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                                                                    EXHIBIT 10.3

                           THIRD AMENDED AND RESTATED
                         PACIFICARE HEALTH SYSTEMS, INC.
                      STOCK UNIT DEFERRED COMPENSATION PLAN

        WHEREAS, PacifiCare Health Systems, Inc., (the "Company") has
established a non-qualified stock unit deferred compensation plan to provide
supplemental retirement income benefits for a select group of management and
highly compensated employees through deferrals of salary and bonuses, effective
as of December 18, 1997;

        WHEREAS, it is believed that providing for deferral of compensation at
the election of each executive is in the best interests of the Company; and

        WHEREAS, the Company believes that it is in its best interest to amend
and restate this plan; and

        WHEREAS, the Company intends that this plan shall be maintained as a
"top hat" plan described in Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA:

        NOW, THEREFORE, it is hereby declared as follows:

                                    ARTICLE I
                                   DEFINITIONS

        Whenever the following words and phrases are used in this Plan, they
shall have the meanings specified below.

Section 1.1 "Beneficiary" or "Beneficiaries" for purposes of this Plan shall
have the meaning set forth in Section 4.5.

Section 1.2 "Board of Directors" or "Board" means the Board of Directors of the
Company.

Section 1.3 "Bonus" means the management incentive plan bonus, long-term bonus,
sign-on bonus, retention bonus, sales commission, or any other bonuses
determined as eligible for the Plan by the Committee payable to a Participant in
addition to the Participant's Salary, other than moving expenses, prior to any
reduction for any deferrals to a plan qualified under Section 125 or Section 401
(k) of the Code. [NOTE: I CONFORMED THIS DEFINITION TO THE DEFINITION NOW
CONTAINED IN THE AMENDED AND RESTATED DEFERRED COMPENSATION PLAN.]

Section 1.4 "Change of Control" shall have the meaning set forth in Section 4.3.

Section 1.5 "Common Stock" means the Company's Common Stock, par value $0.01 per
share.

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Section 1.6 "Code" means the Internal Revenue Code of 1986, as amended from time
to time.

Section 1.7 "Committee" means the Committee appointed by the Compensation
Committee to administer the Plan in accordance with Article III.

Section 1.8 "Company" means PacifiCare Health Systems, Inc., a Delaware
corporation, or any successor corporation.

Section 1.9 "Compensation Committee" shall mean the Compensation Committee of
the Board of Directors of the Company.

Section 1.10 "Disability." A Participant shall be deemed to be incapacitated or
disabled, if such Participant's incapacity or disability prevents a Participant
from fully performing his or her duties to an Employer for a period in excess of
90 days and, after such 90-day period, the Company and a physician, duly
licensed and qualified in the specialty of the Participant's incapacity or
disability, decide in their reasonable judgments, that such incapacity or
disability will be permanent or of such continued duration as to prevent a
Participant from resuming the rendition of services to the Employer for at least
an additional six-month period.

Section 1.11 "Eligible Employee" means any Employee of an Employer who the
Company has designated to be in executive salary grade of 15 or above, is a
Senior Vice President or above and is scheduled to work at least 32 hours per
week.

Section 1.12 "Employee" shall mean any employee (as defined in accordance with
the Treasury Regulations and Revenue Rulings then applicable under Section 3401
(c) of the Code) of an Employer, whether such employee is so employed at the
time this Plan is adopted or becomes so employed subsequent to the adoption of
this Plan.

Section 1.13 "Employer" means the Company (or any successor by merger,
consolidation or purchase of substantially all of the Company's assets) and any
and all Subsidiaries of the Company.

Section 1.14 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.

Section 1.15 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.

Section 1.16 "Participant" means for purposes of this Plan, any Eligible
Employee who satisfies the requirements of Section 2.1.

Section 1.17 "Payment Eligibility Date" means the first day of the month
following the end of the calendar quarter in which a Participant terminates
employment for any reason with all Employers or dies.

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Section 1.18 "Plan" means this Third Amended and Restated Stock Unit Deferred
Compensation Plan of PacifiCare Health Systems, Inc., as may be amended from
time to time.

Section 1.19 "Plan Year" means the 12 consecutive month period beginning on
January 1 and ending on December 31 of the same year.

Section 1.20 "Retirement" or "Retire", for purposes of this Plan, mean
termination of a Participant's employment from all Employers, which occurs after
the sum of the following two factors meet or exceed fifty-five (55): (i) the
Participant's age and (ii) the Participant's number of years of service with all
Employers, both calculated at the last day of work.

Section 1.21 "Salary" shall mean the Participant's Salary prior to any reduction
for deferrals to a plan qualified under Section 125 or Section 401 (k) of the
Code.

Section 1.22 "Stock Unit" means a unit representing the right to receive a share
of Common Stock in accordance with the terms of this Plan.

Section 1.23 "Stock Unit Account" is the cumulative number of Stock Units
assigned to a Participant in accordance with Section 2.2.

Section 1.24 "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.

                                   ARTICLE II
                            DEFERRAL OF COMPENSATION

Section 2.1 Eligibility.

        a.      The Company's Chief Executive Officer (the "CEO") may elect to
defer (on a pre-tax basis) all, or a portion, of his or her Salary to be paid
during a Plan Year by filing an election to participate in this Plan on a form
provided by the Committee and filed with the Committee no later than December 15
of the preceding Plan Year. The election form filed by the CEO shall signify the
CEO's acceptance of the terms of this Plan and the portion of Salary that he or
she elects to defer. Notwithstanding the foregoing, the Committee may, in its
sole and absolute discretion, permit the Chief Executive Officer to file an
application on or after December 15 if, in its judgment, his or her failure to
do so prior to said date was due to reasonable cause, but in no event may such
application be filed after December 31. All elections, once made, are
irrevocable.

        b.      The Compensation Committee shall determine at least 60 days
prior to the beginning of each Plan Year, the Eligible Employees, including the
CEO, who may defer

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all or a portion of Bonus pursuant to the provisions of this Plan for the next
Plan Year. The Committee shall notify each Eligible Employee of his or her
eligibility to participate in this Plan at least 30 days prior to the time he or
she must file an application for participation. The CEO and any Eligible
Employee must file a written application with the Committee no later than
December 15 of the preceding Plan Year to participate in this Plan for the next
succeeding Plan Year. Notwithstanding the foregoing, the Committee may, in its
sole and absolute discretion, permit an Eligible Employee to file an application
on or after December 15 if, in its judgment, his or her failure to do so prior
to said date was due to reasonable cause, but in no event may such application
be filed after December 31. All elections, once made, are irrevocable.

Section 2.2 Stock Unit Account.

        a.      Any amount of Salary deferred by the CEO pursuant to Section 2.1
(a) shall be converted into Stock Units of the Company's Common Stock. The
number of shares of Common Stock into which the deferred amount shall be
converted shall equal the amount of Salary deferred by the CEO multiplied by a
risk premium (the "Risk Premium") determined by the Compensation Committee at
least 45 days prior to the beginning of the next Plan Year, divided by the
closing price of the Common Stock as quoted on Nasdaq on a date selected by the
Committee. The Stock Units deferred pursuant to this provision shall be credited
to a bookkeeping account established for this purpose (the "Stock Unit Account")
in the name of the CEO. The number of Stock Units established by deferrals of
Salary under this Plan shall remain constant over the deferral period, except as
provided in Section 4.4.

        b.      Any amount of Bonus deferred pursuant to this Section 2.2 by any
Participant shall be converted into Stock Units of the Company's Common Stock.
The number of shares of Common Stock into which the deferred amount shall be
converted shall equal the amount of Bonus deferred multiplied by the Risk
Premium divided by the closing price of the Common Stock as quoted on Nasdaq on
a date selected by the Committee. The Stock Units deferred pursuant to this
provision shall be credited to the Stock Unit Account in the name of each
Participant. The number of Stock Units established by deferrals of Bonus and
Salary under this Plan shall remain constant over the deferral period, except as
provided in Section 4.4.

        c.      No fractional shares shall be deferred under this Plan.
Accordingly, if the conversion of Salary and/or a Bonus into Stock Units results
in fractional shares, such unit shall be rounded up to the next highest whole
number.

Section 2.3 Distribution of Deferred Compensation.

        (a)     In the case of a Participant who terminates employment with all
Employers on or after Retirement or who terminates as a result of a Disability,
the balance of the Stock Unit Account (the "Distributable Amount") shall be paid
to the Participant in the form of substantially equal annual installments over
five years beginning on a date as soon as administratively possible from his or
her Payment

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Eligibility Date. Notwithstanding the foregoing, a Participant described in the
preceding sentence may elect one of the following optional forms of distribution
provided that his or her election is filed with the Committee at least one year
prior to his or her termination of employment with all Employers:

                (i)     a lump sum of the balance of the Stock Unit Account
        payable as soon as administratively possible from the Participant's
        Payment Eligibility Date; or

                (ii)    substantially equal annual installments of the balance
        of the Stock Unit Account over three years beginning on a date as soon
        as administratively possible from the Participant's Payment Eligibility
        Date.

Notwithstanding this subsection, if the value of the balance of the Stock Unit
Account is $50,000 or less then the entire amount contained in the Stock Unit
Account shall automatically be distributed in the form of a single lump sum
payment as soon as administratively possible from the Participant's Payment
Eligibility Date.

For all purposes under this Plan, a Participant shall not be considered
terminated from employment with all Employers if the Participant remains
employed by an entity that is an Employer. However, if the Employee is employed
by an Employer and such Employer ceases to be an Employer as a result of a sale
or other corporate reorganization, such sale or other corporate reorganization
shall be treated as termination of employment with all Employers unless
immediately following such event and without any break in employment the
Participant remains employed by an Employer.

        (b)     In the case of a Participant who terminates employment with all
Employers prior to Retirement for reasons other than a Disability, the balance
of the Stock Unit Account shall be paid to the Participant (and after his or her
death to his or her Beneficiary) in a lump sum as soon as administratively
possible from the Participant's Payment Eligibility Date.

        (c)     A Participant who has not terminated employment with all
Employers may change his or her form of payment applicable to the portion of the
Stock Unit Account balance attributable to one or more Plan Years to one of the
payment forms permitted by this Plan at least one year prior to the payment date
to be deferred. The Participant's payment election with respect to a given Plan
Year may not be changed after payment of that portion of the Stock Unit Account
balance has been made or has begun.

Section 2.4 Scheduled Early Distributions.

        Participants may elect to have Salary and/or Bonus deferred during a
given Plan Year be paid on a future date while still employed, provided the
payment date (the "Scheduled Payment Date") is at least two years from the last
day of such Plan Year. This election shall apply to the compensation deferred
for the Plan Year specified by the Participant on his or her payment election. A
Participant may elect a different Payment Date for compensation deferred for
each Plan Year. In addition, Scheduled Payment

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Dates elected pursuant to this Section 2.4 may be deferred by at least one year,
by filing with the Committee written notice at least one year prior to the
Scheduled Payment Date. A Participant may elect to defer a Scheduled Payment
Date selected by this Section 2.4 once every two years. A distribution pursuant
to this Section 2.4 of less than the Participant's entire interest in the Stock
Unit Account shall be made pro rata from his or her Stock Unit Account. All
early distributions pursuant to this Section 2.4 shall be made in either: (i) a
lump sum payment; (ii) annual installments over a period of three years; or
(iii) annual installments over a period of five years. Notwithstanding the
foregoing, if a Participant terminates employment with the all Employers for any
reason prior to the date on which a payment is scheduled to be made pursuant to
this Section 2.4, the Participant's entire Stock Unit Account balance will be
paid pursuant to the provisions of Section 2.3.

Section 2.5 Distributions Upon A Change of Control.

        a.      If a Change of Control occurs, the Stock Unit Account balance of
each Participant will be paid to the Participant (or Beneficiary) in a lump sum
as soon as administratively possible after such Change of Control.

        b.      Following a Change in Control, no changes in the Plan, or in any
documents evidencing an election to defer compensation, and no adjustments,
determinations or other exercises of discretion by the Compensation Committee,
the Committee or the Company's board of directors that were made subsequent to
the Change in Control and that would have the effect of diminishing a
Participant's rights or payments under this Plan or this Section 2.5, or of
causing a Participant to recognize income (for federal income tax purposes) with
respect to a Participant's Stock Unit Account prior to the actual distribution
to a Participant of such Stock Unit Account, shall be effective.

Section 2.6. Form of Distribution.

        Upon the occurrence of any event giving rise to a distribution, amounts
deferred under this Plan shall be distributed in shares of Common Stock equal to
the number of Stock Units of Common Stock converted on the date of deferral as
determined by Article II. Such shares shall be distributed as provided in
Sections 2.3, 2.4, 2.5 and 2.7.

Section 2.7 Financial Hardship Withdrawals.

        The Committee may, pursuant to rules adopted by it and applied in a
uniform manner, accelerate the date of distribution of all or any portion of a
Participant's Stock Unit Account, because of a financial hardship. A financial
hardship means an unforeseeable, severe financial emergency resulting from (a) a
sudden and unexpected illness or accident of the Participant or his or her
dependent (as defined in Section 152(a) of the Code); (b) loss of the
Participant's property due to casualty; or (c) other similar extraordinary and
unforeseeable circumstances arising out of event beyond the control of the
Participant, which may not be relieved through other available resources of the
Participant, as determined by the Committee in accordance with uniform rules
adopted by

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it. Payment of any amount with respect to which a Participant has filed a
request under this Section 2.7 shall be made as soon as practicable after
approval of such request by the Committee, but shall be limited to the amount
necessary to satisfy the financial hardship. Distributions made pursuant to this
Section 2.7 shall be without penalty.

                                   ARTICLE III
                                 ADMINISTRATION

Section 3.1 Committee.

        A number of individuals shall be appointed by, and serve at the pleasure
of, the Compensation Committee as a committee to administer the Plan (the
"Committee"). The number of members comprising the Committee shall be determined
by the Compensation Committee, which may from time to time vary the number of
members. A member of the Committee may resign by delivering a written notice of
resignation to the Compensation Committee. The Compensation Committee may remove
any member by delivering a certified copy of its resolution of removal to such
member. Vacancies in the membership of the Committee shall be filled promptly by
the Compensation Committee.

Section 3.2 Committee Action.

        The Committee shall act at meetings by affirmative vote of a majority of
the members of the Committee. Any action permitted to be taken at a meeting may
be taken without a meeting if, prior to such action, a written consent to the
action is signed by all members of the Committee and such written consent is
filed with the minutes of the proceedings of the Committee. A member of the
Committee shall not vote or act upon any matter, which relates solely to himself
or herself as a Participant. The Chairman or any other member or members of the
Committee designated by the Chairman may execute any certificate or other
written direction on behalf of the Committee.

Section 3.3 Powers and Duties of the Committee.

        a.      The Committee, on behalf of the Participants and their
Beneficiaries, shall enforce the Plan in accordance with its terms, shall be the
"Plan Administrator" charged with the general administration of the Plan, and
shall have all discretionary authority and powers necessary to accomplish its
purposes, including, but not by way of limitation, the following:

                i.      To construe and interpret the terms and provisions of
        this Plan;

                ii.     To compute and certify to the amount and kind of
        benefits payable to Participants and their Beneficiaries;

                iii.    To maintain all records that may be necessary for the
        administration of the Plan;

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                iv.     To provide for the disclosure of all information and the
        filing or provision of all reports and statements to Participants,
        Beneficiaries or governmental agencies as shall be required by law;

                v.      To make and publish such rules for the regulation of
        this Plan, and procedures for the administration of this Plan, as are
        not inconsistent with the terms hereof; and

                vi.     To appoint a plan administrator or any other agent, and
        to delegate to them such powers and duties in connection with the
        administration of this Plan as the Committee may from time to time
        prescribe.

Section 3.4 Construction and Interpretation.

        The Committee shall have full discretion to construe and interpret the
terms and provisions of this Plan, which interpretation or construction shall be
final and binding on all parties, including but not limited to the Company and
any Participant or Beneficiary. The Committee shall administer such terms and
provisions in a uniform and nondiscriminatory manner and in full accordance with
any and all laws applicable to the Plan.

Section 3.5 Information.

        To enable the Committee to perform its functions, the Employers shall
supply full and timely information to the Committee on all matters relating to
the Compensation of all Participants, their death or other cause of termination,
and such other pertinent facts as the Committee may require.

Section 3.6 Compensation, Expenses and Indemnity.

        a.      The members of the Committee shall serve without compensation
for their services hereunder.

        b.      The Committee is authorized at the expense of the Company to
employ such legal counsel as it may deem advisable to assist in the performance
of its duties hereunder. Expenses and fees in connection with the administration
of the Plan shall be paid by the Company.

        c.      To the extent permitted by applicable state law, the Company
shall indemnify and hold harmless the Committee and each member thereof, the
Board of Directors, Compensation Committee and any delegate of the Committee who
is an employee of the Company against any and all expenses, liabilities and
claims, including legal fees to defend against such liabilities and claims
arising out of their discharge in good faith of responsibilities under or
incident to this Plan, other than expenses and liabilities arising out of bad
faith or willful misconduct. This indemnity shall not preclude such further
indemnities as may be available under insurance purchased by the Company

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or provided by the Company under any bylaw, agreement or otherwise, as such
indemnities are permitted under state law.

Section 3.7 Quarterly Statements.

        Under procedures established by the Committee, a Participant shall
receive a statement with respect to such Participant's Stock Unit Account on an
annual basis as of each March 31. A CEO who selects Salary deferral shall
receive a statement with respect to such Participant's Stock Unit Accounts on a
quarterly basis as of each March 31, June 30, September 30 and December 31.

Section 3.8 Claim Procedures.

        a.      Claim. A person who believes that he or she is being denied a
benefit to which he or she is entitled under this Plan (hereinafter referred to
as "Claimant") may file a written request for such benefit with the Plan
Administrator, setting forth his or her claim.

        b.      Claim Decision. Upon receipt of a claim, the Plan Administrator
shall advise the Claimant that a reply will be forthcoming within 90 days and
shall, in fact, deliver such reply within such period. The Plan Administrator
may, however, extend the reply period for an additional 90 days for special
circumstances. If the claim is denied in whole or in part, the Plan
Administrator shall inform the Claimant in writing, using language calculated to
be understood by the Claimant, setting forth: (A) the specified reason or
reasons for such denial; (B) the specific reference to pertinent provisions of
this Plan on which such denial is based; (C) a description of any additional
material or information necessary for the Claimant to perfect his or her claim
and an explanation why such material or such information is necessary; (D)
appropriate information as to the steps to be taken if the Claimant wishes to
submit the claim for review; and (E) the time limits for requesting a review
under subsection 3.8(c).

        c.      Request for Review. Within 60 days after the receipt by the
Claimant of the written opinion described above, the Claimant may request in
writing that the Committee review the determination of the Plan Administrator.
The Claimant or his or her duly authorized representative may, but need not,
review the pertinent documents and submit issues and comments in writing for
consideration by the Committee. If the Claimant does not request a review within
such 60 day period, he or she shall be barred and estopped from challenging the
Plan Administrator's determination.

        d.      Review of Decision. Within 60 days after the Committee's receipt
of a request for review, after considering all materials presented by the
Claimant, the Committee will inform the Participant in writing, in a manner
calculated to be understood by the Claimant, of its decision, setting forth the
specific reasons for the decision and containing specific references to the
pertinent provisions of this Agreement on which the decision is based. If
special circumstances require that the 60 day time period be

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extended, the Committee will so notify the Claimant and will render the decision
as soon as possible, but no later than 120 days after receipt of the request for
review.

                                   ARTICLE IV
                                  MISCELLANEOUS

Section 4.1 Unsecured General Creditor.

        Participants and their Beneficiaries, heirs, successors, and assigns
shall have no legal or equitable rights, claims, or interest in any specific
property or assets of any Employer. Any and all of the assets of each Employer
shall be, and remain, the general unpledged, unrestricted assets of such
Employer. Each Employer's obligation under this Plan shall be merely that of an
unfunded and unsecured promise of such Employer to pay money in the future, and
the rights of the Participants and Beneficiaries shall be no greater than those
of unsecured general creditors. It is the intention of the Company that this
Plan (and the Trust described in Article VI) be unfunded for purposes of the
Code and for purposes of Title I of ERISA.

Section 4.2 Restriction Against Assignment.

        The Employers shall pay all amounts payable hereunder only to the person
or persons designated by this Plan and not to any other person or corporation.
No part of a Participant's Account shall be liable for the debts, contracts, or
engagements of any Participant, his or her Beneficiary, or successors in
interest, nor shall a Participant's Account be subject to execution by levy,
attachment, or garnishment or by any other legal or equitable proceeding, nor
shall any such person have any right to alienate, anticipate, sell, transfer,
commute, pledge, encumber, or assign any benefits or payments hereunder in any
manner whatsoever. If any Participant, Beneficiary or successor in interest is
adjudicated bankrupt or purports to anticipate, alienate, sell, transfer,
commute, assign, pledge, encumber or charge any distribution or payment from the
Plan, voluntarily or involuntarily, the Committee, in its discretion, may cancel
such distribution or payment (or any part thereof) to or for the benefit of such
Participant, Beneficiary or successor in interest in such manner as the
Committee shall direct.

Section 4.3 Change of Control.

        For purposes of this Plan, "Change of Control" means the occurrence of
any of the following:

                a.      The acquisition by any Person (as hereinafter defined)
        of Beneficial Ownership (as hereinafter defined) of 20% or more of
        either the then outstanding stock (the "Outstanding Company Stock") or
        the combined voting power of the then outstanding voting securities of
        the Company entitled to vote generally in the election of directors (the
        "Outstanding Company Voting Securities"), provided that, for purposes of
        this subsection (a), 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)

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        sponsored or maintained by the Company or any Person that controls, is
        controlled by or is under common control with, the Company or (III) any
        acquisition by any Person pursuant to a transaction which complies with
        clauses (I), (II) and (III) of subsection (c) of this definition; or

                b.      Individuals who, as of the Effective Date, constitute
        the Board (the "Incumbent Board") cease for any reason to constitute at
        least a majority of the Board, provided that, for purposes of this
        subsection (b), any individual who becomes a director subsequent to the
        Effective Date whose election, or nomination for election by the
        Company's shareholders, was approved by a vote of at least a majority of
        the directors then comprising the Incumbent Board shall be considered as
        though such individual were a member of the Incumbent Board, excluding,
        however, any such individual who initially assumes office as a result of
        an actual or threatened election contest with respect to the election or
        removal of directors or other actual or threatened solicitation of
        proxies or consents by or on behalf of a Person other than the Board; or

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

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

                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.

Section 4.4 Change In Company Shares.

        If the outstanding shares of Common Stock are hereafter changed into or
exchanged for a different number or kind of shares or other securities of the
Company, or of another company, by reason of reorganization, merger,
consolidation, recapitalization, reclassification, stock split, stock dividend
or combination of shares, or if the Company distributes a cash or non-cash
dividend to holders of Common Stock or engages in another similar transaction,
the Compensation Committee shall make an appropriate and equitable adjustment in
the number and kind of units credited to the Stock Unit Account. Any such
adjustment made by the Compensation Committee shall be final and binding upon a
Participant, the Company and all other interested persons.

Section 4.5 Beneficiary.

        For purposes of this Plan, "Beneficiary" or "Beneficiaries" mean the
person or persons, including a trustee, personal representative or other
fiduciary, last designated in writing by a Participant in accordance with
procedures established by the Committee to receive the benefits specified
hereunder in the event of the Participant's death. No beneficiary designation
shall become effective until it is filed with the Committee. If there is no such
designation or if there is no surviving designated Beneficiary, then the
Participant's surviving spouse shall be the Beneficiary. If there is no
surviving spouse to receive any benefits payable in accordance with the
preceding sentence, the participant's estate shall be the Beneficiary. In the
event any amount is payable under the Plan to a minor, payment shall not be made
to the minor, but instead be paid (a) to that person's living parent(s) to act
as custodian, (b) if that person's parents are then divorced, and one parent is
the sole custodial parent, to such custodial parent, or (c) if no parent of that
person is then living, to a custodian selected by the Committee to hold the
funds for the minor under the Uniform Transfers or Gifts to Minors Act in effect
in the jurisdiction in which the minor resides. If no parent is living and the
Committee decides not to select another custodian to hold the funds for the
minor, then payment shall be made to the duly appointed and currently acting
guardian of the estate for the minor or, if no guardian of the estate for the
minor is duly appointed and currently acting within 60 days after the date the
amount becomes payable, payment shall be deposited with the court having
jurisdiction over the estate of the minor.

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Section 4.6 Withholding.

        There shall be deducted from each payment made under the Plan or any
other compensation payable to the Participant (or Beneficiary) all taxes which
are required to be withheld by the Company in respect to such payment for this
Plan. The Company shall have the right to reduce any payment (or compensation)
by the amount of cash sufficient to provide the amount of said taxes.

Section 4.7 Amendment, Modification, Suspension or Termination.

        The Compensation Committee may amend, modify, suspend or terminate this
Plan in whole or in part, except that no amendment, modification, suspension or
termination shall have any retroactive effect to reduce any amounts allocated to
a Participant's Stock Account. In the event that this Plan is terminated, the
amounts allocated to a Participant's Stock Account shall be distributed to the
Participant or, in the event of his or her death, his or her Beneficiary in a
lump sum as soon as administratively possible following the date of termination.

Section 4.8 Governing Law.

        This Plan shall be construed, governed and administered in accordance
with the laws of the United States and, to the extent not preempted by such law,
by the laws of the State of California.

Section 4.9 Receipt or Release.

        Any payment to a Participant or the Participant's Beneficiary in
accordance with the provisions of the Plan shall to the extent thereof, be in
full satisfaction of all claims for benefits under this Plan against the
Committee and the Company. The Committee may require such Participant or
Beneficiary, as a condition precedent to such payment, to execute a receipt and
release to such effect.

Section 4.10 Effective Date.

        This Plan shall be effective as of January 1, 2002.

        IN WITNESS WHEREOF, this Plan is adopted as of January 1, 2002.

                                    PACIFICARE HEALTH SYSTEMS, INC.

                                    ------------------------------------
                                    By:
                                    Title:

                                       13<PAGE>

                                                                    EXHIBIT 10.1

                              TRANSFER/ASSIGNMENT

WHEREAS Essentially Yours Industries Corp ("Corp"), #201 -- 8322 -- 130th
Street, Surrey, B.C. V3W 8J9
Fax: 604.502.5120
Email: laroseb@eyicorp.com
a Canadian Federal company with an office in Surrey, B.C. has determined that it
is in its interests to carry its sales and marketing activities through its
wholly owned subsidiary,
Essentially Yours Industries, Inc ("Inc"), a Nevada Company;
3753 -- Howard Hughes Pkwy, Suite 200, Las Vegas, NV 89109
Fax: 702.892.3950
Email: eyi@jaybiz.com

AND WHEREAS most of sales and marketing activities of Corp are carried out in
the United States of America and to a lesser extent in Canada;

AND WHEREAS Corp primary carries out its sales activities through Independent
Business Associates ("IBAs") who are contracted to Corp;

AND WHEREAS Inc is able and prepared to carry out all of Corp's sales and
marketing activities in the United States of America, Canada and elsewhere and
to assume the contracts of Corp with the IBAs;

Now Therefore, in consideration of the sum of one ($1.00) US Dollar paid by each
Party to the Other, the receipt and sufficiency of which is hereby acknowledged
the Parties agree as follows:

1.    Corp hereby transfers and assigns all of its right, title and interest in
      and to the contracts with its IBAs and any other contracts that may be
      identified by the parties as being inherent in or necessary to the sales
      and marketing activities to Inc. Inc hereby agrees to accept the transfer
      of the contracts of the IBAs and any other necessary contracts and agrees
      to assume all rights, responsibilities and duties in and to the contracts
      with the IBAs and any other contracts that may be identified by the
      parties as being inherent in or necessary to the sales and marketing
      activities that may be transferred and assigned to it, as if it had been
      an original signatory to such contracts.

2.    The Parties agree that the transfer and assignment of the contracts of the
      IBAs will be noon PDT June 30, 2002 (the "effective date").

3.    Corp agrees that as of the effective date it will cease all sales and
      marketing activities and Inc agrees that effective the effective date it
      will commence all sales and marketing activities previously carried on by
      Corp.

4.    The Parties agree to execute and deliver any and all transfers,
      assignments and other documentation necessary or reasonably requested to
      carry out and ensure compliance with the intention of the Parties
      expressed herein.

<PAGE>

5.    Each of the Parties confirms that it has the authority to enter into this
      agreement; that the agreement has been properly authorized; and that the
      agreement is binding upon each respective party.

6.    Any notice required or permitted to be given hereunder shall be in writing
      and shall be effectively given if:

      (a)   Delivered personally;

      (b)   Sent by prepaid courier service or mail; or,

      (c)   Sent prepaid by telecopiers, fax, telex or other similar means of
            electronic communication, including email;

      Addressed to the relevant Party at the address/number shown for that Party
      at the beginning of this Agreement.

      Any notice so given shall be deemed conclusively to have been given and
      received when so personally delivered or, if sent by fax, telex,
      telecopier or other electronic communication, including email, on the
      first business day thereafter, or if sent by mail on the third business
      day thereafter. Any Party may change any particulars of its address/number
      for notice by notice to the other in the manner above described.

7.    Save and except for actions for injunctive relief or similar, the Parties
      shall make every effort to resolve amicably by direct, informal
      negotiation any disagreement or dispute arising between them under and in
      connection with this Agreement. If, after TEN (10) DAYS from the
      commencement of such informal negotiations, the Parties have been unable
      to amicably resolve any dispute arising out of or in connection with this
      Agreement, except for actions for injunctive relief or similar, any Party
      may require that the dispute be referred to and finally resolved by
      Arbitration, under the rules of the American Arbitration Association (the
      "Rules"), which Rules are deemed to be incorporated by reference into this
      Article. The tribunal shall consist of One (1) Arbitrator. The Parties
      will endeavour within TEN (10) DAYS of the matter being referred to
      Arbitration to agree upon an Arbitrator, failing which the Arbitrator
      shall be appointed in accordance with the Rules. The place of Arbitration
      shall be Las Vegas, NV. The language of the Arbitration shall be English.
      The Parties agree that the Arbitrator shall be requested to make his award
      within SIXTY (60) DAYS following the later of the conclusion of the
      Arbitration hearings or any exchange of final written submissions by the
      Parties and further agree that the word of the Arbitrator shall be final
      and binding and without appeal.

8.    If any provision of this Agreement is unenforceable or invalid for any
      reason whatever, such unenforceability or invalidity shall not affect the
      enforceability or validity of the remaining provisions of this Agreement,
      and such provision shall be severable from the remainder of this
      Agreement.

9     Time shall be of the essence hereof.

<PAGE>

10.   No waiver by any Party of any breach by any other Party of any of its
      covenants, obligations and agreements hereunder shall be a waiver of any
      subsequent breach of any other covenant, obligation or agreement, nor
      shall any forbearance to seek a remedy for any breach be a waiver of any
      rights and remedies with respect to such or any subsequent breach.

11.   This Agreement shall be governed by and construed in accordance with the
      laws of the State of Nevada, USA. without regard to its choice of law
      rules.

12.   This Agreement may be executed in two (2) or more counterparts, each of
      which, when executed, shall be considered an original for all purposes,
      provided that all counterparts shall, together, constitute one and the
      same document.

This Agreement ensures to the benefit of and is binding upon the parties and
their respective heirs, executors, administrators, successors and assigns, as
permitted herein.

IN WITNESS WHEREOF, the parties have signed this Agreement as of May 27, 2002.

By: Essentially Yours Industries Corp.    By: Essentially Yours Industries, Inc.

X  /s/ BARRY LAROSE                       X  /s/ JAY SARGEANT
 -------------------------------------     -------------------------------------
Name:  Barry LaRose                       Name:  Jay Sargeant
Title: Secretary                          Title: President
Date:                                     Date:

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