Document:

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                                                                   EXHIBIT 10.10

                      SENIOR EXECUTIVE EMPLOYMENT AGREEMENT

         This EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
as of October 3, 2002, by and between PACIFICARE HEALTH SYSTEMS, INC., a
Delaware corporation (the "Company"), with its principal place of business
located at 5995 Plaza Drive, Cypress, California 90630 and A. PETER REYNOLDS
("Executive"), residing at 1934 Pt. Locksleigh Place, Newport Beach, CA 92660.

                                    RECITALS

         WHEREAS, the Company desires to employ Executive in the capacity of
Senior Vice President, Corporate Controller.

         WHEREAS, the Company and Executive are entering into this Agreement to
establish the 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, Corporate
Controller, 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 may be assigned.

         1.2 Devotion of Executive. During the term of this Agreement, Executive
shall devote his 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

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devote more time, 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. Except as provided by Section 2.2(f), if the Company offers
Executive a new employment agreement at the term of this Agreement, but
Executive does not accept the new employment agreement, then Executive's
continued employment with the Company will be without the benefit of a written
employment agreement, in which case Executive's entitlement to severance
benefits on termination shall be governed by then-existing Company policies and
practices.

         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 his
         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 his 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; 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 his employment with the Company) or engaging in unlawful
         activity which places the Company at financial risk or which could
         reasonably be expected to embarrass the Company or cause damage to the
         Company's reputation. In such event, Executive's termination shall be
         effective immediately upon receipt of written notice from the Company.

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                  d.       Company may terminate this Agreement, with or without
         cause, upon written notice to Executive. Except for the circumstances
         described in Subsections (a), (b), (e) and (f) of this Section 2.2,
         Executive's termination shall be effective upon receipt of such written
         notice. Executive may terminate this Agreement upon 30 days written
         notice to Company.

                  e.       Upon the expiration of the term of this Agreement,
         the Company neither extends the Agreement pursuant to Section 2.1 nor
         offers Executive a new employment agreement.

                  f.       Executive voluntarily terminates his employment, upon
         written notice to the Company, to be effective at the end of the term
         of this Agreement, after the Company offers Executive a new employment
         agreement that either establishes duties materially inconsistent with
         those described in Section 1.1 or reduces Executive's salary by more
         than 10 percent below the salary in effect at the end of the term of
         this Agreement.

3.       COMPENSATION DURING THE TERM OF THIS AGREEMENT

         3.1 Base Salary. As long as Executive satisfactorily performs all of
his 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 $250,000.
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 his 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, 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, the
Company's Statutory Restoration Plan and the Company's Deferred Compensation
Plan. 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
$750 (seven hundred fifty dollar) per month automobile allowance. The Company
shall furnish

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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 his
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.

         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, Corporate
Controller of the Company or in any other capacity to which Executive may be
appointed or elected.

         3.9 Promotional Grant of Stock Options. Company will recommend to its
Compensation Committee a promotional stock option grant of 17,000 shares.
Issuance of the options is subject to approval of the Compensation Committee.
The grant date and exercise price will be determined as of the closing price of
shares of PacifiCare stock on the effective date of the Executive's promotion.

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;

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                  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;

                  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 (except for resignation pursuant to Section 2.2(f)), 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 by Company Pursuant to Section 2.2(d) or 2.2(e). In the
event that the Company terminates Executive pursuant to Section 2.2(d) or 2.2(e)
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

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         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 dependents'
         medical, dental and vision benefits, on the same terms as other
         executives who remain employed with the Company, 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 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

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         shall provide the Company a certificate certifying as to his employment
         status and if employed, the name and business of his 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.

         4.5      Resignation by Executive Pursuant to Section 2.2(f). In the
event that Executive resigns pursuant to Section 2.2(f), then Executive shall be
entitled to the compensation provided by Section 4.4 of this Agreement.

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 his employment for "good cause" as defined in
         Section 5.1(d), then Executive shall be entitled to the following
         compensation:

                           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; or 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 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 by the Company 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; (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;

                           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

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                  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 he 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. The acquisition by any Person (as hereinafter
                  defined) of Beneficial Ownership (as hereinafter defined) of
                  20% or more of either the then outstanding Stock (the
                  "Outstanding Company Stock") or the combined voting power of
                  the then outstanding voting securities of the Company entitled
                  to vote generally in the election of directors (the
                  "Outstanding Company Voting Securities"), provided that, for
                  purposes of this subsection (1), the following acquisitions
                  shall not constitute a Change of Control: (I) any acquisition
                  by the Company, (II) any acquisition by any employee benefit
                  plan (or related trust) sponsored or maintained by the Company
                  or any Person that controls, is controlled by or is under
                  common control with, the Company or (III) any acquisition by
                  any Person pursuant to a transaction which complies with
                  clauses (I), (II) and (III) of subsection (3) of this
                  definition; or

                           2. Individuals who, as of the Effective Date,
                  constitute the Board (the "Incumbent Board") cease for any
                  reason to constitute at least a majority of the Board,
                  provided that, for purposes of this subsection (2), any
                  individual who becomes a director subsequent to the Effective
                  Date whose election, or nomination for election by the
                  Company's shareholders, was approved by a vote of at least a
                  majority of the directors then comprising the Incumbent Board
                  shall be considered as though such individual were a member of
                  the Incumbent Board, 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

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                  other actual or threatened solicitation of proxies or consents
                  by or on behalf of a Person other than the Board; or

                           3. Consummation of a reorganization, merger or
                  consolidation or sale or other disposition of all or
                  substantially all of the assets of the Company or the
                  acquisition of assets or stock of another corporation (a
                  "Business Combination"), in each case, unless, following such
                  Business Combination, (I) the Persons who had Beneficial
                  Ownership, respectively, of the Outstanding Company Stock and
                  Outstanding Company Voting Securities immediately prior to
                  such Business Combination have Beneficial Ownership
                  immediately following the consummation of such Business
                  Combination, directly or indirectly, of more than 50% of,
                  respectively, the then outstanding common shares and the
                  combined voting power of the then outstanding voting
                  securities entitled to vote generally in the election of
                  directors, as the case may be, of the corporation resulting or
                  surviving from such Business Combination (including, without
                  limitation, a corporation which as a result of such
                  transaction owns the Company or all or substantially all of
                  the Company's assets either directly or through one or more
                  subsidiaries) in substantially the same proportions as their
                  ownership immediately prior to such Business Combination of
                  the Outstanding Company Stock and Outstanding Company Voting
                  Securities, as the case may be, (II) no Person (excluding any
                  entity resulting from such Business Combination or any
                  employee benefit plan (or related trust) of the Company or
                  such entity resulting from such Business Combination) has
                  Beneficially Ownership, directly or indirectly, of 20% or more
                  of, respectively, the then outstanding common shares of the
                  entity resulting from such Business Combination or the
                  combined voting power of the then outstanding voting
                  securities of such entity, except to the extent that such
                  ownership existed in respect of the Company prior to such
                  Business Combination and (III) at least a majority of the
                  members of the board of directors or similar body of the
                  entity resulting from such Business Combination were members
                  of the Incumbent Board at the time of the execution of the
                  initial agreement, or of the action of the Board of Directors,
                  providing for such Business Combination; or

                           4. Approval by the shareholders of the Company of a
                  complete liquidation or dissolution of the Company.

                  Notwithstanding the foregoing provisions of this definition,
         unless otherwise determined by the Board, no Change of Control shall be
         deemed to have occurred if (I) Executive is a member of a group that
         first announces a proposal which, if successful, would result in a
         Change of Control and which proposal (including any modifications
         thereof) is ultimately successful, or (II) Executive acquires a two
         percent (2%) or more equity interest in the entity which ultimately
         acquires the Company pursuant to the transaction described in clause
         (I), above.

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                  For purposes of this definition, "Person" means an individual,
         partnership, joint venture corporation, trust, unincorporated
         organization, government (or agency or political subdivision thereof),
         group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
         Exchange Act) or any other entity, and "Beneficial Ownership" means
         beneficial ownership within the meaning of Rule 13d-3 promulgated under
         the Exchange Act.

                  d.       Good Cause. As used in this Agreement "good cause"
         for Executive to terminate his 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 his reporting level, title,
                  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;

                           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;

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                           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 records and any other protected healthcare
information, 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),

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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 and may include confidential or proprietary information received from
third parties. 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, 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

                                     - 12 -
<PAGE>

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      No Solicitation. Executive acknowledges and agrees that
Executive will not solicit or participate in or assist in any way in the
solicitation of any employees of Company. For purposes of this provision,
"solicitation" means directly or indirectly influencing or attempting to
influence employees of Company to become employed with any other person,
partnership, firm, or entity.

         6.5      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.

         6.6.     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.

                                     - 13 -
<PAGE>

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.
                             5995 Plaza Drive
                             Cypress, California 90630
                             Attn: President and
                             Chief Executive Officer

         If to Executive:    A. Peter Reynolds
                             1934 Pt. Locksleigh Place
                             Newport Beach, CA 92660

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.
Executive must execute the standard severance agreement and release within 45
days of being provided with the document to sign or the severance agreement
offer will expire.

         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

                                     - 14 -
<PAGE>

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.

         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

Date:   __/__/__
                                      By:
                                          --------------------------------------
                                               Gregory Scott
                                               Executive Vice President & CFO

Executive:
                                      ------------------------------------------
Date:  __/__/__                       A. Peter Reynolds

                                     - 15 -<PAGE>
                                                                   EXHIBIT 10.21

                         PACIFICARE HEALTH SYSTEMS, INC.
                            2003 INCENTIVE BONUS PLAN

Section 1.        Purpose

                           The purpose of the Management Incentive Compensation
                           Plan is to promote the interests of the Company by
                           attracting and retaining an outstanding management
                           and key employee staff. Under the Plan, incumbents in
                           stipulated key positions may receive Awards that vary
                           with the success of the Company, the Subsidiary
                           Operating Units as appropriate, and individual
                           performance. Awards payable under this Plan are not
                           intended to qualify as performance-based compensation
                           with the meaning of Section 162(m) of the Internal
                           Revenue Code of 1986, as amended (the "Code"), and
                           the Treasury Regulations promulgated thereunder.

Section 2.        Definitions

                           (a)      "Award" refers to a contingent right to
                                    receive cash at the end of a Plan Year.

                           (b)      "Committee" means a committee of the Board
                                    of Directors established to administer this
                                    Plan.

                           (c)      "Company" means PacifiCare Health Systems,
                                    Inc.

                           (d)      "Covered Employee" means (i) the Company's
                                    chief executive officer (or officers) on the
                                    last day of each Plan Year, and (ii) the
                                    four (4) highest compensated executive
                                    officers of the Company (as defined in Rule
                                    3b-7 under the Securities Exchange Act of
                                    1934, as amended) other than the chief
                                    executive officer (or officers), as
                                    determined on the last day of each Plan
                                    Year.

                           (e)      "Disability" means, with respect to a
                                    Participant, the Participant's permanent and
                                    total disability as defined in Section
                                    22(e)(3) of the Code.

                           (f)      "Participant" means any officer or full-time
                                    employee of the Company or any subsidiary of
                                    the Company as are determined by the
                                    Committee to have a direct, significant, and
                                    measurable impact on the attainment of the
                                    Company's or subsidiary's long term growth
                                    and profitability objectives; provided, that
                                    a Covered Employee may not be a Participant
                                    under this Plan.

                           (g)      "Plan" refers to this 2003 Incentive Bonus
                                    Plan.

                           (h)      "Plan Year" refers to each annual fiscal
                                    year of the Company.

                           (i)      "Retirement" means, with respect to a
                                    Participant, the Participant's voluntary
                                    termination of his or her employment with
                                    the Company that occurs after the sum of the
                                    following two factors meet or

                                       1

<PAGE>

                                    exceed fifty-five (55): (i) the
                                    Participant's age and (ii) the Participant's
                                    number of full years of service with the
                                    Company.

                           (j)      "Subsidiary Operating Units" refers to any
                                    profit center so designated by the
                                    Committee.

Section 3.        Administration

                           The Plan will be administered by the Committee. The
                           Committee will: (i) approve the Participants eligible
                           to receive Awards under the Plan with respect to each
                           Plan Year; (ii) determine the performance objectives;
                           and (iii) determine the amount of Awards subject to
                           the terms and conditions set forth in the Plan and to
                           other terms and conditions consistent with the
                           purpose and provisions of the Plan.

                           The Committee may prescribe, amend, or rescind such
                           rules, regulations, policies, interpretations, and
                           guides as deemed appropriate for proper and effective
                           Plan administration. In addition, only the Board of
                           Directors may suspend or terminate the Plan. Any of
                           the foregoing actions will affect future Plan Years
                           only.

                           No member of the Committee or employee of the Company
                           will be personally liable for any action, failure to
                           act, determination, or interpretation made in good
                           faith with respect to the Plan or any transaction
                           under the Plan.

                           All decisions, determinations, and interpretations of
                           the Committee will be final and binding.

Section 4.        Eligibility and Participation

                           The persons eligible to participate in the Plan shall
                           be those Participants designated by the Committee to
                           participate in the Plan.

                           The Committee will designate Participants who are to
                           be granted Awards for an Award year and, in its
                           discretion, may designate additional Participants
                           during any Award year as deemed appropriate;
                           provided, however, that adjustments shall be made to
                           the minimum performance objectives applicable to new
                           Participants to ensure that any Award payable to such
                           new Participant is based solely on the attainment of
                           future performance objectives. The Committee, through
                           its designee, will notify Participants of their
                           eligibility in writing. The Committee will not be
                           bound by selections made for prior Award years.

Section 5.        Determination and Allocation of Awards

                           (a)      Establishment of Annual Objectives and
                                    Formulas. For each Plan Year, the Committee
                                    will establish, in writing, specific
                                    financial and/or strategic performance
                                    objectives for such Plan Year. At such time,
                                    the Committee will establish minimum
                                    performance objectives below which no Awards
                                    will be earned, maximum performance
                                    objectives above which Awards will not be
                                    affected,

                                       2

<PAGE>

                                    and the formula for computing each
                                    Participant's Award. The performance
                                    objectives may, but need not, be based on
                                    the following criteria, either alone or in
                                    any combination, and on either a
                                    consolidated or Subsidiary Operating Unit
                                    level, and measured either on an absolute
                                    basis, relative basis against a
                                    pre-established target, and/or peer group,
                                    or prior year's performance as the Committee
                                    determine: (i) revenue(sales); (ii) cash
                                    flow; (iii) earnings per share (including
                                    earnings before interest, taxes and
                                    amortization); (iv) return on equity; (v)
                                    total shareholder return, (vi) return on
                                    capital; (vii) return on assets or net
                                    assets; (viii) income or net income; (ix)
                                    operating income or net operating income;
                                    (x) adjusted operating income; (xi)
                                    operating profit or net operating profit;
                                    (xii) operating margin; (xiii) market share;
                                    (xiv) member satisfaction; or (xv) employee
                                    satisfaction. The foregoing criteria shall
                                    have any reasonable definitions that the
                                    Committee may specify, which may include or
                                    exclude any or all of the following items as
                                    the Committee may specify: extraordinary,
                                    unusual or non-recurring items; effects of
                                    accounting changes; effects of financing
                                    activities; expenses for restructuring or
                                    productivity initiatives; other
                                    non-operating items; spending for
                                    acquisitions; and effects of divestitures.
                                    Any such performance objective or
                                    combination of such objectives may apply to
                                    a Participant's Award opportunity in its
                                    entirety or to any designated portion or
                                    portions of the Award opportunity, as the
                                    Committee may specify.

                                    Upon establishment of the performance
                                    objective(s) for a specific Plan Year, the
                                    appointed designee of the Committee will
                                    notify each participant in writing of the
                                    established objective(s).

                                    If the Committee determines the established
                                    performance objectives are no longer
                                    suitable due to a change in the Company's
                                    business, operations, corporate structure,
                                    capital structure, or other conditions
                                    deemed by the Committee to be material, the
                                    Committee will have sole discretion during
                                    the Plan Year to modify the performance
                                    objectives as considered appropriate and
                                    equitable.

                           (b)      Without limiting the generality of Section
                                    5(a), the Committee may, in its sole
                                    discretion, reduce the amount of any Award
                                    made to any Participant from the potential
                                    Award allocated to that Participant under
                                    Section 5(a), taking into account such
                                    factors as it deems relevant, including,
                                    without limitation: (1) significant
                                    financial or strategic achievements during
                                    the year; (2) its subjective assessment of
                                    such Participant's overall performance for
                                    the Plan Year; and (3) information about
                                    compensation practices at other peer group
                                    companies for the purpose of evaluating
                                    competitive compensation levels so that the
                                    Committee may determine that the amount of
                                    the Award is within the targeted competitive
                                    compensation range of the Company's
                                    compensation program. The Committee shall
                                    determine the amount of any

                                       3

<PAGE>

                                    reduction in a Participant's Award on the
                                    basis of the foregoing and other factors it
                                    deems relevant and shall not be required to
                                    establish any allocation or weighting
                                    formula with respect to the factors it
                                    considers.

                           (c)      No Stockholder Approval. Establishment of
                                    Awards for Participants shall not be subject
                                    to, nor contingent upon, the disclosure to
                                    the stockholders of the Company of the
                                    material terms of the performance objectives
                                    and stockholder approval of such terms.

Section 6.        Payment of Awards Earned

                           The basis of Awards for a given Plan Year will be the
                           achievement of the performance objectives and
                           individual contributions as determined by the
                           Committee. If minimum financial performance is not
                           attained for a Plan Year, no payment will be made and
                           all contingent rights will cease. Further, no
                           additional payments will be made for financial
                           performance above the maximum objective.

                           If performance objectives are achieved, the Committee
                           shall certify in writing, prior to the payment of any
                           Award, that such performance goals (and any other
                           material terms) were satisfied. The Award, if any,
                           earned by each Participant will be paid as soon as
                           administratively possible following the close of the
                           applicable Plan year and the certification by the
                           Committee, described in the preceding sentence.

                           A Participant may elect in writing one year in
                           advance of a Plan Year, upon approval by the
                           Committee, to defer receipt of all or a portion of an
                           Award earned for a specified time as approved by the
                           Committee. Payment of deferred amounts may be in a
                           lump sum on the designated payment date or in
                           installments as approved by the Committee. A
                           Participant's right to any deferred Award will be
                           that of a general creditor of the Company; no trust
                           will be deemed to be created by virtue of such
                           deferral.

Section 7.        Termination of Employment

                           In the event of a Participant's death, Disability, or
                           Retirement during a Plan Year, payment of the Award
                           earned will be prorated unless otherwise determined
                           by the Committee. Such Awards will then be paid to
                           the Participant, the Participant's estate or legal
                           representative as determined by the Committee.

                           In the event of a Participant's death, Disability, or
                           Retirement, after the end of the Plan Year but before
                           payment of an Award to which the Participant is
                           entitled, such Award will be paid to the Participant,
                           the Participant's estate or legal representative.

                           In the event of termination of employment of a
                           Participant or a Participant ceases to be an Officer,
                           voluntarily or by the actions of the Company, with

                                       4

<PAGE>

                           or without cause, for reasons other than those
                           specified above, at any time before payment of the
                           incentive award, the Participant will forfeit all
                           rights to any Award subject to the sole discretion of
                           the Committee.

Section 8.        Discretionary Incentive Award.

                           The Committee may, in its sole discretion, make an
                           additional award to any Participant determined by the
                           Committee to have positively impacted directly on the
                           attainment of the performance objectives established
                           by the Committee.

Section 9.        Adjustments Upon Changes in Capitalization

                           In the event of a reorganization, merger,
                           consolidation or similar transaction in which the
                           Company is not the surviving corporation, or upon the
                           sale of substantially all the assets of the Company
                           to another corporation, or upon the dissolution or
                           liquidation of the Company, then the Company or a
                           successor corporation, if any, may continue the Plan
                           and, if not, then the Plan will terminate on the
                           effective date of such transaction. Provision will be
                           made for determining the amount of cash payable for
                           all Awards for a Plan Year which will end after such
                           event based on the portion of the Plan Year occurring
                           prior to such event, unless provisions are made for
                           the continuance of the Plan and the assumption or
                           substitution for such Awards of an equivalent value
                           by the successor corporation.

                           Adjustments under this section will be made by the
                           Committee whose determination as to what adjustments
                           will be made and the extent will be final, binding,
                           and conclusive.

Section 10.       General Provisions

                           (a)      No right to Participate: Nothing in the Plan
                                    will be deemed to give a Participant or a
                                    Participant's legal representative or any
                                    other person or entity claiming under or
                                    through a Participant any contract or right
                                    to participate in the benefits of the Plan.

                           (b)      No Employment Right: Participation in the
                                    Plan will not be construed as constituting a
                                    commitment, guarantee, agreement, or
                                    understanding of any kind that the Company
                                    will continue to employ any individual.

                           (c)      Nontransferability: A Participant or any
                                    designed beneficiary has no right to assign,
                                    transfer, attach, or hypothecate any
                                    benefits or payments of the Plan.

                           (d)      Withholding: The Company has the right to
                                    deduct any sums federal, state, or local tax
                                    requires to be withheld with respect to the
                                    payment of any Award.

                           (e)      Restricted Liability: Payments held by the
                                    Company before distribution will not be
                                    liable for the debts, contracts, or
                                    obligations

                                       5

<PAGE>

                                    of any Participant or beneficiary, or be
                                    taken in execution by attachment or
                                    garnishment, or by any other legal or
                                    equitable proceeding.

Section 11.       Amendment, Suspension, or Termination of Plan

                           The Company may amend, suspend, or terminate the Plan
                           at any time. Such amendment, suspension, or
                           termination will not adversely alter or affect any
                           right or obligation to any Award made before this
                           action. The Committee will determine the effect on
                           Awards that may be effected by such event and make
                           adjustments and/or payments as it, in its sole
                           discretion, determines appropriate.

Section 12.       Effective Date

                           This Plan will be effective upon its adoption by the
                           Company and may be applied retroactively to the
                           beginning of the Company's fiscal year at the sole
                           discretion of the Committee.

                                       6

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