EMPLOYMENT AGREEMENT

         This Employment  Agreement (this  "Agreement") is made and entered into
as of the 12th day of January,  1999 (the "Effective  Date"),  between Concentra
Managed Care, Inc., a Delaware corporation (the "Company"), and Daniel J. Thomas
("Executive").

                                   WITNESSETH:

         WHEREAS,  Executive  desires to continue to serve as the  President and
Chief  Executive  Officer of the Company and as an executive  officer of various
Company subsidiaries and affiliates; and

         WHEREAS, it is the desire of the Board of Directors of the Company (the
"Board of Directors")  to assure itself of the management  services of Executive
by directly engaging Executive as an officer of the Company and its subsidiaries
and affiliates; and

         WHEREAS,  the  execution  and  delivery  of this  Agreement  have  been
approved on the Effective Date by the Option and  Compensation  Committee of the
Board of Directors of the Company; and

         WHEREAS,  Executive  is  desirous  of  committing  himself to serve the
Company on the terms herein provided.

         NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements set forth below, the parties hereto agree as follows:

         1.  Employment and Term. The Company hereby agrees to employ  Executive
as the President and Chief Executive  Officer of the Company and as an executive
officer of various Company  subsidiaries  and affiliates,  and Executive  hereby
agrees to accept such employment,  on the terms and conditions set forth herein,
for the period commencing on the Effective Date and expiring as of 11:59 p.m. on
the second  anniversary  of the  Effective  Date (unless  sooner  terminated  as
hereinafter set forth) (the "Term"); provided,  however, that commencing on such
second anniversary date, and each anniversary of the date hereof thereafter, the
Term of this Agreement shall  automatically  be extended for one additional year
unless at least  thirty  (30)  days  prior to each such  anniversary  date,  the
Company or Executive shall have given notice that it or he, as applicable,  does
not wish to extend this Agreement.

         2.       Duties and Restrictions.

                  (a)  Duties  as  Employee  of the  Company.  Executive  shall,
subject to the  supervision  of the  Company's  Board of Directors  serve as the
Company's  President and Chief Executive  Officer and as an executive officer of
various Company subsidiaries and affiliates,  with all such powers as may be set
forth in the Company's  Bylaws with respect to, and/or are  reasonably  incident
to, such officerships.


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<PAGE>

                  (b) Other  Duties.  Executive  agrees to serve as requested by
the Company as a director of the Company's  subsidiaries  and  affiliates and in
one  or  more  executive  offices  of  any of  the  Company's  subsidiaries  and
affiliates;  provided, that the Company indemnifies Executive for serving in any
and all such  capacities in a manner  acceptable  to the Company and  Executive.
Executive  agrees that he shall not be entitled to receive any  compensation for
serving in any capacities of the Company's  subsidiaries  and  affiliates  other
than the  compensation  to be paid to Executive by the Company  pursuant to this
Agreement.

                  (c)  Noncompetition.  Executive agrees that he will not, for a
period of two (2) years  following the  termination of his  employment  with the
Company, (1) solicit the employment of, endeavor to entice away from the Company
or its subsidiaries or affiliates or otherwise interfere with any person who was
an  employee  of or  consultant  to the  Company or any of its  subsidiaries  or
affiliates  during the one year period  preceding  such  termination,  or (2) be
employed by,  associated  with, or have any interest in,  directly or indirectly
(whether  as  principal,  director,  officer,  employee,  consultant,   partner,
stockholder,  trustee,  manager,  or  otherwise),  any  occupational  healthcare
company or managed care company  which has a principal  line of business that is
directly  competitive  with the Company or its subsidiaries or affiliates in any
geographical  area in which the Company or its subsidiaries or affiliates engage
in business at the time of such  termination  or in which any of them,  prior to
termination  of  Executive's  employment,  evidenced in writing its intention to
engage  in  business.  Notwithstanding  the  foregoing,  Executive  shall not be
prohibited from owning five percent or less of the outstanding equity securities
of any entity  whose  equity  securities  are  listed on a  national  securities
exchange or publicly traded in any over-the-counter market.

                  (d)   Confidentiality.   Executive  shall  not,   directly  or
indirectly,  at any time during or following the  termination  of his employment
with the Company, reveal, divulge, or make known to any person or entity, or use
for Executive's personal benefit (including, without limitation, for the purpose
of  soliciting  business,  whether or not  competitive  with any business of the
Company or any of its  subsidiaries  or affiliates),  any  information  acquired
during  the  course  of  employment  hereunder  with  regard  to the  financial,
business,  or  other  affairs  of the  Company  or any  of its  subsidiaries  or
affiliates  (including,  without  limitation,  any list or record of  persons or
entities with which the Company or any of its subsidiaries or affiliates has any
dealings), other than (1) material already in the public domain, (2) information
of a type not considered confidential by persons engaged in the same business or
a similar  business to that  conducted  by the  Company,  or (3)  material  that
Executive is required to disclose under the following circumstances:  (A) in the
performance  by  Executive  of  his  duties  and   responsibilities   hereunder,
reasonably  necessary  or  appropriate  disclosure  to another  employee  of the
Company or to  representatives  or agents of the  Company  (such as  independent
public  accountants  and legal  counsel);  (B) at the express  direction  of any
authorized  governmental  entity;  (C)  pursuant  to a subpoena  or other  court
process; (D) as otherwise required by law or the rules,  regulations,  or orders
of any applicable regulatory body; or (E) as otherwise necessary, in the opinion
of counsel for  Executive,  to be disclosed by Executive in connection  with the
prosecution of any legal action or proceeding initiated by Executive against the
Company or any  subsidiary  or  affiliate  of the  Company or the defense of any
legal action or  proceeding  initiated  against  Executive in his capacity as an
employee  or  director  of the Company or any  subsidiary  or  affiliate  of the


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<PAGE>


Company. Executive shall, at any time requested by the Company (either during or
after his  employment  with the  Company),  promptly  deliver to the Company all
memoranda,  notes, reports,  lists, and other documents (and all copies thereof)
relating to the business of the Company or any of its subsidiaries or affiliates
which he may then possess or have under his control.

         3.       Compensation and Related Matters.

                  (a) Base Salary. Executive shall receive a base salary paid by
the Company ("Base Salary") at the annual rate of Four Hundred  Thousand Dollars
($400,000) during each calendar year of the Term, payable in substantially equal
monthly  installments  (or such other more  frequent  times as executives of the
Company  normally are paid).  In addition,  the Company's  Board of Directors or
Option and  Compensation  Committee  of the Board of  Directors  shall,  in good
faith,  consider granting  increases in the Base Salary based on such factors as
Executive's  performance and the growth and/or profitability of the Company, but
the Company shall have no obligation to grant such increases in compensation.

                  (b) Bonus Payments. Executive shall be entitled to receive, in
addition  to the Base  Salary,  such  bonus  payments,  if any,  as the Board of
Directors or the Option and Compensation Committee of the Board of Directors may
specify.

                  (c)  Expenses.  During the term of his  employment  hereunder,
Executive shall be entitled to receive prompt  reimbursement  for all reasonable
expenses  incurred  by him (in  accordance  with  the  policies  and  procedures
established  by the Board of  Directors  for its senior  executive  officers) in
performing  services  hereunder,   provided  that  Executive  properly  accounts
therefor in accordance with Company policy.

                  (d) Other Benefits.  The Company shall not make any changes in
any employee benefit plans or other arrangements in effect on the date hereof or
subsequently  in  effect  in  which   Executive   currently  or  in  the  future
participates (including,  without limitation,  each pension and retirement plan,
supplemental pension and retirement plan, savings and profit sharing plan, stock
or unit ownership plan,  stock or unit purchase plan, stock or unit option plan,
life insurance plan,  medical  insurance  plan,  disability  plan,  dental plan,
health-and-accident  plan, or any other similar plan or arrangement)  that would
adversely affect Executive's rights or benefits  thereunder,  unless such change
occurs  pursuant to a program  applicable  to all  executives of the Company and
does not  result in a  proportionately  greater  reduction  in the  rights of or
benefits to  Executive  as compared  with any other  executive  of the  Company.
Executive  shall be entitled to  participate  in or receive  benefits  under any
employee benefit plan or other  arrangement made available by the Company now or
in the future to its senior  executive  officers and key  management  employees,
subject to and on a basis  consistent  with the terms,  conditions,  and overall
administration of such plan or arrangement.  Nothing paid to Executive under any
plan or arrangement presently in effect or made available in the future shall be
deemed  to be in lieu of the  Base  Salary  payable  to  Executive  pursuant  to
paragraph (a) of this Section 3.

                  (e) Vacations. Executive shall be entitled to twenty (20) paid
vacation days in


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<PAGE>

each calendar year commencing, or such additional number as may be determined by
the Board of Directors  from time to time.  For  purposes of this Section  3(e),
weekends  shall not count as vacation days and Executive  shall also be entitled
to all paid holidays given by the Company to its senior executive officers.

                  (f)  Perquisites.  Executive  shall be entitled to receive the
perquisites and fringe benefits appertaining to senior executive officers of the
Company in accordance  with any practice  established by the Board of Directors.
In  the  event  Executive's  employment  hereunder  is  terminated  (whether  by
Executive  or the  Company) for any reason  whatsoever  (other than  Executive's
death), then the Company shall, at Executive's written request and to the extent
permitted by the terms of such policies and applicable law, assign and convey to
Executive any life insurance  policies  maintained by the Company on the life of
Executive,  who shall thereafter be solely responsible,  at his election, to pay
all  premiums  payable  after such  assignment  and  conveyance  to maintain the
coverage under such policies with respect to Executive.  Executive  shall not be
required  to pay any  money or other  consideration  to the  Company  upon  such
assignment  and  conveyance,  it being  acknowledged  and agreed by the  parties
hereto that Executive's  execution and delivery hereof  constitute  adequate and
satisfactory consideration for such assignment and conveyance.

                  (g) Proration.  Any payments or benefits  payable to Executive
hereunder in respect of any calendar year during which  Executive is employed by
the  Company for less than the entire  year,  unless  otherwise  provided in the
applicable plan or arrangement,  shall be prorated in accordance with the number
of days in such calendar year during which he is so employed.

         4. Executive's Office and Relocation. Executive shall primarily perform
his duties and  responsibilities  hereunder at the Company's  offices located at
312 Union Wharf, Boston, Massachusetts (or at such other location in the Boston,
Massachusetts, metropolitan area to which the Company may in the future relocate
such principal executive offices),  except for reasonable required travel on the
Company's  business.  If the  Company  requests  Executive  to  report  for  the
performance  of his services  hereunder  on a regular or permanent  basis at any
location  or office  more than  thirty-five  (35)  miles  from 312 Union  Wharf,
Boston,  Massachusetts,  and Executive agrees to such change,  the Company shall
pay Executive's  reasonable relocation and moving expenses,  including,  but not
limited to, the cost of moving his immediate  family,  expenses  incurred  while
seeking new  housing  (including  travel by  Executive's  spouse) and  temporary
living expenses incurred by Executive or his family for up to one hundred eighty
(180) days.

         5. Termination.  Executive's  employment hereunder may be terminated by
the Company or Executive,  as applicable,  without any breach of this Agreement,
only under the following circumstances.

                  (a) Death. Executive's  employment  hereunder shall  terminate
                      upon his death.

                  (b) Disability.  If, as a result of Executive's incapacity due
to physical or mental illness, Executive shall have been unable, with reasonable
accommodation,   to  perform  the


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<PAGE>

essential functions of his duties and responsibilities  hereunder on a full time
basis for one hundred eighty (180) consecutive  calendar days, and within thirty
(30) days after written  notice of  termination is given (which may occur before
or after the end of such one hundred  eighty (180) day period)  Executive  shall
not have  returned to the  performance  of his  material  managerial  duties and
responsibilities  hereunder  on a full time basis,  the  Company  may  terminate
Executive's employment hereunder.

                  (c) Cause.  Subject to the  provisions  of Section  7(d),  the
Company may terminate  Executive's  employment hereunder for Cause. For purposes
of this  Agreement,  the Company  shall have  "Cause" to  terminate  Executive's
employment hereunder upon:

                  (1)      Executive's willful or intentional failure to perform
                           Executive's   material  duties  and  responsibilities
                           hereunder (other than any such failure resulting from
                           Executive's  incapacity  due to  physical  or  mental
                           illness  or any such  actual or  anticipated  failure
                           after the  issuance  of a Notice of  Termination  for
                           Good Reason (as hereinafter defined) by Executive);

                  (2)      The commission by Executive of dishonesty or fraud of
                           a material  nature in connection with the performance
                           of his duties hereunder, intentional violation of law
                           or  governmental  regulation of a material  nature in
                           connection   with  the   performance  of  his  duties
                           hereunder,  or willful or intentional misconduct of a
                           material nature in connection with the performance of
                           his duties hereunder;

                  (3)      Unprofessional  or  unethical  conduct  of a material
                           nature   by   Executive   in   connection   with  the
                           performance of his duties  hereunder as determined in
                           a  final  adjudication  of  any  board,  institution,
                           organization  or   governmental   agency  having  any
                           privilege  or  right  to pass  upon  the  conduct  of
                           Executive;

                  (4)      Intentional or willful  conduct by Executive which is
                           materially detrimental to the reputation,  character,
                           business, or standing of the Company; or

                  (5)      The   continued   breach  by   Executive  of  any  of
                           Executive's    material    obligations   under   this
                           Agreement.

                           (d)   Termination   by  Executive.   Subject  to  the
         provisions of Section 7(c), and at his option,  Executive may terminate
         his  employment  hereunder  (1) for Good Reason  and/or for  Additional
         Reason,  or (2) if his health should become  impaired to an extent that
         makes the continued  performance of his duties  hereunder  hazardous to
         his physical or mental health or his life.


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<PAGE>

                  For purposes of this Agreement, the termination of Executive's
         employment  hereunder by Executive because of the occurrence of any one
         or more of the  following  events shall be deemed to have  occurred for
         "Good Reason":

                  (A)      a   material   change  in  the  nature  or  scope  of
                           Executive's authorities,  status, powers,  functions,
                           duties, responsibilities,  or reporting relationships
                           that is  determined  by Executive in good faith to be
                           adverse to those existing before such change;

                  (B)      any removal by the Company of Executive  from, or any
                           failure  to  reelect   Executive  to,  the  positions
                           indicated  in Section 1 hereof  except in  connection
                           with termination of Executive's  employment for Cause
                           or disability;

                  (C)      a reduction in  Executive's  Base Salary or any other
                           failure  by the  Company  to  comply  with  Section 3
                           hereof  that  is  not  consented  to or  approved  by
                           Executive;

                  (D)      the relocation of  Executive's  office at which he is
                           to perform his duties and responsibilities  hereunder
                           to a location  outside of the Boston,  Massachusetts,
                           metropolitan area, or a materially adverse alteration
                           in the office  space  within  which  Executive  is to
                           perform his duties and responsibilities  hereunder or
                           in  the   secretarial  and   administrative   support
                           provided to Executive; or

                  (E)      a  failure  by  the  Company  or  any  subsidiary  or
                           affiliate  of the  Company  to comply  with any other
                           material  term or  provision  hereof  or of any other
                           written  agreement  between Executive and the Company
                           or any such subsidiary or affiliate.

                  For purposes of this Agreement, the termination of Executive's
         employment  hereunder by Executive because of the occurrence of any one
         or more of the following  events within one (1) year following a Change
         in Control  (as  defined  in the  Concentra  Managed  Care,  Inc.  1997
         Long-Term Incentive Plan) of the Company which takes place on or before
         December 31,  1999,  shall be deemed to have  occurred for  "Additional
         Reason":

                  (A)      the removal of  Executive  from the position of Chief
                           Executive Officer, or a material change in the nature
                           or scope of any of Executive's  authorities,  status,
                           powers,  functions,  duties, or responsibilities that
                           is generally an essential  function of such  position
                           and which is determined by Executive in good faith to
                           be adverse to those existing before such change;



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<PAGE>

                  (B)      a reduction in  Executive's  Base Salary or any other
                           failure  by the  Company  to  comply  with  Section 3
                           hereof  that  is  not  consented  to or  approved  by
                           Executive;

                  (C)      the relocation of  Executive's  office at which he is
                           to perform his duties and responsibilities  hereunder
                           to a location  outside of the Boston,  Massachusetts,
                           metropolitan area, or a materially adverse alteration
                           in the office  space  within  which  Executive  is to
                           perform his duties and responsibilities  hereunder or
                           in  the   secretarial  and   administrative   support
                           provided to Executive; or

                  (D)      a  failure  by  the  Company  or  any  subsidiary  or
                           affiliate  of the  Company  to comply  with any other
                           material  term or  provision  hereof  or of any other
                           written  agreement  between Executive and the Company
                           or any such subsidiary or affiliate.

         6. Compensation  Upon Termination or Failure to Renew.  Executive shall
be entitled to the following  compensation from the Company upon the termination
of his employment or upon the Company's delivery of notice pursuant to Section 1
that the Term of this Agreement  shall not following any anniversary of the date
hereof be automatically extended for an additional year.

                  (a) Death.  If Executive's  employment  shall be terminated by
reason of his death,  the  Company  shall pay to such  person as shall have been
designated in a notice filed with the Company prior to Executive's death, or, if
no such person shall be designated,  to his estate as a death benefit,  his Base
Salary to the date of his death in addition to any payments  Executive's spouse,
beneficiaries,  or estate may be entitled to receive  pursuant to any pension or
employee benefit plan or other  arrangement or life insurance policy  maintained
by the Company. In addition,  (x) the Company shall make payments of premiums to
continue the medical and dental  insurance  coverage of  Executive's  spouse and
children  under  age  twenty-five  (25) as in  effect  at and as of the  date of
Executive's  death (or to provide as similar  coverage as possible  for the same
premiums if the continuation of existing  coverage is not permitted) for two (2)
years  after the date of  Executive's  death,  in each case to the  extent  such
coverage is available, and (y) the Company shall make a lump sum cash payment to
the appropriate  insurance  company(ies)  in an amount  sufficient to fully fund
future premium  payments  pursuant to Executive's  then existing  second-to-die,
split-dollar   insurance   policy(ies)   obtained  through  the  Company  and/or
OccuSystems, Inc.

                  (b)  Disability.  During any period  that  Executive  fails to
perform his  material  managerial  duties and  responsibilities  hereunder  as a
result of incapacity due to physical or mental illness, Executive shall continue
to receive his Base Salary and any bonus payments until  Executive's  employment
is terminated pursuant to Section 5(b) hereof or until Executive  terminates his
employment  pursuant to Section  5(d)(2) hereof,  whichever first occurs.  After
such termination, the Company shall pay to Executive, on or before the fifth day
following the Date of Termination  (as  hereinafter  defined) his Base Salary to
the Date of  Termination.  In addition,  (x) the Company  shall make payments of
premiums as necessary to cause  Executive  and  Executive's 



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<PAGE>


spouse and children under age twenty-five  (25) to continue to be covered by the
medical and dental  insurance as in effect at and as of the Date of  Termination
(or to provide as similar  coverage  as  possible  for the same  premiums if the
continuation of existing  coverage is not permitted) for two (2) years after the
Date of Termination,  in each case to the extent such coverage is available, and
(y) the Company shall make a lump sum cash payment to the appropriate  insurance
company(ies)  in an amount  sufficient  to fully fund  future  premium  payments
pursuant to  Executive's  then existing  second-to-die,  split-dollar  insurance
policy(ies) obtained through the Company and/or OccuSystems, Inc.

                  (c) Cause. If Executive's  employment  shall be terminated for
Cause,  the Company  shall pay  Executive  his Base  Salary  through the Date of
Termination  at the rate in effect at the time Notice of  Termination  is given.
Such payments shall fully discharge the Company's obligations hereunder.

                  (d) Breach by the Company, for Good Reason, or Upon Failure to
Renew.  If  (1) in  breach  of  this  Agreement,  the  Company  shall  terminate
Executive's  employment  (it being  understood  that a purported  termination of
Executive's  employment  by the  Company  pursuant  to  any  provision  of  this
Agreement that is disputed and finally  determined not to have been proper shall
be a termination by the Company in breach of this  Agreement),  or (2) Executive
shall  terminate his employment  for Good Reason,  or (3) the Company shall give
Executive  notice  pursuant  to Section 1 prior to any  anniversary  of the date
hereof that the Term of this Agreement shall not be  automatically  extended for
an  additional  year on any such  anniversary  date,  then the Company shall pay
Executive:

         (A)      his Base Salary through the Date of Termination at the rate in
                  effect at the time Notice of Termination is given;

         (B)      in  lieu of any  further  salary  payments  to  Executive  for
                  periods  subsequent  to the Date of  Termination,  the Company
                  shall pay as severance pay to Executive on or before the fifth
                  day  following  the  Date of  Termination,  a lump sum in cash
                  equal to two (2) times  Executive's full annual Base Salary at
                  the rate in effect at the time the  Notice of  Termination  is
                  given; and

         (C)      all benefits  payable under the terms of any employee  benefit
                  plan or other arrangement as of the Date of Termination.

                  In addition,  (x) the Company  shall make payments of premiums
as necessary to cause  Executive and  Executive's  spouse and children under age
twenty-five  (25) to continue to be covered by the medical and dental  insurance
as in effect at and as of the Date of  Termination  (or to  provide  as  similar
coverage  as possible  for the same  premiums  if the  continuation  of existing
coverage is not permitted) for two (2) years after the Date of  Termination,  in
each case to the extent such  coverage is  available,  and (y) the Company shall
make a lump sum cash payment to the  appropriate  insurance  company(ies)  in an
amount  sufficient to fully fund future premium

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<PAGE>

payments  pursuant to  Executive's  then  existing  second-to-die,  split-dollar
insurance policy(ies) obtained through the Company and/or OccuSystems, Inc.

                  (e)  Mitigation.  Executive  shall not be required to mitigate
the  amount of any  payment  provided  for in this  Section 6 by  seeking  other
employment  or  otherwise,  nor shall the amount of any payment  provided for in
this Section 6 be reduced by any compensation  earned by Executive as the result
of employment by another employer after the Date of Termination, or otherwise.

                  (f)  Additional  Reason.  If  Executive  shall  terminate  his
employment for Additional Reason, as well as for Good Reason,  then, in addition
to and not in lieu of any other  amounts  payable by the  Company  to  Executive
whether  pursuant to Section  6(d) or otherwise  (it being the  intention of the
parties  that,  upon  the  occurrence  of an event or  events  described  in the
definition or "Good Reason" and "Additional  Reason" in Section 5(d),  Executive
may terminate this Agreement for Good Reason and for  Additional  Reason),  then
the Company shall pay Executive as  additional  severance  pay, on or before the
fifth  day  following  the  Date of  Termination,  a lump  sum in cash  equal to
one-half (1/2) of  Executive's  full annual Base Salary at the rate in effect at
the time the Notice of  Termination is given (for a total of two and one-half (2
1/2) times  Executive's  full  annual Base Salary  when  combined  with  amounts
payable pursuant to Section 6(d)(B)).

                  In addition,  (x) the Company  shall make payments of premiums
as necessary to cause  Executive and  Executive's  spouse and children under age
twenty-five  (25) to continue to be covered by the medical and dental  insurance
as in effect at and as of the Date of  Termination  (or to  provide  as  similar
coverage  as possible  for the same  premiums  if the  continuation  of existing
coverage is not  permitted)  for six (6) months in addition to the two (2) years
provided for under  Section 6(d) (for a total of two and one-half (2 1/2) years)
after the Date of  Termination,  in each case to the  extent  such  coverage  is
available.

         7.       Other Provisions Relating to Termination.

                  (a) Notice of  Termination.  Any  termination  of  Executive's
employment by the Company or by Executive (other than termination because of the
death of Executive)  shall be  communicated  by written Notice of Termination to
the  other  party  hereto.  For  purposes  of  this  Agreement,   a  "Notice  of
Termination"  shall mean a notice which shall indicate the specific  termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and  circumstances  claimed  to  provide  a basis for  termination  of
Executive's employment under the provision so indicated.

                  (b) Date of Termination. For purposes of this Agreement, "Date
of Termination"  shall mean: (1) if Executive's  employment is terminated by his
death,  the date of his  death;  (2) if  Executive's  employment  is  terminated
because of a disability  pursuant to Section  5(b),  then thirty (30) days after
Notice of Termination is given  (provided that Executive shall not have returned
to the  performance  of his duties on a full-time  basis during such thirty (30)
day period);  (3) if  Executive's  employment  is  terminated by the Company for
Cause or by  Executive


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<PAGE>

for Good Reason and/or for Additional Reason, then, subject to Sections 7(c) and
7(d), the date specified in the Notice of Termination;  (4) if the Company gives
Executive  notice  pursuant  to Section 1 prior to any  anniversary  of the date
hereof that the Term of this Agreement shall not be  automatically  extended for
an additional  year on any such  anniversary  date, the date upon which the Term
expires;  and (5) if Executive's  employment is terminated for any other reason,
the date on which a Notice of Termination is given.

                  (c) Good Reason and/or Additional Reason.  Upon the occurrence
of an event  described  in clauses (A) through  (E) of the  definition  of "Good
Reason" in Section 5(d),  and/or upon the  occurrence  of an event  described in
clauses (A)  through (D) of the  definition  of  "Additional  Reason" in Section
5(d),  Executive may terminate his  employment  hereunder for Good Reason and/or
Additional  Reason,  as  applicable,   within  one  hundred  eighty  (180)  days
thereafter by giving a Notice of Termination  to the Company to that effect.  If
the effect of the  occurrence  of the event  giving rise to Good  Reason  and/or
Additional  Reason under  Section 5(d) may be cured,  the Company shall have the
opportunity  to cure any such effect for a period of thirty (30) days  following
receipt of Executive's  Notice of Termination.  If the Company fails to cure any
such effect,  the  termination  for Good Reason and/or  Additional  Reason shall
become effective on the date specified in Executive's Notice of Termination.  If
Executive  does not give such Notice of  Termination  to the Company,  then this
Agreement  will  remain  in  effect;  provided,  however,  that the  failure  of
Executive to terminate this Agreement for Good Reason and/or  Additional  Reason
shall not be deemed a waiver of  Executive's  right to terminate his  employment
for Good Reason  and/or  Additional  Reason upon the  occurrence of a subsequent
event described in Section 5(d) in accordance with the terms of this Agreement.

                  (d) Cause.  In the case of any  termination  of Executive  for
Cause,  the Company will give  Executive a Notice of  Termination  describing in
reasonable  detail,  the  facts  or  circumstances  giving  rise to  Executive's
termination  (and,  if  applicable,  the action  required to cure same) and will
permit  Executive  thirty  (30) days to cure such  failure to comply or perform.
Cause  for  Executive's  termination  will  not be  deemed  to exist  until  the
expiration of the foregoing cure period,  so long as Executive  continues to use
his best efforts  during the cure period to cure such failure.  If within thirty
(30) days following Executive's receipt of a Notice of Termination for Cause (1)
Executive  delivers written notice to the Company denying that Cause exists, the
question  of the  existence  or  nonexistence  of Cause  will be  submitted  for
arbitration in accordance with Section 10; or (2) if Executive has not cured the
facts or  circumstances  giving rise to  Executive's  termination  for Cause and
shall not have  delivered a notice  pursuant to clause (1) of this Section 7(d),
then  Executive's  termination  for  Cause  shall  be  effective  as of the date
specified in the Notice of Termination.

                  (e) Interest.  Until paid, all past due amounts required to be
paid by the Company under any provision of this Agreement shall bear interest at
the highest  non-usurious rate permitted by applicable federal,  state, or local
law.

         8.       Successors; Binding Agreement.
                  ------------------------------


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<PAGE>

                  (a)  Successors.  This  Agreement  shall be binding upon,  and
inure  to  the  benefit  of,  the  Company,   Executive,  and  their  respective
successors,   assigns,   personal   and   legal   representatives,    executors,
administrators, heirs, distributees, devisees, and legatees, as applicable.

                  (b)  Assumption.   The  Company  will  require  any  successor
(whether direct or indirect, by purchase of securities,  merger,  consolidation,
sale of assets,  or  otherwise) to all or  substantially  all of the business or
assets  of the  Company,  by an  agreement  in  form  and  substance  reasonably
satisfactory  to Executive,  to expressly  assume this Agreement and to agree to
perform  this  Agreement  in the same  manner  and to the same  extent  that the
Company would be required to perform it if no such  succession  had taken place.
Failure of the Company to obtain such agreement  prior to the  effectiveness  of
any such  succession  shall be a breach  of this  Agreement  and  shall  entitle
Executive  to  compensation  from the Company in the same amount and on the same
terms as he would be entitled to hereunder if he terminated  his  employment for
Good Reason, except that for purposes of implementing the foregoing, the date on
which  any  such  succession  becomes  effective  shall  be  deemed  the Date of
Termination.

                  (c)  Certain  Payments.  If  Executive  should  die  while any
amounts would still be payable to him hereunder if he had continued to live, all
such amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to Executive's  devisee,  legatee, or other designee
or, if there be no such designee, to Executive's estate.

         9. Notice.  For purposes of this  Agreement,  all notices and all other
communications  provided for in this Agreement  shall be in writing and shall be
deemed  to have been  duly  given  when (a)  delivered  personally,  (b) sent by
facsimile or similar electronic device and confirmed, (c) delivered by overnight
express, or (d) if sent by any other means, upon receipt.  Notices and all other
communications provided for in this Agreement shall be addressed as follows:

         If to Executive:

                  Daniel J. Thomas
                  4 Stevens Circle
                  Westwood, Massachusetts  02090

         If to the Company:

                  Concentra Managed Care, Inc.
                  312 Union Wharf
                  Boston, Massachusetts  02109
                  Fax No.: (617) 367-8519
                  Attention: Chief Executive Officer

         With a copy to:

                  Concentra Managed Care, Inc.



                                       11

<PAGE>

                  5080 Spectrum Drive, Suite 400 - West Tower
                  Addison, Texas  75001
                  Fax No.:  (972) 387-1938
                  Attention:  General Counsel

or to such other  address  as either  party may have  furnished  to the other in
writing in accordance herewith.

         10. Disputes. In the event any dispute or controversy arises under this
Agreement and is not resolved by mutual written  agreement between Executive and
the Company  within thirty (30) days after notice of the dispute is first given,
then,  upon the written  request of Executive  or the  Company,  such dispute or
controversy  shall be  submitted  to  arbitration,  which  arbitration  shall be
conducted in accordance with the rules of the American Arbitration  Association.
Judgment may be entered  thereon and the results of arbitration  will be binding
and conclusive on the parties hereto.  Any arbitrator's  award or finding or any
judgment or verdict  thereon will be final and  unappealable.  All parties agree
that venue for arbitration  will be in the city specified in Section 4, and that
any arbitration  commenced in any other venue will be transferred to such venue,
upon the written  request of any party to this Agreement.  The prevailing  party
will be entitled to reimbursement for reasonable attorneys fees, costs, or other
expenses  pertaining to the  arbitration  and the  enforcement  thereof and such
attorneys  fees,  costs,  or other  expenses  shall  become a part of any award,
judgment,  or verdict.  All arbitrations will have three  individuals  acting as
arbitrators:  one arbitrator will be selected by Executive,  one arbitrator will
be selected by the Company,  and the two  arbitrators  so selected will select a
third  arbitrator.  Any  arbitrator  selected by a party will not be  affiliated
with,  associated with, or related to the party selecting that arbitrator in any
matter  whatsoever.  The  decision of the  majority of the  arbitrators  will be
binding on all parties.

         11.  Miscellaneous.  No  provision of this  Agreement  may be modified,
waived, or discharged unless such waiver,  modification,  or discharge is agreed
to in a written  instrument  signed by Executive  and the Company.  No waiver by
either party hereto of, or compliance  with,  any condition or provision of this
Agreement  to be  performed  by such  other  party  shall be  deemed a waiver of
similar or  dissimilar  provisions  or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied,  with  respect to the  subject  matter  hereof have been made by either
party  which  are not set  forth  expressly  in this  Agreement.  The  validity,
interpretation,  construction,  and  performance  of  this  Agreement  shall  be
governed  by the laws of the  State of  Delaware,  excluding  any  choice-of-law
provisions thereof.

         12.  Attorney  Fees.  Except as  otherwise  provided in Section 10, all
legal fees and costs incurred by Executive in connection  with the resolution of
any dispute or controversy  under or in connection  with this Agreement shall be
reimbursed  by the Company to Executive as bills for such services are presented
by Executive to the Company, unless such dispute or controversy is found to have
been  brought  not in good  faith  or  without  merit  by a court  of  competent
jurisdiction.


                                       12

<PAGE>

         13. Validity.  The invalidity or  unenforceability  of any provision or
provisions of this Agreement shall not affect the validity or  enforceability of
any other  provision  of this  Agreement,  which shall  remain in full force and
effect.

         14.   Counterparts.   This   Agreement   may  be  executed  in  several
counterparts,  each of which shall be deemed to be an original, but all of which
together will constitute one and the same agreement.

         15. Entire  Agreement;  Effectiveness.  This Agreement  constitutes the
entire  agreement  between the parties with respect to the subject matter hereof
and  supersedes  any  and  all  prior  employment  agreements  and/or  severance
protection letters,  agreements,  or arrangements between Executive,  on the one
hand,  and the Company or any  predecessor  in interest  thereto or any of their
respective subsidiaries,  on the other hand, including, without limitation, that
certain  Employment  Agreement,  dated April 21,  1997,  between the Company and
Executive.

footer b id he IN WITNESS  WHEREOF,  the parties have executed this Agreement as
of the date and year first above written.

                                         COMPANY:

                                         CONCENTRA  MANAGED  CARE,   INC.
                                         a Delaware corporation

                                         By:_________________________
                                               John K. Carlyle
                                               Chairman

                                         EXECUTIVE:



                                         -------------------------
                                               Daniel J. Thomas




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