Document:

<PAGE>
                                                                    EXHIBIT 4.2

        THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE
HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF
REGULATION D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR")
OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT, (2) AGREES
THAT IT WILL NOT, WITHIN THE TIME PERIOD REFERRED TO UNDER RULE 144(k) UNDER THE
SECURITIES ACT AS IN EFFECT ON THE DATE OF THE TRANSFER OF THIS NOTE, RESELL OR
OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO PACIFICARE HEALTH SYSTEMS, INC. OR
ANY OF ITS SUBSIDIARIES, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE
WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE
TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER
CAN BE OBTAINED FROM THE TRUSTEE), AND, IF SUCH TRANSFER IS IN RESPECT OF AN
AGGREGATE PRINCIPAL AMOUNT OF NOTES OF LESS THAN $100,000, AN OPINION OF COUNSEL
ACCEPTABLE TO PACIFICARE HEALTH SYSTEMS, INC. THAT SUCH TRANSFER IS IN
COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT
TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT
(IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS
NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
CONNECTION WITH ANY TRANSFER OF THIS NOTE WITHIN THE TIME PERIOD REFERRED TO IN
RULE 144(k), THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE
HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO
THE TRUSTEE. IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR
OR NON-U.S. PERSON, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE
TRUSTEE AND PACIFICARE HEALTH SYSTEMS, INC. SUCH CERTIFICATIONS, LEGAL OPINIONS
OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT
SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE
THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE
INDENTURE CONTAINS

<PAGE>

PROVISIONS REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE
IN VIOLATION OF THE FOREGOING RESTRICTION.

        UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, TO PACIFICARE HEALTH SYSTEMS, INC. OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER ENTITY AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

        TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
SECTION 2.08 OF THE INDENTURE.

                         PACIFICARE HEALTH SYSTEMS, INC.

                          10 3/4% Senior Note due 2009

                                                              CUSIP 695 112 AD 4

No. 1                                                               $499,420,000

        PACIFICARE HEALTH SYSTEMS, INC., a Delaware corporation (the "Company",
which term includes any successor under the Indenture hereinafter referred to),
for value received, promises to pay to CEDE & Co., or its registered assigns,
the principal sum of FOUR HUNDRED NINETY-NINE MILLION FOUR HUNDRED AND TWENTY
THOUSAND DOLLARS ($499,420,000) on June 1, 2009.

        Interest Payment Dates: June 1 and December 1, commencing December 1,
2002.

        Regular Record Dates: May 15 and November 15.

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

<PAGE>
        IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officer.

                                           PACIFICARE HEALTH SYSTEMS, INC.

                                           By: /s/ Howard G. Phanstiel
                                               --------------------------------
                                               Name:
                                               Title:

                                           By: /s/ Gregory W. Scott
                                               --------------------------------
                                               Name:
                                               Title:

                    (Trustee's Certificate of Authentication)

This is one of the 10 3/4% Senior Notes due 2009 described in the
within-mentioned Indenture.

Date:  May 21, 2002                        STATE STREET BANK AND TRUST
                                           COMPANY OF CALIFORNIA, N.A.,
                                           as Trustee

                                           By:  /s/ Mark Henson
                                               --------------------------------
                                               Authorized Signatory

<PAGE>

                             [REVERSE SIDE OF NOTE]

                         PACIFICARE HEALTH SYSTEMS, INC.

                          10 3/4% Senior Note due 2009

1. Principal and Interest.

        The Company will pay the principal of this Note on June 1, 2009.

        The Company promises to pay interest on the principal amount of this
Note on each Interest Payment Date, as set forth below, at the rate per annum
shown above except as provided below.

        Interest will be payable semiannually (to the holders of record of the
Notes at the close of business on the May 15 or November 15 immediately
preceding the Interest Payment Date) on each Interest Payment Date, commencing
December 1, 2002.

        If an exchange offer (the "Exchange Offer") registered under the
Securities Act is not consummated and a shelf registration statement (the "Shelf
Registration Statement") under the Securities Act with respect to resales of the
Notes is not declared effective by the Commission, on or before February 21,
2003 in accordance with the terms of the Registration Rights Agreement dated May
21, 2002 between the Company, the Initial Subsidiary Guarantors and Morgan
Stanley & Co. Incorporated and UBS Warburg LLC, the annual interest rate borne
by the Notes shall be increased by 0.5% from the rate shown above accruing from
February 21, 2003 payable in cash semiannually, in arrears, on each Interest
Payment Date, commencing June 1, 2003 until the Exchange Offer is consummated, a
shelf registration statement under the Securities Act with respect to resales of
the Notes is declared effective by the Commission in accordance with the terms
of the Registration Rights Agreement or the Notes become freely tradeable
without registration under the Securities Act. The Holder of this Note is
entitled to the benefits of such Registration Rights Agreement.

        Interest on the Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from May 21, 2002;
provided that, if there is no existing default in the payment of interest and
this Note is authenticated between a Regular Record Date referred to on the face
hereof and the next succeeding Interest Payment Date, interest shall accrue from
such Interest Payment Date. Interest will be computed on the basis of a 360-day
year of twelve 30-day months.

        The Company shall pay interest on overdue principal and premium, if any,
and interest on overdue installments of interest, to the extent lawful, at a
rate per annum that is 1% in excess of the rate otherwise payable.

<PAGE>

2. Method of Payment.

        The Company will pay interest (except defaulted interest) on the
principal amount of the Notes as provided above on each June 1 and December 1,
commencing December 1, 2002 to the persons who are Holders (as reflected in the
Security Register at the close of business on the May 15 or November 15
immediately preceding the Interest Payment Date), in each case, even if the Note
is cancelled on registration of transfer or registration of exchange after such
record date; provided that, with respect to the payment of principal, the
Company will make payment to the Holder that surrenders this Note to a Paying
Agent on or after June 1, 2009.

        The Company will pay principal, premium, if any, and as provided above,
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts. The Company shall pay principal,
premium, if any, and interest by wire transfer to any Holder who has provided
the Company with wire transfer instructions. The Company may pay principal,
premium, if any, and interest by check to any other Holder. It may mail an
interest check to a Holder's registered address (as reflected in the Security
Register). If a payment date is a date other than a Business Day at a place of
payment, payment may be made at that place on the next succeeding day that is a
Business Day and no interest shall accrue for the intervening period.

3. Paying Agent and Registrar.

        Initially, the Trustee will act as authenticating agent, Paying Agent
and Registrar. The Company may change any authenticating agent, Paying Agent or
Registrar without notice. The Company, any Subsidiary or any Affiliate of any of
them may act as Paying Agent, Registrar or co-Registrar.

4. Indenture; Limitations.

        The Company issued the Notes under an Indenture dated as of May 21, 2002
(the "Indenture"), among the Company, the Subsidiary Guarantors named therein
and State Street Bank and Trust Company of California, N.A., trustee (the
"Trustee"). Capitalized terms herein are used as defined in the Indenture unless
otherwise indicated. The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act. The Notes are subject to all such terms, and Holders are referred
to the Indenture and the Trust Indenture Act for a statement of all such terms.
To the extent permitted by applicable law, in the event of any inconsistency
between the terms of this Note and the terms of the Indenture, the terms of the
Indenture shall control.

        The Notes are general unsecured obligations of the Company.

        The Company's obligations under the Notes are fully and unconditionally
guaranteed on an unsecured unsubordinated basis, to the extent set forth in the
Indenture, by each of the Subsidiary Guarantors.

        The Company may, subject to Article Four of the Indenture and applicable
law, issue additional Notes under the Indenture.

<PAGE>

5. Optional Redemption.

        The Notes are redeemable, at the Company's option, in whole or in part,
at any time or from time to time, on or after June 1, 2006 and prior to
maturity, upon not less than 30 nor more than 60 days' prior notice mailed by
first class mail to each Holder's last address, as it appears in the Security
Register, at the following Redemption Prices (expressed in percentages of
principal amount), plus accrued and unpaid interest to the Redemption Date
(subject to the right of Holders of record on the relevant Regular Record Date
that is prior to the Redemption Date to receive interest due on an Interest
Payment Date), if redeemed during the 12-month period commencing June 1 of the
years set forth below:

<TABLE>
<CAPTION>
                                                                 Redemption
                            Year                                   Price
                          --------                               ----------
<S>                                                              <C>
                          2006 ..............................    105.375%
                          2007 ..............................    102.688%
                          2008 and thereafter................    100.000%
</TABLE>

        At any time prior to June 1, 2005 the Company may redeem up to 35% of
the aggregate principal amount of the Notes with the Net Cash Proceeds of one or
more sales of its Capital Stock (other than Disqualified Stock), at any time as
a whole or from time to time in part, at a Redemption Price (expressed as a
percentage of principal amount) of 110.750% plus accrued and unpaid interest to
the Redemption Date (subject to the rights of Holders of record on the relevant
Regular Record Date that is prior to the Redemption Date to receive interest due
on an Interest Payment Date)); provided that (i) at least 65% of the aggregate
principal amount of Notes originally issued on the Closing Date remains
outstanding after each such redemption and (ii) notice of such redemption shall
be mailed within 60 days of each such sale of Capital Stock.

        At any time on or prior to June 1, 2006, the Notes may be redeemed, in
whole but not in part, at the option of the Company upon the occurrence of a
Change of Control (but in no event more than 90 days after the occurrence of
such Change of Control) at a redemption price equal to 100% of the principal
amount thereof plus the Applicable Premium as of, and accrued and unpaid
interest, to, the Redemption Date.

        Notes in original denominations larger than $1,000 may be redeemed in
part. On and after the Redemption Date, interest ceases to accrue on Notes or
portions of Notes called for redemption, unless the Company defaults in the
payment of the Redemption Price.

6. Repurchase upon Change of Control.

        Upon the occurrence of any Change of Control, each Holder shall have the
right to require the repurchase of its Notes by the Company in cash pursuant to
the offer described in the Indenture at a purchase price equal to 101% of the
principal amount thereof plus accrued and unpaid interest, if any, to the date
of purchase (the "Payment Date").

        A notice of such Change of Control will be mailed within 30 days after
any Change of Control occurs to each Holder at its last address as it appears in
the Security Register. Notes in original denominations larger than $1,000 may be
sold to the Company in part. On and

<PAGE>

after the Payment Date, interest ceases to accrue on Notes or portions of Notes
surrendered for purchase by the Company, unless the Company defaults in the
payment of the purchase price.

7. Denominations; Transfer; Exchange.

        The Notes are in registered form without coupons in denominations of
$1,000 of principal amount and multiples of $1,000 in excess thereof. A Holder
may register the transfer or exchange of Notes in accordance with the Indenture.
The Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not register the transfer
or exchange of any Notes selected for redemption. Also, it need not register the
transfer or exchange of any Notes for a period of 15 days before the day of
mailing of a notice of redemption of Notes selected for redemption.

8. Persons Deemed Owners.

        A Holder shall be treated as the owner of a Note for all purposes.

9. Unclaimed Money.

        If money for the payment of principal, premium, if any, or interest
remains unclaimed for two years, the Trustee and the Paying Agent will pay the
money back to the Company at its request. After that, Holders entitled to the
money must look to the Company for payment, unless an abandoned property law
designates another Person, and all liability of the Trustee and such Paying
Agent with respect to such money shall cease.

10. Discharge Prior to Redemption or Maturity.

        If the Company deposits with the Trustee money and/or U.S. Government
Obligations sufficient to pay the then outstanding principal ==== of, premium,
if any, and accrued interest on the Notes (a) to redemption or maturity, the
Company will be discharged from the Indenture and the Notes, except in certain
circumstances for certain provisions thereof, and (b) to the Stated Maturity,
the Company will be discharged from certain covenants set forth in the
Indenture.

11. Amendment; Supplement; Waiver.

        Subject to certain exceptions, the Indenture, the Note Guarantees or the
Notes may be amended or supplemented with the consent of the Holders of at least
a majority in principal amount of the Notes then outstanding, and any existing
default or compliance with any provision may be waived with the consent of the
Holders of at least a majority in principal amount of the Notes then
outstanding. Without notice to or the consent of any Holder, the parties thereto
may amend or supplement the Indenture, the Note Guarantees or the Notes to,
among other things, cure any ambiguity, defect or inconsistency and make any
change that does not materially and adversely affect the rights of any Holder.

<PAGE>

12. Restrictive Covenants.

        The Indenture imposes certain limitations on the ability of the Company
and its Restricted Subsidiaries, among other things, to Incur additional
Indebtedness, make Restricted Payments, suffer to exist restrictions on the
ability of Restricted Subsidiaries to make certain payments to the Company,
issue Capital Stock of Restricted Subsidiaries, Guarantee Indebtedness of the
Company, engage in transactions with Affiliates, suffer to exist or incur Liens,
enter into sale-leaseback transactions, use the proceeds from Asset Sales, or
merge, consolidate or transfer substantially all of its assets. Within 120 days
after the end of each fiscal year, the Company shall deliver to the Trustee an
Officers' Certificate stating whether or not the signers thereof know of any
Default or Event of Default under such restrictive covenants.

13. Successor Persons.

        When a successor person or other entity assumes all the obligations of
its predecessor under the Notes or a Note Guarantee and the Indenture, the
predecessor person will be released from those obligations.

14. Defaults and Remedies.

        Any of the following events constitutes an "Event of Default" under the
Indenture:

                The following events will be defined as "Events of Default" in
        the Indenture:

                (a) default in the payment of principal of (or premium, if any,
        on) any Note when the same becomes due and payable at maturity, upon
        acceleration, redemption or otherwise;

                (b) default in the payment of interest on any Note when the same
        becomes due and payable, and such default continues for a period of 30
        days;

                (c) default in the performance or breach of Article Five of the
        Indenture or the failure by the Company to make or consummate an Offer
        to Purchase in accordance with Sections 4.11 or 4.12;

                (d) The Company or any Subsidiary Guarantor defaults in the
        performance of or breaches any other covenant or agreement in the
        Indenture or under the Notes (other than a default specified in clause
        (a), (b) or (c) above) and such default or breach continues for a period
        of 30 consecutive days after written notice by the Trustee or the
        Holders of 25% or more in aggregate principal amount of the Notes;

                (e) there occurs with respect to any issue or issues of
        Indebtedness of the Company, any Subsidiary Guarantor or any Significant
        Subsidiary having an outstanding principal amount of $35 million or more
        in the aggregate for all such issues of all such Persons, whether such
        Indebtedness now exists or shall hereafter be created, (I) an event of
        default that has caused the holder thereof to declare such Indebtedness
        to be due and payable prior to its Stated Maturity and such Indebtedness
        has not been discharged in full

<PAGE>

        or such acceleration has not been rescinded or annulled within 30 days
        of such acceleration and/or (II) the failure to make a principal payment
        at the final (but not any interim) fixed maturity and such defaulted
        payment shall not have been made, waived or extended within 30 days of
        such payment default;

                (f) any final judgment or order (not covered by insurance) for
        the payment of money in excess of $35 million in the aggregate for all
        such final judgments or orders against all such Persons (treating any
        deductibles, self-insurance or retention as not so covered) shall be
        rendered against the Company, any Subsidiary Guarantor or any
        Significant Subsidiary and shall not be paid or discharged, and there
        shall be any period of 60 consecutive days following entry of the final
        judgment or order that causes the aggregate amount for all such final
        judgments or orders outstanding and not paid or discharged against all
        such Persons to exceed $35 million during which a stay of enforcement of
        such final judgment or order, by reason of a pending appeal or
        otherwise, shall not be in effect;

                (g) a court having jurisdiction in the premises enters a decree
        or order for (A) relief in respect of the Company, any Subsidiary
        Guarantor or any Significant Subsidiary in an involuntary case under any
        applicable bankruptcy, insolvency or other similar law now or hereafter
        in effect, (B) appointment of a receiver, liquidator, assignee,
        custodian, trustee, sequestrator or similar official of the Company, any
        Subsidiary Guarantor or any Significant Subsidiary or for all or
        substantially all of the property and assets of the Company, any
        Subsidiary Guarantor or any Significant Subsidiary or (C) the winding up
        or liquidation of the affairs of the Company, any Subsidiary Guarantor
        or any Significant Subsidiary and, in each case, such decree or order
        shall remain unstayed and in effect for a period of 60 consecutive days;

                (h) The Company, any Subsidiary Guarantor or any Significant
        Subsidiary (A) commences a voluntary case under any applicable
        bankruptcy, insolvency or other similar law now or hereafter in effect,
        or consents to the entry of an order for relief in an involuntary case
        under any such law, (B) consents to the appointment of or taking
        possession by a receiver, liquidator, assignee, custodian, trustee,
        sequestrator or similar official of the Company, any Subsidiary
        Guarantor or any Significant Subsidiary or for all or substantially all
        of the property and assets of the Company, any Subsidiary Guarantor or
        any Significant Subsidiary or (C) effects any general assignment for the
        benefit of creditors; or

                (i) any Subsidiary Guarantor repudiates its obligations under
        its Note Guarantee or, except as permitted by the Indenture, any Note
        Guarantee is determined to be unenforceable or invalid or shall for any
        reason cease to be in full force and effect.

           If an Event of Default, as defined in the Indenture, occurs and is
continuing, the Trustee may, and at the direction of the Holders of at least 25%
in aggregate principal amount of the Notes then outstanding shall, declare all
the Notes to be due and payable. If a bankruptcy or insolvency default with
respect to the Company occurs and is continuing, the Notes automatically become
due and payable. Holders may not enforce the Indenture or the Notes except as
provided in the Indenture. The Trustee may require indemnity reasonably
satisfactory

<PAGE>

to it before it enforces the Indenture or the Notes. Subject to certain
limitations, Holders of at least a majority in principal amount of the Notes
then outstanding may direct the Trustee in its exercise of any trust or power.

15. Trustee Dealings with the Company.

        The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from and perform services for the
Company or its Affiliates and may otherwise deal with the Company or its
Affiliates as if it were not the Trustee.

16. No Recourse Against Others.

        No incorporator or any past, present or future partner, stockholder,
other equity holder, officer, director, employee or controlling person, as such,
of the Company or any of the Subsidiary Guarantors or of any successor Person
shall have any liability for any obligations of the Company or such Subsidiary
Guarantor under the Notes, the Note Guarantees or the Indenture or for any claim
based on, in respect of or by reason of, such obligations or their creation.
Each Holder by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for the issuance of the Notes.

17. Authentication.

        This Note shall not be valid until the Trustee or authenticating agent
signs the certificate of authentication on the other side of this Note.

18. Abbreviations.

        Customary abbreviations may be used in the name of a Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian) and U/G/M/A (= Uniform Gifts to Minors
Act).

        The Company will furnish a copy of the Indenture to any Holder upon
written request and without charge. Requests may be made to PacifiCare Health
Systems, Inc., 3120 Lake Center Drive, Santa Ana, California 92704. Attention:
General Counsel.

<PAGE>

                                 TRANSFER NOTICE

        FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto

Insert Taxpayer Identification No.

-----------------------------------------------------

Please print or typewrite name and address including zip code of assignee

-----------------------------------------------------

the within Note and all rights thereunder, hereby irrevocably constituting and
appointing _______________________________________________ attorney to transfer
said Note on the books of the Company with full power of substitution in the
premises.

        In connection with any transfer of this Note occurring prior to the date
which is the earlier of (i) the date the Shelf Registration Statement is
declared effective or (ii) the end of the period referred to in Rule 144(k)
under the Securities Act, the undersigned confirms that without utilizing any
general solicitation or general advertising that:

                                   [Check One]

[ ]   (a)      this Note is being transferred in compliance with the exemption
               from registration under the Securities Act of 1933 provided by
               Rule 144A thereunder.

                                       or

[ ]   (b)      this Note is being transferred other than in accordance with
               (a) above and documents are being furnished which comply with the
               conditions of transfer set forth in this Note and the Indenture.

If none of the foregoing boxes is checked, the Trustee or other Registrar shall
not be obligated to register this Note in the name of any Person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.08 of the Indenture shall have
been satisfied.

Date:_______________                    ________________________________________

                                        NOTICE: The signature to this assignment
                                        must correspond with the name as written
                                        upon the face of the within-mentioned
                                        instrument in every particular, without
                                        alteration or any change whatsoever.

<PAGE>

TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.

        The undersigned represents and warrants that it is purchasing this Note
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933 and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.

Date:_______________                    ________________________________________

                                        NOTICE: To be executed by an executive
                                        officer

<PAGE>
                       OPTION OF HOLDER TO ELECT PURCHASE

        If you wish to have this Note purchased by the Company pursuant to
Section 4.11 or 4.12 of the Indenture, check the Box below.

             [ ]   Section 4.11         [ ] Section 4.12

        If you wish to have a portion of this Note purchased by the Company
pursuant to Section 4.11 or 4.12 of the Indenture, state the amount (in
principal amount):  $___________________.

Date:  ________________

Your Signature: ___________________________________________________________
        (Sign exactly as your name appears on the other side of this Note)

Signature Guarantee: ______________________________

Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.<PAGE>
                                                                    EXHIBIT 4.3

        THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE
HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF
REGULATION D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR")
OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT, (2) AGREES
THAT IT WILL NOT, WITHIN THE TIME PERIOD REFERRED TO UNDER RULE 144(k) UNDER THE
SECURITIES ACT AS IN EFFECT ON THE DATE OF THE TRANSFER OF THIS NOTE, RESELL OR
OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO PACIFICARE HEALTH SYSTEMS, INC. OR
ANY OF ITS SUBSIDIARIES, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE
WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE
TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER
CAN BE OBTAINED FROM THE TRUSTEE), AND, IF SUCH TRANSFER IS IN RESPECT OF AN
AGGREGATE PRINCIPAL AMOUNT OF NOTES OF LESS THAN $100,000, AN OPINION OF COUNSEL
ACCEPTABLE TO PACIFICARE HEALTH SYSTEMS, INC. THAT SUCH TRANSFER IS IN
COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT
TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT
(IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS
NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
CONNECTION WITH ANY TRANSFER OF THIS NOTE WITHIN THE TIME PERIOD REFERRED TO IN
RULE 144(k), THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE
HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO
THE TRUSTEE. IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR
OR NON-U.S. PERSON, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE
TRUSTEE AND PACIFICARE HEALTH SYSTEMS, INC. SUCH CERTIFICATIONS, LEGAL OPINIONS
OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT
SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE
THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE
INDENTURE CONTAINS

<PAGE>

PROVISIONS REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE
IN VIOLATION OF THE FOREGOING RESTRICTION.

        UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, TO PACIFICARE HEALTH SYSTEMS, INC. OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER ENTITY AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

        TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
SECTION 2.08 OF THE INDENTURE.

                         PACIFICARE HEALTH SYSTEMS, INC.

                          10 3/4% Senior Note due 2009

                                                                 CUSIP U6941MAB3

No. 2                                                                  $580,000

        PACIFICARE HEALTH SYSTEMS, INC., a Delaware corporation (the "Company",
which term includes any successor under the Indenture hereinafter referred to),
for value received, promises to pay to CEDE & Co., or its registered assigns,
the principal sum of FIVE HUNDRED EIGHTY THOUSAND DOLLARS ($580,000) on June 1,
2009.

        Interest Payment Dates: June 1 and December 1, commencing December 1,
2002.

        Regular Record Dates: May 15 and November 15.

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

<PAGE>

        IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officer.

                                            PACIFICARE HEALTH SYSTEMS, INC.

                                            By: /s/ Howard G. Phanstiel
                                                -------------------------------
                                                Name:
                                                Title:

                                            By: /s/ Gregory W. Scott
                                                -------------------------------
                                                Name:
                                                Title:

                    (Trustee's Certificate of Authentication)

This is one of the 10 3/4% Senior Notes due 2009 described in the
within-mentioned Indenture.

Date:  May 21, 2002                         STATE STREET BANK AND TRUST COMPANY
                                            OF CALIFORNIA, N.A.,
                                            as Trustee

                                            By: /s/ Mark Henson
                                                -------------------------------
                                                Authorized Signatory

<PAGE>

                             [REVERSE SIDE OF NOTE]

                         PACIFICARE HEALTH SYSTEMS, INC.

                          10 3/4% Senior Note due 2009

1. Principal and Interest.

        The Company will pay the principal of this Note on June 1, 2009.

        The Company promises to pay interest on the principal amount of this
Note on each Interest Payment Date, as set forth below, at the rate per annum
shown above except as provided below.

        Interest will be payable semiannually (to the holders of record of the
Notes at the close of business on the May 15 or November 15 immediately
preceding the Interest Payment Date) on each Interest Payment Date, commencing
December 1, 2002.

        If an exchange offer (the "Exchange Offer") registered under the
Securities Act is not consummated and a shelf registration statement (the "Shelf
Registration Statement") under the Securities Act with respect to resales of the
Notes is not declared effective by the Commission, on or before February 21,
2003 in accordance with the terms of the Registration Rights Agreement dated May
21, 2002 between the Company, the Initial Subsidiary Guarantors and Morgan
Stanley & Co. Incorporated and UBS Warburg LLC, the annual interest rate borne
by the Notes shall be increased by 0.5% from the rate shown above accruing from
February 21, 2003 payable in cash semiannually, in arrears, on each Interest
Payment Date, commencing June 1, 2003 until the Exchange Offer is consummated, a
shelf registration statement under the Securities Act with respect to resales of
the Notes is declared effective by the Commission in accordance with the terms
of the Registration Rights Agreement or the Notes become freely tradeable
without registration under the Securities Act. The Holder of this Note is
entitled to the benefits of such Registration Rights Agreement.

        Interest on the Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from May 21, 2002;
provided that, if there is no existing default in the payment of interest and
this Note is authenticated between a Regular Record Date referred to on the face
hereof and the next succeeding Interest Payment Date, interest shall accrue from
such Interest Payment Date. Interest will be computed on the basis of a 360-day
year of twelve 30-day months.

        The Company shall pay interest on overdue principal and premium, if any,
and interest on overdue installments of interest, to the extent lawful, at a
rate per annum that is 1% in excess of the rate otherwise payable.

<PAGE>

2. Method of Payment.

        The Company will pay interest (except defaulted interest) on the
principal amount of the Notes as provided above on each June 1 and December 1,
commencing December 1, 2002 to the persons who are Holders (as reflected in the
Security Register at the close of business on the May 15 or November 15
immediately preceding the Interest Payment Date), in each case, even if the Note
is cancelled on registration of transfer or registration of exchange after such
record date; provided that, with respect to the payment of principal, the
Company will make payment to the Holder that surrenders this Note to a Paying
Agent on or after June 1, 2009.

        The Company will pay principal, premium, if any, and as provided above,
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts. The Company shall pay principal,
premium, if any, and interest by wire transfer to any Holder who has provided
the Company with wire transfer instructions. The Company may pay principal,
premium, if any, and interest by check to any other Holder. It may mail an
interest check to a Holder's registered address (as reflected in the Security
Register). If a payment date is a date other than a Business Day at a place of
payment, payment may be made at that place on the next succeeding day that is a
Business Day and no interest shall accrue for the intervening period.

3. Paying Agent and Registrar.

        Initially, the Trustee will act as authenticating agent, Paying Agent
and Registrar. The Company may change any authenticating agent, Paying Agent or
Registrar without notice. The Company, any Subsidiary or any Affiliate of any of
them may act as Paying Agent, Registrar or co-Registrar.

4. Indenture; Limitations.

        The Company issued the Notes under an Indenture dated as of May 21, 2002
(the "Indenture"), among the Company, the Subsidiary Guarantors named therein
and State Street Bank and Trust Company of California, N.A., trustee (the
"Trustee"). Capitalized terms herein are used as defined in the Indenture unless
otherwise indicated. The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act. The Notes are subject to all such terms, and Holders are referred
to the Indenture and the Trust Indenture Act for a statement of all such terms.
To the extent permitted by applicable law, in the event of any inconsistency
between the terms of this Note and the terms of the Indenture, the terms of the
Indenture shall control.

        The Notes are general unsecured obligations of the Company.

        The Company's obligations under the Notes are fully and unconditionally
guaranteed on an unsecured unsubordinated basis, to the extent set forth in the
Indenture, by each of the Subsidiary Guarantors.

        The Company may, subject to Article Four of the Indenture and applicable
law, issue additional Notes under the Indenture.

<PAGE>

5. Optional Redemption.

        The Notes are redeemable, at the Company's option, in whole or in part,
at any time or from time to time, on or after June 1, 2006 and prior to
maturity, upon not less than 30 nor more than 60 days' prior notice mailed by
first class mail to each Holder's last address, as it appears in the Security
Register, at the following Redemption Prices (expressed in percentages of
principal amount), plus accrued and unpaid interest to the Redemption Date
(subject to the right of Holders of record on the relevant Regular Record Date
that is prior to the Redemption Date to receive interest due on an Interest
Payment Date), if redeemed during the 12-month period commencing June 1 of the
years set forth below:

<TABLE>
<CAPTION>
                                                                     Redemption
                           Year                                        Price
                          -------                                    ----------
<S>                                                                   <C>
                          2006 .................................      105.375%
                          2007 .................................      102.688%
                          2008 and thereafter...................      100.000%
</TABLE>

        At any time prior to June 1, 2005 the Company may redeem up to 35% of
the aggregate principal amount of the Notes with the Net Cash Proceeds of one or
more sales of its Capital Stock (other than Disqualified Stock), at any time as
a whole or from time to time in part, at a Redemption Price (expressed as a
percentage of principal amount) of 110.750% plus accrued and unpaid interest to
the Redemption Date (subject to the rights of Holders of record on the relevant
Regular Record Date that is prior to the Redemption Date to receive interest due
on an Interest Payment Date)); provided that (i) at least 65% of the aggregate
principal amount of Notes originally issued on the Closing Date remains
outstanding after each such redemption and (ii) notice of such redemption shall
be mailed within 60 days of each such sale of Capital Stock.

        At any time on or prior to June 1, 2006, the Notes may be redeemed, in
whole but not in part, at the option of the Company upon the occurrence of a
Change of Control (but in no event more than 90 days after the occurrence of
such Change of Control) at a redemption price equal to 100% of the principal
amount thereof plus the Applicable Premium as of, and accrued and unpaid
interest, to, the Redemption Date.

        Notes in original denominations larger than $1,000 may be redeemed in
part. On and after the Redemption Date, interest ceases to accrue on Notes or
portions of Notes called for redemption, unless the Company defaults in the
payment of the Redemption Price.

6. Repurchase upon Change of Control.

        Upon the occurrence of any Change of Control, each Holder shall have the
right to require the repurchase of its Notes by the Company in cash pursuant to
the offer described in the Indenture at a purchase price equal to 101% of the
principal amount thereof plus accrued and unpaid interest, if any, to the date
of purchase (the "Payment Date").

        A notice of such Change of Control will be mailed within 30 days after
any Change of Control occurs to each Holder at its last address as it appears in
the Security Register. Notes in original denominations larger than $1,000 may be
sold to the Company in part. On and

<PAGE>

after the Payment Date, interest ceases to accrue on Notes or portions of Notes
surrendered for purchase by the Company, unless the Company defaults in the
payment of the purchase price.

7. Denominations; Transfer; Exchange.

        The Notes are in registered form without coupons in denominations of
$1,000 of principal amount and multiples of $1,000 in excess thereof. A Holder
may register the transfer or exchange of Notes in accordance with the Indenture.
The Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not register the transfer
or exchange of any Notes selected for redemption. Also, it need not register the
transfer or exchange of any Notes for a period of 15 days before the day of
mailing of a notice of redemption of Notes selected for redemption.

8. Persons Deemed Owners.

        A Holder shall be treated as the owner of a Note for all purposes.

9. Unclaimed Money.

        If money for the payment of principal, premium, if any, or interest
remains unclaimed for two years, the Trustee and the Paying Agent will pay the
money back to the Company at its request. After that, Holders entitled to the
money must look to the Company for payment, unless an abandoned property law
designates another Person, and all liability of the Trustee and such Paying
Agent with respect to such money shall cease.

10. Discharge Prior to Redemption or Maturity.

        If the Company deposits with the Trustee money and/or U.S. Government
Obligations sufficient to pay the then outstanding principal ==== of, premium,
if any, and accrued interest on the Notes (a) to redemption or maturity, the
Company will be discharged from the Indenture and the Notes, except in certain
circumstances for certain provisions thereof, and (b) to the Stated Maturity,
the Company will be discharged from certain covenants set forth in the
Indenture.

11. Amendment; Supplement; Waiver.

        Subject to certain exceptions, the Indenture, the Note Guarantees or the
Notes may be amended or supplemented with the consent of the Holders of at least
a majority in principal amount of the Notes then outstanding, and any existing
default or compliance with any provision may be waived with the consent of the
Holders of at least a majority in principal amount of the Notes then
outstanding. Without notice to or the consent of any Holder, the parties thereto
may amend or supplement the Indenture, the Note Guarantees or the Notes to,
among other things, cure any ambiguity, defect or inconsistency and make any
change that does not materially and adversely affect the rights of any Holder.

<PAGE>

12. Restrictive Covenants.

        The Indenture imposes certain limitations on the ability of the Company
and its Restricted Subsidiaries, among other things, to Incur additional
Indebtedness, make Restricted Payments, suffer to exist restrictions on the
ability of Restricted Subsidiaries to make certain payments to the Company,
issue Capital Stock of Restricted Subsidiaries, Guarantee Indebtedness of the
Company, engage in transactions with Affiliates, suffer to exist or incur Liens,
enter into sale-leaseback transactions, use the proceeds from Asset Sales, or
merge, consolidate or transfer substantially all of its assets. Within 120 days
after the end of each fiscal year, the Company shall deliver to the Trustee an
Officers' Certificate stating whether or not the signers thereof know of any
Default or Event of Default under such restrictive covenants.

13. Successor Persons.

        When a successor person or other entity assumes all the obligations of
its predecessor under the Notes or a Note Guarantee and the Indenture, the
predecessor person will be released from those obligations.

14. Defaults and Remedies.

        Any of the following events constitutes an "Event of Default" under the
Indenture:

        The following events will be defined as "Events of Default" in the
Indenture:

                (a) default in the payment of principal of (or premium, if any,
        on) any Note when the same becomes due and payable at maturity, upon
        acceleration, redemption or otherwise;

                (b) default in the payment of interest on any Note when the same
        becomes due and payable, and such default continues for a period of 30
        days;

                (c) default in the performance or breach of Article Five of the
        Indenture or the failure by the Company to make or consummate an Offer
        to Purchase in accordance with Sections 4.11 or 4.12;

                (d) The Company or any Subsidiary Guarantor defaults in the
        performance of or breaches any other covenant or agreement in the
        Indenture or under the Notes (other than a default specified in clause
        (a), (b) or (c) above) and such default or breach continues for a period
        of 30 consecutive days after written notice by the Trustee or the
        Holders of 25% or more in aggregate principal amount of the Notes;

                (e) there occurs with respect to any issue or issues of
        Indebtedness of the Company, any Subsidiary Guarantor or any Significant
        Subsidiary having an outstanding principal amount of $35 million or more
        in the aggregate for all such issues of all such Persons, whether such
        Indebtedness now exists or shall hereafter be created, (I) an event of
        default that has caused the holder thereof to declare such Indebtedness
        to be due and payable prior to its Stated Maturity and such Indebtedness
        has not been discharged in full

<PAGE>

        or such acceleration has not been rescinded or annulled within 30 days
        of such acceleration and/or (II) the failure to make a principal payment
        at the final (but not any interim) fixed maturity and such defaulted
        payment shall not have been made, waived or extended within 30 days of
        such payment default;

                (f) any final judgment or order (not covered by insurance) for
        the payment of money in excess of $35 million in the aggregate for all
        such final judgments or orders against all such Persons (treating any
        deductibles, self-insurance or retention as not so covered) shall be
        rendered against the Company, any Subsidiary Guarantor or any
        Significant Subsidiary and shall not be paid or discharged, and there
        shall be any period of 60 consecutive days following entry of the final
        judgment or order that causes the aggregate amount for all such final
        judgments or orders outstanding and not paid or discharged against all
        such Persons to exceed $35 million during which a stay of enforcement of
        such final judgment or order, by reason of a pending appeal or
        otherwise, shall not be in effect;

                (g) a court having jurisdiction in the premises enters a decree
        or order for (A) relief in respect of the Company, any Subsidiary
        Guarantor or any Significant Subsidiary in an involuntary case under any
        applicable bankruptcy, insolvency or other similar law now or hereafter
        in effect, (B) appointment of a receiver, liquidator, assignee,
        custodian, trustee, sequestrator or similar official of the Company, any
        Subsidiary Guarantor or any Significant Subsidiary or for all or
        substantially all of the property and assets of the Company, any
        Subsidiary Guarantor or any Significant Subsidiary or (C) the winding up
        or liquidation of the affairs of the Company, any Subsidiary Guarantor
        or any Significant Subsidiary and, in each case, such decree or order
        shall remain unstayed and in effect for a period of 60 consecutive days;

                (h) The Company, any Subsidiary Guarantor or any Significant
        Subsidiary (A) commences a voluntary case under any applicable
        bankruptcy, insolvency or other similar law now or hereafter in effect,
        or consents to the entry of an order for relief in an involuntary case
        under any such law, (B) consents to the appointment of or taking
        possession by a receiver, liquidator, assignee, custodian, trustee,
        sequestrator or similar official of the Company, any Subsidiary
        Guarantor or any Significant Subsidiary or for all or substantially all
        of the property and assets of the Company, any Subsidiary Guarantor or
        any Significant Subsidiary or (C) effects any general assignment for the
        benefit of creditors; or

                (i) any Subsidiary Guarantor repudiates its obligations under
        its Note Guarantee or, except as permitted by the Indenture, any Note
        Guarantee is determined to be unenforceable or invalid or shall for any
        reason cease to be in full force and effect.

           If an Event of Default, as defined in the Indenture, occurs and is
continuing, the Trustee may, and at the direction of the Holders of at least 25%
in aggregate principal amount of the Notes then outstanding shall, declare all
the Notes to be due and payable. If a bankruptcy or insolvency default with
respect to the Company occurs and is continuing, the Notes automatically become
due and payable. Holders may not enforce the Indenture or the Notes except as
provided in the Indenture. The Trustee may require indemnity reasonably
satisfactory

<PAGE>

to it before it enforces the Indenture or the Notes. Subject to certain
limitations, Holders of at least a majority in principal amount of the Notes
then outstanding may direct the Trustee in its exercise of any trust or power.

15. Trustee Dealings with the Company.

        The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from and perform services for the
Company or its Affiliates and may otherwise deal with the Company or its
Affiliates as if it were not the Trustee.

16. No Recourse Against Others.

        No incorporator or any past, present or future partner, stockholder,
other equity holder, officer, director, employee or controlling person, as such,
of the Company or any of the Subsidiary Guarantors or of any successor Person
shall have any liability for any obligations of the Company or such Subsidiary
Guarantor under the Notes, the Note Guarantees or the Indenture or for any claim
based on, in respect of or by reason of, such obligations or their creation.
Each Holder by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for the issuance of the Notes.

17. Authentication.

        This Note shall not be valid until the Trustee or authenticating agent
signs the certificate of authentication on the other side of this Note.

18. Abbreviations.

        Customary abbreviations may be used in the name of a Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian) and U/G/M/A (= Uniform Gifts to Minors
Act).

        The Company will furnish a copy of the Indenture to any Holder upon
written request and without charge. Requests may be made to PacifiCare Health
Systems, Inc., 3120 Lake Center Drive, Santa Ana, California 92704. Attention:
General Counsel.

<PAGE>

                                 TRANSFER NOTICE

        FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto

Insert Taxpayer Identification No.

----------------------------------------------------

Please print or typewrite name and address including zip code of assignee

----------------------------------------------------

the within Note and all rights thereunder, hereby irrevocably constituting and
appointing ________________________________________ attorney to transfer said
Note on the books of the Company with full power of substitution in the
premises.

        In connection with any transfer of this Note occurring prior to the date
which is the earlier of (i) the date the Shelf Registration Statement is
declared effective or (ii) the end of the period referred to in Rule 144(k)
under the Securities Act, the undersigned confirms that without utilizing any
general solicitation or general advertising that:

                                   [Check One]
                                    ---------

[ ]    (a)     this Note is being transferred in compliance with the
               exemption from registration under the Securities Act of 1933
               provided by Rule 144A thereunder.

                                       or

[ ]    (b)     this Note is being transferred other than in accordance with
               (a) above and documents are being furnished which comply with the
               conditions of transfer set forth in this Note and the Indenture.

If none of the foregoing boxes is checked, the Trustee or other Registrar shall
not be obligated to register this Note in the name of any Person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.08 of the Indenture shall have
been satisfied.

Date:_______________                    ________________________________________

                                        NOTICE: The signature to this assignment
                                        must correspond with the name as written
                                        upon the face of the within-mentioned
                                        instrument in every particular, without
                                        alteration or any change whatsoever.

<PAGE>

TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.

        The undersigned represents and warrants that it is purchasing this Note
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933 and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.

Date:_______________                    ________________________________________

                                        NOTICE: To be executed by an executive
                                        officer

<PAGE>

                       OPTION OF HOLDER TO ELECT PURCHASE

        If you wish to have this Note purchased by the Company pursuant to
Section 4.11 or 4.12 of the Indenture, check the Box below.

             [ ]   Section 4.11         [ ] Section 4.12

        If you wish to have a portion of this Note purchased by the Company
pursuant to Section 4.11 or 4.12 of the Indenture, state the amount (in
principal amount): $___________________.

Date:  ________________

Your Signature: ___________________________________________________________
           (Sign exactly as your name appears on the other side of this Note)

Signature Guarantee: ______________________________

Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.

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