<PAGE>
                                                                   EXHIBIT 10.06

                      SENIOR EXECUTIVE EMPLOYMENT AGREEMENT

      This EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as
of March 30, 2001, by and between PACIFICARE HEALTH SYSTEMS, INC., a Delaware
corporation (the "Company"), with its principal place of business located at
3120 Lake Center Drive, Santa Ana, California 92704 and KATHERINE FEENY
("Executive"), residing at 25 Sparrowhawk, Irvine, CA 92612.

                                    RECITALS

      WHEREAS, the Company desires to continue Executive's employment in the
capacity of Senior Vice President, Sales and Marketing.

      WHEREAS, the Company and Executive are entering into this Agreement to
establish new terms and conditions of the employment relationship.

      NOW, THEREFORE, in consideration of the following covenants, conditions
and promises contained herein, and other good and valuable consideration, the
Company and Executive hereby agree as follows:

1.    EMPLOYMENT

      1.1 Executive's General Duties. The Company employs Executive and
Executive serves the Company in the capacity of Senior Vice President, Sales and
Marketing, having such usual and customary duties and authority as an officer of
similar capacity in a corporation of comparable size, holdings, and business as
that of the Company.

      Executive shall do and perform all services, acts, or things necessary or
advisable to manage and conduct the business of the Company and shall preside
over such other areas of corporate activity as specified from time to time by
the Board of Directors of the Company. During the term of this Agreement,
Executive shall perform such additional or different duties, and accept the
election or appointment to such other offices or positions as are mutually
agreed upon by Executive and the Company.

      1.2 Devotion of Executive. During the term of this Agreement, Executive
shall devote her entire productive time, ability, and attention to the business
of the Company. Executive shall use Executive's best efforts, skills, and
abilities to promote the general welfare and interests of the Company and to
preserve, maintain, and foster the Company's business and business relationships
with all persons and entities associated therewith, including, without
limitation, employer groups, medical service providers, shareholders,
affiliates, officers, employees, and banks and other financial institutions. The
Company shall give Executive a reasonable opportunity to perform Executive's
duties and shall neither expect Executive to devote more time,


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                                                                   EXHIBIT 10.06

nor assign more duties or functions to Executive, than are customary and
reasonable for a person in Executive's position.

2.    TERM AND TERMINATION

      2.1 Term. The initial term of Executive's employment under this Agreement
shall be 24 months, commencing on the effective date of this Agreement. The
Company may extend this Agreement for successive one-year terms by giving
Executive written notice at least 60 days prior to the expiration of the term.
Notwithstanding the foregoing, if a Change-of-Control occurs, as defined in
Section 5.1(c) of this Agreement, then the term of the Agreement shall be
extended for a period of 24 months from the effective date of the
Change-of-Control. This Agreement is subject to termination prior to the
expiration of its term, as provided in Section 2.2.

      2.2 Termination. This Agreement, and Executive's employment with the
Company, shall be terminated upon the occurrence of any one of the following
events:

            a. The death of the Executive.

            b. Executive becomes incapacitated or disabled, which incapacity or
      disability prevents Executive from fully performing her duties to the
      Company for a period in excess of 90 days and, after such 90-day period,
      the Company and a physician, duly licensed and qualified in the specialty
      of Executive's incapacity, decide in their reasonable judgments, that such
      incapacity will be of such continued duration as to prevent Executive from
      resuming the rendition of services to the Company for at least an
      additional six-month period. For purposes of this Agreement, Executive
      shall be deemed permanently disabled, and this Agreement terminated upon
      the date Executive receives written notice from the Company that such
      determination has been made.

            c. Executive habitually neglects her duties to the Company or
      engages in gross misconduct during the term of this Agreement. For the
      purposes of this Agreement, "gross misconduct" shall mean Executive's
      misappropriation of funds; securities fraud; insider trading; unauthorized
      possession of corporate property; the sale, distribution, possession or
      use of a controlled substance; or conviction of any criminal offense
      (whether or not such criminal offense is committed in connection with
      Executive's duties hereunder or in the course of her employment with the
      Company). In such event, Executive's termination shall be effective
      immediately upon receipt of written notice from the Company.

            d. Either party hereto may terminate this Agreement, with or without
      cause, upon 45 days prior written notice to the other party. Except for
      the circumstances described in Section 2.2(b) and Section 2.2(c) above,
      Executive's termination shall be effective 45 days after receipt of such
      written notice.


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                                                                   EXHIBIT 10.06

3.    COMPENSATION DURING THE TERM OF THIS AGREEMENT

      3.1 Base Salary. As long as Executive satisfactorily performs all of her
obligations under this Agreement, the Company shall pay Executive an annual base
salary, payable in equal installments on the Company's regular payroll dates. As
of this date, Executive's annual base salary has been set at $249,999. On an
annual basis, the Company shall review Executive's salary, but shall be under no
obligation to increase Executive's salary. Executive authorizes the Company to
take such deductions and withholdings from her salary as are required by law,
directed by Executive, or as reasonably directed by the Company for its
employees, which deductions shall include, without limitation, withholding for
federal and state income taxes and social security.

      3.2 Benefits. Executive shall be entitled to fully participate in all of
the employee benefit plans and programs available to other high-level executives
of the Company, including, without limitation, health, dental, and life
insurance benefits for Executive and Executive's dependents, pension and profit
sharing programs, and vacation and sick leave benefits. However, the terms of
this Agreement shall not restrict the Company's right to change, amend, modify,
or terminate any existing benefit plan or program, or to change any insurance
company or modify any insurance policy adopted incident to such existing benefit
plan and program.

      3.3 Automobile Allowance. The Company shall provide Executive with a
$550.00 (five hundred and fifty dollars) per month automobile allowance. The
Company shall furnish Executive with a cellular telephone. Executive shall
provide and maintain automobile insurance for Executive's car including
collision, comprehensive liability, personal and property damage, and uninsured
and underinsured motorist coverage in amounts customarily obtained to cover such
contingencies in the State of California. Executive shall provide proof of such
coverage to the Company upon the Company's request.

      3.4 Reimbursement of Expenses. The Company shall pay for or reimburse
Executive for all reasonable travel, entertainment, and other business expenses
incurred or paid for by Executive in connection with the performance of her
services under this Agreement. The Company shall not be obligated to make any
such reimbursement unless Executive presents corresponding expense statements or
vouchers and such other supporting information as the Company may from time to
time reasonably request. The Company reserves the right to place subsequent
limitations or restrictions on business expenses to be incurred or reimbursed.

      3.5 Annual Incentive Plan. Executive shall be entitled to participate
fully in the Company's 1996 Management Incentive Compensation Plan, as amended
(the "MICP"), and as may be further amended, modified, or replaced, from time to
time, in accordance with the terms and conditions set forth herein and therein.

      3.6 Stock Option Plans. Executive shall be entitled to participate in the
applicable Stock Option Plans for Officers and Key Employees of PacifiCare
Health Systems, Inc., as amended, and as may be further amended modified or
replaced, from time to time, in accordance with the terms and conditions set
forth herein and therein.


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                                                                   EXHIBIT 10.06

      3.7 Insurance. During the term of this Agreement, the Company shall insure
Executive under its general liability insurance for all conduct committed in
good faith while acting in the capacity of Senior Vice President, Sales and
Marketing of the Company or in any other capacity to which Executive may be
appointed or elected.

      3.8 Savings and Profit Sharing Plan. As part of the compensation for
services rendered under this Agreement, Executive shall be entitled to
participate in the Amended and Restated PacifiCare Health Systems, Inc. Savings
and Profit-Sharing Plan, and the trust agreement implemented pursuant thereto,
adopted as of July 1999, as amended, and as may be further amended, modified, or
replaced, from time to time in accordance with the terms and conditions set
forth therein.

      3.9 Non-Qualified Deferred Compensation Plans. Executive shall be entitled
to participate in any non-qualified deferred compensation plan established by
the Company, including, without limitation, the Company's Statutory Restoration
Plan, Deferred Compensation Plan, and such other plans as may be applicable, as
such plans may be amended, modified or replaced, from time to time, in
accordance with the terms set forth herein and therein.

4.    COMPENSATION FOLLOWING TERMINATION OF EMPLOYMENT PURSUANT TO SECTION 2.2

      4.1 Death. In the event that this Agreement is terminated by reason of
Executive's death, Executive's estate or legal representative shall be entitled
to receive the following:

            a. Payment of benefits under the life insurance policy purchased by
      the Company on Executive's behalf, if any;

            b. Payments of benefits under the MICP set forth in Section 3.5 in
      accordance with the terms of the MICP plan document;

            c. Executive's legal representative shall be permitted to exercise
      any vested and unexercised options granted under the 1996 Stock Option
      Plan and any other existing stock option plans of the Company
      (collectively, the "Stock Option Plans") in accordance with their terms
      for a period of one year following Executive's death.

      4.2 Disability. In the event that Executive is terminated because of
incapacity or disability, the Company shall provide Executive with the
following:

            a. Payment of benefits under the disability insurance policy
      maintained by the Company on Executive's behalf, if any;

            b. Payment of benefits under the MICP set forth in Section 3.5 in
      accordance with the terms of the MICP plan document;


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                                                                   EXHIBIT 10.06

            c. The right to exercise any vested and unexercised options under
      the Stock Option Plans in accordance with the terms stated therein;

            d. Payment of the automobile allowance as provided under Section 3.3
      for a period of 18 months following the effective date of such
      termination.

      4.3 Neglect, Misconduct or Voluntary Termination. In the event this
Agreement is terminated because of Executive's habitual neglect or gross
misconduct pursuant to Section 2.2(c) or because of Executive's voluntary
termination, the Company shall be relieved from any and all further or future
obligations to compensate Executive; provided, however, that Executive shall be
able to exercise any vested and unexercised awards under the Stock Option Plans
in accordance with the terms set forth therein.

      4.4 Discharge. In the event that the Company terminates Executive under
circumstances other than a Change-of-Control (as defined herein) and for any
reason other than Executive's incapacity or disability or neglect/misconduct as
described in Sections 2.2(b) and 2.2(c), respectively, then Executive shall be
entitled to the following compensation:

            a. An amount equal to one and one half times Executive's then
      current annual salary under Section 3.1;

            b. An amount equal to one and one half times the average of the last
      two MICP bonuses paid to Executive. If Executive has been employed by the
      Company for more than one, but less than two years, then the MICP bonus
      severance payment shall equal one and one half times the average of the
      MICP bonus paid to Executive for the prior year and the target for
      Executive for the current year. If Executive has been employed by the
      Company for less than one year, Executive will not receive any bonus
      severance payment. For purposes of this Section 4.4(b), the word "paid"
      shall include $0.00 for any year in which Executive was eligible for, but
      was not paid, an MICP bonus;

            c. The right to exercise any vested and unexercised options under
      the Stock Option Plans in accordance with their terms within one year of
      the effective date of such termination;

            d. Continuation of Executive's and his/her dependents' medical,
      dental and vision benefits for a period of 18 months following the
      effective date of such termination;

            e. An amount equal to 18 months of Executive's automobile allowance;

            f. The Company shall provide to Executive outplacement services to
      assist Executive in securing a position comparable to the one from which
      Executive was terminated. The Company shall be obligated to provide those
      outplacement services which are customarily provided by companies of
      similar size and holdings as those of the Company to executives with
      comparable responsibility and longevity as Executive and for


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                                                                   EXHIBIT 10.06

      reasonable cost as approved by the Company. The Company's provision of
      such outplacement services shall not limit, restrict, or reduce, in any
      manner, any and all other compensation to which Executive is entitled
      hereunder;

            g. Executive shall receive, or have paid, the amounts of severance
      compensation provided in clauses (a), (b) and (e) above in equal
      installments over a period of 18 months. Payments will be made either in
      biweekly installments on the Company's regular paydays or as currently
      being paid to Executive;

            h. Notwithstanding the foregoing, in the event Executive engages in
      employment, whether as an employee, consultant or contractor with a
      competitor of the Company during the 18 month period in which Executive's
      salary continues pursuant to this Section 4.4, the severance compensation
      available to Executive under this Section 4.4 shall be reduced by the
      amount of any and all gross earnings Executive earns while engaged in
      employment with any such competitor or competitors. For the purposes of
      this Section 4.4, a "competitor of the Company" shall include, without
      limitation, managed care organizations, including a health maintenance
      organization, competitive medical plan, preferred provider organization,
      provider sponsored organization ("PSO"), or health or life insurance
      company which owns a managed care organization, plan or program. Executive
      agrees to provide immediate notice to Company upon receipt of any gross
      earnings received by Executive from a competitor of Company. Quarterly,
      Executive shall provide the Company a certificate certifying as to his/her
      employment status and if employed, the name and business of his/her
      current employer;

            i. If Executive is rehired by Company, payments of severance
      compensation provided for in this Section 4.4 shall cease; and

            j. If Executive dies while receiving the salary continuation benefit
      as provided in this Section 4.4, Executive's estate will receive a lump
      sum payment of the remaining salary continuation benefit.

5.    COMPENSATION FOLLOWING TERMINATION OF EMPLOYMENT AS A RESULT OF A
      CHANGE-OF-CONTROL

      5.1   Termination of Employment or Resignation for Good Cause

            a. Executive's Rights. In the event that, during the term of this
      Agreement, the Company undergoes a Change-of-Control, (as that term is
      defined below) and if within 24 months after the consummation of such
      change either (1) Executive is involuntarily terminated, except as
      provided in Section 5.1(b), or (2) Executive voluntarily terminates her
      employment for "good cause" as defined in Section 5.1(d), then Executive
      shall be entitled to the following compensation:


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                                                                   EXHIBIT 10.06

                  1. A lump sum payment consisting of: (i) an amount equal to
            two times Executive's then annual salary; (ii) an amount equal to
            two times the average of the last two MICP bonuses paid to
            Executive; (iii) a prorated bonus based on target opportunity for
            the year in which the Change-of-Control occurs; (iv) an amount equal
            to the equivalent of the cost of 24 months of COBRA benefits; and
            (v) an amount equal to 24 months of Executive's automobile
            allowance. If Executive has been employed for more than one, but
            less than two years, then the amount attributable to the MICP bonus
            portion set forth in clause (ii) above shall equal two times the
            average of the MICP bonus paid to Executive for the prior year and
            the target for Executive for the current year. If Executive has been
            employed for less than one year, Executive shall receive an amount
            equal to two times target bonus for the current year. For purposes
            of this Section 5.1(a)(1), the word "paid" shall include $0.00 for
            any year in which Executive was eligible for, but was not paid, an
            MICP bonus.

                  2. The right to exercise any and all unexercised stock options
            granted under the Stock Option Plans in accordance with their terms,
            as if all such unexercised stock options were fully vested, within
            one year of the effective date of such termination;

                  3. A payment to executive to compensate for any excise penalty
            or other associated taxes resulting from severance payments
            exceeding the cap imposed by Internal Revenue Code Section 280(G);

                  4. The Company shall provide to Executive the outplacement
            services described in Section 4.4(f).

            b. Limitation of Benefits. In the event that Executive is terminated
      within 24 months after a Change-of-Control of the Company, and such
      termination results from either Executive's death, incapacity or
      disability or habitual neglect or gross misconduct, then, notwithstanding
      anything in this Article 5 to the contrary, Executive shall receive only
      that compensation, if any, to which she is entitled to under Sections 4.1,
      4.2 and 4.3, respectively.

            c. Change-of-Control. As used in this Article 5, the term
      "Change-of-Control" means and refers to:

                  1. Any merger, consolidation, or sale of the Company such that
            any individual, entity or group (within the meaning of Section
            13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
            amended (the "Exchange Act")) acquires beneficial ownership, within
            the meaning of Rule 13d-3 of the Exchange Act, of 20 percent or more
            of the voting common stock of the Company;


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                                                                   EXHIBIT 10.06


                  2. Any transaction in which the Company sells substantially
            all of its material assets;

                  3. A dissolution or liquidation of the Company;

                  4. The Company becomes a non-publicly held company; or

                  5. The "Incumbent Directors" cease for any reason to
            constitute a majority of the Board of Directors. "Incumbent
            Directors" shall be those directors who, as of December 20, 2000,
            constitute the Board and any individual who becomes a director
            subsequent to December 20, 2000 whose election, or nomination for
            election by the Company's shareholders, was approved by a vote of at
            least fifty percent (50%) of the Incumbent Directors, excluding,
            however, any such individual who initially assumes office as a
            result of an actual or threatened election contest with respect to
            the election or removal of directors or other actual or threatened
            solicitation of proxies or consents by or on behalf of a person or
            entity other than the Board.

            d. Good Cause. As used in this Agreement "good cause" for Executive
      to terminate her employment shall be deemed to exist if Executive
      voluntarily terminates employment within 24 months of a Change-of-Control
      for any of the following reasons:

                  1. Without Executive's express prior written consent,
            Executive is assigned duties materially inconsistent with
            Executive's position, duties, responsibilities, or status with the
            Company which substantially varies from that which existed
            immediately prior to such Change-of-Control;

                  2. Without Executive's express prior written consent,
            Executive experiences a change in her reporting level, titles, or
            business location (of more than 50 miles from Executive's current
            business location or residence whichever is closer to the new
            business location) which substantially varies from that which
            existed immediately prior to the Change-of-Control; except that if
            Executive is not located at the Company's corporate headquarters in
            California, a relocation to the Company's corporate headquarters in
            California shall not be deemed a substantial variation, unless
            Executive's reporting level or title is also substantially varied;

                  3. Without Executive's express prior written consent,
            Executive is removed from any position held immediately prior to the
            Change-of-Control, or if Executive fails to obtain reelection to any
            position held immediately prior to the Change-of-Control, which
            removal or failure to reelect is not directly related to Executive's
            incapacity or disability, habitual neglect, gross misconduct or
            death;


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                                                                   EXHIBIT 10.06

                  4. Without Executive's express prior written consent,
            Executive experiences a reduction in salary of more than 10 percent
            below that which existed immediately prior to the Change-of-Control;

                  5. Without Executive's express prior written consent,
            Executive experiences an elimination or reduction of any employee
            benefit, business expense reimbursement or allotment, incentive
            bonus program, or any other manner or form of compensation available
            to Executive immediately prior to the Change-of-Control and such
            change is not otherwise applied to others in the Company with
            Executive's position or title;

                  6. The Company fails to obtain from any successor, before the
            succession takes place, a written commitment obligating the
            successor to perform this Agreement in accordance with all of its
            terms and conditions; or

                  7. The Company or any successor thereto purports to terminate
            Executive pursuant to Section 4.4 without first giving Executive
            prior written notice thereof that specifies the facts and
            circumstances, in reasonable detail, serving as the basis for
            Executive's termination.

      5.2 Resignation for Other Than Good Cause After a Change-of-Control. In
the event that the Company undergoes a Change-of-Control and Executive remains
with the Company for 12 months following the effective date of the
Change-of-Control, Executive will be given a 30-day "window period" in which to
elect to voluntarily terminate Executive's employment for reasons other than
good cause. Should Executive choose to terminate Executive's employment within
the 30-day "window period," then Executive shall be entitled to the following
compensation:

            a. One-half the lump sum payment referred to in Section 5.1(a)(1).

            b. The right to exercise all vested and unexercised stock options
      granted under the Stock Option Plans in accordance with their terms within
      one year of the effective date of such termination.

            c. Outplacement services as defined in Section 4.4(f).

6.    CONFIDENTIALITY AND OWNERSHIP OF PROPRIETARY INFORMATION

      6.1 Confidential Information. Executive acknowledges that, during the
course of Executive's employment with the Company or with any subsidiary or
affiliate of the Company, Executive will have access to certain confidential
information in the form of know-how, trade secrets, or proprietary information
of the Company or its subsidiaries or affiliates ("Confidential Information")
and that such Confidential Information will be acquired in confidence and as a
fiduciary of the Company or its subsidiaries or affiliates. For the purposes of
this Agreement, Confidential Information shall include, without limitation,
member health data and medical


                                      -9-
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                                                                   EXHIBIT 10.06

records, any and all cost and expense data, marketing and customer data, sales
manuals, underwriting guidelines, case management policies and procedures,
utilization review and quality assurance policies and procedures, provider
manuals, individual and group subscriber information (including, the name,
address, telephone number, or contact person for an individual or group
subscriber), subscriber group manuals, processes, designs, devices, compilations
of information, operational techniques operating manuals, symbols, service
marks, logos, customer and vendor lists (including, without limitation, lists of
subscribers, subscriber groups, clients, brokers, and providers contracting with
the Company or any subsidiary or affiliate of the Company), business
information, marketing programs, plans, and strategies, research and development
plans, contracts and licenses, licensing techniques and practices, advertising
and promotional materials, financial information and strategies, computer
software and other computer-related materials, copyrightable material, security
controls, including computer system passwords, and other legally protected
information owned by or used in the respective businesses of the Company or its
subsidiaries or affiliates which are confidential or proprietary in nature. In
addition to the foregoing, Confidential Information also includes any
information which is not generally known to the public, or within the market or
trade in which the Company competes, and the physical embodiments of such
information in any tangible form, whether written or machine-readable in nature,
or any information which is marked or designated as "Confidential" or
"Proprietary."

      6.2 Ownership of Inventions. Executive agrees to assign and does hereby
assign to the Company any and all ideas, designs, know-how, programs,
improvements, inventions, discoveries and literary creations (collectively
referred to as "Inventions") which Executive alone or with others may conceive
or make, and which (a) are made wholly or partially with the Company's assets or
confidential or trade secret information; or (b) are developed wholly or
partially on the Company's time; or (c) relate at the time of conception or
reduction to practice to the Company's business, including actual or
demonstrably anticipated research or development of the Company; or (d) result
from Executive's work for the Company. Such Inventions are and shall be the
property of the Company and shall be deemed to be part of the Company's
business, whether or not any applications for patents, trademarks or copyrights
are filed thereon. Further, all such Inventions shall constitute Confidential
Information. Executive shall not claim to own any Inventions relating to the
business of the Company. Executive agrees that, upon request of the Company,
Executive shall execute any and all papers and do all other lawful acts that may
be required by the Company in order to make applications for Letters Patent, of
the United States and of any and all other countries, on such Inventions, or
that may be required to vest ownership of such applications, patents and
copyrights in the Company, or that may be required to prosecute or obtain such
patents, or to maintain, preserve or enforce the rights of the Company in such
Inventions, patents and copyrights. Except as otherwise prohibited by law
(including but not limited to California Labor Code section 2870), and except
for Inventions made prior to commencement of Executive's employment with the
Company, in addition to the above assignment of Inventions to the Company,
without further consideration, Executive hereby fully, forever, and irrevocably
assigns, transfers, and conveys to the Company: (i) all patents, patent
applications, copyrights, mask works, trade secrets, and other intellectual
property rights in any Invention; and (ii) any and all "Moral Rights" (as
defined below) which Executive may have in,


                                      -10-
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                                                                   EXHIBIT 10.06

to, or with respect to any Invention. For purposes of this Agreement, "Moral
Rights" shall mean any rights to claim authorship of an Invention, to object to
or prevent the modification of any Invention, or to withdraw from circulation or
control the publication or distribution of any Invention, and any similar right,
existing under judicial or statutory law of any country in the world, or under
any treaty, regardless of whether or not such right is denominated or generally
referred to as a "moral right." Executive will promptly disclose any Inventions
to the Company whether developed or created alone or jointly with others.

      6.3 Confidentiality Covenant. Executive acknowledges and agrees that
maintaining the confidentiality of all of the Confidential Information is
integral to the value of the Company and is vital to the successful operations
of the Company and its subsidiaries and affiliates. In view of the foregoing,
Executive agrees to maintain the confidentiality of all Confidential Information
and to not disclose, divulge, exploit, or use, in any manner whatsoever, the
Confidential Information for Executive's own benefit or the benefit of another
person. Executive will additionally take all reasonable precautions to prevent
the inadvertent or accidental exposure of the Confidential Information.
Executive shall not remove any Confidential Information from the Company's
premises or make copies of any of such information except for the benefit of the
Company and in furtherance of Executive's duties as an employee of the Company.
Upon Executive's termination of employment with the Company, Executive shall not
remove from the Company's premises any materials containing any Confidential
Information, and will promptly return to the Company any material which contain
Confidential Information which are in Executive's possession or control.

      6.4 Equitable Relief. Executive acknowledges and agrees that it would be
difficult to measure the damage to the Company (or any subsidiary or affiliate,
as the case may be) from any breach of Executive's obligations under this
Article 6, that injury to the Company (or to any subsidiary or affiliate, as the
case may be) from any such breach would be impossible to calculate, and that
money damages would therefore be an inadequate remedy for any such breach.
Therefore, Executive acknowledges and agrees that the Company, in addition to
any of its other rights or remedies, shall be entitled to seek injunctive or
other equitable relief without bond or other security in the event of an actual
or threatened breach of this Agreement. The obligations of Executive and the
rights and remedies of the Company under this Agreement are cumulative and in
addition to, and not in lieu of, any obligations, rights, or remedies created by
applicable patent, copyright, or other laws, including the statutory and common
laws governing unfair competition, misappropriation or theft of trade secrets,
proprietary rights, or confidential information generally.

      6.5. Survival of Obligations. Executive's obligations under this Article 6
shall survive the termination of Executive's employment regardless of the manner
of such termination and shall be binding upon Executive's heirs, executors,
administrators and legal representatives. The remedies to which the Company is
entitled under this Article 6 shall survive the termination of Executive's
employment with the Company until the expiration of the statute of limitations
period applicable to any claims which may arise under this Article 6.


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                                                                   EXHIBIT 10.06

7.    NOTICES

      All notices or other communications required or permitted to be made
hereunder shall be given in writing and sent by either personal delivery,
overnight delivery, or United States registered or certified mail, return
receipt requested, all of which shall be properly addressed with postal or
delivery charges prepaid, to the parties at their respective addresses set forth
below, or to such other addresses as either party may designate to the other in
accordance with this Article 7:

      If to the Company:      PacifiCare Health Systems, Inc.
                              3120 Lake Center Drive
                              Santa Ana, California 92704
                              Attn: President and
                              Chief Executive Officer

      If to Executive:        Katherine Feeny
                              25 Sparrowhawk
                              Irvine, CA  92612

All notices sent by personal delivery shall be deemed given when actually
received. All notices sent by overnight delivery shall be deemed received on the
next business day. All other notices sent via United States mail shall be deemed
received no later than two business days after mailing. Any notice given by any
method not expressly authorized herein, shall nevertheless be effective if
actually received, and shall be deemed given upon actual receipt.

8.    GENERAL PROVISIONS

      8.1 Severance Agreement. Any payments of compensation made pursuant to
Articles 4 and 5 are contingent on Executive executing the Company's standard
severance agreement, including a general release of the Company, its owners,
partners, stockholders, directors, officers, employees, independent contractors,
agents, attorneys, representatives, predecessors, successors and assigns,
parents, subsidiaries, affiliated entities and related entities.

      8.2 Assignability. This Agreement shall inure to the benefit of, and shall
be binding upon the heirs, executors, administrators, successors, and legal
representatives of Executive and shall inure to the benefit of, and be binding
upon the Company and its successors and assigns. Executive shall not assign,
delegate, subdelegate, transfer, pledge, encumber, hypothecate, or otherwise
dispose of this Agreement, or any rights, obligations, or duties hereunder, and
any such attempted delegation or disposition shall be null and void and without
any force or effect; provided, however, that nothing contained herein shall
prevent Executive from designating beneficiaries for insurance, death or
retirement benefits.


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<PAGE>
                                                                   EXHIBIT 10.06

      8.3 Entire Agreement. This Agreement is a fully integrated document and
contains any and all promises, covenants, and agreements between the parties
hereto with respect to Executive's employment. This Agreement supersedes any and
all other, prior or contemporaneous, discussions, negotiations, representations,
warranties, covenants, conditions, and agreements, whether written or oral,
between the parties hereto. Except as expressed herein, the parties have not
exchanged any other representations, warranties, inducements, promises, or
agreements respecting Executive's employment with the Company.

      8.4 Severability. In the event any one or more of the provisions of this
Agreement shall be rendered by a court of competent jurisdiction to be invalid,
illegal, or unenforceable, in any respect, such invalidity, illegality, or
unenforceability shall not affect or impair the remainder of this Agreement
which shall remain in full force and effect and enforced accordingly, unless a
party demonstrates by a preponderance of the evidence that the invalidated
provision was an essential economic term of this Agreement.

      8.5 Amendment. This Agreement shall not be changed, amended, or modified,
nor shall any performance or condition hereunder be waived, in whole or in part,
except by written instrument signed by the party against whom enforcement or
waiver is sought. The waiver of any breach of any term or condition of this
Agreement shall not be deemed to constitute the waiver of any other or
subsequent breach of the same or any other term or condition of this Agreement.

      8.6 Governing Law. This Agreement shall be governed by, enforced under,
and construed in accordance with the laws of the State of California.

      IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.

The Company:                        PACIFICARE HEALTH SYSTEMS, INC.,
                                    a Delaware corporation


                                    By: ____________________________
                                          Howard G. Phanstiel
                                          President and
                                          Chief Executive Officer


Executive:                          ________________________________
                                          Katherine Feeny


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