SENIOR EXECUTIVE EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (this Agreement) is made and entered into as of March 1, 2005 (the Effective Date), by and between PACIFICARE HEALTH SYSTEMS, INC., a Delaware corporation (the Company), with its principal place of business located at 5995 Plaza Drive, Cypress, California 90630, and James Frey (Executive).

RECITALS

WHEREAS, the Company desires to employ Executive in the capacity of Executive Vice President, Major Accounts.

WHEREAS, the Company and Executive are entering into this Agreement to establish the terms and conditions of the employment relationship.

NOW, THEREFORE, in consideration of the following covenants, conditions and promises contained herein, and other good and valuable consideration, the Company and Executive hereby agree as follows:

1. Employment

1.1 Executives General Duties. The Company will employ Executive and Executive will serve the Company in the capacity of Executive Vice President, Major Accounts, having such usual and customary duties and authority as an officer of similar capacity in a corporation of comparable size, holdings, and business as that of the Company.

Executive shall do and perform all services, acts, or things necessary or advisable to manage and conduct the business of the Company and shall preside over such other areas of corporate activity as specified from time to time by the Board of Directors or Chief Executive Officer of the Company. During the term of this Agreement, Executive shall perform such additional or different duties, and accept the election or appointment to such other offices or positions as are mutually agreed upon by Executive and the Company.

1.2 Devotion of Executive. During the term of this Agreement, Executive shall devote his entire productive time, ability, and attention to the business of the Company. Executive shall use Executives best efforts, skills, and abilities to promote the general welfare and interests of the Company and to preserve, maintain, and foster the Companys business and business relationships with all persons and entities associated therewith, including, without limitation, employer groups, medical service providers, stockholders, affiliates, officers, employees, and banks and other financial institutions. The Company shall give Executive a

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reasonable opportunity to perform Executives duties and shall neither expect Executive to devote more time, nor assign more duties or functions to Executive, than are customary and reasonable for a person in Executives position.

2. Term and Termination

2.1 Term. The initial term of Executives employment under this Agreement shall be 24 months, commencing on the Effective Date. The Company may extend the term of this Agreement for a successive term of 12 months or more by giving Executive written notice at least 45 days prior to the expiration of the term. Notwithstanding the foregoing, if a Change-of-Control occurs, as defined in Section 5.1(c) of this Agreement, then the term of the Agreement shall end 24 months from the effective date of the Change-of-Control. Except as provided by Section 2.2(f), if the Company offers Executive a new employment agreement at the end of the term of this Agreement, but Executive does not accept the new employment agreement, then Executives continued employment with the Company will be without the benefit of a written employment agreement, in which case Executives entitlement to severance benefits on termination shall be governed by then-existing Company policies and practices. In the event that at the end of the term of this Agreement, the Company neither extends the term of the Agreement nor offers Executive a new employment agreement, then the Company shall have been deemed to have given 45 days written notice pursuant to Section 2.2(d) of this Agreement and Executives employment with the Company shall terminate pursuant to Section 2.2(d) of this Agreement.

2.2 Termination. This Agreement, and Executives employment with the Company, shall be terminated upon the occurrence of any one of the following events:

a. The death of the Executive.

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