Document:

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                                                                   EXHIBIT 10.13

                        PACIFICARE HEALTH SYSTEMS, INC.
                  FORM OF NON-QUALIFIED STOCK OPTION AGREEMENT
                        UNDER THE 1996 STOCK OPTION PLAN
                         FOR OFFICERS AND KEY EMPLOYEES

        THIS AGREEMENT, dated ____________, is made by and between PacifiCare
Health Systems, Inc., a Delaware corporation (the "Company"), and ______________
(the "Optionee"):

        WHEREAS, the Company wishes to afford the Optionee the opportunity to
purchase shares of its Common Stock; and

        WHEREAS, the Company wishes to carry out the 2000 Employee Plan of
PacifiCare Health Systems, Inc., as amended, the terms of which are hereby
incorporated by reference and made a part of this Agreement; and

        WHEREAS, the Compensation Committee of the Company's Board of Directors
(the "Committee"), has determined that it would be to the advantage and best
interest of the Company and its stockholders to grant the Non-Qualified Stock
Options provided for herein to the Optionee as an inducement to remain in the
service of the Company or its Subsidiaries and as an incentive for increased
efforts during such service, and has advised the Company thereof and instructed
the undersigned officers to issue said Option.

        NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto do hereby agree as follows:

                                    ARTICLE I
                                   DEFINITIONS

        Whenever the following terms are used in this Agreement, they shall have
the meaning specified below unless the context clearly indicates to the
contrary.

Section 1.1 - Board

        "Board" shall mean the Board of Directors of the Company.

Section 1.2 - Chief Financial Officer

        "Chief Financial Officer" shall mean the Chief Financial Officer of the
Company.

Section 1.3 - Common Stock

        "Common Stock" shall mean the Common Stock, par value $.01 per share, of
the Company.

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Section 1.4 - Option

        "Option" shall mean the Non-Qualified Stock Option to purchase shares of
the Common Stock granted under this Agreement.

Section 1.5 - Plan

        "Plan" shall mean the 2000 Employee Plan of PacifiCare Health Systems,
Inc., as amended.

Section 1.6 - Pronouns

        The masculine pronoun shall include the feminine and neuter, and the
singular the plural, where the context so indicates.

Section 1.7 - Secretary

        "Secretary" shall mean the Secretary of the Company.

Section 1.8 - Stock Appreciation Right

        "Stock Appreciation Right" or "Right" shall mean a right granted
pursuant to Article VI of the Plan to receive an amount of cash or, in the
discretion of the Committee, a number of shares of Common Stock of the Company
or a combination of shares of Common Stock and cash, based on the increase in
Fair Market Value of the shares of Common Stock subject to the right.

Section 1.9 - Subsidiary

        "Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations other than
the last corporation in the unbroken chain then owns stock possessing 50 percent
or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.

Section 1.10 - Termination of Employment

        "Termination of Employment" shall mean (a) the time when the Optionee
ceases to be an Employee or an Officer of the Company or a Subsidiary for any
reason, including, but not limited to, a termination by resignation, discharge,
death or retirement, or if Optionee is a consultant, the time when Optionee is
no longer retained by the Company or any Subsidiary of the Company, but
excluding terminations where there is a simultaneous reemployment or
reappointment of the Optionee as an Employee or Officer by the Company or a
Subsidiary or (b) with respect to an Optionee who is an Employee or Officer of a
Subsidiary, the time when such Subsidiary ceases to be a Subsidiary of the
Company. The Committee, in its absolute discretion, shall determine the effect
of all other matters and questions relating to Termination of Employment,
including, but not

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limited to, the question of whether a Termination of Employment resulted from a
discharge for good cause, and all questions of whether particular leaves of
absence constitute Terminations of Employment.

                                   ARTICLE II
                                 GRANT OF OPTION

Section 2.1 - Grant of Option

        In consideration of the Optionee's agreement to render services to the
Company or its Subsidiaries and for other good and valuable consideration, the
Company irrevocably grants to the Optionee the option to purchase any part or
all of an aggregate of ____ shares of its Common Stock upon the terms and
conditions set forth in this Agreement. The date of grant of this Option is
_______________.

Section 2.2 - Purchase Price

        The purchase price of the shares of stock covered by the Option shall be
$_________ per share without commission or other charge.

Section 2.3 - Consideration to Company

        This Option is being granted in consideration of the Optionee's
agreement to render services to the Company or a Subsidiary as an Officer or
Employee of the Company or a Subsidiary, with such duties and responsibilities
as the Company or Subsidiary shall from time to time prescribe for a period of
at least one year from the date the Option is granted. Nothing in this Agreement
or in the Plan shall confer upon the Optionee a right to continue in the employ
of the Company or any Subsidiary or shall interfere with or restrict in any way
the rights of the Company and its Subsidiaries, which are hereby expressly
reserved, to discharge the Optionee or if Optionee is a consultant to terminate
Optionee's service to the Company or any Subsidiary of the Company at any time
for any reason whatsoever, with or without good cause.

Section 2.4 - Adjustments in Option

        In the event that the outstanding shares of the stock subject to the
Option are changed into or exchanged for a different number or kind of shares of
the Company or other securities of the Company or of another corporation by
reason of reorganization, merger, consolidation, recapitalization,
reclassification, stock split, stock dividend or combination of shares, or in
the event of extraordinary cash or non-cash dividends being declared with
respect to outstanding shares of Common Stock or similar transactions, the
Committee shall make an appropriate and equitable adjustment in the number and
kind of shares as to which the Option, or portions thereof then unexercised,
shall be exercisable, to the end that after such event the Optionee's
proportionate interest shall be maintained as before the occurrence of such
event. Such adjustment in the Option shall be made without change in the total
price applicable to the unexercised portion of the Option

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(except for any change in the aggregate price resulting from rounding-off of
share quantities or prices) and with any necessary corresponding adjustment in
the exercise price per share. Any such adjustment made by the Committee shall be
final and binding upon the Optionee, the Company and all other interested
persons; provided, however, that each such adjustment shall be made in such
manner as not to constitute: (i) a "material modification" to the Option if it
is intended to qualify for treatment as an "existing binding contract" within
the meaning of Section 162(m)(4)(D) of the Code; or (ii) a cancellation and
reissuance of the Option for purposes of 162(m) of the Code, or the regulations
promulgated thereunder to the extent that such reissuance would result in the
grant of Awards in excess of the maximum permitted to be granted to any
participant in any fiscal year.

                                   ARTICLE III
                            PERIOD OF EXERCISABILITY

Section 3.1 - Commencement of Exercisability

        a. Subject to Sections 3.1(b), 3.2, 3.3, and 3.4, the Option shall
become exercisable in four cumulative installments as follows:

           (i)      The first installment shall consist of 25 percent of the
        shares covered by the Option and shall become exercisable on the first
        anniversary of the date the Option is granted.

           (ii)     The second installment shall consist of 25 percent of the
        shares covered by the Option and shall become exercisable on the second
        anniversary of the date the Option is granted.

           (iii)    The third installment shall consist of 25 percent of the
        shares covered by the Option and shall become exercisable on the third
        anniversary of the date the Option is granted.

           (iv)     The fourth installment shall consist of all remaining shares
        covered by the Option and shall become exercisable on the fourth
        anniversary of the date the Option is granted.

        b. No portion of the Option which is unexercisable at Termination of
Employment shall thereafter be exercisable.

Section 3.2 - Duration of Exercisability

        The installments provided for in Section 3.1 are cumulative. Each such
installment which becomes exercisable pursuant to Section 3.1 shall remain
exercisable until such installment becomes unexercisable under Section 3.3. If
the Option is granted in connection with a Stock Appreciation Right and the
Right is exercised by the Optionee in whole or part, all or a portion of

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the Option, as the case may be, shall be canceled to the extent of the number of
shares with respect to which the Right is exercised.

Section 3.3 - Expiration of Option

        The Option may not be exercised to any extent by anyone after the first
to occur of the following events:

        a. The expiration of 10 years from the date the Option was granted;

        b. Optionee's Termination of Employment for cause;

        c. The expiration of 90 days from the date of Optionee's Termination of
Employment for any reason other than being discharged for cause, unless the
Optionee dies within said 90-day period; provided, however, that if Optionee has
a written employment agreement with the Company that provides for a different
exercise period, then Optionee may exercise the Option in accordance with such
exercise period;

        d. The expiration of one year from the date of the Optionee's
Termination of Employment by reason of his disability; or

        e. The expiration of one year from the date of the Optionee's death.

        For purposes of this Section 3.3, "disability" shall mean a medically
determinable physical or mental impairment which has lasted or can be expected
to last for a continuous period of not less than 12 months and which renders the
Optionee substantially unable to function as an Officer or Employee of the
Company or a Subsidiary. Nothing contained herein shall be construed to confer
on any Optionee any right to continue as an officer or employee of the Company
or its Subsidiaries.

Section 3.4 - Acceleration of Exercisability

        a. Notwithstanding anything to the contrary in Section 3.3 hereof or any
provisions in the Plan, Optionee acknowledges and agrees that instead of such
contrary provisions, this Option, if held for at least six months, shall be
exercisable as to all the shares covered hereby immediately upon the effective
date of a "Change of Control" notwithstanding that this Option may not yet have
become fully exercisable under Section 3.1(a); provided, however, that the
acceleration of exercisability shall not take place if this Option becomes
unexercisable under Section 3.3 prior to said effective date.

        b. Notwithstanding anything to the contrary contained in Section 8.2 of
the Plan or any other provision thereof, Optionee acknowledges and agrees that
instead of such contrary provisions, for purposes of this Section 3.4, the term
"Change of Control" shall mean the occurrence of any of the following:

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           (i) the acquisition by any Person (as hereinafter defined) of 20% or
more of the outstanding common stock of the Company (the "Outstanding Company
Stock"), provided that, for purposes of this subsection 3.4(b)(i), 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) a
Non-Qualifying Business Combination (as hereinafter defined); or

           (ii) individuals who, as of December 17, 2003 or such subsequent date
as the Board may determine from time to time to be applicable for this Change of
Control definition (the "Base 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 3.4(b)(ii), any individual who
becomes a director subsequent to the Base Date whose election, or nomination for
election by the Company's stockholders, 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 other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or

           (iii) 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, the Persons who had Beneficial Ownership of the Outstanding Company
Stock 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 the combined voting power of the then
outstanding securities entitled to vote generally in the election of directors
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 (a Business Combination that satisfies this
exception shall be deemed to be a "Non-Qualifying Business Combination"); or

           (iv) approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company; or

           (v) the consummation of any other transaction involving a significant
issuance of the Company's securities, a change in the composition of the Board
or other material event that the Board determines to be a Change of Control for
purposes of this section.

        Optionee shall receive at least 10 days notice prior to the effective
date of the Change of Control that the Option will be exercisable upon the
effective date of the Change of Control.

        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) Optionee is a member of a

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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) Optionee acquires a two percent (2%) or more
equity interest in the entity which ultimately acquires the Company pursuant to
the transaction described in subsection (I), above.

        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 Securities Exchange Act of 1934,
as amended (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.

        c. By a resolution adopted after this Option is granted the Committee
may in its absolute discretion, on such terms and conditions as it may determine
to be appropriate and subject to Sections 3.1, 3.2 and 3.3 accelerate the time
at which such Option or any portion thereof may be exercised.

        d. The Committee may make such determinations and adopt such rules and
conditions as it, in its absolute discretion, deems appropriate in connection
with a Change in Control and acceleration of exercisability, including, without
limitation, provisions to ensure that any such acceleration and resulting
exercise shall be conditioned upon the consummation of the contemplated
corporate transaction. All such determinations by the Committee shall be
conclusive.

                                   ARTICLE IV
                               EXERCISE OF OPTIONS

Section 4.1 - Person Eligible to Exercise

        During the lifetime of the Optionee, only he, his guardian or legal
representative may exercise the Option or any portion thereof. After the death
of the Optionee, any exercisable portion of the Option may, prior to the time
when the Option becomes unexercisable under Article III, be exercised by his
personal representative or by any person empowered to do so under the Optionee's
will or under the then applicable laws of descent and distribution.

Section 4.2 - Partial Exercise

        Any exercisable portion of the Option or the entire Option, if then
wholly exercisable, may be exercised in whole or in part at any time prior to
the time when the Option or portion thereof becomes unexercisable under Article
III; provided, however, that each partial exercise shall be for not less than
100 shares (or the minimum installment set forth in Section 3.1, if a smaller
number of shares) and shall be for whole shares only.

Section 4.3 - Manner of Exercise

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        The Option, or any exercisable portion thereof, may be exercised solely
by delivery to the Secretary or Chief Financial Officer or their respective
offices of all of the following prior to the time when the Option or such
portion becomes unexercisable under Section 3.3:

        a. Notice in writing signed by the Optionee or the other person then
entitled to exercise the Option or portion, stating that the Option or portion
is thereby exercised, such notice complying with all applicable rules
established by the Committee;

        b. (i) Full payment (in cash or by check) for the shares with respect to
which such Option or portion is exercised;

           (ii) With the consent of the Committee, shares of any class of the
        Company's stock owned by the Optionee duly endorsed for transfer to the
        Company with a Fair Market Value (as determinable under Section 1.14 of
        the Plan) on the date of delivery equal to the aggregate Option price of
        the shares with respect to which such Option or portion is exercised
        (which shares shall be owned by the Optionee for more than six months at
        the time they are delivered);

           (iii) With the consent of the Committee and provided the use of the
        following procedure by an Optionee would not violate Rule 16(b) under
        the Exchange Act delivery to the Company of (x) irrevocable instructions
        to deliver the stock certificates representing the shares for which the
        Option is being exercised directly to a broker, and (y) instructions to
        the broker to sell such shares and promptly deliver to the Company the
        portion of the sale proceeds equal to the aggregate Option exercise
        price;

           (iv) With the consent of the Committee, any other form of cashless
        exercise permitted under Section 4.4 hereof; or

           (v) Any combination of the consideration provided in the foregoing
        subparagraphs (i), (ii), (iii) and (iv);

        c. Full payment to the Company of all amounts which, under federal,
state or local law, it is required to withhold upon exercise of the Option; and

        d. In the event the Option or portion shall be exercised pursuant to
Section 4.1 by any person or persons other than the Optionee, appropriate proof
of the right of such person or persons to exercise the Option.

Section 4.4 - Cashless Exercise Procedures

        The Company, in its sole discretion, may establish procedures whereby
the Optionee, subject to the requirements of Rule 16b-3 under the Exchange Act ,
Regulation T issued by the Board of Governors of the Federal Reserve System
pursuant to the Exchange Act, federal income tax laws, and other federal, state
and local tax and securities laws, can exercise the Option or a

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portion thereof without making a direct payment of the Option price to the
Company. If the Company so elects to establish a cashless exercise program, the
Company shall determine, in its sole discretion and from time to time, such
administrative procedures and policies as it deems appropriate and such
procedures and policies shall be binding on the Optionee should he elect to
utilize the cashless exercise program.

Section 4.5 - Conditions to Issuance of Stock Certificates

        The shares of stock deliverable upon the exercise of the Option, or any
portion thereof, may be either previously authorized but unissued shares or
issued shares which have then been reacquired by the Company. Such shares shall
be fully paid and nonassessable. The Company shall not be required to issue or
deliver any certificate or certificates for shares of stock purchased upon the
exercise of the Option or portion thereof prior to fulfillment of all of the
following conditions:

        a. The admission of such shares to listing on all stock exchanges or
quoted on Nasdaq or successor quotation system on which such class of stock is
then listed or quoted;

        b. The completion of any registration or other qualification of such
shares under any state or federal law or under rulings or regulations of the
Securities and Exchange Commission or of any other governmental regulatory body,
which the Committee shall, in its absolute discretion, deem necessary or
advisable;

        c. The obtaining of any approval or other clearance from any state or
federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable;

        d. The payment to the Company of all amounts which, under federal, state
or local law, it is required to withhold upon exercise of the Option; and

        e. The lapse of such reasonable period of time following the exercise of
the Option as the Committee may from time to time establish for reasons of
administrative convenience.

Section 4.6 - Rights as Stockholder

        The holder of the Option shall not be, nor have any of the rights or
privileges of, a stockholder of the Company in respect of any shares receivable
upon the exercise of any part of the Option unless and until certificates
representing such shares shall have been issued by the Company to such holder.

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                                    ARTICLE V
                                  MISCELLANEOUS

Section 5.1 - Administration

        The Committee shall have the power to interpret the Plan and this
Agreement and to adopt such rules for the administration, interpretation and
application of the Plan as are consistent therewith and to interpret, amend or
revoke any such rules. All actions taken and all interpretations and
determinations made by the Committee in good faith shall be final and binding
upon the Optionee, the Company and all other interested persons. No member of
the Committee shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan or the Option.

Section 5.2 - Options Not Transferable

        Neither the Option nor any interest or right therein or part thereof
shall be liable for the debts, contracts or engagements of the Optionee or his
successors in interest or shall be subject to disposition by transfer,
alienation, anticipation, pledge, encumbrance, assignment or any other means
whether such disposition be voluntary or involuntary or by operation of law by
judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy) and any attempted disposition thereof shall
be null and void and of no effect; provided, however, that this Section 5.2
shall not prevent transfers by will or by the applicable laws, including those
of descent and distribution.

Section 5.3 - Shares to Be Reserved

        The Company shall at all times during the term of the Option reserve and
keep available such number of shares of stock as will be sufficient to satisfy
the requirements of this Agreement.

Section 5.4 - Withholding

        The provisions of Section 8.4 of the Plan shall govern any withholding
that the Company is required to make with respect to the exercise of the Option.

Section 5.5 - Notices

        Any notice to be given under the terms of this Agreement to the Company
shall be addressed to the Company in care of its Secretary or Chief Financial
Officer and any notice to be given to the Optionee shall be addressed to him at
the address given beneath his signature hereto. By a notice given pursuant to
this Section 5.5, either party may hereafter designate a different address for
notices to be given to him. Any notice which is required to be given to the
Optionee shall, if the Optionee is then deceased, be given to the Optionee's
personal representative if such representative has previously informed the
Company of his status and address by written notice under this Section 5.5. Any
notice shall have been deemed duly given when enclosed in a properly sealed
envelope or wrapper addressed as aforesaid, deposited (with postage prepaid) in
a post office or branch post office regularly maintained by the United States
Postal Service.

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Section 5.6 - Titles

        Titles are provided herein for convenience only and are not to serve as
a basis for interpretation or construction of this Agreement.

Section 5.7 - Inconsistency between Agreement and Plan

        In the event of any inconsistency between the provisions of this
Agreement and the Plan, the provisions of the Plan shall govern.

Section 5.8 - Choice of Law

        This Agreement shall be construed and enforced in accordance with the
laws of the State of California.

Section 5.9 - Integration

        Optionee acknowledges that this Agreement, together with the Plan, sets
forth the complete, final and exclusive understanding between Optionee and the
Company regarding this Option and the acquisition of Common Stock upon the
exercise of this Option and supersedes all prior oral and written agreements on
that subject with the exception of any written employment agreement (executed by
an appropriately authorized officer of the Company) that specifies its intent to
control some or all of the terms of Options granted to Optionee.

        IN WITNESS WHEREOF, this Agreement has been executed and delivered by
the parties hereto.

                                    PACIFICARE HEALTH SYSTEMS, INC.

                                    By:
                                       -----------------------------------------

------------------------------
Optionee

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

------------------------------
         Address

Social Security Number:

------------------------------
                                                                              11<PAGE>
                                                                   EXHIBIT 10.16

                         PACIFICARE HEALTH SYSTEMS, INC.
                     FORM OF RESTRICTED STOCK GRANT NOTICE
                      AND RESTRICTED STOCK GRANT AGREEMENT
                          UNDER THE 2000 EMPLOYEE PLAN

PACIFICARE HEALTH SYSTEMS, INC. ("PacifiCare"), pursuant to its 2000 Employee
Plan (the "Plan"), hereby awards to the Employee as a restricted stock award the
number of shares of PacifiCare's Common Stock set forth below (the "Shares").
This Award is subject to all of the terms and conditions as set forth in this
Restricted Stock Grant Notice (this "Grant Notice") and in the Restricted Stock
Grant Agreement (and any attachments thereto) and the Plan, each of which is
incorporated herein in its entirety.

Employee:                               _______________________________
Date of Grant:                          _______________________________
Vesting Commencement Date:              _______________________________
Number of Shares:                       _______________________________

VESTING SCHEDULE:  The Shares shall vest in periodic installments as follows:

o       1/3rd of the Shares shall vest on the second anniversary of the Date of
        Grant,

o       1/3rd of the Shares shall vest on the third anniversary of the Date of
        Grant, and

o       1/3rd of the Shares shall vest on the fourth anniversary of the Date of
        Grant.

ADDITIONAL TERMS/ACKNOWLEDGEMENTS: The undersigned Employee acknowledges receipt
of, and understands and agrees to, this Grant Notice, the Restricted Stock Grant
Agreement and the Plan. The Employee further acknowledges that as of the Date of
Grant, this Grant Notice, the Restricted Stock Grant Agreement (and attachments
thereto) and the Plan set forth the entire understanding between the Employee
and PacifiCare regarding the grant of restricted stock pursuant to this Grant
Notice:

        IN WITNESS WHEREOF, this Grant Notice has been executed and delivered by
the parties hereto.

                                             PACIFICARE HEALTH SYSTEMS, INC.

                                             By:
                                                --------------------------------

--------------------------------------
Employee

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

        Address

Social Security Number:

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

                                       1.
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ATTACHMENT: Restricted Stock Grant Agreement

                                       2.
<PAGE>

                        PACIFICARE HEALTH SYSTEMS, INC.
                    FORM OF RESTRICTED STOCK GRANT AGREEMENT
                          UNDER THE 2000 EMPLOYEE PLAN

        Pursuant to the terms of the Restricted Stock Grant Notice (the "Grant
Notice") and this Restricted Stock Agreement (collectively, this "Agreement"),
PacifiCare Health Systems, Inc., a Delaware corporation ("PacifiCare"), grants
to the individual identified in the Grant Notice (the "Employee") shares of
PacifiCare's Common Stock under the following terms and conditions:

        a. PacifiCare's management has implemented a long-term incentive program
by granting shares of restricted stock to certain employees;

        b. The restricted stock to be used for this long-term incentive will be
granted pursuant to the 2000 Employee Plan, the terms of which are hereby
incorporated by reference and made a part of this Agreement;

        c. PacifiCare has determined that it would be to the advantage and best
interest of PacifiCare and its stockholders to grant the shares provided for
herein to the Employee as an inducement to remain in the service of PacifiCare
or its Subsidiaries and as an incentive for increased efforts during such
service; and

        d. Any capitalized terms used throughout this Agreement, which are not
defined elsewhere herein, shall have the meanings ascribed to them in Section 1
of this Agreement.

        NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto do hereby agree as follows:

                                   ARTICLE I
                                   DEFINITIONS

Section 1.1 - Chief Financial Officer

        "Chief Financial Officer" shall mean the Chief Financial Officer of
PacifiCare.

Section 1.2 - Code

        "Code" shall mean the Internal Revenue Code of 1986, as amended.

Section 1.3 - Committee

        "Committee" shall mean the Compensation Committee of PacifiCare's Board
of Directors.

Section 1.4 - Common Stock

        "Common Stock" shall mean the Common Stock, par value $.01 per share, of
PacifiCare.

Section 1.5 - Date of Grant

        "Date of Grant" shall mean the date set forth in the Grant Notice.

Section 1.6 - Plan

        "Plan" shall mean the 2000 Employee Plan.

                                       3.
<PAGE>

Section 1.7 - President

        "President" shall mean the President of PacifiCare.

Section 1.8 - Pronouns

        The masculine pronoun shall include the feminine and neuter, and the
singular the plural, where the context so indicates.

Section 1.9 - Shares

        "Shares" shall mean the shares of Common Stock granted to the Employee
under this Agreement.

Section 1.10 - Stock Unit Plan

        "Stock Unit Plan" shall mean the Third Amended and Restated Stock Unit
Deferred Compensation Plan, as amended.

Section 1.11 - Subsidiary

        "Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with PacifiCare if each of the corporations other than
the last corporation in the unbroken chain then owns stock possessing 50 percent
or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.

Section 1.12 - Termination of Employment

        "Termination of Employment" shall mean (a) the time when the Employee
ceases to be an employee or officer of PacifiCare or a Subsidiary for any
reason, including, but not limited to, a termination by resignation, discharge,
death or retirement, or if the Employee is a consultant, the time when the
Employee is no longer retained by PacifiCare or any Subsidiary of PacifiCare in
any capacity whatsoever, but excluding terminations where there is a
simultaneous re-employment or re-appointment of the Employee as an employee or
officer by PacifiCare or a Subsidiary, or (b) with respect to an Employee who is
an employee or officer of a Subsidiary, the time when such Subsidiary ceases to
be a Subsidiary of PacifiCare. The Committee, in its absolute discretion, shall
have the power to determine the effect of all matters and questions relating to
Termination of Employment, including, but not limited to, the question of
whether a Termination of Employment resulted from a discharge for good cause,
and whether particular leaves of absence constitute Terminations of Employment.

                                   ARTICLE II
                                 GRANT OF SHARES

Section 2.1 - Grant of Shares

        On the terms and conditions set forth in this Agreement, PacifiCare
agrees to grant to the Employee, and the Employee agrees to receive from
PacifiCare, the number of Shares set forth in the Grant Notice.

Section 2.2 - Consideration

The Employee is receiving the Shares in consideration of past services rendered
during the Employee's employment with PacifiCare, so no payment is required from
the Employee for the Shares; provided however, that if the Employee is receiving
the Shares in connection with the Employee's initial employment, the Employee
shall pay PacifiCare an amount equal to the aggregate par value of the Shares.

                                       4.
<PAGE>

Section 2.3 - Rights as a Stockholder

        Unless the receipt of the Shares is deferred pursuant to Article IV,
upon the Date of Grant, the Employee shall have all rights as a stockholder of
PacifiCare, including without limitation the right to vote the Shares. If the
Shares do not vest and are forfeited, the Employee will lose any and all rights
as a stockholder with respect to the forfeited Shares.

Section 2.4 - Escrow

        Upon the Date of Grant, the certificates for the Shares not deferred
pursuant to Article IV (the "Non-Deferred Shares") shall be deposited in escrow
with PacifiCare or an agent acting on behalf of PacifiCare to be held in
accordance with the provisions of this Agreement. Any new, substituted or
additional securities or other property described in Section 2.6 below shall
immediately be delivered to PacifiCare or its agent to be held in escrow until
vesting of the Non-Deferred Shares. All regular cash dividends, if any, on the
Non-Deferred Shares (or other securities at the time held in escrow) shall be
paid directly to the Employee and shall not be held in escrow. The Non-Deferred
Shares shall be released from escrow to the Employee within thirty (30) days
upon vesting of the Non-Deferred Shares as provided in Section 3.2 of this
Agreement, together with any other assets or securities held in escrow
hereunder. If the Non-Deferred Shares do not vest as provided herein, the
Non-Deferred Shares shall be surrendered to PacifiCare for cancellation.

Section 2.5 - No Retention Rights

        Nothing in this Agreement or in the Plan shall confer upon the Employee
a right to continue in the employ of PacifiCare or any Subsidiary or shall
interfere with or restrict in any way the rights of PacifiCare and its
Subsidiaries, which are hereby expressly reserved, to discharge the Employee.

Section 2.6 - Additional Shares or Substituted Securities

        In the event that the outstanding shares of Common Stock are hereafter
changed into or exchanged for a different number or kind of shares or other
securities of PacifiCare, or of another corporation, by reason of
reorganization, merger, consolidation, recapitalization, reclassification, stock
split, stock dividend or combination of shares, or in the event of extraordinary
cash or non-cash dividends being declared with respect to the outstanding shares
of Common Stock or other similar transactions, proportionate adjustments shall
be made to the Shares by the Committee.

                                  ARTICLE III
                          VESTING; RISKS OF FORFEITURE

Section 3.1 - Risk of Forfeiture

        The Shares shall initially be restricted Shares and shall be subject to
the risk of forfeiture. Upon an Employee's Termination of Employment for any
reason, except death or Disability, prior to the vesting of the Shares, such
Employee shall lose all rights to any and all unvested Shares.

Section 3.2 - Vesting of Shares

        Subject to Sections 3.1 and 3.3, beneficial ownership of the Shares
shall vest on the date or dates set forth in the Grant Notice (each, a "Vesting
Date").

Section 3.3 - Acceleration of Vesting

        (a) Notwithstanding anything to the contrary in Section 3.2 hereof or
any provisions in the Plan, the Employee acknowledges and agrees that instead of
such contrary provisions, beneficial ownership of all of the Shares shall vest
immediately upon the first to occur of the following events:

                                       5.
<PAGE>

            (i)     Employee's death;

           (ii)     Employee's Disability (as defined in Section 3.3(b) below);
                    or

          (iii)     The effective date of a "Change of Control" (as defined
                    below in Section 3.3(c) ).

        (b) For purposes of this Section 3.3, "Disability" shall mean a
medically determinable physical or mental impairment which has lasted or can be
expected to last for a continuous period of not less than 12 months and which
renders the Employee substantially unable to function as an officer or employee
of PacifiCare or a Subsidiary.

        (c) Notwithstanding anything to the contrary contained in Section 8.2 of
the Plan or any other provision thereof, the Employee acknowledges and agrees
that instead of such contrary provisions, for purposes of this Section 3.3, the
term "Change of Control" shall mean the occurrence of any of the following:

            (i) the acquisition by any Person (as hereinafter defined) of
Beneficial Ownership (as hereinafter defined) of 20% or more of the outstanding
common stock of PacifiCare (the "Outstanding PacifiCare Stock"), provided that,
for purposes of this Subsection 3.3(c)(i), the following acquisitions shall not
constitute a Change of Control: (I) any acquisition by PacifiCare, (II) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by PacifiCare or any Person that controls, is controlled by or is
under common control with, PacifiCare or (III) a Non-Qualifying Business
Combination (as hereinafter defined); or

            (ii) individuals who, as of December 17, 2003 or such subsequent
date as the Board may determine from time to time to be applicable for this
Change of Control definition (the "Base 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 3.3(c)(ii), any individual
who becomes a director subsequent to the Base Date whose election, or nomination
for election by PacifiCare's stockholders, 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 other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or

            (iii) consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of
PacifiCare or the acquisition of assets or stock of another corporation (a
"Business Combination"), in each case, unless, following such Business
Combination, the Persons who had Beneficial Ownership of the Outstanding
PacifiCare Stock 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 the combined voting power of the
then outstanding securities entitled to vote generally in the election of
directors of the corporation resulting or surviving from such Business
Combination (including, without limitation, a corporation which as a result of
such transaction owns PacifiCare or all or substantially all of PacifiCare'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 PacifiCare Stock (a Business Combination that
satisfies this exception shall be deemed to be a "Non-Qualifying Business
Combination"); or

            (iv) approval by the stockholders of PacifiCare of a complete
liquidation or dissolution of PacifiCare; or

            (v) the consummation of any other transaction involving a
significant issuance of PacifiCare's securities, a change in the composition of
the Board or other material event that the Board determines to be a Change of
Control for purposes of this section.

               Notwithstanding the foregoing provisions of this definition,
unless otherwise determined by the Board, no Change of Control shall be deemed
to have occurred if (1) the Employee 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 (2)
the Employee acquires a two percent (2%) or more equity

                                       6.
<PAGE>

interest in the entity which ultimately acquires PacifiCare pursuant to the
transaction described in clause (1), above.

        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 Securities Exchange Act of 1934, as amended.

        (d) By a resolution adopted after the Shares are granted, the Committee
may in its absolute discretion, on such terms and conditions as it may determine
to be appropriate and subject to Section 3.1, accelerate the time at which the
Shares or any portion thereof shall vest.

        (e) The Committee may make such determinations and adopt such rules and
conditions as it, in its absolute discretion, deems appropriate in connection
with a Change in Control and acceleration of vesting, including, without
limitation, provisions to ensure that any such acceleration shall be conditioned
upon the consummation of the contemplated corporate transaction. All such
determinations by the Committee shall be conclusive.

                                   ARTICLE IV
                          DEFERRAL OF RECEIPT OF SHARES

Section 4.1 - Eligibility

        Only those employees who have the title of Vice President or above or
who have a salary grade of X14 or above are eligible to defer the receipt of
their Shares.

Section 4.2 - Deferral of the Shares

        Under the terms of the Stock Unit Plan, any employee who has the title
of Vice President or who has a salary grade of X14 may elect to defer receipt of
all or a portion of his or her Shares and any employee who has the title of
Senior Vice President or above or who has a salary grade of X15 or above is
required to defer receipt of all of his or her Shares.

Section 4.3 - Conversion of Shares into Stock Units

        Upon the deferral of receipt of all or a portion of the Shares, the
Shares deferred will be converted into an equal number of restricted stock units
(the "Restricted Stock Units"). Upon conversion of the Shares into Restricted
Stock Units, the Restricted Stock Units will be subject to the terms and
conditions of the Stock Unit Plan. The number of Restricted Stock Units shall be
credited to an account established under the Stock Unit Plan for Employee. The
Stock Units shall have the same vesting schedule as the Shares as provided in
Section 3.2. If the Stock Units do not vest, the unvested Stock Units will be
surrendered to PacifiCare for cancellation pursuant to the terms of the Stock
Unit Plan.

                                   ARTICLE V
                                  MISCELLANEOUS

Section 5.1 - Shares Granted Under The Plan

        The Shares will be granted under the Plan and the Non-Deferred Shares
will be governed by the terms of the Plan.

Section 5.2 - Administration

        The Committee shall have the power to interpret the Plan and this
Agreement and to adopt such rules for the administration, interpretation and
application of the Plan as are consistent therewith and to interpret, amend or
revoke any such rules. All actions taken and all interpretations and
determinations made by the Committee in good

                                       7.
<PAGE>

faith shall be final and binding upon the Employee, PacifiCare and all other
interested persons. No member of the Committee shall be personally liable for
any action, determination or interpretation made in good faith with respect to
the Plan or the Non-Deferred Shares.

Section 5.3 - Non-Deferred Shares Not Transferable

        Prior to the applicable Vesting Date, none of the Non-Deferred Shares,
nor any interest or right therein or part thereof, may be transferred,
alienated, pledged, encumbered, assigned or otherwise disposed of by Employee,
whether such disposition be voluntary or involuntary or by operation of law by
judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy) and any attempted disposition thereof shall
be null and void and of no effect; provided, however, that this Section 5.3
shall not prevent transfers by will, by qualified domestic relations order or by
the applicable laws of descent and distribution.

Section 5.4 - Notices

        Any notice to be given under the terms of this Agreement to PacifiCare
shall be addressed to PacifiCare in care of its President or Chief Financial
Officer and any notice to be given to the Employee shall be addressed to him at
the address given beneath his signature hereto. By a notice given pursuant to
this Section 5.4, either party may hereafter designate a different address for
notices to be given to him. Any notice which is required to be given to the
Employee shall, if the Employee is then deceased, be given to the Employee's
personal representative if such representative has previously informed
PacifiCare of his status and address by written notice under this Section 5.4.
Any notice shall have been deemed duly given when enclosed in a properly sealed
envelope or wrapper addressed as aforesaid, deposited (with postage prepaid) in
a post office or branch post office regularly maintained by the United States
Postal Service.

Section 5.5 - Withholding

        Employee may satisfy any federal, state or local tax withholding
obligation relating to the vesting of any Non-Deferred Shares by any of the
following means (in addition to PacifiCare's right to withhold from any
compensation paid to Employee by PacifiCare) or by a combination of such means:
(i) tendering a cash payment; (ii) authorizing PacifiCare to withhold shares of
Common Stock from fully vested shares of Common Stock otherwise issuable to
Employee as a result of the vesting of any Non-Deferred Shares, having a fair
market value, determined as of the date of withholding, not in excess of the
amount of such tax obligation; or (iii) delivering to PacifiCare owned and
unencumbered shares of Common Stock having a fair market value, determined as of
the date of delivery, not in excess of such tax obligation. A share withholding
election shall be deemed made when written notice of such election, signed by
Employee, has been delivered or transmitted to the Secretary or Chief Financial
Officer of PacifiCare at its then principal office. Delivery of such notice
shall constitute an irrevocable election to have shares withheld.

Section 5.6 - Titles

        Titles are provided herein for convenience only and are not to serve as
a basis for interpretation or construction of this Agreement.

Section 5.7 - Inconsistency between Agreement and Plan

        In the event of any inconsistency between the provisions of this
Agreement and the Plan, the provisions of the Plan shall govern.

Section 5.8 - Choice of Law

        This Agreement shall be construed and enforced in accordance with the
laws of the State of California.

                                       8.

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