The Purchase Agreement

On February 11, 2013, Molina Healthcare, Inc. (the "Company") entered into a Purchase Agreement (the "Purchase Agreement") with J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated (the "Representatives"), as the representatives of the initial purchasers (the "Initial Purchasers"), relating to the sale of $550 million aggregate principal amount of the Company's 1.125% Cash Convertible Senior Notes due 2020 (including $100 million aggregate principal amount issuable upon exercise of the over-allotment option granted by the Company to the Initial Purchasers) (the "Notes") to the Initial Purchasers. The Initial Purchasers exercised the over-allotment option in full on February 13, 2013. The Notes were offered and sold only to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act").

The Purchase Agreement includes customary representations, warranties and covenants. Under the terms of the Purchase Agreement, the Company has agreed to indemnify the Initial Purchasers against certain liabilities.

The foregoing description of the Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the Purchase Agreement, which is filed as Exhibit 1.1 to this Current Report on Form 8-K and is incorporated herein by reference.

The Notes and the Indenture

On February 15, 2013, the Company issued $550 million aggregate principal amount of the Notes pursuant to an indenture, dated as of February 15, 2013 (the "Indenture"), between the Company and U.S. Bank National Association, as Trustee. The Notes bear interest at a rate of 1.125% per year, payable semiannually in arrears on January 15 and July 15 of each year, beginning on July 15, 2013. The Notes will mature on January 15, 2020.

The Notes are not convertible into the Company's common stock or any other securities under any circumstances. Holders may convert their Notes solely into cash at their option at any time prior to the close of business on the business day immediately preceding July 15, 2019 only under the following circumstances:
(1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2013 (and only during such calendar quarter), if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period immediately after any five consecutive trading day period in which the trading price per $1,000 principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company's common stock and the conversion rate on each such trading day; or (3) upon the occurrence of specified corporate events. On or after July 15, 2019 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their Notes solely into cash at any time, regardless of the foregoing circumstances. Upon conversion, in lieu of receiving shares of the Company's common stock, a holder will receive an amount in cash, per $1,000 principal amount of Notes, equal to the settlement amount, determined in the manner set forth in the Indenture.

The Company may not redeem the Notes prior to the maturity date, and no sinking fund is provided for the Notes.

If the Company undergoes a fundamental change (as defined in the Indenture), holders may require the Company to repurchase for cash all or part of their Notes at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

The indenture provides for customary events of default, including cross acceleration to certain other indebtedness of the Company and its significant subsidiaries.

The Notes will be senior unsecured obligations of the Company and will rank senior in right of payment to any of the Company's indebtedness that is expressly subordinated in right of payment to the Notes; equal in right of payment to any of the Company's unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of the Company's secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of the Company's subsidiaries.

The foregoing description of the Indenture and the Notes does not purport to be . . .

The Company used approximately $40 million of the net proceeds from the offering of the Notes to repay all of the currently outstanding indebtedness under its $170 million revolving credit facility (the "Credit Facility") with various lenders and U.S. Bank National Association, as Line of Credit Issuer, Swing Line Lender, and Administrative Agent. The Company terminated the Credit Facility in connection with the closing of the offering and sale of the Notes. The Credit Facility had a term of five years under which all amounts outstanding would have been due and payable on September 9, 2016.

Borrowings under the Credit Facility accrued interest based, at the Company's election, on the base rate plus an applicable margin or the Eurodollar rate. The base rate is, for any day, a rate of interest per annum equal to the highest of
(i) the prime rate of interest announced from time to time by U.S. Bank or its parent, (ii) the sum of the federal funds rate for such day plus 0.50% per annum and (iii) the Eurodollar rate (without giving effect to the applicable margin) for a one month interest period on such day (or if such day is not a business day, the immediately preceding business day) plus 1.00%. The Eurodollar rate is a reserve adjusted rate at which Eurodollar deposits are offered in the interbank Eurodollar market plus an applicable margin. In addition to interest payable on the principal amount of indebtedness outstanding from time to time under the Credit Facility, the Company was required to pay a quarterly commitment fee of 0.25% to 0.50% (based upon the Company's leverage ratio) of the unused amount of the lenders' commitments under the Credit Facility. The applicable margins ranged between 0.75% to 1.75% for base rate loans and 1.75% to 2.75% for Eurodollar loans, in each case, based upon the Company's leverage ratio.

The information set forth under Item 1.01 of this Current Report on Form 8-K with respect to the Notes is incorporated by reference herein.

As described in Item 1.01 of this Current Report on Form 8-K, which is incorporated herein by reference, on February 11, 2013 and February 15, 2013, the Company entered into warrant transactions and additional warrant transactions, respectively, with each of the two Option Counterparties. Pursuant to these warrant transactions, the Company issued 1,152,802 warrants with a strike price of $53.8475 per share. The number of warrants and the strike price are subject to adjustment under certain circumstances described in the base warrants confirmations and the additional warrant confirmations. The Company offered and sold the warrants in reliance on the exemption from registration provided by Section 4(2) of the Securities Act. Neither the warrants nor the underlying shares of common stock (issuable in the event the market price per share of the common stock exceeds the strike price of the warrants on the date the warrants are exercised) have been registered under the Securities Act. Neither the warrants nor such underlying shares of common stock may be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

(d) Exhibits

Exhibit No.                                  Description

 1.1              Purchase Agreement, dated as of February 11, 2013, among Molina
                  Healthcare, Inc. and J.P. Morgan Securities LLC and Merrill
                  Lynch, Pierce, Fenner & Smith Incorporated, as Representatives of
                  the Initial Purchasers.

 4.1              Indenture, dated as of February 15, 2013, by and between Molina
                  Healthcare, Inc. and U.S. Bank, National Association.

 4.2              Form of 1.125% Cash Convertible Senior Note due 2020 (included in
                  Exhibit 4.1).

10.1              Base Call Option Transaction Confirmation, dated as of
                  February 11, 2013, between Molina Healthcare, Inc. and JPMorgan
                  Chase Bank, National Association, London Branch.

10.2              Base Call Option Transaction Confirmation, dated as of
                  February 11, 2013, between Molina Healthcare, Inc. and Bank of
                  America, N.A.

10.3              Base Warrants Confirmation, dated as of February 11, 2013,
                  between Molina Healthcare, Inc. and JPMorgan Chase Bank, National
                  Association, London Branch.

10.4              Base Warrants Confirmation, dated as of February 11, 2013,
                  between Molina Healthcare, Inc. and Bank of America, N.A.

10.5              Amendment to Base Call Option Transaction Confirmation, dated as
                  of February 13, 2013, between Molina Healthcare, Inc. and
                  JPMorgan Chase Bank, National Association, London Branch.

10.6              Amendment to Base Call Option Transaction Confirmation, dated as
                  of February 13, 2013, between Molina Healthcare, Inc. and Bank of
                  America, N.A.

10.7              Additional Base Warrants Confirmation, dated as of February 13,
                  2013, between Molina Healthcare, Inc. and JPMorgan Chase Bank,
                  National Association, London Branch.

10.8              Additional Base Warrants Confirmation, dated as of February 13,
                  2013, between Molina Healthcare, Inc. and Bank of America, N.A.