<PAGE>

                                                                    EXHIBIT 4.18

                         PACIFICARE HEALTH SYSTEMS, INC.

                                       and

                       _________________, AS WARRANT AGENT

                            FORM OF DEPOSITARY SHARES
                                WARRANT AGREEMENT

                     DATED AS OF __________________________

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                                TABLE OF CONTENTS

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ARTICLE 1             ISSUANCE OF WARRANTS AND EXECUTION AND DELIVERY OF WARRANT CERTIFICATES...................       1

         1.1      Issuance of Warrants..........................................................................       1

         1.2      Execution and Delivery of Warrant Certificates................................................       1

         1.3      Issuance of Warrant Certificates..............................................................       2

ARTICLE 2             WARRANT PRICE, DURATION AND EXERCISE OF WARRANTS..........................................       3

         2.1      Warrant Price.................................................................................       3

         2.2      Duration of Warrants..........................................................................       3

         2.3      Exercise of Warrants..........................................................................       3

ARTICLE 3             OTHER PROVISIONS RELATING TO RIGHTS OF HOLDERS OF WARRANT CERTIFICATES....................       4

         3.1      No Rights as Warrant Securityholder Conferred by Warrants or Warrant Certificates.............       4

         3.2      Lost, Stolen, Mutilated or Destroyed Warrant Certificates.....................................       4

         3.3      Holder of Warrant Certificate May Enforce Rights..............................................       5

         3.4      Adjustments...................................................................................       5

         3.5      Notice to Warrantholders......................................................................       8

         3.6      [If the Warrants are subject to acceleration by the Company, insert--Acceleration of
                  Warrants by the Company.......................................................................       8

ARTICLE 4             EXCHANGE AND TRANSFER OF WARRANT CERTIFICATES.............................................       9

         4.1      Exchange and Transfer of Warrant Certificates.................................................       9

         4.2      Treatment of Holders of Warrant Certificates..................................................      10

         4.3      Cancellation of Warrant Certificates..........................................................      10

ARTICLE 5             CONCERNING THE WARRANT AGENT..............................................................      11

         5.1      Warrant Agent.................................................................................      11

         5.2      Conditions of Warrant Agent's Obligations.....................................................      11

         5.3      Resignation and Appointment of Successor......................................................      12

ARTICLE 6             MISCELLANEOUS.............................................................................      14

         6.1      Amendment.....................................................................................      14

         6.2      Notices and Demands to the Company and Warrant Agent..........................................      14

         6.3      Addresses.....................................................................................      14
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                                       -i-

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                                TABLE OF CONTENTS
                                   (CONTINUED)

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         6.4      Governing Law.................................................................................      14

         6.5      Delivery of Prospectus........................................................................      14

         6.6      Obtaining of Governmental Approvals...........................................................      14

         6.7      Persons Having Rights Under Warrant Agreement.................................................      15

         6.8      Headings......................................................................................      15

         6.9      Counterparts..................................................................................      15

         6.10     Inspection of Agreement.......................................................................      15
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                                      -ii-

<PAGE>

                         PACIFICARE HEALTH SYSTEMS, INC.
                   Form of Depositary Shares Warrant Agreement

         DEPOSITARY SHARES WARRANT AGREEMENT, dated as of _______ between
PACIFICARE HEALTH SYSTEMS, INC., a Delaware corporation (the "COMPANY") and
___________________, a [corporation] [national banking association] organized
and existing under the laws of ____________ and having a corporate trust office
in ____________, as warrant agent (the "WARRANT AGENT").

         WHEREAS, the Company proposes to sell [if Warrants are sold with other
securities - [title of such other securities being offered] (the "OTHER
SECURITIES") with] warrant certificates evidencing one or more warrants (the
"WARRANTS" or, individually, a "WARRANT") representing the right to purchase
[title of Depositary Shares purchasable through exercise of Warrants] (the
"WARRANT SECURITIES"), such warrant certificates and other warrant certificates
issued pursuant to this Agreement being herein called the "WARRANT
CERTIFICATES"; and

         WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing so to act, in connection with the
issuance, registration, transfer, exchange, exercise and replacement of the
Warrant Certificates, and in this Agreement wishes to set forth, among other
things, the form and provisions of the Warrant Certificates and the terms and
conditions on which they may be issued, registered, transferred, exchanged,
exercised and replaced;

         NOW THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the parties hereto agree as follows:

                                    ARTICLE 1

                     ISSUANCE OF WARRANTS AND EXECUTION AND
                        DELIVERY OF WARRANT CERTIFICATES

         1.1      ISSUANCE OF WARRANTS. [If Warrants alone - Upon issuance, each
Warrant Certificate shall evidence one or more Warrants.] [If Other Securities
and Warrants - Warrants shall be [initially] issued in connection with the
issuance of the Other Securities [but shall be separately transferable on and
after ___________________________________ (the "DETACHABLE DATE")] [and shall
not be separately transferable] and each Warrant Certificate shall evidence one
or more Warrants.] Each Warrant evidenced thereby shall represent the right,
subject to the provisions contained herein and therein, to purchase one Warrant
Security. [If Other Securities and Warrants - Warrant Certificates shall be
initially issued in units with the Other Securities and each Warrant Certificate
included in such a unit shall evidence _____________ Warrants for each
[$__________ principal amount] [________ shares] of Other Securities included in
such unit.]

         1.2      EXECUTION AND DELIVERY OF WARRANT CERTIFICATES. Each Warrant
Certificate, whenever issued, shall be in registered form substantially in the
form set forth in Exhibit A hereto, shall be dated the date of its
countersignature by the Warrant Agent and may have such

                                       1

<PAGE>

letters, numbers, or other marks of identification or designation and such
legends or endorsements printed, lithographed or engraved thereon as the
officers of the Company executing the same may approve (execution thereof to be
conclusive evidence of such approval) and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply with any law or
with any rule or regulation made pursuant thereto or with any rule or regulation
of any securities exchange on which the Warrants may be listed, or to conform to
usage. The Warrant Certificates shall be signed on behalf of the Company by any
of its present or future chief executive officers, presidents, senior vice
presidents, vice presidents, chief financial officers, chief legal officers,
treasurers, assistant treasurers, controllers, assistant controllers,
secretaries or assistant secretaries under its corporate seal reproduced
thereon. Such signatures may be manual or facsimile signatures of such
authorized officers and may be imprinted or otherwise reproduced on the Warrant
Certificates. The seal of the Company may be in the form of a facsimile thereof
and may be impressed, affixed, imprinted or otherwise reproduced on the Warrant
Certificates.

         No Warrant Certificate shall be valid for any purpose, and no Warrant
evidenced thereby shall be exercisable, until such Warrant Certificate has been
countersigned by the manual signature of the Warrant Agent. Such signature by
the Warrant Agent upon any Warrant Certificate executed by the Company shall be
conclusive evidence that the Warrant Certificate so countersigned has been duly
issued hereunder.

         In case any officer of the Company who shall have signed any of the
Warrant Certificates either manually or by facsimile signature shall cease to be
such officer before the Warrant Certificates so signed shall have been
countersigned and delivered by the Warrant Agent, such Warrant Certificates may
be countersigned and delivered notwithstanding that the person who signed
Warrant Certificates ceased to be such officer of the Company; and any Warrant
Certificate may be signed on behalf of the Company by such persons as, at the
actual date of the execution of such Warrant Certificate, shall be the proper
officers of the Company, although at the date of the execution of this Agreement
any such person was not such officer.

         The term "holder" or "holder of a Warrant Certificate" as used herein
shall mean any person in whose name at the time any Warrant Certificate shall be
registered upon the books to be maintained by the Warrant Agent for that purpose
[If Other Securities and Warrants are not immediately detachable - or upon the
registration of the Other Securities prior to the Detachable Date. Prior to the
Detachable Date, the Company will, or will cause the registrar of the Other
Securities to, make available at all times to the Warrant Agent such information
as to holders of the Other Securities as may be necessary to keep the Warrant
Agent's records up to date].

         1.3      ISSUANCE OF WARRANT CERTIFICATES. Warrant Certificates
evidencing the right to purchase Warrant Securities may be executed by the
Company and delivered to the Warrant Agent upon the execution of this Warrant
Agreement or from time to time thereafter. The Warrant Agent shall, upon receipt
of Warrant Certificates duly executed on behalf of the Company, countersign such
Warrant Certificates and shall deliver such Warrant Certificates to or upon the
order of the Company.

                                       2.

<PAGE>

                                    ARTICLE 2

                WARRANT PRICE, DURATION AND EXERCISE OF WARRANTS

         2.1      WARRANT PRICE. During the period specified in Section 2.2,
each Warrant shall, subject to the terms of this Warrant Agreement and the
applicable Warrant Certificate, entitle the holder thereof to purchase the
number of Warrant Securities specified in the applicable Warrant Certificate at
an exercise price of $_____ per Warrant Security, subject to adjustment upon the
occurrence of certain events, as hereinafter provided. Such purchase price per
Warrant Security is referred to in this Agreement as the "WARRANT PRICE."

         2.2      DURATION OF WARRANTS. Each Warrant may be exercised in whole
or in part at any time, as specified herein, on or after [the date thereof]
[________] and at or before [________] p.m., [City] time, on ________ or such
later date as the Company may designate by notice to the Warrant Agent and the
holders of Warrant Certificates mailed to their addresses as set forth in the
record books of the Warrant Agent (the "EXPIRATION DATE"). Each Warrant not
exercised at or before [________] p.m., [City] time, on the Expiration Date
shall become void, and all rights of the holder of the Warrant Certificate
evidencing such Warrant under this Agreement shall cease.

         2.3      EXERCISE OF WARRANTS.

                  (a)      During the period specified in Section 2.2, the
Warrants may be exercised to purchase a whole number of Warrant Securities in
registered form by providing certain information as set forth on the reverse
side of the Warrant Certificate and by paying in full, in lawful money of the
United States of America, [in cash or by certified check or official bank check
in New York Clearing House funds] [by bank wire transfer in immediately
available funds] the Warrant Price for each Warrant Security with respect to
which a Warrant is being exercised to the Warrant Agent at its corporate trust
office, provided that such exercise is subject to receipt within five business
days of such payment by the Warrant Agent of the Warrant Certificate with the
form of election to purchase Warrant Securities set forth on the reverse side of
the Warrant Certificate properly completed and duly executed. The date on which
payment in full of the Warrant Price is received by the Warrant Agent shall,
subject to receipt of the Warrant Certificate as aforesaid, be deemed to be the
date on which the Warrant is exercised; provided, however, that if, at the date
of receipt of such Warrant Certificates and payment in full of the Warrant
Price, the transfer books for the Warrant Securities purchasable upon the
exercise of such Warrants shall be closed, no such receipt of such Warrant
Certificates and no such payment of such Warrant Price shall be effective to
constitute the person so designated to be named as the holder of record of such
Warrant Securities on such date, but shall be effective to constitute such
person as the holder of record of such Warrant Securities for all purposes at
the opening of business on the next succeeding day on which the transfer books
for the Warrant Securities purchasable upon the exercise of such Warrants shall
be opened, and the certificates for the Warrant Securities in respect of which
such Warrants are then exercised shall be issuable as of the date on such next
succeeding day on which the transfer books shall next be opened, and until such
date the Company shall be under no duty to deliver any certificate for such
Warrant Securities. The Warrant Agent shall deposit all funds received by it in
payment of the Warrant Price in an account of the Company maintained with it and
shall advise the Company by

                                       3.

<PAGE>

telephone at the end of each day on which a payment for the exercise of Warrants
is received of the amount so deposited to its account. The Warrant Agent shall
promptly confirm such telephone advice to the Company in writing.

                  (b)      The Warrant Agent shall, from time to time, as
promptly as practicable, advise the Company of (i) the number of Warrant
Securities with respect to which Warrants were exercised, (ii) the instructions
of each holder of the Warrant Certificates evidencing such Warrants with respect
to delivery of the Warrant Securities to which such holder is entitled upon such
exercise, (iii) delivery of Warrant Certificates evidencing the balance, if any,
of the Warrants for the remaining Warrant Securities after such exercise, and
(iv) such other information as the Company shall reasonably require.

                  (c)      As soon as practicable after the exercise of any
Warrant, the Company shall issue to or upon the order of the holder of the
Warrant Certificate evidencing such Warrant the Warrant Securities to which such
holder is entitled, in fully registered form, registered in such name or names
as may be directed by such holder. If fewer than all of the Warrants evidenced
by such Warrant Certificate are exercised, the Company shall execute, and an
authorized officer of the Warrant Agent shall manually countersign and deliver,
a new Warrant Certificate evidencing Warrants for the number of Warrant
Securities remaining unexercised.

                  (d)      The Company shall not be required to pay any stamp or
other tax or other governmental charge required to be paid in connection with
any transfer involved in the issue of the Warrant Securities, and in the event
that any such transfer is involved, the Company shall not be required to issue
or deliver any Warrant Security until such tax or other charge shall have been
paid or it has been established to the Company's satisfaction that no such tax
or other charge is due.

                  (e)      Prior to the issuance of any Warrants there shall
have been reserved, and the Company shall at all times through the Expiration
Date keep reserved, out of its authorized but unissued Warrant Securities, a
number of shares sufficient to provide for the exercise of the Warrants.

                                    ARTICLE 3

                       OTHER PROVISIONS RELATING TO RIGHTS
                       OF HOLDERS OF WARRANT CERTIFICATES

         3.1      NO RIGHTS AS WARRANT SECURITYHOLDER CONFERRED BY WARRANTS OR
WARRANT CERTIFICATES. No Warrant Certificate or Warrant evidenced thereby shall
entitle the holder thereof to any of the rights of a holder of Warrant
Securities, including, without limitation, the right to receive the payment of
dividends or distributions, if any, on the Warrant Securities or to exercise any
voting rights, except to the extent expressly set forth in this Agreement or the
applicable Warrant Certificate.

         3.2      LOST, STOLEN, MUTILATED OR DESTROYED WARRANT CERTIFICATES.
Upon receipt by the Warrant Agent of evidence reasonably satisfactory to it and
the Company of the ownership of and the loss, theft, destruction or mutilation
of any Warrant Certificate and/or indemnity

                                       4.

<PAGE>

reasonably satisfactory to the Warrant Agent and the Company and, in the case of
mutilation, upon surrender of the mutilated Warrant Certificate to the Warrant
Agent for cancellation, then, in the absence of notice to the Company or the
Warrant Agent that such Warrant Certificate has been acquired by a bona fide
purchaser, the Company shall execute, and an authorized officer of the Warrant
Agent shall manually countersign and deliver, in exchange for or in lieu of the
lost, stolen, destroyed or mutilated Warrant Certificate, a new Warrant
Certificate of the same tenor and evidencing Warrants for a like number of
Warrant Securities. Upon the issuance of any new Warrant Certificate under this
Section 3.2, the Company may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto and
any other expenses (including the fees and expenses of the Warrant Agent) in
connection therewith. Every substitute Warrant Certificate executed and
delivered pursuant to this Section 3.2 in lieu of any lost, stolen or destroyed
Warrant Certificate shall represent an additional contractual obligation of the
Company, whether or not the lost, stolen or destroyed Warrant Certificate shall
be at any time enforceable by anyone, and shall be entitled to the benefits of
this Agreement equally and proportionately with any and all other Warrant
Certificates duly executed and delivered hereunder. The provisions of this
Section 3.2 are exclusive and shall preclude (to the extent lawful) all other
rights and remedies with respect to the replacement of mutilated, lost, stolen
or destroyed Warrant Certificates.

         3.3      HOLDER OF WARRANT CERTIFICATE MAY ENFORCE RIGHTS.
Notwithstanding any of the provisions of this Agreement, any holder of a Warrant
Certificate, without the consent of the Warrant Agent, the holder of any Warrant
Securities or the holder of any other Warrant Certificate, may, in such holder's
own behalf and for such holder's own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company suitable to enforce,
or otherwise in respect of, such holder's right to exercise the Warrants
evidenced by such holder's Warrant Certificate in the manner provided in such
holder's Warrant Certificate and in this Agreement.

         3.4      ADJUSTMENTS.

                  (a)      In case the Company shall at any time subdivide its
outstanding shares of [title of Depositary Shares purchasable through exercise
of Warrants] into a greater number of shares, the Warrant Price in effect
immediately prior to such subdivision shall be proportionately reduced and the
number of Warrant Securities purchasable under the Warrants shall be
proportionately increased. Conversely, in case the outstanding shares of [title
of Depositary Shares purchasable through exercise of Warrants] of the Company
shall be combined into a smaller number of shares, the Warrant Price in effect
immediately prior to such combination shall be proportionately increased and the
number of Warrant Securities purchasable under the Warrants shall be
proportionately decreased.

                  (b)      If at any time or from time to time the holders of
[title of Preferred Stock underlying the Depositary Shares purchasable through
exercise of Warrants] (or any shares of stock or other securities at the time
receivable upon the exercise of the Warrants) shall have received or become
entitled to receive, without payment therefore,

                           (i)      [title of Preferred Stock underlying
Depositary Shares purchasable through exercise of Warrants] or any shares of
stock or other securities which are at any time

                                       5.

<PAGE>

directly or indirectly convertible into or exchangeable for [title of Preferred
Stock underlying Depositary Shares purchasable through exercise of Warrants], or
any rights or options to subscribe for, purchase or otherwise acquire any of the
foregoing by way of dividend or other distribution;

                           (ii)     any cash paid or payable otherwise than in
accordance with the terms of [title of Preferred Stock underlying Depositary
Shares purchasable through exercise of Warrants] or otherwise than as a cash
dividend paid or payable out of the Company's current or retained earnings;

                           (iii)    any evidence of the Company's indebtedness
or rights to subscribe for or purchase the Company's indebtedness; or

                           (iv)     [title of Preferred Stock underlying
Depositary Shares purchasable through exercise of Warrants] or additional stock
or other securities or property (including cash) by way of spinoff, split-up,
reclassification, combination of shares or similar corporate rearrangement
(other than shares of [title of Depositary Shares purchasable through exercise
of Warrants] issued as a stock split or adjustments in respect of which shall be
covered by the terms of Section 3.4(a) above),

then and in each such case, the holder of each Warrant shall, upon the exercise
of the Warrant, be entitled to receive, in addition to the number of Warrant
Securities receivable thereupon, and without payment of any additional
consideration therefore, the amount of stock and other securities and property
(including cash and indebtedness (or rights to subscribe for or purchase
indebtedness) which such holder would hold on the date of such exercise had he
been the holder of record of such Warrant Securities as of the date on which
holders of [title of Preferred Stock underlying Depositary Shares purchasable
through exercise of Warrants] received or became entitled to receive such shares
or all other additional stock and other securities and property.

                  (c)      In case of (i) any reclassification, capital
reorganization, or change in the [title of Depositary Shares purchasable through
exercise of Warrants] or [title of Preferred Stock underlying Depositary Shares
purchasable through the exercise of the Warrants] of the Company (other than as
a result of a subdivision, combination or stock dividend provided for in Section
3.4(a) or Section 3.4(b) above), (ii) share exchange, merger or similar
transaction of the Company with or into another person or entity (other than a
share exchange, merger or similar transaction in which the Company is the
acquiring or surviving corporation and which does not result in any change in
the [title of Depositary Shares purchasable through exercise of Warrants] or
[title of Preferred Stock underlying Depositary Shares purchasable through the
exercise of the Warrants] other than the issuance of additional shares of [title
of Depositary Shares purchasable through exercise of Warrants] or [title of
Preferred Stock underlying Depositary Shares purchasable through the exercise of
the Warrants]) or (iii) the sale, exchange, lease, transfer or other disposition
of all or substantially all of the properties and assets of the Company as an
entirety (in any such case, a "REORGANIZATION EVENT"), then, as a condition of
such Reorganization Event, lawful provisions shall be made, and duly executed
documents evidencing the same from the Company or its successor shall be
delivered to the holders of the Warrants, so that the holders of the Warrants
shall have the right at any time prior to the expiration of the Warrants to
purchase, at a total price equal to that payable upon the exercise of the
Warrants, the

                                       6.

<PAGE>

kind and amount of shares of stock and other securities and property receivable
in connection with such Reorganization Event by a holder of the same number of
shares of [title of Depositary Shares purchasable through the exercise of the
Warrants] as were purchasable by the holders of the Warrants immediately prior
to such Reorganization Event. In any such case appropriate provisions shall be
made with respect to the rights and interests of the holders of the Warrants so
that the provisions hereof shall thereafter be applicable with respect to any
shares of stock or other securities and property deliverable upon exercise the
Warrants, and appropriate adjustments shall be made to the Warrant Price payable
hereunder provided the aggregate purchase price shall remain the same. In the
case of any transaction described in clauses (ii) and (iii) above, the Company
shall thereupon be relieved of any further obligation hereunder or under the
Warrants, and the Company as the predecessor corporation may thereupon or at any
time thereafter be dissolved, wound up or liquidated. Such successor or assuming
entity thereupon may cause to be signed, and may issue either in its own name or
in the name of the Company, any or all of the Warrants issuable hereunder which
heretofore shall not have been signed by the Company, and may execute and
deliver securities in its own name, in fulfillment of its obligations to deliver
Warrant Securities upon exercise of the Warrants. All the Warrants so issued
shall in all respects have the same legal rank and benefit under this Agreement
as the Warrants theretofore or thereafter issued in accordance with the terms of
this Agreement as though all of such Warrants had been issued at the date of the
execution hereof. In any case of any such Reorganization Event, such changes in
phraseology and form (but not in substance) may be made in the Warrants
thereafter to be issued as may be appropriate.

         The Warrant Agent may receive a written opinion of legal counsel as
conclusive evidence that any such Reorganization Event complies with the
provisions of this Section 3.4.

                  (d)      The Company may, at its option, at any time until the
Expiration Date, reduce the then current Warrant Price to any amount deemed
appropriate by the Board of Directors of the Company for any period not
exceeding twenty consecutive days (as evidenced in a resolution adopted by such
Board of Directors), but only upon giving the notices required by Section 3.5 at
least ten days prior to taking such action.

                  (e)      Except as herein otherwise expressly provided, no
adjustment in the Warrant Price shall be made by reason of the issuance of any
securities of the Company or for any other reason whatsoever.

                  (f)      No fractional Warrant Securities shall be issued upon
the exercise of Warrants. If more than one Warrant shall be exercised at one
time by the same holder, the number of full Warrant Securities which shall be
issuable upon such exercise shall be computed on the basis of the aggregate
number of Warrant Securities purchased pursuant to the Warrants so exercised.
Instead of any fractional Warrant Security which would otherwise be issuable
upon exercise of any Warrant, the Company shall pay a cash adjustment in respect
of such fraction in an amount equal to the same fraction of the last sales price
(or bid price if there were no sales) per Warrant Security, in either case as
reported on the New York Stock Exchange Composite Tape on the business day which
next precedes the day of exercise or, if the Warrant Securities are not then
listed or admitted to trading on the New York Stock Exchange, on the principal
national securities exchange on which the Warrant Securities are listed or
admitted to trading or, if not listed or admitted to trading on any national
securities exchange, on the

                                       7.

<PAGE>

National Market System of the National Association of Securities Dealers, Inc.
Automated Quotations System ("NASDAQ"), or if the Warrant Securities are not
then listed or admitted to trading on any national securities exchange or quoted
on the National Market System of NASDAQ, the average of the closing high bid and
low asked prices in the over-the-counter market, as reported by NASDAQ, or such
other system then in use, or if on any such date the Warrant Securities are not
quoted by any such organization, an amount equal to the same fraction of the
average of the closing bid and asked prices as furnished by any New York Stock
Exchange firm selected from time to time by the Company for that purpose at the
close of business on the business day which next precedes the day of exercise.

                  (g)      Whenever the Warrant Price then in effect is adjusted
as herein provided, the Company shall mail to each holder of the Warrants at
such holder's address as it shall appear on the books of the Company a statement
setting forth the adjusted Warrant Price then and thereafter effective under the
provisions hereof, together with the facts, in reasonable detail, upon which
such adjustment is based.

         3.5      NOTICE TO WARRANTHOLDERS. In case the Company shall (a) effect
any dividend or distribution described in Section 3.4(b), (b) effect any
Reorganization Event, (c) make any distribution on or in respect of the [title
of Depositary Shares purchasable through exercise of Warrants] or [title of
Preferred Stock underlying Depositary Shares purchasable through the exercise of
the Warrants] in connection with the dissolution, liquidation or winding up of
the Company, or (d) reduce the then current Warrant Price pursuant to Section
3.4(d), then the Company shall mail to each holder of Warrants at such holder's
address as it shall appear on the books of the Warrant Agent, at least ten days
prior to the applicable date hereinafter specified, a notice stating (x) the
record date for such dividend or distribution, or, if a record is not to be
taken, the date as of which the holders of record of [title of Preferred Stock
underlying Depositary Shares purchasable through the exercise of Warrants] that
will be entitled to such dividend or distribution are to be determined, (y) the
date on which such Reorganization Event, dissolution, liquidation or winding up
is expected to become effective, and the date as of which it is expected that
holders of [title of Depositary Shares purchasable through the exercise of the
Warrants] of record shall be entitled to exchange their shares of [title of
Depositary Shares purchasable through the exercise of the Warrants] for
securities or other property deliverable upon such Reorganization Event,
dissolution, liquidation or winding up, or (z) the first date on which the then
current Warrant Price shall be reduced pursuant to Section 3.4(d). No failure to
mail such notice nor any defect therein or in the mailing thereof shall affect
any such transaction or any adjustment in the Warrant Price required by Section
3.4.

         3.6      [IF THE WARRANTS ARE SUBJECT TO ACCELERATION BY THE COMPANY,
INSERT--ACCELERATION OF WARRANTS BY THE COMPANY.

                  (a)      At any time on or after ___________, the Company
shall have the right to accelerate any or all Warrants at any time by causing
them to expire at the close of business on the day next preceding a specified
date (the "ACCELERATION DATE"), if the Market Price (as hereinafter defined) of
the [title of Depositary Shares purchasable through the exercise of the
Warrants] equals or exceeds ____________ percent (_____%) of the then effective
Warrant Price on any twenty Trading Days (as hereinafter defined) within a
period of thirty consecutive

                                       8.

<PAGE>

Trading Days ending no more than five Trading Days prior to the date on which
the Company gives notice to the Warrant Agent of its election to accelerate the
Warrants.

                  (b)      "Market Price" for each Trading Day shall be, if the
[title of Depositary Shares purchasable through the exercise of the Warrants] is
listed or admitted for trading on the New York Stock Exchange, the last reported
sale price, regular way (or, if no such price is reported, the average of the
reported closing bid and asked prices, regular way) of [title of Depositary
Shares purchasable through the exercise of the Warrants], in either case as
reported on the New York Stock Exchange Composite Tape or, if the [title of
Depositary Shares purchasable through the exercise of the Warrants] is not
listed or admitted to trading on the New York Stock Exchange, on the principal
national securities exchange on which the [title of Depositary Shares
purchasable through the exercise of the Warrants] is listed or admitted to
trading or, if not listed or admitted to trading on any national securities
exchange, on the National Market System of NASDAQ or, if not listed or admitted
to trading on any national securities exchange or quoted on the National Market
System of NASDAQ, the average of the closing high bid and low asked prices in
the over-the-counter market, as reported by NASDAQ, or such other system then in
use, or if on any such date the shares of [title of Depositary Shares
purchasable through the exercise of the Warrants] are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by
any New York Stock Exchange firm selected from time to time by the Company for
that purpose. "Trading Day" shall be each Monday through Friday, other than any
day on which securities are not traded in the system or on the exchange that is
the principal market for the [title of Depositary Shares purchasable through the
exercise of the Warrants], as determined by the Board of Directors of the
Company.

                  (c)      In the event of an acceleration of less than all of
the Warrants, the Warrant Agent shall select the Warrants to be accelerated by
lot, pro rata or in such other manner as it deems, in its discretion, to be fair
and appropriate.

                  (d)      Notice of an acceleration specifying the Acceleration
Date shall be sent by mail first class, postage prepaid, to each registered
holder of a Warrant Certificate representing a Warrant accelerated at such
holder's address appearing on the books of the Warrant Agent not more than sixty
days nor less than thirty days before the Acceleration Date. Such notice of an
acceleration also shall be given no more than twenty days, and no less than ten
days, prior to the mailing of notice to registered holders of Warrants pursuant
to this Section 3.6, by publication at least once in a newspaper of general
circulation in the City of New York.

                  (e)      Any Warrant accelerated may be exercised until
[_____] p.m., [City] time, on the business day next preceding the Acceleration
Date. The Warrant Price shall be payable as provided in Section 2.]

                                   ARTICLE 4

                  EXCHANGE AND TRANSFER OF WARRANT CERTIFICATES

         4.1      EXCHANGE AND TRANSFER OF WARRANT CERTIFICATES. [If Other
Securities with Warrants which are immediately detachable - Upon] [If Other
Securities with Warrants which are not immediately detachable - Prior to the
Detachable Date, a Warrant Certificate may be

                                       9.

<PAGE>

exchanged or transferred only together with the Other Security to which the
Warrant Certificate was initially attached, and only for the purpose of
effecting or in conjunction with an exchange or transfer of such Other Security.
Prior to any Detachable Date, each transfer of the Other Security shall operate
also to transfer the related Warrant Certificates. After the Detachable Date,
upon] surrender at the corporate trust office of the Warrant Agent, Warrant
Certificates evidencing Warrants may be exchanged for Warrant Certificates in
other denominations evidencing such Warrants or the transfer thereof may be
registered in whole or in part; provided that such other Warrant Certificates
evidence Warrants for the same aggregate number of Warrant Securities as the
Warrant Certificates so surrendered. The Warrant Agent shall keep, at its
corporate trust office, books in which, subject to such reasonable regulations
as it may prescribe, it shall register Warrant Certificates and exchanges and
transfers of outstanding Warrant Certificates, upon surrender of the Warrant
Certificates to the Warrant Agent at its corporate trust office for exchange or
registration of transfer, properly endorsed or accompanied by appropriate
instruments of registration of transfer and written instructions for transfer,
all in form satisfactory to the Company and the Warrant Agent. No service charge
shall be made for any exchange or registration of transfer of Warrant
Certificates, but the Company may require payment of a sum sufficient to cover
any stamp or other tax or other governmental charge that may be imposed in
connection with any such exchange or registration of transfer. Whenever any
Warrant Certificates are so surrendered for exchange or registration of
transfer, an authorized officer of the Warrant Agent shall manually countersign
and deliver to the person or persons entitled thereto a Warrant Certificate or
Warrant Certificates duly authorized and executed by the Company, as so
requested. The Warrant Agent shall not be required to effect any exchange or
registration of transfer which will result in the issuance of a Warrant
Certificate evidencing a Warrant for a fraction of a Warrant Security or a
number of Warrants for a whole number of Warrant Securities and a fraction of a
Warrant Security. All Warrant Certificates issued upon any exchange or
registration of transfer of Warrant Certificates shall be the valid obligations
of the Company, evidencing the same obligations and entitled to the same
benefits under this Agreement as the Warrant Certificate surrendered for such
exchange or registration of transfer.

         4.2      TREATMENT OF HOLDERS OF WARRANT CERTIFICATES. [If Other
Securities and Warrants are not immediately detachable - Prior to the Detachable
Date, the Company, the Warrant Agent and all other persons may treat the owner
of the Other Security as the owner of the Warrant Certificates initially
attached thereto for any purpose and as the person entitled to exercise the
rights represented by the Warrants evidenced by such Warrant Certificates, any
notice to the contrary notwithstanding. After the Detachable Date and prior to
due presentment of a Warrant Certificate for registration of transfer, the]
[T]he Company, the Warrant Agent and all other persons may treat the registered
holder of a Warrant Certificate as the absolute owner thereof for any purpose
and as the person entitled to exercise the rights represented by the Warrants
evidenced thereby, any notice to the contrary notwithstanding.

         4.3      CANCELLATION OF WARRANT CERTIFICATES. Any Warrant Certificate
surrendered for exchange, registration of transfer or exercise of the Warrants
evidenced thereby shall, if surrendered to the Company, be delivered to the
Warrant Agent and all Warrant Certificates surrendered or so delivered to the
Warrant Agent shall be promptly canceled by the Warrant Agent and shall not be
reissued and, except as expressly permitted by this Agreement, no Warrant
Certificate shall be issued hereunder in exchange therefor or in lieu thereof.
The

                                      10.

<PAGE>

Warrant Agent shall deliver to the Company from time to time or otherwise
dispose of canceled Warrant Certificates in a manner satisfactory to the
Company.

                                   ARTICLE 5

                          CONCERNING THE WARRANT AGENT

         5.1      WARRANT AGENT. The Company hereby appoints _____________ as
Warrant Agent of the Company in respect of the Warrants and the Warrant
Certificates upon the terms and subject to the conditions herein set forth, and
_____________ hereby accepts such appointment. The Warrant Agent shall have the
powers and authority granted to and conferred upon it in the Warrant
Certificates and hereby and such further powers and authority to act on behalf
of the Company as the Company may hereafter grant to or confer upon it. All of
the terms and provisions with respect to such powers and authority contained in
the Warrant Certificates are subject to and governed by the terms and provisions
hereof.

         5.2      CONDITIONS OF WARRANT AGENT'S OBLIGATIONS. The Warrant Agent
accepts its obligations herein set forth upon the terms and conditions hereof,
including the following to all of which the Company agrees and to all of which
the rights hereunder of the holders from time to time of the Warrant
Certificates shall be subject:

                  (a)      COMPENSATION AND INDEMNIFICATION. The Company agrees
promptly to pay the Warrant Agent the compensation to be agreed upon with the
Company for all services rendered by the Warrant Agent and to reimburse the
Warrant Agent for reasonable out-of-pocket expenses (including reasonable
counsel fees) incurred without negligence, bad faith or willful misconduct by
the Warrant Agent in connection with the services rendered hereunder by the
Warrant Agent. The Company also agrees to indemnify the Warrant Agent for, and
to hold it harmless against, any loss, liability or expense incurred without
negligence, bad faith or willful misconduct on the part of the Warrant Agent,
arising out of or in connection with its acting as Warrant Agent hereunder,
including the reasonable costs and expenses of defending against any claim of
such liability.

                  (b)      AGENT FOR THE COMPANY. In acting under this Warrant
Agreement and in connection with the Warrant Certificates, the Warrant Agent is
acting solely as agent of the Company and does not assume any obligations or
relationship of agency or trust for or with any of the holders of Warrant
Certificates or beneficial owners of Warrants.

                  (c)      COUNSEL. The Warrant Agent may consult with counsel
satisfactory to it, which may include counsel for the Company, and the written
advice of such counsel shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in accordance with the advice of such counsel.

                  (d)      DOCUMENTS. The Warrant Agent shall be protected and
shall incur no liability for or in respect of any action taken or omitted by it
in reliance upon any Warrant Certificate, notice, direction, consent,
certificate, affidavit, statement or other paper or document reasonably believed
by it to be genuine and to have been presented or signed by the proper parties.

                                      11.

<PAGE>

                  (e)      CERTAIN TRANSACTIONS. The Warrant Agent, and its
officers, directors and employees, may become the owner of, or acquire any
interest in, Warrants, with the same rights that it or they would have if it
were not the Warrant Agent hereunder, and, to the extent permitted by applicable
law, it or they may engage or be interested in any financial or other
transaction with the Company and may act on, or as depositary, trustee or agent
for, any committee or body of holders of Warrant Securities or other obligations
of the Company as freely as if it were not the Warrant Agent hereunder. Nothing
in this Warrant Agreement shall be deemed to prevent the Warrant Agent from
acting as trustee under any indenture to which the Company is a party.

                  (f)      NO LIABILITY FOR INTEREST. Unless otherwise agreed
with the Company, the Warrant Agent shall have no liability for interest on any
monies at any time received by it pursuant to any of the provisions of this
Agreement or of the Warrant Certificates.

                  (g)      NO LIABILITY FOR INVALIDITY. The Warrant Agent shall
have no liability with respect to any invalidity of this Agreement or any of the
Warrant Certificates (except as to the Warrant Agent's countersignature
thereon).

                  (h)      NO RESPONSIBILITY FOR REPRESENTATIONS. The Warrant
Agent shall not be responsible for any of the recitals or representations herein
or in the Warrant Certificates (except as to the Warrant Agent's
countersignature thereon), all of which are made solely by the Company.

                  (i)      NO IMPLIED OBLIGATIONS. The Warrant Agent shall be
obligated to perform only such duties as are herein and in the Warrant
Certificates specifically set forth and no implied duties or obligations shall
be read into this Agreement or the Warrant Certificates against the Warrant
Agent. The Warrant Agent shall not be under any obligation to take any action
hereunder which may tend to involve it in any expense or liability, the payment
of which within a reasonable time is not, in its reasonable opinion, assured to
it. The Warrant Agent shall not be accountable or under any duty or
responsibility for the use by the Company of any of the Warrant Certificates
authenticated by the Warrant Agent and delivered by it to the Company pursuant
to this Agreement or for the application by the Company of the proceeds of the
Warrant Certificates. The Warrant Agent shall have no duty or responsibility in
case of any default by the Company in the performance of its covenants or
agreements contained herein or in the Warrant Certificates or in the case of the
receipt of any written demand from a holder of a Warrant Certificate with
respect to such default, including, without limiting the generality of the
foregoing, any duty or responsibility to initiate or attempt to initiate any
proceedings at law or otherwise or, except as provided in Section 6.2 hereof, to
make any demand upon the Company.

         5.3      RESIGNATION AND APPOINTMENT OF SUCCESSOR.

                  (a)      The Company agrees, for the benefit of the holders
from time to time of the Warrant Certificates, that there shall at all times be
a Warrant Agent hereunder until all the Warrants have been exercised or are no
longer exercisable.

                  (b)      The Warrant Agent may at any time resign as agent by
giving written notice to the Company of such intention on its part, specifying
the date on which its desired

                                      12.

<PAGE>

resignation shall become effective; provided that such date shall not be less
than three months after the date on which such notice is given unless the
Company otherwise agrees. The Warrant Agent hereunder may be removed at any time
by the filing with it of an instrument in writing signed by or on behalf of the
Company and specifying such removal and the intended date when it shall become
effective. Such resignation or removal shall take effect upon the appointment by
the Company, as hereinafter provided, of a successor Warrant Agent (which shall
be a bank or trust company authorized under the laws of the jurisdiction of its
organization to exercise corporate trust powers) and the acceptance of such
appointment by such successor Warrant Agent. The obligation of the Company under
Section 5.2(a) shall continue to the extent set forth therein notwithstanding
the resignation or removal of the Warrant Agent.

                  (c)      In case at any time the Warrant Agent shall resign,
or shall be removed, or shall become incapable of acting, or shall be adjudged a
bankrupt or insolvent, or shall commence a voluntary case under the Federal
bankruptcy laws, as now or hereafter constituted, or under any other applicable
Federal or state bankruptcy, insolvency or similar law or shall consent to the
appointment of or taking possession by a receiver, custodian, liquidator,
assignee, trustee, sequestrator (or other similar official) of the Warrant Agent
or its property or affairs, or shall make an assignment for the benefit of
creditors, or shall admit in writing its inability to pay its debts generally as
they become due, or shall take corporate action in furtherance of any such
action, or a decree or order for relief by a court having jurisdiction in the
premises shall have been entered in respect of the Warrant Agent in an
involuntary case under the Federal bankruptcy laws, as now or hereafter
constituted, or any other applicable Federal or state bankruptcy, insolvency or
similar law, or a decree or order by a court having jurisdiction in the premises
shall have been entered for the appointment of a receiver, custodian,
liquidator, assignee, trustee, sequestrator (or similar official) of the Warrant
Agent or of its property or affairs, or any public officer shall take charge or
control of the Warrant Agent or of its property or affairs for the purpose of
rehabilitation, conservation, winding up or liquidation, a successor Warrant
Agent, qualified as aforesaid, shall be appointed by the Company by an
instrument in writing, filed with the successor Warrant Agent. Upon the
appointment as aforesaid of a successor Warrant Agent and acceptance by the
successor Warrant Agent of such appointment, the Warrant Agent shall cease to be
Warrant Agent hereunder.

                  (d)      Any successor Warrant Agent appointed hereunder shall
execute, acknowledge and deliver to its predecessor and to the Company an
instrument accepting such appointment hereunder, and thereupon such successor
Warrant Agent, without any further act, deed or conveyance, shall become vested
with all the authority, rights, powers, trusts, immunities, duties and
obligations of such predecessor with like effect as if originally named as
Warrant Agent hereunder, and such predecessor, upon payment of its charges and
disbursements then unpaid, shall thereupon become obligated to transfer, deliver
and pay over, and such successor Warrant Agent shall be entitled to receive, all
monies, securities and other property on deposit with or held by such
predecessor, as Warrant Agent hereunder.

                  (e)      Any corporation into which the Warrant Agent
hereunder may be merged or converted or any corporation with which the Warrant
Agent may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Warrant Agent shall be a party, or any
corporation to which the Warrant Agent shall sell or otherwise transfer all or
substantially all the assets and business of the Warrant Agent, provided that it
shall be

                                      13.

<PAGE>

qualified as aforesaid, shall be the successor Warrant Agent under this
Agreement without the execution or filing of any paper or any further act on the
part of any of the parties hereto.

                                   ARTICLE 6

                                  MISCELLANEOUS

         6.1      AMENDMENT. This Agreement may be amended by the parties
hereto, without the consent of the holder of any Warrant Certificate, for the
purpose of curing any ambiguity, or of curing, correcting or supplementing any
defective provision contained herein, or making any other provisions with
respect to matters or questions arising under this Agreement as the Company and
the Warrant Agent may deem necessary or desirable; provided that such action
shall not materially adversely affect the interests of the holders of the
Warrant Certificates.

         6.2      NOTICES AND DEMANDS TO THE COMPANY AND WARRANT AGENT. If the
Warrant Agent shall receive any notice or demand addressed to the Company by the
holder of a Warrant Certificate pursuant to the provisions of the Warrant
Certificates, the Warrant Agent shall promptly forward such notice or demand to
the Company.

         6.3      ADDRESSES. Any communication from the Company to the Warrant
Agent with respect to this Agreement shall be addressed to ______________,
Attention: ____________ and any communication from the Warrant Agent to the
Company with respect to this Agreement shall be addressed to PacifiCare Health
Systems, Inc., 5995 Plaza Drive, Cypress, California 90630, Attention: General
Counsel (or such other address as shall be specified in writing by the Warrant
Agent or by the Company).

         6.4      GOVERNING LAW. This Agreement and each Warrant Certificate
issued hereunder shall be governed by and construed in accordance with the laws
of the State of [____________].

         6.5      DELIVERY OF PROSPECTUS. The Company shall furnish to the
Warrant Agent sufficient copies of a prospectus meeting the requirements of the
Securities Act of 1933, as amended, relating to the Warrant Securities
deliverable upon exercise of the Warrants (the "PROSPECTUS"), and the Warrant
Agent agrees that upon the exercise of any Warrant, the Warrant Agent will
deliver to the holder of the Warrant Certificate evidencing such Warrant, prior
to or concurrently with the delivery of the Warrant Securities issued upon such
exercise, a Prospectus.

The Warrant Agent shall not, by reason of any such delivery, assume any
responsibility for the accuracy or adequacy of such Prospectus.

         6.6      OBTAINING OF GOVERNMENTAL APPROVALS. The Company will from
time to time take all action which may be necessary to obtain and keep effective
any and all permits, consents and approvals of governmental agencies and
authorities and securities act filings under United States Federal and state
laws (including without limitation a registration statement in respect of the
Warrants and Warrant Securities under the Securities Act of 1933, as amended),
which may be or become requisite in connection with the issuance, sale,
transfer, and delivery of the Warrant Securities issued upon exercise of the
Warrants, the issuance, sale, transfer and delivery of the Warrants or upon the
expiration of the period during which the Warrants are exercisable.

                                      14.

<PAGE>

         6.7      PERSONS HAVING RIGHTS UNDER WARRANT AGREEMENT. Nothing in this
Agreement shall give to any person other than the Company, the Warrant Agent and
the holders of the Warrant Certificates any right, remedy or claim under or by
reason of this Agreement.

         6.8      HEADINGS. The descriptive headings of the several Articles and
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.

         6.9      COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which as so executed shall be deemed to be an original,
but such counterparts shall together constitute but one and the same instrument.

         6.10     INSPECTION OF AGREEMENT. A copy of this Agreement shall be
available at all reasonable times at the principal corporate trust office of the
Warrant Agent for inspection by the holder of any Warrant Certificate. The
Warrant Agent may require such holder to submit his Warrant Certificate for
inspection by it.

                                      15.

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.

                                PACIFICARE HEALTH SYSTEMS, INC.

                                By_________________________________________

                                Its_________________________________________

Attest:

___________________________

                                  _________________________________________
                                  Warrant Agent

                                  By_________________________________________

                                  Its_________________________________________

Attest:

___________________________

              [SIGNATURE PAGE DEPOSITARY SHARES WARRANT AGREEMENT]

<PAGE>

                                    EXHIBIT A

                           FORM OF WARRANT CERTIFICATE

                          [FACE OF WARRANT CERTIFICATE]

[Form if Warrants are attached to    Prior to _____________, this Warrant
Other Securities and are not         Certificate cannot be transferred or
immediately detachable.              exchanged unless attached to a [Title of
                                     Other Securities].]

[Form of Legend if Warrants are not  Prior to _____________, Warrants evidenced
immediately exercisable.             by this Warrant Certificate cannot be
                                     exercised.]

                EXERCISABLE ONLY IF COUNTERSIGNED BY THE WARRANT

                            AGENT AS PROVIDED HEREIN

           VOID AFTER [_______] P.M., [CITY] TIME, ON ______________,

                         PACIFICARE HEALTH SYSTEMS, INC.

                        WARRANT CERTIFICATE REPRESENTING
                              WARRANTS TO PURCHASE
                          [TITLE OF WARRANT SECURITIES]

No. ____________                                             __________ Warrants

         This certifies that _________________ or registered assigns is the
registered owner of the above indicated number of Warrants, each Warrant
entitling such owner [if Warrants are attached to Other Securities and are not
immediately detachable - , subject to the registered owner qualifying as a
"Holder" of this Warrant Certificate, as hereinafter defined),] to purchase, at
any time [after [________] p.m., [City] time, on ________ and] on or before
[____] p.m., [City] time, on __________, ________ shares of [Title of Warrant
Securities] (the "WARRANT SECURITIES"), of PacifiCare Health Systems, Inc. (the
"COMPANY") on the following basis: during the period from _________, through and
including ____________, the exercise price per Warrant Security will be
$_________, subject to adjustment as provided in the Warrant Agreement (as
hereinafter defined) (the "WARRANT PRICE"). The Holder may exercise the Warrants
evidenced hereby by providing certain information set forth on the back hereof
and by paying in full, in lawful money of the United States of America, [in cash
or by certified check or official bank check in New York Clearing House funds]
[by bank wire transfer in immediately available funds], the Warrant Price for
each Warrant Security with respect to which this Warrant is exercised to the
Warrant Agent (as hereinafter defined) and by surrendering this Warrant
Certificate, with the purchase form on the back hereof duly executed, at the
corporate trust office of [name of Warrant Agent], or its successor as warrant
agent (the "WARRANT AGENT"), which is, on the date hereof, at the address
specified on the reverse hereof, and upon compliance with and subject to the
conditions set forth herein and in the Warrant Agreement (as hereinafter
defined).

                                      A-1

<PAGE>

         The term "HOLDER" as used herein shall mean [if Warrants are attached
to Other Securities and are not immediately detachable - prior to ____________,
_____ (the "DETACHABLE DATE"), the registered owner of the Company's [title of
Other Securities] to which this Warrant Certificate was initially attached, and
after such Detachable Date,] the person in whose name at the time this Warrant
Certificate shall be registered upon the books to be maintained by the Warrant
Agent for that purpose pursuant to Section 4 of the Warrant Agreement.

         The Warrants evidenced by this Warrant Certificate may be exercised to
purchase a whole number of Warrant Securities in registered form. Upon any
exercise of fewer than all of the Warrants evidenced by this Warrant
Certificate, there shall be issued to the Holder hereof a new Warrant
Certificate evidencing Warrants for the number of Warrant Securities remaining
unexercised.

         This Warrant Certificate is issued under and in accordance with the
Warrant Agreement dated as of _____________, ____ (the "WARRANT AGREEMENT"),
between the Company and the Warrant Agent and is subject to the terms and
provisions contained in the Warrant Agreement, to all of which terms and
provisions the Holder of this Warrant Certificate consents by acceptance hereof.
Copies of the Warrant Agreement are on file at the above-mentioned office of the
Warrant Agent.

         [If Warrants are attached to Other Securities and are not immediately
detachable - Prior to the Detachable Date, this Warrant Certificate may be
exchanged or transferred only together with the [Title of Other Securities] (the
"OTHER SECURITIES") to which this Warrant Certificate was initially attached,
and only for the purpose of effecting or in conjunction with, an exchange or
transfer of such Other Security. Additionally, on or prior to the Detachable
Date, each transfer of such Other Security on the register of the Other
Securities shall operate also to transfer this Warrant Certificate. After such
date, transfer of this] [If Warrants are attached to Other Securities and are
immediately detachable - Transfer of this] Warrant Certificate may be registered
when this Warrant Certificate is surrendered at the corporate trust office of
the Warrant Agent by the registered owner or such owner's assigns, in the manner
and subject to the limitations provided in the Warrant Agreement.

         [If Other Securities with Warrants which are not immediately detachable
- Except as provided in the immediately preceding paragraph, after] [If Other
Securities with Warrants which are immediately detachable or Warrants alone -
After] countersignature by the Warrant Agent and prior to the expiration of this
Warrant Certificate, this Warrant Certificate may be exchanged at the corporate
trust office of the Warrant Agent for Warrant Certificates representing Warrants
for the same aggregate number of Warrant Securities.

         This Warrant Certificate shall not entitle the Holder hereof to any of
the rights of a holder of the Warrant Securities, including, without limitation,
the right to receive payments of dividends or distributions, if any, on the
Warrant Securities (except to the extent set forth in the Warrant Agreement) or
to exercise any voting rights.

         Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.

                                      A-2

<PAGE>

         This Warrant Certificate shall not be valid or obligatory for any
purpose until countersigned by the Warrant Agent.

         IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
in its name and on its behalf by the facsimile signatures of its duly authorized
officers.

Dated:_____________________________     PACIFICARE HEALTH SYSTEMS, INC.

                                        By____________________________________

                                        Its____________________________________

Attest:

____________________________________

Countersigned:

____________________________________
As Warrant Agent

By _________________________________
   Authorized Signature

                                      A-3

<PAGE>

                        [REVERSE OF WARRANT CERTIFICATE]

                     (Instructions for Exercise of Warrant)

         To exercise any Warrants evidenced hereby for Warrant Securities (as
hereinafter defined), the Holder must pay, in lawful money of the United States
of America, [in cash or by certified check or official bank check in New York
Clearing House funds] [by bank wire transfer in immediately available funds],
the Warrant Price in full for Warrants exercised, to [Warrant Agent] [address of
Warrant Agent], Attn: _____________, which payment must specify the name of the
Holder and the number of Warrants exercised by such Holder. In addition, the
Holder must complete the information required below and present this Warrant
Certificate in person or by mail (certified or registered mail is recommended)
to the Warrant Agent at the appropriate address set forth above. This Warrant
Certificate, completed and duly executed, must be received by the Warrant Agent
within five business days of the payment.

                   (To be executed upon exercise of Warrants)

         The undersigned hereby irrevocably elects to exercise __________
Warrants, evidenced by this Warrant Certificate, to purchase __________ shares
of the [Title of Warrant Securities] (the "WARRANT SECURITIES"), of PacifiCare
Health Systems, Inc. and represents that he has tendered payment for such
Warrant Securities, in lawful money of the United States of America, [in cash or
by certified check or official bank check in New York Clearing House funds] [by
bank wire transfer in immediately available funds], to the order of PacifiCare
Health Systems, Inc., c/o [insert name and address of Warrant Agent], in the
amount of $__________ in accordance with the terms hereof. The undersigned
requests that said Warrant Securities be in fully registered form in the
authorized denominations, registered in such names and delivered all as
specified in accordance with the instructions set forth below.

         If the number of Warrants exercised is less than all of the Warrants
evidenced hereby, the undersigned requests that a new Warrant Certificate
evidencing the Warrants for the number of Warrant Securities remaining
unexercised be issued and delivered to the undersigned unless otherwise
specified in the instructions below.

Dated ________________________           Name ________________________________
                                                     (Please Print)

                                         Address _______________________________

                                         _______________________________________

                                      A-4

<PAGE>

                                    ___________________________________________
                                   (Insert Social Security or Other Identifying
                                    Number of Holder)

Signature Guaranteed
                                    ___________________________________________
                                    Signature

                                    (Signature must conform in all respects to
                                    name of holder as specified on the face of
                                    this Warrant Certificate and must bear a
                                    signature guarantee by a bank, trust company
                                    or member broker of the New York, Midwest or
                                    Pacific Stock Exchange)

This Warrant may be exercised at the following addresses:

         By hand at ____________________________________________________________

                    ____________________________________________________________

                    ____________________________________________________________

         By mail at ____________________________________________________________

                    ____________________________________________________________

                    ____________________________________________________________

[Instructions as to form and delivery of Warrant Securities and, if applicable,
Warrant Certificates evidencing Warrants for the number of Warrant Securities
remaining unexercised - complete as appropriate.]

                                      A-5

<PAGE>

                                   ASSIGNMENT

                      [Form of assignment to be executed if
                   Warrant Holder desires to transfer Warrant)

         FOR VALUE RECEIVED, ___________________ hereby sells, assigns and
transfers unto:

________________________________________
________________________________________
________________________________________  ______________________________________
(Please print name and address including  Please insert Social Security or other
 zip code)                                identifying number

the right represented by the within Warrant to purchase _______ shares of [Title
of Warrant Securities] of PacifiCare Health Systems, Inc. to which the within
Warrant relates and appoints ____________ attorney to transfer such right on the
books of the Warrant Agent with full power of substitution in the premises.

Dated________________               __________________________________________
                                    Signature

                                    (Signature must conform in all respects to
                                    name of holder as specified on the face of
                                    the Warrant)

Signature Guaranteed

_______________________________

                                      A-6