services                NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Pharmacy Costs                     NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Hospital Inpatient Services        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Eyewear                                          NOT Covered by the Plan
--------------------------------------------------------------------------------
   Heroin Detoxification                            NOT Covered by the Plan
--------------------------------------------------------------------------------
   AIDS Waiver Services                             NOT Covered by the Plan
--------------------------------------------------------------------------------
   Adult Day Health Care                            NOT Covered by the Plan
--------------------------------------------------------------------------------
   Chiropractor/Acupuncture                         NOT Covered by the Plan
--------------------------------------------------------------------------------
   Local Education Authority                        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Alphateto Protein Testing                        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care for month of entry plus one       Covered-by the Plan
--------------------------------------------------------------------------------
   Long Term Care after month of entry plus one     NOT Covered by the Plan
--------------------------------------------------------------------------------
   Special AIDS drugs                               NOT Covered by the Plan
--------------------------------------------------------------------------------

C5 to Contract 95-23637
Attachment 1
Page 10 of 16

<TABLE>
<CAPTION>
Rate Calculation                                                  Hospital     Hospital    Long Term
                                        Physician    Pharmacy    Inpatient    Outpatient     Care
<S>                                    <C>          <C>          <C>          <C>          <C>
1. Average Cost Per Unit               $    46.41   $    39.70   $   611.26   $    12.37   $   139.87
2. Units per Eligible                       6.969       26.661        1.556        5.050        0.459
3. Addt'l Capitation Amts              $     2.96   $     0.09   $     9.89   $     0.02   $     0.00
   Cost per Ellg. per Mo               $    29.91      $ 88.45   $    89.15   $     5.23   $     5.35
Adjustments
   a. Demographics                          0.980        0.973        0.961        0.998        0.996
   b. Area                                  1.043        1.000        1.000        1.000        1.000
   c. Coverages                             0.900        0.875        0.920        0.973        0.995
   d. Interest                              1.000        1.000        1.000        1.000        1.000
Adjusted Base Cost                     $    27.51   $    75.74   $    78.82   $     5.08   $     5.30
3. Legislative Adjs                         0.941        1.043        0.919        0.931        1.130
4. Trend Adjustments
   a. Cost per Unit                         1.000        1.100        1.050        1.000        1.100
   b. Units per Eligible                    1.100        1.210        1.050        1.045        0.950
Projected Cost per Eligible            $    28.48   $   105.14      $ 79.86   $     4.94   $     6.26
5. Slop Loss Reins                              Amount           $        0
6. CHDP
7. Fee-for-Service Adj.
Capitation Rale With FQHC Increment                 $   234.65 / Without      $   234.65

<CAPTION>
Rate Calculation                                                       FQHC
                                                       Other        FFSE      Increment       Total
<S>                                                 <C>          <C>          <C>           <C>
1. Average Cost Per Unit                            $    10.16   $    69.96   $     0.00
2. Units per Eligible                                   21.959        0.120        0.120
3. Addt'l Capitation Amts                           $     0.00   $     0.00   $     0.00
   Cost per Ellg. per Mo                            $    18.59   $     0.70         0.00    $  237.89
Adjustments
   a. Demographics                                       1.006        0.989        0.989
   b. Area                                               1.000        1.000        1.000
   c. Coverages                                          0.878        0.863        0.863
   d. Interest                                           1.000        1.000        1.000
Adjusted Base Cost                                  $    16.42   $     0.60   $     0.00    $  209.47
3. Legislative Adjs                                      0.923        0.932        0.932
4. Trend Adjustments
   a. Cost per Unit                                      1.100        1.000        1,000
   b. Units per Eligible                                 1.000        1.000        1.000
Projected Cost per Eligible                         $    16.67   $     0.56   $     0.00    $  241.91
5. Slop Loss Reins                           Rate          0.0%      Premium                     0.00
6. CHDP                                                                                          0.00
7. Fee-for-Service Adj.                                   -3.0%                                 (7.26)
Capitation Rale With FQHC Increment
</TABLE>

<PAGE>

<TABLE>

<S>                                            <C>                              <C>
Plan Name:           Molina Medical Center     Plan#:      356                  Date:           01-Dec-99
County:              San Bernardino            Plan Type:  Commercial Plan      Base Period:    FY 96/97
Ald Code Grouping:   Aged
</TABLE>

The Rate Period Is October 1,1998               Capitation Payments at the
to September 3D, 1999                           Beginning of the Month

  Coverages

   CCS Indicated Claims                             NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Outpatient Services                NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Pharmacy Costs                     NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Hospital Inpatient Services        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Eyewear                                          NOT Covered by the Plan
--------------------------------------------------------------------------------
   Heroin Detoxification                            NOT Covered by the Plan
--------------------------------------------------------------------------------
   AIDS Waiver Services                             NOT Covered by the Plan
--------------------------------------------------------------------------------
   Adult Day Health Care                            NOT Covered by the Plan
--------------------------------------------------------------------------------
   Chiropractor/Acupuncture                         NOT Covered by the Plan
--------------------------------------------------------------------------------
   Local Education Authority                        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Alphateto Protein Testing                        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care for month of entry plus one       Covered-by the Plan
--------------------------------------------------------------------------------
   Long Term Care after month of entry plus one     NOT Covered by the Plan
--------------------------------------------------------------------------------
   Special AIDS drugs                               NOT Covered by the Plan
--------------------------------------------------------------------------------

C5 to Contract 95-23637
Attachment 1
Page 11 of 16

<TABLE>
<CAPTION>

Rate Calculation                                                  Hospital     Hospital    Long Term
                                        Physician    Pharmacy    Inpatient    Outpatient     Care
<S>                                   <C>              <C>      <C>          <C>          <C>
1. Average Cost Per Unit              $    48.90   $    32.71   $   316.16   $    10.02   $    77.33
2. Units per Eligible                      4.580       21.914        1.265        3.306        2.016
3. Add'l Capitation Amts              $     1.29   $     0.00   $     7.41   $     0.02   $     0.00
   Cost per Ellg. per Mo              $    19.95   $    59.73   $    40.74   $     2.78   $    12.99
Adjustments
    a. Demographics                        0.963        1.014        0.962        0.975        1.027
    b. Area                                1.043        1.000        1.000        1.000        1.000
    c. Coverages                           0.981        0.996        0.997        0.986        0.997
    d. Interest                            1.000        1.000        1.000        1.000        1.000
Adjusted Base Cost                    $    19.66   $    60.32   $    39.07   $     2.67   $    13.30
3. Legislative Adjs                        0.939        1.049        0.926        0.931        1.140
4. Trend Adjustments
   a. Cost per Unit                        1.100        1.100        1.100        1.050        1.000
   b. Units per Eligible                   1.100        1.155        1.100        1.100        1.000
Projected Cost per Eligible           $    22.34   $    80.39   $    43.78   $     2.87   $    15.16
5.  Stop Loss Reins                                    Amount   $        0
6.   CHOP
7.  Fee-for-Service Adj.
Capitation Rate With FQHC Increment                $   164.60 /Without       $   164.60

<CAPTION>
Rate Calculation                                             FQHC
                                               Other       FFSE        Increment    Total
<S>                                          <C>          <C>          <C>         <C>
1. Average Cost Per Unit                     $     6.41   $    50.63   $     0.00
2. Units per Eligible                            12.862        0.024        0.024
3. Add'l Capitation Amts                     $     0.00   $     0.00   $     0.00
   Cost per Ellg. per Mo                     $     6.87   $     0.10   $     0.00  $ 143.16
Adjustments
    a. Demographics                               1.013        0.979        0.979
    b. Area                                       1.000        1.000        1.000
    c. Coverages                                  0.791        0.603        0.603
    d. Interest                                   1.000        1.000        1.000
Adjusted Base Cost                           $     5.50   $     0.06   $     0.00  $ 140.58
3. Legislative Adjs                               0.927        0.926        0.926
4. Trend Adjustments
   a. Cost per Unit                               1.050        1.000        1.000
   b. Units per Eligible                          0.950        1.000        1.000
Projected Cost per Eligible                  $     5.09   $     0.06   $     0.00  $ 169.69
5.  Stop Loss Reins                   Rate          0.0%     Premium                   0.00
6.   CHOP                                                                              0.00
7.  Fee-for-Service Adj.                           -3.0%                              (5.09)
Capitation Rate With FQHC  Increment
</TABLE>

<PAGE>

<TABLE>

<S>                                            <C>                              <C>
Plan Name:           Molina Medical Center     Plan#:      356                  Date:           01-Dec-99
County:              San Bernardino            Plan Type:  Commercial Plan      Base Period:    FY 96/97
Ald Code Grouping:   Child
</TABLE>

The Rate Period Is October 1,1998               Capitation Payments at the
to September 3D, 1999                           Beginning of the Month

  Coverages

   CCS Indicated Claims                             NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Outpatient Services                NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Pharmacy Costs                     NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Hospital Inpatient Services        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Eyewear                                          NOT Covered by the Plan
--------------------------------------------------------------------------------
   Heroin Detoxification                            NOT Covered by the Plan
--------------------------------------------------------------------------------
   AIDS Waiver Services                             NOT Covered by the Plan
--------------------------------------------------------------------------------
   Adult Day Health Care                            NOT Covered by the Plan
--------------------------------------------------------------------------------
   Chiropractor/Acupuncture                         NOT Covered by the Plan
--------------------------------------------------------------------------------
   Local Education Authority                        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Alphateto Protein Testing                        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care for month of entry plus one       Covered-by the Plan
--------------------------------------------------------------------------------
   Long Term Care after month of entry plus one     NOT Covered by the Plan
--------------------------------------------------------------------------------
   Special AIDS drugs                               NOT Covered by the Plan
--------------------------------------------------------------------------------

C5 to Contract 95-23637
Attachment 1
Page 12 of 16

<TABLE>
<CAPTION>
Rate Calculation                                                  Hospital     Hospital    Long Term
                                        Physician    Pharmacy    Inpatient    Outpatient     Care
<S>                                   <C>              <C>      <C>          <C>          <C>
1. Average Cost Per Unit              $    67.42   $    13.64   $ 1,120.53   $    16.21   $   469.38
2. Units per Eligible                      4.035        3.411        0.465        1.516        0.007
3. Add'l Capitation Amts              $     0.23   $     0.03   $     2.90   $     0.00   $     0.00
   Cost par Ellg. per Mo              $    22.90   $     3.91   $    46.32   $     2.05   $     0.27
Adjustments
   a. Demographics                         1.212        1.021        1.342        1.157        1.000
   b. Area                                 1.043        1.000        1.000        1.000        1.000
   c. Coverages                            0.974        0.984        0.952        0.973        0.996
   d. Interest                             1.000        1.000        1.000        1.000        1.000
Adjusted Base Cost                    $    28.20   $     3.93   $    59.18   $     2.31   $     0.27
3. Legislative Adjs                        1.076        1.047        0.999        1.024        1.134
4. Trend Adjustments
   a. Cost per Unit                        1.000        1.100        1.050        1.000        1.000
   b. Units per Eligible                   0.950        1.000        1.050        0.950        1.050
Projected Cost per Eligible           $    28.83   $     4.53   $    65.18   $     2.25   $     0.32
5. Stop Loss Reins                              Amount          $        0                  Rate
6.   CHOP
7.  Fee-for-Service AdJ.
Capitation Rate With FQHC     Increment            $   106.97 /Without       $   106.89

<CAPTION>
Rate Calculation                                      FQHC
                                        Other       FFSE        Increment    Total
<S>                                   <C>          <C>          <C>          <C>
1. Average Cost Per Unit              $    20.69   $    68.10   $     7.33
2. Units per Eligible                      1.958        0.132        0.132
3. Add'l Capitation Amts              $     0.00   $     0.00   $     0.00
   Cost par Ellg. per Mo              $     3.38   $     0.75   $     0.08   $  79.66
Adjustments
   a. Demographics                         1.080        1.084        1.084
   b. Area                                 1.000        1.000        1.000
   c. Coverages                            0.815        0.970        0.970
   d. Interest                             1.000        1.000        1.000
Adjusted Base Cost                    $     2.98   $     0.79   $     0.08   $  97.74
3. Legislative Adjs                        1.090        1.031        1.031
4. Trend Adjustments
   a. Cost per Unit                        0.950        1.000        1.000
   b. Units per Eligible                   1.050        1.000        1.000
Projected Cost per Eligible           $     3.24   $     0.81   $     0.08   $ 105.24
5. Stop Loss Reins                                                Premium        0.00
6.   CHDP                                                                        5.04
7.  Fee-for-Service AdJ.                    -3.0%                               (3.31)
Capitation Rate With FQHC Increment
</TABLE>

<PAGE>

<TABLE>

<S>                                            <C>                              <C>
Plan Name:           Molina Medical Center     Plan#:      356                  Date:           01-Dec-99
County:              San Bernardino            Plan Type:  Commercial Plan      Base Period:    FY 96/97
Ald Code Grouping:   Adult
</TABLE>

The Rate Period Is October 1,1998               Capitation Payments at the
to September 3D, 1999                           Beginning of the Month

  Coverages

   CCS Indicated Claims                             NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Outpatient Services                NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Pharmacy Costs                     NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Hospital Inpatient Services        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Eyewear                                          NOT Covered by the Plan
--------------------------------------------------------------------------------
   Heroin Detoxification                            NOT Covered by the Plan
--------------------------------------------------------------------------------
   AIDS Waiver Services                             NOT Covered by the Plan
--------------------------------------------------------------------------------
   Adult Day Health Care                            NOT Covered by the Plan
--------------------------------------------------------------------------------
   Chiropractor/Acupuncture                         NOT Covered by the Plan
--------------------------------------------------------------------------------
   Local Education Authority                        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Alphateto Protein Testing                        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care for month of entry plus one       Covered-by the Plan
--------------------------------------------------------------------------------
   Long Term Care after month of entry plus one     NOT Covered by the Plan
--------------------------------------------------------------------------------
   Special AIDS drugs                               NOT Covered by the Plan
--------------------------------------------------------------------------------

C5 to Contract 95-23637
Attachment 1
Page 13 of 16

<TABLE>
<CAPTION>
Rate Calculation                                                  Hospital     Hospital    Long Term
                                        Physician    Pharmacy    Inpatient    Outpatient     Care
<S>                                   <C>              <C>      <C>          <C>          <C>
1. Average Cost Per Unit              $    90.48   $    17.11   $ 1,140.81   $    15.76   $   812.04
2. Units per Eligible                     21.541        5.818        5.446        4.679        0.000
3. Add'l Capitation Amts              $     0.37   $     0.06   $    35.62   $     0.08   $     0.00
   Cost per Ellg. per Mo              $   162.79   $     6.36   $   553.36   $     6.23   $     0.00
Adjustments
   a. Demographics                         1.000        1.000        1.000        1.000        1.000
   b. Area                                 1.043        1.000        1.000        1.000        1.000
   c. Coverages                            0.999        0.999        0.999        0.989        1.000
   d. Interest                             1.000        1.000        1.000        1.000        1.000
Adjusted Base Cost                    $   169.62   $     8.35   $   552.81   $     6.16   $     0.00
3. Legislative Adjs                        1.029        1.054        1.000        1.022        1.102
4. Trend Adjustments
   a. Cost per Unit                        1.000        1.100        1.050        1.000        1.000
   b. Units per Eligible                   0.950        1.000        1.050        0.950        1.050
Projected Cost per Eligible           $   165.81   $     9.68   $   609.47   $     5.98   $     0.00
5. Stop Loss Reins                                     Amount   $        0
6.   CHOP
7.  Fee-for-Service Adj.
Capitation Rate With FQHC     Increment            $   794.86 /Without       $   794.50

<CAPTION>
Rate Calculation                                      FQHC
                                        Other       FFSE        Increment    Total
<S>                                   <C>          <C>          <C>          <C>
1. Average Cost Per Unit              $    36.13   $    68.10   $     7.33
2. Units per Eligible                     10.172        0.577        0.577
3. Add'l Capitation Amts              $     0.00   $     0.00   $     0.00
   Cost par Ellg. per Mo              $    30.63   $     3.28   $     0.35   $ 765.00
Adjustments
   a. Demographics                             .        1.000        1.000
   b. Area                                 1.000        1.000        1.000
   c. Coverages                            0.809        0.995       .0.995
   d. Interest                             1.000        1.000        1.000
Adjusted Base Cost                    $    24.78   $     3.26   $     0.35   $ 765.33
3. Legislative Adjs                        1.004        1.015        1.015
4. Trend Adjustments
   a. Cost per Unit                        0.950        1.000        1.000
   b. Units per Eligible                   1.050        1.000        1.000
Projected Cost per Eligible           $    24.82   $     3.31   $     0.36   $ 819.43
5. Stop Loss Reins                           0.0%                 Premium        0.00
6.   CHOP                                                                        0.00
7.  Fee-for-Service Adj.                    -3.0%                              (24.57)
Capitation Rate With FQHC Increment
</TABLE>

<PAGE>

<TABLE>

<S>                  <C>                       <C>         <C>                  <C>             <C>
Plan Name:           Molina Medical Center     Plan#:      356                  Date:           01-Dec-99
County:              San Bernardino            Plan Type:  Commercial Plan      Base Period:    FY 96/97
Ald Code Grouping:   AIDS
</TABLE>

The Rate Period Is October 1,1998               Capitation Payments at the
to September 3D, 1999                           Beginning of the Month

  Coverages

   CCS Indicated Claims                             NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Outpatient Services                NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Pharmacy Costs                     NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Hospital Inpatient Services        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Eyewear                                          NOT Covered by the Plan
--------------------------------------------------------------------------------
   Heroin Detoxification                            NOT Covered by the Plan
--------------------------------------------------------------------------------
   AIDS Waiver Services                             NOT Covered by the Plan
--------------------------------------------------------------------------------
   Adult Day Health Care                            NOT Covered by the Plan
--------------------------------------------------------------------------------
   Chiropractor/Acupuncture                         NOT Covered by the Plan
--------------------------------------------------------------------------------
   Local Education Authority                        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Alphateto Protein Testing                        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care for month of entry plus one       Covered-by the Plan
--------------------------------------------------------------------------------
   Long Term Care after month of entry plus one     NOT Covered by the Plan
--------------------------------------------------------------------------------
   Special AIDS drugs                               NOT Covered by the Plan
--------------------------------------------------------------------------------

 C5 to Contract 95-23637
 Attachment 1
 Page 14 of 16

<TABLE>
<CAPTION>
Rate Calculation                                                  Hospital     Hospital    Long Term
                                        Physician    Pharmacy    Inpatient    Outpatient     Care
<S>                                   <C>              <C>      <C>          <C>          <C>

1. Average Cost Per Unit              $    32.67   $   126.04   $   611.26   $    13.79   $   139.87
2. Units per Eligible                     26.584       74.792        3.169        9.882        0.000
3. Add'l Capitation Amis              $     2.96   $     0.09   $     9.89   $     0.02   $     0.00
   Cost per Elig. per Mo              $    75.33   $   785.66   $   171.31   $    11.38   $     0.00
Adjustments
   a. Demographics                         1.000        1.000        1.000        1.000        1.000
   b. Area                                 1.043        1.000        1.000        1.000        1.000
   c. Coverages                            0.918        0.648        0.957        0.992        0.998
   d. Interest                             1.000        1.000        1.000        1.000        1.000
Adjusted Base Cost                    $    72.13   $   509.11   $   163.94   $    11.29   $     0.00
3. Legislative Adjs                        0.963        1.006        0.977        0.982        1.186
4. Trend Adjustments
   a. Cost per Unit                        1.000        1.100        1.050        1.000        1,100

   b. Units per Eligible                   1.100        1.210        1.050        1.045        0.950
Projected Cost per Eligible           $    76.41   $   681.69   $   176.59   $    11.59   $     0.00
5.  Stop Loss Reins
6.   CHOP
7.  Fee-for-Service Adj.
Capitation Rate With FQHC Increment                $ 1,000.01/Without        $ 1,000.01

<CAPTION>
Rate Calculation                                        FQHC
                                          Other       FFSE        Increment      Total
<S>                                     <C>          <C>          <C>          <C>

1. Average Cost Per Unit                $    42.30   $    69.96   $     0.00
2. Units per Eligible                       36.392        0.349        0.349
3. Add'l Capitation Amis                $     0.00   $     0.00   $     0.00
   Cost per Elig. per Mo                $   128.28   $     2.04   $     0.00   $ 1,174.00
Adjustments
   a. Demographics                           1.000        1.000        1.000
   b. Area                                   1.000        1.000        1.000

   c. Coverages                              0.599        0.951        0.951
   d. Interest                               1.000        1.000        1,000
Adjusted Base Cost                      $    76.84   $     1.94   $     0.00   $   835.25
3. Legislative Adjs                          0.979        0.984        0.984
4. Trend Adjustments
   a. Cost per Unit                          1.100        1,000
                                                                       1.000

   b. Units per Eligible                     1.000        1.000        1.000
Projected Cost per Eligible             $    82.75   $     1.91   $     0.00   $ 1,030.94
5.  Stop Loss Reins                            0.0%                                  0.00
6.   CHOP                                                                            0.00
7.  Fee-for-Service Adj.             Rate     -3.0%                Premium         (30.93)
Capitation Rate With FQHC Increment
</TABLE>

<PAGE>

Aid Group Poverty-47/72                      Base: Statewide
                                           Base Period:  FY 96/97

 Payments at Beginning of Month
 Services ==>

<TABLE>
<CAPTION>
                                                           Hospital   Hospital  Nursing                       FQHC
                                     physician   Pharmacy  Inpatient Outpatient Facility    Other      FFSE Increment       Totals

<S>                                  <C>        <C>        <C>        <C>       <C>        <C>       <C>        <C>        <C>
1. Base Cost                         $  10.40   $   6.74   $  13.64   $   3.91  $  0.24    $   8.30  $  2.96    $  1.21    $ 47.42
2. Age/5ex Adjustments                  1.000      1.000      1.000      1.000    1.000       1.000    1.000      1.000
3. Eligibility Adjustments              1.000      1.000      1.000      1.000    1.000       1.000    1.000      1.000
4. Coverage Adjustments                 0.997      0.997      0.999      0.964    1.000       0.891    0.991      0.991
5. Interest Offset                      0.995      1.001      0.991      0.993    0.998       0.995    0.998      0.998

 Contract Cost FY 96/37              $  10.32   $   6.73   $  13.50   $   3.74  $  0.24    $   7.36  $  2.94    $  1.20    $ 46.03

6. Legislative Adjustments              1.044      0.740      0.985      1.021    1.061       1.150    1.024      1.024
7. Trend Adjustments
           a. Cost per Unit             1.000      1.308      1.055      0.970    1.000       1.445    1.071      1.071
           b. Utilization               1.000      1.027      1.050      1.000    1.107       1.000    1.265      1.265

Projected Cost 10/98-9/99            $  10.77   $   6.69   $  14.73   $   3.70  $  0.28    $  12.23  $  4.08    $  1.66    $ 54.14

8.CHOP                                                                                                                     $  2.54

9. Administrative Allowance                                                                     1.5%                       $  0.88

Fee-for-Service Equivalent Cost                                                                                            $ 57.56

Fee-for-Service Adj.                                                                             94%                         (3.45)

Capitation Rate with FQHC Increment                                                                                        $ 54.11

Capitation Rate without FQHC Increment                                                                                     $ 52.55
</TABLE>

                             C5 to Contract 95-23637
                             Attachment 1
                             Page 15 of 16

<PAGE>

Aid Group Poverty-47/72                      Base: Statewide
                                           Base Period:  FY 96/97

 Payments at Beginning of Month
 Services ==>

<TABLE>
<CAPTION>
                                                           Hospital   Hospital  Nursing                       FQHC
                                     physician   Pharmacy  Inpatient Outpatient Facility    Other      FFSE Increment      Totals

<S>                                  <C>        <C>        <C>        <C>       <C>        <C>       <C>        <C>       <C>
1. Base Cost                         $  10.66   $   7.27   $  20.52   $   5.31  $  0.14    $   2.92  $  5.42    $  2.21   $   54.45
2. Age/5ex Adjustments                  1.000      1.000      1.000      1.000    1.000       1.000    1.000      1.000
3. Eligibility Adjustments              1.000      1.000      1.000      1.000    1.000       1.000    1.000      1.000
4. Coverage Adjustments                 0.997      0.997      0.999      0.964    1.000       0.891    0.991      0.991
5. Interest Offset                      0.995      1.001      0.991      0.993    0.998       0.995    0.998      0.994

 Contract Cost FY 96/37              $  10.57   $   7.25   $  20.32   $   5.09  $  0.14    $   2.59  $  5.36    $  2.18   $   53.50

6. Legislative Adjustments              1.044      0.740      0.985      1.021     1.061      1.150    1.024      1.024
7. Trend Adjustments
           a. Cost per Unit             1.000      1.308      1.055      0.970    1.000       1.445    1.071      1.071
           b. Utilization               1.000      1.027      1.050      1.000    1.107       1.000    1.265      1.265

Projected Cost 10/98-9/99            $  11.04   $   7.21   $  22.17   $   5.04  $  0.16    $   4.30  $  7.44    $  3.02   $   60.38

8.CHOP                                                                                                                    $    2.54

9. Administrative Allowance                                                                     1.5%                      $    0.96

Fee-for-Service Equivalent Cost                                                                                           $   63.88

Fee-for-Service Adj.                                                                             94%                          (3.83)

Capitation Rate with FQHC Increment                                                                                       $   60.05

Capitation Rate without FQHC Increment                                                                                    $   57.21
</TABLE>

                             C5 to Contract 95-23637
                             Attachment 1
                             Page 16 of 16

<PAGE>

STATE OF CALIFORNIA-HEALTH AND HUMAN SERVICES AGENCY        GRAY DAVIS, Governor

================================================================================

[SEAL OF DEPARTMENT OF HEALTH SERVICES]

[SEAL]

DEPARTMENT OF HEALTH SERVICES
714/744 P Street
P. O. Box 942732
Sacramento, CA 94234-7320
(916)654-8076

         February 8, 2000

         Mr. George Goldstein, President
         Molina
         One Golden Shore
         Long Beach, CA 90802

         Dear Mr. Goldstein:

         In accordance with Article V, Section 5.5 of your Contract, the
         enclosed Change Order No. 06 transmits ( Molina's ) annual capitation
         rates for the period October 1, 1999 to September 30, 2000.

         This Change Order also includes a rate change for the two-month period
         of August 1999 through September 1999, to include the provider rate
         increases established in the Budget Act of 1999/2000, which were
         effective August 1, 1999.

         The retropayment between the old rates and the new 1999/2000 rates for
         the period October 1, 1999 through February 2000 and the provider rate
         increases for the period August 1999 through September 1999 will appear
         in your capitation check for February 2000. The March capitation check
         will reflect the 1999/2000 rates.

         If you have any questions, please contact your contract manager.

         Sincerely,

         /s/
         Susanne M. Hughes
         Acting Chief
         Medi-Cal Managed Care Division

<PAGE>

STATE OF CALIFORNIA-HEALTH AND HUMAN SERVICES AGENCY        GRAY DAVIS, Governor

================================================================================

[SEAL OF DEPARTMENT OF HEALTH SERVICES]

[SEAL]

DEPARTMENT OF HEALTH SERVICES
714/744 P Street
P. O. Box 942732
Sacramento, CA 94234-7320
(916)654-8076

CHANGE ORDER C06 TO CONTRACT NO.95-23637: ADJUSTING THE ANNUAL CAPITATION RATE
FOR PROVIDER RATE INCREASES DURING THE TWO MONTH PERIOD OF AUGUST 1, 1999
THROUGH SEPTEMBER 30, 1999; AND THE ANNUAL CAPITATION RATES FOR THE PERIOD
OCTOBER 1,1999 TO SEPTEMBER 30, 2000, BY CHANGING CONTRACT SECTIONS; 5.3
CAPITATION RATES; AND 5.4 CAPITATION RATES CONSTITUTE PAYMENT IN FULL. This
Change Order is effective February 1, 2000.

1.   5.3    CAPITATION RATES

      For the Period 8-1-99 to 9-30-99             San Bernardino County
     ---------------------------------------------------------------------------
                 GROUPS              AID CODES                           RATE
     ---------------------------------------------------------------------------
      Family                     01, OA. 02, 08, 30,                     81.00
                                 32, 33, 34, 35, 38,
                                 39, 40, 42, 54, 59,
                                 3A, 3C, 3E, 3G, 3H,
                                 3L, 3M, 3N, 3P, 3R,
                                 3U, 5X.7X
     ---------------------------------------------------------------------------
      Disabled                   20,24, 26, 28, 36,                      234.98
                                 60, 64, 66, 68, 6A,
                                 6C, 6N, 6P, 6R
     ---------------------------------------------------------------------------
      Aged                       10, 14. 16. 18                          165.06
     ---------------------------------------------------------------------------
      Child                      03, 04, 4C, 4K, 5K,                     107.27
                                 45,82
     ---------------------------------------------------------------------------
      Adult                      86                                      796.46
     ---------------------------------------------------------------------------
      AIDS Beneficiary                                                   996.35
     ---------------------------------------------------------------------------
      Percent of Poverty         7A                                       52.87
     ---------------------------------------------------------------------------
      Percent of Poverty         47,72                                    57.53
     ---------------------------------------------------------------------------

                                        1

<PAGE>

For the Period 8-1-99 to 9-30-99             Riverside County
----------------------------------------------------------------
             GROUPS          AID CODES                      RATE
----------------------------------------------------------------
 Family                   01, OA, 02, 08, 30,              78.99
                          32, 33, 34, 35, 38, 39, 40,
                          42, 54, 59, 3A, 3C, 3E, 3G,
                          3H, 3L, 3M, 3N, 3P, 3R, 3U,
                          SX,7X
----------------------------------------------------------------
 Disabled                 20,24, 26, 28, 36,              224.00
                         60, 64, 66; 68, 6A,
                         6C, 6N, 6P. 6R
----------------------------------------------------------------
 Aged                     10, 14, 16, 18                  161.75
----------------------------------------------------------------
 Child                   03, 04, 4C, 4K, 5K,               93.54
                         45,82
----------------------------------------------------------------
 Adult                   86                               710.61
----------------------------------------------------------------
 AIDS Beneficiary                                         963.67
----------------------------------------------------------------
 Percent of Poverty      7A                                52.87
----------------------------------------------------------------
 Percent of Poverty      47,72                             57.53
----------------------------------------------------------------

 For the period 10-1-99 to 9-30-2000     San Bernardino County
----------------------------------------------------------------
             GROUPS          AID CODES                     RATE
----------------------------------------------------------------
 Family                  01. OA. 02, 08, 30,               84.07
                         32, 33, 34, 35, 38, 39, 40,
                         42, 54, 59, 3A, 3C, 3E, 3G,
                         3H, 3L, 3M, 3N, 3P, 3R, 3U,
                         4F, 4G, 5X, 7A, 7X
----------------------------------------------------------------
 Disabled                20, 24, 26, 28, 36,              198.68
                         60, 64, 66, 68, 6A,
                         6C, 6N, 6P, 6R
----------------------------------------------------------------
 Aged                     10, 14, 16, 18                  145.52
----------------------------------------------------------------
 Child                   03, 04, 4A, AC, 4K,                8582
                         5K, 45, 47, 72, 82,
                         8R.8P
----------------------------------------------------------------
 Adult                   86                               914.05
----------------------------------------------------------------
 AIDS Beneficiary                                         763.69
----------------------------------------------------------------

                                        2

<PAGE>

Riverside  County
     For the period 10-1-99 to 9-30-2QQQ
     ----------------------------------------------------------------
              GROUPS              AID CODES                     RATE
     ----------------------------------------------------------------
      Family                  01, 0A, 02, 08, 30,               79.61
                              32, 33, 34, 35, 38,
                              39, 40, 42, 54, 59,
                              3A, 3C, 3E, 3G, 3H,
                              3L, 3M, 3N, 3P, 3R,
                              3U, 4F, 4G, 5X, 7A,
                              7X
     ----------------------------------------------------------------
      Disabled                20, 24. 26, 28, 36,             201.02
                              GO, 64, 66, 68, 6A,
                              6C, 6N, 6P, 6R
     ----------------------------------------------------------------
      Aged                    10, 14, 16, 18                   143.42
     ----------------------------------------------------------------
      Child                   03, 04, 4A, 4C, 4K,              101.31
                              5K, 45, 47, 72, 82,
                              8R.8P
     ----------------------------------------------------------------
      Adult                   86                               838.60
     ----------------------------------------------------------------
      AIDS Beneficiary                                         722.10
     ----------------------------------------------------------------

     .    Aid codes 4A, 4F, 4G, 8R, & 8P will be effective February 1, 2000.

     .    All other terms, conditions, and provisions contained in Section 5.3
          remain unchanged.

2.   5.4     CAPITATION RATES CONSTITUTE PAYMENT IN FULL

     Capitation rates for each rate period, as calculated by DHS, are
     prospective rates and constitute payment in full, subject to any stop loss
     reinsurance provisions, on behalf of a Member for all Covered Services
     required by such Member and for all Administrative Costs incurred by the
     Contractor in providing or arranging for such services, and subject to
     adjustments for federally qualified health centers in accordance with
     Section 14087.325 of the W&.I Code, but do not include payment for the
     recoupment of current or previous losses incurred by Contractor. DHS is not
     responsible for making payments for recoupment of losses. The actuarial
     basis for the determination of the capitation payment rates is outlined in
     Attachment 1 (consisting of 28 pages).

     All other terms, conditions, and provisions contained in Section 5.4 remain
     unchanged.

                                        3

<PAGE>
<TABLE>
<S>                  <C>                       <C>         <C>                  <C>             <C>
Plan Name:           Molina Medical Center     Plan#:      356                  Date:           01-Nov-99
County:              San Bernardino            Plan Type:  Commercial Plan      Base Period:    FY 96/97
Ald Code Grouping:   Family
</TABLE>

Adjusted Rate is Effective August 1,              Capitation Payments at the
1999 to September 30. 1999                        Beginning of the Month

Coverages
--------------------------------------------------------------------------------
  CCS Indicated Claims                             NOT Covered by the Plan
-------------------------------------------------------------------------------
  Mental Health Outpatient Services                NOT Covered by the Plan
-------------------------------------------------------------------------------
  Mental Health Pharmacy Costs                     NOT Covered by the Plan
-------------------------------------------------------------------------------
  Mental Health Hospital Inpatient Services        NOT Covered by the Plan
-------------------------------------------------------------------------------
  Eyewear                                          NOT Covered by the Plan
-------------------------------------------------------------------------------
  Heroin Detoxification                            NOT Covered by the Plan
-------------------------------------------------------------------------------
  AIDS Waiver Services                             NOT Covered by the Plan
-------------------------------------------------------------------------------
  Adult Day Health Care                            NOT Covered by the Plan
-------------------------------------------------------------------------------
  Chiropractor/Acupuncture                         NOT Covered by the Plan
-------------------------------------------------------------------------------
  Local Education Authority                        NOT Covered by the Plan
-------------------------------------------------------------------------------
  Alphateto Protein Testing                        NOT Covered by the Plan
-------------------------------------------------------------------------------
  Long Term Care for month of entry plus one       Covered by the Plan
-------------------------------------------------------------------------------
  Long Term Care after month of entry plus one     NOT Covered by the Plan
-------------------------------------------------------------------------------
  Special AIDS drugs                               NOT Covered by the Plan
--------------------------------------------------------------------------------

C6 to Contract 95-23637
Attachment 1
Page 1 of 28

<TABLE>
<CAPTION>
Rate Calculation                                                  Hospital     Hospital    Long Term
                                        Physician    Pharmacy    Inpatient    Outpatient     Care
<S>                                   <C>              <C>      <C>          <C>          <C>

1. Average Cost Per Unit              $    69.46   $    19.88   $   978.02   $    16.16   $   812.04
2. Units per Eligible                      4.050        4.683        0.373        2.146        0.004
3. Addt'l Capitation Amis             $     0.37   $     0.05   $     4.62   $     0.01   $     0.00
    Cost per Elig. per Mo             $    23.81   $     7.81   $    35.02   $     2.90   $     0.27
4. Adjustments
   a. Demographics                         0.997        0.993        0.977        0.987        1.000
   b. Area                                 1.043        1.000        1.000        1.000        1.000
   c. Coverages                            0.975        0.992        0.968        0.956        0.995
   d. Interest                             0.995        0.995        0.995        0.995        0.995
Adjusted Base Cost                    $    24.02   $     7.65   $    32.95   $     2.72   $     0.27
5. Legislative Adjs                        1.061        1.053        1.006        1.031
6. Trend Adjustments
   a. Cost per Unit                        1.000        1.100        1.050        1.000        1.000
   b. Units per Eligible                   0.950        1.000        1.050        0.950        1.050
Projected Cost per Eligible           $    24.21   $     8.86   $    36.55   $     2.66   $     0.34
7. Stop Loss Reins.                                 Amount      $        0
8. CHOP
9. Fee-for-Service Adj.
Capitation Rate

<CAPTION>
Rate Calculation                                   FQHC
                                     Other       FFSE        Increment     Total
<S>                                <C>          <C>          <C>          <C>

1. Average Cost Per Unit           $    20.09   $    68.10
2. Units per Eligible                   3.532        0.132
3. Addt'l Capitation Amis           $     0.00   $     0.00
    Cost per Elig. per Mo          $     5.91   $     0.75   $    76.47
4. Adjustments
   a. Demographics                      0.985        0.992
   b. Area                              1.000        1.000
   c. Coverages                         0.833        0.935
   d. Interest                          0.995        0.995
Adjusted Base Cost                 $     4.82   $     0.69   $    73.12
5. Legislative Adjs                     1.061        1.041
6. Trend Adjustments
   a. Cost per Unit                     0.950        1.000
   b. Units per Eligible                1.050        1.000
Projected Cost per Eligible        $     5.10   $     0.72   $    78.44
7. Stop Loss Reins.                Rate   0.0%                     0.00   $ 78.44
8. CHOP                                                                      0.00
9. Fee-for-Service Adj.                                                      5.06
Capitation Rate                          -3.0%                              (2.50)
                                                                          $ 81.00
</TABLE>
Department of Health Services. Rate Development Branch

<PAGE>

<TABLE>
<S>                                                <C>                          <C>
Plan Name:               Molina Medical Center     Plant #:    356              Date:          16-NOV-99
County:                  San Bernardino            Plan Type: Commercial Plan   Base Period:   FY 96/97
Aid Code Grouping:       Aged
</TABLE>

Adjusted Rate is Effective August               Capitation Payments at the
1,1999 to September 30, 1999                    Beginning of the Month

Coverages
---------------------------------------------------------------------------
 CCS Indicated Claims                           NOT Covered by the Plan
---------------------------------------------------------------------------
 Mental Health Outpatient Services              NOT Covered by the Plan
---------------------------------------------------------------------------
 Mental Health Pharmacy Costs                   NOT Covered by the Plan
---------------------------------------------------------------------------
 Mental Health Hospital Inpatient Services      NOT Covered by the Plan
---------------------------------------------------------------------------
 Eyewear                                        NOT Covered by the Plan
---------------------------------------------------------------------------
 Heroin Detoxification                          NOT Covered by the Plan
---------------------------------------------------------------------------
 AIDS Waiver Services                           NOT Covered by the Plan
---------------------------------------------------------------------------
 Adult Day Health Care                          NOT Covered by the Plan
---------------------------------------------------------------------------
 Chiropractor/Acupuncture                       NOT Covered by the Plan
---------------------------------------------------------------------------
 Local Education Authority                      NOT Covered by the Plan
---------------------------------------------------------------------------
 Alphafeto Protein Testing                      NOT Covered by the Plan
---------------------------------------------------------------------------
 Long Term Care for month of entry plus one     Covered by the Plan
---------------------------------------------------------------------------
 Long Term Care after month of entry plus one   NOT Covered by the Plan
---------------------------------------------------------------------------
 Special AIDS drugs                             NOT Covered by the Plan
---------------------------------------------------------------------------

C6 to Contract No. 95-23637
Page 2 of 28

<TABLE>
<CAPTION>
Rate Calculation                                    Hospital      Hospital     Long Term                        FQHC
                             Physician   Pharmacy   Inpatient    Outpatient       Care      Other         FFSE        Total
<S>                           <C>        <C>         <C>            <C>          <C>       <C>           <C>        <C>
1. Average Cost Per Unit      $  48.90   $  32.71    $ 316.16       $ 10.02      $ 77.33   $   6.41      $ 50.63
2. Units per Eligible            4.580     21.914       1.265         3.306        2.016     12.862        0.024
3. Addt'l Capitation Amis.    $   1.29   $   0.00    $   7.41       $  0.02      $  0.00   $   0.00      $  0.00
   Cost per Elig. per Mo.     $  19.95   $  59.73    $  40.74       $  2.78      $ 12.99   $   6.87      $  0.10    $ 143.18
4. Adjustments
   a. Demographics               0.963      1.014       0.962         0.975        1.027      1.013        0.979
   b. Area                       1.043      1.000       1.000         1.000        1.000      1.000        1.000
   c. Coverages                  0.981      0.996       0.997         0.986        0.997      0.791        0.603
   d. Interest                   0.995      O.995       0.995         0.995        0.995      0.995        0.995
Adjusted Base Cost            $  19.56   $  60.02    $  38.88       $  2.66      $ 13.23   $   5.48     $  0.06    $ 139.89
5. Legislative Adjs.             0.947      1.049       0.933         0.939        1.194      0.941        0.939
6. Trend Adjustments
   a.Cost per Unit               1.100      1.100       1.100         1.050        1.000      1.050        1.000
   b.Units per Eligible          1.100      1.155       1.100         1.100        1.000      0.950        1.000
Projected Cost per Eligible   $  22.41   $  79.99    $  43.89       $  2.88      $ 15.80   $   5.14      $  0.06    $ 170.17
7. Stop Loss Reins.                  Amount          $      0              Rate                 0.0%                    0.00
8. CHOP                                                                                                                 0.00
9. Fee-for-Service Adj.                                                                        -3.0%                   (5.11)
Capitation Rate                                                                                                     $ 165.06
</TABLE>

Department of Health Services, Rate Development Branch

<PAGE>

<TABLE>
<S>                 <C>                         <C>                             <C>
Plan Name:          Molina Medical Center       Plan#:     356                  Date:        16-Nov-99
Country:            San Bernardino              Plan Type: Commercial Plan      Base Period: FY 96/97
Aid Code Grouping:  Disabled
</TABLE>

Adjusted Rate is Effective August 1, 1999           Capitation Payments at the
to September 30, 1999                               Beginning of the Month

Coverages
--------------------------------------------------------------------------------
   CCS Indicated Claims                             NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Outpatient Services                NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Pharmacy Costs                     NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Hospital Inpatient Services        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Eyewear                                          NOT Covered by the Plan
--------------------------------------------------------------------------------
   Heroin Detoxification                            NOT Covered by the Plan
--------------------------------------------------------------------------------
   AIDS Waiver Services                             NOT Covered by the Plan
--------------------------------------------------------------------------------
   Adult Day Health Cam                             NOT Covered by the Plan
--------------------------------------------------------------------------------
   Chiropractor/Acupuncture                         NOT Covered by the Plan
--------------------------------------------------------------------------------
   Local Education Authority                        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Alphafeto Protein Testing                        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care for month of entry plus one       Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care after month of entry plus one     NOT Covered by the Plan
--------------------------------------------------------------------------------
   Special AIDS drugs                               NOT Covered by the Plan
--------------------------------------------------------------------------------

C6 to Contract No. 95-23637
Page 3 of 28

<TABLE>
<CAPTION>
Rate Calculation
                                                           Hospital    Hospital    Long Term                    FQHC
                                   Physician   Pharmacy   Inpatient   Outpatient     Care        Other     FFSE       Total
<S>                                  <C>       <C>         <C>          <C>         <C>        <C>         <C>       <C>
1. Average Cost Per Unit             $ 46.41   $  39.70    $ 611.26     $  12.37    $ 139.87   $  10.16    $ 69.96
2. Units per Eligible                  6.969     26.861       1.556        5.050       0.459     21.959      0.120
3. Addt'l Capitation Amts            $  2.96   $   0.09    $   9.89     $   0.02    $   0.00      $0.00    $  0.00
   Cost per Elig. per Mo.            $ 29.91   $  88.96    $  89.15     $   5.23    $   5.35   $  18.59    $  0.70   $ 237.89
4. Adjustments
   a. Demographics                     0.980      0.973       0.961        0.998       0.996      1.006      0.989
   b. Area                             1.043      1.000       1.000        1.000       1.000      1.000      1.000
   c. Coverages                        0.900      0.875       0.920        0.973       0.995      0.878      0.863
   d. Interest                         0.995      0.995       0,995        0.995       0.995      0.995      0.995
Adjusted Base Cost                   $ 27.38   $  75.36    $  78.43     $   5.05    $   5.28   $  16.34    $  0.59   $ 208.43
5. Legislative Adjs.                   0.949      1.043       0.927        0.939       1.184      0.937      0.945
6. Trend Adjustments
   a. Cost per Unit                    1.000      1.100       1.050        1.000       1.100      1.100      1.000
   b. Units per Eligible               1.100      1.210       1.050        1.045       0.950      1.000      1.000
Projected Cost per Eligible          $ 28.58   $ 104.62    $  80.16     $   4.96    $   6.53   $  16.84    $  0.56   $ 242.25
7. Stop Loss Reins.                         Amount         $      0             Rate                0.0%                 0.00
6. CHOP                                                                                                                  0.00
9. Fee-for-Service Adj.                                                                            -3.0%                (7.27)
Capitation  Rate                                                                                                     $ 234.98
</TABLE>

Department of Health Services, Rate Development Branch

<PAGE>

<TABLE>
<S>                                             <C>                             <C>
Plan Name:          Molina Medical Center       Plan#:     356                  Date:        16-Nov-99
Country:            San Bernardino              Plan Type: Commercial Plan      Base Period: FY 96/97
Aid Code Grouping:  Child
</TABLE>

Adjusted Rate is Effective August 1, 1999       Capitation Payments at the
to September 30, 1999                           Beginning of the Month

Coverages
---------------------------------------------------------------------------
  CCS Indicated Claims                          NOT Covered by the Plan
---------------------------------------------------------------------------
  Mental Health Outpatient Services             NOT Covered by the Plan
---------------------------------------------------------------------------
  Mental Health Pharmacy Costs                  NOT Covered by the Plan
---------------------------------------------------------------------------
  Mental Health Hospital Inpatient Services     NOT Covered by the Plan
---------------------------------------------------------------------------
  Eyewear                                       NOT Covered by the Plan
---------------------------------------------------------------------------
  Heroin Detoxification                         NOT Covered by the Plan
---------------------------------------------------------------------------
  AIDS Waiver Services                          NOT Covered by the Plan
---------------------------------------------------------------------------
  Adult Day Health Care                         NOT Covered by the Plan
---------------------------------------------------------------------------
  Chiropractor/Acupuncture                      NOT Covered by the Plan
---------------------------------------------------------------------------
  Local Education Authority                     NOT Covered by the Plan
---------------------------------------------------------------------------
  Alphafeto Protein Testing                     NOT Covered by the Plan
---------------------------------------------------------------------------
  Long Term Care for month of entry plus one    Covered by the Plan
---------------------------------------------------------------------------
  Long Term Care after month of entry plus one  NOT Covered by the Plan
---------------------------------------------------------------------------
  Special AIDS drugs                            NOT Covered by the Plan
---------------------------------------------------------------------------

C6 to Contract No. 95-23637
Page 4 of. 28

<TABLE>
<CAPTION>
Rate Calculation                                            Hospital     Hospital    Long Term                   FQHC
                                    Physician   Pharmacy   Inpatient    Outpatient     Care       Other     FFSE      Total
<S>                                   <C>        <C>       <C>             <C>        <C>        <C>       <C>       <C>
1. Average Cost Per Unit              $ 67.42    $ 13.64   $ 1,120.53      $ 16.21    $ 469.38   $ 20.69   $ 68.10
2. Units per Eligible                   4.036      3.411        0.465        1.516       0.007     1.958     0.132
3. Addt'l Capitation Amts             $  0.23    $  0.03   $     2.90      $  0.00    $   0.00   $  0.00   $  0.00
   Cost per Elig. per Mo.             $ 22.90    $  3.91   $    46.32      $  2.05    $   0.27   $  3.38   $  0.75   $  79.58
4. Adjustments
   a. Demographics                      1.212      1.021        1.342        1.157       1.000     1.080     1.084
   b. Area                              1.043      1.000        1.000        1.000       1.000     1.000     1.000
   c. Coverages                         0.974      0.984        0.952        0.973       0.996     0.815     0.970
   d. Interest                          0.995      0.995        0.995        0.995       0.995     0.995     0.995
Adjusted Base Cost                    $ 28.05    $  3.91   $    58.88      $  2.30    $   0.27   $  2.96   $  0.78   $  97.15
5. Legislative Adjs.                    1.084      1.047        1.009        1.031       1.188     1.104     1.044
6. Trend Adjustments
   a. Cost per Unit                     1.000      1.100        1.050        1.000       1.000     0.950     1.000
   b. Units per Eligible                0,950      1.000        1.050        0.950       1.050     1.050     1.000
Projected Cost per Eligible           $ 28.89    $  4.50   $    65.50      $  2.25    $   0.34   $  3.26   $  0.81   $ 105.55
7. Stop Loss Reins.                        Amount          $        0             Rate               0.0%                0.00
6. CHOP                                                                                                                  5.04
9. Fee-for-Service Adj.                                                                             -3.0%               (3.32)
Capitation  Rate                                                                                                     $ 107.27
</TABLE>

Department of Health Services, Rate Development Branch

<PAGE>

<TABLE>
<S>                                             <C>                             <C>
Plan Name:          Molina Medical Center       Plan#:     356                  Date:        16-Nov-99
Country:            San Bernardino              Plan Type: Commercial Plan      Base Period: FY 96/97
Aid Code Grouping:  Adult
</TABLE>

Adjusted Rate is Effective August 1,1999             Capitation Payments at the
to September 30,1999                                 Beginning of the Month
Coverages
--------------------------------------------------------------------------------
 CCS Indicated Claims                                 NOT Covered by the Plan
--------------------------------------------------------------------------------
 Mental Health Outpatient Services                    NOT Covered by the Plan
--------------------------------------------------------------------------------
 Mental Health Pharmacy Costs                         NOT Covered by the Plan
--------------------------------------------------------------------------------
 Mental Health Hospital inpatient Services            NOT Covered by the Plan
--------------------------------------------------------------------------------
 Eyewear                                              NOT Covered by the Plan
--------------------------------------------------------------------------------
 Heroin Detoxification                                NOT Covered by the Plan
--------------------------------------------------------------------------------
 AIDS Waiver Services                                 NOT Covered by the Plan
--------------------------------------------------------------------------------
 Adult Day Health Care                                NOT Covered by the Plan
--------------------------------------------------------------------------------
 Chiropractor/Acupuncture                             NOT Covered by the Plan
--------------------------------------------------------------------------------
 Local Education Authority                            NOT Covered by the Plan
--------------------------------------------------------------------------------
 Alphafeto Protein Testing                            NOT Covered by the Plan
--------------------------------------------------------------------------------
 Long Term Care for month of entry plus one           Covered by the Plan
--------------------------------------------------------------------------------
 Long Term Care after month of entry plus one         NOT Covered by the Plan
--------------------------------------------------------------------------------
 Special AIDS drugs                                   NOT Covered by the Plan
--------------------------------------------------------------------------------

C6 to Contract :No.  95-23637
Page 5 of 28

<TABLE>
<CAPTION>
Rate Calculation                                                 Hospital     Hospital   Long Term                       FQHC
                                         Physician   Pharmacy    Inpatient   Outpatient    Care        Other      FFSE      Total
<S>                                       <C>         <C>       <C>             <C>        <C>        <C>        <C>       <C>
1. Average Cost Per Unit                  $  90.48    $ 17.11   $ 1,140.81      $ 15.76    $ 812.04   $  36.13   $ 68.10
2. Units per Eligible                       21.541      5.818        5.446        4.679       0.000     10.172     0.577
3. Addt'l Capitation Amts                 $   0.37    $  0.06   $    35.62      $  0.08    $   0.00   $   0.00   $  0.00
   Cost per Elig. per Mo.                 $ 162.79    $  8.36   $   553.36      $  6.23    $   0.00   $  30.63   $  3.28   $ 764.65
4. Adjustments
   a. Demographics                           1.000      1.000        1.OOO        1.000       1.000      1.000     1.000
   b. Area                                   1.043      1.000        1.OOO        1.000       1.000      1.000     1.000
   c. Coverages                              0.999      0.999        0.999        0.989       1.000      O.809     0.995
   d. Interest                               0.995      0.995        0.995        0.995       0.995      0.995     0.995
Adjusted Base Cost                        $ 168.77    $  8.31   $   550.04      $  6.13    $   0.00   $  24.66   $  3.25   $ 761.16
5. Legislative Adjs.                         1.038      1.054        1.007        1.031       1.154      1.018     1.029
6. Trend Adjustments
   a. Cost per Unit                          1.000      1.100        1.050        1.000       1.000      0.950     1.000
   b. Units per Eligible                     0.950      1.000        1.050        0.950       1.050      1.050     1.000
Projected Cost per Eligible               $ 166.42    $  9.63   $   610.66      $  6.00    $   0.00   $  25.04   $  3.34   $ 821.09
7. Stop Loss Reins.                               Amount        $        0             Rate               0.0%                0.00
6. CHOP                                                                                                                        0.00
9. Fee-for-Service Adj.                                                                                   -3.0%              (24.63)
Capitation  Rate                                                                                                           $ 796.46
</TABLE>

Department of Health Services, Rate Development Branch

<PAGE>

<TABLE>
<S>                                             <C>                             <C>
Plan Name:          Molina Medical Center       Plan#:     356                  Date:        16-Nov-99
Country:            San Bernardino              Plan Type: Commercial Plan      Base Period: FY 96/97
Aid Code Grouping:  AIDS
</TABLE>

Adjusted Rate is Effective August 1,1999              Capitation Payments at the
to September 30, 1999                                 Beginning of the Month

Coverages
--------------------------------------------------------------------------------
 CCS Indicated Claims                                 NOT Covered by the Plan
--------------------------------------------------------------------------------
 Menial Health Outpatient Services                    NOT Covered by the Plan
--------------------------------------------------------------------------------
 Mental Health Pharmacy Costs                         NOT Covered by the Plan
--------------------------------------------------------------------------------
 Mental Health Hospital Inpatient Services            NOT Covered by the Plan
--------------------------------------------------------------------------------
 Eyewear                                              NOT Covered by the Plan
--------------------------------------------------------------------------------
 Heroin Detoxification                                NOT Covered by the Plan
--------------------------------------------------------------------------------
 AIDS Waiver Services                                 NOT Covered by the Plan
--------------------------------------------------------------------------------
 Adult Day Health Care                                NOT Covered by the Plan
--------------------------------------------------------------------------------
 Chiropractor/Acupuncture                             NOT Covered by the Plan
--------------------------------------------------------------------------------
 Local Education Authority                            NOT Covered by the Plan
--------------------------------------------------------------------------------
 Alphafeto Protein Testing                            NOT Covered by the Plan
--------------------------------------------------------------------------------
 Long Term Care for month of entry plus one           Covered by the Plan
--------------------------------------------------------------------------------
 Long Term Care after month of entry plus one         NOT Covered by the Plan
--------------------------------------------------------------------------------
 Special AIDS drugs                                   NOT Covered by the Plan
--------------------------------------------------------------------------------

 C6 to Contract No. 95-23637
 Page 6 of 28

<TABLE>
<CAPTION>
Rate Calculation                                    Hospital       Hospital    Long Term                     FQHC
                              Physician  Pharmacy   Inpatient    Outpatient      Care       Other      FFSE        Total
<S>                           <C>        <C>        <C>            <C>        <C>         <C>        <C>       <C>
1. Average Cost Per Unit      $  32.67   $ 126.04   $  611.26      $  13.79   $  139.87   $  42.30   $ 69.96
2. Units per Eligible           26.584     74.792       3.169         9.882       0.000     36.392     0.349
3. Addt'l Capitation Amts     $   2.96   $   0.09   $    9.89      $   0.02   $    0.00   $   0.00   $  0.00
   Cost per Elig. per Mo.     $  75.33   $ 785.66   $  171.31      $  11.38   $    0.00   $ 128.28   $  2.04   $  1,174.00
4. Adjustments
   a. Demographics               1.000      1.000       1.000         1.000       1.000      1.000     1,000
   b. Area                       1.043      1.000       1.000         1.000       1.000      1.000     1.000
   c. Coverages                  0.918      0.648       0.957         0.992       0.998      0.599     0.951
   d. Interest                   0.995      0.995       0.995         0.995       0.995      0.995     0.995
Adjusted Base Cost            $  71.77   $ 506.56   $  163.12      $  11.23   $    0.00   $  76.46   $  1.93   $    831.07
5. Legislative Adjs.             0.969      1.006       0.980         0.984       1.242      0.983     0.988
6. Trend Adjustments
   a. Cost per Unit              1.000      1.100       1.050         1.000       1.100      1.100     1.000
   b. Units per Eligible         1.100      1.210       1.050         1.045       0.950      1.000     1.000
Projected Cost per Eligible   $  76.50   $ 678.28   $  176.24      $  11.55   $    0.00   $  82.68   $  1.91   $  1,027.16
7. Stop Loss Reins.                   Amount        $       0              Rate                0.0%                   0.00
6. CHOP                                                                                                               0.00
9. Fee-for-Service Adj.                                                                       -3.0%                 (30.81)
Capitation  Rate                                                                                               $    996.35
</TABLE>

Department of Health Services, Rate Development Branch

<PAGE>

C6 to Contract No.95-2367
Page 7 of 28

Aid Group: Poverty-47/72                          Base:           Statewide
           Rate Period: August 1999 to September  Base Period:    FY 96/97

<TABLE>
<CAPTION>
                                                                       Hospital     Hospital   Nursing
  Services ==>                                Physician   Pharmacy    Inpatient   Outpatient   Facility    Other     FQHC    Totals
<S>                                             <C>        <C>         <C>           <C>        <C>       <C>       <C>      <C>
1. Base Cost                                    $ 10.66    $  7.27     $  20.52      $  5.31    $  0.14   $  2.92   $  5.42  $52.24
2. Age/Sex Adjustments                            1.000      1.000        1.000        1.000      1.000     1.000     1.000
3. Eligibility Adjustments                        1.000      1.000        1.000        1.OOO      1.000     1.000     1.000
4. Coverage Adjustments                           0.997      0.997        0.999        0.964      1.000     0.891     0.991
5. Interest Offset                                0.990      0.996        0.987        0.989      0.993     0.990     0.994

Contract Cost FY 96/97                          $ 10.52    $  7.22     $  20.24      $  5.07    $  0.14   $  2.57   $  5.34  $51.10
6. Legislative Adjustments                        1.054      0.740        0.997        1.031      1.111     1.167     1.038
7. Trend Adjustments
       a. Cost Per Unit                           1.000      1.308        1.055        0.970      1.000     1.445     1.071
       b. Utilization                             1.000      1.027        1.050        1.000      1.107     1.000     1.265

Projected Cost 10/98-9/99                       $ 11.09    $  7.18     $  22.35      $  5.07    $  0.17   $  4.33   $  7.51  $57.70

8. CHDP                                                                                                                      $ 2.54

9. Administrative Allowance                                                                         1.6%                     $ 0.96

Fee-for-Service Equivalent Cost                                                                                              $61.20

Adjustment to Fee-for Service                                                                        94%                     $(3.67)

Capitation Rate (payments at beginning of month)                                                                             $57.53
</TABLE>

01/21/2000-Department of Health Services, Rate Development Branch

<PAGE>

C6 to Contract No.   95-23637
Page 8 of 28

<TABLE>
<S>                                                 <C>
Aid Group: Poverty - 7 A                              Base:        Statewide Family Age Adjusted
           Rate Period : August 1999 to September   Base Period:   FY 96/97'
</TABLE>

<TABLE>
<CAPTION>
                                                                     Hospital      Hospital    Nursing
         Services==>                          Physician   Pharmacy   Inpatient    Outpatient   Facility    Other    FQHC     Totals
<S>                                             <C>        <C>         <C>           <C>        <C>       <C>       <C>      <C>
1. Base Cost                                    $ 10.40    $  6.74     $ 13.64       $  3.91    $  0.24   $  8.30   $  2.98  $46.21
2. Age/Sex Adjustments                            1.000      1.000       1.000         1.000      1,000     1.000     1.000
3. Eligibility Adjustments                        1,000      1.000       1.000         1.000      1.000     1.000     1.000
4. Coverage Adjustments                           0.997      0.997       0.999         0.964      1.000     0.891     0.991
5. Interest Offset                                0.99O      0.996       0.987         0.989      0.993     0.990     0.994

Contract Cost FY 96/97                          $ 10.27    $  6.69     $ 13.45       $  3.73    $  0.24   $  7.32   $  2.93  $44.63

6. Legislative Adjustments                        1.054      0.740       0.997         1.031      1.111     1.167     1.038
7. Trend Adjustments
       a. Cost Per Unit                           1.000      1.308       1.055         0.970      1.000     1.445     1.071
       b. Utilization                             1.000      1.027       1.050         1.000      1.107     1.000     1.265

Projected Cost 10/98-9/99                       $ 10.82    $  6.65     $ 14.85       $  3.73    $  0.30   $ 12.34   $  4.12  $52.81

8. CHDP                                                                                                                      $ 2.54
                                                                                                     1.6%                    $ 0.89
9. Administrative Allowance

Fee-for-Service Equivalent Cost                                                                                              $56.24

Adjustment to Fee-for Service                                                                         94%                    $(3.37)

Capitation Rate (payments at beginning of month)                                                                             $52.87
</TABLE>

01 /21 /2000 - Department of Health Services, Rate Development Branch

<PAGE>

<TABLE>
<S>                                           <C>                   <C>
Plan Name:          Molina Medical Center     Plan #:    355        Date:             16-Nov-99
County:             Riverside                 Plan Type: Commercial Plan Base Period: Fy 96/97
Aid Code Grouping   Family
</TABLE>

Adjusted Rate is Effective August 1, 1999      Capitation Payments at the
to September 30, 1999                          Beginning of the Month

Coverages
---------------------------------------------------------------------------
 CCS Indicated Claims                          NOT Covered by the Plan
---------------------------------------------------------------------------
 Mental Health Outpatient Services             NOT Covered by the Plan
---------------------------------------------------------------------------
 Mental Health Pharmacy Costs                  NOT Covered by the Plan
---------------------------------------------------------------------------
 Mental Health Hospital Inpatient Services     NOT Covered by the Plan
---------------------------------------------------------------------------
 Eyewear                                       NOT Covered by the Plan
---------------------------------------------------------------------------
 Heroin Detoxification                         NOT Covered by the Plan
---------------------------------------------------------------------------
 AiDS Waiver Services                          NOT Covered by the Plan
---------------------------------------------------------------------------
 Adult Day Health Care                         NOT Covered by the Plan
---------------------------------------------------------------------------
 Chiropractor/Acupuncture                      NOT Covered by the Plan
---------------------------------------------------------------------------
 Local Education Authority                     NOT Covered by the Plan
---------------------------------------------------------------------------
 Alphafeto Protein Testing                     NOT Covered by the Plan
---------------------------------------------------------------------------
 Long Term Care for month of entry plus one    Covered by the Plan
---------------------------------------------------------------------------
 Long Term Care after month of entry plus one  NOT Covered by the Plan
---------------------------------------------------------------------------
 Special AIDS drugs                            NOT Covered by the Plan
---------------------------------------------------------------------------

C6 to 'Contract No.  95-23637
Page 9 of 28

<TABLE>
<CAPTION>
Rate Calculation                                    Hospital       Hospital    Long Term                    FQHC
                              Physician  Pharmacy   Inpatient    Outpatient      Care       Other      FFSE     Total
<S>                           <C>        <C>        <C>            <C>        <C>         <C>        <C>       <C>
1. Average Cost Per Unit      $  69.46   $  19.86   $  864.71      $  16.16   $  812.04   $  20.09   $ 68.39
2. Units per Eligible            4.014      4.683       0.373         2.146       0.004      3.532     0.168
3. Addt'l Capitation Amts     $   0.37   $   0.05   $    4.62      $   0.00   $    0.00   $   0.00   $  0.00
   Cost per Elig. per Mo.     $  23.60   $   7.81   $   31.50      $   2.90   $    0.27   $   5.91   $  0.96   $  72.95
4. Adjustments
   a. Demographics               1.004      0.976       1.023         1.002       1.000      0.985     0.994
   b. Area                       1.043      1.000       1.000         1.000       1.000      1.000     1.000
   c. Coverages                  0.975      0.992       0.968         0.956       0.995      0.833     0.935
   d. Interest                   0.995      0.995       0.995         0.995       0.995      0.995     0.995
Adjusted Base Cost            $  23.97   $   7.52   $   31.04      $   2.76   $    0.27   $   4.82   $  0.89   $  71.27
5. Legislative Adjs.             1.061      1.053       1.006         1.031       1.195      1.061     1.041
6. Trend Adjustments
   a. Cost per Unit              1.000      1.100       1.050         1.000       1.000      0.950     1.000
   b. Units per Eligible         0.950      1.210       1.050         0.950       0.050      1.050     1.000
Projected Cost per Eligible   $  24.16   $   8.71   $   34.43      $   2.70   $    0.34   $   5.10   $  0.93   $  76.37
7. Stop Loss Reins.                   Amount        $       0              Rate                0.0%                0.00
6. CHOP                                                                                                            0.00
9. Fee-for-Service Adj.                                                                       -3.0%               (2.44)
Capitation  Rate                                                                                               $  78.99
</TABLE>

Department of Health Services, Rate Development Branch

<PAGE>

<TABLE>
<S>                                           <C>                                <C>
Plan Name:          Molina Medical Center     Plan #:    355                     Date:        16-Nov-99
County:             Riverside                 Plan Type: Commercial Plan         Base Period: Fy 96/97
Aid Code Grouping:  Aged
</TABLE>

Adjusted Rate is Effective August 1,1999      Capitation Payments at the
to September 30,1999                          Beginning of the Month

Coverages

---------------------------------------------------------------------------
 CCS Indicated Claims                          NOT Covered by the Plan
---------------------------------------------------------------------------
 Menial Health Outpatient Services             NOT Covered by the Plan
---------------------------------------------------------------------------
 Menial Health Pharmacy Costs                  NOT Covered by the Plan
---------------------------------------------------------------------------
 Mental Health Hospital Inpatient Services     NOT Covered by the Plan
---------------------------------------------------------------------------
 Eyewear                                       NOT Covered by the Plan
---------------------------------------------------------------------------
 Heroin Detoxification                         NOT Covered by the Plan
---------------------------------------------------------------------------
 AIDS Waiver Services                          NOT Covered by the Plan
---------------------------------------------------------------------------
 Adult Day Health Care                         NOT Covered by the Plan
---------------------------------------------------------------------------
 Chiropractor/Acupuncture                      NOT Covered by the Plan
---------------------------------------------------------------------------
 Local Education Authority                     NOT Covered by the Plan
---------------------------------------------------------------------------
 Alphafeto Protein Testing                     NOT Covered by the Plan
---------------------------------------------------------------------------
 Long Term Care for month of entry plus one    Covered by the Plan
---------------------------------------------------------------------------
 Long Term Care after month of entry plus one  NOT Covered by the Plan
---------------------------------------------------------------------------
 Special AIDS drugs                            NOT Covered by the Plan
---------------------------------------------------------------------------

C6 to Contract No. 95-23637
Page 10 of 28

<TABLE>
<CAPTION>
Rate Calculation                                    Hospital       Hospital    Long Term                    FQHC
                              Physician  Pharmacy   Inpatient    Outpatient      Care       Other      FFSE     Total
<S>                           <C>        <C>        <C>            <C>        <C>         <C>        <C>       <C>
1. Average Cost Per Unit      $  48.90   $  32.71   $  287.24      $  10.02   $   77.33   $   6.41   $ 28.59
2. Units per Eligible            4.472     21.914       1.265         3.306       2.016     12.862     0.132
3. Addt'l Capitation Amts     $   1.29   $   0.00   $    7.41      $   0.02   $    0.00   $   0.00   $  0.00
   Cost per Elig. per Mo.     $  19.51   $  59.73   $   37.69      $   2.78   $   12.99   $   6.87   $  0.31   $ 139.88
4. Adjustments
   a. Demographics               0.955      1.019       0.957         0.970       1.039      1.025     0.970
   b. Area                       1.043      1.000       1.000         1.000       1.000      1.000     1.000
   c. Coverages                  0.981      0.996       0.997         0.986       0.997      0.791     0.603
   d. Interest                   0.995      0.995       0.995         0.995       0.995      0.995     0.995
Adjusted Base Cost            $  18.97   $  60.32   $   35.78      $   2.65   $   13.39   $   5.54   $  0.18   $ 136.83
5. Legislative Adjs.             0.947      1.049       0.933         0.939       1.194      0.941     0.939
6. Trend Adjustments
   a. Cost per Unit              1.100      1.100       1.100         1.050       1.000      1.050     1.000
   b. Units per Eligible         1.100      1.155       1.100         1.100       0.050      0.950     1.000
Projected Cost per Eligible   $  21.74   $  80.39   $   40.39      $   2.87   $   15.99   $  5.20   $   0.17   $ 166.75
7. Stop Loss Reins.                   Amount        $       0              Rate                0.0%                0.00
6. CHOP                                                                                                            0.00
9. Fee-for-Service Adj.                                                                       -3.0%               (5.00)
Capitation  Rate                                                                                               $ 161.75
</TABLE>

Department of Health Services, Rate Development Branch

<PAGE>

<TABLE>
<S>                                           <C>                               <C>
Plan Name:          Molina Medical Center     Plan #:    355                    Date:        16-Nov-99
County:             Riverside                 Plan Type: Commercial Plan        Base Period: Fy 96/97
Aid Code Grouping:  Disabled
</TABLE>

Adjusted Rate is Effective August 1, 1999     Capitation Payments at the
to September 30, 1999                         Beginning of the Month
Coverages

---------------------------------------------------------------------------
 CCS Indicated Claims                          NOT Covered by the Plan
---------------------------------------------------------------------------
 Mental health Outpatient Services             NOT Covered by the Plan
---------------------------------------------------------------------------
 Mental Health Pharmacy Costs                  NOT Covered by the Plan
---------------------------------------------------------------------------
 Mental Health Hospital Inpatient Services     NOT Covered by the Plan
---------------------------------------------------------------------------
 Eyewear                                       NOT Covered by the Plan
---------------------------------------------------------------------------
 Heroin Detoxification                         NOT Covered by the Plan
---------------------------------------------------------------------------
 AIDS Waiver Services                          NOT Covered by the Plan
---------------------------------------------------------------------------
 Adult Day Health Care                         NOT Covered by the Plan
---------------------------------------------------------------------------
 Chiropractor/Acupuncture                      NOT Covered by the Plan
---------------------------------------------------------------------------
 Local Education Authority                     NOT Covered by the Plan
---------------------------------------------------------------------------
 Alphafeto Protein Testing                     NOT Covered by the Plan
---------------------------------------------------------------------------
 Long Term Care for month of entry plus one    Covered by the Plan
---------------------------------------------------------------------------
 Long Term Care after month of entry plus one  NOT Covered by the Plan
---------------------------------------------------------------------------
 Special AIDS drugs                            NOT Covered by the Plan
---------------------------------------------------------------------------

C6 to Contract No. 95-23637
Page 11 of 28

<TABLE>
<CAPTION>
Rate Calculation                                    Hospital       Hospital    Long Term                    FQHC
                              Physician  Pharmacy   Inpatient    Outpatient      Care       Other      FFSE     Total
<S>                           <C>        <C>        <C>            <C>        <C>         <C>        <C>       <C>
1. Average Cost Per Unit      $  46.41   $  39.70   $  485.15      $  12.37   $  139.87   $  10.16   $ 66.52
2. Units per Eligible            6.873     26.861       1.556         5.050       0.459     21.959     0.216
3. Addt'l Capitation Amts     $   2.96   $   0.09   $    9.89      $   0.02   $    0.00   $   0.00   $  0.00
   Cost per Elig. per Mo.     $  29.54   $  88.96   $   72.80      $   5.23   $    5.35   $  18.59   $  1.20   $ 221.67
4. Adjustments
   a. Demographics               0.983      0.989       0.981         0.998       1.000      1.015     0.987
   b. Area                       1.043      1.000       1.000         1.000       1.000      1.000     1.000
   c. Coverages                  0.900      0.875       0.920         0.973       0.995      0.878     0.863
   d. Interest                   0.995      0.995       0.995         0.995       0.995      0.995     0.995
Adjusted Base Cost            $  27.12   $  76.60   $   65.37      $   5.05   $    5.30   $  16.48   $  1.02   $ 196.94
5. Legislative Adjs.             0.949      1.043       0.927         0.939       1.184      0.937     0.945
6. Trend Adjustments
   a. Cost per Unit              1.000      1.100       1.050         1.000       1.100      1.100     1.000
   b. Units per Eligible         1.100      1.210       1.050         1.045       0.950      1.000     1.000
Projected Cost per Eligible   $  28.31   $ 106.34   $   66.81      $   4.96   $    6.56   $  16.99  $   0.96   $ 230.93
7. Stop Loss Reins.                   Amount        $       0              Rate                0.0%                0.00
6. CHOP                                                                                                            0.00
9. Fee-for-Service Adj                                                                        -3.0%               (6.93)
Capitation  Rate                                                                                               $ 224.00
</TABLE>

<PAGE>

<TABLE>
<S>                                             <C>                             <C>
Plan Name:          Molina Medical Center       Plan#:     355                  Date:        16-Nov-99
Country:            San Bernardino              Plan Type: Commercial Plan      Base Period: FY 96/97
Aid Code Grouping:  Child
</TABLE>

Adjusted Rate is Effective August 1,1999              Capitation Payments at the
to September 30, 1999                                 Beginning of the Month

Coverages

--------------------------------------------------------------------------------
 CCS Indicated Claims                                 NOT Covered by the Plan
--------------------------------------------------------------------------------
 Menial Health Outpatient Services                    NOT Covered by the Plan
--------------------------------------------------------------------------------
 Mental Health Pharmacy Costs                         NOT Covered by the Plan
--------------------------------------------------------------------------------
 Mental Health Hospital Inpatient Services            NOT Covered by the Plan
--------------------------------------------------------------------------------
 Eyewear                                              NOT Covered by the Plan
--------------------------------------------------------------------------------
 Heroin Detoxification                                NOT Covered by the Plan
--------------------------------------------------------------------------------
 AIDS Waiver Services                                 NOT Covered by the Plan
--------------------------------------------------------------------------------
 Adult Day Health Care                                NOT Covered by the Plan
--------------------------------------------------------------------------------
 Chiropractor/Acupuncture                             NOT Covered by [ha Plan
--------------------------------------------------------------------------------
 Local Education Authority                            NOT Covered by the Plan
--------------------------------------------------------------------------------
 Alphafeto Protein Testing                            NOT Covered by the Plan
--------------------------------------------------------------------------------
 Long Term Care for month of entry plus one           Covered by the Plan
--------------------------------------------------------------------------------
 Long Term Care after month of entry plus one         NOT Covered by the Plan
--------------------------------------------------------------------------------
 Special AIDS drugs                                   NOT Covered by the Plan
--------------------------------------------------------------------------------

C6 to Contract No. 95-23637
Page 12 of 28

<TABLE>
<CAPTION>
Rate Calculation                                    Hospital       Hospital    Long Term                     FQHC
                              Physician  Pharmacy   Inpatient    Outpatient      Care       Other      FFSE        Total
<S>                           <C>        <C>        <C>            <C>        <C>         <C>        <C>       <C>
1. Average Cost Per Unit      $  67.42   $  13.64   $  889.41      $  16.21   $  469.38   $  20.69   $ 68.39
2. Units per Eligible            3.999      3.411       0.465         1.516       0.007      1.958     0.168
3. Addt'l Capitation Amts     $   0.23   $   0.03   $    2.90      $   0.00   $    0.00   $   0.00   $  0.00
   Cost per Elig. per Mo.     $  22.70   $   3.91   $   37.36      $   2.05   $    0.27   $   3.38   $  0.96   $     70.63
4. Adjustments
   a. Demographics               1.181      1.019       1.321         1.114       1.000      1.165     1.003
   b. Area                       1.043      1.000       1.000         1.000       1.000      1.000     1.000
   c. Coverages                  0.974      0.984       0.952         0.973       0.996      0.815     0.970
   d. Interest                   0.995      0.995       0.995         0.995       0.995      0.995     0.995
Adjusted Base Cost            $  27.10   $   3.90   $   46.75      $   2.21   $    0.27   $   3.19   $  0.93   $     84.35
5. Legislative Adjs.             1.084      1.047       1.009         1.031       1.188      1.104     1.044
6. Trend Adjustments
   a. Cost per Unit              1.000      1.100       1.050         1.000       1.000      0.950     1.000
   b. Units per Eligible         0.950      1.000       1.050         0.950       1.050      1.050     1.000
Projected Cost per Eligible   $  27.91   $   4.49   $   52.01      $   2.16   $    0.34   $   3.51   $  0.97   $     91.39
7. Stop Loss Reins.                   Amount        $       0              Rate                0.0%                   0.00
6. CHOP                                                                                                               5.04
9. Fee-for-Service Adj.                                                                       -3.0%                  (2.89)
Capitation  Rate                                                                                               $     93.54
</TABLE>

Department of Health Services, Rate Development Branch

<PAGE>

<TABLE>
<S>                                             <C>                             <C>
Plan Name:          Molina Medical Center       Plan#:     355                  Date:        16-Nov-99
Country:            San Bernardino              Plan Type: Commercial Plan      Base Period: FY 96/97
Aid Code Grouping:  Adult
</TABLE>

Adjusted Rate is Effective August 1,1999              Capitation Payments at the
to September 30, 1999                                 Beginning of the Month

Coverages

--------------------------------------------------------------------------------
 CCS Indicated Claims                                 NOT Covered by the Plan
--------------------------------------------------------------------------------
 Menial Health Outpatient Services                    NOT Covered by the Plan
--------------------------------------------------------------------------------
 Mental Health Pharmacy Costs                         NOT Covered by the Plan
--------------------------------------------------------------------------------
 Mental Health Hospital Inpatient Services            NOT Covered by the Plan
--------------------------------------------------------------------------------
 Eyewear                                              NOT Covered by the Plan
--------------------------------------------------------------------------------
 Heroin Detoxification                                NOT Covered by the Plan
--------------------------------------------------------------------------------
 AIDS Waiver Services                                 NOT Covered by the Plan
--------------------------------------------------------------------------------
 Adult Day Health Care                                NOT Covered by the Plan
--------------------------------------------------------------------------------
 Chiropractor/Acupuncture                             NOT Covered by [ha Plan
--------------------------------------------------------------------------------
 Local Education Authority                            NOT Covered by the Plan
--------------------------------------------------------------------------------
 Alphafeto Protein Testing                            NOT Covered by the Plan
--------------------------------------------------------------------------------
 Long Term Care for month of entry plus one           Covered by the Plan
--------------------------------------------------------------------------------
 Long Term Care after month of entry plus one         NOT Covered by the Plan
--------------------------------------------------------------------------------
 Special AIDS drugs                                   NOT Covered by the Plan
--------------------------------------------------------------------------------

C6 to Contract No. 95-23637
Page 13 of 28

<TABLE>
<CAPTION>
Rate Calculation                                    Hospital       Hospital    Long Term                     FQHC
                              Physician  Pharmacy   Inpatient    Outpatient      Care       Other      FFSE        Total
<S>                           <C>        <C>        <C>            <C>        <C>         <C>        <C>       <C>
1. Average Cost Per Unit      $  90.48   $  17.11   $  964.66      $  15.76   $  812.04   $  36.13   $ 68.39
2. Units per Eligible           21.383      5.818       5.446         4.679       0.000     10.172     0.735
3. Addt'l Capitation Amts     $   0.37   $   0.06   $   35.62      $   0.08   $    0.00   $   0.00   $  0.00
   Cost per Elig. per Mo.     $ 161.60   $   8.36   $  473.41      $   6.23   $    0.00   $  30.63   $  4.19   $    684.42
4. Adjustments
   a. Demographics               1.000      1.000       1.000         1.000       1.000      1.000     1.000
   b. Area                       1.043      1.000       1.000         1.000       1.000      1.000     1.000
   c. Coverages                  0.999      0.999       0.999         0.989       1.000      0.809     0.995
   d. Interest                   0.995      0.995       0.995         0.995       0.995      0.995     0.995
Adjusted Base Cost            $ 167.54   $   8.31   $  470.57      $   6.13   $    0.00   $  24.66   $  4.15   $    681.36
5. Legislative Adjs.             1.038      1.054       1.007         1.031       1.154      1.018     1.029
6. Trend Adjustments
   a. Cost per Unit              1.000      1.100       1.050         1.000       1.000      0.950     1.000
   b. Units per Eligible         0.950      1.000       1.050         0.950       1.050      1.050     1.000
Project Cost per Eligible     $ 165.21   $   9.63   $  522.44      $   6.00   $    0.00   $  25.04   $  4.27   $    732.59
7. Stop Loss Reins.                    Amount              $0              Rate                0.0%                   0.00
8. CHDP                                                                                                               0.00
9. Fee-for-Service Adj.                                                                       -3.0%                 (21.98)
Capitation Rate                                                                                                $    710.61
</TABLE>

Department of Health Services, Rate Development Branch

<PAGE>

Plan Name:          Molina Medical Center   Plan #:  355
County:             Riverside               Plan Type: Commercial Plan
Ald Code Grouping:  AIDS

Date:        16-Nov-99
Base Period: FY 96/97

Adjusted  Rate is  Effective  August  1,1999  to  September  30,1999
Capitation Payments at the Beginning of the Month

Coverages
---------------------------------------------------------------------------
  CCS Indicated Claims                              NOT Covered by the Plan
---------------------------------------------------------------------------
  Mental Health Outpatient Services                 NOT Covered by the Plan
---------------------------------------------------------------------------
  Mental Health Pharmacy Costs                      NOT Covered by the Plan
---------------------------------------------------------------------------
  Mental Health Hospital Inpatient Services         NOT Covered by the Plan
---------------------------------------------------------------------------
  Eyewear                                           NOT Covered by the Plan
---------------------------------------------------------------------------
  Heroin Detoxification                             NOT Covered by the Plan
---------------------------------------------------------------------------
  AIDS Waiver Services                              NOT Covered by the Plan
---------------------------------------------------------------------------
  Adult Day Health Care                             NOT Covered by the Plan
---------------------------------------------------------------------------
  Chiropractor/Acupuncture                          NOT Covered by the Plan
---------------------------------------------------------------------------
  Local Education Authority                         NOT Covered by the Plan
---------------------------------------------------------------------------
  Alphafeto Protein Testing                         NOT Covered by the Plan
---------------------------------------------------------------------------
  Long Term Care for month of entry plus one        Covered by the Plan
---------------------------------------------------------------------------
  Long Term Care alter month of entry plus one      NOT Covered by the Plan
---------------------------------------------------------------------------
  Special AIDS drugs                                NOT Covered by the Plan
---------------------------------------------------------------------------

 C6 to Contract No.95-23637
 Page 14 of 28

<TABLE>
<CAPTION>
Rate Calculation                                           Hospital     Hospital     Long Term                     FQHC
                                 Physician    Pharmacy    Inpatient   Outpatient          Care       Other       FFSE         Total
<S>                              <C>          <C>         <C>          <C>           <C>          <C>         <C>        <C>
1. Average Cost Per Unit         $   32.67    $ 126.04    $  485.15    $   13.79     $  139.87    $  42.30    $ 66.52
2. Units per Eligible               26.305      74.792        3.169        9.882         0.000      36.392      0.628
3. Addt'l Capitation Amts.       $    2.96    $   0.09    $    9.89    $    0.02     $    0.00    $   0.00    $  0.00
   Cost per Elig. per Mo.        $   74.57    $ 785.66    $  138.01    $   11.38     $    0.00    $ 128.28    $  3.48    $ 1,141.38
4. Adjustments
   a. Demographics                   1.000       1.000        1.000        1.000         1.000       1.000      1.000
   b. Area                           1.043       1.000        1.000        1.000         1.000       1.000      1.000
   c. Coverages                      0.918       0.648        0.957        0.992         0.998       0.599      0.951
   d. Interest                       0.995       0.995        0.995        0.995         0.995       0.995      0.995
Adjusted Base Cost               $   71.04    $ 506.56    $  131.42    $   11.23     $    0.00    $  76.46    $  3.29    $   800.00
5. Legislative Adjs.                 0.969       1.006        0.980        0.984         1.242       0.983      0.988
6. Trend Adjustments
   a. Cost per Unit                  1.000       1.100        1.050        1.000         1.100       1.100      1.000
   b. Units per Eligible             1.100       1.210        1.050        1.045         0.950       1.000      1.000
Projected Cost per Eligible      $   75.72    $ 678.28    $  141.99    $   11.55     $    0.00    $  82.68    $  3.25    $   993.47
7. Stop Loss Reins.                        Amount                50              Rate                  0.0%                    0.00
8. CHDP                                                                                                                        0.00
9. Fee-for-Service Adj.                                                                               -3.0%                  (29.80)
Capitation Rate                                                                                                          $   963.67
</TABLE>

Department of Health Services, Rate Development Branch

<PAGE>

                                                    C6 to Contract No.95-23637
                                                    Page 15 of 28
Aid Group: Poverty-47/72
  Rate Period: August 1999 to September        Base:     Statewide
                                            Base Period:  FY 96/97

<TABLE>
<CAPTION>
                                                           Hospital     Hospital       Nursing
        Services===>             Physician    Pharmacy    Inpatient    Outpatient     Facility       Other       FQHC         Total

<S>                              <C>          <C>         <C>          <C>           <C>          <C>         <C>        <C>
1. Base Cost                     $   10.66    $   7.27    $   20.52    $    5.31     $    0.14    $   2.92    $  5.42    $    52.24
2. Age/Sex Adjustments               1.000       1.000        1.000        1.000         1.000       1.000      1.000
3. Eligibility Adjustments           1.000       1.000        1.000        1.000         1.000       1.000      1.000
4. Coverage Adjustments              0.997       0.997        0.999        0.964         1.000       0.891      0.991
5. Interest Offset                   0.990       0.996        0.987        0.989         0.993       0.990      0.994

Contract Cost FY 96/97           $   10.52    $   7.22    $   20.24    $    5.07     $    0.14    $   2.57    $  5.34    $    51.10

6. Legislative Adjustments           1.054       0.740        0.997        1.031         1.111       1.167      1.038
7. Trend Adjustments
     a. Cost per Unit                1.000       1.308        1.055        0.970         1.000       1.445      1.071
     b. Utilization                  1.000       1.027        1.050        1.000         1.107       1.000      1.265

Projected Cost 10/98-9/99        $   11.09    $   7.18    $   22.35    $    5.07     $    0.17    $   4.33    $  7.51    $    57.70

8. CHDP                                                                                                                  $     2.54

9. Administrative Allowance                                                                1.6%                          $     0.96

Fee-for-Service Equivalent Cost                                                                                          $    61.20

Adjustment to Fee-for Service                                                               94%                          $    (3.67)

Capitation Rate (payments at
 beginning of month)                                                                                                     $    57.53
</TABLE>

01/21/2000 - Department of Health Services, Rate Development Branch

<PAGE>

                                                    C6 to Contract No.95-23637
                                                    Page 16 of 28
Aid Group: Poverty-7A                     Base:  Statewide Family Age Adjusted
 Rate Period: August 1999 to September    Base Period:  FY 96/97

<TABLE>
<CAPTION>
                                                           Hospital     Hospital      Nursing
        Services===>             Physician    Pharmacy    Inpatient    Outpatient    Facility        Other       FQHC      Total

<S>                              <C>          <C>         <C>          <C>           <C>          <C>         <C>       <C>
1. Base Cost                     $   10.40    $   6.74    $   13.64    $    3.91     $    0.24    $   8.30    $  2.98   $  46.21
2. Age/Sex Adjustments               1.000       1.000        1.000        1.000         1.000       1.000      1.000
3. Eligibility Adjustments           1.000       1.000        1.000        1.000         1.000       1.000      1.000
4. Coverage Adjustments              0.997       0.997        0.999        0.964         1.000       0.891      0.991
5. Interest Offset                   0.990       0.996        0.987        0.989         0.993       0.990      0.994

Contract Cost FY 96/97           $   10.27    $   6.69    $   13.45        $3.73     $    0.24    $   7.32    $  2.93   $  44.63

6. Legislative Adjustments           1.054       0.740        0.997        1.031         1.111       1.167      1.038
7. Trend Adjustment
     a. Cost per Unit                1.000       1.308        1.055        0.970         1.000       1.445      1.071
     b. Utilization                  1.000       1.027        1.050        1.000         1.107       1.000      1.265

Projected Cost 10/98-9/99        $   10.82    $   6.65    $   14.85    $    3.73     $    0.30    $  12.34    $  4.12   $  52.81

8. CHDP                                                                                                       $  2.54

9. Administrative Allowance                                                                1.6%               $  0.89

Fee-for-Service Equivalent Cost                                                                               $ 56.24

Adjustment to Fee-for Service                                                               94%               $ (3.37)

Capitation Rate (payment at
 beginning of month)                                                                                          $ 52.87
</TABLE>

<PAGE>

                                                     C6 to Contract No.95-23637
                                                     Page 17 of 28

Plan Name:          Molina Medical Center
County:             San Bernardino          Plan #:    Commercial Plan
Aid Code Grouping:  Family                  Plan Type: 356

Date:        01-Dec-99
Base Period: FY 96/97

The Rate Period is October 1, 1999 to September 30,2000 Capitation Payments
at the End of the Month

Coverage Adjustments
----------------------------------------------------------------------------
  CCS Indicated Claims                              NOT Covered by the Plan
----------------------------------------------------------------------------
  Mental Health Outpatient Services                 NOT Covered by the Plan
----------------------------------------------------------------------------
  Mental Health Pharmacy Costs                      NOT Covered by the Plan
----------------------------------------------------------------------------
  Mental Health Hospital Inpatient Services         NOT Covered by the Plan
----------------------------------------------------------------------------
  Eyewear                                           NOT Covered by the  Plan
----------------------------------------------------------------------------
  Heroin Detoxification                             NOT Covered by the Plan
----------------------------------------------------------------------------
  AIDS Waiver Services                              NOT Covered by the Plan
----------------------------------------------------------------------------
  Adult Day Health Care                             NOT Covered by the Plan
----------------------------------------------------------------------------
  Chiropractor/Acupuncture                          NOT Covered by the Plan
----------------------------------------------------------------------------
  Local Education Authority                         NOT Covered by the Plan
----------------------------------------------------------------------------
  Alphafeto Protein Testing                         NOT Covered by the Plan
----------------------------------------------------------------------------
  Long Term Care for month of entry plus one        Covered by the Plan
----------------------------------------------------------------------------
  Long Term Care after month of entry plus one      NOT Covered by the Plan
----------------------------------------------------------------------------
  Special AIDS drugs                                NOT Covered by the Plan
----------------------------------------------------------------------------

<TABLE>
<CAPTION>
Rate Calculation                                           Hospital      Hospital    Long Term
                                 Physician    Pharmacy    Inpatient    Outpatient         Care       Other      Total
<S>                              <C>          <C>         <C>          <C>           <C>          <C>         <C>
1. Average Cost Per Unit         $   66.25    $  23.82    $  978.02    $    20.37    $  229.41    $   8.79
2. Units per Eligible                5.957       3.361        0.304         2.609        0.009       6.410
   Cost per Elig. per Mo.        $   32.89    $   6.67    $   24.78    $     4.43    $    0.17    $   4.70    $ 73.64
Adjustments
   a. Demographics                   0.829       0.863        0.714         0.835        1.000       0.871
   b. Area                           1.008       1.000        1.000         1.000        1.000       1.000
   c. Coverages                      0.975       0.992        0.968         0.956        0.995       0.868
   d. Interest                       1.000       1.000        1.000         1.000        1.000       1.000
Adjusted Base Cost               $   26.80    $   5.71    $   17.13    $     3.54    $    0.17    $   3.55    $ 56.90
3. Legislative Adjs.                 1.139       0.975        1.012         1.034        1.159       1.065
4. Trend Adjustments
   a. Cost per Unit                  1.000       1.100        1.000         1.000        1.100       1.000
   b. Units per Eligible             1.000       0.998        1.045         1.000        1.000       1.100
Projected Cost per Eligible      $   30.53    $   6.11    $   18.12    $     3.66    $    0.20    $   4.16    $ 62.78
5. Stop Loss Reins.                      Amount           $       0              Rate                  0.0%      0.00
6. CHDP                                                                                                          4.88
7. Fee-for-Service Adj.                                                                               26.1%     16.41
Capitation Rate                                                                                               $ 84.07
</TABLE>

<PAGE>

                                                     C6 to Contract No.95-23637
                                                     Page 18 of 28

Plan Name:          Molina Medical Center
County:             San Bernardino          Plan #:       Commercial Plan
Aid Code Grouping:  Aged                    Plan Type  :  356

Date:        01-Dec-99
Base Period: FY 96/97

The Rate Period is October 1, 1999 to September 30,2000
Capitation Payments at the End of the Month

Coverage Adjustments
---------------------------------------------------------------------------
  CCS Indicated Claims                              NOT Covered by the Plan
---------------------------------------------------------------------------
  Mental Health Outpatient Services                 NOT Covered by the Plan
---------------------------------------------------------------------------
  Mental Health Pharmacy Costs                      NOT Covered by the Plan
---------------------------------------------------------------------------
  Mental Health Hospital Inpatient Services         NOT Covered by the Plan
---------------------------------------------------------------------------
  Eyewear                                           NOT Covered by the Plan
---------------------------------------------------------------------------
  Heroin Detoxification                             NOT Covered by the Plan
---------------------------------------------------------------------------
  AIDS Waiver Services                              NOT Covered by the Plan
---------------------------------------------------------------------------
  Adult Day Health Care                             NOT Covered by the Plan
---------------------------------------------------------------------------
  Chiropractor/Acupuncture                          NOT Covered by the Plan
---------------------------------------------------------------------------
  Local Education Authority                         NOT Covered by the Plan
---------------------------------------------------------------------------
  Alphafeto Protein Testing                         NOT Covered by the Plan
---------------------------------------------------------------------------
  Long Term Care for month of entry plus one        Covered by the Plan
---------------------------------------------------------------------------
  Long Term Care after month of entry plus one      NOT Covered by the Plan
---------------------------------------------------------------------------
  Special AIDS drugs                                NOT Covered by the Plan
---------------------------------------------------------------------------

<TABLE>
<CAPTION>
Rate Calculation                                           Hospital     Hospital     Long Term
                                 Physician    Pharmacy    Inpatient   Outpatient          Care       Other       Total
<S>                              <C>          <C>         <C>          <C>           <C>          <C>         <C>
1. Average Cost Per Unit         $   16.06    $  38.28    $  316.16    $   11.67     $  177.26    $   6.49
2. Units per Eligible               11.563      16.963        0.819        3.904         1.049      42.784
   Cost per Elig. per Mo.        $   15.48    $  54.11    $   21.58    $    3.80     $   15.50    $  23.14    $ 133.61
Adjustments
   a. Demographics                   0.964       1.019        0.964        0.983         1.034       1.022
   b. Area                           1.008       1.000        1.000        1.000         1.000       1.000
   c. Coverages                      0.981       0.996        0.997        0.986         0.997       0.781
   d. Interest                       1.000       1.000        1.000        1.000         1.000       1.000
Adjusted Base Cost                $  14.76    $  54.92    $   20.74    $    3.68     $   15.98    $  18.47    $ 128.55
3. Legislative Adjs.                 0.952       0.920        0.940        1.035         1.159       0.932
4. Trend Adjustments
   a. Cost per Unit                  1.000       1.100        1.100        1.000         1.000       1.000
   b. Units per Eligible             1.050       0.998        0.950        1.045         0.950       1.100
Projected Cost per Eligible       $  14.75    $  55.47    $   20.37    $    3.98     $   17.59    $  18.94    $ 131.10
5. Stop Loss Reins.                      Amount           $       0              Rate                  0.0%       0.00
6. CHDP                                                                                                           0.00
7. Fee-for-Service Adj.                                                                               11.0%      14.42
Capitation Rate                                                                                               $ 145.52
</TABLE>

<PAGE>

                                                     C6 to Contract No.95-23637
                                                     Page 19 of 28

Plan Name:          Molina Medical Center
County:             San Bernardino          Plan #:    Commercial Plan
Aid Code Grouping:  Disabled                Plan Type: 356

Date:        01-Dec-99
Base Period: FY 96/97

The Rate Period is October 1, 1999 to September 30,2000
Capitation Payments at the End of the Month

Coverage Adjustments
---------------------------------------------------------------------------
  CCS Indicated Claims                              NOT Covered by the Plan
---------------------------------------------------------------------------
  Mental Health Outpatient Services                 NOT Covered by the Plan
---------------------------------------------------------------------------
  Mental Health Pharmacy Costs                      NOT Covered by the Plan
---------------------------------------------------------------------------
  Mental Health Hospital Inpatient Services         NOT Covered by the Plan
---------------------------------------------------------------------------
  Eyewear                                           NOT Covered by the Plan
---------------------------------------------------------------------------
  Heroin Detoxification                             NOT Covered by the Plan
---------------------------------------------------------------------------
  AIDS Waiver Services                              NOT Covered by the Plan
---------------------------------------------------------------------------
  Adult Day Health Care                             NOT Covered by the Plan
---------------------------------------------------------------------------
  Chiropractor/Acupuncture                          NOT Covered by the Plan
---------------------------------------------------------------------------
  Local Education Authority                         NOT Covered by the Plan
---------------------------------------------------------------------------
  Alphafeto Protein Testing                         NOT Covered by the Plan
---------------------------------------------------------------------------
  Long Term Care for month of entry plus one        Covered by the Plan
---------------------------------------------------------------------------
  Long Term Care after month of entry plus one      NOT Covered by the Plan
---------------------------------------------------------------------------
  Special AIDS drugs                                NOT Covered by the Plan
---------------------------------------------------------------------------

<TABLE>
<CAPTION>
Rate Calculation                                           Hospital     Hospital     Long Term
                                 Physician    Pharmacy    Inpatient    Outpatient         Care       Other       Total
<S>                              <C>          <C>         <C>          <C>           <C>          <C>         <C>
1. Average Cost Per Unit         $   20.15    $  50.42    $  611.26    $   18.26     $  184.85    $   7.07
2. Units per Eligible               13.720      21.892        1.011        6.029         0.452      63.930
   Cost per Elig. per Mo.        $   23.04    $  91.98    $   51.50    $    9.17     $    6.96    $  37.67    $ 220.32
Adjustments
   a. Demographics                   0.942       0.851        0.850        1.019         0.995       1.023
   b. Area                           1.008       1.000        1.000        1.000         1.000       1.000
   c. Coverages                      0.900       0.875        0.920        0.973         0.995       0.877
   d. Interest                       1.000       1.000        1.000        1.000         1.000       1.000
Adjusted Base Cost               $   19.69    $  68.49    $   40.27    $    9.09     $    6.89    $  33.80    $ 178.23
3. Legislative Adjs.                 0.969       0.920        0.933        1.035         1.159       0.956
4. Trend Adjustments
   a. Cost per Unit                  1.000       1.100        1.100        1.000         1.000       1.000
   b. Units per Eligible             1.050       0.998        0.903        0.950         1.000       1.100
Projected Cost per Eligible       $  20.03    $  69.17    $   37.32    $    8.94     $    7.99    $  35.54    $ 178.99
5. Stop Loss Reins.                        Amount         $       0              Rate                  0.0%       0.00
6. CHDP                                                                                                           0.00
7. Fee-for-Service Adj.                                                                               11.0%      19.69
Capitation Rate                                                                                               $ 198.68
</TABLE>

<PAGE>

                                                     C6 to Contract No.95-23637
                                                     Page 20 of 28

Plan Name:          Molina Medical Center
County:             San Bernardino          Plan #:     Commercial Plan
Aid Code Grouping:  Child                   Plan Type:  356

Date:        01-Dec-99
Base Period: FY 96/97

The Rate Period is October 1,1999 to September 30,2000
Capitation Payments at the End of the Month

Coverages Adjustments
---------------------------------------------------------------------------
  CCS Indicated Claims                              NOT Covered by the Plan
---------------------------------------------------------------------------
  Mental Health Outpatient Services                 NOT Covered by the Plan
---------------------------------------------------------------------------
  Mental Health Pharmacy Costs                      NOT Covered by the Plan
---------------------------------------------------------------------------
  Mental Health Hospital Inpatient Services         NOT Covered by the Plan
---------------------------------------------------------------------------
  Eyewear                                           NOT Covered by the Plan
---------------------------------------------------------------------------
  Heroin Detoxification                             NOT Covered by the Plan
---------------------------------------------------------------------------
  AIDS Waiver Services                              NOT Covered by the Plan
---------------------------------------------------------------------------
  Adult Day Health Care                             NOT Covered by the Plan
---------------------------------------------------------------------------
  Chiropractor/Acupuncture                          NOT Covered by the Plan
---------------------------------------------------------------------------
  Local Education Authority                         NOT Covered by the Plan
---------------------------------------------------------------------------
  Alphafeto Protein Testing                         NOT Covered by the Plan
---------------------------------------------------------------------------
  Long Term Care for month of entry plus one        Covered by the Plan
---------------------------------------------------------------------------
  Long Term Care after month of entry plus one      NOT Covered by the Plan
---------------------------------------------------------------------------
  Special AIDS drugs                                NOT Covered by the Plan
---------------------------------------------------------------------------

<TABLE>
<CAPTION>
Rate Calculation                                            Hospital     Hospital    Long Term
                                 Physician    Pharmacy     Inpatient   Outpatient         Care       Other       Total
<S>                              <C>          <C>         <C>          <C>           <C>          <C>         <C>
1. Average Cost Per Unit         $   58.40    $  17.50    $ 1,120.53   $    18.79    $  140.26    $   6.45
2. Units per Eligible                5.196       3.068         0.436        2.787        0.019      10.564
   Cost per Elig. per Mo.        $   25.29    $   4.47    $    40.71   $     4.36    $    0.22    $   5.68    $  80.73
Adjustments
   a. Demographics                   0.927       0.989         0.778        0.935        1.000       0.946
   b. Area                           1.008       1.000         1.000        1.000        1.000       1.000
   c. Coverages                      0.974       0.984         0.952        0.973        0.996       0.882
   d. Interest                       1.000       1.000         1.000        1.000        1.000       1.000
Adjusted Base Cost               $   23.02    $   4.35    $    30.15   $     3.97    $    0.22    $   4.74    $  66.45
3. Legislative Adjs.                 1.155       1.055         1.019        1.034        1.159       1.069
4. Trend Adjustments
   a. Cost per Unit                  1.000       1.100         1.000        1.000        1.000       1.000
   b. Units per Eligible             1.000       0.998         1.045        1.000        1.000       1.100
Projected Cost per Eligible      $   26.59    $   5.04    $    32.11   $     4.10    $    0.25    $   5.57    $  73.66
5. Stop Loss Reins.                      Amount           $        0             Rate                  0.0%       0.00
6. CHDP                                                                                                           4.06
7. Fee-for-Service Adj.                                                                               11.0%       8.10
Capitation Rate                                                                                               $  85.82
</TABLE>

<PAGE>

                                                     C6 to Contract No.95-23637
                                                     Page 21 of 28

Plan Name:          Molina Medical Center
County:             San Bernardino          Plan #:      Commercial Plan
Aid Code Grouping:  Adult                   Plan Type  : 356

Date:        01-Dec-99
Base Period: FY 96/97

The Rate Period is October 1, 1999 to September 30,2000
Capitation Payments at the End of the Month

Coverage Adjustments
---------------------------------------------------------------------------
  CCS Indicated Claims                              NOT Covered by the Plan
---------------------------------------------------------------------------
  Mental Health Outpatient Services                 NOT Covered by the Plan
---------------------------------------------------------------------------
  Mental Health Pharmacy Costs                      NOT Covered by the Plan
---------------------------------------------------------------------------
  Mental Health Hospital Inpatient Services         NOT Covered by the Plan
---------------------------------------------------------------------------
  Eyewear                                           NOT Covered by the Plan
---------------------------------------------------------------------------
  Heroin Detoxification                             NOT Covered by the Plan
---------------------------------------------------------------------------
  AIDS Waiver Services                              NOT Covered by the Plan
---------------------------------------------------------------------------
  Adult Day Health Care                             NOT Covered by the Plan
---------------------------------------------------------------------------
  Chiropractor/Acupuncture                          NOT Covered by the Plan
---------------------------------------------------------------------------
  Local Education Authority                         NOT Covered by the Plan
---------------------------------------------------------------------------
  Alphafeto Protein Testing                         NOT Covered by the Plan
---------------------------------------------------------------------------
  Long Term Care for month of entry plus one        Covered by the Plan
---------------------------------------------------------------------------
  Long Term Care after month of entry plus one      NOT Covered by the Plan
---------------------------------------------------------------------------
  Special AIDS drugs                                NOT Covered by the Plan
---------------------------------------------------------------------------

<TABLE>
<CAPTION>
Rate Calculation                                           Hospital     Hospital    Long Term
                                 Physician    Pharmacy    Inpatient   Outpatient         Care        Other       Total
<S>                              <C>          <C>         <C>          <C>           <C>          <C>        <C>
1. Average Cost Per Unit         $  164.23    $  19.84    $ 1,140.81   $    19.73    $    0.00    $  30.86
2. Units per Eligible               22.157       4.314         4.387       17.657        0.000       8.468
   Cost per Elig. per Mo.        $  303.24    $   7.13    $   417.06   $    29.03    $    0.00    $  21.78    $ 778.24
Adjustments
   a. Demographics                   1.000       1.000         1.000        1.000        1.000       1.000
   b. Area                           1.008       1.000         1.000        1.000        1.000       1.000
   c. Coverages                      0.999       0.999         0.999        0.989        1.000       0.887
   d. Interest                       1.000       1.000         1.000        1.000        1.000       1.000
Adjusted Base Cost               $  305.43    $   7.12    $   416.64   $    28.71    $    0.00    $  19.32    $ 777.22
3. Legislative Adjs.                 1.059       0.945         1.011        1.034        1.159       1.071
4. Trend Adjustments
   a. Cost per Unit                  1.000       1.100         1.000        1.000        1.000       1.000
   b. Units per Eligible             1.000       0.998         1.045        1.000        1.000       1.100
Projected Cost per Eligible      $  323.45    $   7.39    $   440.18   $    29.69    $    0.00    $  22.76    $ 823.47
5. Stop Loss Reins.                      Amount           $        0             Rate                  0.0%       0.00
6. CHDP                                                                                                           0.00
7. Fee-for-Service Adj.                                                                               11.0%      90.58
Capitation Rate                                                                                               $ 914.05
</TABLE>

<PAGE>
                                                     C6 to Contract No.95-23637
                                                     Page 22 of 28

Plan Name:          Molina Medical Center
County:             San Bernardino          Plan #:     Commercial Plan
Aid Code Grouping:  AIDS                    Plan Type:  356

Date:        01-Dec-99
Base Period: FY 96/97

The Rate Period is October 1,1999 to September 30,2000
Capitation Payments at the End of the Month

Coverage Adjustments
---------------------------------------------------------------------------
  CCS Indicated Claims                              NOT Covered by the Plan
---------------------------------------------------------------------------
  Mental Health Outpatient Services                 NOT Covered by the Plan
---------------------------------------------------------------------------
  Mental Health Pharmacy Costs                      NOT Covered by the Plan
---------------------------------------------------------------------------
  Mental Health Hospital Inpatient Services         NOT Covered by the Plan
---------------------------------------------------------------------------
  Eyewear                                           NOT Covered by the Plan
---------------------------------------------------------------------------
  Heroin Detoxification                             NOT Covered by the Plan
---------------------------------------------------------------------------
  AIDS Waiver Services                              NOT Covered by the Plan
---------------------------------------------------------------------------
  Adult Day Health Care                             NOT Covered by the Plan
---------------------------------------------------------------------------
  Chiropractor/Acupuncture                          NOT Covered by the Plan
---------------------------------------------------------------------------
  Local Education Authority                         NOT Covered by the Plan
---------------------------------------------------------------------------
  Alphafeto Protein Testing                         NOT Covered by the Plan
---------------------------------------------------------------------------
  Long Term Care for month of entry plus one        Covered by the Plan
---------------------------------------------------------------------------
  Long Term Care after month of entry plus one      NOT Covered by the Plan
---------------------------------------------------------------------------
  Special AIDS drugs                                NOT Covered by the Plan
---------------------------------------------------------------------------

<TABLE>
<CAPTION>
Rate Calculation                                           Hospital     Hospital    Long Term
                                 Physician    Pharmacy    Inpatient   Outpatient          Care       Other      Total
<S>                              <C>          <C>         <C>           <C>          <C>          <C>        <C>
1. Average Cost Per Unit         $   25.87    $ 141.75    $   611.26   $    17.75    $  228.06    $  14.00
2. Units per Eligible               29.254      46.897         3.823       28.506        0.450      78.563
   Cost per Elig. per Mo.        $   63.07    $ 553.97    $   194.74   $    42.17    $    8.55    $  91.66    $ 954.16
Adjustments
   a. Demographics                   1.000       1.000         1.000        1.000        1.000       1.000
   b. Area                           1.008       1.000         1.000        1.000        1.000       1.000
   c. Coverages                      0.918       0.648         0.957        0.992        0.998       0.642
   d. Interest                       1.000       1.000         1.000        1.000        1.000       1.000
Adjusted Base Cost               $   58.37    $ 358.97    $   186.37   $    41.83    $    8.53    $  58.85    $ 712.92
3. Legislative Adjs.                 0.982       0.843         0.981        1.009        1.159       0.989
4. Trend Adjustments
   a. Cost per Unit                  1.000       1.100         1.100        1.000        1.000       1.000
   b. Units per Eligible             1.050       0.998         0.903        0.950        1.000       1.100
Projected Cost per Eligible      $   60.19    $ 332.21    $   181.60   $    40.10    $    9.89    $  64.02    $ 688.01
5. Stop Loss Reins.                      Amount           $        0             Rate                  0.0%       0.00
6. CHDP                                                                                                           0.00
7. Fee-for-Service Adj.                                                                               11.0%      75.68
Capitation Rate                                                                                               $ 763.69
</TABLE>

<PAGE>

                                                     C6 to Contract No.95-23637
                                                     Page 23 of 28

Plan Name:          Molina Medical Center
County:             Riverside               Plan #:     Commercial Plan
Aid Code Grouping:  Family                  Plan Type:  355

Date:        01-Dec-99
Base Period: FY 96/97

The Rate Period is October 1,1999 to September 30,2000
Capitation Payments at the End of the Month

Coverage Adjustments
---------------------------------------------------------------------------
  CCS Indicated Claims                              NOT Covered by the Plan
---------------------------------------------------------------------------
  Mental Health Outpatient Services                 NOT Covered by the Plan
---------------------------------------------------------------------------
  Mental Health Pharmacy Costs                      NOT Covered by the Plan
---------------------------------------------------------------------------
  Mental Health Hospital Inpatient Services         NOT Covered by the Plan
---------------------------------------------------------------------------
  Eyewear                                           NOT Covered by the Plan
---------------------------------------------------------------------------
  Heroin Detoxification                             NOT Covered by the Plan
---------------------------------------------------------------------------
  AIDS Waiver Services                              NOT Covered by the Plan
---------------------------------------------------------------------------
  Adult Day Health Care                             NOT Covered by the Plan
---------------------------------------------------------------------------
  Chiropractor/Acupuncture                          NOT Covered by the Plan
---------------------------------------------------------------------------
  Local Education Authority                         NOT Covered by the Plan
---------------------------------------------------------------------------
  Alphafeto Protein Testing                         NOT Covered by the Plan
---------------------------------------------------------------------------
  Long Term Care for month of entry plus one        Covered by the Plan
---------------------------------------------------------------------------
  Long Term Care after month of entry plus one      NOT Covered by the Plan
---------------------------------------------------------------------------
  Special AIDS drugs                                NOT Covered by the Plan
---------------------------------------------------------------------------

<TABLE>
<CAPTION>
Rate Calculation                                            Hospital     Hospital    Long Term
                                 Physician    Pharmacy     Inpatient   Outpatient         Care       Other       Total
<S>                              <C>         <C>         <C>          <C>           <C>          <C>          <C>
1. Average Cost Per Unit         $   66.25    $  23.82    $   864.71   $    20.37    $  229.41    $   8.79
2. Units per Eligible                5.957       3.361         0.304        2.609        0.009       6.410
   Cost per Elig. per Mo.        $   32.89    $   6.67    $    21.91   $     4.43    $    0.17    $   4.70    $  70.77
Adjustments
   a. Demographics                   0.883      0.8750         0.853        0.903        1.000       0.866
   b. Area                           1.008       1.000         1.000        1.000        1.000       1.000
   c. Coverages                      0.975       0.992         0.968        0.956        0.995       0.868
   d. Interest                       1.000       1.000         1.000        1.000        1.000       1.000
Adjusted Base Cost               $   28.55    $   5.79    $    18.09   $     3.82    $    0.17    $   3.53    $  59.95
3. Legislative Adjs.                 1.139       0.975         1.012        1.034        1.159       1.065
4. Trend Adjustments
   a. Cost per Unit                  1.000       1.100         1.000        1.000        1.000       1.000
   b. Units per Eligible             1.000       0.998         1.045        1.000        1.000       1.100
Projected Cost per Eligible      $   32.52    $   6.20    $    19.13   $     3.95    $    0.20    $   4.14    $  66.14
5. Stop Loss Reins.                      Amount           $        0             Rate                  0.0%       0.00
6. CHDP                                                                                                           4.88
7. Fee-for-Service Adj.                                                                               13.0%       8.59
Capitation Rate                                                                                               $  79.61
</TABLE>

<PAGE>
                                                     C6 to Contract No.95-23637
                                                     Page 24 of 28

Plan Name:          Molina Medical Center
County:             Riverside               Plan #:    Commercial Plan
Aid Code Grouping:  Aged                    Plan Type: 355

Date:        01-Dec-99
Base Period: FY 96/97

The Rate Period is October 1,1999 to September 30,2000
Capitation Payments at the End of the Month

Coverage Adjustments
---------------------------------------------------------------------------
  CCS Indicated Claims                              NOT Covered by the Plan
---------------------------------------------------------------------------
  Mental Health Outpatient Services                 NOT Covered by the Plan
---------------------------------------------------------------------------
  Mental Health Pharmacy Costs                      NOT Covered by the Plan
---------------------------------------------------------------------------
  Mental Health Hospital Inpatient Services         NOT Covered by the Plan
---------------------------------------------------------------------------
  Eyewear                                           NOT Covered by the Plan
---------------------------------------------------------------------------
  Heroin Detoxification                             NOT Covered by the Plan
---------------------------------------------------------------------------
  AIDS Waiver Services                              NOT Covered by the Plan
---------------------------------------------------------------------------
  Adult Day Health Care                             NOT Covered by the Plan
---------------------------------------------------------------------------
  Chiropractor/Acupuncture                          NOT Covered by the Plan
---------------------------------------------------------------------------
  Local Education Authority                         NOT Covered by the Plan
---------------------------------------------------------------------------
  Alphafeto Protein Testing                         NOT Covered by the Plan
---------------------------------------------------------------------------
  Long Term Care for month of entry plus one        Covered by the Plan
---------------------------------------------------------------------------
  Long Term Care after month of entry plus one      NOT Covered by the Plan
---------------------------------------------------------------------------
  Special AIDS drugs                                NOT Covered by the Plan
---------------------------------------------------------------------------

<TABLE>
<CAPTION>
Rate Calculation                                            Hospital     Hospital    Long Term
                                 Physician    Pharmacy     Inpatient   Outpatient         Care       Other       Total
<S>                              <C>          <C>         <C>          <C>           <C>          <C>         <C>
1. Average Cost Per Unit         $   16.06    $  38.28    $   287.24   $    11.67    $  177.26    $   6.49
2. Units per Eligible               11.563      16.963         0.819        3.904        1.049      42.784
   Cost per Elig. per Mo.       $   15.48    $  54.11    $    19.60   $     3.80    $   15.50    $  23.14    $ 131.63
Adjustments
   a. Demographics                   0.953       1.025         0.958        0.968        1.035       1.021
   b. Area                           1.008       1.000         1.000        1.000        1.000       1.000
   c. Coverages                      0.981       0.996         0.997        0.986        0.997       0.781
   d. Interest                       1.000       1.000         1.000        1.000        1.000       1.000
Adjusted Base Cost               $   14.59    $  55.24    $    18.72   $     3.63    $   15.99    $  18.45    $ 126.62
3. Legislative Adjs.                 0.952       0.920         0.940        1.035        1.159       0.932
4. Trend Adjustments
   a. Cost per Unit                  1.000       1.100         1.100        1.000        1.000       1.000
   b. Units per Eligible             1.050       0.998         0.950        1.045        0.950       1.100
Projected Cost per Eligible      $   14.58    $  55.79    $    18.39   $     3.93    $   17.61    $  18.91    $ 129.21
5. Stop Loss Reins.                      Amount           $        0             Rate                  0.0%       0.00
6. CHDP                                                                                                           0.00
7. Fee-for-Service Adj.                                                                               11.0%      14.21
Capitation Rate                                                                                               $ 143.42
</TABLE>

<PAGE>

                                                     C6 to Contract No.95-23637
                                                     Page 25 of 28

Plan Name:          Molina Medical Center
County:             Riverside               Plan #:     Commercial Plan
Aid Code Grouping:  Disabled                Plan Type:  355

Date:        01-Dec-99
Base Period: FY 96/97

The Rate Period is October 1,1999 to September 30,2000 \
Capitation Payments at the End of the Month

Coverage Adjustments
---------------------------------------------------------------------------
  CCS Indicated Claims                              NOT Covered by the Plan
---------------------------------------------------------------------------
  Mental Health Outpatient Services                 NOT Covered by the Plan
---------------------------------------------------------------------------
  Mental Health Pharmacy Costs                      NOT Covered by the Plan
---------------------------------------------------------------------------
  Mental Health Hospital Inpatient Services         NOT Covered by the Plan
---------------------------------------------------------------------------
  Eyewear                                           NOT Covered by the Plan
---------------------------------------------------------------------------
  Heroin Detoxification                             NOT Covered by the Plan
---------------------------------------------------------------------------
  AIDS Waiver Services                              NOT Covered by the Plan
---------------------------------------------------------------------------
  Adult Day Health Care                             NOT Covered by the Plan
---------------------------------------------------------------------------
  Chiropractor/Acupuncture                          NOT Covered by the Plan
---------------------------------------------------------------------------
  Local Education Authority                         NOT Covered by the Plan
---------------------------------------------------------------------------
  Alphafeto Protein Testing                         NOT Covered by the Plan
---------------------------------------------------------------------------
  Long Term Care for month of entry plus one        Covered by the Plan
---------------------------------------------------------------------------
  Long Term Care after month of entry plus one      NOT Covered by the Plan
---------------------------------------------------------------------------
  Special AIDS drugs                                NOT Covered by the Plan
---------------------------------------------------------------------------

<TABLE>
<CAPTION>
Rate Calculation                                            Hospital     Hospital    Long Term
                                 Physician    Pharmacy     Inpatient   Outpatient         Care       Other       Total
<S>                              <C>          <C>         <C>          <C>           <C>          <C>         <C>
1. Average Cost Per Unit         $   20.15    $  50.42    $   485.15   $    18.26    $  184.85    $   7.07
2. Units per Eligible               13.720      21.892         1.011        6.029        0.452      63.930
   Cost per Elig. per Mo.       $   23.04    $  91.98    $    40.87   $     9.17    $    6.96    $  37.67    $ 209.69
Adjustments
   a. Demographics                   1.027       0.895         0.946        1.076        0.937       1.053
   b. Area                           1.008       1.000         1.000        1.000        1.000       1.000
   c. Coverages                      0.900       0.875         0.920        0.973        0.995       0.877
   d. Interest                       1.000       1.000         1.000        1.000        1.000       1.000
Adjusted Base Cost               $   21.47    $  72.03    $    35.57   $     9.60    $    6.49    $  34.79    $ 179.95
3. Legislative Adjs.                 0.969       0.920         0.933        1.035        1.159       0.956
4. Trend Adjustments
   a. Cost per Unit                  1.000       1.100         1.100        1.000        1.000       1.000
   b. Units per Eligible             1.050       0.998         0.903        0.950        1.000       1.100
Projected Cost per Eligible      $   21.84    $  72.75    $    32.96   $     9.44    $    7.52    $  36.59    $ 181.10
5. Stop Loss Reins.                      Amount           $        0             Rate                  0.0%       0.00
6. CHDP                                                                                                           0.00
7. Fee-for-Service Adj.                                                                               11.0%      19.92
Capitation Rate                                                                                               $ 201.02
</TABLE>

<PAGE>

                                                     C6 to Contract No.95-23637
                                                     Page 26 of 28

Plan Name:          Molina Medical Center
County:             Riverside               Plan #:     Commercial Plan
Aid Code Grouping:  Child                   Plan Type:  355

Date:        01-Dec-99
Base Period: FY 96/97

The Rate Period is October 1,1999 to September 30,2000
Capitation Payments at the End of the Month

Coverage Adjustments
---------------------------------------------------------------------------
  CCS Indicated Claims                              NOT Covered by the Plan
---------------------------------------------------------------------------
  Mental Health Outpatient Services                 NOT Covered by the Plan
---------------------------------------------------------------------------
  Mental Health Pharmacy Costs                      NOT Covered by the Plan
---------------------------------------------------------------------------
  Mental Health Hospital Inpatient Services         NOT Covered by the Plan
---------------------------------------------------------------------------
  Eyewear                                           NOT Covered by the Plan
---------------------------------------------------------------------------
  Heroin Detoxification                             NOT Covered by the Plan
---------------------------------------------------------------------------
  AIDS Waiver Services                              NOT Covered by the Plan
---------------------------------------------------------------------------
  Adult Day Health Care                             NOT Covered by the Plan
---------------------------------------------------------------------------
  Chiropractor/Acupuncture                          NOT Covered by the Plan
---------------------------------------------------------------------------
  Local Education Authority                         NOT Covered by the Plan
---------------------------------------------------------------------------
  Alphafeto Protein Testing                         NOT Covered by the Plan
---------------------------------------------------------------------------
  Long Term Care for month of entry plus one        Covered by the Plan
---------------------------------------------------------------------------
  Long Term Care after month of entry plus one      NOT Covered by the Plan
---------------------------------------------------------------------------
  Special AIDS drugs                                NOT Covered by the Plan
---------------------------------------------------------------------------

<TABLE>
<CAPTION>
Rate Calculation                                            Hospital     Hospital    Long Term
                                 Physician    Pharmacy     Inpatient   Outpatient         Care       Other       Total
<S>                              <C>          <C>         <C>          <C>           <C>          <C>         <C>
1. Average Cost Per Unit         $   58.40    $  17.50    $   889.41   $    18.79    $  140.26    $   6.45
2. Units per Eligible                5.196       3.068         0.436        2.787        0.019      10.564
   Cost per Elig. per Mo.       $   25.29    $   4.47    $    32.32   $     4.36    $    0.22    $   5.68    $  72.34
Adjustments
   a. Demographics                   1.156       1.020         1.155        1.139        1.OOO       1.048
   b. Area                           1.008       1.000         1.000        1.000        1.000       1.000
   c. Coverages                      0.974       0.984         0.952        0.973        0.996       0.882
   d. Interest                       1.000       1.000         1.000        1.000        1.000       1.000
Adjusted Base Cost               $   28.71    $   4.49    $    35.54   $     4.83    $    0.22    $   5.25    $  79.04
3. Legislative Adjs.                 1.155       1.055         1.019        1.034        1.159       1.069
4. Trend Adjustments
   a. Cost per Unit                  1.000       1.100         1.000        1.000        1.000       1.000
   b. Units per Eligible             1.000       0.998         1.045        1.000        1.000       1.100
Projected Cost per Eligible      $   33.16    $   5.20    $    37.84   $     4.99    $    0.25    $   6.17    $  87.61
5. Stop Loss Reins.                      Amount           $        0             Rate                  0.0%       0.00
6. CHDP                                                                                                           4.06
7. Fee-for-Service Adj.                                                                                 11%       9.64
Capitation Rate                                                                                               $ 101.31
</TABLE>

<PAGE>

                                                     C6 to Contract No.95-23637
                                                     Page 27 of 28

Plan Name:          Molina Medical Center
County:             Riverside               Plan #:     Commercial Plan
Aid Code Grouping:  Adult                   Plan Type:  355

Date:        01-Dec-99
Base Period: FY 96/97

The Rate Period is October 1,1999 to September 30,2000
Capitation Payments at the End of the Month

Coverage Adjustments
---------------------------------------------------------------------------
  CCS Indicated Claims                              NOT Covered by the Plan
---------------------------------------------------------------------------
  Mental Health Outpatient Services                 NOT Covered by the Plan
---------------------------------------------------------------------------
  Mental Health Pharmacy Costs                      NOT Covered by the Plan
---------------------------------------------------------------------------
  Mental Health Hospital Inpatient Services         NOT Covered by the Plan
---------------------------------------------------------------------------
  Eyewear                                           NOT Covered by the Plan
---------------------------------------------------------------------------
  Heroin Detoxification                             NOT Covered by the Plan
---------------------------------------------------------------------------
  AIDS Waiver Services                              NOT Covered by the Plan
---------------------------------------------------------------------------
  Adult Day Health Care                             NOT Covered by the Plan
---------------------------------------------------------------------------
  Chiropractor/Acupuncture                          NOT Covered by the Plan
---------------------------------------------------------------------------
  Local Education Authority                         NOT Covered by the Plan
---------------------------------------------------------------------------
  Alphafeto Protein Testing                         NOT Covered by the Plan
---------------------------------------------------------------------------
  Long Term Care for month of entry plus one        Covered by the Plan
---------------------------------------------------------------------------
  Long Term Care after month of entry plus one      NOT Covered by the Plan
---------------------------------------------------------------------------
  Special AIDS drugs                                NOT Covered by the Plan
---------------------------------------------------------------------------

<TABLE>
<CAPTION>
Rate Calculation                                            Hospital     Hospital    Long Term
                                 Physician    Pharmacy     Inpatient   Outpatient         Care       Other       Total
<S>                              <C>          <C>         <C>          <C>           <C>          <C>         <C>
1. Average Cost Per Unit         $  164.23    $  19.84    $   964.66   $    19.73    $    0.00    $  30.86
2. Units per Eligible               22.157       4.314         4.387       17.657        0.000       8.468
   Cost per Elig. per Mo.       $  303.24    $   7.13    $   352.66   $    29.03    $    0.00    $  21.78    $ 713.84
Adjustments
   a. Demographics                   1.000       1.000         1.000        1.000        1.000       1.000
   b. Area                           1.008       1.000         1.000        1.000        1.000       1.000
   c. Coverages                      0.999       0.999         0.999        0.989        1.000       0.887
   d. Interest                       1.000       1.000         1.000        1.000        1.000       1.000
Adjusted Base Cost               $  305.43    $   7.12    $   352.31   $    28.71    $    0.00    $  19.32    $ 712.89
3. Legislative Adjs.                 1.059       0.945         1.011        1.034        1.159       1.071
4. Trend Adjustments
   a. Cost per Unit                  1.000       1.100         1.000        1.000        1.000       1.000
   b. Units per Eligible             1.000       0.998         1.045        1.000        1.000       1.100
Projected Cost per Eligible      $  323.45    $   7.39    $   372.21   $    29.69    $    0.00    $  22.76    $ 755.50
5. Stop Loss Reins.                      Amount           $        0             Rate                  0.0%       0.00
6. CHDP                                                                                                           0.00
7. Fee-for-Service Adj.                                                                               11.0%      83.10
Capitation Rate                                                                                               $ 838.60
</TABLE>

<PAGE>

                                                     C6 to Contract No.95-23637
                                                     Page 28 of 28

Plan Name:          Molina Medical Center
County:             Riverside               Plan #:     Commercial Plan
Aid Code Grouping:  AIDS                    Plan Type:  355

Date:        01-Dec-99
Base Period: FY 96/97

The Rate Period is October 1,1999 to September 30,2000
Capitation Payments at the End of the Month

Coverage Adjustments
---------------------------------------------------------------------------
  CCS Indicated Claims                              NOT Covered by the Plan
---------------------------------------------------------------------------
  Mental Health Outpatient Services                 NOT Covered by the Plan
---------------------------------------------------------------------------
  Mental Health Pharmacy Costs                      NOT Covered by the Plan
---------------------------------------------------------------------------
  Mental Health Hospital Inpatient Services         NOT Covered by the Plan
---------------------------------------------------------------------------
  Eyewear                                           NOT Covered by the Plan
---------------------------------------------------------------------------
  Heroin Detoxification                             NOT Covered by the Plan
---------------------------------------------------------------------------
  AIDS Waiver Services                              NOT Covered by the Plan
---------------------------------------------------------------------------
  Adult Day Health Care                             NOT Covered by the Plan
---------------------------------------------------------------------------
  Chiropractor/Acupuncture                          NOT Covered by the Plan
---------------------------------------------------------------------------
  Local Education Authority                         NOT Covered by the Plan
---------------------------------------------------------------------------
  Alphafeto Protein Testing                         NOT Covered by the Plan
---------------------------------------------------------------------------
  Long Term Care for month of entry plus one        Covered by the Plan
---------------------------------------------------------------------------
  Long Term Care after month of entry plus one      NOT Covered by the Plan
---------------------------------------------------------------------------
  Special AIDS drugs                                NOT Covered by the Plan
---------------------------------------------------------------------------

<TABLE>
<CAPTION>
Rate Calculation                                            Hospital     Hospital    Long Term
                                 Physician    Pharmacy     Inpatient   Outpatient         Care       Other       Total
<S>                              <C>          <C>         <C>          <C>           <C>          <C>         <C>
1. Average Cost Per Unit         $   25.87    $ 141.75    $   485.15   $    17.75    $  228.06    $  14.00
2. Units per Eligible               29.254      46.897         3.823       28.506        0.450      78.563
   Cost per Elig. per Mo.       $   63.07    $ 553.97    $   154.56   $    42.17    $    8.55    $  91.66    $ 913.98
Adjustments
   a. Demographics                   1.000       1.000         1.000        1.000        1.000       1.000
   b. Area                           1.008       1.000         1.000        1.000        1.000       1.000
   c. Coverages                      0.918       0.648         0.957        0.992        0.998       0.642
   d. Interest                       1.000       1.000         1.000        1.000        1.000       1.000
Adjusted Base Cost               $   58.37    $ 358.97    $   147.91   $    41.83    $    8.53    $  58.85    $ 674.46
3. Legislative Adjs.                 0.982       0.843         0.981        1.009        1.159       0.989
4. Trend Adjustments
   a. Cost per Unit                  1.000       1.100         1.100        1.000        1.000       1.000
   b. Units per Eligible             1.050       0.998         0.903        0.950        1.000       1.100
Projected Cost per Eligible      $   60.19    $ 332.21    $   144.13   $    40.10    $    9.89    $  64.02    $ 650.54
5. Stop Loss Reins.                      Amount           $        0             Rate                  0.0%       0.00
6. CHDP                                                                                                           0.00
7. Fee-for-Service Adj.                                                                               11.0%      71.56
Capitation Rate                                                                                               $ 722.10
</TABLE>

<PAGE>

[LETTER HEAD OF DEPARTMENT OF HEALTH SERVICES]

DEPARTMENT OF HEALTH SERVICES
714/744 P Street
P.O. Box 942732
Sacramento, CA 94234-7320
(916)654-8076

[SEAL]

     March 1, 2000

     George Goldstein
     Molina
     One Golden Shore
     Long Beach, CA 90802

     Dear Mr. Goldstein:

     Change Order Number C7 to Contract No.95-23637 is being provided to rectify
     the capitation payment schedule from prepaid to postpaid in accordance with
     Article V, Section 5.3, Capitation Rates and Section 5.4 Capitation Rates
     Constitute Payment in Full, of your Contract for the periods February 1,
     1998 through September 30, 1998; October 1, 1998 through June 30, 1999
     (Includes FQHC); July 1, 1999 through July 31, 1999 (excludes FQHC); and
     August 1, 1999 through September 30, 1999. Corresponding postpaid rate
     sheets are attached. This Change Order is effective March 1, 2000.

     The retropayment for the above mentioned periods will be processed and
     payment should be mailed within three (3) to six (6) weeks from the date of
     this letter.

     If you have any questions, please contact your contract manager.

     Sincerely,

     /s/
     Susanne M. Hughes
     Acting Chief
     Medi-Cal Managed Care Division

     Enclosures

<PAGE>

[LETTER HEAD OF DEPARTMENT OF HEALTH SERVICES]

1.   5.3  CAPITATION RATES

DHS will remit to the Contractor a capitation payment each month for each
Medi-Cal Member that appears on the approved list of Members supplied to the
Contractor by DHS. The capitation rate shall be the amount specified in this
Article. The payment period for health care services will commence on the first
day of operations, as determined by DHS. Capitation payments will be made in
accordance with the following schedule of capitation payment rates:

<TABLE>
<CAPTION>
FOR THE PERIOD 2/1/98 - 9/30/98                         RIVERSIDE COUNTY
-------------------------------------------------------------------------------------------------
                GROUPS                                     AID CODES                      RATE
-------------------------------------------------------------------------------------------------
<S>                                              <C>                                   <C>
Family                                           01, OA, 02, 08, 30,                   $    76.14
                                                 32, 33, 34, 35, 38,
                                                 39, 40, 42, 54, 59,
                                                 3A, 3C, 3E, 3G, 3H,
                                                 3L, 3M, 3N, 3P, 3R,
                                                 3U, 7X,
-------------------------------------------------------------------------------------------------
Disabled                                         20, 24, 26, 28, 36,                   $   205.99
                                                 60, 64, 66, 68, 6A,
                                                 6C, 6N, 6P, 6R
-------------------------------------------------------------------------------------------------
Aged                                             10, 14, 16, 18                        $   163.11
-------------------------------------------------------------------------------------------------
Child                                            03, 04, 4C, 4K, 5K,                   $    79.71
                                                 45, 82
-------------------------------------------------------------------------------------------------
Adult                                            86                                    $   518.25
-------------------------------------------------------------------------------------------------
AIDS Beneficiary                                                                       $ 1,026.62
-------------------------------------------------------------------------------------------------
</TABLE>

                                     1 of 5

<PAGE>

<TABLE>
<CAPTION>
FOR THE PERIOD 2/1/98  - 9/30/98                        SAN BERNARDINO COUNTY
-------------------------------------------------------------------------------------------------
                GROUPS                                     AID CODES                      RATE
-------------------------------------------------------------------------------------------------
<S>                                              <C>                                   <C>
Family                                           01, 0A, 02, 08, 30,                   $   74.39
                                                 32, 33, 34, 35, 38,
                                                 39, 40, 42, 54, 59,
                                                 3A, 3C, 3E, 3G, 3H,
                                                 3L, 3M, 3N, 3P, 3R,
                                                 3U, 7X,
-------------------------------------------------------------------------------------------------
Disabled                                         20, 24, 26, 28, 36,                   $   218.97
                                                 6O, 64, 66, 68, 6A,
                                                 6C, 6N, 6P, 6R
-------------------------------------------------------------------------------------------------
Aged                                             10, 14, 16, 18                        $   168.09
-------------------------------------------------------------------------------------------------
Child                                            03, 04, 4C, 4K,                       $    79.79
                                                 5K, 45, 82
-------------------------------------------------------------------------------------------------
Adult                                            86                                    $   534.10
-------------------------------------------------------------------------------------------------
AIDS Beneficiary                                                                       $ 1,078.17
-------------------------------------------------------------------------------------------------

<CAPTION>
FOR THE PERIOD 10/1/98 - 6/30/99                        RIVERSIDE COUNTY
-------------------------------------------------------------------------------------------------
                GROUPS                                     AID CODES                      RATE
-------------------------------------------------------------------------------------------------
<S>                                              <C>                                   <C>
Family                                           01, OA, 02, 08, 30,                   $    79.13
                                                 32, 33, 34, 35, 38,
                                                 39, 40, 42, 54, 59,
                                                 3A, 3C, 3E, 3G, 3H,
                                                 3L, 3M, 3N, 3P, 3R,
                                                 3U, 7X,
-------------------------------------------------------------------------------------------------
Disabled                                         20, 24, 26, 28, 36,                   $   223.73
                                                 60, 64, 66, 68, 6A,
                                                 6C, 6N, 6P, 6R
-------------------------------------------------------------------------------------------------
Aged                                             10, 14, 16, 18                        $   161.27
-------------------------------------------------------------------------------------------------
Child                                            03, 04, 4C, 4K, 5K,                   $    93.51
                                                 45,82
-------------------------------------------------------------------------------------------------
Adult                                            86                                    $   710.32
-------------------------------------------------------------------------------------------------
AIDS Beneficiary                                                                       $   967.27
-------------------------------------------------------------------------------------------------
Percent of Poverty                               7A,                                   $    54.11
-------------------------------------------------------------------------------------------------
Percent of Poverty                               47, 72,                               $    60.05
-------------------------------------------------------------------------------------------------
</TABLE>

                                     2 of 5

<PAGE>

<TABLE>
<CAPTION>
FOR THE PERIOD 10/1/98 - 6/30/99                        SAN BERNARDINO COUNTY
-------------------------------------------------------------------------------------------------
                GROUPS                                     AID CODES                      RATE
-------------------------------------------------------------------------------------------------
<S>                                              <C>                                   <C>
Family                                           01, OA, 02, 08, 30,                   $    80.89
                                                 32, 33, 34, 35, 38,
                                                 39, 40, 42, 54, 59,
                                                 3A, 3C, 3E, 3G, 3H,
                                                 3L, 3M, 3N, 3P, 3R,
                                                 3U, 7X,
-------------------------------------------------------------------------------------------------
Disabled                                         20, 24, 26, 28, 36,                   $   234.65
                                                 60, 64, 66, 68, 6A,
                                                 6C, 6N, 6P, 6R
-------------------------------------------------------------------------------------------------
Aged                                             10, 14, 16, 18                        $   164.60
-------------------------------------------------------------------------------------------------
Child                                            03, 04, 4C, 4K,                       $   106.97
                                                 5K, 45, 82
-------------------------------------------------------------------------------------------------
Adult                                            86                                    $   794.86
-------------------------------------------------------------------------------------------------
AIDS Beneficiary                                                                       $ 1,000.01
-------------------------------------------------------------------------------------------------
Percent of Poverty                               7A,                                   $    54.11
-------------------------------------------------------------------------------------------------
Percent of Poverty                               47, 72,                               $    60.05
-------------------------------------------------------------------------------------------------

<CAPTION>
FOR THE PERIOD 7/1/99 - 7/31/99                         RIVERSIDE COUNTY
-------------------------------------------------------------------------------------------------
                GROUPS                                     AID CODES                      RATE
-------------------------------------------------------------------------------------------------
<S>                                              <C>                                   <C>
Family                                           01, 0A, 02, 08, 30,                   $    78.80
                                                 32, 33, 34, 35, 38,
                                                 39, 40, 42, 54, 59,
                                                 3A, 3C, 3E, 3G, 3H,
                                                 3L, 3M, 3N, 3P, 3R,
                                                 3U, 7X,
-------------------------------------------------------------------------------------------------
Disabled                                         20, 24, 26, 28, 36,                   $   223.73
                                                 6O, 64, 66, 68, 6A,
                                                 6C, 6N, 6P, 6R
-------------------------------------------------------------------------------------------------
Aged                                             10, 14, 16, 18                        $   161.27
-------------------------------------------------------------------------------------------------
Child                                            03, 04, 4C, 4K,                       $    93.17
                                                 5K, 45, 82
-------------------------------------------------------------------------------------------------
Adult                                            86                                    $   708.81
-------------------------------------------------------------------------------------------------
AIDS Beneficiary                                                                       $   967.27
-------------------------------------------------------------------------------------------------
Percent of Poverty                               7A,                                   $    52.55
-------------------------------------------------------------------------------------------------
Percent of Poverty                               47, 72,                               $    57.21
-------------------------------------------------------------------------------------------------
</TABLE>

                                     3 of 5

<PAGE>

<TABLE>
<CAPTION>
FOR THE PERIOD 7/1/99 - 7/31/99                         SAN BERNARDINO COUNTY
-------------------------------------------------------------------------------------------------
                GROUPS                                     AID CODES                      RATE
-------------------------------------------------------------------------------------------------
<S>                                              <C>                                   <C>
Family                                           01, 0A, 02, 08, 30,                   $    80.82
                                                 32, 33, 34, 35, 38,
                                                 39, 40, 42, 54, 59,
                                                 3A, 3C, 3E, 3G, 3H,
                                                 3L, 3M, 3N, 3P, 3R,
                                                 3U, 7X,
-------------------------------------------------------------------------------------------------
Disabled                                         20, 24, 26, 28, 36,                   $   234.65
                                                 6O, 64, 66, 68, 6A,
                                                 6C, 6N, 6P, 6R
-------------------------------------------------------------------------------------------------
Aged                                             10, 14, 16, 18                        $   164.60
-------------------------------------------------------------------------------------------------
Child                                            03, 04, 4C, 4K,                       $   106.89
                                                 5K, 45, 82
-------------------------------------------------------------------------------------------------
Adult                                            86                                    $   794.50
-------------------------------------------------------------------------------------------------
AIDS Beneficiary                                                                       $ 1,000.01
-------------------------------------------------------------------------------------------------
Percent of Poverty                               7A,                                   $    52.55
-------------------------------------------------------------------------------------------------
Percent of Poverty                               47, 72,                               $    57.21
-------------------------------------------------------------------------------------------------

<CAPTION>
FOR THE PERIOD 8/1/99 - 9/30/99                         RIVERSIDE COUNTY
-------------------------------------------------------------------------------------------------
                GROUPS                                     AID CODES                      RATE
-------------------------------------------------------------------------------------------------
<S>                                              <C>                                   <C>
Family                                           01, 0A, 02, 08, 30,                   $    79.37
                                                 32, 33, 34, 35, 38,
                                                 39, 40, 42, 54, 59,
                                                 3A, 3C, 3E, 3G, 3H,
                                                 3L, 3M, 3N, 3P, 3R,
                                                 3U, 5X, 7X,
-------------------------------------------------------------------------------------------------
Disabled                                         20, 24, 26, 28, 36,                   $   225.12
                                                 6O, 64, 66, 68, 6A,
                                                 6C, 6N, 6P, 6R
-------------------------------------------------------------------------------------------------
Aged                                             10, 14, 16, 18                        $   162.55
-------------------------------------------------------------------------------------------------
Child                                            03, 04, 4C, 4K,                       $    93.95
                                                 5K, 45, 82
-------------------------------------------------------------------------------------------------
Adult                                            86                                    $   714.18
-------------------------------------------------------------------------------------------------
AIDS Beneficiary                                                                       $   968.53
-------------------------------------------------------------------------------------------------
Percent of Poverty                               7A,                                   $    53.10
-------------------------------------------------------------------------------------------------
Percent of Poverty                               47, 72,                               $    57.78
-------------------------------------------------------------------------------------------------
</TABLE>

                                     4 of 5

<PAGE>

For the Period 8/1/99 - 9/30/99             San Bernardino County

<TABLE>
<CAPTION>
         --------------------------------------------------------------------------
                     GROUPS                     AID CODES                 RATE
         --------------------------------------------------------------------------
         <S>                                <C>                       <C>
          Family                            01, 0A, 02, 08,           $       81.39
                                            30, 32, 33, 34, 35,
                                            38, 39, 40, 42, 54,
                                            59, 3A, 3C, 3E,
                                            3G, 3H, 3L, 3M,
                                            3N, 3P, 3R, 3U,
                                            5X, 7X,
         --------------------------------------------------------------------------
          Disabled                          20, 24, 26, 28, 36,       $      236.15
                                            60, 64, 66, 68,
                                            6A, 6C, 6N, 6P,
                                            6R
         --------------------------------------------------------------------------
          Aged                              10,14,16,18               $      165.90
         --------------------------------------------------------------------------
          Child                             03, 04, 4C, 4K,           $      107.81
                                            5K, 45, 82
         --------------------------------------------------------------------------
          Adult                             86                        $      800.46
         --------------------------------------------------------------------------
          AIDS Beneficiary                                            $    1,001.35
         --------------------------------------------------------------------------
          Percent of Poverty                7A,                       $       53.10
         --------------------------------------------------------------------------
          Percent of Poverty                47,72,                    $       57.78
         --------------------------------------------------------------------------
</TABLE>

         All other terms, conditions, and provisions contained in Section 5.3
         remain unchanged.

2.       5.4      CAPITATION RATES CONSTITUTE PAYMENT IN FULL

         Capitation rates for each rate period, as calculated by DHS, are
         prospective rates and constitute payment in full, subject to any stop
         loss reinsurance provisions, on behalf of a Member for all Covered
         Services required by such Member and for all Administrative Costs
         incurred by the Contractor in providing or arranging for such services,
         and subject to adjustments for federally qualified health centers in
         accordance with Section 5.13, but do not include payment for the
         recoupment of current or previous losses incurred by Contractor. DHS is
         not responsible for making payments for recoupment of losses. The
         actuarial basis for the determination of the capitation payment rates
         is outlined in Attachment 1 (consisting of 60 pages).

                                     5 of 5

<PAGE>

[LETTER HEAD OF DEPARTMENT OF HEALTH SERVICES]

[SEAL]

[SEAL]

            November 20, 2000

            Mr. George Goldstein
            President
            Molina Healthcare of California
            Dba Molina
            One Golden Shore
            Long Beach, CA 90802

            Dear Mr. Goldstein:

            In accordance with Article V, Section 5.5 of your Contract, the
            enclosed Change Order No. 08 transmits (Molina's) annual capitation
            rates for the Period beginning October 1,2000 to September 30, 2001.

            The retropayment between the old rates and the new 2000/2001 rates
            for the period beginning October 1, 2000 will be processed in
            approximately four to six weeks.

            If you have any questions, please contact your contract manager.

            Sincerely,

            /s/
            ----------------------
            Susanne M. Hughes
            Acting Chief
            Medi-Cal Managed Care Division

            Enclosure

<PAGE>

[LETTER HEAD OF DEPARTMENT OF HEALTH SERVICES]

            CHANGE ORDER C08 TO CONTRACT NO.95-23637; ADJUSTING THE ANNUAL
            CAPITATION RATE FOR PROVIDER RATE INCREASES FOR THE PERIOD OCTOBER
            1, 2000 TO SEPTEMBER 30, 2001, BY CHANGING CONTRACT SECTIONS; 5.3
            CAPITATION RATES; AND 5.4 CAPITATION RATES CONSTITUTE PAYMENT IN
            FULL. This Change Order is effective November 1, 2000.

            1.     5.3      CAPITATION RATES

            For the period October 1, 2000 to
            September 30,2001                                   Riverside County
<TABLE>
<CAPTION>
            -----------------------------------------------------------------------------
                   GROUPS                       AID CODES                     RATE
            -----------------------------------------------------------------------------
             <S>                      <C>                                <C>
             Family                   01, 0A, 02, 08, 30, 32, 33,        $      86.14
                                      34, 35, 38, 39, 40, 42, 47,
                                      54, 59, 72, 3A, 3C, 3E, 3G,
                                      3H, 3L, 3M, 3N, 3P, 3R, 3U,
                                      4F, 4G, 5X, 7X, 8P
            -----------------------------------------------------------------------------
             Disabled                 20, 24, 26, 28, 36, 60, 64,        $     223.64
                                      66, 68, 6A, 6C, 6N, 6P, 6R
            -----------------------------------------------------------------------------
             Aged                     10, 14, 16, 18                     $     160.60
            -----------------------------------------------------------------------------
             Child                    03, 04, 4A, 4C, 4K, 5K, 45,        $      89.04
                                      82, 7A, 8R
            -----------------------------------------------------------------------------
             Adult                    86                                 $     843.25
            -----------------------------------------------------------------------------
             AIDS Beneficiary                                            $     847.95
            -----------------------------------------------------------------------------
</TABLE>

            For the period October 1, 2000 to
            September 30,2001                              San Bernardino County
<TABLE>
<CAPTION>
            ----------------------------------------------------------------------------------
                   GROUPS                       AID CODES                     RATE
            ----------------------------------------------------------------------------------
             <S>                      <C>                                <C>
             Family                   01, 0A, 02, 08, 30, 32, 33,        $      82.56
                                      34, 35, 38, 39, 40, 42, 47,
                                      54, 59, 72, 3A, 3C, 3E, 3G,
                                      3H, 3L, 3M, 3N, 3P, 3R, 3U,
                                      4F, 4G, 5X, 7X, 8P
            ----------------------------------------------------------------------------------
             Disabled                 20, 24, 26, 28, 36, 60, 64,        $     223.41
                                      66, 68, 6A, 6C, 6N, 6P, 6R
            ----------------------------------------------------------------------------------
             Aged                     10, 14, 16, 18                     $     151.60
            ----------------------------------------------------------------------------------
             Child                    03, 04, 4A, 4C, 4K, 5K, 45,        $      93.28
                                      82, 7A, 8R
            ----------------------------------------------------------------------------------
             Adult                    86                                 $     922.71
            ----------------------------------------------------------------------------------
             AIDS Beneficiary                                            $     891.15
            ----------------------------------------------------------------------------------
</TABLE>

<PAGE>

2.       5.4      CAPITATION RATES CONSTITUTE PAYMENT IN FULL

         Capitation rates for each rate period, as calculated by DHS, are
         prospective rates and constitute payment in full, subject to any stop
         loss reinsurance provisions, on behalf of a Member for all Covered
         Services required by such Member and for all administrative costs
         incurred by the Contractor in providing or arranging for such services,
         and subject to adjustments for federally qualified health centers in
         accordance with Section 14087.325 of the W&I Code, but do not include
         payment for recoupment of current or previous losses incurred by
         Contractor. DHS is not responsible for making payments for recoupment
         of losses. The actuarial basis for the determination of the capitation
         payment rates is outlined in Attachment 1 (consisting of 12 pages).

3.       All other terms, conditions, and provisions contained in Sections 5.3
         and 5.4 remain unchanged.

                                                                               2

<PAGE>

                                                Contract    #95-23637   C-8
                                                Attachment   1
                                                Page  1 of  12

Plan Name:              Molina Medical Center
County:                 Riverside                Plan #:        355
Aid Code Grouping:      Family                   Plan Type:     Commercial Plan

Date:  14-Nov-00

The Rate Period is October 1, 2000                  Capitation Payments at the
to September 30, 2001                               End of the Month

Coverages (C = Covered by Plan, N = NOT Covered by Plan)

<TABLE>
----------------------------------------------------------------------------------------------------------
   <S>                                  <C>         <C>                                              <C>
   CCS Indicated Claims                 N           AIDS Waiver                                       N
----------------------------------------------------------------------------------------------------------
   GHPP                                 C           In Home Waiver                                    N
----------------------------------------------------------------------------------------------------------
   Hemodialysis                         C           Model NF Waiver                                   N
----------------------------------------------------------------------------------------------------------
   Major Organ Transplants              N           Adult Day Health Care                             N
----------------------------------------------------------------------------------------------------------
   Out-of-State                         C           Newborn Hearing Screening                         N
----------------------------------------------------------------------------------------------------------
   Chiropractor                         N           Psychiatric Drugs                                 N
----------------------------------------------------------------------------------------------------------
   Local Education Authority            N           AIDS Drugs                                        N
----------------------------------------------------------------------------------------------------------
   Psychiatrist                         N           Injections                                        N
----------------------------------------------------------------------------------------------------------
   Acupuncturist                        N           MH - Hospital Inpatient                           N
----------------------------------------------------------------------------------------------------------
   Alphafeto Protein Testing            N           MH - Outpatient Services                          N
----------------------------------------------------------------------------------------------------------
   Heroin Detoxification                N           Long Term Care for month of entry plus one        C
----------------------------------------------------------------------------------------------------------
   Direct Observed Therapy              N           Long Term Care after month of entry plus one      N
----------------------------------------------------------------------------------------------------------
   PIA Lenses                           N           CHDP                                              C
----------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
Rate Calculation                                                     Hospital     Hospital        Long Term
                                        Physician      Pharmacy     Inpatient   Outpatient             Care         Other    Total
<S>                                     <C>            <C>          <C>         <C>             <C>             <C>        <C>
1. Average Cost Per Unit                $   66.25      $  23.82     $  864.71   $    20.37      $    229.41     $    8.79
2. Units per Eligible                       5.957         3.361         0.304        2.609            0.009         6.410
   Cost per Elig. per Mo.               $   32.89      $   6.67     $   21.91   $     4.43      $      0.17     $    4.70  $ 70.77
3. Adjustments
    a.Demographics                          0.933         0.927         0.903        0.933            1.000         0.938
    b.Area                                  0.900         1.000         1.000        1.000            1.000         1.000
    c.Coverages                             0.975         0.992         0.968        0.956            0.995         0.868
    d.Interest                              1.000         1.000         1.000        1.000            1.000         1.000
Adjusted Base Cost                      $   26.93      $   6.13     $   19.15   $     3.95      $      0.17     $    3.83  $ 60.16
4. Legislative Adjs.                        1.261         0.895         1.016        1.065            1.375         1.086
5. Trend Adjustments
    a. Cost per Unit                        1.000         1.148         1.000        1.000            1.000         1.000
    b. Units per Eligible                   1.000         1.073         1.066        1.000            1.000         1.148
Projected Cost per Eligible             $   33.96      $   6.76     $   20.73   $     4.21      $      0.23     $    4.77  $ 70.66
6. Adjustment to No Loss                                                                                                      0.00
7. CHDP                                                                                                                       4.88
8. Adjustment to Fee-For-Service                                                                                     15.0%   10.60
Capitation Rate                                                                                                            $ 86.14
Value of Provider Rate Increase                                                                                            $  4.44
</TABLE>

Prepared by Department of Health Services, Rate Development Branch

<PAGE>

                                                Contract    #95-23637   C-8
                                                Attachment   1
                                                Page  2 of  12

Plan Name:              Molina Medical Center
County:                 Riverside                Plan #:        355
Aid Code Grouping:      Disabled                 Plan Type:     Commercial Plan

Date:  14-Nov-00

The Rate Period is October 1, 2000                  Capitation Payments at the
to September 30, 2001                               End of the Month

Coverages (C = Covered by Plan, N = NOT Covered by Plan)

<TABLE>
   <S>                                  <C>         <C>                                              <C>
   CCS Indicated Claims                 N           AIDS Waiver                                       N
----------------------------------------------------------------------------------------------------------
   GHPP                                 C           In Home Waiver                                    N
----------------------------------------------------------------------------------------------------------
   Hemodialysis                         C           Model NF Waiver                                   N
----------------------------------------------------------------------------------------------------------
   Major Organ Transplants              N           Adult Day Health Care                             N
----------------------------------------------------------------------------------------------------------
   Out-of-State                         C           Newborn Hearing Screening                         N
----------------------------------------------------------------------------------------------------------
   Chiropractor                         N           Psychiatric Drugs                                 N
----------------------------------------------------------------------------------------------------------
   Local Education Authority            N           AIDS Drugs                                        N
----------------------------------------------------------------------------------------------------------
   Psychiatrist                         N           Injections                                        N
----------------------------------------------------------------------------------------------------------
   Acupuncturist                        N           MH - Hospital Inpatient                           N
----------------------------------------------------------------------------------------------------------
   Alphafeto Protein Testing            N           MH - Outpatient Services                          N
----------------------------------------------------------------------------------------------------------
   Heroin Detoxification                N           Long Term Care for month of entry plus one        C
----------------------------------------------------------------------------------------------------------
   Direct Observed Therapy              N           Long Term Care after month of entry plus one      N
----------------------------------------------------------------------------------------------------------
   PIA Lenses                           N           CHDP                                              C
----------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
Rate Calculation                                                     Hospital     Hospital        Long Term
                                        Physician      Pharmacy     Inpatient   Outpatient             Care         Other     Total
<S>                                     <C>            <C>          <C>         <C>             <C>             <C>        <C>
1. Average Cost Per Unit                $   20.15      $  50.42     $  485.15   $    18.26      $    184.85     $    7.07
2. Units per Eligible                      13.720        21.892         1.011        6.029            0.452        63.930
   Cost per Elig. per Mo.               $   23.04      $  91.98     $   40.87   $     9.17      $      6.96     $   37.67  $ 209.69
3. Adjustments
    a.Demographics                          0.990         0.881         0.935        1.064            0.954         1.046
    b.Area                                  0.900         1.000         1.000        1.000            1.000         1.000
    c.Coverages                             0.900         0.875         0.920        0.973            0.995         0.877
    d.Interest                              1.000         1.000         1.000        1.000            1.000         1.000
Adjusted Base Cost                      $   18.48      $  70.91     $   35.16   $     9.49      $      6.61     $   34.56  $ 175.21
4. Legislative Adjs.                        1.151         0.925         0.952        1.057            1.379         0.991
5. Trend Adjustments
    a. Cost per Unit                        1.000         1.148         1.148        1.000            1.000         1.000
    b. Units per Eligible                   1.073         1.073         0.863        0.929            1.000         1.148
Projected Cost per Eligible             $   22.82      $  80.77     $   33.15   $     9.31      $      9.12     $   39.30  $ 194.47
6. Adjustment to No Loss                                                                                                       0.00
7. CHDP                                                                                                                        0.00
8. Adjustment to Fee-For-Service                                                                                     15.0%    29.17
Capitation Rate                                                                                                            $ 223.64
Value of Provider Rate Increase                                                                                            $   4.65
</TABLE>

Prepared by Department of Health Services, Rate Development Branch

<PAGE>

                                                Contract    #95-23637   C-8
                                                Attachment   1
                                                Page  3 of  12

Plan Name:              Molina Medical Center
County:                 Riverside                Plan #:        355
Aid Code Grouping:      Aged                     Plan Type:     Commercial Plan

Date:  14-Nov-00

The Rate Period is October 1, 2000                  Capitation Payments at the
to September 30, 2001                               End of the Month

Coverages (C = Covered by Plan, N = NOT Covered by Plan)

<TABLE>
----------------------------------------------------------------------------------------------------------
   <S>                                  <C>         <C>                                               <C>
   CCS Indicated Claims                 N           AIDS Waiver                                       N
----------------------------------------------------------------------------------------------------------
   GHPP                                 C           In Home Waiver                                    N
----------------------------------------------------------------------------------------------------------
   Hemodialysis                         C           Model NF Waiver                                   N
----------------------------------------------------------------------------------------------------------
   Major Organ Transplants              N           Adult Day Health Care                             N
----------------------------------------------------------------------------------------------------------
   Out-of-State                         C           Newborn Hearing Screening                         N
----------------------------------------------------------------------------------------------------------
   Chiropractor                         N           Psychiatric Drugs                                 N
----------------------------------------------------------------------------------------------------------
   Local Education Authority            N           AIDS Drugs                                        N
----------------------------------------------------------------------------------------------------------
   Psychiatrist                         N           Injections                                        N
----------------------------------------------------------------------------------------------------------
   Acupuncturist                        N           MH - Hospital Inpatient                           N
----------------------------------------------------------------------------------------------------------
   Alphafeto Protein Testing            N           MH - Outpatient Services                          N
----------------------------------------------------------------------------------------------------------
   Heroin Detoxification                N           Long Term Care for month of entry plus one        C
----------------------------------------------------------------------------------------------------------
   Direct Observed Therapy              N           Long Term Care after month of entry plus one      N
----------------------------------------------------------------------------------------------------------
   PIA Lenses                           N           CHDP                                              C
----------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
Rate Calculation                                                    Hospital      Hospital        Long Term
                                        Physician      Pharmacy     Inpatient   Outpatient             Care         Other     Total
<S>                                     <C>            <C>          <C>         <C>             <C>             <C>        <C>
1. Average Cost Per Unit                $   16.06      $  38.28     $  287.24   $    11.67      $    177.26     $    6.49
2. Units per Eligible                      11.563        16.963         0.819        3.904            1.049        42.784
   Cost per Elig. per Mo.               $   15.48      $  54.11     $   19.60   $     3.80      $     15.50     $   23.14  $ 131.63
3. Adjustments
    a.Demographics                          1.007         1.014         1.005        1.001            0.975         1.011
    b.Area                                  0.900         1.000         1.000        1.000            1.000         1.000
    c.Coverages                             0.981         0.996         0.997        0.986            0.997         0.781
    d.Interest                              1.000         1.000         1.000        1.000            1.000         1.000
Adjusted Base Cost                      $   13.76      $  54.65     $   19.64   $     3.75      $     15.07     $   18.27  $ 125.14
4. Legislative Adjs.                        0.993         0.911         0.960        1.052            1.368         0.966
5. Trend Adjustments
    a. Cost per Unit                        1.000         1.148         1.148        1.000            1.000         1.000
    b. Units per Eligible                   1.073         1.073         0.929        1.066            0.929         1.148
Projected Cost per Eligible             $   14.66      $  61.31     $   20.09   $     4.20      $     19.14     $   20.25  $ 139.65
6. Adjustment to No Loss                                                                                                       0.00
7. CHDP                                                                                                                        0.00
8. Adjustment to Fee-For-Service                                                                                     15.0%    20.95
Capitation Rate                                                                                                            $ 160.60
Value of Provider Rate Increase                                                                                            $   0.84
</TABLE>

Prepared by Department of Health Services, Rate Development Branch

<PAGE>

                                                Contract    #95-23637   C-8
                                                Attachment   1
                                                Page  4 of  12

Plan Name:              Molina Medical Center
County:                 Riverside                Plan #:        355
Aid Code Grouping:      Child                    Plan Type:     Commercial Plan

Date:  14-Nov-00

The Rate Period is October 1, 2000                  Capitation Payments at the
to September 30, 2001                               End of the Month

Coverages (C = Covered by Plan, N = NOT Covered by Plan)

<TABLE>
----------------------------------------------------------------------------------------------------------
   <S>                                  <C>         <C>                                               <C>
   CCS Indicated Claims                 N           AIDS Waiver                                       N
----------------------------------------------------------------------------------------------------------
   GHPP                                 C           In Home Waiver                                    N
----------------------------------------------------------------------------------------------------------
   Hemodialysis                         C           Model NF Waiver                                   N
----------------------------------------------------------------------------------------------------------
   Major Organ Transplants              N           Adult Day Health Care                             N
----------------------------------------------------------------------------------------------------------
   Out-of-State                         C           Newborn Hearing Screening                         N
----------------------------------------------------------------------------------------------------------
   Chiropractor                         N           Psychiatric Drugs                                 N
----------------------------------------------------------------------------------------------------------
   Local Education Authority            N           AIDS Drugs                                        N
----------------------------------------------------------------------------------------------------------
   Psychiatrist                         N           Injections                                        N
----------------------------------------------------------------------------------------------------------
   Acupuncturist                        N           MH - Hospital Inpatient                           N
----------------------------------------------------------------------------------------------------------
   Alphafeto Protein Testing            N           MH - Outpatient Services                          N
----------------------------------------------------------------------------------------------------------
   Heroin Detoxification                N           Long Term Care for month of entry plus one        C
----------------------------------------------------------------------------------------------------------
   Direct Observed Therapy              N           Long Term Care after month of entry plus one      N
----------------------------------------------------------------------------------------------------------
   PIA Lenses                           N           CHDP                                              C
----------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
 Rate Calculation                                                    Hospital    Hospital        Long Term
                                        Physician      Pharmacy     Inpatient   Outpatient            Care          Other     Total
<S>                                     <C>            <C>          <C>         <C>             <C>             <C>        <C>
1. Average Cost Per Unit                $   58.40      $  17.50     $  889.41   $    18.79      $    140.26     $    6.45
2. Units per Eligible                       5.196         3.068         0.436        2.787            0.019        10.564
   Cost per Elig. per Mo.               $   25.29      $   4.47     $   32.32   $     4.36      $      0.22     $    5.68  $  72.34
3. Adjustments
    a.Demographics                          1.020         1.029         0.953        1.033            1.000         0.988
    b.Area                                  0.900         1.000         1.000        1.000            1.000         1.000
    c.Coverages                             0.974         0.984         0.952        0.973            0.996         0.882
    d.Interest                              1.000         1.000         1.000        1.000            1.000         1.000
Adjusted Base Cost                      $   22.61      $   4.53     $   29.32   $     4.38      $      0.22     $    4.95  $  66.01
4. Legislative Adjs.                        1.144         0.907         1.019        1.055            1.359         1.089
5. Trend Adjustments
    a. Cost per Unit                        1.000         1.148         1.000        1.000            1.000         1.000
    b. Units per Eligible                   1.000         1.073         1.066        1.000            1.000         1.148
Projected Cost per Eligible             $   25.87      $   5.06     $   31.84   $     4.62      $      0.30     $    6.19  $  73.88
6. Adjustment to No Loss                                                                                                       0.00
7. CHDP                                                                                                                        4.08
8. Adjustment to Fee-For-Service                                                                                     15.0%    11.08
Capitation Rate                                                                                                            $  89.04
Value of Provider Rate Increase                                                                                            $   0.71
</TABLE>

Prepared by Department of Health Services, Rate Development Branch

<PAGE>

                                                Contract    #95-23637   C-8
                                                Attachment   1
                                                Page  5 of  12

Plan Name:              Molina Medical Center
County:                 Riverside                Plan #:        355
Aid Code Grouping:      Adult                    Plan Type:     Commercial Plan

Date:  14-Nov-00

The Rate Period is October 1, 2000                  Capitation Payments at the
to September 30, 2001                               End of the Month

Coverages (C = Covered by Plan, N = NOT Covered by Plan)

<TABLE>
----------------------------------------------------------------------------------------------------------
   <S>                                  <C>         <C>                                              <C>
   CCS Indicated Claims                 N           AIDS Waiver                                       N
----------------------------------------------------------------------------------------------------------
   GHPP                                 C           In Home Waiver                                    N
----------------------------------------------------------------------------------------------------------
   Hemodialysis                         C           Model NF Waiver                                   N
----------------------------------------------------------------------------------------------------------
   Major Organ Transplants              N           Adult Day Health Care                             N
----------------------------------------------------------------------------------------------------------
   Out-of-State                         C           Newborn Hearing Screening                         N
----------------------------------------------------------------------------------------------------------
   Chiropractor                         N           Psychiatric Drugs                                 N
----------------------------------------------------------------------------------------------------------
   Local Education Authority            N           AIDS Drugs                                        N
----------------------------------------------------------------------------------------------------------
   Psychiatrist                         N           Injections                                        N
----------------------------------------------------------------------------------------------------------
   Acupuncturist                        N           MH - Hospital Inpatient                           N
----------------------------------------------------------------------------------------------------------
   Alphafeto Protein Testing            N           MH - Outpatient Services                          N
----------------------------------------------------------------------------------------------------------
   Heroin Detoxification                N           Long Term Care for month of entry plus one        C
----------------------------------------------------------------------------------------------------------
   Direct Observed Therapy              N           Long Term Care after month of entry plus one      N
----------------------------------------------------------------------------------------------------------
   PIA Lenses                           N           CHDP                                              C
----------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
Rate Calculation                                                    Hospital     Hospital        Long Term
                                        Physician      Pharmacy     Inpatient   Outpatient            Care          Other     Total
<S>                                     <C>            <C>          <C>         <C>             <C>             <C>        <C>
1. Average Cost Per Unit                $  164.23      $  19.84     $  964.66   $    19.73      $      0.00     $   30.86
2. Units per Eligible                      22.157         4.314         4.387       17.657            0.000         8.468
   Cost per Elig. per Mo.               $  303.24      $   7.13     $  352.66   $    29.03      $      0.00     $   21.78  $ 713.84
3. Adjustments
    a.Demographics                          1.000         1.000         1.000        1.000            1.000         1.000
    b.Area                                  0.900         1.000         1.000        1.000            1.000         1.000
    c.Coverages                             0.999         0.999         0.999        0.989            1.000         0.887
    d.Interest                              1.000         1.000         1.000        1.000            1.000         1.000
Adjusted Base Cost                      $  272.64      $   7.12     $  352.31   $    28.71      $      0.00     $   19.32  $ 680.10
4. Legislative Adjs.                        1.075         0.900         1.008        1.062            1.213         1.053
5. Trend Adjustments
    a. Cost per Unit                        1.000         1.148         1.000        1.000            1.000         1.000
    b. Units per Eligible                   1.000         1.073         1.066        1.000            1.000         1.148
Projected Cost per Eligible             $  293.09      $   7.89     $  378.44   $    30.49      $      0.00     $   23.35  $ 733.26
6. Adjustment to No Loss                                                                                                       0.00
7. CHDP                                                                                                                        0.00
8. Adjustment to Fee-For-Service                                                                                     15.0%   109.99
Capitation Rate                                                                                                            $ 843.25
Value of Provider Rate Increase                                                                                            $   3.39
</TABLE>

Prepared by Department of Health Services, Rate Development Branch

<PAGE>

                                                Contract    #95-23637   C-8
                                                Attachment   1
                                                Page  6 of  12

Plan Name:              Molina Medical Center
County:                 Riverside                Plan #:         355
Aid Code Grouping:      AIDS                     Plan Type:      Commercial Plan

Date:  14-Nov-00

The Rate Period is October 1, 2000                  Capitation Payments at the
to September 30, 2001                               End of the Month

Coverages (C = Covered by Plan, N = NOT Covered by Plan)

<TABLE>
----------------------------------------------------------------------------------------------------------
   <S>                                  <C>         <C>                                               <C>
   CCS Indicated Claims                 N           AIDS Waiver                                       N
----------------------------------------------------------------------------------------------------------
   GHPP                                 C           In Home Waiver                                    N
----------------------------------------------------------------------------------------------------------
   Hemodialysis                         C           Model NF Waiver                                   N
----------------------------------------------------------------------------------------------------------
   Major Organ Transplants              N           Adult Day Health Care                             N
----------------------------------------------------------------------------------------------------------
   Out-of-State                         C           Newborn Hearing Screening                         N
----------------------------------------------------------------------------------------------------------
   Chiropractor                         N           Psychiatric Drugs                                 N
----------------------------------------------------------------------------------------------------------
   Local Education Authority            N           AIDS Drugs                                        N
----------------------------------------------------------------------------------------------------------
   Psychiatrist                         N           Injections                                        N
----------------------------------------------------------------------------------------------------------
   Acupuncturist                        N           MH - Hospital Inpatient                           N
----------------------------------------------------------------------------------------------------------
   Alphafeto Protein Testing            N           MH - Outpatient Services                          N
----------------------------------------------------------------------------------------------------------
   Heroin Detoxification                N           Long Term Care for month of entry plus one        C
----------------------------------------------------------------------------------------------------------
   Direct Observed Therapy              N           Long Term Care after month of entry plus one      N
----------------------------------------------------------------------------------------------------------
   PIA Lenses                           N           CHDP                                              C
----------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
Rate Calculation                                                     Hospital     Hospital        Long Term
                                        Physician      Pharmacy     Inpatient   Outpatient             Care         Other     Total
<S>                                     <C>            <C>          <C>         <C>             <C>             <C>        <C>
1. Average Cost Per Unit                $   25.87      $ 141.75     $  485.15   $    17.75      $    228.06     $   14.00
2. Units per Eligible                      29.254        46.897         3.823       28.506            0.450        78.563
   Cost per Elig. per Mo.               $   63.07      $ 553.97     $  154.56   $    42.17      $      8.55     $   91.66  $ 913.98
3. Adjustments
    a.Demographics                          1.000         1.000         1.000        1.000            1.000         1.000
    b.Area                                  0.900         1.000         1.000        1.000            1.000         1.000
    c.Coverages                             0.918         0.663         0.957        0.992            0.998         0.970
    d.Interest                              1.000         1.000         1.000        1.000            1.000         1.000
Adjusted Base Cost                      $   52.11      $ 367.28     $  147.91   $    41.83      $      8.53     $   88.91  $ 706.57
4. Legislative Adjs.                        1.098         0.836         0.986        1.015            1.453         0.996
5. Trend Adjustments
    a. Cost per Unit                        1.000         1.148         1.148        1.000            1.000         1.000
    b. Units per Eligible                   1.073         1.073         0.863        0.929            1.000         1.148
Projected Cost per Eligible             $   61.39      $ 378.09     $  144.43   $    39.43      $     12.39     $  101.62  $ 737.35
6. Adjustment to No Loss                                                                                                       0.00
7. CHDP                                                                                                                        0.00
8. Adjustment to Fee-For-Service                                                                                     15.0%   110.60
Capitation Rate                                                                                                            $ 847.95
Value of Provider Rate Increase                                                                                            $   7.25
</TABLE>

Prepared by Department of Health Services, Rate Development Branch

<PAGE>

                                                Contract    #95-23637   C-8
                                                Attachment   1
                                                Page  7 of  12

Plan Name:              Molina Medical Center
County:                 San Bernardino           Plan #:        356
Aid Code Grouping:      Family                   Plan Type:     Commercial Plan

Date:  14-Nov-00

The Rate Period is October 1, 2000                  Capitation Payments at the
to September 30, 2001                               End of the Month

Coverages (C = Covered by Plan, N = NOT Covered by Plan)

<TABLE>
----------------------------------------------------------------------------------------------------------
   <S>                                  <C>         <C>                                               <C>
   CCS Indicated Claims                 N           AIDS Waiver                                       N
----------------------------------------------------------------------------------------------------------
   GHPP                                 C           In Home Waiver                                    N
----------------------------------------------------------------------------------------------------------
   Hemodialysis                         C           Model NF Waiver                                   N
----------------------------------------------------------------------------------------------------------
   Major Organ Transplants              N           Adult Day Health Care                             N
----------------------------------------------------------------------------------------------------------
   Out-of-State                         C           Newborn Hearing Screening                         N
----------------------------------------------------------------------------------------------------------
   Chiropractor                         N           Psychiatric Drugs                                 N
----------------------------------------------------------------------------------------------------------
   Local Education Authority            N           AIDS Drugs                                        N
----------------------------------------------------------------------------------------------------------
   Psychiatrist                         N           Injections                                        N
----------------------------------------------------------------------------------------------------------
   Acupuncturist                        N           MH - Hospital Inpatient                           N
----------------------------------------------------------------------------------------------------------
   Alphafeto Protein Testing            N           MH - Outpatient Services                          N
----------------------------------------------------------------------------------------------------------
   Heroin Detoxification                N           Long Term Care for month of entry plus one        C
----------------------------------------------------------------------------------------------------------
   Direct Observed Therapy              N           Long Term Care after month of entry plus one      N
----------------------------------------------------------------------------------------------------------
   PIA Lenses                           N           CHDP                                              C
----------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
 Rate Calculation                                                    Hospital    Hospital        Long Term
                                        Physician      Pharmacy     Inpatient   Outpatient            Care          Other     Total
<S>                                     <C>            <C>          <C>         <C>             <C>             <C>        <C>
1. Average Cost Per Unit                $   66.25      $  23.82     $  978.02   $    20.37      $    229.41     $    8.79
2. Units per Eligible                       5.957         3.361         0.304        2.609            0.009         6.410
   Cost per Elig. per Mo.               $   32.89      $   6.67     $   24.78   $     4.43      $      0.17     $    4.70  $  73.64
3. Adjustments
    a. Demographics                         0.870         0.911         0.786        0.871            1.000         0.918
    b. Area                                 0.900         1.000         1.000        1.000            1.000         1.000
    c. Coverages                            0.975         0.992         0.968        0.956            0.995         0.868
    d. Interest                             1.000         1.000         1.000        1.000            1.000         1.000
Adjusted Base Cost                      $   25.11      $   6.03     $   18.85   $     3.69      $      0.17     $    3.75  $  57.60
4. Legislative Adjs.                        1.261         0.895         1.016        1.065            1.375         1.086
5. Trend Adjustments
    a. Cost per Unit                        1.000         1.148         1.000        1.000            1.000         1.000
    b. Units per Eligible                   1.000         1.073         1.066        1.000            1.000         1.148
Projected Cost per Eligible             $   31.66      $   6.65     $   20.41   $     3.93      $      0.23     $    4.67  $  67.55
6. Adjustment to No Loss                                                                                                       0.00
7. CHDP                                                                                                                        4.88
8. Adjustment to Fee-For-Service                                                                                     15.0%    10.13
Capitation Rate                                                                                                            $  82.56
Value of Provider Rate Increase                                                                                            $   4.15
</TABLE>

Prepared by Department of Health Services, Rate Development Branch

<PAGE>

                                                Contract    #95-23637   C-8
                                                Attachment   1
                                                Page  8 of  12

Plan Name:              Molina Medical Center
County:                 San Bernardino           Plan #:        356
Aid Code Grouping:      Disabled                 Plan Type:     Commercial Plan

Date:  14-Nov-00

The Rate Period is October 1, 2000                  Capitation Payments at the
to September 30, 2001                               End of the Month

Coverages (C = Covered by Plan, N = NOT Covered by Plan)

<TABLE>
   <S>                                  <C>         <C>                                              <C>
   CCS Indicated Claims                 N           AIDS Waiver                                       N
----------------------------------------------------------------------------------------------------------
   GHPP                                 C           In Home Waiver                                    N
----------------------------------------------------------------------------------------------------------
   Hemodialysis                         C           Model NF Waiver                                   N
----------------------------------------------------------------------------------------------------------
   Major Organ Transplants              N           Adult Day Health Care                             N
----------------------------------------------------------------------------------------------------------
   Out-of-State                         C           Newborn Hearing Screening                         N
----------------------------------------------------------------------------------------------------------
   Chiropractor                         N           Psychiatric Drugs                                 N
----------------------------------------------------------------------------------------------------------
   Local Education Authority            N           AIDS Drugs                                        N
----------------------------------------------------------------------------------------------------------
   Psychiatrist                         N           Injections                                        N
----------------------------------------------------------------------------------------------------------
   Acupuncturist                        N           MH - Hospital Inpatient                           N
----------------------------------------------------------------------------------------------------------
   Alphafeto Protein Testing            N           MH - Outpatient Services                          N
----------------------------------------------------------------------------------------------------------
   Heroin Detoxification                N           Long Term Care for month of entry plus one        C
----------------------------------------------------------------------------------------------------------
   Direct Observed Therapy              N           Long Term Care after month of entry plus one      N
----------------------------------------------------------------------------------------------------------
   PIA Lenses                           N           CHDP                                              C
----------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
 Rate Calculation                                                    Hospital    Hospital        Long Term
                                        Physician      Pharmacy     Inpatient   Outpatient            Care          Other     Total
<S>                                     <C>            <C>          <C>         <C>             <C>             <C>        <C>
1. Average Cost Per Unit                $   20.15      $  50.42     $  611.26   $    18.26      $    184.85     $    7.07
2. Units per Eligible                      13.720        21.892         1.011        6.029            0.452        63.930
   Cost per Elig. per Mo.               $   23.04      $  91.98     $   51.50   $     9.17      $      6.96     $   37.67  $ 220.32
3. Adjustments
    a.Demographics                          0.927         0.841         0.865        1.023            0.991         1.031
    b.Area                                  0.900         1.000         1.000        1.000            1.000         1.000
    c.Coverages                             0.900         0.875         0.920        0.973            0.995         0.877
    d.Interest                              1.000         1.000         1.000        1.000            1.000         1.000
Adjusted Base Cost                      $   17.30      $  67.69     $   40.98   $     9.13      $      6.86     $   34.06  $ 176.02
4. Legislative Adjs.                        1.151         0.925         0.952        1.057            1.379         0.991
5. Trend Adjustments
    a. Cost per Unit                        1.000         1.148         1.148        1.000            1.000         1.000
    b. Units per Eligible                   1.073         1.073         0.863        0.929            1.000         1.148
Projected Cost per Eligible             $   21.37      $  77.10     $   38.64   $     8.96      $      9.46     $   38.74  $ 194.27
6. Adjustment to No Loss                                                                                                       0.00
7. CHDP                                                                                                                        0.00
8. Adjustment to Fee-For-Service                                                                                     15.0%    29.14
Capitation Rate                                                                                                            $ 223.41
Value of Provider Rate Increase                                                                                            $   4.42
</TABLE>

Prepared by Department of Health Services, Rate Development Branch

<PAGE>

                                                Contract    #95-23637   C-8
                                                Attachment   1
                                                Page  9 of  12

Plan Name:              Molina Medical Center
County:                 San Bernardino           Plan #:        356
Aid Code Grouping:      Aged                     Plan Type:     Commercial Plan

Date:  14-Nov-00

The Rate Period is October 1, 2000                  Capitation Payments at the
to September 30, 2001                               End of the Month

Coverages (C = Covered by Plan, N = NOT Covered by Plan)

<TABLE>
   <S>                                  <C>         <C>                                              <C>
   CCS Indicated Claims                 N           AIDS Waiver                                       N
----------------------------------------------------------------------------------------------------------
   GHPP                                 C           In Home Waiver                                    N
----------------------------------------------------------------------------------------------------------
   Hemodialysis                         C           Model NF Waiver                                   N
----------------------------------------------------------------------------------------------------------
   Major Organ Transplants              N           Adult Day Health Care                             N
----------------------------------------------------------------------------------------------------------
   Out-of-State                         C           Newborn Hearing Screening                         N
----------------------------------------------------------------------------------------------------------
   Chiropractor                         N           Psychiatric Drugs                                 N
----------------------------------------------------------------------------------------------------------
   Local Education Authority            N           AIDS Drugs                                        N
----------------------------------------------------------------------------------------------------------
   Psychiatrist                         N           Injections                                        N
----------------------------------------------------------------------------------------------------------
   Acupuncturist                        N           MH - Hospital Inpatient                           N
----------------------------------------------------------------------------------------------------------
   Alphafeto Protein Testing            N           MH - Outpatient Services                          N
----------------------------------------------------------------------------------------------------------
   Heroin Detoxification                N           Long Term Care for month of entry plus one        C
----------------------------------------------------------------------------------------------------------
   Direct Observed Therapy              N           Long Term Care after month of entry plus one      N
----------------------------------------------------------------------------------------------------------
   PIA Lenses                           N           CHDP                                              C
----------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
 Rate Calculation                                                    Hospital    Hospital        Long Term
                                        Physician      Pharmacy     Inpatient   Outpatient            Care          Other     Total
<S>                                     <C>            <C>          <C>         <C>             <C>             <C>        <C>
1. Average Cost Per Unit                $   16.06      $  38.28     $  316.16   $    11.67      $    177.26     $    6.49
2. Units per Eligible                      11.563        16.963         0.819        3.904            1.049        42.784
   Cost per Elig. per Mo.               $   15.48      $  54.11     $   21.58   $     3.80      $     15.50     $   23.14  $ 133.61
3. Adjustments
    a. Demographics                         1.014         1.009         0.894        1.039            0.650         0.962
    b. Area                                 0.900         1.000         1.000        1.000            1.000         1.000
    c. Coverages                            0.981         0.996         0.997        0.986            0.997         0.781
    d. Interest                             1.000         1.000         1.000        1.000            1.000         1.000
Adjusted Base Cost                      $   13.86      $  54.38     $   19.23   $     3.89      $     10.04     $   17.39  $ 118.79
4. Legislative Adjs.                        0.993         0.911         0.960        1.052            1.368         0.966
5. Trend Adjustments
    a. Cost per Unit                        1.000         1.148         1.148        1.000            1.000         1.000
    b. Units per Eligible                   1.073         1.073         0.929        1.066            0.929         1.148
Projected Cost per Eligible             $   14.77      $  61.00     $   19.67   $     4.36      $     12.75     $   19.28  $ 131.83
6. Adjustment to No Loss                                                                                                       0.00
7. CHDP                                                                                                                        0.00
8. Adjustment to Fee-For-Service                                                                                     15.0%    19.77
Capitation Rate                                                                                                            $ 151.60
Value of Provider Rate Increase                                                                                            $   0.81
</TABLE>

Prepared by Department of Health Services, Rate Development Branch

<PAGE>

                                                Contract    #95-23637   C-8
                                                Attachment   1
                                                Page 10 of 12

                                                                Date:  14-Nov-00
Plan Name:              Molina Medical Center
County:                 San Bernardino           Plan #:        356
Aid Code Grouping:      Child                    Plan Type:     Commercial Plan

The Rate Period is October 1, 2000                  Capitation Payments at the
to September 30, 2001                               End of the Month

Coverages (C = Covered by Plan, N = NOT Covered by Plan)

<TABLE>
   <S>                                  <C>         <C>                                              <C>
   CCS Indicated Claims                 N           AIDS Waiver                                       N
----------------------------------------------------------------------------------------------------------
   GHPP                                 C           In Home Waiver                                    N
----------------------------------------------------------------------------------------------------------
   Hemodialysis                         C           Model NF Waiver                                   N
----------------------------------------------------------------------------------------------------------
   Major Organ Transplants              N           Adult Day Health Care                             N
----------------------------------------------------------------------------------------------------------
   Out-of-State                         C           Newborn Hearing Screening                         N
----------------------------------------------------------------------------------------------------------
   Chiropractor                         N           Psychiatric Drugs                                 N
----------------------------------------------------------------------------------------------------------
   Local Education Authority            N           AIDS Drugs                                        N
----------------------------------------------------------------------------------------------------------
   Psychiatrist                         N           Injections                                        N
----------------------------------------------------------------------------------------------------------
   Acupuncturist                        N           MH - Hospital Inpatient                           N
----------------------------------------------------------------------------------------------------------
   Alphafeto Protein Testing            N           MH - Outpatient Services                          N
----------------------------------------------------------------------------------------------------------
   Heroin Detoxification                N           Long Term Care for month of entry plus one        C
----------------------------------------------------------------------------------------------------------
   Direct Observed Therapy              N           Long Term Care after month of entry plus one      N
----------------------------------------------------------------------------------------------------------
   PIA Lenses                           N           CHDP                                              C
----------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
 Rate Calculation                                                   Hospital     Hospital        Long Term
                                       Physician      Pharmacy     Inpatient    Outpatient         Care           Other     Total
<S>                                    <C>            <C>          <C>         <C>             <C>             <C>        <C>
1. Average Cost Per Unit               $   58.40      $  17.50     $ 1,120.53   $    18.79      $    140.26     $    6.45
2. Units per Eligible                      5.196         3.068          0.436        2.787            0.019        10.564
   Cost per Elig. per Mo.              $   25.29      $   4.47     $    40.71   $     4.36      $      0.22     $    5.68  $  80.73
3. Adjustments
    a. Demographics                        0.986         1.016          0.877        0.987            1.000         0.976
    b. Area                                0.900         1.000          1.000        1.000            1.000         1.000
    c. Coverages                           0.974         0.984          0.952        0.973            0.996         0.882
    d. Interest                            1.000         1.000          1.000        1.000            1.000         1.000
Adjusted Base Cost                     $   21.86      $   4.47     $    33.99   $     4.19      $      0.22     $    4.89  $  69.62
4. Legislative Adjs.                       1.144         0.907          1.019        1.055            1.359         1.089
5. Trend Adjustments
    a. Cost per Unit                       1.000         1.148          1.000        1.000            1.000         1.000
    b. Units per Eligible                  1.000         1.073          1.066        1.000            1.000         1.148
Projected Cost per Eligible            $   25.01      $   4.99     $    36.91   $     4.42      $      0.30     $    6.11  $  77.74
6. Adjustment to No Loss                                                                                                       0.00
7. CHDP                                                                                                                        4.08
8. Adjustment to Fee-For-Service                                                                                     15.0%    11.66
Capitation Rate                                                                                                            $  93.48
Value of Provider Rate Increase                                                                                            $   0.69
</TABLE>

Prepared by Department of Health Services, Rate Development Branch

<PAGE>

                                                Contract    #95-23637   C-8
                                                Attachment   1
                                                Page  11 of 12

                                                                Date:  14-Nov-00
Plan Name:              Molina Medical Center
County:                 San Bernadino            Plan #:        356
Aid Code Grouping:      Adult                    Plan Type:     Commercial Plan

The Rate Period is October 1, 2000                  Capitation Payments at the
to September 30, 2001                               End of the Month

Coverages (C = Covered by Plan, N = NOT Covered by Plan)

<TABLE>
   <S>                                  <C>         <C>                                              <C>
   CCS Indicated Claims                 N           AIDS Waiver                                       N
----------------------------------------------------------------------------------------------------------
   GHPP                                 C           In Home Waiver                                    N
----------------------------------------------------------------------------------------------------------
   Hemodialysis                         C           Model NF Waiver                                   N
----------------------------------------------------------------------------------------------------------
   Major Organ Transplants              N           Adult Day Health Care                             N
----------------------------------------------------------------------------------------------------------
   Out-of-State                         C           Newborn Hearing Screening                         N
----------------------------------------------------------------------------------------------------------
   Chiropractor                         N           Psychiatric Drugs                                 N
----------------------------------------------------------------------------------------------------------
   Local Education Authority            N           AIDS Drugs                                        N
----------------------------------------------------------------------------------------------------------
   Psychiatrist                         N           Injections                                        N
----------------------------------------------------------------------------------------------------------
   Acupuncturist                        N           MH - Hospital Inpatient                           N
----------------------------------------------------------------------------------------------------------
   Alphafeto Protein Testing            N           MH - Outpatient Services                          N
----------------------------------------------------------------------------------------------------------
   Heroin Detoxification                N           Long Term Care for month of entry plus one        C
----------------------------------------------------------------------------------------------------------
   Direct Observed Therapy              N           Long Term Care after month of entry plus one      N
----------------------------------------------------------------------------------------------------------
   PIA Lenses                           N           CHDP                                              C
----------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
 Rate Calculation                                                   Hospital     Hospital        Long Term
                                      Physician      Pharmacy      Inpatient    Outpatient            Care          Other     Total
<S>                                   <C>            <C>          <C>           <C>             <C>             <C>        <C>
1. Average Cost Per Unit              $  164.23      $  19.84     $ 1,140.81    $    19.73      $      0.00     $   30.86
2. Units per Eligible                    22.157         4.314          4.387        17.657            0.000         8.468
   Cost per Elig. per Mo.             $  303.24      $   7.13     $   417.06    $    29.03      $      0.00     $   21.78  $ 778.24
3. Adjustments
    a. Demographics                       1.000         1.000          1.000         1.000            1.000         1.000
    b. Area                               0.900         1.000          1.000         1.000            1.000         1.000
    c. Coverages                          0.999         0.999          0.999         0.989            1.000         0.887
    d. Interest                           1.000         1.000          1.000         1.000            1.000         1.000
Adjusted Base Cost                    $  272.64      $   7.12     $   416.64    $    28.71      $      0.00     $   19.32  $ 744.43
4. Legislative Adjs.                      1.075         0.900          1.008         1.062            1.213         1.053
5. Trend Adjustments
    a. Cost per Unit                      1.000         1.148          1.000         1.000            1.000         1.000
    b. Units per Eligible                 1.000         1.073          1.066         1.000            1.000         1.148
Projected Cost per Eligible           $  293.09      $   7.89     $   447.54    $    30.49      $      0.00     $   23.35  $ 802.36
6. Adjustment to No Loss                                                                                                       0.00
7. CHDP                                                                                                                        0.00
8. Adjustment to Fee-For-Service                                                                                     15.0%   120.35
Capitation Rate                                                                                                            $ 922.71
Value of Provider Rate Increase                                                                                            $   3.39
</TABLE>

Prepared by Department of Health Services, Rate Development Branch

<PAGE>

                                                Contract   #95-23637   C-8
                                                Attachment   1
                                                Page  12 of  12
Plan Name:              Molina Medical Center
County:                 San Bernardino           Plan #:        356
Aid Code Grouping:      AIDS                     Plan Type:     Commercial Plan

Date:  14-Nov-00

The Rate Period is October 1, 2000                  Capitation Payments at the
to September 30, 2001                               End of the Month

Coverages (C = Covered by Plan, N = NOT Covered by Plan)

<TABLE>
   <S>                                  <C>         <C>                                              <C>
   CCS Indicated Claims                 N           AIDS Waiver                                       N
----------------------------------------------------------------------------------------------------------
   GHPP                                 C           In Home Waiver                                    N
----------------------------------------------------------------------------------------------------------
   Hemodialysis                         C           Model NF Waiver                                   N
----------------------------------------------------------------------------------------------------------
   Major Organ Transplants              N           Adult Day Health Care                             N
----------------------------------------------------------------------------------------------------------
   Out-of-State                         C           Newborn Hearing Screening                         N
----------------------------------------------------------------------------------------------------------
   Chiropractor                         N           Psychiatric Drugs                                 N
----------------------------------------------------------------------------------------------------------
   Local Education Authority            N           AIDS Drugs                                        N
----------------------------------------------------------------------------------------------------------
   Psychiatrist                         N           Injections                                        N
----------------------------------------------------------------------------------------------------------
   Acupuncturist                        N           MH - Hospital Inpatient                           N
----------------------------------------------------------------------------------------------------------
   Alphafeto Protein Testing            N           MH - Outpatient Services                          N
----------------------------------------------------------------------------------------------------------
   Heroin Detoxification                N           Long Term Care for month of entry plus one        C
----------------------------------------------------------------------------------------------------------
   Direct Observed Therapy              N           Long Term Care after month of entry plus one      N
----------------------------------------------------------------------------------------------------------
   PIA Lenses                           N           CHDP                                              C
----------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
 Rate Calculation                                                   Hospital     Hospital        Long Term
                                      Physician      Pharmacy      Inpatient    Outpatient            Care          Other     Total
<S>                                   <C>            <C>          <C>           <C>             <C>             <C>        <C>
1. Average Cost Per Unit              $   25.87      $ 141.75     $   611.26    $    17.75      $    228.06     $   14.00
2. Units per Eligible                    29.254        46.897          3.823        28.506            0.450        78.563
   Cost per Elig. per Mo.             $   63.07      $ 553.97     $   194.74    $    42.17      $      8.55     $   91.66  $ 954.16
3. Adjustments
    a. Demographics                       1.000         1.000          1.000         1.000            1.000         1.000
    b. Area                               0.900         1.000          1.000         1.000            1.000         1.000
    c. Coverages                          0.918         0.663          0.957         0.992            0.998         0.970
    d. Interest                           1.000         1.000          1.000         1.000            1.000         1.000
Adjusted Base Cost                    $   52.11      $ 367.28     $   186.37    $    41.83      $      8.53     $   88.91  $ 745.03
4. Legislative Adjs.                      1.098         0.836          0.986         1.015            1.453         0.996
5. Trend Adjustments
    a. Cost per Unit                      1.000         1.148          1.148         1.000            1.000         1.000
    b. Units per Eligible                 1.073         1.073          0.863         0.929            1.000         1.148
Projected Cost per Eligible           $   61.39      $ 378.09     $   181.99    $    39.43      $     12.39     $  101.62  $ 774.91
6. Adjustment to No Loss                                                                                                       0.00
7. CHDP                                                                                                                        0.00
8. Adjustment to Fee-For-Service                                                                                     15.0%   116.24
Capitation Rate                                                                                                            $ 891.15
Value of Provider Rate Increase                                                                                            $   7.26
</TABLE>

Prepared by Department of Health Services, Rate Development Branch

<PAGE>

[LETTER HEAD OF DEPARTMENT OF HEALTH SERVICES]

[SEAL]

[SEAL]

            January 9, 2001

            Mr. George Goldstein
            President
            Molina Healthcare of California
            Dba Molina
            One Golden Shore
            Long Beach, CA 90802

            Dear Mr. Goldstein:

            In accordance with Article V, Section 5.5 of your Contract, the
            enclosed Change Order No. 09 transmits (Molina's) annual capitation
            rates for the Period August 1, 2000 to September 30, 2000.

            The retropayment between the old rates and the new rates for the
            period August 1, 2000 through September 30, 2000 will be processed
            in approximately four to six weeks.

            If you have any questions, please contact your contract manager.

            Sincerely,

            /s/
            ------------------------
            Roberto B. Martinez
            Acting Chief
            Medi-Cal Managed Care Division

            Enclosure

<PAGE>

[LETTER HEAD OF DEPARTMENT OF HEALTH SERVICES]

            CHANGE ORDER C09 TO CONTRACT NO.95-23637; ADJUSTING THE ANNUAL
            CAPITATION RATE FOR PROVIDER RATE INCREASES FOR THE PERIOD AUGUST 1,
            2000 TO SEPTEMBER 30, 2000, BY CHANGING CONTRACT SECTIONS; 5.3
            CAPITATION RATES; AND 5.4 CAPITATION RATES CONSTITUTE PAYMENT IN
            FULL. This Change Order is effective January 1, 2001.

            1.     5.3      CAPITATION RATES

For the period August 1, 2000 to September 30,2000             Riverside County

<TABLE>
<CAPTION>
            -----------------------------------------------------------------------------
                   GROUPS                       AID CODES                     RATE
            -----------------------------------------------------------------------------
             <S>                      <C>                                <C>
             Family                   01, 0A, 02, 08, 30, 32, 33,        $      84.28
                                      34, 35, 38, 39, 40, 42, 47,
                                      54, 59, 72, 3A, 3C, 3E, 3G,
                                      3H, 3L, 3M, 3N, 3P, 3R, 3U,
                                      4F, 4G, 5X, 7X, 8P
            -----------------------------------------------------------------------------
             Disabled                 20, 24, 26, 28, 36, 60, 64         $     205.86
                                      66, 68, 6A, 6C, 6N, 6P, 6R
            -----------------------------------------------------------------------------
             Aged                     10, 14, 16, 18                     $     144.20
            -----------------------------------------------------------------------------
             Child                    03, 04, 4A, 4C, 4K, 5K, 45,        $     102.15
                                      82, 7A, 8R
            -----------------------------------------------------------------------------
             Adult                    86                                 $     841.84
            -----------------------------------------------------------------------------
             AIDS Beneficiary                                            $     729.33
            -----------------------------------------------------------------------------
</TABLE>

For the period August 1, 2000 to September 30,2001        San Bernardino County
<TABLE>
<CAPTION>
            ----------------------------------------------------------------------------------
                   GROUPS                       AID CODES                     RATE
            ----------------------------------------------------------------------------------
             <S>                      <C>                                <C>
             Family                   01, 0A, 02, 08, 30, 32, 33,        $      88.96
                                      34, 35, 38, 39, 40, 42, 47,
                                      54, 59, 72, 3A, 3C, 3E, 3G,
                                      3H, 3L, 3M, 3N, 3P, 3R, 3U,
                                      4F, 4G, 5X, 7X, 8P
            ----------------------------------------------------------------------------------
             Disabled                 20, 24, 26, 28, 36, 60, 64,        $     203.17
                                      66, 68, 6A, 6C, 6N, 6P, 6R
            ----------------------------------------------------------------------------------
             Aged                     10, 14, 16, 18                     $     146.29
            ----------------------------------------------------------------------------------
             Child                    03, 04, 4A, 4C, 4K, 5K, 45,        $      86.53
                                      82, 7A, 8R

            ----------------------------------------------------------------------------------
             Adult                    86                                 $     917.28
            ----------------------------------------------------------------------------------
             AIDS Beneficiary                                            $     770.92
            ----------------------------------------------------------------------------------
</TABLE>

<PAGE>

2.       5.4      CAPITATION RATES CONSTITUTE PAYMENT IN FULL

         Capitation rates for each rate period, as calculated by DHS, are
         prospective rates and constitute payment in full, subject to any stop
         loss reinsurance provisions, on behalf of a Member for all Covered
         Services required by such Member and for all administrative costs
         incurred by the Contractor in providing or arranging for such services,
         and subject to adjustments for federally qualified health centers in
         accordance with Section 14087.325 of the W&I Code, but do not include
         payment for recoupment of current or previous losses incurred by
         Contractor. DHS is not responsible for making payments for recoupment
         of losses. The actuarial basis for the determination of the capitation
         payment rates is outlined in Attachment 1 (consisting of 12 pages).

3.       All other terms, conditions, and provisions contained in Sections 5.3
         and 5.4 remain unchanged.

<PAGE>

                                                Contract    #95-23637   C-9
                                                Attachment
                                                Page  1  of  12
Plan Name:              Molina Medical Center
County:                 Riverside                Plan #:        Commercial Plan
Aid Code Grouping:      Family                   Plan Type:     355

Date:  03-Nov-00

The Rate Period is August 1, 2000                      Capitation Payments at
to September 30, 2000                                  the End of the Month

 Coverage Adjustments
--------------------------------------------------------------------------------
   CCS Indicated Claims                                NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Outpatient Services                   NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Pharmacy Costs                        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Hospital Inpatient Services           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Eyewear                                             NOT Covered by the Plan
--------------------------------------------------------------------------------
   Heroin Detoxification                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   AIDS Waiver Services                                NOT Covered by the Plan
--------------------------------------------------------------------------------
   Adult Day Health Care                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   Chiropractor/Acupuncture                            NOT Covered by the Plan
--------------------------------------------------------------------------------
   Local Education Authority                           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Alphafeto Protein Testing                           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care for month of entry plus one          Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care after month of entry plus one        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Special AIDS drugs                                  NOT Covered by the Plan
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Rate Calculation                                                    Hospital     Hospital        Long Term
                                      Physician      Pharmacy      Inpatient    Outpatient         Care           Other     Total
<S>                                   <C>            <C>          <C>           <C>             <C>             <C>        <C>
1.  Average Cost Per Unit             $   66.25      $  23.82     $   864.71    $    20.37      $    229.41     $    8.79
2.  Units per Eligible                    5.957         3.361          0.304         2.609            0.009         6.410
    Cost per Elig. per Mo.            $   32.89      $   6.67     $    21.91    $     4.43      $      0.17     $    4.70  $  70.77
Adjustments
    a. Demographics                       0.883         0.875          0.853         0.903            1.000         0.866
    b. Area                               1.008         1.000          1.000         1.000            1.000         1.000
    c. Coverages                          0.975         0.992          0.968         0.956            0.995         0.868
    d. Interest                           1.000         1.000          1.000         1.000            1.000         1.000
Adjusted Base Cost                    $   28.55      $   5.79     $    18.09    $     3.82      $      0.17     $    3.53  $  59.95
3.  Legislative Adjs.                     1.280         0.975          1.012         1.034            1.159         1.094
4.  Trend Adjustments
    a. Cost per Unit                      1.000         1.100          1.000         1.000            1.000         1.000
    b. Units per Eligible                 1.000         0.998          1.045         1.000            1.000         1.100
Projected Cost per Eligible           $   36.54      $   6.20     $    19.13    $     3.95      $      0.20     $    4.25  $  70.27
5.  Stop Loss Rein.                             Amount            $        0                 Rate                     0.0%     0.00
6.  CHDP                                                                                                                       4.88
7.  Fee-for-Service Adj.                                                                                             13.0%     9.13
Capitation Rate                                                                                                            $  84.28
Value of Provider Rate Increase                                                                                            $   4.67
</TABLE>

Prepared by Department of Health Services, Rate Development Branch

<PAGE>

                                                Contract    #95-23637   C-9
                                                Attachment   1
                                                Page  2  of 12
Plan Name:              Molina Medical Center
County:                 Riverside                Plan # :       Commercial Plan
Aid Code Grouping:      Disabled                 Plan Type:           355

Date:  03-Nov-00
Base Period: FY 96/97

The Rate Period is August 1, 2000                      Capitation Payments at
to September 30, 2000                                  the End of the Month

Coverage Adjustments
--------------------------------------------------------------------------------
   CCS Indicated Claims                                NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Outpatient Services                   NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Pharmacy Costs                        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Hospital Inpatient Services           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Eyewear                                             NOT Covered by the Plan
--------------------------------------------------------------------------------
   Heroin Detoxification                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   AIDS Waiver Services                                NOT Covered by the Plan
--------------------------------------------------------------------------------
   Adult Day Health Care                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   Chiropractor/Acupuncture                            NOT Covered by the Plan
--------------------------------------------------------------------------------
   Local Education Authority                           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Alphafeto Protein Testing                           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care for month of entry plus one          Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care after month of entry plus one        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Special AIDS drugs                                  NOT Covered by the Plan
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Rate Calculation                                                  Hospital     Hospital        Long Term
                                    Physician      Pharmacy      Inpatient    Outpatient            Care          Other     Total
<S>                                 <C>            <C>          <C>           <C>             <C>             <C>        <C>
1.  Average Cost Per Unit           $   20.15      $  50.42     $   485.15    $    18.26      $    184.85     $    7.07
2.  Units per Eligible                 13.720        21.892          1.011         6.029            0.452        63.930
    Cost per Elig. per Mo.          $   23.04      $  91.98     $    40.87    $     9.17      $      6.96     $   37.67  $ 209.69
Adjustments
    a. Demographics                     1.027         0.895          0.946         1.076            0.937         1.053
    b. Area                             1.008         1.000          1.000         1.000            1.000         1.000
    c. Coverages                        0.900         0.875          0.920         0.973            0.995         0.877
    d. Interest                         1.000         1.000          1.000         1.000            1.000         1.000
Adjusted Base Cost                  $   21.47      $  72.03     $    35.57    $     9.60      $      6.49     $   34.79  $ 179.95
3.  Legislative Adjs.                   1.123         0.920          0.933         1.035            1.159         0.979
4.  Trend Adjustments
    a. Cost per Unit                    1.000         1.100          1.100         1.000            1.000         1.000
    b. Units per Eligible               1.050         0.998          0.903         0.950            1.000         1.100
Projected Cost per Eligible         $   25.32      $  72.75     $    32.96    $     9.44      $      7.52     $   37.47    185.46
5.  Stop Loss Reins.                          Amount            $        0                 Rate                     0.0%     0.00
6.  CHDP                                                                                                                     0.00
7.  Fee-for-Service Adj.                                                                                           11.0%    20.40
Capitation Rate                                                                                                            205.86
Value of Provider Rate Increase                                                                                              4.84
</TABLE>

Prepared by Department of Health Services, Rate Development Branch

<PAGE>

                                                Contract    #95-23637   C-9
                                                Attachment   1
                                                Page  3  of 12
Plan Name:              Molina Medical Center
County:                 Riverside                Plan #:        Commercial Plan
Aid Code Grouping:      Aged                     Plan Type:           355

Date:  03-Nov-00
Base Period: 96/97

The Rate Period is August 1, 2000                      Capitation Payments at
to September 30, 2000                                  the End of the Month

Coverage Adjustments
--------------------------------------------------------------------------------
   CCS Indicated Claims                                NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Outpatient Services                   NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Pharmacy Costs                        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Hospital Inpatient Services           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Eyewear                                             NOT Covered by the Plan
--------------------------------------------------------------------------------
   Heroin Detoxification                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   AIDS Waiver Services                                NOT Covered by the Plan
--------------------------------------------------------------------------------
   Adult Day Health Care                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   Chiropractor/Acupuncture                            NOT Covered by the Plan
--------------------------------------------------------------------------------
   Local Education Authority                           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Alphafeto Protein Testing                           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care for month of entry plus one          Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care after month of entry plus one        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Special AIDS drugs                                  NOT Covered by the Plan
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Rate Calculation                                                  Hospital     Hospital        Long Term
                                    Physician      Pharmacy      Inpatient    Outpatient             Care         Other     Total
<S>                                 <C>            <C>          <C>           <C>             <C>             <C>        <C>
1.  Average Cost Per Unit           $   16.06      $  38.28     $   287.24    $    11.67      $    177.26     $    6.49
2.  Units per Eligible                 11.563        16.963          0.819         3.904            1.049        42.784
    Cost per Elig. per Mo.          $   15.48      $  54.11     $    19.60    $     3.80      $     15.50     $   23.14  $ 131.63
Adjustments
    a. Demographics                     0.953         1.025          0.958         0.968            1.035         1.021
    b. Area                             1.008         1.000          1.000         1.000            1.000         1.000
    c. Coverages                        0.981         0.996          0.997         0.986            0.997         0.781
    d. Interest                         1.000         1.000          1.000         1.000            1.000         1.000
Adjusted Base Cost                  $   14.59      $  55.24     $    18.72    $     3.63      $     15.99     $   18.45  $ 126.62
3.  Legislative Adjs.                   0.968         0.920          0.940         1.035            1.159         0.954
4.  Trend Adjustments
    a. Cost per Unit                    1.000         1.100          1.100         1.000            1.000         1.000
    b. Units per Eligible               1.050         0.998          0.950         1.045            0.950         1.100
Projected Cost per Eligible         $   14.83      $  55.79     $    18.39    $     3.93      $     17.61     $   19.36    129.91
5.  Stop Loss Rein.                           Amount            $        0                 Rate                     0.0%     0.00
6.  CHDP                                                                                                                     0.00
7.  Fee-for-Service Adj.                                                                                           11.0%    14.29
Capitation Rate                                                                                                            144.20
Value of Provider Rate Increase                                                                                              0.78
</TABLE>

Prepared by Department of Health Services, Rate Development Branch

<PAGE>

                                                Contract    #95-23637   C-9
                                                Attachment   1
                                                Page  4  of  12
Plan Name:              Molina Medical Center
County:                 Riverside                Plan #:        Commercial Plan
Aid Code Grouping:      Child                    Plan Type:           355

Date:  03-Nov-00

Base Period: FY 96/97

The Rate Period is August 1, 2000                      Capitation Payments at
to September 30, 2000                                  the End of the Month

Coverage Adjustments
--------------------------------------------------------------------------------
   CCS Indicated Claims                                NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Outpatient Services                   NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Pharmacy Costs                        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Hospital Inpatient Services           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Eyewear                                             NOT Covered by the Plan
--------------------------------------------------------------------------------
   Heroin Detoxification                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   AIDS Waiver Services                                NOT Covered by the Plan
--------------------------------------------------------------------------------
   Adult Day Health Care                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   Chiropractor/Acupuncture                            NOT Covered by the Plan
--------------------------------------------------------------------------------
   Local Education Authority                           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Alphafeto Protein Testing                           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care for month of entry plus one          Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care after month of entry plus one        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Special AIDS drugs                                  NOT Covered by the Plan
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Rate Calculation                                                  Hospital     Hospital        Long Term
                                    Physician      Pharmacy      Inpatient    Outpatient            Care          Other     Total
<S>                                 <C>            <C>          <C>           <C>             <C>             <C>        <C>
1.  Average Cost Per Unit           $   58.40      $  17.50     $   889.41    $    18.79      $    140.26     $    6.45
2.  Units per Eligible                  5.196         3.068          0.436         2.787            0.019        10.564
    Cost per Elig. per Mo.          $   25.29      $   4.47     $    32.32    $     4.36      $      0.22     $    5.68  $  72.34
Adjustments
    a. Demographics                     1.156         1.020          1.155         1.139            1.000         1.048
    b. Area                             1.008         1.000          1.000         1.000            1.000         1.000
    c. Coverages                        0.974         0.984          0.952         0.973            0.996         0.882
    d. Interest                         1.000         1.000          1.000         1.000            1.000         1.000
Adjusted Base Cost                  $   28.71      $   4.49     $    35.54    $     4.83      $      0.22     $    5.25  $  79.04
3.  Legislative Adjs.                   1.175         1.055          1.019         1.034            1.159         1.102
4.  Trend Adjustments
    a. Cost per Unit                    1.000         1.100          1.000         1.000            1.000         1.000
    b. Units per Eligible               1.000         0.998          1.045         1.000            1.000         1.100
Projected Cost per Eligible         $   33.73      $   5.20     $    37.84    $     4.99      $      0.25     $    6.36     88.37
5.  Stop Loss Reins.                          Amount            $        0                 Rate                     0.0%     0.00
6.  CHDP                                                                                                                     4.06
7.  Fee-for-Service Adj.                                                                                           11.0%     9.72
Capitation Rate                                                                                                            102.15
Value of Provider Rate Increase                                                                                              0.84
</TABLE>

Prepared by Department of Health Services, Rate Development Branch

<PAGE>

                                                Contract    #95-23637   C-9
                                                Attachment   1
                                                Page  5  of  12
Plan Name:              Molina Medical Center
County:                 Riverside                Plan #:        Commercial Plan
Aid Code Grouping:      Adult                    Plan Type:           355

Date:  03-Nov-00
Base Period: FY 96/97

The Rate Period is August 1, 2000                      Capitation Payments at
to September 30, 2000                                  the End of the Month

Coverage Adjustments
--------------------------------------------------------------------------------
   CCS Indicated Claims                                NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Outpatient Services                   NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Pharmacy Costs                        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Hospital Inpatient Services           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Eyewear                                             NOT Covered by the Plan
--------------------------------------------------------------------------------
   Heroin Detoxification                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   AIDS Waiver Services                                NOT Covered by the Plan
--------------------------------------------------------------------------------
   Adult Day Health Care                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   Chiropractor/Acupuncture                            NOT Covered by the Plan
--------------------------------------------------------------------------------
   Local Education Authority                           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Alphafeto Protein Testing                           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care for month of entry plus one          Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care after month of entry plus one        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Special AIDS drugs                                  NOT Covered by the Plan
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Rate Calculation                                                  Hospital     Hospital        Long Term
                                    Physician      Pharmacy      Inpatient    Outpatient            Care          Other     Total
<S>                                 <C>            <C>          <C>           <C>             <C>             <C>        <C>
1.  Average Cost Per Unit           $  164.23      $  19.84     $   964.66    $    19.73      $      0.00     $   30.86
2.  Units per Eligible                 22.157         4.314          4.387        17.657            0.000         8.468
    Cost per Elig. per Mo.          $  303.24      $   7.13     $   352.66    $    29.03      $      0.00     $   21.78  $ 713.84
Adjustments
    a. Demographics                     1.000         1.000          1.000         1.000            1.000         1.000
    b. Area                             1.008         1.000          1.000         1.000            1.000         1.000
    c. Coverages                        0.999         0.999          0.999         0.989            1.000         0.887
    d. Interest                         1.000         1.000          1.000         1.000            1.000         1.000
Adjusted Base Cost                  $  305.43      $   7.12     $   352.31    $    28.71      $      0.00     $   19.32  $ 712.89
3.  Legislative Adjs.                   1.067         0.945          1.011         1.034            1.159         1.093
4.  Trend Adjustments
    a. Cost per Unit                    1.000         1.100          1.000         1.000            1.000         1.000
    b. Units per Eligible               1.000         0.998          1.045         1.000            1.000         1.100
Projected Cost per Eligible         $  325.89      $   7.39     $   372.21    $    29.69      $      0.00     $   23.23    758.41
5.  Stop Loss Reins.                          Amount            $        0                 Rate                     0.0%     0.00
6.  CHDP                                                                                                                     0.00
7.  Fee-for-Service Adj.                                                                                           11.0%    83.43
Capitation Rate                                                                                                            841.84
Value of Provider Rate Increase                                                                                              3.24
</TABLE>

Prepared by Department of Health Services, Rate Development Branch

<PAGE>

                                                Contract   #95-23637   C-9
                                                Attachment   1
                                                Page  6  of  12
Plan Name:              Molina Medical Center
County:                 Riverside                Plan #:        Commercial Plan
Aid Code Grouping:      AIDS                     Plan Type:           355

Date:  03-Nov-00
Base Period: FY 96/97

The Rate Period is August 1, 2000                      Capitation Payments at
to September 30, 2000                                  the End of the Month

Coverage Adjustments
--------------------------------------------------------------------------------
   CCS Indicated Claims                                NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Outpatient Services                   NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Pharmacy Costs                        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Hospital Inpatient Services           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Eyewear                                             NOT Covered by the Plan
--------------------------------------------------------------------------------
   Heroin Detoxification                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   AIDS Waiver Services                                NOT Covered by the Plan
--------------------------------------------------------------------------------
   Adult Day Health Care                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   Chiropractor/Acupuncture                            NOT Covered by the Plan
--------------------------------------------------------------------------------
   Local Education Authority                           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Alphafeto Protein Testing                           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care for month of entry plus one          Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care after month of entry plus one        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Special AIDS drugs                                  NOT Covered by the Plan
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Rate Calculation                                                  Hospital     Hospital        Long Term
                                    Physician      Pharmacy      Inpatient    Outpatient            Care        Other     Total
<S>                                 <C>            <C>          <C>           <C>             <C>             <C>        <C>
1.  Average Cost Per Unit           $   25.87      $ 141.75     $   485.15    $    17.75      $    228.06     $   14.00
2.  Units per Eligible                 29.254        46.897          3.823        28.506            0.450        78.563
    Cost per Elig. per Mo.          $   63.07      $ 553.97     $   154.56    $    42.17      $      8.55     $   91.66  $ 913.98
Adjustments
    a. Demographics                     1.000         1.000          1.000         1.000            1.000         1.000
    b. Area                             1.008         1.000          1.000         1.000            1.000         1.000
    c. Coverages                        0.918         0.648          0.957         0.992            0.998         0.642
    d. Interest                         1.000         1.000          1.000         1.000            1.000         1.000
Adjusted Base Cost                  $   58.37      $ 358.97     $   147.91    $    41.83      $      8.53     $   58.85  $ 674.46
3.  Legislative Adjs.                   1.082         0.843          0.981         1.009            1.159         0.995
4.  Trend Adjustments
    a. Cost per Unit                    1.000         1.100          1.100         1.000            1.000         1.000
    b. Units per Eligible               1.050         0.998          0.903         0.950            1.000         1.100
Projected Cost per Eligible         $   66.31      $ 332.21     $   144.13    $    40.10      $      9.89     $   64.41    657.05
5.  Stop Loss Reins.                          Amount            $        0                 Rate                     0.0%     0.00
6.  CHDP                                                                                                                     0.00
7.  Fee-for-Service Adj.                                                                                           11.0%    72.28
Capitation Rate                                                                                                            729.33
Value of Provider Rate Increase                                                                                              7.23
</TABLE>

Prepared by Department of Health Services, Rate Development Branch

<PAGE>

                                                Contract    #95-23637   C-9
                                                Attachment   1
                                                Page  7  of  12
Plan Name:              Molina Medical Center
County:                 San Bernadino            Plan #:        Commercial Plan
Aid Code Grouping:      Family                   Plan Type:           356

Date:  03-Nov-00
Base Period: FY 96/97

The Rate Period is August 1, 2000                      Capitation Payments at
to September 30, 2000                                  the End of the Month

Coverage Adjustments
--------------------------------------------------------------------------------
   CCS Indicated Claims                                NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Outpatient Services                   NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Pharmacy Costs                        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Hospital Inpatient Services           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Eyewear                                             NOT Covered by the Plan
--------------------------------------------------------------------------------
   Heroin Detoxification                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   AIDS Waiver Services                                NOT Covered by the Plan
--------------------------------------------------------------------------------
   Adult Day Health Care                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   Chiropractor/Acupuncture                            NOT Covered by the Plan
--------------------------------------------------------------------------------
   Local Education Authority                           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Alphafeto Protein Testing                           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care for month of entry plus one          Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care after month of entry plus one        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Special AIDS drugs                                  NOT Covered by the Plan
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Rate Calculation                                                  Hospital     Hospital        Long Term
                                    Physician      Pharmacy      Inpatient    Outpatient            Care          Other     Total
<S>                                 <C>            <C>          <C>           <C>             <C>             <C>        <C>
1.  Average Cost Per Unit           $   66.25      $  23.82     $   978.02    $    20.37      $    229.41     $    8.79
2.  Units per Eligible                  5.957         3.361          0.304         2.609            0.009         6.410
    Cost per Elig. per Mo.          $   32.89      $   6.67     $    24.78    $     4.43      $      0.17     $    4.70  $  73.64
Adjustments
    a. Demographics                     0.829         0.863          0.714         0.835            1.000         0.871
    b. Area                             1.008         1.000          1.000         1.000            1.000         1.000
    c. Coverages                        0.975         0.992          0.968         0.956            0.995         0.868
    d. Interest                         1.000         1.000          1.000         1.000            1.000         1.000
Adjusted Base Cost                  $   26.80      $   5.71     $    17.13    $     3.54      $      0.17     $    3.55  $  56.90
3.  Legislative Adjs.                   1.280         0.975          1.012         1.034            1.159         1.094
4.  Trend Adjustments
    a. Cost per Unit                    1.000         1.100          1.000         1.000            1.000         1.000
    b. Units per Eligible               1.000         0.998          1.045         1.000            1.000         1.100
Projected Cost per Eligible         $   34.30      $   6.11     $    18.12    $     3.66      $      0.20     $    4.27     66.66
5.  Stop Loss Reins.                          Amount            $        0                 Rate                     0.0%     0.00
6.  CHDP                                                                                                                     4.88
7.  Fee-for-Service Adj.                                                                                           26.1%    17.42
Capitation Rate                                                                                                             88.96
Value of Provider Rate Increase                                                                                              4.89
</TABLE>

Prepared by Department of Health Services, Rate Development Branch

<PAGE>

                                                #95-23637   C-9
                                                Attachment
                                                Page  8  of  12
Plan Name:              Molina Medical Center
County:                 San Bernardino           Plan #:       Commercial Plan
Aid Code Grouping:      Disabled                 Plan Type:           356

Date:  03-Nov-00
Base Period : FY 96/97
The Rate Period is August 1, 2000                      Capitation Payments at
to September 30, 2000                                  the End of the Month

Coverage Adjustments
--------------------------------------------------------------------------------
   CCS Indicated Claims                                NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Outpatient Services                   NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Pharmacy Costs                        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Hospital Inpatient Services           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Eyewear                                             NOT Covered by the Plan
--------------------------------------------------------------------------------
   Heroin Detoxification                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   AIDS Waiver Services                                NOT Covered by the Plan
--------------------------------------------------------------------------------
   Adult Day Health Care                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   Chiropractor/Acupuncture                            NOT Covered by the Plan
--------------------------------------------------------------------------------
   Local Education Authority                           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Alphafeto Protein Testing                           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care for month of entry plus one          Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care after month of entry plus one        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Special AIDS drugs                                  NOT Covered by the Plan
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Rate Calculation                                                  Hospital     Hospital        Long Term
                                    Physician      Pharmacy      Inpatient    Outpatient            Care          Other     Total
<S>                                 <C>            <C>          <C>           <C>             <C>             <C>        <C>
1.  Average Cost Per Unit           $   20.15      $  50.42     $   611.26    $    18.26      $    184.85     $    7.07
2.  Units per Eligible                 13.720        21.892          1.011         6.029            0.452        63.930
    Cost per Elig. per Mo.          $   23.04      $  91.98     $    51.50    $     9.17      $      6.96     $   37.67  $ 220.32
Adjustments
    a. Demographics                     0.942         0.851          0.850         1.019            0.995         1.023
    b. Area                             1.008         1.000          1.000         1.000            1.000         1.000
    c. Coverages                        0.900         0.875          0.920         0.973            0.995         0.877
    d. Interest                         1.000         1.000          1.000         1.000            1.000         1.000
Adjusted Base Cost                  $   19.69      $  68.49     $    40.27    $     9.09      $      6.89     $   33.80  $ 178.23
3.  Legislative Adjs                    1.123         0.920          0.933         1.035            1.159         0.979
4.  Trend Adjustments
    a. Cost per Unit                    1.000         1.100          1.100         1.000            1.000         1.000
    b. Units per Eligible               1.050         0.998          0.903         0.950            1.000         1.100
Projected Cost per Eligible         $   23.22      $  69.17     $    37.32    $     8.94      $      7.99     $   36.40    183.04
5.  Stop Loss Reins.                          Amount            $        0                 Rate                     0.0%     0.00
6.  CHDP                                                                                                                     0.00
7.  Fee-for-Service Adj.                                                                                           11.0%    20.13
Capitation Rate                                                                                                            203.17
Value of Provider Rate Increase                                                                                              4.49
</TABLE>

Prepared by Department of Health Services, Rate Development Branch

<PAGE>

                                                #95-23637   C-9
                                                Attachment
                                                Page  9  of  12
Plan Name:              Molina Medical Center
County:                 San Bernardino           Plan #:        Commercial Plan
Aid Code Grouping:      Aged                     Plan Type:           356

Date:        03-Nov-00
Base Period: FY 96/97

The Rate Period is August 1, 2000                      Capitation Payments at
to September 30, 2000                                  the End of the Month

Coverage Adjustments
--------------------------------------------------------------------------------
   CCS Indicated Claims                                NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Outpatient Services                   NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Pharmacy Costs                        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Hospital Inpatient Services           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Eyewear                                             NOT Covered by the Plan
--------------------------------------------------------------------------------
   Heroin Detoxification                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   AIDS Waiver Services                                NOT Covered by the Plan
--------------------------------------------------------------------------------
   Adult Day Health Care                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   Chiropractor/Acupuncture                            NOT Covered by the Plan
--------------------------------------------------------------------------------
   Local Education Authority                           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Alphafeto Protein Testing                           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care for month of entry plus one          Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care after month of entry plus one        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Special AIDS drugs                                  NOT Covered by the Plan
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Rate Calculation                                                  Hospital     Hospital        Long Term
                                    Physician      Pharmacy      Inpatient    Outpatient            Care          Other     Total
<S>                                 <C>            <C>          <C>           <C>             <C>             <C>        <C>
1.  Average Cost Per Unit           $   16.06      $  38.28     $   316.16    $    11.67      $    117.26     $    6.49
2.  Units per Eligible                  11.563        16.963          0.819         3.904            1.049        42.784
    Cost per Elig. per Mo.          $   15.48      $  54.11     $    21.58    $     3.60      $     15.50     $   23.14  $ 133.61
Adjustments
    a. Demographics                     0.964         1.019          0.964         0.963            1.034         1.022
    b. Area                             1.008         1.000          1.000         1.000            1.000         1.000
    c. Coverages                        0.981         0.996          0.997         0.986            0.997         0.781
    d. Interest                         1.000         1.000          1.000         1.000            1.000         1.000
Adjusted Base Cost                  $   14.76      $  54.92     $    20.74    $     3.68      $     15.98     $   18.47  $ 128.55
3.  Legislative Adjs                    0.968         0.920          0.940         1.035            1.159         0.954
4.  Trend Adjustments
    a. Cost per Unit                    1.000         1.100          1.100         1.000            1.000         1.000
    b. Units per Eligible               1.050         0.998          0.950         1.045            0.950         1.100
Projected Cost per Eligible         $   15.00      $  55.47     $    20.37    $     3.98      $     17.59     $   19.38    131.79
5.  Stop Loss Reins.                          Amount            $        0                 Rate                     0.0%     0.00
6.  CHDP                                                                                                                     0.00
7.  Fee-for-Service Adj.                                                                                           11.0%    14.50
Capitation Rate                                                                                                            146.29
Value of Provider Rate Increase                                                                                              0.77
</TABLE>

Prepared by Department of Health Services, Rate Development Branch

<PAGE>

                                                #95-23637   C-9
                                                Attachment
                                                Page  10 of  12
Plan Name:              Molina Medical Center
County:                 San Bernardino           Plan #:        Commercial Plan
Aid Code Grouping:      Child                    Plan Type:           356

Date:        03-Nov-00
Base Period: FY 96/97

The Rate Period is August 1, 2000                      Capitation Payments at
to September 30, 2000                                  the End of the Month

Coverage Adjustments
--------------------------------------------------------------------------------
   CCS Indicated Claims                                NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Outpatient Services                   NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Pharmacy Costs                        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Hospital Inpatient Services           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Eyewear                                             NOT Covered by the Plan
--------------------------------------------------------------------------------
   Heroin Detoxification                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   AIDS Waiver Services                                NOT Covered by the Plan
--------------------------------------------------------------------------------
   Adult Day Health Care                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   Chiropractor/Acupuncture                            NOT Covered by the Plan
--------------------------------------------------------------------------------
   Local Education Authority                           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Alphafeto Protein Testing                           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care for month of entry plus one          Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care after month of entry plus one        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Special AIDS drugs                                  NOT Covered by the Plan
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Rate Calculation                                                  Hospital     Hospital        Long Term
                                    Physician      Pharmacy      Inpatient    Outpatient            Care          Other     Total
<S>                                 <C>            <C>          <C>           <C>             <C>             <C>        <C>
1.  Average Cost Per Unit           $   58.40      $  17.50     $ 1,120.53    $    18.79      $    140.26     $    6.45
2.  Units per Eligible.                 5.196         3.068          0.436         2.787            0.019        10.564
    Cost per Elig. per Mo           $   25.29      $   4.47     $    40.71    $     4.36      $      0.22     $    5.68  $  80.73
Adjustments
    a. Demographics                     0.927         0.989          0.788         0.935            1.000         0.946
    b. Area                             1.008         1.000          1.000         1.000            1.000         1.000
    c. Coverages                        0.974         0.984          0.952         0.973            0.996         0.882
    d. Interest                         1.000         1.000          1.000         1.000            1.000         1.000
Adjusted Base Cost                  $   23.02      $   4.35     $    30.15    $     3.97      $      0.22     $    4.74  $  66.45
3.  Legislative Adjs.                   1.175         1.055          1.019         1.034            1.159         1.102
4.  Trend Adjustments
    a. Cost per Unit                    1.000         1.100          1.000         1.000            1.000         1.000
    b. Units per Eligible               1.000         0.998          1.045         1.000            1.000         1.100
Projected Cost per Eligible         $   27.05      $   5.04     $    32.11    $     4.10      $      0.25     $    5.75     74.30
5.  Stop Loss Reins.                          Amount            $        0                 Rate                     0.0%     0.00
6.  CHDP                                                                                                                     4.06
7.  Fee-for-Service Adj.                                                                                           11.0%     8.17
Capitation Rate                                                                                                             86.53
Value of Provider Rate Increase                                                                                              0.71
</TABLE>

Prepared by Department of Health Services, Rate Development Branch

<PAGE>

                                                #95-23637   C-9
                                                Attachment
                                                Page  11 of  12
Plan Name:              Molina Medical Center
County:                 San Bernardino            Plan #:       Commercial Plan
Aid Code Grouping:      Adult                     Plan Type:          356

Date:        03-Nov-00
Base Period: FY 96/97

The Rate Period is August 1, 2000                      Capitation Payments at
to September 30, 2000                                  the End of the Month

Coverage Adjustments
--------------------------------------------------------------------------------
   CCS Indicated Claims                                NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Outpatient Services                   NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Pharmacy Costs                        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Hospital Inpatient Services           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Eyewear                                             NOT Covered by the Plan
--------------------------------------------------------------------------------
   Heroin Detoxification                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   AIDS Waiver Services                                NOT Covered by the Plan
--------------------------------------------------------------------------------
   Adult Day Health Care                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   Chiropractor/Acupuncture                            NOT Covered by the Plan
--------------------------------------------------------------------------------
   Local Education Authority                           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Alphafeto Protein Testing                           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care for month of entry plus one          Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care after month of entry plus one        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Special AIDS drugs                                  NOT Covered by the Plan
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Rate Calculation                                                  Hospital     Hospital        Long Term
                                    Physician      Pharmacy      Inpatient    Outpatient             Care         Other     Total
<S>                                 <C>            <C>          <C>           <C>             <C>             <C>        <C>
1.  Average Cost Per Unit           $  164.23      $  19.84     $ 1,140.81    $    19.73      $      0.00     $   30.86
2.  Units per Eligible                 22.157        4.314          4.387        17.657            0.000         8.468
    Cost per Elig. per Mo.          $  303.24      $   7.13     $   417.06    $    29.03      $      0.00     $   21.78  $ 778.24
Adjustments
    a. Demographics                     1.000         1.000          1.000         1.000            1.000         1.000
    b. Area                             1.008         1.000          1.000         1.000            1.000         1.000
    c. Coverages                        0.999         0.999          0.999         0.989            1.000         0.887
    d. Interest                         1.000         1.000          1.000         1.000            1.000         1.000
Adjusted Base Cost                  $  305.43      $   7.12     $   416.64    $    28.71      $      0.00     $   19.32  $ 777.22
3.  Legislative Adjs.                   1.067         0.945          1.011         1.034            1.159         1.093
4.  Trend Adjustments
    a. Cost per Unit                    1.000         1.100          1.000         1.000            1.000         1.000
    b. Units per Eligible               1.000         0.998          1.045         1.000            1.000         1.100
Projected Cost per Eligible         $  325.89      $   7.39     $   440.18    $    29.69      $      0.00     $   23.23    826.38
5.  Stop Loss Rein                            Amount            $        0                 Rate                     0.0%     0.00
6.  CHDP                                                                                                                     0.00
7.  Fee-for-Service Adj.                                                                                           11.0%    90.90
Capitation Rate                                                                                                            917.28
Value of Provider Rate Increase                                                                                              3.23
</TABLE>

Prepared by Department of Health Services, Rate Development Branch

<PAGE>

                                                #95-23637   C-9
                                                Attachment
                                                Page  12 of  12
Plan Name:              Molina Medical Center
County:                 San Bernardino           Plan #:        Commercial Plan
Aid Code Grouping:      AIDS                     Plan Type:           356

Date:        03-Nov-00
Base Period: FY 96/97

The Rate Period is August 1, 2000                      Capitation Payments at
to September 30, 2000                                  the End of the Month

Coverage Adjustments
--------------------------------------------------------------------------------
   CCS Indicated Claims                                NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Outpatient Services                   NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Pharmacy Costs                        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Mental Health Hospital Inpatient Services           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Eyewear                                             NOT Covered by the Plan
--------------------------------------------------------------------------------
   Heroin Detoxification                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   AIDS Waiver Services                                NOT Covered by the Plan
--------------------------------------------------------------------------------
   Adult Day Health Care                               NOT Covered by the Plan
--------------------------------------------------------------------------------
   Chiropractor/Acupuncture                            NOT Covered by the Plan
--------------------------------------------------------------------------------
   Local Education Authority                           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Alphafeto Protein Testing                           NOT Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care for month of entry plus one          Covered by the Plan
--------------------------------------------------------------------------------
   Long Term Care after month of entry plus one        NOT Covered by the Plan
--------------------------------------------------------------------------------
   Special AIDS drugs                                  NOT Covered by the Plan
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Rate Calculation                                                  Hospital     Hospital        Long Term
                                    Physician      Pharmacy      Inpatient    Outpatient            Care          Other     Total
<S>                                 <C>            <C>          <C>           <C>             <C>             <C>        <C>
1.  Average Cost Per Unit           $   25.87      $ 141.75     $   611.26    $    17.75      $    228.06     $   14.00
2.  Units per Eligible                 29.254        46.897          3.823        28.506            0.450       78.563
    Cost per Elig. per Mo.          $   63.07      $ 553.97     $   194.74    $    42.17      $      8.55     $   91.66  $ 954.16
Adjustments
    a. Demographics                     1.000         1.000          1.000         1.000            1.000         1.000
    b. Area                             1.008         1.000          1.000         1.000            1.000         1.000
    c. Coverages                        0.918         0.648          0.957         0.992            0.998         0.642
    d. Interest                         1.000         1.000          1.000         1.000            1.000         1.000
Adjusted Base Cost                  $   58.37      $ 358.97     $   186.37    $    41.83      $      8.53     $   58.85  $ 712.92
3.  Legislative Adjs                    1.082         0.843          0.981         1.009            1.159         0.995
4.  Trend Adjustments
    a. Cost per Unit                    1.000         1.100          1.100         1.000            1.000         1.000
    b. Units per Eligible               1.050         0.998          0.903         0.950            1.000         1.100
Projected Cost per Eligible         $   66.31      $ 332.21     $   181.60    $    40.10      $      9.89     $   64.41    694.52
5.  Stop Loss Reins.                          Amount            $        0                 Rate                     0.0%     0.00
6.  CHDP                                                                                                                     0.00
7.  Fee-for-Service Adj.                                                                                           11.0%    76.40
Capitation Rate                                                                                                            770.92
Value of Provider Rate Increase                                                                                              7.23
</TABLE>

Prepared by Department of Health Services, Rate Development Branch

<PAGE>

[LETTER HEAD OF DEPARTMENT OF HEALTH SERVICES]

            October 30, 2001

            Mr. George Goldstein
            CEO
            Molina Healthcare of California
            dba: Molina
            One Golden Shore Dr.
            Long Beach, CA 90802

            Dear Mr. Goldstein:

            In accordance with Article V, Section 5.5 of your Contract, the
            enclosed Change Order No. 10 transmits (Molina Health Care of
            California dba: Molina) annual capitation rates for the period
            beginning October 1, 2001 to September 30, 2002.

            The retropayment, between the old rates and the new 2001/2002 rates
            for the period beginning October 1, 2001, will be processed in
            approximately four to six weeks.

            If you have any questions, please contact your contract manager.

            Sincerely,

            /s/
            -------------------
            Cheri Rice, Chief
            Medi-Cal Managed Care Division

            Enclosure

<PAGE>

[LETTER HEAD OF DEPARTMENT OF HEALTH SERVICES]

            CHANGE ORDER NUMBER C10 TO CONTRACT NO.95-23637: ADJUSTING THE
            ANNUAL CAPITATION RATE FOR PROVIDER RATE INCREASES FOR THE PERIOD
            OCTOBER 1, 2001 TO SEPTEMBER 30, 2002, BY CHANGING CONTRACT
            SECTIONS; 5.3 CAPITATION RATES; AND 5.4 CAPITATION RATES CONSTITUTE
            PAYMENT IN FULL. This Change Order is effective October 1, 2001.

            1.     5.3      CAPITATION RATES

                   DHS shall remit to Contractor a capitation payment each month
                   for each Medi-Cal Member that appears on the approved list of
                   Members supplied to Contractor by DHS. The capitation rate
                   shall be the amount specified in this Article. The payment
                   period for health care services shall commence on the first
                   day of operations, as determined by DHS. Capitation payments
                   shall be made in accordance with the following schedule of
                   capitation payment rates:

<TABLE>
<CAPTION>
                   -----------------------------------------------------------------------
                   For the period 10/01/01 - 9/30/02                        San Bernardino
                   -----------------------------------------------------------------------
                   Groups             Aid Codes                                Rate
                   -----------------------------------------------------------------------
                       <S>            <C>                                   <C>
                         Family       01, OA, 02, 08, 30, 32, 33, 34,       $     87.86
                                      35, 38, 39, 40, 42, 47, 54, 59,
                                      72, 3A, 3C, 3E, 3G, 3H, 3L,
                                      3M, 3N, 3P, 3R, 3U, 4F, 4G,
                                      5X, 7X, 8P
                   -----------------------------------------------------------------------
                        Disabled      20, 24, 26, 28, 36, 60, 64, 66,       $    235.58
                                      68, 6A, 6C, 6H, 6N, 6P, 6R
                   -----------------------------------------------------------------------
                          Aged        1H, 10, 14, 16, 18                    $    172.72
                   -----------------------------------------------------------------------
                         Child        03, 04, 4A, 4C, 4K, 5K, 45, 82,       $    104.73
                                      7A, 7J, 8R
                   -----------------------------------------------------------------------
                         Adult        86                                    $    925.69
                   -----------------------------------------------------------------------
                          Aids                                              $    922.10
                       Beneficiary
                   -----------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                   -----------------------------------------------------------------------
                   For the period 10/01/01 - 9/30/02                        Riverside
                   -----------------------------------------------------------------------
                   Groups             Aid Codes                                Rate
                   -----------------------------------------------------------------------
                       <S>            <C>                                   <C>
                         Family       01, OA, 02, 08, 30, 32, 33,34,        $     86.87
                                      35,38, 39,40,42,47,54,59,
                                      72, 3A, 3C, 3E, 3G, 3H, 3L,
                                      3M, 3N, 3P, 3R, 3U, 4F, 4G,
                                      5X, 7X, 8P
                   -----------------------------------------------------------------------
                        Disabled      20, 24, 26, 28, 36, 60, 64, 66,       $    233.86
                                      68,6A,6C, 6H,6N,6P, 6R
                   -----------------------------------------------------------------------
                          Aged        1H, 10, 14, 16, 18                    $    170.89
                   -----------------------------------------------------------------------
                         Child        03, 04, 4A, 4C, 4K, 5K, 45, 82,       $     97.58
                                      7A, 7J, 8R
                   -----------------------------------------------------------------------
                         Adult        86                                    $    844.46
                   -----------------------------------------------------------------------
                          Aids                                              $    878.16
                       Beneficiary
                   -----------------------------------------------------------------------
</TABLE>

                   If DHS creates a new aid code that is split or derived from
                   an existing aid code covered under this Contract, and the aid
                   code has a neutral revenue effect for the Contractor, then
                   the split aid code will automatically be included in the same
                   aid code category as is the original aid code covered under
                   this Contract. Contractor agrees to continue providing
                   covered services to the Members at the monthly capitation
                   rate specified for the original aid code. DHS shall confirm
                   all aid code splits, and the rates of payment for such new
                   aid codes, in writing to Contractor as soon as practicable
                   after such aid code splits occur.

2.     5.4         CAPITATION RATES CONSTITUTE PAYMENT IN FULL

                   Capitation rates for each rate period, as calculated by DHS,
                   are prospective rates and constitute payment in full, subject
                   to any stop loss reinsurance provisions, on behalf of a
                   Member for all Covered Services required by such Member and
                   for all administrative Costs incurred by the Contractor in
                   providing or arranging for such services, and subject to
                   adjustments for federally qualified health centers in
                   accordance with Section 14087.325 of the W&I Code, but do not
                   include payment for recoupment of current or previous losses
                   incurred by Contractor. DHS is not responsible for making
                   payments for recoupment of losses. The actuarial basis for
                   the determination of the capitation payment rates is outlined
                   in Attachment 1 (consisting of 12 pages).

3.     All other terms, conditions, and provisions contained in Sections 5.3 and
       5.4 remain unchanged.

                                        2

<PAGE>

                                                #95-23637 C-10
                                                Attachment 1
                                                Page 1  of 12

Plan Name:              Molina Medical Center
County:                 San Bernardino           Plan #:        356
Aid Code Grouping:      Family                   Plan Type:     Commercial Plan

Date:  11-Oct-01

The Rate Period is October 1, 2000                     Capitation Payments at
to September 30, 2000                                  the End of the Month

Coverages ( C = Covered by Plan, N = NOT Covered by Plan)

<TABLE>

<S>                              <C>      <C>                                                <C>
------------------------------------------------------------------------------------------------
CCS Indicated Claims             N        AIDS Waiver                                        N
------------------------------------------------------------------------------------------------
GHPP                             N        In Home Waiver                                     N
------------------------------------------------------------------------------------------------
Hemodialysis                     C        Model NF Waiver                                    N
------------------------------------------------------------------------------------------------
Major Organ Transplants          N        Adult Day Health Care                              N
------------------------------------------------------------------------------------------------
Out-of-State                     C        Newborn Hearing Screens                            N
------------------------------------------------------------------------------------------------
Chiropractor                     N        Psychiatric Drugs                                  N
------------------------------------------------------------------------------------------------
Local Education Authority        N        AIDS Drugs                                         N
------------------------------------------------------------------------------------------------
Psychiatrist                     N        Injections                                         C
------------------------------------------------------------------------------------------------
Acupuncturist                    N        MH - Hospital Inpatient                            N
------------------------------------------------------------------------------------------------
Alphafeto Protein Testing        N        MH - Outpatient Services                           N
------------------------------------------------------------------------------------------------
Heroin Detoxification            N        Long Term Care for month of entry plus one         C
------------------------------------------------------------------------------------------------
Direct Observed Therapy          N        Long Term Care after month of entry plus one       N
------------------------------------------------------------------------------------------------
Lenses for eyewear               N        CHDP                                               C
------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
Rate Calculation                                            Hospital       Hospital      Long Term
                              Physician      Pharmacy      Inpatient      Outpatient          Care          Other         Total
<S>                           <C>          <C>            <C>            <C>            <C>           <C>            <C>
1. Average Cost Per Unit      $    66.25   $      23.82   $     978.02   $      20.37   $    229.41   $      8.79
2. Units per Eligible/year         5.957          3.361          0.304          2.609         0.009         6.410
   Cost per Elig. per Mo.     $    32.89   $       6.67   $      24.78   $       4.43   $      0.17   $      4.70    $    73.64
3. Adjustments
   a.Age/Sex                       0.916          0.943          0.875          0.919         1.000         0.955
   b.Area                          0.915          1.000          1.000          1.000         1.000         1.000
   c.Coverages                     0.975          0.992          0.968          0.956         0.995         0.868
   d.Interest                      1.000          1.000          1.000          1.000         1.000         1.000
Adjusted Base Cost            $    26.88   $       6.24   $      20.99   $       3.89   $      0.17   $      3.90    $    62.07
4. Legislative Adjustments         1.221          0.869          1.029          1.054         1.436         1.079
5. Trend Adjustments
   a.Cost per Unit                 1.000          1.262          1.040          1.000         1.000         1.000
   b.Units per Eligible            1.000          1.180          1.066          1.000         1.000         1.148
Projected Cost per Eligible   $    32.82   $       8.08   $      23.95   $       4.10   $      0.24   $      4.83    $    74.02
6. CHDP                                                                                                                    4.88
7. Adjustment to Pool                                                                                        12.1%         8.96
Capitation Rate                                                                                                      $    87.86
</TABLE>

Prepared by Department of Health Services, Rate Development Branch

<PAGE>

                                                #95-23637 C-10
                                                Attachment 1
                                                Page 2  of 12

Plan Name:              Molina Medical Center
County:                 San Bernardino           Plan #:        356
Aid Code Grouping:      Disabled                 Plan Type:     Commercial Plan

Date:  11-Oct-01

The Rate Period is October 1, 2001                     Capitation Payments at
to September 30, 2002                                  the End of the Month

Coverages ( C = Covered by Plan, N = NOT Covered by Plan)

<TABLE>

<S>                              <C>      <C>                                                <C>
CCS Indicated Claims             N        AIDS Waiver                                        N
------------------------------------------------------------------------------------------------
GHPP                             N        In Home Waiver                                     N
------------------------------------------------------------------------------------------------
Hemodialysis                     C        Model NF Waiver                                    N
------------------------------------------------------------------------------------------------
Major Organ Transplants          N        Adult Day Health Care                              N
------------------------------------------------------------------------------------------------
Out-of-State                     C        Newborn Hearing Screens                            N
------------------------------------------------------------------------------------------------
Chiropractor                     N        Psychiatric Drugs                                  N
------------------------------------------------------------------------------------------------
Local Education Authority        N        AIDS Drugs                                         N
------------------------------------------------------------------------------------------------
Psychiatrist                     N        Injections                                         C
------------------------------------------------------------------------------------------------
Acupuncturist                    N        MH - Hospital Inpatient                            N
------------------------------------------------------------------------------------------------
Alphafeto Protein Testing        N        MH - Outpatient Services                           N
------------------------------------------------------------------------------------------------
Heroin Detoxification            N        Long Term Care for month of entry plus one         C
------------------------------------------------------------------------------------------------
Direct Observed Therapy          N        Long Term Care after month of entry plus one       N
------------------------------------------------------------------------------------------------
Lenses for eyewear               N        CHDP                                               C
------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
Rate Calculation                                            Hospital       Hospital      Long Term
                              Physician      Pharmacy      Inpatient      Outpatient          Care          Other         Total
<S>                           <C>          <C>            <C>            <C>            <C>           <C>            <C>
1. Average Cost Per Unit      $    20.15   $      50.42   $     611.26   $      18.26   $    184.85   $      7.07
2. Units per Eligible/year        13.720         21.892          1.011          6.029         0.452        63.930
   Cost per Elig. per Mo.     $    23.04   $      91.98   $      51.50   $       9.17   $      6.96   $     37.67    $   220.32
3. Adjustments
   a.Age/Sex                       0.929          0.838          0.895          1.038         0.977         1.048
   b.Area                          0.915          1.000          1.000          1.000         1.000         1.000
   c.Coverages                     0.900          0.875          0.920          0.973         0.995         0.877
   d.Interest                      1.000          1.000          1.000          1.000         1.000         1.000
Adjusted Base Cost            $    17.63   $      67.44   $      42.41   $       9.26   $      6.77   $     34.62    $   178.13
4. Legislative Adjustments         1.099          0.888          0.965          1.048         1.442         0.987
5. Trend Adjustments
   a.Cost per Unit                 1.000          1.262          1.194          1.000         1.000         1.000
   b.Units per Eligible            1.073          1.180          0.863          0.929         1.000         1.148
Projected Cost per Eligible   $    20.79   $      89.18   $      42.17   $       9.02   $      9.76   $     39.23    $   210.15
6. CHDP                                                                                                                    0.00
7. Adjustment to Pool                                                                                        12.1%        25.43
Capitation Rate                                                                                                      $   235.58
</TABLE>

Prepared by Department of Health Services, Rate Development Branch

<PAGE>

                                                #95-23637 C-10
                                                Attachment 1
                                                Page 3  of 12

Plan Name:              Molina Medical Center
County:                 San Bernardino           Plan #:        356
Aid Code Grouping:      Aged                     Plan Type:     Commercial Plan

Date:  11-Oct-01

The Rate Period is October 1, 2000                     Capitation Payments at
to September 30, 2000                                  the End of the Month

Coverages ( C = Covered by Plan, N = NOT Covered by Plan)

<TABLE>
<S>                              <C>      <C>                                                <C>
------------------------------------------------------------------------------------------------
CCS Indicated Claims             N        AIDS Waiver                                        N
------------------------------------------------------------------------------------------------
GHPP                             N        In Home Waiver                                     N
------------------------------------------------------------------------------------------------
Hemodialysis                     C        Model NF Waiver                                    N
------------------------------------------------------------------------------------------------
Major Organ Transplants          N        Adult Day Health Care                              N
------------------------------------------------------------------------------------------------
Out-of-State                     C        Newborn Hearing Screens                            N
------------------------------------------------------------------------------------------------
Chiropractor                     N        Psychiatric Drugs                                  N
------------------------------------------------------------------------------------------------
Local Education Authority        N        AIDS Drugs                                         N
------------------------------------------------------------------------------------------------
Psychiatrist                     N        Injections                                         C
------------------------------------------------------------------------------------------------
Acupuncturist                    N        MH - Hospital Inpatient                            N
------------------------------------------------------------------------------------------------
Alphafeto Protein Testing        N        MH - Outpatient Services                           N
------------------------------------------------------------------------------------------------
Heroin Detoxification            N        Long Term Care for month of entry plus one         C
------------------------------------------------------------------------------------------------
Direct Observed Therapy          N        Long Term Care after month of entry plus one       N
------------------------------------------------------------------------------------------------
Lenses for eyewear               N        CHDP                                               C
------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
Rate Calculation                                                Hospital       Hospital      Long Term
                                  Physician      Pharmacy      Inpatient      Outpatient          Care       Other          Total
<S>                               <C>          <C>            <C>            <C>            <C>           <C>            <C>
1. Average Cost Per Unit          $    16.06   $      38.28   $     316.16   $      11.67   $    177.26   $      6.49
2. Units per Eligible/year            11.563         16.963          0.819          3.904         1.049        42.784
   Cost per Elig. per Mo.         $    15.48   $      54.11   $      21.58   $       3.80   $     15.50   $     23.14    $   133.61
3. Adjustments
   a.Age/Sex                           0.995          1.007          1.003          0.992         1.021         1.005
   b.Area                              0.915          1.000          1.000          1.000         1.000         1.000
   c.Coverages                         0.981          0.996          0.997          0.986         0.997         0.781
   d.Interest                          1.000          1.000          1.000          1.000         1.000         1.000
Adjusted Base Cost                $    13.83   $      54.27   $      21.58   $       3.72   $     15.78   $     18.16    $   127.34
4. Legislative Adjustments             0.984          0.879          0.969          1.046         1.433         0.963
5. Trend Adjustments
   a.Cost per Unit                     1.000          1.262          1.194          1.000         1.000         1.000
   b.Units per Eligible                1.073          1.180          0.929          1.066         0.929         1.148
Projected Cost per Eligible       $    14.60   $      71.04   $      23.20   $       4.15   $     21.01   $     20.08    $   154.08
6. CHDP                                                                                                                        0.00
7. Adjustment to Pool                                                                                            12.1%        18.64
Capitation Rate                                                                                                          $   172.72
</TABLE>

Prepared by Department of Health Services, Rate Development Branch

<PAGE>

                                                #95-23637 C-10
                                                Attachment 1
                                                Page 4 of 12

Plan Name:              Molina Medical Center
County:                 San Bernardino           Plan #:        356
Aid Code Grouping:      Child                    Plan Type:     Commercial Plan

Date:  11-Oct-01

The Rate Period is October 1, 2001                     Capitation Payments at
to September 30, 2002                                  the End of the Month

Coverages ( C = Covered by Plan, N = NOT Covered by Plan)

<TABLE>
<S>                              <C>      <C>                                                <C>
------------------------------------------------------------------------------------------------
CCS Indicated Claims             N        AIDS Waiver                                        N
------------------------------------------------------------------------------------------------
GHPP                             N        In Home Waiver                                     N
------------------------------------------------------------------------------------------------
Hemodialysis                     C        Model NF Waiver                                    N
------------------------------------------------------------------------------------------------
Major Organ Transplants          N        Adult Day Health Care                              N
------------------------------------------------------------------------------------------------
Out-of-State                     C        Newborn Hearing Screens                            N
------------------------------------------------------------------------------------------------
Chiropractor                     N        Psychiatric Drugs                                  N
------------------------------------------------------------------------------------------------
Local Education Authority        N        AIDS Drugs                                         N
------------------------------------------------------------------------------------------------
Psychiatrist                     N        Injections                                         C
------------------------------------------------------------------------------------------------
Acupuncturist                    N        MH - Hospital Inpatient                            N
------------------------------------------------------------------------------------------------
Alphafeto Protein Testing        N        MH - Outpatient Services                           N
------------------------------------------------------------------------------------------------
Heroin Detoxification            N        Long Term Care for month of entry plus one         C
------------------------------------------------------------------------------------------------
Direct Observed Therapy          N        Long Term Care after month of entry plus one       N
------------------------------------------------------------------------------------------------
Lenses for eyewear               N        CHDP                                               C
------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
Rate Calculation                                                Hospital       Hospital      Long Term
                                  Physician      Pharmacy      Inpatient      Outpatient          Care          Other         Total
<S>                               <C>          <C>            <C>            <C>            <C>           <C>            <C>
1. Average Cost Per Unit          $    58.40   $      17.50   $   1,120.53   $      18.79   $    140.26   $      6.45
2. Units per Eligible/year             5.196          3.068          0.436          2.787         0.019        10.564
   Cost per Elig. per Mo.         $    25.29   $       4.47   $      40.71   $       4.36   $      0.22   $      5.68    $    80.73
3. Adjustments
   a.Age/Sex                           1.062          1.056          1.029          1.067         1.000         0.997
   b.Area                              0.915          1.000          1.000          1.000         1.000         1.000
   c.Coverages                         0.974          0.984          0.952          0.973         0.996         0.882
   d.Interest                          1.000          1.000          1.000          1.000         1.000         1.000
Adjusted Base Cost                $    23.94   $       4.64   $      39.88   $       4.53   $      0.22   $      4.99    $    78.20
4. Legislative Adjustments             1.116          0.875          1.035          1.049         1.424         1.082
5. Trend Adjustments
   a.Cost per Unit                     1.000          1.262          1.040          1.000         1.000   $     1.000
   b.Units per Eligible                1.000          1.180          1.066          1.000         1.000         1.148
Projected Cost per Eligible       $    26.72   $       6.05   $      45.76   $       4.75   $      0.31   $      6.20    $    89.79
6. CHDP                                                                                                                        4.08
7. Adjustment to Pool                                                                                            12.1%        10.86
Capitation Rate                                                                                                          $   104.73
</TABLE>

Prepared by Department of Health Services, Rate Development Branch

<PAGE>

                                                #95-23637 C-10
                                                Attachment 1
                                                Page 5 of 12

Plan Name:              Molina Medical Center
County:                 San Bernardino           Plan #:        356
Aid Code Grouping:      Adult                    Plan Type:     Commercial Plan

Date:  11-Oct-01

The Rate Period is October 1, 2001                     Capitation Payments at
to September 30, 2002                                  the End of the Month

Coverages ( C = Covered by Plan, N = NOT Covered by Plan)

<TABLE>
<S>                              <C>      <C>                                                <C>
------------------------------------------------------------------------------------------------
CCS Indicated Claims             N        AIDS Waiver                                        N
------------------------------------------------------------------------------------------------
GHPP                             N        In Home Waiver                                     N
------------------------------------------------------------------------------------------------
Hemodialysis                     C        Model NF Waiver                                    N
------------------------------------------------------------------------------------------------
Major Organ Transplants          N        Adult Day Health Care                              N
------------------------------------------------------------------------------------------------
Out-of-State                     C        Newborn Hearing Screens                            N
------------------------------------------------------------------------------------------------
Chiropractor                     N        Psychiatric Drugs                                  N
------------------------------------------------------------------------------------------------
Local Education Authority        N        AIDS Drugs                                         N
------------------------------------------------------------------------------------------------
Psychiatrist                     N        Injections                                         C
------------------------------------------------------------------------------------------------
Acupuncturist                    N        MH - Hospital Inpatient                            N
------------------------------------------------------------------------------------------------
Alphafeto Protein Testing        N        MH - Outpatient Services                           N
------------------------------------------------------------------------------------------------
Heroin Detoxification            N        Long Term Care for month of entry plus one         C
------------------------------------------------------------------------------------------------
Direct Observed Therapy          N        Long Term Care after month of entry plus one       N
------------------------------------------------------------------------------------------------
Lenses for eyewear               N        CHDP                                               C
------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
Rate Calculation                                                Hospital       Hospital      Long Term
                                  Physician      Pharmacy      Inpatient      Outpatient          Care          Other         Total
<S>                               <C>          <C>            <C>            <C>            <C>           <C>            <C>
1. Average Cost Per Unit          $   164.23   $      19.84   $   1,140.81   $      19.73   $      0.00   $     30.86
2. Units per Eligible/year            22.157          4.314          4.387         17.657         0.000         8.468
   Cost per Elig. per Mo.         $   303.24   $       7.13   $     417.06   $      29.03   $      0.00   $     21.78    $   778.24
3. Adjustments
   a.Age/Sex                           1.000          1.000          1.000          1.000         1.000         1.000
   b.Area                              0.915          1.000          1.000          1.000         1.000         1.000
   c.Coverages                         0.999          0.999          0.999          0.989         1.000         0.887
   d.Interest                          1.000          1.000          1.000          1.000         1.000         1.000
Adjusted Base Cost                $   277.19   $       7.12   $     416.64   $      28.71   $      0.00   $     19.32    $   748.98
4. Legislative Adjustments             1.060          0.872          1.016          1.053         1.242         1.045
5. Trend Adjustments
   a.Cost per Unit                     1.000          1.262          1.040          1.000         1.000   $     1.000
   b.Units per Eligible                1.000          1.180          1.066          1.000         1.000         1.148
Projected Cost per Eligible       $   293.82   $       9.25   $     469.29   $      30.23   $      0.00   $     23.18    $   825.77
6. CHDP                                                                                                                        0.00
7. Adjustment to Pool                                                                                            12.1%        99.92
Capitation Rate                                                                                                          $   925.69
</TABLE>

Prepared by Department of Health Services, Rate Development Branch

<PAGE>

                                                #95-23637 C-10
                                                Attachment 1
                                                Page 6 of 12

Plan Name:              Molina Medical Center
County:                 San Bernardino           Plan #:        356
Aid Code Grouping:      AIDS                     Plan Type:     Commercial Plan

Date:  11-Oct-01

The Rate Period is October 1, 2001                     Capitation Payments at
to September 30, 2002                                  the End of the Month

Coverages ( C = Covered by Plan, N = NOT Covered by Plan)

<TABLE>
<S>                              <C>      <C>                                                <C>
------------------------------------------------------------------------------------------------
CCS Indicated Claims             N        AIDS Waiver                                        N
------------------------------------------------------------------------------------------------
GHPP                             N        In Home Waiver                                     N
------------------------------------------------------------------------------------------------
Hemodialysis                     C        Model NF Waiver                                    N
------------------------------------------------------------------------------------------------
Major Organ Transplants          N        Adult Day Health Care                              N
------------------------------------------------------------------------------------------------
Out-of-State                     C        Newborn Hearing Screens                            N
------------------------------------------------------------------------------------------------
Chiropractor                     N        Psychiatric Drugs                                  N
------------------------------------------------------------------------------------------------
Local Education Authority        N        AIDS Drugs                                         N
------------------------------------------------------------------------------------------------
Psychiatrist                     N        Injections                                         C
------------------------------------------------------------------------------------------------
Acupuncturist                    N        MH - Hospital Inpatient                            N
------------------------------------------------------------------------------------------------
Alphafeto Protein Testing        N        MH - Outpatient Services                           N
------------------------------------------------------------------------------------------------
Heroin Detoxification            N        Long Term Care for month of entry plus one         C
------------------------------------------------------------------------------------------------
Direct Observed Therapy          N        Long Term Care after month of entry plus one       N
------------------------------------------------------------------------------------------------
Lenses for eyewear               N        CHDP                                               C
------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
Rate Calculation                                                Hospital       Hospital      Long Term
                                  Physician      Pharmacy      Inpatient      Outpatient          Care          Other         Total
<S>                               <C>          <C>            <C>            <C>            <C>           <C>            <C>
1. Average Cost Per Unit          $    25.87   $     141.75   $     611.26   $      17.75   $    228.06   $     14.00
2. Units per Eligible/year            29.254         46.897          3.823         28.506         0.450        78.563
   Cost per Elig. per Mo.         $    63.07   $     553.97   $     194.74   $      42.17   $      8.55   $     91.66    $   954.16
3. Adjustments
   a.Age/Sex                           1.000          1.000          1.000          1.000         1.000         1.000
   b.Area                              0.915          1.000          1.000          1.000         1.000         1.000
   c.Coverages                         0.918          0.663          0.957          0.992         0.998         0.642
   d.Interest                          1.000          1.000          1.000          1.000         1.000         1.000
Adjusted Base Cost                $    52.98   $     367.28   $     186.37   $      41.83   $      8.53   $     58.85    $   715.84
4. Legislative Adjustments             1.070          0.826          0.989          1.013         1.529         1.001
5. Trend Adjustments
   a.Cost per Unit                     1.000          1.262          1.194          1.000         1.000   $     1.000
   b.Units per Eligible                1.073          1.180          0.863          1.929         1.000         1.148
Projected Cost per Eligible       $    60.83   $     451.77   $     189.93   $      39.37   $     13.04   $     67.63    $   822.57
6. CHDP                                                                                                                        0.00
7. Adjustment to Pool                                                                                            12.1%        99.53
Capitation Rate                                                                                                          $   922.10
</TABLE>

Prepared by Department of Health Services, Rate Development Branch

<PAGE>

                                                #95-23637 C-10
                                                Attachment 1
                                                Page 7 of 12

Plan Name:              Molina Medical Center
County:                 Riverside                Plan #:        355
Aid Code Grouping:      Family                   Plan Type:     Commercial Plan

Date:  11-Oct-01

The Rate Period is October 1, 2001                     Capitation Payments at
to September 30, 2002                                  the End of the Month

Coverages ( C = Covered by Plan, N = NOT Covered by Plan)

<TABLE>
<S>                              <C>      <C>                                                <C>
------------------------------------------------------------------------------------------------
CCS Indicated Claims             N        AIDS Waiver                                        N
------------------------------------------------------------------------------------------------
GHPP                             N        In Home Waiver                                     N
------------------------------------------------------------------------------------------------
Hemodialysis                     C        Model NF Waiver                                    N
------------------------------------------------------------------------------------------------
Major Organ Transplants          N        Adult Day Health Care                              N
------------------------------------------------------------------------------------------------
Out-of-State                     C        Newborn Hearing Screens                            N
------------------------------------------------------------------------------------------------
Chiropractor                     N        Psychiatric Drugs                                  N
------------------------------------------------------------------------------------------------
Local Education Authority        N        AIDS Drugs                                         N
------------------------------------------------------------------------------------------------
Psychiatrist                     N        Injections                                         C
------------------------------------------------------------------------------------------------
Acupuncturist                    N        MH - Hospital Inpatient                            N
------------------------------------------------------------------------------------------------
Alphafeto Protein Testing        N        MH - Outpatient Services                           N
------------------------------------------------------------------------------------------------
Heroin Detoxification            N        Long Term Care for month of entry plus one         C
------------------------------------------------------------------------------------------------
Direct Observed Therapy          N        Long Term Care after month of entry plus one       N
------------------------------------------------------------------------------------------------
Lenses for eyewear               N        CHDP                                               C
------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
Rate Calculation                                                Hospital       Hospital      Long Term
                                  Physician      Pharmacy      Inpatient      Outpatient          Care       Other          Total
<S>                               <C>          <C>            <C>            <C>            <C>           <C>            <C>
1. Average Cost Per Unit          $    66.25   $      23.82   $     864.71   $      20.37   $    229.41   $      8.79
2. Units per Eligible/year             5.957          3.361          0.304          2.609         0.009         6.410
   Cost per Elig. per Mo.         $    32.89   $       6.67   $      21.91   $       4.43   $      0.17   $      4.70    $    70.77
3. Adjustments
   a.Age/Sex                           0.939          0.949          0.911          0.942         1.000         0.966
   b.Area                              0.915          1.000          1.000          1.000         1.000         1.000
   c.Coverages                         0.975          0.992          0.968          0.956         0.995         0.868
   d.Interest                          1.000          1.000          1.000          1.000         1.000         1.000
Adjusted Base Cost                $    27.55   $       6.28   $      19.32   $       3.99   $      0.17   $      3.94    $    61.25
4. Legislative Adjustments             1.221          0.869          1.029          1.054         1.436         1.079
5. Trend Adjustments
   a.Cost per Unit                     1.000          1.262          1.040          1.000         1.000   $     1.000
   b.Units per Eligible                1.000          1.180          1.066          1.000         1.000         1.148
Projected Cost per Eligible       $    33.64   $       8.13   $      22.04   $       4.21   $      0.24   $      4.88    $    73.14
6. CHDP                                                                                                                        4.88
7. Adjustment to Pool                                                                                            12.1%         8.85
Capitation Rate                                                                                                          $    86.87
</TABLE>

Prepared by Department of Health Services, Rate Development Branch

<PAGE>

                                                  #95-23637 C-10
                                                  Attachment 1
                                                  Page 8 of 12

Plan Name:              Molina Medical Center
County:                 Riverside                  Plan #:      355
Aid Code Grouping:      Disabled                   Plan Type:   Commercial Plan

Date:  11-Oct-01

The Rate Period is October 1, 2001                     Capitation Payments at
to September 30, 2002                                  the End of the Month

Coverages ( C = Covered by Plan, N = NOT Covered by Plan)

<TABLE>
<S>                              <C>      <C>                                                <C>
------------------------------------------------------------------------------------------------
CCS Indicated Claims             N        AIDS Waiver                                        N
------------------------------------------------------------------------------------------------
GHPP                             N        In Home Waiver                                     N
------------------------------------------------------------------------------------------------
Hemodialysis                     C        Model NF Waiver                                    N
------------------------------------------------------------------------------------------------
Major Organ Transplants          N        Adult Day Health Care                              N
------------------------------------------------------------------------------------------------
Out-of-State                     C        Newborn Hearing Screens                            N
------------------------------------------------------------------------------------------------
Chiropractor                     N        Psychiatric Drugs                                  N
------------------------------------------------------------------------------------------------
Local Education Authority        N        AIDS Drugs                                         N
------------------------------------------------------------------------------------------------
Psychiatrist                     N        Injections                                         C
------------------------------------------------------------------------------------------------
Acupuncturist                    N        MH - Hospital Inpatient                            N
------------------------------------------------------------------------------------------------
Alphafeto Protein Testing        N        MH - Outpatient Services                           N
------------------------------------------------------------------------------------------------
Heroin Detoxification            N        Long Term Care for month of entry plus one         C
------------------------------------------------------------------------------------------------
Direct Observed Therapy          N        Long Term Care after month of entry plus one       N
------------------------------------------------------------------------------------------------
Lenses for eyewear               N        CHDP                                               C
------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
Rate Calculation                                                Hospital       Hospital      Long Term
                                  Physician      Pharmacy      Inpatient      Outpatient          Care       Other          Total
<S>                               <C>          <C>            <C>            <C>            <C>           <C>            <C>
1. Average Cost Per Unit          $    20.15   $      50.42   $     485.15   $      18.26   $    184.85   $      7.07
2. Units per Eligible/year            13.720         21.892          1.011          6.029         0.452        63.930
   Cost per Elig. per Mo.         $    23.04   $      91.98   $      40.87   $       9.17   $      6.96   $     37.67    $   209.69
3. Adjustments
   a.Age/Sex                           0.981          0.869          0.938          1.074         0.949         1.077
   b.Area                              0.915          1.000          1.000          1.000         1.000         1.000
   c.Coverages                         0.900          0.875          0.920          0.973         0.995         0.877
   d.Interest                          1.000          1.000          1.000          1.000         1.000         1.000
Adjusted Base Cost                $    18.61   $      69.94   $      35.27   $       9.58   $      6.57   $     35.58    $   175.55
4. Legislative Adjustments             1.099          0.888          0.965          1.048         1.442         0.987
5. Trend Adjustments
   a.Cost per Unit                     1.000          1.262          1.194          1.000         1.000   $     1.000
   b.Units per Eligible                1.073          1.180          0.863          0.929         1.000         1.148
Projected Cost per Eligible       $    21.95   $      92.49   $      35.07   $       9.33   $      9.47   $     40.31    $   208.62
6. CHDP                                                                                                                        0.00
7. Adjustment to Pool                                                                                            12.1%        25.24
Capitation Rate                                                                                                          $   233.86
</TABLE>

Prepared by Department of Health Services, Rate Development Branch

<PAGE>

                                                 #95-23637 C-10
                                                 Attachment 1
                                                 Page 9 of 12

Plan Name:             Molina Medical Center
County:                Riverside                  Plan #:        355
Aid Code Grouping:     Aged                       Plan Type:     Commercial Plan

Date:  11-Oct-01

The Rate Period is October 1, 2001                     Capitation Payments at
to September 30, 2002                                  the End of the Month

Coverages ( C = Covered by Plan, N = NOT Covered by Plan)

<TABLE>
<S>                              <C>      <C>                                                <C>
------------------------------------------------------------------------------------------------
CCS Indicated Claims             N        AIDS Waiver                                        N
------------------------------------------------------------------------------------------------
GHPP                             N        In Home Waiver                                     N
------------------------------------------------------------------------------------------------
Hemodialysis                     C        Model NF Waiver                                    N
------------------------------------------------------------------------------------------------
Major Organ Transplants          N        Adult Day Health Care                              N
------------------------------------------------------------------------------------------------
Out-of-State                     C        Newborn Hearing Screens                            N
------------------------------------------------------------------------------------------------
Chiropractor                     N        Psychiatric Drugs                                  N
------------------------------------------------------------------------------------------------
Local Education Authority        N        AIDS Drugs                                         N
------------------------------------------------------------------------------------------------
Psychiatrist                     N        Injections                                         C
------------------------------------------------------------------------------------------------
Acupuncturist                    N        MH - Hospital Inpatient                            N
------------------------------------------------------------------------------------------------
Alphafeto Protein Testing        N        MH - Outpatient Services                           N
------------------------------------------------------------------------------------------------
Heroin Detoxification            N        Long Term Care for month of entry plus one         C
------------------------------------------------------------------------------------------------
Direct Observed Therapy          N        Long Term Care after month of entry plus one       N
------------------------------------------------------------------------------------------------
Lenses for eyewear               N        CHDP                                               C
------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
Rate Calculation                                                Hospital        Hospital     Long Term
                                  Physician      Pharmacy      Inpatient      Outpatient          Care          Other         Total
<S>                               <C>          <C>            <C>            <C>            <C>           <C>            <C>
1. Average Cost Per Unit          $    16.06   $      38.28   $     287.24   $      11.67   $    177.26   $      6.49
2. Units per Eligible/year            11.563         16.963          0.819          3.904         1.049        42.784
   Cost per Elig. per Mo.         $    15.48   $      54.11   $      19.60   $       3.80   $     15.50   $     23.14    $   131.63
3. Adjustments
   a.Age/Sex                           0.993          1.008          1.012          0.993         1.029         1.007
   b.Area                              0.915          1.000          1.000          1.000         1.000         1.000
   c.Coverages                         0.981          0.996          0.997          0.986         0.997         0.781
   d.Interest                          1.000          1.000          1.000          1.000         1.000         1.000
Adjusted Base Cost                $    13.87   $      54.32   $      19.78   $       3.72   $     15.90   $     18.20    $   125.79
4. Legislative Adjustments             0.984          0.879          0.969          1.046         1.433         0.963
5. Trend Adjustments
   a.Cost per Unit                     1.000          1.262          1.194          1.000         1.000   $     1.000
   b.Units per Eligible                1.073          1.180          0.929          1.066         0.929         1.148
Projected Cost per Eligible       $    14.64   $      71.10   $      21.26   $       4.15   $     21.17   $     20.12    $   152.44
6. CHDP                                                                                                                        0.00
7. Adjustment to Pool                                                                                            12.1%        18.45
Capitation Rate                                                                                                          $   170.89
</TABLE>

Prepared by Department of Health Services, Rate Development Branch

<PAGE>

                                                #95-23637 C-10
                                                Attachment 1
                                                Page 10 of 12

Plan Name:              Molina Medical Center
County:                 Riverside                Plan #:        355
Aid Code Grouping:      Child                    Plan Type:     Commercial Plan

Date:  11-Oct-01

The Rate Period is October 1, 2001                     Capitation Payments at
to September 30, 2002                                  the End of the Month

Coverages ( C = Covered by Plan, N = NOT Covered by Plan)

<TABLE>
<S>                              <C>      <C>                                                <C>
------------------------------------------------------------------------------------------------
CCS Indicated Claims             N        AIDS Waiver                                        N
------------------------------------------------------------------------------------------------
GHPP                             N        In Home Waiver                                     N
------------------------------------------------------------------------------------------------
Hemodialysis                     C        Model NF Waiver                                    N
------------------------------------------------------------------------------------------------
Major Organ Transplants          N        Adult Day Health Care                              N
------------------------------------------------------------------------------------------------
Out-of-State                     C        Newborn Hearing Screens                            N
------------------------------------------------------------------------------------------------
Chiropractor                     N        Psychiatric Drugs                                  N
------------------------------------------------------------------------------------------------
Local Education Authority        N        AIDS Drugs                                         N
------------------------------------------------------------------------------------------------
Psychiatrist                     N        Injections                                         C
------------------------------------------------------------------------------------------------
Acupuncturist                    N        MH - Hospital Inpatient                            N
------------------------------------------------------------------------------------------------
Alphafeto Protein Testing        N        MH - Outpatient Services                           N
------------------------------------------------------------------------------------------------
Heroin Detoxification            N        Long Term Care for month of entry plus one         C
------------------------------------------------------------------------------------------------
Direct Observed Therapy          N        Long Term Care after month of entry plus one       N
------------------------------------------------------------------------------------------------
Lenses for eyewear               N        CHDP                                               C
------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
Rate Calculation                                                Hospital        Hospital     Long Term
                                  Physician      Pharmacy      Inpatient      Outpatient          Care          Other         Total
<S>                               <C>          <C>            <C>            <C>            <C>           <C>            <C>
1. Average Cost Per Unit          $    58.40   $      17.50   $     889.41   $      18.79   $    140.26   $      6.45
2. Units per Eligible/year             5.196          3.068          0.436          2.787         0.019        10.564
   Cost per Elig. per Mo.         $    25.29   $       4.47   $      32.32   $       4.36   $      0.22   $      5.68    $    72.34
3. Adjustments
   a.Age/Sex                           1.090          1.071          1.089          1.100         1.000         0.994
   b.Area                              0.915          1.000          1.000          1.000         1.000         1.000
   c.Coverages                         0.974          0.984          0.952          0.973         0.996         0.882
   d.Interest                          1.000          1.000          1.000          1.000         1.000         1.000
Adjusted Base Cost                $    24.57   $       4.71   $      33.51   $       4.67   $      0.22   $      4.98    $    72.65
4. Legislative Adjustments             1.116          0.875          1.035          1.049         1.424         1.082
5. Trend Adjustments
   a.Cost per Unit                     1.000          1.262          1.040          1.000         1.000   $     1.000
   b.Units per Eligible                1.000          1.180          1.066          1.000         1.000         1.148
Projected Cost per Eligible       $    27.42   $       6.14   $      38.45   $       4.90   $      0.31   $      6.19    $    83.41
6. CHDP                                                                                                                        4.08
7. Adjustment to Pool                                                                                            12.1%        10.09
Capitation Rate                                                                                                          $    97.58
</TABLE>

Prepared by Department of Health Services, Rate Development Branch

<PAGE>

                                                 #95-23637 C-10
                                                 Attachment 1
                                                 Page 11 of 12

Plan Name:              Molina Medical Center
County:                 Riverside                 Plan #:       355
Aid Code Grouping:      Aged                      Plan Type:    Commercial Plan

Date:  11-Oct-01

The Rate Period is October 1, 2001                     Capitation Payments at
to September 30, 2002                                  the End of the Month

Coverages ( C = Covered by Plan, N = NOT Covered by Plan)

<TABLE>
<S>                              <C>      <C>                                                <C>
------------------------------------------------------------------------------------------------
CCS Indicated Claims             N        AIDS Waiver                                        N
------------------------------------------------------------------------------------------------
GHPP                             N        In Home Waiver                                     N
------------------------------------------------------------------------------------------------
Hemodialysis                     C        Model NF Waiver                                    N
------------------------------------------------------------------------------------------------
Major Organ Transplants          N        Adult Day Health Care                              N
------------------------------------------------------------------------------------------------
Out-of-State                     C        Newborn Hearing Screens                            N
------------------------------------------------------------------------------------------------
Chiropractor                     N        Psychiatric Drugs                                  N
------------------------------------------------------------------------------------------------
Local Education Authority        N        AIDS Drugs                                         N
------------------------------------------------------------------------------------------------
Psychiatrist                     N        Injections                                         C
------------------------------------------------------------------------------------------------
Acupuncturist                    N        MH - Hospital Inpatient                            N
------------------------------------------------------------------------------------------------
Alphafeto Protein Testing        N        MH - Outpatient Services                           N
------------------------------------------------------------------------------------------------
Heroin Detoxification            N        Long Term Care for month of entry plus one         C
------------------------------------------------------------------------------------------------
Direct Observed Therapy          N        Long Term Care after month of entry plus one       N
------------------------------------------------------------------------------------------------
Lenses for eyewear               N        CHDP                                               C
------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
Rate Calculation                                                Hospital        Hospital     Long Term
                                  Physician      Pharmacy      Inpatient      Outpatient          Care          Other         Total
<S>                               <C>          <C>            <C>            <C>            <C>           <C>            <C>
1. Average Cost Per Unit          $   164.23   $      19.84   $     964.66   $      19.73   $      0.00   $     30.86
2. Units per Eligible/year            22.157          4.314          4.387         17.657         0.000         8.468
   Cost per Elig. per Mo.         $   303.24   $       7.13   $     352.66   $      29.03   $      0.00   $     21.78    $   713.84
3. Adjustments
   a.Age/Sex                           1.000          1.000          1.000          1.000         1.000         1.000
   b.Area                              0.915          1.000          1.000          1.000         1.000         1.000
   c.Coverages                         0.999          0.999          0.999          0.989         1.000         0.887
   d.Interest                          1.000          1.000          1.000          1.000         1.000         1.000
Adjusted Base Cost                $   277.19   $       7.12   $     352.31   $      28.71   $      0.00   $     19.32    $   684.65
4. Legislative Adjustments             1.060          0.872          1.016          1.053         1.242         1.045
5. Trend Adjustments
   a.Cost per Unit                     1.000          1.262          1.040          1.000         1.000   $     1.000
   b.Units per Eligible                1.000          1.180          1.066          1.000         1.000         1.148
Projected Cost per Eligible       $   293.82   $       9.25   $     396.83   $      30.23   $      0.00   $     23.18    $   753.31
6. CHDP                                                                                                                        0.00
7. Adjustment to Pool                                                                                            12.1%        91.15
Capitation Rate                                                                                                          $   844.46
</TABLE>

Prepared by Department of Health Services, Rate Development Branch

<PAGE>

                                                #95-23637 C-10
                                                Attachment 1
                                                Page 12 of 12

Plan Name:              Molina Medical Center
County:                 Riverside                Plan #:       355
Aid Code Grouping:      AIDS                     Plan Type:    Commercial Plan

Date:  11-Oct-01

The Rate Period is October 1, 2001                     Capitation Payments at
to September 30, 2002                                  the End of the Month

Coverages ( C = Covered by Plan, N = NOT Covered by Plan)

<TABLE>
<S>                              <C>      <C>                                                <C>
------------------------------------------------------------------------------------------------
CCS Indicated Claims             N        AIDS Waiver                                        N
------------------------------------------------------------------------------------------------
GHPP                             N        In Home Waiver                                     N
------------------------------------------------------------------------------------------------
Hemodialysis                     C        Model NF Waiver                                    N
------------------------------------------------------------------------------------------------
Major Organ Transplants          N        Adult Day Health Care                              N
------------------------------------------------------------------------------------------------
Out-of-State                     C        Newborn Hearing Screens                            N
------------------------------------------------------------------------------------------------
Chiropractor                     N        Psychiatric Drugs                                  N
------------------------------------------------------------------------------------------------
Local Education Authority        N        AIDS Drugs                                         N
------------------------------------------------------------------------------------------------
Psychiatrist                     N        Injections                                         C
------------------------------------------------------------------------------------------------
Acupuncturist                    N        MH - Hospital Inpatient                            N
------------------------------------------------------------------------------------------------
Alphafeto Protein Testing        N        MH - Outpatient Services                           N
------------------------------------------------------------------------------------------------
Heroin Detoxification            N        Long Term Care for month of entry plus one         C
------------------------------------------------------------------------------------------------
Direct Observed Therapy          N        Long Term Care after month of entry plus one       N
------------------------------------------------------------------------------------------------
Lenses for eyewear               N        CHDP                                               C
------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
Rate Calculation                                                Hospital        Hospital     Long Term
                                  Physician      Pharmacy      Inpatient      Outpatient          Care          Other         Total
<S>                               <C>          <C>            <C>            <C>            <C>           <C>            <C>
1. Average Cost Per Unit          $    25.87   $     141.75   $     485.15   $      17.75   $    228.06   $     14.00
2. Units per Eligible/year            29.254         46.897          3.823         28.506         0.450        78.563
   Cost per Elig. per Mo.         $    63.07   $     553.97   $     154.56   $      42.17   $      8.55   $     91.66    $   913.98
3. Adjustments
   a.Age/Sex                           1.000          1.000          1.000          1.000         1.000         1.000
   b.Area                              0.915          1.000          1.000          1.000         1.000         1.000
   c.Coverages                         0.918          0.663          0.957          0.992         0.998         0.642
   d.Interest                          1.000          1.000          1.000          1.000         1.000   $     1.000
Adjusted Base Cost                $    52.98   $     367.28   $     147.91   $      41.83   $      8.53   $     58.85    $   677.38
4. Legislative Adjustments             1.070          0.826          0.989          1.013         1.529         1.001
5. Trend Adjustments
   a.Cost per Unit                     1.000          1.262          1.194          1.000         1.000   $     1.000
   b.Units per Eligible                1.073          1.180          0.863          0.929         1.000         1.148
Projected Cost per Eligible       $    60.83   $     451.77   $     150.73   $      39.37   $     13.04   $     67.63    $   783.37
6. CHDP                                                                                                                        0.00
7. Adjustment to Pool                                                                                            12.1%        94.79
Capitation Rate                                                                                                          $   878.16
</TABLE>

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00046-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00046-of-00352.parquet"}]]