CASH COLLATERAL ACCOUNT AGREEMENT



        THIS CASH COLLATERAL ACCOUNT AGREEMENT (this "Agreement") is made and

entered into as of April 18, 2002 between PACIFICARE HEALTH SYSTEMS, INC., a

Delaware corporation (the "Company") and BANK OF AMERICA, N.A., as Collateral

Agent for the Secured Parties (as defined in the Credit Agreement referred to

below) (the "Collateral Agent"). Terms used but not otherwise defined herein

shall have the meanings provided in the Credit Agreement referred to below.



                                    RECITALS



       WHEREAS, the Company, the Subsidiary Guarantors party thereto, the

Lenders party thereto, the Initial Issuing Bank party thereto, the Swingline

Bank party thereto, Banc of America Securities LLC and J.P. Morgan Securities

Inc., as co-lead arrangers, Banc of America Securities LLC, J.P. Morgan

Securities Inc. and Salomon Smith Barney, as joint book running managers, the

Collateral Agent and Bank of America, N.A., as Administrative Agent are parties

to that certain Amended and Restated Credit Agreement dated as of August 20,

2001, as amended by that certain Letter Amendment dated August 30, 2001, that

certain Letter Amendment dated January 23, 2002 and that certain Amendment No. 3

to Amended and Restated Credit Agreement ("Amendment No. 3") dated as of the

date hereof (such Amended and Restated Credit Agreement, as amended, restated or

otherwise modified from time to time, the "Credit Agreement").



       WHEREAS, pursuant to the terms of Amendment No. 3, (i) the Lenders have

agreed, among other things, to permit the Company to deposit up to a certain

amount of the proceeds from the issuance or incurrence of certain Debt into a

Debt Proceeds Account to be pledged to the Collateral Agent for the benefit of

the Secured Parties pursuant to the terms hereof and (ii) the Collateral Agent

will release the proceeds of such Debt Proceeds Account to prepay, repurchase or

redeem the 7% Senior Notes, subject to the terms and conditions hereof;



        WHEREAS, it is a condition precedent to the effectiveness of Amendment

 No. 3 that the Company execute and deliver this Agreement in favor of the

 Collateral Agent.



              NOW THEREFORE, for good and valuable consideration, the receipt

and sufficiency of which is hereby acknowledged, the parties hereto agree as

follows:



       1. Defined Terms. As set forth above, terms used herein but not otherwise

defined herein shall have the meanings provided in the Credit Agreement, and the

terms "Deposit Accounts" and "Proceeds", which are defined in the Uniform

Commercial Code in effect in the State of New York on the date hereof (the

"UCC"), are used herein as so defined. For purposes of this Agreement, the term

"Secured Party" shall include any Affiliate of a Secured Party that has entered

into a Hedge Agreement with a Loan Party.



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        2. Cash Collateral Account. The Company shall deposit Dollars in an

amount equal to 100% of the Net Cash Proceeds of the issuance or incurrence of

Debt, other than Debt incurred or issued pursuant to clauses (ii) or (iv) of

Section 5.02(b) of the Credit Agreement, which the Company or the other Loan

Parties are not otherwise required to apply as a prepayment of the Advances and

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