Document:

<PAGE>

                                                                    EXHIBIT 10.3

                                 $475,000,000

                     AMENDED AND RESTATED CREDIT AGREEMENT

                                     among

                         CONCENTRA MANAGED CARE, INC.

                                 as Holdings,

                       CONCENTRA OPERATING CORPORATION,

                                 as Borrower,

                              The Several Lenders
                       from Time to Time Parties Hereto,

                           THE CHASE MANHATTAN BANK,
                           as Administrative Agent,

                          CREDIT SUISSE FIRST BOSTON
                                      and
                             FLEET NATIONAL BANK,
                          as Co-Documentation Agents,

                                      and

                          DLJ CAPITAL FUNDING, INC.,
                             as Syndication Agent,

                          Dated as of March 21, 2000

                             CHASE SECURITIES INC.
                                      and
                          DLJ CAPITAL FUNDING, INC.,
                 as Co-Lead Arrangers and Joint Book Managers
<PAGE>

          AMENDED AND RESTATED CREDIT AGREEMENT, dated as of March 21, 2000
(this "Amendment"), to the Credit Agreement, dated as of August 17, 1999 (the
       ---------
"Credit Agreement"), among CONCENTRA MANAGED CARE, INC., a Delaware corporation
-----------------
("Holdings"), CONCENTRA OPERATING CORPORATION, a Nevada corporation (the
  --------
"Borrower"), the several banks and other financial institutions or entities from
 --------
time to time parties to the Credit Agreement  (the "Lenders"), THE CHASE
                                                    -------
MANHATTAN BANK, as administrative agent (the "Administrative Agent"), CREDIT
                                              --------------------
SUISSE FIRST BOSTON and FLEET NATIONAL BANK, as co-documentation agents (the

"Co-Documentation Agents"), and DLJ CAPITAL FUNDING, INC., as syndication agent
------------------------
(the "Syndication Agent").
      -----------------

                             W I T N E S S E T H:
                             -------------------

          WHEREAS, the Borrower, the Lenders, the Administrative Agent, the
Co-Documentation Agents and the Syndication Agent are parties to the Credit
Agreement;

          WHEREAS, the Borrower has requested that the Lenders amend and restate
certain provisions contained in the Credit Agreement as set forth herein; and

          WHEREAS, the Required Lenders have consented to the requested
amendments to, and restatements of, the Credit Agreement on and subject to the
terms and conditions as set forth herein.

          NOW THEREFORE, in consideration of the foregoing premises and for
other good and valuable consideration the receipt and sufficiency of which is
hereby acknowledged, the parties hereto hereby agree as follows:

I.   Definitions.  Unless otherwise defined herein, terms defined in the Credit
     -----------
Agreement are used herein as therein defined.

II.  Amendment and Restatement.  The parties hereto agree that the Credit
     -------------------------
Agreement shall be amended and restated by incorporating the Credit Agreement by
reference herein and amending and restating it as expressly set forth below:

A.   Amendments to Section 1 (Definitions).
     -------------------------------------
1.   Section 1.1 of the Credit Agreement is hereby amended by adding in their
proper alphabetical order the following definitions:

     "Amendment Effective Date":  the date on which each of the conditions
     -------------------------
precedent set forth in the Amendment shall have been satisfied or waived.
<PAGE>

          "Amendment":  the Amended and Restated Credit Agreement, dated as of
           ---------
March 21, 2000, among Holdings, the Borrower, the Required Lenders, the
Administrative Agent, the Co-Documentation Agents and the Syndication Agent, to
amend and restate certain provisions contained in the Credit Agreement, dated as
of August 17, 1999, among Holdings, the Borrower, the Lenders, the
Administrative Agent, the Co-Documentation Agents and the Syndication Agent.

1.  Section 1.1 of the Credit Agreement is hereby amended by deleting in its
entirety the definitions of "Applicable Margin", "Permitted Acquisition",
"Pricing Grid" and substituting in lieu thereof, respectively, the following
definitions in the proper alphabetical order:

          "Applicable Margin":  (a) Prior to the Amendment Effective Date, for
           -----------------
each Type of Loan, the rate per annum set forth under the relevant column
heading below:

                               ABR Loans                  Eurodollar Loans
                               ---------                  ----------------

   Revolving Loans               1.75%                         2.75%
   Tranche B Term Loans          2.25%                         3.25%
   Tranche C Term Loans          2.50%                         3.50%

; provided, that on and after the first Adjustment Date occurring after the
completion of four full fiscal quarters of the Borrower after the Closing Date,
the Applicable Margin with respect to Revolving Loans will be determined
pursuant to the Pricing Grid.

          (b) On and after the Amendment Effective Date, for each Type of Loan,
the rate per annum set forth under the relevant column heading below:

                                ABR Loans                 Eurodollar Loans
                                ---------                 ----------------

   Revolving Loans               2.50%                          3.50%
   Tranche B Term Loans          3.00%                          4.00%
   Tranche C Term Loans          3.25%                          4.25%

; provided, that on and after the first Adjustment Date occurring after the
completion of four full fiscal quarters of the Borrower after the Closing Date,
the Applicable Margin with respect to Revolving Loans will be determined
pursuant to the Pricing Grid.

          "Permitted Acquisition":  any acquisition by the Borrower or a
           ---------------------
Subsidiary of all or substantially all of the assets of, or all the Capital
Stock of, a Person or division or line of business of a Person if, immediately
after giving effect thereto, (a) no Default or Event of Default has occurred
and is continuing or would result therefrom, (b) all transactions related
thereto are consummated in accordance with applicable laws, except where any
non-compliance could not, singly or in the aggregate, reasonably be expected to
have a Material Adverse Effect, (c) all of the Capital Stock in each Subsidiary
formed for the purpose of or resulting from such acquisition shall be owned
directly by the Borrower or a Subsidiary of the Borrower and all actions
required to be taken with respect to such acquired or newly created Subsidiary
under Section 6.10 have been taken, (d) the Borrower and its Subsidiaries are in
compliance, on a pro forma basis as at the end of the last fiscal quarter of the
Borrower for which financial statements are available after giving effect to
such acquisition, with the covenants contained in Section 7.1 calculated as at
the last day of the most recently ended fiscal quarter of the Borrower for which
financial statements are available, as if such acquisition (and any related
incurrence or repayment of Indebtedness,
<PAGE>

with any new Indebtedness being deemed amortized over the applicable testing
period in accordance with its terms, and with any Revolving Loans borrowed in
connection with such acquisition being deemed to be repaid with excess cash
balances as available) had occurred on the first day of each relevant period for
testing such compliance (provided, that, with respect to determining the
                         --------
compliance by the Borrower and its Subsidiaries with the covenant for
Consolidated Leverage Ratio set forth in Section 7.1(a), each such ratio for the
respective fiscal quarter set forth therein shall be deemed to have been
decreased by 0.25, provided, further, that such decrease shall not apply in the
                   --------  -------
event the Consolidated Leverage Ratio is at or less than 3.00 to 1.00) and (e)
the Borrower has delivered to the Administrative Agent an officers' certificate
to the effect set forth in clauses (a), (b), (c) and (d) above, together with
all relevant financial information for the Person or assets to be acquired.

    "Pricing Grid":  the pricing grid attached to Amendment as Annex A.

B.  Amendment to Section 4 (Representations and Warranties). Section 4.2 of the
Credit Agreement is hereby amended by adding immediately before the period at
the end of such section the following phrase:", except as disclosed to the
Administrative Agent and the Lenders on or prior to March 1, 2000".

C.  Amendment to Section 6 (Affirmative Covenants). Section 6.1 of the Credit
Agreement is hereby amended by (i) deleting the word "and" at the end of clause
(ii) of paragraph (a) of said Section, (ii) deleting the period at the end of
clause (ii) of paragraph (b) of said Section and substituting in lieu thereof";
and" and (iii) adding the following paragraph immediately after the word "and"
at the end of clause (ii) of paragraph (b) of said Section:

           "(c) prior to an IPO, as soon as available, but in any event not
       later than 50 days after the end of each month occurring during each
       fiscal year (other than the third, sixth, ninth and twelfth such month)
       beginning as of April 1, 2000:

           (i)  of the Borrower, a copy of (A) the unaudited consolidated
           balance sheets of the Borrower and its consolidated Subsidiaries as
           at the end of such month and the related unaudited consolidated
           statements of income and of cash flows for such month and the portion
           of the fiscal year through the end of such month, and (B) the
           unaudited consolidating statements of income of the Borrower for such
           month and the portion of the fiscal year through the end of such
           month (calculated on a business unit basis), setting forth in each
           case in comparative form the figures for the previous year, certified
           by a Responsible Officer as being fairly stated in all material
           respects (subject to normal year-end audit adjustments and the
           absence of notes thereto); and

           (ii) of Holdings, a copy of the unaudited consolidated balance sheets
           of Holdings and its consolidated Subsidiaries as at the end of such
           month and the related unaudited consolidated statements of income and
           of cash flows for such month and the portion of the fiscal year
           through the end of such month, setting forth in comparative form the
           figures for the previous year, certified by a Responsible
<PAGE>

           Officer as being fairly stated in all material respects (s ubject to
           normal year-end audit adjustments and the absence of notes thereto)."

D.                                 Amendments to Section 7 (Negative Covenants).
                                   --------------------------------------------

1.  Section 7.1(a) of the Credit Agreement is hereby amended by deleting the
table set forth therein in its entirety and substituting in lieu thereof the
following table:

                                                 Consolidated
     Fiscal Quarter                             Leverage Ratio
     --------------                             --------------

     March 31, 2000                              5.85 to 1.00
     June 30, 2000                               5.80 to 1.00
     September 30, 2000                          5.70 to 1.00
     December 31, 2000                           5.30 to 1.00
     March 31, 2001                              5.30 to 1.00
     June 30, 2001                               5.00 to 1.00
     September 30, 2001                          5.00 to 1.00
     December 31, 2001                           4.75 to 1.00
     March 31, 2002                              4.50 to 1.00
     June 30, 2002                               4.25 to 1.00
     September 30, 2002                          4.00 to 1.00
     December 31, 2002                           3.75 to 1.00
     March 31, 2003                              3.75 to 1.00
     June 30, 2003                               3.50 to 1.00
     September 30, 2003                          3.25 to 1.00
     December 31, 2003                           3.00 to 1.00
     Each Quarter thereafter
         2004-2008                               3:00 to 1:00

2.   Section 7.1(b) of the Credit Agreement is hereby amended by deleting the
table set forth therein in its entirety and substituting in lieu thereof the
following table:

                                             Consolidated Interest
     Fiscal Quarter                             Coverage Ratio
     --------------                             --------------

     March 31, 2000                              1.50 to 1.00
     June 30, 2000                               1.50 to 1.00
     September 30, 2000                          1.50 to 1.00
     December 31, 2000                           1.50 to 1.00
     March 31, 2001                              1.50 to 1.00
     June 30, 2001                               1.50 to 1.00
     September 30, 2001                          1.75 to 1.00
     December 31, 2001                           1.75 to 1.00
     March 31, 2002                              1.75 to 1.00
     June 30, 2002                               2.00 to 1.00
     September 30, 2002                          2.00 to 1.00

<PAGE>

             December 31, 2002                 2.25 to 1.00
             March 31, 2003                    2.25 to 1.00
             June 30, 2003                     2.50 to 1.00
             September 30, 2003                2.75 to 1.00
             December 31, 2003                 3.00 to 1.00
             March 31, 2004                    3.00 to 1.00
             June 30, 2004                     3.25 to 1.00
             September 30, 2004                3.50 to 1.00
             December 31, 2004                 4.00 to 1.00
             Each Quarter thereafter           4.00 to 1.00
                 2005-2008

3.  Section 7.7 of the Credit Agreement is hereby amended by deleting said
Section in its entirety and substituting in lieu thereof the following:

    7.7  Capital Expenditures.  Make or commit to make any Capital Expenditure
         --------------------
Expenditure, except (a) Maintenance Capital Expenditures of the Borrower and its
Subsidiaries not exceeding the amount set forth opposite each of the fiscal
years set forth below:

                                               Maintenance
             Fiscal Year                       Capital Expenditures
             -----------                       --------------------

             2000                               $32,500,000
             2001                               $37,500,000
             2002                               $42,500,000
             2003                               $50,000,000
             2004                               $55,000,000
             2005                               $60,000,000
             2006                               $65,000,000
             2007                               $70,000,000
             2008                               $75,000,000

; provided, that in the event Consolidated Leverage Ratios for the Borrower and
  --------
its Subsidiaries shall not exceed the respective Consolidated Leverage Ratios as
originally set forth in Section 7.1(a) of this Agreement prior to the
effectiveness of the Amendment for four consecutive fiscal quarters, which
ratios are as set forth below for each relevant fiscal quarter:

                                               Consolidated
             Fiscal Quarter                    Leverage Ratio
             --------------                    --------------

             March 31, 2000                    5.25 to 1.00
             June 30, 2000                     5.00 to 1.00
             September 30, 2000                4.75 to 1.00
             December 31, 2000                 4.50 to 1.00
             March 31, 2001                    4.25 to 1.00
             June 30, 2001                     4.25 to 1.00
<PAGE>

             September 30, 2001                4.00 to 1.00
             December 31, 2001                 3.75 to 1.00
             March 31, 2002                    3.50 to 1.00
             June 30, 2002                     3.50 to 1.00
             September 30, 2002                3.25 to 1.00
             December 31, 2002                 3.25 to 1.00
             Each Quarter thereafter
                  2003-2008                    3.00 to 1.00

, then the Maintenance Capital Expenditures of the Borrower and its Subsidiaries
shall be permitted to be of amounts up to but not exceeding the Maintenance
Capital Expenditures as originally set forth in Section 7.7 of this Agreement
prior to the effectiveness of the Amendment, each of which amounts is as set
forth below for each relevant fiscal year:

                                               Maintenance
             Fiscal Year                       Capital Expenditures
             -----------                       --------------------

             2000                              $50,000,000
             2001                              $55,000,000
             2002                              $55,000,000
             2003                              $60,000,000
             2004                              $60,000,000
             2005                              $70,000,000
             2006                              $70,000,000
             2007                              $80,000,000
             2008                              $90,000,000

; provided, further, in any event, that up to 50% of each such applicable amount
  --------  -------
set forth above in this Section 7.7, if not expended in the fiscal year for
which it is permitted, may be carried over for expenditure in the next
succeeding fiscal year, and (b) Acquisition Capital Expenditures of the Borrower
and its Subsidiaries as permitted pursuant to Section 7.8A.

4.        Section 7.8A of the Credit Agreement is hereby amended by deleting
said Section in its entirety and substituting in lieu thereof the following:

          7.8A  Acquisitions.  Make or commit to make any Acquisition Capital
                ------------
Expenditures or purchase any assets constituting a business unit of, or the
Capital Stock of, any Person, or make any investment in or loan or advance to
any Permitted Joint Venture except for Acquisition Capital Expenditures,
Permitted Acquisitions and investments in Permitted Joint Ventures involving the
expenditure (including the principal amount of any Indebtedness incurred or
assumed in connection with the same, the continuing Indebtedness of any acquired
Person outstanding at any time of its Permitted Acquisition and the fair market
value of any other non-cash consideration, but excluding common stock issued by
Holdings as well as the proceeds received from the issuance of common stock of
Holdings to the existing stockholders of Holdings or to the Sponsor in
connection with the financing of Permitted Acquisitions, which proceeds may be
used by the Borrower or its Subsidiaries for Permitted Acquisitions independent
of the limits set forth in this Section 7.8A) in an aggregate amount not to
exceed $20,000,000 in the fiscal year ending 2000, $22,500,000 in the fiscal
year ending 2001, $25,000,000 in the fiscal year ending 2002, and $30,000,000 in
each fiscal year thereafter, (which amount shall include a maximum of up to
$10,000,000 in each fiscal year which may be used for investments in new
<PAGE>

Permitted Joint Ventures formed or acquired after the Closing Date or the
contribution of cash to existing Permitted Joint Ventures); provided, however,
                                                            --------  -------
that in the event Consolidated Leverage Ratios for the Borrower and its
Subsidiaries shall not exceed the respective Consolidated Leverage Ratios as
originally set forth in Section 7.1(a) of this Agreement prior to the
effectiveness of the Amendment for four consecutive fiscal quarters, then the
amount of Acquisition Capital Expenditures, Permitted Acquisitions and
investments in Permitted Joint Ventures permitted hereunder shall not exceed
such amounts as originally set forth in Section 7.8A of this Agreement prior to
the effectiveness of the Amendment, which shall be an aggregate amount not to
exceed $30,000,000 in each fiscal year (which amount shall include a maximum of
up to $10,000,000 in each fiscal year which may be used for investments in new
Permitted Joint Ventures formed or acquired after the Closing Date or the
contribution of cash to existing Permitted Joint Ventures); provided, further,
                                                            --------  -------
however, that immediately after giving effect to any such Acquisition Capital
-------
Expenditure, Permitted Acquisition or investments in a Permitted Joint Venture,
(a) no Default or Event of Default shall have occurred and be continuing, and
(b) the Borrower and its Subsidiaries shall be in compliance, on a pro forma
basis as at the end of the last fiscal quarter of the Borrower for which
financial statements are available after giving effect thereto, with the
covenants contained in Section 7.1 calculated as at the last day of the most
recently ended fiscal quarter of the Borrower for which financial statements are
available, as if such transaction (and any related incurrence or repayment of
Indebtedness, with any new Indebtedness being deemed amortized over the
applicable testing period in accordance with its terms, and with any Revolving
Loans borrowed in connection with such acquisition being deemed to be repaid
with excess cash balances as available) had occurred on the first day of each
relevant period for testing such compliance (provided, that, with respect to
                                             --------
determining the compliance by the Borrower and its Subsidiaries with the
covenant for Consolidated Leverage Ratio set forth in Section 7.1(a), each such
ratio for the respective fiscal quarter set forth therein shall be deemed to
have been decreased by 0.25, provided, further, that such decrease shall not
                             --------  -------
apply in the event the Consolidated Leverage Ratio is at or less than 3.00 to
1.00).  With respect to any such amount as set forth above (including the amount
allocated to investments in Permitted Joint Ventures), which is not expended in
the period or fiscal year, as the case may be, for which it is permitted, up to
50% of each such amount may be carried over for expenditure in the next
succeeding fiscal year.

III. Conditions Precedent.  This Amendment shall become effective as of the date
     --------------------
on which each of the conditions precedent set forth below shall have been
satisfied or waived (the date such conditions are fulfilled, the "Amendment
                                                                  ---------
Effective Date"):
--------------

A.  Documents.
    ---------

1.  Holdings, the Borrower, the Administrative Agent and the Required Lenders
shall have executed and delivered this Amendment.

2.  The Administrative Agent shall have received, to the extent that it has not
theretofore received, a certificate of the Secretary or Assistant Secretary of
each of Holdings and the Borrower as to the incumbency and signature of each of
the officers signing this Amendment, and any other instrument or document
delivered by Holdings and the Borrower in connection herewith, together with
evidence of the incumbency of such Secretary or Assistant Secretary.
<PAGE>

B.  No Default or Event of Default.  On and as of the Amendment Effective Date
    ------------------------------
and after giving effect to this Amendment and the transactions contemplated
hereby, no Default or Event of Default shall have occurred and be continuing.

C.  Fees.  The Administrative Agent shall have received (i) for the ratable
    ----
account of the Lenders who have executed and delivered to the Administrative
Agent this Amendment on or prior to March 17, 2000, an amendment fee in an
amount equal to 0.50% of the amount of such Lenders' Commitments and (ii) all
other fees and expenses (including the reasonable fees and expenses of legal
counsel) incurred in connection with this Amendment, which fees shall be payable
in immediately available funds on or prior to the Amendment Effective Date.

IV. General.
    -------

A.  Representation and Warranties.  To induce the Administrative Agent and the
    -----------------------------
Lenders parties hereto to enter into this Amendment, Holdings and the Borrower
hereby jointly and severally represent and warrant to the Administrative Agent
and Lenders parties hereto as of the Amendment Effective Date that:

1.  Power; Authorization; Enforceable Obligations.
    ---------------------------------------------

a.  Each of Holdings and the Borrower has the corporate power and authority, and
the legal right, to make, deliver and perform this Amendment, and to perform the
Loan Documents, to which it is a party, as amended by this Amendment, and has
taken all necessary corporate action to authorize the execution, delivery and
performance of this Amendment and the performance of such Loan Documents, as so
amended.

b.  No consent or authorization of, filing with, notice to or other act by or in
respect of, any Governmental Authority or any other Person is required in
connection with the execution, delivery, performance, validity or enforceability
of this Amendment, or the Loan Documents to which it is a party, as amended by
this Amendment, except for consents, authorizations, filings and notices which
have been obtained or made and are in full force and effect.

c.  This Amendment has been duly executed and delivered on behalf of Holdings
and the Borrower.

d.  This Amendment and the Loan Documents to which Holdings or the Borrower is a
party, as amended by this Amendment, each, constitutes a legal, valid and
binding obligation of Holdings and the Borrower, as the case may be, enforceable
against each of Holdings and the Borrower, as the case may be, in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting
the enforcement of creditors' rights generally and by general equitable
principles (whether enforcement is sought by proceedings in equity or at law).

2.  No Legal Bar.  The execution, delivery and performance of this Amendment and
    ------------
the performance of the Loan Documents to which Holdings or the Borrower, as the
case may be, is a party, as amended by this Amendment, (a) will not violate or
conflict with any Requirement of Law or any material Contractual Obligation of
Holdings, the Borrower or any of its Subsidiaries and will not result in, or
require, the creation or imposition of any Lien on any of
<PAGE>

their respective properties or revenues pursuant to any Requirement of Law or
any such Contractual Obligation.

3.  No Change.  Since December 31, 1998 there has been no development or event
    ---------
that has had or is reasonably expected to have a Material Adverse Effect,
except as disclosed to the Administrative Agent and the Lenders on or prior to
March 1, 2000.

4.  Representations and Warranties in Loan Documents.  The representations and
    ------------------------------------------------
warranties made by each Loan Party in each Loan Document to which it is a party
and herein are true and correct on and as of the Amendment Effective Date,
before and after giving effect to the effectiveness of this Amendment, as if
made on and as of the Amendment Effective Date, except to the extent that such
representation and warranty is expressly limited by its terms to an earlier
date.

B.  Continuing Effect of Loan Documents.  Except as expressly amended, modified
    -----------------------------------
and supplemented hereby, the provisions of the Credit Agreement and the other
Loan Documents are and shall remain in full force and effect.

C.  Expenses.  The Borrower agrees to pay to the Administrative Agent and the
    --------
Lenders parties hereto all fees as set forth herein and to reimburse the
Administrative Agent for all of its reasonable out-of-pocket costs and expenses
incurred in connection with this Amendment and any other documents prepared in
connection herewith, including the reasonable fees and expenses of counsel.

D.  GOVERNING LAW.  THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
    -------------
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

E.  Counterparts.  This Amendment may be executed in any number of counterparts
    ------------
by the parties hereto, each of which counterparts when so executed shall be an
original, but all counterparts taken together shall constitute one and the same
instrument.  This Amendment may be delivered by facsimile transmission of the
relevant signature pages thereof.
<PAGE>

          IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their respective duly authorized officers as
of the day and year first above written.

CONCENTRA MANAGED CARE, INC.

By: /s/ Thomas E. Kiraly
   ---------------------------

Name: Thomas E. Kiraly

Title: Executive Vice President and
        Chief Financial Officer

CONCENTRA OPERATING CORPORATION

By: /s/ Thomas E. Kiraly
   ---------------------------

Name: Thomas E. Kiraly

Title: Executive Vice President and
        Chief Financial Officer
<PAGE>

                          THE CHASE MANHATTAN BANK,
                          as Administrative Agent and a Lender

                          By: /s/ Stephen P. Rochford
                             ------------------------------

                          Name: Stephen P. Rochford

                          Title: Vice President
<PAGE>

DLJ CAPITAL FUNDING, INC., as Syndication Agent
and a Lender

By: /s/ Dana F. Klein
   -------------------------

Name: Dana F. Klein

Title: Senior Vice President
<PAGE>

                              CREDIT SUISSE FIRST BOSTON, as Co-Documentation
                              Agent and a Lender

                              By: /s/ William S. Lutkins
                                 --------------------------------

                              Name:  William S. Lutkins

                              Title: Vice President

                              By: /s/ Thomas G. Muoio
                                 --------------------------------

                              Name:  Thomas G. Muoio

                              Title: Vice President
<PAGE>

FLEET NATIONAL BANK, as Co-Documentation Agent and
a Lender

By: /s/ Maryann S. Smith
   -------------------------

Name:  Maryann S. Smith

Title: Vice President
<PAGE>

BANK AUSTRIA CREDITANSTALT
CORPORATE FINANCE, INC.

By: /s/ John G. Taylor
   -----------------------------

Name:  John G. Taylor

Title: Vice President

By: /s/ Robert M. Biringer
   -----------------------------

Name:  Robert M. Biringer

Title: Executive Vice President
<PAGE>

                              CANADIAN IMPERIAL BANK OF COMMERCE

                              By: /s/ Koren Volk
                                 --------------------------

                              Name:  Koren Volk

                              Title: Authorized Signatory
<PAGE>

                              CARLYLE HIGH YIELD PARTNERS, L.P.

                              By: /s/ Linda Pace
                                 -------------------------

                              Name:  Linda Pace

                              Title: Vice President
<PAGE>

CREDIT LYONNAIS NEW YORK BRANCH

By: /s/ John C. Oberle
   ---------------------------

Name:  John C. Oberle

Title: Vice President
<PAGE>

                              ELC (CAYMAN LTD., LENDER)
                              99-I

                              By: /s/ Joseph H. Towell
                                 ----------------------------

                              Name:  Joseph H. Towell

                              Title: Senior Vice President
<PAGE>

                                        ELC (CAYMAN LTD., LENDER)
                                        99-II

                                        By:  /s/ Joseph H. Towell
                                            -----------------------------------
                                        Name:      Joseph H. Towell
                                        Title:     Senior Vice President

<PAGE>

                                        ELC (CAYMAN LTD., LENDER)
                                        99-III

                                        By:  /s/ Joseph H. Towell
                                            -----------------------------------
                                        Name:      Joseph H. Towell
                                        Title:     Senior Vice President

<PAGE>

                                        PILGRIM CLO 1999-1 LTD.

                                        By: Pilgrim Investments, Inc.,
                                            as its investment manager

                                        By:  /s/ MICHAEL PRINCE
                                            -----------------------------------
                                        Name:      Michael Prince, CFA
                                        Title:     Vice President

<PAGE>

                                        KZH SHOSHONE, LLC

                                        By:  /s/ SUSAN LEE
                                            -----------------------------------
                                        Name:      Susan Lee
                                        Title:     Authorized Agent

<PAGE>

                                        SANKATY HIGH YIELD PARTNERS II, L.P.

                                        By:  /s/ DIANE J. EXTER
                                            -----------------------------------
                                        Name:      Diane J. Exter
                                        Title:     Executive Vice President,
                                                   Portfolio Manager
<PAGE>

GALAXY CLO 1999-I, LTD.

By: /s/ Sabur Moini
   -------------------------

Name:  Sabur Moini

Title: Authorized Signatory
<PAGE>

                              SANKATY ADVISORS, INC. AS COLLATERAL MANAGER FOR
                              GREAT POINT CLO 1999-1 LTD.

                              By: /s/ Diane J. Exter
                                 ----------------------------------------

                              Name:  Diane J. Exter

                              Title: Executive Vice President,
                                     Portfolio Manager
<PAGE>

                              JACKSON NATIONAL LIFE INSURANCE
                              COMPANY

                              BY:  PPM AMERICA, INC., as Attorney-in-Fact,
                              on behalf of JACKSON NATIONAL LIFE
                              INSURANCE COMPANY

                              By: /s/ Michael Dire
                                 -------------------------------------

                              Name:  Michael Dire

                              Title: Senior Managing Director
<PAGE>

KZH SHOSHONE, LLC

By:  /s/ SUSAN LEE
   --------------------------
Name:  Susan Lee

Title: Authorized Agent
<PAGE>

                              KZH STERLING LLC

                              By: /s/ Susan Lee
                                 -------------------------------

                              Name:  Susan Lee

                              Title: Authorized Agent
<PAGE>

KZH SOLEIL-2 LLC

By: /s/ Susan Lee
   ---------------------------

Name:  Susan Lee

Title: Authorized Agent
<PAGE>

MASSMUTUAL HIGH YIELD PARTNERS II LLC

By: /s/ Clifford M. Noreen
   -----------------------------------

Name:  Clifford M. Noreen

Title: Vice President,
       HYP Management Inc.,
       As Managing Member
<PAGE>

                              MASSACHUSETTS MUTUAL LIFE
                              INSURANCE COMPANY

                              By: /s/ Steven J. Katz
                                 ------------------------------

                              Name:  Steven J. Katz

                              Title: Second Vice President and
                                     Associate General Counsel
<PAGE>

PERSEUS CDO I, LIMITED

By: /s/ Steven J. Katz
   -----------------------------------

Name:  Steven J. Katz

Title: Second Vice President and
       Associate General Counsel
       Massachusetts Mutual Life
       Insurance Company, As
       Collateral Manager
<PAGE>

                              METROPOLITAN LIFE INSURANCE COMPANY

                              By: /s/ James R. Dingler
                                 ------------------------------------

                              Name:  James R. Dingler

                              Title: Director
<PAGE>

MOUNTAIN CAPITAL CLO I LTD.

By: /s/ Darren P. Riley
   ------------------------------

Name:  Darren P. Riley

Title: Director
<PAGE>

PARIBAS

By: /s/ David I. Canavan
   --------------------------------

Name:  David I. Canavan

Title: Managing Director

By: /s/ Stas Byhovsky
   --------------------------------

Name:  Stas Byhovsky

Title: Assistant Vice President
<PAGE>

                              SEQUILS - PILGRIM I, LTD.

                              By: Pilgrim Investments, Inc.,
                                  as its investment manager

                              By: /s/ Michel Prince, CFA
                                 ---------------------------------

                              Name:  Michel Prince, CFA

                              Title: Vice President
<PAGE>

PILGRIM CLO 1999-1 LTD.

By:   Pilgrim Investments, Inc.,
      as its investment manager

By:   /s/ MICHAEL PRINCE, CFA
   ------------------------------
Name:   Michael Prince, CFA

Title:  Vice President
<PAGE>

                              PILGRIM PRIME RATE TRUST

                              By:   Pilgrim Investments, Inc.,
                                    as its investment manager

                              By: /s/ Michel Prince, CFA
                                 ---------------------------------

                              Name:  Michel Prince, CFA

                              Title: Vice President
<PAGE>

SCOTIABANC INC.

By: /s/ Carolyn A. Calloway
   -------------------------------

Name:  Carolyn A. Calloway

Title: Director
<PAGE>

                              SENIOR DEBT PORTFOLIO

                              By: Boston Management and Research as
                                  Investment Advisor

                              By: /s/ Scott H. Page
                                 -----------------------------

                              Name:  Scott H. Page

                              Title: Vice President
<PAGE>

SOCIETE GENERALE

By: /s/ Cynthia A. Jay
   --------------------------

Name:  Cynthia A. Jay

Title: Managing Director
<PAGE>

                              SRF TRADING, INC.

                              By: /s/ Kelly C. Walker
                                 ------------------------------

                              Name:  Kelly C. Walker

                              Title: Vice President
<PAGE>

STEIN ROE & FARNHAM CLO I LTD.

By Stein Roe Farnham Incorporated,
As Portfolio Manager

By: /s/ James R. Fellows
   ---------------------------------

Name:  James R. Fellows

Title: Vice President
<PAGE>

                              STEIN ROE FLOATING RATE LIMITED
                              LIABILITY COMPANY

                              By: /s/ James R. Fellows
                                 ----------------------------------------------

                              Name:  James R. Fellows

                              Title: Vice President
                                     Stein Roe & Farnham Incorporated,
                                     as Advisor to the Stein Roe Floating Rate
                                     Limited Liability Company
<PAGE>

SUMMIT BANK

By: /s/ Miguel J. Medida
   ---------------------------

Name:  Miguel J. Medida

Title: Vice President
<PAGE>

                                                            Annex A
                                                            -------
<TABLE>
<CAPTION>

          PRICING GRID FOR REVOLVING CREDIT LOANS AND COMMITMENT FEES

Consolidated Leverage Ratio        Applicable Margin        Applicable Margin        Commitment Fee
                                   for Eurodollar           for ABR Loans            Rate
                                   Loans
----------------------------------------------------------------------------------======================
<S>                                <C>                     <C>                       <C>
] 4.5 to 1.0                             3.50%                   2.50%                 0.50%
----------------------------------------------------------------------------------======================
[ 4.5 to 1.0 and $ 4.0 to 1.0            3.25%                   2.25%                 0.50%
----------------------------------------------------------------------------------======================
[ 4.0 to 1.0 and $ 3.5 to 1.0            3.00%                   2.00%                 0.50%
----------------------------------------------------------------------------------======================
[ 3.5 to 1.0                             2.75%                   1.75%                0.375%
========================================================================================================
</TABLE>

Changes in the Applicable Margin with respect to the Revolving Loans resulting
from changes in the Consolidated Leverage Ratio shall become effective on the
date (the "Adjustment Date") on which financial statements are delivered to the
           ---------------
Lenders pursuant to Section 6.1 and shall remain in effect until the next change
to be effected pursuant to this paragraph.  If any financial statements referred
to above are not delivered within the time periods specified above, then, until
such financial statements are delivered, the Consolidated Leverage Ratio as at
the end of the fiscal period that would have been covered thereby shall for the
purposes of this definition be deemed to be greater than 4.5 to 1.0.  In
addition, at all times while an Event of Default shall have occurred and be
continuing, the Consolidated Leverage Ratio shall for the purposes of this
definition be deemed to be greater than 4.5 to 1.0.  Each determination of the
Consolidated Leverage Ratio pursuant to this pricing grid shall be made with
respect to (or, in the case of Consolidated Total Debt, as at the end of) the
period of four consecutive fiscal quarters of the Borrower ending at the end of
the period covered by the relevant financial statements.<PAGE>

                                                                  EXHIBIT 10.16

                             EMPLOYMENT  AGREEMENT
                             ---------------------

     This Employment Agreement (this "Agreement") is made and entered into as of
the 7th day of December, 1999 (the "Effective Date"), between Concentra Managed
Care, Inc., a Delaware corporation (the "Company"), and Brad Harslem
("Executive").

                                  WITNESSETH:

     WHEREAS, Executive desires to be employed as Senior Vice President and
Chief Information Officer of the Company and the Company desires to employ
Executive in such capacity; 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
          -------------------
its Senior Vice President and Chief Information Officer, 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 anniversary of the Effective Date (unless sooner terminated as hereinafter
set forth) (the "Term"); provided, however, that commencing on such 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 Chief Executive Officer or his designee, serve
as the Company's Senior Vice President and Chief Information Officer, 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.

          (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 one year 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

                                       1
<PAGE>

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 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 Two Hundred Twenty-Five Thousand
Dollars ($225,000) 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,

                                       2
<PAGE>

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.  With respect to calendar year 2000, and subject in all respects to the
Company's standard policies with respect to the earning and payment of bonus
compensation, Executive will be eligible for bonus compensation of up to fifty
percent (50%) of Base Salary based on achievement of individual and corporate
performance objectives which will be developed following the Effective Date.

          (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 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 each calendar year, 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 officers.

          (f) Perquisites.  Executive shall be entitled to receive the
              -----------
perquisites and fringe benefits appertaining to senior 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

                                       3
<PAGE>

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.
          ---------------------------------

          (a) Executive shall primarily perform his duties and responsibilities
hereunder at the Company's offices located at 5080 Spectrum Drive, Addison,
Texas (or at such other location within the Dallas, Texas, 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 the office location described in the first sentence of this Section
4, and Executive agrees to such change, the Company shall, in accordance with
the Company's standard relocation expense reimbursement policies reimburse
Executive for reasonable relocation and moving expenses.

          (b) Following the Effective Date, in accordance with the Company's
standard relocation expense reimbursement policies, the Company shall reimburse
Executive for reasonable relocation and moving expenses incurred by Executive in
relocating his home from Omaha, Nebraska, to the Dallas, Texas, metropolitan
area.

     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 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

                                       4
<PAGE>

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 or gross
negligence in the performance of 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, or
willful or intentional misconduct of a material nature in connection with the
performance of his duties hereunder;

              (3) The conviction of Executive, or the entering of a plea of
nolo contendere by Executive, with respect to a felony;

              (4) 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;

              (5) Intentional, willful, or grossly negligent conduct by
Executive which is materially detrimental to the reputation, character,
business, or standing of the Company, including, without limitation, the use by
Executive of a controlled substance; or

              (6) 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, 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.

          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 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;

               (B) the relocation of Executive's office at which he is to
perform his duties and responsibilities hereunder to a location outside of the
Dallas-Fort Worth, Texas, metropolitan area, or a materially adverse alteration
in the office space within which Executive is

                                       5
<PAGE>

to perform his duties and responsibilities hereunder or in the secretarial and
administrative support provided to Executive; or

               (C) 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, 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 one (1)
year after the date of Executive's death, in each case to the extent such
coverage is available.

          (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, 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 one (1) year after the Date of
Termination, in each case to the extent such coverage is available.

          (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

                                       6
<PAGE>

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 and on
the fifth day of each of the eleven (11) months thereafter (amounting to a total
of twelve (12) months), an amount in cash equal one-twelfth (1/12) of
Executive's 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, 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 one (1) year after the Date of Termination, in each case to the extent such
coverage is available.

       (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; provided, however, that, anything herein to the contrary
           --------  -------
notwithstanding, in the event of the termination of Executive's employment prior
to a Change in Control (as defined in the Concentra Managed Care, Inc., 1997
Long-Term Incentive Plan) which occurs after the consummation of the Merger (as
defined in that certain Amended and Restated Agreement and Plan of Merger, dated
as of March 24, 1999, by and between Yankee Acquisition Corp., a Delaware
corporation, and the Company) (but not if Executive's employment terminates
after such a Change in Control), the amount of any payment pursuant to Section
6(d)(B) shall be reduced by any compensation earned by Executive as the result
of employment by another employer (whether as a director, officer, employee,
manager, owner, consultant, independent contractor, advisor or otherwise) after
the Date of Termination until the end of the twelve month period of clause (B)
of Section 6(d) above.

   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

                                       7
<PAGE>

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 for Good 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.  Upon the occurrence of an event described in clauses
            -----------
(A) through (C) of the definition of "Good Reason" in Section 5(d), Executive
may terminate his employment hereunder for Good Reason 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
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 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 shall not be deemed a waiver of Executive's right to terminate his
employment for Good 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, Executive
has not cured the facts or circumstances giving rise to Executive's termination
for Cause, then Executive's termination for Cause shall be effective as of the
date specified in the Notice of Termination.

                                       8
<PAGE>

       (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.
        -----------------------------

        (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:              Brad Harslem
                                          13310 Bedford Avenue
                                          Omaha, Nebraska  68164

            If to the Company:            Concentra Managed Care, Inc.
                                          5080 Spectrum Drive, Suite 400 - West
                                          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.

                                       9
<PAGE>

     10.  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.

     11.  Attorney Fees.  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.  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.

     13.  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.

     14.  Entire Agreement; Effectiveness.  This Agreement constitutes the
          -------------------------------
entire agreement between the parties with respect to the subject matter hereof
and supersedes in all respects 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 other predecessor in interest thereto or
any of their respective subsidiaries, on the other hand, which prior employment
agreements and/or severance protection letters, agreements, and arrangements, if
any, are hereby cancelled and of no further force or effect.

     15.  Right and Option of Company to Repurchase Shares Upon Termination of
          --------------------------------------------------------------------
Employment.
----------

          (a)  In the event that, prior to an initial public offering of the
Company's equity securities, Executive's employment with the Company is
terminated for any reason, the Company shall thereupon have the right and
option, but not the obligation, to purchase from Executive all or any part of
the shares of common stock, par value $.01 per share, of the Company (the
"Shares") held by Executive as of the date Executive's employment so ceases at a
purchase price equal to the greater of (1) Sixteen and 50/100 Dollars ($16.50)
per Share, and (2) the fair market value (as hereinafter defined) of such Shares
as of the date Executive's employment so ceases.

          (b)  The Company may exercise the right and option provided in Section
15(a) above by giving Executive a written notice of such election to purchase at
any time within ninety

                                       10
<PAGE>

(90) days after the date Executive's employment so ceases. The closing for the
purchase by the Company of any such Shares pursuant to the provisions of said
Section 15(a) shall take place at the offices of the Company on the date
specified in such written notice, which date shall be a business day not later
than sixty (60) days after the date such notice is given. At such closing,
Executive will deliver or cause to be delivered such Shares, duly endorsed for
transfer, against payment of the applicable purchase price therefor. Such
purchase price shall be payable to Executive in cash or other immediately
available funds. To the extent the Company chooses not to exercise such right
and option under said Section 15(a) to purchase any Shares, such Shares shall
thereupon cease to be subject to the provisions of this Section 15.

          (c)  For the purposes of this Agreement, "fair market value" of a
Share as of any date shall mean the value of such stock as determined in good
faith by the Board of Directors of the Company on a basis consistent with the
manner of determining the fair market value of the Company's common stock for
purposes of offering the Company's common stock to equity investors.

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

                                      COMPANY:

                                      CONCENTRA MANAGED CARE, INC.

                                      By: /s/ Richard A. Parr II
                                          --------------------------------------
                                          Richard A. Parr II
                                          Executive Vice President and Secretary

                                      EXECUTIVE:

                                               /s/ Brad Harslem
                                      ------------------------------------------
                                                   Brad Harslem

                                       11

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00005-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00005-of-00352.parquet"}]]