S-4

As filed with the Securities and Exchange Commission on August 28, 2003

Registration No. 333-            

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

CONCENTRA OPERATING CORPORATION

AND THE GUARANTORS NAMED IN FOOTNOTE (1) BELOW

(exact name of Registrants as specified in their charters)

Nevada	75-2822620
(state or jurisdiction of incorporation or organization)	(I.R.S. employer identification no.)

5080 Spectrum Drive Suite 400 West Addison, Texas 75001 (972) 364-8000	Richard A. Parr II 5080 Spectrum Drive Suite 400 West Addison, Texas 75001 (972) 364-8000
(Address, including zip code, and telephone number, including area code, of Registrants’ principal executive offices)	(Name, address, including zip code, and telephone number, including area code, of agent for service)

Approximate date of commencement of proposed sale to the public:    As soon as practicable after the effective date of this Registration Statement

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  ¨

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered	Amount to be Registered	Proposed Maximum Offering Price Per Note	Proposed Maximum Aggregate Offering Price	Amount of Registration Fee(2)
9½% Senior Subordinated Notes Due 2010	$150,000,000	100%	$150,000,000	$12,135
Senior Subordinated Note Guarantees(3)	—	—	—	—

(1) Concentra Preferred Systems, Inc., a Delaware corporation (I.R.S. Employer Identification No. 36-3715258), National Healthcare Resources, Inc., a Delaware corporation (I.R.S. Employer Identification No. 11-3273542), MetraComp, Inc., a Delaware corporation (I.R.S. Employer Identification No. 06-1095987), Concentra Integrated Services Inc., a Massachusetts corporation (I.R.S. Employer Identification No. 04-2658593), First Notice Systems, Inc., a Delaware corporation (I.R.S. Employer Identification No. 04-3373927), Focus Healthcare Management, Inc., a Tennessee corporation (I.R.S. Employer Identification No. 62-1266888), CRA-MCO, Inc., a Nevada corporation (I.R.S. Employer Identification No. 36-4266562), CRA Managed Care of Washington, Inc., a Washington corporation (I.R.S. Employer Identification No. 91-1374650), Concentra Health Services, Inc., a Nevada corporation (I.R.S. Employer Identification No. 75-2510547), OCI Holdings, Inc. a Nevada corporation (I.R.S. Employer Identification No. 75-2679204), Concentra Management Services, Inc., a Nevada corporation (I.R.S. Employer Identification No. 93-1187448), NHR Washington, Inc., a Delaware corporation (I.R.S. Employer Identification No. 11-3379380), Concentra Laboratory, LLC, a Delaware limited liability company (I.R.S. Employer Identification No. 76-0546504), HealthNetwork Systems LLC, a Delaware limited liability company (I.R.S. Employer Identification No. 36-4285919), Medical Network Systems LLC, a Delaware limited liability company (I.R.S. Employer Identification No. (N/A), OccuCenters I, L.P., a Texas limited partnership (I.R.S. Employer Identification No. 75-2678146), Concentra Preferred Business Trust, a Massachusetts business trust (I.R.S. Employer Identification No. 74-3024282), Concentra Managed Care Business Trust, a Massachusetts business trust (I.R.S. Employer Identification No. 04-3449352), and Focus Healthcare Business Trust, a Massachusetts business trust (I.R.S. Employer Identification No. 74-3024280).

(2) Registration fee calculated pursuant to Rule 457(f)(2) under the Securities Act of 1933 (the “Securities Act”).

(3) The 9½% Senior Subordinated Notes due 2010 are guaranteed by the Registrants on a senior subordinated basis. No separate consideration will be paid in respect of the guarantees. Pursuant to Rule 457(n) under the Securities Act, no filing fee is required.

The Registrants hereby amend this Registration Statement on such dates as may be necessary to delay its effective date until the Registrants shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

Subject to Completion, dated August 28, 2003

Prospectus

[LOGO]

Offer to Exchange up to

$150,000,000 9½% Senior Subordinated Notes due 2010

for

$150,000,000 9½% Senior Subordinated Notes due 2010

that have been Registered under the Securities Act of 1933

Terms of the Exchange Offer

•       We are offering to exchange up to $150,000,000 of our outstanding 9 ¹/2%Senior Subordinated Notes due 2010, which we refer to herein as the “old notes,” for up to $150,000,000 of new 9½% Senior Subordinated Notes due 2010, which we refer to herein as the “new notes,” with substantially identical terms that have been registered under the Securities Act and are freely tradable. •       We will exchange all outstanding old notes that you validly tender and do not validly withdraw before the exchange offer expires for an equal principal amount of new notes. •       The exchange offer expires at 5:00 p.m., New York City time, on                     , 2003, unless extended. We do not currently intend to extend the exchange offer. •        Tenders of outstanding old notes may be withdrawn at any time prior to the expiration of the exchange offer. •        The exchange of outstanding old notes for new notes will not be a taxable event for U.S. federal income tax purposes. •        We will not receive any proceeds from the exchange offer.

Terms of the New 9 ½% Senior Subordinated Notes Offered in the Exchange Offer

Maturity •        The new notes will mature on August 15, 2010. Interest •        Interest on the new notes is payable on February 15 and August 15 of each year, beginning February 15, 2004. •        Interest will accrue from August 13, 2003. Redemption •        We may redeem the new notes, in whole or in part, on or after August 15, 2007. We may redeem the new notes in whole prior to that date pursuant to the make-whole provisions described in this prospectus. •        In addition, on or prior to August 15, 2006, we may redeem up to $52.5 million of the new notes using the net proceeds of one or more qualified equity offerings. Change of Control •        Upon a change of control, you may require us to repurchase all or a portion of your notes at a purchase price of 101% of their principal amount, plus accrued and unpaid interest. Ranking •        The new notes and the guarantees will be our and the applicable guarantors’ unsecured senior subordinated obligations. •        The new notes will rank junior to all of our and the guarantors’ existing and future senior indebtedness. The new notes will be guaranteed on a senior subordinated basis by certain of our current and future restricted domestic subsidiaries.

See “Risk Factors” beginning on page 12 for a discussion of factors you should consider before investing in the new notes.

These securities have not been approved or disapproved by the Securities and Exchange Commission or any state securities commission nor has the Securities and Exchange Commission passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

Each broker-dealer that receives the new notes for its own account pursuant to the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of such new notes. The letter of transmittal accompanying this prospectus states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of new notes received in exchange for the old notes where such old notes were acquired by such broker-dealer as a result of market-making activities or other trading activities. We have agreed that, for a period of 180 days after the expiration date of this exchange offer, we will make this prospectus available to any broker-dealer for use in connection with any such resale. See “Plan of Distribution.”

The date of this prospectus is                     , 2003

TABLE OF CONTENTS

	Page
FORWARD-LOOKING STATEMENTS	i
INDUSTRY AND MARKET DATA	ii
PROSPECTUS SUMMARY	1
THE EXCHANGE OFFER	5
RISK FACTORS	12
USE OF PROCEEDS	30
CAPITALIZATION	31
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA	32
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	34
BUSINESS	55
MANAGEMENT	71
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT	79
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS	82
DESCRIPTION OF OTHER INDEBTEDNESS	86
DESCRIPTION OF THE NEW NOTES	90
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS	128
PLAN OF DISTRIBUTION	128
LEGAL MATTERS	129
INDEPENDENT AUDITORS	129
WHERE YOU CAN FIND MORE INFORMATION	129
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES	F-1
LETTER OF TRANSMITTAL	A-1

FORWARD-LOOKING STATEMENTS

This prospectus contains “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). Forward-looking statements give our current expectations or forecasts of future events. All statements other than statements of current or historical fact contained in this prospectus, including statements regarding our future financial position, business strategy, budgets, projected costs and plans and objectives of management for future operations, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “estimate,” “expect,” “intend,” “may,” “plan,” “will” and similar expressions, as they relate to us, are intended to identify forward-looking statements. In particular, these include, among other things, statements relating to:

• our significant indebtednesses and ability to incur substantially more debt;

• our future cash flow and earnings;

• our ability to meet our debt obligations;

• our ability to increase our market share;

• our ability to retain our significant customers;

• our ability to identify suitable acquisition candidates or joint venture relationships for expansion, to consummate these transactions on favorable terms and to achieve satisfactory operating results from the acquired businesses;

• our ability to avoid unforeseen material liabilities as a result of acquiring new companies;

• our ability to manage business growth and diversification and the effectiveness of our information systems;

• our ability to process data and enhance our information systems to deliver streamlined patient care and outcome reporting;

• our ability to compete in our industry;

• possible litigation;

• the effects of increased costs of professional and general liability insurance;

• our ability to attract and retain qualified management personnel;

• the effects of general industry and economic conditions, including declines in nationwide employment levels and rates of workforce injuries;

• the impact of changes in, and restrictions imposed by, laws and regulations affecting the workers’ compensation, insurance and healthcare industries;

• the effects of significant negative publicity of the managed care industry;

• the impact of any reduction of costs associated with workers’ compensation claims; and

• performance of early intervention services and other future cost containment initiatives undertaken by state workers’ compensation commissions and other third-party payors.

We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. They can be affected by inaccurate assumptions we might make or by known or unknown risks, uncertainties and assumptions, including the risks, uncertainties and assumptions described in “Risk Factors.” In light of these risks, uncertainties and assumptions, the forward-looking statements in this prospectus may not occur and actual results could differ materially from those anticipated or implied in the forward-looking statements. When you consider these forward-looking statements, you should keep in mind these risk factors and other cautionary statements in this prospectus.

Our forward-looking statements speak only as of the date made. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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INDUSTRY AND MARKET DATA

Industry and market data used throughout this prospectus were obtained from our own research, studies conducted by third parties and industry and general publications published by third parties and, in some cases, was derived from management estimates based on its knowledge of the industry and other knowledge. We have not independently verified market and industry data from third-party sources and we make no representations as to the accuracy of such information. While we believe internal company estimates are reliable and market definitions appropriate, they have not been verified by any independent sources and we make no representations as to the accuracy of such estimates.

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PROSPECTUS SUMMARY

This summary highlights information about us and the offering of the new notes contained elsewhere in this prospectus and is qualified in its entirety by the more detailed information and consolidated financial statements included elsewhere in this prospectus. This summary is not complete and may not contain all of the information that you should consider before deciding to exchange your old notes for new notes. You should read this entire prospectus carefully, including the “Risk Factors” section and the consolidated financial statements included elsewhere in this prospectus. Unless the context otherwise requires, references to “we,” “us,” or “our” refer to Concentra Inc., Concentra Operating Corporation and their subsidiaries.

Our Company

We are a leading provider of workers’ compensation and other occupational healthcare services in the United States. We offer our customers a broad range of services designed to improve patient recovery and to reduce the total costs of healthcare. In 2002, we serviced over five million patient visits, reviewed and repriced over $10.0 billion in medical bills and managed or reviewed over 337,000 cases. Our initial treatment of workplace injuries and illnesses accounts for approximately 7% of total reported workplace injuries in the United States. The knowledge we have developed in improving workers’ compensation results for our customers has enabled us to expand successfully into other industries, such as group health and auto insurance, where payors of healthcare and insurance benefits are also seeking to reduce costs. For the twelve months ended June 30, 2003, we generated revenue of $1,017.3 million and operating income of $89.0 million.

We believe we are the largest outsource provider of occupational healthcare improvement and cost containment services in the nation. Through our nationwide network of occupational healthcare centers, we serve employers who have more than 114,000 locations. We also provide services to over 3,500 insurance companies, group health plans, third party administrators and other healthcare payors. These payors and our employer customers provide virtually all of our revenue, with less than 0.1% of our revenue derived from Medicare or Medicaid reimbursement.

We provide our services through three operating segments: Health Services, Network Services and Care Management Services. Through our Health Services segment we treat workplace injuries and perform other occupational healthcare services. We provide these services through our 247 owned and managed centers, located in 79 markets within 34 states. Our services at these centers are performed by over 650 affiliated primary care physicians, as well as affiliated physical therapists, nurses and other healthcare providers. Our Network Services segment offers services designed to assist insurance companies and other payors in the review and reduction of the bills they receive from medical providers. During 2002, we estimate that this segment enabled our customers to eliminate approximately $1.5 billion in excess costs. Our Care Management Services segment offers services designed to monitor cases and facilitate the return to work of injured employees who have been out of work for an extended period of time due to a work-related illness or injury.

The following chart provides an overview of our services and customer markets:

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Industry Overview

Workers’ Compensation and Other Occupational Healthcare. Workers’ compensation legislation in the United States generally requires employers, either directly or indirectly through the use of insurance, to fund the total costs of an employee’s medical treatment and all lost wages, legal fees and other costs associated with a work-related injury or illness. In addition, workers’ compensation programs vary among jurisdictions, making it difficult for insurance companies and multi-state employers to adopt uniform policies to administer, manage and control the costs of benefits across states. As a result, managing the cost of workers’ compensation requires approaches that are tailored to the specific regulatory environments in which the employer operates. As distinguished from providers who do not specialize in workers’ compensation and occupational healthcare services, we believe our focus on these services enables us to more efficiently manage the regulatory complexities and cost-saving interests of employers and payors.

According to the National Safety Council, total workers’ compensation costs to employers in the United States exceeded $132.1 billion in 2001, with approximately 65% of those costs related to wages and lost productivity. In recent years, premiums paid by employers for workers’ compensation insurance have risen significantly. Although total U.S. workers’ compensation costs have increased, work-related injury rates have decreased in past years due to improvements in workplace safety and general shifts in job composition toward less physical work activities. Historically, steady increases in the overall size of the workforce have partially offset these lower injury rates. We believe the market for workers’ compensation and occupational healthcare will grow in future years due primarily to the following factors:

• premium increases for workers’ compensation insurance;

• broader definitions of work-related injuries and illnesses covered by workers’ compensation laws;

• the shifting of medical costs from group health plans to the workers’ compensation system as the result of an increase in the number of uninsured individuals and the first dollar coverage provided in workers’ compensation programs;

• an aging work force;

• medical cost inflation;

• the under-utilization to date of comprehensive cost containment programs in the workers’ compensation industry; and

• the recovery of employment growth rates within the United States.

Non-injury occupational healthcare services include physical examinations, drug and alcohol testing, functional capacity testing and other related programs designed to meet specific employer or regulatory requirements. Non-injury occupational healthcare services also include programs to assist employers in complying with certain federal and state health and safety requirements.

Group Health and Auto Injury. In recent years, we have leveraged our extensive workers’ compensation experience to successfully expand our services into the group health and auto injury markets. According to the Centers for Medicare and Medicaid Services, private health insurance expenditures for personal healthcare in the United States were estimated to total over $550.0 billion in 2002. Healthcare payors are exposed to high costs in particular when medical care under a group health plan is delivered outside of a healthcare payor’s geographic coverage area or outside its network of providers. Non-network healthcare claims experience a greater incidence of over-utilization of care, excessive charges for care and billing errors than contracted or in-network claims. As a result of these trends, payors are increasingly seeking ways to reduce their exposure to these adverse costs. We provide our cost containment services to group health customers by analyzing and applying cost savings techniques to such claims. Similarly, auto insurance carriers have experienced increased costs associated with the reimbursement of medical expenses, lost wages and other essential services associated with personal injury protection coverage. In most states, independent medical examinations and peer reviews are the primary mechanisms used to manage the care rendered to individuals injured in auto accidents. We provide these and other cost containment services to our auto insurance customers.

Our Competitive Strengths

We believe that we are distinguished by the following competitive strengths:

Leadership in Workers’ Compensation and Occupational Healthcare. We believe we are the nation’s largest provider specializing in the treatment of workplace injuries and other occupational healthcare needs. In 2002, we serviced over five million patient visits, accounting for approximately 7% of total workplace injuries in the United States. Our extensive treatment, bill review

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and care management experience, as well as our clinicians’ principal focus on occupational healthcare, enable us to deliver high-quality results and reduce workers’ compensation costs for our customers.

Demonstrated Superior Clinical Expertise and Outcomes. We have developed a comprehensive set of clinical protocols for occupational injuries by collecting and analyzing data regarding treatment methodologies and outcomes achieved. By applying these clinical protocols consistently across our organization, we have produced superior patient outcomes and generated significant cost savings for our customers. For example, workplace injury patients we treated in 2001 were able to return to work in an average of 17 days, versus the national average of 23 days, as reported by the National Safety Council in 2001. Our track record of superior clinical outcomes allows us to demonstrate the value of our services to our current and prospective customers.

National Service Network. We currently operate 247 dedicated occupational healthcare centers across the United States, which we believe is the broadest national network of centers in the workers’ compensation industry. We have operations in 34 states, giving us a regional presence in 79 markets. In addition, to address the needs of large employers whose workforce extends beyond the geographic coverage of our centers, we expand the reach of our service offerings by giving these employers access to an additional network of select occupational healthcare providers. These providers use our proprietary software to benchmark treatment methodologies and outcomes achieved, thereby extending the delivery of consistent, high quality health services to our customers. We believe that our numerous centers and our broad geographic reach provide us with an advantage in serving national customers over single-market or regional service providers.

Comprehensive Scope of Services. Our broad service offerings enable us to offer our customers a single source for workers’ compensation, group health and auto injury outcomes improvement and cost containment services. Our product offerings cover the continuum of services required to process a healthcare claim from the initial incident through its final resolution. For example, our Health Services segment provides services at the outset of a claim, including initial treatment and follow-up care. Through our Network Services segment we review healthcare bills to recover excess costs incurred on patient care, including cases in which a patient is treated by a non-network provider or a provider with whom the insurance company does not have a negotiated billing rate. Our Care Management Services segment helps our customers minimize the costs associated with workers’ compensation cases where workplace injuries or illnesses prevent employees from returning to work for an extended period of time. During 2002, we estimate that we enabled our customers to eliminate more than $1.5 billion in excess costs by using our combined service offerings.

Effective Use of Technology. We have developed and maintain sophisticated information systems and an extensive, proprietary database of patient outcomes, disability management information, treatment protocols and complex regulatory provisions governing the workers’ compensation market. These resources currently enable us to generate cost savings for our customers by promptly identifying and addressing care being provided outside of recommended treatment parameters and generally reducing medical and administrative costs. In addition, our information systems enable us to automate certain administrative complexities in the markets we serve and allow our customers to more easily access the range of products and services we offer. These and other uses of technology enable us to deliver superior service quality and cost savings to our customers, as well as optimize our own operating efficiencies.

Established Base of Blue Chip Customers. Through our nationwide network of centers, we serve employers who have over 114,000 locations. We also provide services to over 3,500 insurance companies, group health plans, third party administrators and other healthcare payors. Nevertheless, no single customer represents more than 5% of our total annual revenue. We believe that we have been able to establish our strong customer base and achieve a solid rate of customer retention due to the significant name recognition that Concentra has achieved in the marketplace and due to our high quality performance.

Strong Cash Flow Generation. We believe our strong operating cash flow substantially enhances our competitive position in the markets we serve. During the twelve-month period ended June 30, 2003, we had cash flow from operating activities of $83.0 million. Our cash flow from operating activities is primarily a result of our focus on superior clinical care and outcomes, our economies of scale and our advanced information systems. In addition, we believe our strong operating cash flow strengthens our ability to fund organic and external growth initiatives, which enhances our competitiveness relative to our smaller, regional competitors.

Our Business Strategy

Our goal is to further establish ourselves as a leading provider of healthcare outcomes improvement and cost containment services. We intend to achieve this goal by pursuing the following strategies:

Actively Target New Health Services Customers. We intend to continue to expand our Health Services operations by utilizing advanced database research techniques to identify potential new customers and new locations for our facilities. Qualified customers that could benefit from the services offered by one of our existing facilities are called on by one of our 250-person Health Services sales force. We also have a dedicated business development team that will continue to build and selectively acquire facilities in identified new and existing markets. By giving new customers access to high quality physicians employed by our affiliated physician

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groups, highly trained personnel and experience-based protocols, we intend to grow our patient visits and enhance our industry-leading position in occupational healthcare services.

Intensify the Marketing of Our Network Services and Care Management Services. We believe that multi-state insurance carriers, third party administrators and self-funded employers will continue to seek innovative ways to address rising healthcare and workers’ compensation costs, and will increasingly seek to outsource outcomes improvement and cost containment services to third parties. Across our three business segments, we have built a continuum of services that responds to these outsourcing needs. We intend to build on our reputation as a leading provider of workers’ compensation services to expand our network services and care management services by intensifying our marketing of these services to payors in the group health marketplace. We believe that our size and experience in the workers’ compensation industry has allowed us to build awareness and credibility with this customer base. In addition, we believe that our significant visibility among key decision makers within these organizations will enhance our ability to expand the services we provide these current and potential customers through our Network Services and Care Management Services segments. We believe that our growth will be further enhanced as our multi-state customers, in turn, gain market share, due in part to the outcomes and efficiencies they enjoy by using our services.

Continue Investing in Technology To Broaden Our Service Offerings and Increase Profitability. We have used technology effectively to deliver and demonstrate better outcomes at a more efficient cost. We intend to continue to invest in technology to identify and deliver further improvements in the treatment, management and administrative oversight of medical cases, thereby creating additional revenue opportunities for us from this proprietary resource. In 2002, we acquired a proprietary information system that allows our customers to track all aspects of services provided in the management of a given claim. In addition, we enhanced our bill repricing services by increasing the degree of automation in our bill review processes. We also intend to continue building electronic interfaces with payors in an effort to reduce their administrative burdens and reduce our operating expenses. Additionally, we will use our web-based applications to facilitate a payor’s ability to eliminate many costs associated with the management of its current paper-intensive claims process while making it easier for it to utilize our medical and disability cost management services.

Profitably Expand Our Outsourcing Services into the Group Health Market. We intend to expand our presence in the group health industry. Historically, our focus in this industry has been in services designed to reduce and limit non-network medical costs. We believe that we are the largest outsource provider of these services in the nation today, managing over $4.5 billion annually in medical claim volume. In late 2001, we expanded the services we perform for this industry to include network management services, consisting of processes required to maintain numerous preferred provider and other managed care networks. Our services enable payors to outsource components of the network management function, namely contract repricing and provider file management, in order to improve payment accuracy and cycle times, eliminate redundant costs and improve network management efficiency. We also provide complementary services that reduce the medical and administrative costs associated with network and non-network medical care and assist our customers in meeting automatic claim-adjudication objectives. We believe we are uniquely positioned to capture greater market share as demand for such strategic outsourcing services grows.

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The Exchange Offer

On August 13, 2003, we completed a private offering of the old notes. We entered into a registration rights agreement with the initial purchasers in the private offering in which we agreed to effect this exchange offer.

Exchange Offer	We are offering to exchange new notes for old notes.
Expiration Date	The exchange offer will expire at 5:00 p.m. New York City time, on                     , 2003, unless we decide to extend it. We do not currently intend to extend the exchange offer.
Condition to the Exchange Offer	The registration rights agreement does not require us to accept old notes for exchange if the exchange offer or the making of any exchange by a holder of the old notes would violate any applicable law or interpretation of the staff of the Securities and Exchange Commission (the “SEC”). A tender of a minimum aggregate principal amount of old notes is not a condition to the exchange offer.
Procedures for Tendering Old Notes	To participate in the exchange offer, you must follow the procedures established by The Depository Trust Company, which we call “DTC,” for tendering notes held in book-entry form. These procedures, which we call “ATOP,” require that the exchange agent receive, prior to the expiration date of the exchange offer, a computer generated message known as an “agent’s message” that is transmitted through DTC’s automated tender offer program and that DTC confirm that:
	•	DTC has received your instructions to exchange your notes, and
	•	you agree to be bound by the terms of the letter of transmittal.
	For more details, please read “Exchange Offer—Terms of the Exchange Offer” and “—Procedures for Tendering.”
Guaranteed Delivery Procedures	None.
Withdrawal of Tenders	You may withdraw your tender of old notes at any time prior to 5:00 p.m., New York City time, on the expiration date. To withdraw, you must have delivered a written or facsimile transmission notice of withdrawal, in compliance with the requirements of Rule 14d-7 of the Exchange Act, to the exchange agent at its address indicated on the cover page of the letter of transmittal before 5:00 p.m., New York City time, on the expiration date of the exchange offer.
Acceptance of Old Notes and Delivery of New Notes	If you fulfill all conditions required for proper acceptance of old notes, we will accept any and all old notes that you properly tender in the exchange offer on or before 5:00 p.m. New York City time on the expiration date. We will return any old notes that we do not accept for exchange to you without expense as promptly as practicable after the expiration date. We will deliver the new notes as promptly as practicable after the expiration date and acceptance of the old notes for exchange. Please refer to the section in this prospectus entitled “Exchange Offer—Terms of the Exchange Offer.”
Accrued Interest on New Notes and Old Notes	The new notes will bear interest from August 13, 2003. Holders of old notes whose old notes are accepted for exchange will be deemed to have waived the right to receive any payment in respect of interest on such old notes accrued from August 13, 2003 to the date of the

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	issuance of the new notes. Consequently, holders who exchange their old notes for new notes will receive the same interest payment on February 15, 2004 (the first interest payment date with respect to the old notes and the new notes) that they would have received had they not accepted the exchange offer.
Resale	We believe that the new notes issued pursuant to the exchange offer may be offered for resale, resold and otherwise transferred by you (unless you are an “affiliate” of ours within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, so long as you are acquiring the new notes in the ordinary course of your business and you have not engaged in, do not intend to engage in, and have no arrangement or understanding with any person to participate in, a distribution of the new notes. Each participating broker-dealer that receives new notes for its own account under the exchange offer in exchange for old notes that were acquired by the broker-dealer as a result of market-making or other trading activity must acknowledge that it will deliver a prospectus in connection with any resale of the exchange notes. See “Plan of Distribution.” Any holder of old notes who:
	•	is our affiliate;
	•	does not acquire new notes in the ordinary course of its business; or
	•	exchanges old notes in the exchange offer with the intention to participate, or for the purpose of participating, in a distribution of new notes
	must, in the absence of an exemption, comply with the registration and prospectus delivery requirements of the Securities Act in connection with the resale of the new notes.
Fees and Expenses	We will bear all expenses related to the exchange offer. Please refer to the section in this prospectus entitled “Exchange Offer—Fees and Expenses.”
Use of Proceeds	The issuance of the new notes will not provide us with any new proceeds. We are making this exchange offer solely to satisfy our obligations under our registration rights agreement. Please refer to the sections entitled “Use of Proceeds” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” for a discussion of our use of the proceeds from the issuance of the old notes.
Consequences of Failure to Exchange Old Notes	If you do not exchange your old notes in this exchange offer, you will no longer be able to require us to register the old notes under the Securities Act except in the limited circumstances provided under our registration rights agreement. In addition, you will not be able to resell, offer to resell or otherwise transfer the old notes unless we have registered the old notes under the Securities Act, or unless you resell, offer to resell or otherwise transfer them under an exemption from the registration requirements of, or in a transaction not subject to, the Securities Act.

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United States Federal Income Tax Considerations

The exchange of new notes for old notes in the exchange offer will not be a taxable event for U.S. federal income tax purposes. Please read “United States Federal Income Tax Considerations.”

Exchange Agent

We have appointed The Bank of New York as exchange agent for the exchange offer. You should direct questions and requests for assistance and requests for additional copies of this prospectus (including the letter of transmittal) to the exchange agent addressed as follows: The Bank of New York, Corporate Trust Operations Reorganization Unit, 101 Barclay Street, 7 East, New York, New York 10286, Attention: Corporate Trust Operations Reorganization Unit. Eligible institutions may make requests by facsimile at 212-298-1915.

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Terms of the New Notes

The new notes will be identical to the old notes except that the new notes are registered under the Securities Act and will not have restrictions on transfer, registration rights or provisions for additional interest and will contain different administrative terms. The new notes will evidence the same debt as the old notes, and the same indenture will govern the new notes and the old notes.

The following summary contains basic information about the new notes and is not intended to be complete. It does not contain all the information that is important to you. For a more complete understanding of the new notes, please refer to the section of this document entitled “Description of the New Notes.”

Issuer	Concentra Operating Corporation.
Notes Offered	$150,000,000 aggregate principal amount of 9½%Senior Subordinated Notes due 2010.
Maturity Date	August 15, 2010.
Interest Payment Dates	February 15 and August 15 of each year, commencing on February 15, 2004.
Guarantees	Our obligations under the new notes will be guaranteed, jointly and severally, on a senior subordinated basis, by certain of our current and future restricted domestic subsidiaries, other than certain permitted joint venture subsidiaries. Any future foreign subsidiaries or receivables entities will not guarantee the new notes unless they guarantee other debt of ours or our domestic subsidiaries. For the year ended December 31, 2002 and the six months ended June 30, 2003, our non-guarantor subsidiaries generated approximately 7.4% and 7.7% of our consolidated revenue, respectively.
Ranking	The new notes and the guarantees will be our and the applicable guarantors’ unsecured senior subordinated obligations. The new notes and the guarantees will rank:
	•	junior to all of our and the guarantors’ existing and future senior indebtedness, including the indebtedness under our new credit facility;
	•	equally with all of our and the guarantors’ existing and future senior subordinated indebtedness, including our existing 13% senior subordinated notes; and
	•	senior to all of our and the guarantors’ existing and future subordinated indebtedness.
	In addition, the new notes will be effectively subordinated to the existing and future liabilities of our subsidiaries that are not providing guarantees.
	As of June 30, 2003, after giving pro forma effect to the Refinancing Transactions (as defined in “Use of Proceeds”), the new notes would have ranked junior to approximately $336.6 million of senior indebtedness, all of which would have been secured, and our non-guarantor subsidiaries would have had approximately $3.3 million of liabilities (excluding intercompany liabilities) that would have been structurally senior to the new notes. See “Description of the New Notes—Subordination.”
Optional Redemption	We may redeem all or a portion of the new notes at any time on or after August 15, 2007, at the redemption prices described in this prospectus, plus accrued and unpaid interest to the date of redemption. We may redeem all of the new notes at any time prior to August 15, 2007, at a redemption price equal to 100% of the principal amount of the new notes, plus the

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	applicable premium described in this prospectus, plus accrued and unpaid interest to the date of redemption. In addition, at any time prior to August 15, 2006, we may redeem up to 35% of the aggregate principal amount of the new notes with the net proceeds of certain equity offerings at the redemption price described in this prospectus, plus accrued and unpaid interest to the date of redemption.
Change of Control	Upon a change of control, you may require us to repurchase all or a portion of your new notes at a purchase price of 101% of their principal amount, plus accrued and unpaid interest. The term “change of control” is defined in the “Description of the New Notes—Change of Control” section of this Prospectus.
Restrictive Covenants	The indenture governing the new notes will contain covenants that limit our ability, and the ability of our restricted subsidiaries, to:
	•	incur or guarantee additional indebtedness and issue certain preferred stock;
	•	pay dividends or make distributions to our stockholders;
	•	repurchase or redeem capital stock or subordinated indebtedness;
	•	make investments;
	•	create liens;
	•	incur restrictions on the ability of our subsidiaries to pay dividends or to make other payments to us;
	•	enter into transactions with our affiliates; and
	•	merge or consolidate with other companies or transfer all or substantially all of our assets.
	These covenants are subject to important exceptions and qualifications, which are described under “Description of the New Notes—Certain Covenants.”
Transfer Restrictions; Absence of a Public Market for the New Notes	The new notes generally will be freely transferable, but will also be new securities for which there will not initially be a market. There can be no assurance as to the development or liquidity of any market for the new notes. We do not intend to apply for a listing of the new notes on any securities exchange or any automated dealer quotation system.

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Risk Factors

You should consider carefully the information set forth under the caption “Risk Factors” and all other information set forth in this prospectus before deciding whether to participate in the exchange offer.

Corporate Information

Our headquarters are located at 5080 Spectrum Drive, Suite 400, West Tower, Addison, Texas 75001 and our telephone number is 1-800-232-3550. Concentra Operating Corporation is a Nevada corporation formed in 1999.

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Summary Consolidated Financial Data

The following table provides a summary of certain historical consolidated financial data of Concentra Operating Corporation and its subsidiaries. The summary historical consolidated financial data as of and for each of the years ended December 31, 2000, 2001 and 2002 have been derived from our audited consolidated financial statements. The summary historical consolidated financial data as of and for the six months ended June 30, 2002 and 2003 have been derived from our unaudited consolidated condensed financial statements, which were prepared on the same basis as our audited consolidated financial statements and, in the opinion of management, include all adjustments considered necessary for a fair presentation of our financial position and results of operations for such periods. The summary financial data for the twelve months ended June 30, 2003 were derived by adding our financial data for the year ended December 31, 2002 to our unaudited financial data for the six months ended June 30, 2003, and subtracting our financial data for the six months ended June 30, 2002. We included the summary consolidated financial data for the twelve months ended June 30, 2003 because we believe it provides useful information to investors regarding our current financial trends, which have been impacted by recent changes in general industry and economic conditions, certain increases in our market share and the integration of our recent acquisitions. The results from any interim period are not necessarily indicative of the results that may be expected for a full fiscal year. Historical results are not necessarily indicative of the results to be expected in the future.

The information presented below should be read in conjunction with “Use of Proceeds,” “Capitalization,” “Selected Historical Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the historical consolidated financial statements included elsewhere in this prospectus.

	Years Ended December 31,									Six Months Ended June 30,						Twelve Months Ended June 30, 2003
	2000			2001			2002			2002			2003
	(dollars in thousands)
Statement of Operations Data:
Revenue:
Health Services	$	409,738		$	443,321		$	471,968		$	226,726		$	244,956		$	490,198
Network Services		162,596			185,267			230,299			113,489			123,511			240,321
Care Management Services		189,905			228,315			296,783			153,945			143,961			286,799
Total revenue		762,239			856,903			999,050			494,160			512,428			1,017,318
Cost of services:
Health Services		335,939			375,565			406,164			198,112			202,350			410,402
Network Services		100,741			110,187			138,218			68,988			71,031			140,261
Care Management Services		170,899			200,166			267,054			134,031			127,238			260,261
Total cost of services		607,579			685,918			811,436			401,131			400,619			810,924
Gross profit		154,660			170,985			187,614			93,029			111,809			206,394
General and administrative expenses		66,491			81,631			106,222			49,625			58,054			114,651
Amortization of intangibles		14,628			15,746			3,776			1,863			2,002			3,915
Unusual charges (gains)		—			546			(1,200	)		—			—			(1,200	)
Charges for acquisition of affiliate		—			5,519			—			—			—			—
Operating income		73,541			67,543			78,816			41,541			51,753			89,028
Interest expense, net		67,984			66,398			63,582			33,048			29,154			59,688
(Gain) loss on change in fair value of hedging arrangements		9,586			13,602			7,589			1,184			(4,413	)		1,992
Loss on early retirement of debt		—			—			7,894			—			—			7,894
Loss on acquired affiliate, net of tax		262			5,833			—			—			—			—
Other, net		(1,931	)		(3,640	)		(1,275	)		(1,311	)		1,383			1,419
Income (loss) before taxes and cumulative effect of accounting change		(2,360	)		(14,650	)		1,026			8,620			25,629			18,035
Provision for income taxes		4,362			3,757			4,579			4,987			5,545			5,137
Income (loss) before cumulative effect of accounting change		(6,722	)		(18,407	)		(3,553	)		3,633			20,084			12,898
Cumulative effect of accounting change, net of tax		2,817			—			—			—			—			—
Net income (loss)	$	(9,539	)	$	(18,407	)	$	(3,553	)	$	3,633		$	20,084		$	12,898
Other Financial Data:
Cash flows provided by (used in):
Operating activities	$	36,025		$	77,167		$	54,031		$	7,980		$	36,907		$	82,958
Investing activities		(39,756	)		(151,908	)		(36,285	)		(19,393	)		(18,114	)		(35,006	)
Financing activities		4,442			68,609			(7,694	)		47,568			(1,816	)		(57,078	)

	At December 31,							At June 30, 2003
	2000			2001		2002		Actual		As Adjusted
	(dollars in thousands)
Balance Sheet Data:
Working capital	$	123,676		$	86,315	$	113,632	$	139,731	$	110,850
Total assets		692,899			880,024		888,638		915,956		887,852
Total debt		561,562			562,481		479,826		479,267		629,074
Total stockholder’s equity (deficit)		(5,329	)		86,705		176,771		201,338		54,863

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RISK FACTORS

The value of an investment in the new notes will be subject to the significant risks inherent in our business. You should carefully consider the risks and uncertainties described below and other information included in this prospectus before deciding whether to participate in the exchange offer. If any of the events described below occur, our business and financial results and our ability to make payment obligations pursuant to the new notes could be adversely affected in a material way. Additional risks and uncertainties, including those that are not yet identified or that we currently believe are immaterial, may also adversely affect our business, financial condition or results of operations.

Risks Relating to Our Indebtedness

Our significant indebtedness could limit our ability to successfully operate our business and prevent us from fulfilling our obligations under the new notes.

We are substantially leveraged and will continue to have significant indebtedness following this offering. As of June 30, 2003, on a pro forma basis after giving effect to the use of the estimated net proceeds of this offering and borrowings under our new credit facility, we would have had total debt outstanding of approximately $629.1 million, or approximately 92% of our total capitalization. In addition, we would have had approximately $14.3 million of letters of credit issued for our account and approximately $85.7 million of additional availability under our revolving credit facility.

Our substantial level of indebtedness increases the possibility that we may not generate cash sufficient to pay, when due, interest on or other amounts due in respect of our indebtedness. The degree to which we are leveraged could have other important consequences to you, including the following:

• we must dedicate a substantial portion of our cash flows from operations to the payment of our indebtedness, reducing the funds available for our operations or to pursue other opportunities;

• some of our borrowings are, and will continue to be, at variable rates of interest, which may result in higher interest expense in the event of increases in interest rates;

• we may be more highly leveraged than some of our competitors, which could place us at a competitive disadvantage;

• our degree of leverage may make us more vulnerable to a downturn in our business or the economy generally;

• our debt level could limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; and

• our leverage may impair our ability to borrow money in the future.

Despite our current levels of indebtedness, we still may be able to incur substantially more debt. This could further increase the risks described above.

We may be able to incur substantial additional indebtedness in the future. Although the terms of our financing arrangements, including the indentures governing the new notes and our existing 13% senior subordinated notes and the credit agreement governing our new credit facility, contain restrictions on the incurrence of indebtedness, these restrictions are subject to a number of qualifications and exceptions, and we could incur substantial indebtedness in compliance with these restrictions. Furthermore, these restrictions do not prevent us from incurring obligations that do not constitute indebtedness, as defined in the applicable agreement. If new debt is added to our current debt levels, the risks described above could intensify. See “Capitalization,” “Selected Historical Consolidated Financial Data,” “Description of Other Indebtedness” and “Description of the New Notes.”

To service our indebtedness, we will require a significant amount of cash. Our ability to generate cash depends on many factors beyond our control.

Our ability to make payments on and refinance our indebtedness, including the new notes, and to fund planned capital expenditures will depend on our ability to generate cash in the future. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. As of June 30, 2003, on a pro forma basis after giving effect to the Refinancing Transactions, we would have had a ratio of pro forma earnings to fixed charges of 1.4x. We cannot assure you that our business will generate sufficient cash flow from operations, that we will realize operating improvements on schedule or that future borrowings will be available to us under our new credit facility in an amount sufficient to enable us to pay our indebtedness, including the new notes, or to fund our other liquidity needs. If we are unable to satisfy our debt obligations, we may

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have to undertake alternative financing plans, such as refinancing or restructuring our indebtedness, selling assets, reducing or delaying capital investments or seeking to raise additional capital. We cannot assure you that any refinancing or restructuring would be possible, that any assets could be sold or, if sold, the timing of the sales and the amount of proceeds realized from those sales, or that additional financing could be obtained on acceptable terms.

Risks Relating to the Exchange Offer and the New Notes

If you do not properly tender your old notes, you will continue to hold unregistered old notes and your ability to transfer old notes will be adversely affected.

We will only issue new notes in exchange for old notes that you timely and properly tender. Therefore, you should allow sufficient time to ensure timely tender of the old notes and carefully follow the instructions on how to tender your old notes. Neither we nor the exchange agent are required to tell you of any defects or irregularities with respect to your tender of the old notes.

If you do not exchange your old notes for the new notes pursuant to the exchange offer, the old notes you hold will continue to be subject to the existing transfer restrictions. In general, you may not offer or sell the old notes except under an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. We do not plan to register old notes under the Securities Act unless our registration rights agreement with the initial purchasers of the old notes requires us to do so. Further, if you continue to hold any old notes after the exchange offer is consummated, you may not be able to sell the old notes because there will be fewer old notes outstanding.

Your right to receive payments on the new notes is junior to most of our existing indebtedness and possibly most of our future borrowings. Further, the subsidiary guarantees will be junior to most of the subsidiary guarantors’ existing indebtedness and possibly to all of their future borrowings. Additionally, claims of creditors of our non-guarantor subsidiaries will generally have priority with respect to the assets and earnings of those subsidiaries over claims of holders of the new notes.

The new notes and the subsidiary guarantees will be subordinated to the prior payment in full of our and the subsidiary guarantors’ current and future senior debt. As of June 30, 2003, on a pro forma basis after giving effect to the Refinancing Transactions, we would have had approximately $336.6 million of senior debt outstanding and would have had approximately $85.7 million of additional revolving loan availability under our new credit facility. Because the new notes are unsecured and because of the subordination provisions of the new notes, upon any distribution to our creditors or the creditors of any of our subsidiary guarantors in a bankruptcy or similar proceeding relating to us or any subsidiary guarantor, the holders of our senior indebtedness and the senior indebtedness of our subsidiary guarantors will be entitled to be paid in full in cash before any payment may be made with respect to the new notes or any subsidiary guarantees. We cannot assure you that sufficient assets will remain after all these payments have been made to make any payments on the new notes, including payments of interest. Also, because of these subordination provisions, you may recover less ratably than our other creditors in a bankruptcy or similar proceeding, including trade creditors. In addition, all payments on the new notes and any subsidiary guarantees will be blocked in the event of a payment default on Designated Senior Indebtedness (as defined in “Description of the New Notes—Certain Definitions”), which includes borrowings under our new credit facility, and may be prohibited for up to 179 consecutive days each year in the event of certain non-payment defaults on Designated Senior Indebtedness. See “Description of the New Notes—Subordination.”

In addition, not all of our subsidiaries are guaranteeing the new notes, and these non-guarantor subsidiaries are permitted to incur additional indebtedness under the indenture. Claims of creditors of our non-guarantor subsidiaries, including trade creditors, secured creditors and creditors holding indebtedness or guarantees issued by those subsidiaries, will generally have priority with respect to the assets and earnings of those subsidiaries over the claims of our creditors, including holders of the new notes, even if the obligations of those subsidiaries do not constitute senior indebtedness. As of June 30, 2003, after giving effect to the Refinancing Transactions, our non-guarantor subsidiaries would have had approximately $3.3 million of liabilities (excluding intercompany liabilities) and would have held approximately 6% of our consolidated assets. For the year ended December 31, 2002 and the six months ended June 30, 2003, our non-guarantor subsidiaries generated approximately 7.4% and 7.7% of our consolidated revenue, respectively.

Our historical consolidated financial information included in this prospectus, our pro forma financial information included in this prospectus and our historical financial statements included in this prospectus and filed with the SEC as part of our quarterly and annual reports are presented on a consolidated basis, including both our guarantor and non-guarantor subsidiaries.

The new notes are not secured by our assets nor those of our subsidiary guarantors, and the lenders under our new credit facility will be entitled to remedies available to a secured lender, which gives them priority over you to collect amounts they are due.

In addition to being subordinated to all our existing and future senior debt, the new notes and the subsidiary guarantees will not be secured by any of our assets. Our obligations under our new credit facility are secured by, among other things, substantially all the

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personal property assets and owned real properties of each of our existing and subsequently acquired or organized material domestic subsidiaries (and, to the extent no adverse tax consequences will result, foreign subsidiaries). If we become insolvent or are liquidated, or if there is a default under our new credit facility, the lenders under our new credit facility will be entitled to exercise the remedies available to a secured lender under applicable law (in addition to any remedies that may be available under documents pertaining to our new credit facility). Upon the occurrence of any default under our new credit facility (and even without accelerating the indebtedness under our new credit facility), the lenders may be able to prohibit the payment of the new notes and subsidiary guarantees either by limiting our ability to access our cash flow or under the subordination provisions contained in the indenture governing the new notes. Moreover, the assets that secure our new credit facility or any other secured debt will not be available to you in the event of a bankruptcy, liquidation or similar circumstance of the related obligor until we have fully repaid all amounts due under our secured debt. See “Description of Other Indebtedness” and “Description of the New Notes.”

The terms of our new credit facility and the indenture governing the new notes will impose many restrictions on us.

The terms of our new credit facility and the indenture governing the new notes will contain, and any future indebtedness of ours would likely contain, a number of restrictive covenants that will impose significant operating and financial restrictions on us, including restrictions on our ability to, among other things:

• incur or guarantee additional indebtedness or issue certain preferred stock;

• pay dividends or make distributions to our stockholders;

• repurchase or redeem capital stock or subordinated indebtedness;

• make investments;

• create liens;

• enter into transactions with our affiliates;

• enter into sale and leaseback transactions; and

• merge or consolidate with other companies or transfer all or substantially all of our assets.

Our new credit facility will also require us to maintain certain financial ratios, which become more restrictive over time. As a result of these covenants and ratios, we are limited in the manner in which we conduct our business, and may be unable to engage in favorable business activities or finance future operations or capital needs. Accordingly, these restrictions may limit our ability to successfully operate our business and prevent us from fulfilling our obligations under the new notes.

A failure to comply with the covenants or financial ratios contained in our new credit facility could lead to an event of default. In the event of any default under our new credit facility, the lenders under our new credit facility will not be required to lend any additional amounts to us and could elect to declare all borrowings outstanding, together with accrued and unpaid interest and fees, to be due and payable, require us to apply all of our available cash to repay these borrowings or prevent us from making debt service payments on our new notes, any of which could result in an event of default under the new notes. An acceleration of indebtedness under the new credit facility would also likely result in an event of default under the terms of any other financing arrangement we had outstanding at the time, including with respect to these notes and our existing 13% senior subordinated notes. If any or all of our debt were to be accelerated, there can be no assurance that our assets would be sufficient to repay such indebtedness in full. See “Description of Other Indebtedness” and “Description of the New Notes.”

Notwithstanding the restrictions on our ability to pay dividends, repurchase capital stock and make certain other restricted payments, we have accumulated, and continue to have after the Refinancing Transactions, a significant basket to make such restricted payments under the indenture governing our existing 13% senior subordinated notes, and the indenture governing the new notes offered hereby will provide for a similarly-sized basket as of the issue date of these notes.

We may be unable to repay or repurchase the new notes.

At maturity of the new notes, the entire outstanding principal amount of the new notes, together with accrued and unpaid interest, will become due and payable and we may not have the funds to fulfill these obligations or the ability to arrange for additional financing. If the maturity date occurs at a time when other arrangements prohibit us from repaying the new notes, we would try to obtain waivers of such prohibitions from the lenders under those arrangements, or we could attempt to refinance the borrowings that contain the restrictions. If we could not obtain the waivers or refinance these borrowings, we would be unable to repay the new notes.

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Further, if we experience a change of control, we will be required to make a change of control offer to repurchase the new notes. A change of control would also constitute an event of default under our new credit facility, providing the lenders under our new credit facility with the right to accelerate our borrowings under the facility and to prevent payments in respect of the new notes until outstanding borrowings under our new credit facility were repaid in full. In the event of a change of control, we may not have sufficient funds to purchase all the new notes and to repay the amounts outstanding under our new credit facility.

A financial failure by us or any subsidiary guarantor may hinder the receipt of payment on the new notes, as well as the enforcement of remedies under the subsidiary guarantees.

An investment in the new notes, as in any type of security, involves insolvency and bankruptcy considerations that investors should carefully consider. If we or any of our subsidiary guarantors become a debtor subject to insolvency proceedings under the bankruptcy code, it is likely to result in delays in the payment of the new notes and in the exercise of enforcement remedies under the new notes or the subsidiary guarantees. Provisions under the bankruptcy code or general principles of equity that could result in the impairment of your rights include the automatic stay, avoidance of preferential transfers by a trustee or debtor-in-possession, substantive consolidation, limitations on collectibility of unmatured interest or attorneys’ fees and forced restructuring of the new notes.

A financial failure by us, our parent, our subsidiaries or any other entity in which we have an interest may result in the assets of any or all of those entities becoming subject to the claims of all creditors of those entities.

A financial failure by us, our parent, our subsidiaries or any other entity in which we have an interest could affect payment of the new notes if a bankruptcy court were to “substantively consolidate” us, our parent and our subsidiaries, including entities in which we have an interest but whose financial statements are not consolidated with ours. If a bankruptcy court substantively consolidated us, our parent and our subsidiaries, including entities in which we have an interest but whose financial statements are not consolidated with ours, the assets of each entity would be subject to the claims of creditors of all entities. This would expose holders of the new notes not only to the usual impairments arising from bankruptcy, but also to potential dilution of the amount ultimately recoverable because of the larger creditor base. The indenture does not limit the ability of entities whose financial statements are not consolidated with ours to incur debt, which could increase this risk. Furthermore, forced restructuring of the new notes could occur through the “cram-down” provision of the bankruptcy code. Under this provision, the new notes could be restructured over your objections as to their general terms, primarily interest rate and maturity.

The interests of Welsh Carson, which owns a large percentage of the common stock of our parent, may not be aligned with the interests of the holders of the new notes.

Currently, Welsh, Carson, Anderson & Stowe VIII, L.P. and its affiliated entities beneficially own approximately 64% of the outstanding common stock of our parent, Concentra Inc. Accordingly, Welsh Carson will be able to exert significant influence over:

• the election of our parent’s board of directors;

• our parent’s management and policies; and

• the outcome of any corporate transaction or other matter submitted to the stockholders of our parent for approval, including mergers, consolidations and the sale of all or substantially all of our parent’s assets.

These stockholders will also be able to exert significant influence over a change in control of our parent or an amendment to its certificate of incorporation or bylaws. Their interests may conflict with the interests of the holders of the new notes, and they may take actions affecting us with which you disagree. See “Security Ownership of Certain Beneficial Owners and Management.”

Federal and state statutes allow courts, under specific circumstances, to void subsidiary guarantees and require holders of the new notes to return payments received from subsidiary guarantors.

Certain of our existing and future domestic subsidiaries will guarantee our obligations under the new notes. Under the federal bankruptcy law and comparable provisions of state fraudulent transfer laws, a subsidiary guarantee could be voided or claims in respect of a subsidiary guarantee could be subordinated to all other debts of that subsidiary guarantor. A court might do so if it found that when the subsidiary entered into its guarantee or, in some states, when payments became due under the guarantee, the subsidiary received less than reasonably equivalent value or fair consideration and either:

• was insolvent or rendered insolvent by reason of the incurrence;

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• was engaged in a business or transaction for which the subsidiary guarantor’s remaining assets constituted unreasonably small capital; or

• intended to incur, or believed that it would incur, debts beyond its ability to pay the debts as they mature.

The court might also void a subsidiary guarantee, without regard to the above factors, if the court found that the subsidiary entered into its guarantee with the actual intent to hinder, delay or defraud its creditors.

A court would likely find that a subsidiary guarantor did not receive reasonably equivalent value or fair consideration for its guarantee if the subsidiary guarantor did not substantially benefit directly or indirectly from the issuance of the old notes. If a court were to void a subsidiary guarantee, holders of the new notes would no longer have a claim against the subsidiary guarantor. Sufficient funds to repay the new notes may not be available from other sources, including the remaining subsidiary guarantors, if any. In addition, the court might direct holders of the new notes to repay any amounts that they already received from the subsidiary guarantor.

The measures of insolvency for purposes of these fraudulent transfer laws will vary depending upon the law applied in any proceeding to determine whether a fraudulent transfer has occurred. Generally, however, a subsidiary guarantor would be considered insolvent if:

• the sum of its debts, including contingent liabilities, were greater than the fair saleable value of all of its assets;

• the present fair saleable value of its assets were less than the amount that would be required to pay its probable liability on its existing debts, including contingent liabilities, as they become absolute and mature; or

• it could not pay its debts as they become due.

Each subsidiary guarantee contains a provision intended to limit the subsidiary guarantor’s liability to the maximum amount that it could incur without causing the incurrence of obligations under its subsidiary guarantee to be a fraudulent transfer. This provision may not be effective to protect the subsidiary guarantees from being voided under fraudulent transfer law.

If an active trading market does not develop for the new notes, you may be unable to sell the new notes or to sell the new notes at a price that you deem sufficient.

The new notes will be new securities for which there currently is no established trading market. Although we will register the new notes under the Securities Act, we do not intend to apply for listing of the new notes on any securities exchange or for quotation of the new notes in any automated dealer quotation system. In addition, although the initial purchasers of the old notes have informed us that they intend to make a market in the new notes after the exchange offer, the initial purchasers may stop making a market at any time. Finally, if a large number of holders of old notes do not tender old notes or tender old notes improperly, the limited amount of new notes that would be issued and outstanding after we consummate the exchange offer could adversely affect the development of a market for these new notes. We do not presently intend to list the new notes on any securities exchange.

Risks Related to Our Business

If we are unable to increase our market share among national and regional insurance carriers and large, self-funded employers, our results may be adversely affected.

Our business strategy and future success depend in part on our ability to capture market share with our cost containment services as national and regional insurance carriers and large, self-funded employers look for ways to achieve cost savings. We cannot assure you that we will successfully market to these insurance carriers and employers or that they will not resort to other means to achieve cost savings. Additionally, our ability to capture additional market share may be adversely affected by the decision of potential customers to perform services offered by us internally instead of outsourcing the provision of such services. Furthermore, we may not be able to demonstrate sufficient cost savings to potential or current customers to induce them not to provide comparable services internally or to accelerate efforts to provide such services internally. If the demand for our cost containment services does not increase, our results may be adversely affected.

If we lose a significant customer, our results may be adversely affected.

Our results may decline if we lose one or more significant customers. Most of our customer contracts permit either party to terminate without cause. If one or more significant customers terminates, or does not renew or extend, their contract with us we could be adversely affected. In particular, we have a number of significant customers in our network services business segment. Due to the

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significant fixed costs in this business segment, the loss of a significant customer could cause a material decline in our profitability and operating performance. In 2002, our largest customer provided approximately 3% to 4% of our total consolidated revenue.

If we are unable to acquire or develop occupational healthcare centers in new markets, our results may be adversely affected.

If we are not successful in our acquisition and development of occupational healthcare centers, we may miss opportunities to expand our health services segment or to cross-sell our network and care management services. Our ability to acquire additional occupational healthcare centers may be limited by a lack of attractive acquisition opportunities, a shortage of acceptable properties for such use, an inability to buy or lease such properties at an acceptable price or a shortage of qualified medical personnel to staff new facilities in any particular location. In addition, if we fail to expand the reach of our provider network, we will be at a competitive disadvantage and our results may suffer.

Future acquisitions and joint ventures may use significant resources or be unsuccessful.

As part of our business strategy, we intend to pursue acquisitions of companies providing services that are similar or complementary to those that we provide in our business, and we may enter into joint ventures to operate occupational healthcare centers. These acquisitions and joint venture activities may involve:

• significant cash expenditures;

• additional debt incurrence;

• additional operating losses;

• increases in intangible assets relating to goodwill of acquired companies; and

• significant acquisition and joint venture related expenses,

all of which could have a material adverse effect on our financial condition and results of operations.

Additionally, a strategy of growth by acquisitions and joint ventures involves numerous risks, including:

• difficulties integrating acquired personnel and harmonizing distinct corporate cultures into our current businesses;

• diversion of our management’s time from existing operations; and

• potential losses of key employees or customers of acquired companies.

We cannot assure you that we will be able to identify suitable candidates or negotiate and consummate suitable acquisitions or joint ventures. Also, we cannot assure you that we will succeed in obtaining financing for any future acquisitions or joint ventures at a reasonable cost, or that such financing will not contain restrictive covenants that limit our operating flexibility or other unfavorable terms. Even if we are successful in consummating acquisitions or joint ventures, we may not succeed in developing and achieving satisfactory operating results for the acquired businesses. Further, the acquired businesses may not produce returns that justify our related investment. If our acquisitions or joint ventures are not successful, our ability to increase revenues, cash flows and earnings through future growth may be impaired.

If we incur material liabilities as a result of acquiring companies, our operating results could be adversely affected.

We may acquire companies that have material liabilities for failure to comply with healthcare laws and regulations or for other past activities. Although we maintain various types of business insurance, we do not currently maintain insurance specifically covering any unknown or contingent liabilities that may occur after the acquisition of businesses. In addition, any indemnification provisions we obtain in connection with such acquisitions may not be adequate to protect us, either because of limits or deductibles, or because of the credit quality of the indemnitor. If we incur these liabilities and are not adequately indemnified or insured for them, our operating results and financial condition could be adversely affected.

We are subject to risks associated with acquisitions of intangible assets.

Our acquisition of occupational healthcare centers and other businesses may result in significant increases in our intangible assets relating to goodwill. We regularly evaluate whether events and circumstances have occurred indicating that any portion of our

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goodwill may not be recoverable. When factors indicate that goodwill should be evaluated for possible impairment, we may be required to reduce the carrying value of these assets.

If we are unable to manage growth, we may be unable to achieve our expansion strategy.

The success of our business strategy depends in part on our ability to expand our operations in the future. Our growth has placed, and will continue to place, increased demands on our management, our operational and financial information systems and other resources. Further expansion of our operations will require substantial financial resources and management attention. To accommodate our past and anticipated future growth, and to compete effectively, we will need to continue to implement and improve our management, operational and financial information systems and to expand, train, manage and motivate our workforce. Our personnel, systems, procedures or controls may not be adequate to support our operations in the future. Further, focusing our financial resources and management’s attention on the expansion of our operations may negatively impact our financial results. Any failure to implement and improve our management, operational and financial information systems, or to expand, train, manage or motivate our workforce, could reduce or prevent our growth.

If we are unable to leverage our information systems to enhance our outcome-driven service model, our results may be adversely affected.

To leverage our knowledge of workplace injuries, treatment protocols, outcomes data and complex regulatory provisions related to the workers’ compensation market, we must continue to implement and enhance information systems that can analyze our data related to the workers’ compensation industry. We are currently engaged in comprehensive technology transformation projects for each of our three operating segments. We have detailed implementation schedules for these projects that require extensive involvement from our operations, technology and finance personnel. Delay or other problems we might encounter in implementation of these projects could adversely affect our ability to deliver streamlined patient care and outcome reporting to our customers.

If our data processing is interrupted or our licenses to use software are revoked, our ability to operate our business could be adversely affected.

Many aspects of our business are dependent upon our ability to store, retrieve, process and manage data and to maintain and upgrade our data processing capabilities. Interruption of data processing capabilities for any extended length of time, loss of stored data, programming errors or other technological problems could impair our ability to provide certain services. Some of the software that we use in our medical bill review operation is licensed from an independent third-party software company under a nonexclusive license. Termination of this license could disrupt, and could result in our inability to operate, certain aspects of our business, including our ability to review medical bills effectively, thereby adversely affecting our revenues and overall profitability. In addition, there can be no assurance that we would be able to obtain and successfully integrate any replacement software.

If competition increases, our growth and profits may decline.

The market to provide occupational healthcare services is highly fragmented and competitive. Historically, our primary competitors have typically been independent physicians, hospital emergency departments and hospital-owned or hospital-affiliated medical facilities. As managed care techniques continue to gain acceptance in the occupational healthcare marketplace, however, we believe that our competitors will increasingly consist of nationally-focused workers’ compensation managed care service companies, specialized provider groups, insurance companies, health management organizations and other significant providers of managed care products. These organizations may be significantly larger than us and have greater financial and marketing resources than we do. We cannot assure you that we will be able to compete effectively against these organizations in the future.

Because we believe the barriers to entry in our geographic markets are not substantial and our current customers have the flexibility to move easily to new healthcare service providers, the addition of new competitors may occur relatively quickly. Some of our contracted physicians and other healthcare providers may elect to compete with us by offering their own products and services to our customers. In addition, significant merger and acquisition activity has occurred in our industry as well as in industries that supply products to us, such as the hospital, physician, pharmaceutical, medical device and health information systems industries. If competition within our industry intensifies, our ability to retain customers or physicians, or maintain or increase our revenue growth, pricing flexibility, control over medical cost trends and marketing expenses may be compromised.

The market for our network services and care management services is also fragmented and competitive. Our competitors include national managed care providers, preferred provider networks, smaller independent providers and insurance companies. Companies that offer one or more workers’ compensation managed care services on a national basis are our primary competitors. We also compete with many smaller vendors that generally provide unbundled services on a local level, particularly companies that have an established relationship with a local insurance company adjuster. In addition, several large workers’ compensation insurance carriers

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offer managed care services for their customers, either by performance of the services in-house or by outsourcing to organizations like ours. If these carriers increase their performance of these services in-house, our business could be adversely affected.

If lawsuits against us are successful, we may incur significant liabilities.

Our affiliated physician associations and some of our employees are involved in the delivery of healthcare services to the public. We charge our customers for these services on a fee-for-service basis. In providing these services, the physicians in our affiliated physician associations, our employees and, consequently, our company are exposed to the risk of professional liability claims. Claims of this nature, if successful, could result in significant liabilities that may exceed our insurance coverage and the financial ability of our affiliated physician associations to indemnify us. Further, plaintiffs have proposed expanded theories of liability against managed care companies as well as against employers who use managed care in workers’ compensation cases that, if established and successful, could discourage the use of managed care in workers’ compensation cases and reduce the cases referred to us for treatment or the rates we charge for our services.

Through our network services and care management services, we make recommendations about the appropriateness of providers’ proposed medical treatment plans for patients throughout the country. As a result, we could be subject to charges arising from any adverse medical consequences. Although plaintiffs have not to date subjected us to any claims or litigation related to the grant or denial of claims for payment of benefits or allegations that we engage in the practice of medicine or the delivery of medical services, we cannot assure you that plaintiffs will not make those types of claims in future litigation. We cannot assure you that our insurance will provide sufficient coverage or that insurance companies will make insurance available at a reasonable cost to protect us from significant future liability.

The increased costs of professional and general liability insurance could have an adverse effect on our profitability.

The cost of commercial professional and general liability insurance coverage has risen significantly in the past several years and we anticipate that this trend will continue. In addition, if we were to suffer a material loss, our costs could increase over and above the general increases in the industry. In an effort to contain the costs associated with our professional liability coverage, we are considering future use of a captive insurance program. Under this program we would retain more risk for professional liability costs, including settlements and claims expenses, than under our current third party coverage. If the costs associated with insuring our business continue to increase, it could adversely affect our business.

Our senior management has been key to our growth, and we may be adversely affected if we lose any member of our senior management.

We are highly dependent on our senior management. Although we have employment agreements with each member of our senior management, we do not maintain “key man” life insurance policies on any of them. Because our senior management has contributed greatly to our growth, the loss of key management personnel or our inability to attract, retain and motivate sufficient numbers of qualified management personnel could have a material adverse effect on us.

Risks Related to Our Industry

If the average annual growth in nationwide employment does not offset declines in the frequency of workplace injuries and illnesses, then the size of our market may decline and adversely affect our ability to grow.

Approximately 68% of our revenues in the first six months of 2003 were generated from the treatment or review of workers’ compensation claims. The rate of injuries that occur in the workplace has decreased over time. Although the overall number of people employed in the workplace has generally increased over time, this increase has only partially offset the declining rate of injuries and illnesses. Our business model is based, in part, on our ability to expand our relative share of the market for the treatment and review of claims for workplace injuries and illnesses. If nationwide employment does not increase or experiences periods of decline, our ability to expand our revenues and earnings could be adversely affected. Additionally, if workplace injuries and illnesses continue to decline at a greater rate than the increase in total employment, the number of claims in the workers’ compensation market will decrease and could adversely affect our business.

We operate in an industry that is subject to extensive federal, state and local regulation, and changes in law and regulatory interpretations could reduce our revenue and profitability.

The healthcare industry is subject to extensive federal, state and local laws, rules and regulations relating to, among others:

• payment for services;

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• conduct of operations, including fraud and abuse, anti-kickback prohibitions, physician self-referral prohibitions and false claims;

• operation of provider networks and provision of case management services;

• protection of patient information;

• business, facility and professional licensure, including surveys, certification and recertification requirements;

• corporate practice of medicine and fee splitting prohibitions;

• ERISA health benefit plans; and

• medical waste disposal and environmental protection.

In recent years, Congress and some state legislatures have introduced an increasing number of proposals to make significant changes in the healthcare system. Changes in law and regulatory interpretations could reduce our revenue and profitability, restrict our existing operations, limit the expansion of our business or impose new compliance requirements on our industry.

Recently, both federal and state government agencies have increased civil and criminal enforcement efforts relating to the healthcare industry. This heightened enforcement activity increases our potential exposure to damaging lawsuits, investigations and other enforcement actions. Any such action could distract our management and adversely affect our business reputation and profitability.

In the future, different interpretations or enforcement of laws, rules and regulations governing the healthcare industry could subject our current business practices to allegations of impropriety or illegality or could require us to make changes in our facilities, equipment, personnel, services and capital expenditure programs, increase our operating expenses and distract our management. If we fail to comply with these extensive laws and government regulations, we could become ineligible to receive government program payments, suffer civil and criminal penalties or be required to make significant changes to our operations. In addition, we could be forced to expend considerable resources responding to an investigation or other enforcement action under these laws or regulations.

Changes in state laws, rules and regulations, including those governing the corporate practice of medicine, fee splitting, workers’ compensation and insurance laws, rules and regulations, may affect our ability to expand all of our operations into other states and, therefore, our profitability.

State laws, rules and regulations relating to our business vary widely from state to state, and courts and regulatory agencies have seldom interpreted them in a way that provides guidance with respect to our business operations. Changes in these laws, rules and regulations may adversely affect our profitability. In addition, the application of these laws, rules and regulations may affect our ability to expand all of our operations into new states.

Workers’ compensation laws, rules and regulations are complex and vary from state to state. These laws, among other things, establish requirements for physicians providing care to workers’ compensation patients, set reimbursement levels for healthcare providers, limit or restrict the rights of employers to direct an injured employee to a specific provider and require licensing of businesses that provide medical review services. Changes in these laws, rules and regulations could adversely affect our profitability and our ability to expand our operations into new markets.

Most states limit the practice of medicine to licensed individuals or professional organizations comprised of licensed individuals. Many states also limit the scope of business relationships between business entities like us and licensed professionals and professional organizations, particularly with respect to fee splitting between a licensed professional or professional organization and an unlicensed person or entity. Although we believe that our arrangements with our affiliated physicians and physician associations comply with applicable laws, a government agency charged with enforcement of these laws, or a private party, might assert a contrary position. If our arrangements with these physicians and physician associations were deemed to violate state corporate practice of medicine or fee splitting laws, or if new laws are enacted rendering our arrangements illegal, we and/or our affiliated physician groups would be subject to penalties and/or we could be required to restructure these arrangements, which could result in significant costs to us and affect our profitability.

In addition, state agencies regulate the managed care, auto insurance and workers’ compensation industries. Many states have enacted laws that require:

• licensing, certification and approval of businesses that provide medical review and utilization review services;

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• certification of managed care plans;

• managed care entities to provide reasonable access and availability of specified types of healthcare providers, care management and utilization review, return-to-work programs, quality assurance programs, the use of treatment guidelines and grievance procedures;

• licensing of provider networks; and

• the prompt payment of claims.

Changes in these laws, rules and regulations may also adversely affect our business and profitability.

New federal and state legislative and regulatory initiatives relating to patient privacy and new federal legislative and regulatory initiatives relating to the use of standard transaction code sets have required us and will continue to require us to expend substantial sums of money on the acquisition and implementation of new information systems, which could negatively impact our profitability.

There are currently numerous legislative and regulatory initiatives at both the state and federal levels that address patient privacy concerns. In particular, the Health Insurance Portability and Accountability Act of 1996, commonly referred to as “HIPAA,” contains provisions that may require us to implement expensive new computer systems and business procedures designed to protect the privacy and security of each of our patient’s individual health information. The Department of Health and Human Services published final regulations addressing patient privacy in December 2000. We believe that we have taken the appropriate actions in order to substantially comply with the privacy regulations. Final regulations addressing the security of patient health information were published on February 20, 2003. We must comply with the requirements of the security regulations by April 21, 2005. If we fail to comply with these new laws and regulations relating to patient privacy and security of patient health information, we could be subject to criminal or civil sanctions.

The administrative simplification provisions of HIPAA require the use of uniform electronic data transmission standards for healthcare claims and payment transactions submitted or received electronically. In August 2000, the Department of Health and Human Services finalized the new transaction standards. The original compliance date was October 16, 2002; however, this compliance date has been delayed until October 16, 2003 due to our filing of a compliance extension plan with the Department of Health and Human Services. The transaction standards will require us to use standard code sets when we transmit health information in connection with certain transactions, including health claims and health payment and remittance advice. We believe that we have taken the appropriate actions in order to be substantially compliant with the HIPAA transaction and code set standards by the October 16, 2003 compliance date. Compliance with these rules, including the privacy and security standards, could require us to spend substantial sums of money, which could negatively impact our profitability.

Demand for our network services could be adversely affected if our prospective network services clients are unable to implement the transaction and security standards required under HIPAA.

For some of our network services, we routinely implement electronic data connections to our customers’ locations that enable the exchange of information on a computerized basis. To the extent that our clients do not have sufficient personnel to implement the transaction and security standards required by HIPAA or to work with our information technology personnel in the implementation of our electronic interfaces, the demand for our network services could be adversely affected.

Changes in the federal Anti-Kickback Statute and Stark Law and/or similar state laws, rules and regulations could adversely affect our profitability and ability to expand our operations.

The federal Anti-Kickback Statute prohibits the offer, payment, solicitation or receipt of any form of remuneration in return for referring items or services payable by Medicare, Medicaid or any other federally funded healthcare program. Additionally, the Anti-Kickback Statute prohibits any form of remuneration in return for purchasing, leasing or ordering or arranging for or recommending the purchasing, leasing or ordering of items or services payable by Medicare, Medicaid or any other federally funded healthcare program. The Anti-Kickback Statute is very broad in scope and existing case law and regulations have not uniformly or definitively interpreted many of its provisions. Violations of the Anti-Kickback Statute may result in substantial civil or criminal penalties, including imprisonment of up to five years, criminal fines of up to $25,000, civil monetary penalties of up to $50,000 for each violation plus three times the remuneration involved or the amount claimed and exclusion from participation in the Medicare and Medicaid programs.

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The federal physician self-referral law, commonly referred to as the Stark Law, prohibits, subject to certain exceptions, a physician from making a referral of a Medicare or Medicaid beneficiary for a “designated health service” to an entity if the physician or an immediate family member has a financial relationship with the entity. Some of the services our affiliated physicians and physician associations provide include designated health services. A violation of the Stark Law could result in repayment of amounts collected for services furnished pursuant to an unlawful referral, the imposition of civil monetary penalties and exclusion from participation in the Medicare and Medicaid programs.

Many states have enacted laws similar to the federal Anti-Kickback Statute and, to a lesser degree, the Stark Law. These laws generally apply to both government and non-government health programs. These laws vary from state to state and have infrequently been the subject of judicial or regulatory interpretation.

Other federal healthcare fraud and abuse laws prohibit healthcare-related fraud, theft or embezzlement, false statements, obstruction of criminal investigations and money laundering. These laws apply to all healthcare programs regardless of whether such programs are funded in whole or in part with federal funds. Violations of these provisions constitute felony criminal offenses, and potential sanctions for such violations include imprisonment and/or substantial fines.

Although our operations and arrangements with our affiliated physicians and physician associations have been structured in an attempt to comply with the federal Anti-Kickback Statute or the Stark Law or similar state laws, a government agency or a private party could assert a contrary position. Additionally, new federal or state laws may be enacted that would cause our arrangements with our affiliated physicians and physician associations to be illegal or result in the imposition of fines and penalties against us.

Healthcare providers are becoming increasingly resistant to the application of certain healthcare cost containment techniques, which could cause revenue from our cost containment operations to decrease.

Healthcare providers have become more active in their efforts to minimize the use of certain cost containment techniques and are engaging in litigation to avoid application of certain cost containment practices. Several class action lawsuits are currently pending that involve claims by certain groups of participating providers that the named insurers have conspired together in breaching their provider contracts and violating certain prompt pay laws. The claims in the lawsuits focus on the payment practices of the insurers and allege that the use of certain cost containment techniques by the insurers is wrongful. Although these lawsuits do not directly involve us or any services we provide, these cases could affect the use by insurers of certain cost containment services that we provide and could result in a decrease in revenue from our cost containment business.

The managed care industry receives significant negative publicity, which could adversely affect our profitability.

The managed care industry receives significant negative publicity and has been the subject of large jury awards. This publicity has been accompanied by increased litigation, legislative activity, regulation and governmental review of industry practices. These factors may:

• adversely affect our ability to market our products or services;

• require us to change our products and services; or

• increase the regulatory burdens under which we operate.

If healthcare reform intensifies competition and reduces the costs associated with workers’ compensation claims, the rates we charge for our services could decrease, negatively impacting our financial performance.

Within the past few years, several states have experienced a decrease in the number of workers’ compensation claims and the total value of claims, which we primarily attribute to:

• improvements in workplace safety;

• changes in the type and composition of jobs;

• intensified efforts by payors to manage and control claim costs;

• improved risk management by employers; and

• legislative reforms that have reduced the number of claims and resulted in a corresponding reduction in workers’ compensation insurance premiums.

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Future healthcare reform could decrease the number of claims, further increase competition or decrease the size of the market, forcing us to reduce the rates we charge for our services to compete effectively. Any rate reductions would have an adverse effect on our revenues and profitability.

If the utilization by healthcare payors of early intervention services, including our occupational healthcare, first notice of loss or injury and telephonic case management services, continues to increase, the revenue from our later stage network and care management services may be adversely affected.

The performance of early intervention services, including injury occupational healthcare, first notice of loss or injury and telephonic case management services, often results in a decrease in the average length of, and the total costs associated with, a healthcare claim. By successfully intervening at an early stage in a claim, the need for additional cost containment services for that claim can often be reduced or even eliminated. As healthcare payors continue to increase their utilization of early intervention services, the revenue from our later stage network and care management services may decrease.

Future cost containment initiatives undertaken by state workers’ compensation commissions and other third-party payors may adversely affect our financial performance.

Initiatives undertaken by state workers’ compensation commissions, major insurance companies and other payors to contain both workers’ compensation and non-injury occupational healthcare costs may adversely affect the financial performance of our occupational healthcare centers. State workers’ compensation commissions seek to control healthcare costs by reducing prescribed rates of reimbursements. Insurance companies and other third-party payors contract with hospitals and other healthcare providers to obtain services on a discounted basis. We believe that these cost containment measures may continue and, if so, would limit reimbursements for healthcare services that we provide to our customers. If state workers’ compensation commissions or payors from whom we receive payments reduce the amounts that they pay us for healthcare services, our revenues, profitability and financial condition could be adversely affected.

EXCHANGE OFFER

Purpose and Effect of the Exchange Offer

In connection with the issuance of the old notes, we entered into a registration rights agreement under which we agreed to:

• within 90 days after (or if the 90th day is not a business day, the first business day thereafter) the issue date, file a registration statement with the SEC with respect to a registered offer to exchange the old notes for new notes of ours having terms substantially identical in all material respects to the old notes except with respect to transfer restrictions;

• use our reasonable best efforts to cause the registration statement to be declared effective under the Securities Act within 180 days (or if the 180th day is not a business day, the first business day thereafter) after the issue date;

• as soon as practicable after the effectiveness of the registration statement offer the new notes in exchange for surrender of the old notes; and

• keep the exchange offer open for not less than 30 days (or longer if required by applicable law) after the date notice of the exchange offer is mailed to the holders of the old notes.

For each old note tendered to us pursuant to the exchange offer, we will issue to the holder of such old note a new note having a principal amount equal to that of the surrendered old note. Interest on each new note will accrue from the last interest payment date on which interest was paid on the old note surrendered in exchange therefor, or, if no interest has been paid on such old note, from the date of its original issue.

Under existing SEC interpretations, the new notes will be freely transferable by holders other than our affiliates after the exchange offer without further registration under the Securities Act if the holder of the new notes represents to us in the exchange offer that it is acquiring the new notes in the ordinary course of its business, that it has no arrangement or understanding with any person to participate in the distribution of the new notes and that it is not our affiliate, as such terms are interpreted by the SEC; provided, however, that broker-dealers receiving new notes in the exchange offer will have a prospectus delivery requirement with respect to resales of such new notes. The SEC has taken the position that participating broker-dealers may fulfill their prospectus delivery requirements with respect to new notes (other than a resale of an unsold allotment from the original sale of the old notes) with the prospectus contained in the registration statement. Each broker-dealer that receives new notes for its own account in exchange for

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old notes, where such old notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such new notes. See “Plan of Distribution.”

Under the registration rights agreement, we are required to allow participating broker-dealers and other persons, if any, with similar prospectus delivery requirements to use the prospectus contained in the registration statement in connection with the resale of the new notes for 180 days following the effective date of such registration statement (or such shorter period during which participating broker-dealers are required by law to deliver such prospectus).

A holder of old notes (other than certain specified holders) who wishes to exchange old notes for new notes in the exchange offer will be required to represent that any new notes to be received by it will be acquired in the ordinary course of its business and that at the time of the commencement of the exchange offer it has no arrangement or understanding with any person to participate in the distribution (within the meaning of the Securities Act) of the new notes and that it is not our “affiliate,” as defined in Rule 405 of the Securities Act, or if it is an affiliate, that it will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable.

In the event that:

(1) any change in law or applicable interpretations thereof by the staff of the SEC do not permit us to effect an exchange offer; or

(2) for any other reason we do not consummate the exchange offer within 220 days of the issue date; or

(3) an initial purchaser of the old notes notifies us following consummation of the exchange offer that old notes held by it are not eligible to be exchanged for new notes in the exchange offer; or

(4) certain holders are prohibited by law or SEC policy from participating in the exchange offer or may not resell the new notes acquired by them in the exchange offer to the public without delivering a prospectus, and the prospectus contained in the registration statement is not appropriate or available for such resales by it,

then we will, subject to certain exceptions:

(1) promptly file a shelf registration statement with the SEC covering resales of the old notes or the new notes, as the case may be;

(2) (A) in the case of clause (1) above, use our reasonable best efforts to cause the shelf registration statement to be declared effective under the Securities Act on or prior to the 180th day after the issue date and (B) in the case of clauses (2), (3) or (4) above, use our reasonable best efforts to cause the shelf registration statement to be declared effective under the Securities Act on or prior to the 60th day after the shelf filing date; and

(3) use our reasonable best efforts to keep the shelf registration statement effective until the earliest of (A) the time when the old or new notes covered by the shelf registration statement can be sold pursuant to Rule 144 without any limitations under clauses (c), (e), (f) and (h) of Rule 144, (B) two years from the effective date of the shelf registration statement and (C) the date on which all old or new notes registered under the shelf registration statement are disposed of in accordance with the shelf registration statement.

We will, in the event the shelf registration statement is filed, among other things, provide to each holder for whom the shelf registration statement was filed copies of the prospectus which is a part of the shelf registration statement, notify each holder when the shelf registration statement has become effective and take other actions as are required to permit unrestricted resales of the old notes or the new notes, as the case may be. A holder selling old notes or new notes pursuant to the shelf registration statement generally would be required to be named as a selling security holder in the related prospectus and to deliver a prospectus to purchasers, will be subject to certain of the civil liability provisions under the Securities Act in connection with those sales and will be bound by the provisions of the registration rights agreement that are applicable to the holder (including certain indemnification obligations).

We may require each holder requesting to be named as a selling security holder to furnish to us such information regarding the holder and the distribution of the new notes or the old notes by the holder as we may from time to time reasonably require for the inclusion of the holder in the shelf registration statement, including requiring the holder to properly complete and execute such selling security holder notice and questionnaires, and any amendments or supplements thereto, as we may reasonably deem necessary or appropriate. We may refuse to name any holder as a selling security holder that fails to provide us with such information.

We will pay additional cash interest on the applicable old notes and new notes, subject to certain exceptions:

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(1) if we fail to file the registration statement with the SEC on or prior to the 90th day after the issue date of the old notes;

(2) if the registration statement of which this prospectus forms a part is not declared effective by the SEC on or prior to the 180th day after the issue date of the old notes or if filing the shelf registration statement in the circumstances referenced in clause 2(A) above, the shelf registration statement is not declared effective by the SEC on or prior to the 180th day after the issue date of the old notes;

(3) if the exchange offer is not consummated on or before the 40th day after the registration statement is declared effective;

(4) if filing the shelf registration statement in the circumstances referenced in clause 2(B) above, we fail to file the shelf registration statement with the SEC on or prior the 60th day after the date on which the obligation to file a shelf registration statement arises;

(5) if filing the shelf registration statement in the circumstances referenced in clause 2(B), the shelf registration statement is not declared effective by the SEC on or prior to the 60th after the shelf filing date; or

(6) after the registration statement or the shelf registration statement, as the case may be, is declared effective, that registration statement ceases to be effective or usable (subject to certain exceptions);

from and including the date on which any registration default shall occur to but excluding the date on which all registration defaults have been cured.

The rate of the additional interest will be 0.25% per annum for the first 90-day period immediately following the occurrence of a registration default, and this rate will increase by an additional 0.25% per annum with respect to each subsequent 90-day period until all registration defaults have been cured, up to a maximum additional interest rate of 2.0% per annum. We will pay additional interest on regular interest payment dates. The additional interest will be in addition to any other interest payable from time to time with respect to the old notes and the new notes.

All references in the indenture, in any context, to any interest or other amount payable on or with respect to the old notes or new notes shall be deemed to include any additional interest pursuant to the registration rights agreement.

If we effect the exchange offer, we will be entitled to close the exchange offer 40 days after its commencement, provided, that we have accepted all old notes theretofore validly tendered in accordance with the terms of the exchange offer.

Resale of New Notes

Based on no action letters of the SEC staff issued to third parties, we believe that new notes may be offered for resale, resold and otherwise transferred by you without further compliance with the registration and prospectus delivery provisions of the Securities Act if:

• you are not our “affiliate” within the meaning of Rule 405 under the Securities Act;

• such new notes are acquired in the ordinary course of your business; and

• you do not intend to participate in the distribution of such new notes.

The SEC, however, has not considered the exchange offer for the new notes in the context of a no action letter, and the SEC may not make a similar determination as in the no action letters issued to these third parties.

If you tender in the exchange offer with the intention of participating in any manner in a distribution of the new notes:

• you cannot rely on such interpretations by the SEC staff; and

• you must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction.

Unless an exemption from registration is otherwise available, any security holder intending to distribute new notes should be covered by an effective registration statement under the Securities Act. This registration statement should contain the selling security holder’s information required by Item 507 of Regulation S-K under the Securities Act. This prospectus may be used for an offer to

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resell, resale or other retransfer of new notes only as specifically described in this prospectus. Only broker-dealers that acquired the old notes as a result of market-making activities or other trading activities may participate in the exchange offer. Each broker-dealer that receives new notes for its own account in exchange for old notes, where such old notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of the new notes. Please read the section captioned “Plan of Distribution” for more details regarding the transfer of new notes.

Terms of the Exchange Offer

Subject to the terms and conditions described in this prospectus and in the letter of transmittal, we will accept for exchange any old notes properly tendered and not withdrawn prior to the expiration date. We will issue new notes in principal amount equal to the principal amount of old notes surrendered under the exchange offer. Old notes may be tendered only for new notes and only in integral multiples of $1,000.

The exchange offer is not conditioned upon any minimum aggregate principal amount of old notes being tendered for exchange.

As of the date of this prospectus, $150,000,000 aggregate principal amount of the old notes is outstanding. This prospectus and the letter of transmittal are being sent to all registered holders of old notes. There will be no fixed record date for determining registered holders of old notes entitled to participate in the exchange offer.

We intend to conduct the exchange offer in accordance with the provisions of the registration rights agreement, the applicable requirements of the Securities Act and the Exchange Act and the rules and regulations of the SEC. Old notes not tendered for exchange in the exchange offer will remain outstanding and continue to accrue interest. These old notes will be entitled to the rights and benefits of the holders under the indenture relating to the notes and the registration rights agreement.

We will be deemed to have accepted for exchange properly tendered old notes when we have given oral or written notice of the acceptance to the exchange agent and complied with the applicable provisions of the registration rights agreement. The exchange agent will act as agent for the tendering holders for the purposes of receiving the new notes from us.

If you tender old notes in the exchange offer, you will not be required to pay brokerage commissions or fees or, subject to the letter of transmittal, transfer taxes with respect to the exchange of old notes. We will pay all charges and expenses, other than certain applicable taxes described below, in connecting with the exchange offer. It is important that you read the section labeled “—Fees and Expenses” for more details regarding fees and expenses incurred in the exchange offer.

We will return any old notes that we do not accept for exchange for any reason without expense to their tendering holder as promptly as practicable after the expiration or termination of the exchange offer.

Each broker-dealer that receives new notes for its own account in exchange for old notes, where such old notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such new notes. See “Plan of Distribution.”

Expiration Date

The exchange offer will expire at 5:00 p.m. New York City time on                     , 2003, unless, in our sole discretion, we extend it.

Extensions, Delays in Acceptance, Termination or Amendment

We expressly reserve the right, at any time or various times, to extend the period of time during which the exchange offer is open. We may delay acceptance of any old notes by giving oral or written notice of such extension to their holders. During any such extensions, all old notes previously tendered will remain subject to the exchange offer, and we may accept them for exchange.

In order to extend the exchange offer, we will notify the exchange agent orally or in writing of any extension. We will notify the registered holders of old notes of the extension no later than 9:00 a.m., New York City time, on the business day after the previously scheduled expiration date.

If any of the conditions described below under “–Conditions to the Exchange Offer” have not been satisfied, we reserve the right, in our sole discretion

• to delay accepting for exchange any old notes,

• to extend the exchange offer, or

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• to terminate the exchange offer,

by giving oral or written notice of such delay, extension or termination to the exchange agent. Subject to the terms of the registration rights agreement, we also reserve the right to amend the terms of the exchange offer in any manner.

Any such delay in acceptance, extension, termination or amendment will be followed as promptly as practicable by oral or written notice thereof to the registered holders of old notes. If we amend the exchange offer in a manner that we determine to constitute a material change, we will promptly disclose such amendment by means of a prospectus supplement. The supplement will be distributed to the registered holders of the old notes. Depending upon the significance of the amendment and the manner of disclosure to the registered holders, we will extend the exchange offer if the exchange offer would otherwise expire during such period.

Conditions to the Exchange Offer

We will not be required to accept for exchange, or exchange any new notes for, any old notes if the exchange offer, or the making of any exchange by a holder of old notes, would violate applicable law or any applicable interpretation of the staff of the SEC. Similarly, we may terminate the exchange offer as provided in this prospectus before accepting old notes for exchange in the event of such a potential violation.

In addition, we will not be obligated to accept for exchange the old notes of any holder that has not made to us the representations described under “—Purpose and Effect of the Exchange Offer,” “—Procedures for Tendering” and “Plan of Distribution” and such other representations as may be reasonably necessary under applicable SEC rules, regulations or interpretations to allow us to use an appropriate form to register the new notes under the Securities Act.

We expressly reserve the right to amend or terminate the exchange offer, and to reject for exchange any old notes not previously accepted for exchange, upon the occurrence of any of the conditions to the exchange offer specified above. We will give oral or written notice of any extension, amendment, non-acceptance or termination to the holders of the old notes as promptly as practicable.

These conditions are for our sole benefit, and we may assert them or waive them in whole or in part at any time or at various times in our sole discretion. If we fail at any time to exercise any of these rights, this failure will not mean that we have waived our rights. Each such right will be deemed an ongoing right that we may assert at any time or at various times.

In addition, we will not accept for exchange any old notes tendered, and will not issue new notes in exchange for any such old notes, if at such time any stop order has been threatened or is in effect with respect to the registration statement of which this prospectus constitutes a part or the qualification of the indenture relating to the notes under the Trust Indenture Act of 1939.

Procedures for Tendering

In order to participate in the exchange offer, you must properly tender your old notes to the exchange agent as described below. It is your responsibility to properly tender your notes. We have the right to waive any defects. However, we are not required to waive defects and are not required to notify you of defects in your exchange.

If you have any questions or need help in exchanging your notes, please contact the exchange agent whose address is set forth in “Prospectus Summary—The Exchange Offer—Exchange Agent.”

All of the old notes were issued in book-entry form, and all of the old notes are currently represented by global certificates held for the account of DTC. We have confirmed with DTC that the old notes may be tendered using the Automated Tender Offer Program (“ATOP”) instituted by DTC. The exchange agent will establish an account with DTC for purposes of the exchange offer promptly after the commencement of the exchange offer and DTC participants may electronically transmit their acceptance of the exchange offer by causing DTC to transfer their old notes to the exchange agent using the ATOP procedures. In connection with the transfer, DTC will send an “agent’s message” to the exchange agent. The agent’s message will state that DTC has received instructions from the participant to tender old notes and that the participant agrees to be bound by the terms of the letter of transmittal.

By using the ATOP procedures to exchange old notes, you will not be required to deliver a letter of transmittal to the exchange agent. However, you will be bound by its terms just as if you had signed it.

There is no procedure for guaranteed late delivery of the notes.

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Determinations under the exchange offer

We will determine in our sole discretion all questions as to the validity, form, eligibility, time of receipt, acceptance of tendered old notes and withdrawal of tendered old notes. Our determination will be final and binding. We reserve the absolute right to reject any old notes not properly tendered or any old notes our acceptance of which would, in the opinion of our counsel, be unlawful. We also reserve the right to waive any defects, irregularities or conditions of tender as to particular old notes. Our interpretation of the terms and conditions of the exchange offer, including the instructions in the letter of transmittal, will be final and binding on all parties. Unless waived, all defects or irregularities in connection with tenders of old notes must be cured within such time as we shall determine. Although we intend to notify holders of defects or irregularities with respect to tenders of old notes, neither we, the exchange agent nor any other person will incur any liability for failure to give such notification. Tenders of old notes will not be deemed made until such defects or irregularities have been cured or waived. Any old notes received by the exchange agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned to the tendering holder, unless otherwise provided in the letter of transmittal, as soon as practicable following the expiration date.

When we will issue new notes

In all cases, we will issue new notes for old notes that we have accepted for exchange under the exchange offer only after the exchange agent receives, prior to 5:00 p.m., New York City time, on the expiration date:

• a book-entry confirmation of such old notes into the exchange agent’s account at DTC; and

• a properly transmitted agent’s message.

Return of old notes not accepted or exchanged

If we do not accept any tendered old notes for exchange or if old notes are submitted for a greater principal amount than the holder desires to exchange, the unaccepted or non-exchanged old notes will be returned without expense to their tendering holder. Such non-exchanged old notes will be credited to an account maintained with DTC. These actions will occur as promptly as practicable after the expiration or termination of the exchange offer.

Your representations to us

By signing or agreeing to be bound by the letter of transmittal, you will represent to us that, among other things:

• any new notes that you receive will be acquired in the ordinary course of your business;

• you have no arrangement or understanding with any person or entity to participate in the distribution of the new notes within the meaning of the Securities Act;

• if you are not a broker-dealer that you are not engaged in and do not intend to engage in the distribution of the new notes;

• if you are a broker-dealer that will receive new notes for your own account in exchange for old notes, you acquired those notes as a result of market-making activities or other trading activities and you will deliver a prospectus, as required by law, in connection with any resale of such new notes; and

• you are not our “affiliate,” as defined in Rule 405 of the Securities Act, or if you are our “affiliate” that you will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable.

Withdrawal of Tenders

Except as otherwise provided in this prospectus, you may withdraw your tender at any time prior to 5:00 p.m., New York City time, on the expiration date. For a withdrawal to be effective you must comply with the appropriate procedures of DTC’s ATOP system. Any notice of withdrawal must specify the name and number of the account at DTC to be credited with withdrawn old notes and otherwise comply with the procedures of DTC.

We will determine all questions as to the validity, form, eligibility and time of receipt of notices of withdrawal. Our determination shall be final and binding on all parties. We will deem any old notes so withdrawn not to have been validly tendered for exchange for purposes of the exchange offer.

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Any old notes that have been tendered for exchange but that are not exchanged for any reason will be credited to an account maintained with DTC for the old notes. This return or crediting will take place as soon as practicable after withdrawal, rejection of tender or termination of the exchange offer. You may retender properly withdrawn old notes by following one of the procedures described under “—Procedures for Tendering” above at any time on or prior to the expiration date.

Fees and Expenses

We will bear the expenses of soliciting tenders. The principal solicitation is being made by mail; however, we may make additional solicitation by telegraph, telephone or in person by our officers and regular employees and those of our affiliates.

We have not retained any dealer-manager in connection with the exchange offer and will not make any payments to broker-dealers or others soliciting acceptances of the exchange offer. We will, however, pay the exchange agent reasonable and customary fees for its services and reimburse it for its related reasonable out-of-pocket expenses.

We will pay the cash expenses to be incurred in connection with the exchange offer. They include:

• SEC registration fees;

• fees and expenses of the exchange agent and trustee;

• accounting and legal fees and printing costs; and

• related fees and expenses.

Transfer Taxes

We will pay all transfer taxes, if any, applicable to the exchange of old notes under the exchange offer. The tendering holder, however, will be required to pay any transfer taxes, whether imposed on the registered holder or any other person, if a transfer tax is imposed for any reason other than the exchange of old notes under the exchange offer.

Consequences of Failure to Exchange

If you do not exchange new notes for your old notes under the exchange offer, you will remain subject to the existing restrictions on transfer of the old notes. In general, you may not offer or sell the old notes unless they are registered under the Securities Act or unless the offer or sale is exempt from the registration under the Securities Act of 1933 and applicable state securities laws. Except as required by the registration rights agreement, we do not intend to register resales of the old notes under the Securities Act.

Accounting Treatment

We will record the new notes in our accounting records at the same carrying value as the old notes. This carrying value is the aggregate principal amount of the old notes, as reflected in our accounting records on the date of exchange. Accordingly, we will not recognize any gain or loss for accounting purposes in connection with the exchange offer. The expenses of the exchange offer will be amortized over the term of the new notes.

Other

Participation in the exchange offer is voluntary, and you should carefully consider whether to accept. You are urged to consult your financial and tax advisors in making your own decision on what action to take.

We may in the future seek to acquire untendered old notes in open market or privately negotiated transactions, through subsequent exchange offers or otherwise. We have no present plans to acquire any old notes that are not tendered in the exchange offer or to file a registration statement to permit resales of any untendered old notes.

Each broker-dealer that receives new notes for its own account in exchange for old notes, where such were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such new notes. See “Plan of Distribution.”

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USE OF PROCEEDS

The exchange offer is intended to satisfy our obligations under the registration rights agreement. We will not receive any cash proceeds from the issuance of the new notes in the exchange offer. In consideration for issuing the new notes as contemplated by this prospectus, we will receive old notes in a like principal amount. The form and terms of the new notes are identical in all respects to the form and terms of the old notes, except the new notes are registered under the Securities Act and will not have restrictions on transfer, registration rights or provisions for additional interest. Old notes surrendered in exchange for the new notes will be retired and cancelled and will not be reissued. Accordingly, the issuance of the new notes will not result in any increase in our outstanding indebtedness.

On August 13, 2003, we completed a series of refinancing transactions in this prospectus that included issuing $150.0 million aggregate principal amount of the old notes and entering into a new $435.0 million senior secured term credit facility. The new credit facility consists of a $335.0 million term loan facility and a $100.0 million revolving loan facility. The proceeds from the old notes offering and the new credit facility were used to (1) repay the $335.2 million outstanding under our previous credit facility, (2) terminate our existing interest rate hedging arrangements valued at $23.6 million, (3) transfer $141.2 million of cash proceeds to our parent, Concentra Inc., to enable it to redeem a portion of its 14% senior discount debentures, (4) pay $4.6 million of accrued interest on the existing credit facility and hedging arrangements and (5) pay approximately $11.3 million of related fees and expenses. The offering of the old notes, the entry into our new credit facility and the use of the net proceeds from the offering of the old notes and borrowings under our new credit facility, as discussed above, are referred to collectively as the “Refinancing Transactions.”

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CAPITALIZATION

The table below sets forth our cash and capitalization at June 30, 2003 on an actual basis and as adjusted to give effect to the Refinancing Transactions as if they had occurred at that date. The adjusted information is unaudited and presented for informational purposes only and is not necessarily indicative of what our financial position would have been had the Refinancing Transactions actually occurred on the date indicated. The table below should be read in conjunction with “Use of Proceeds,” “Selected Historical Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Description of Other Indebtedness” and our historical consolidated financial statements, all included elsewhere in this offering circular.

	At June 30, 2003
	Actual		As Adjusted
	(dollars in thousands)
Cash	$	35,979	$	4,430
Debt, including current portion:
Existing loan:
Revolving loan	$	—	$	—
Tranche B term loan due 2006		223,461		—
Tranche C term loan due 2007		111,732		—
New credit facility:
Revolving loan(1)		—		—
Term loan due 2009		—		335,000
Existing 13% senior subordinated notes due 2009		142,500		142,500
9 1/2%senior subordinated notes due 2010		—		150,000
Other debt (including capitalized leases)		1,574		1,574
Total debt		479,267		629,074
Stockholder’s equity(2)		201,338		54,863
Total capitalization	$	680,605	$	683,937

(1) At June 30, 2003, under our new credit facility we would have had a $100.0 million revolving loan facility, with availability reduced by the amount of outstanding letters of our credit. At June 30, 2003, after giving pro forma effect to the Refinancing Transactions, we would have had approximately $85.7 million of availability under our new revolving loan facility (net of $14.3 million of outstanding letters of credit).

(2) As of June 30, 2003, stockholder’s equity has been adjusted to reflect (i) an $8.2 million write-off of the deferred financing fees associated with the early retirement of our previous senior credit facility and (ii) the transfer of $138.3 million to our parent, to be used to redeem a portion of its outstanding 14% debentures.

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

The following table provides selected historical consolidated financial data of Concentra Operating Corporation and its subsidiaries. The selected historical consolidated financial data as of and for each of the years ended December 31, 1998, 1999, 2000, 2001 and 2002 have been derived from our audited consolidated financial statements. The selected historical consolidated financial data as of and for the three months ended June 30, 2002 and 2003 have been derived from our unaudited consolidated condensed financial statements, which were prepared on the same basis as our audited consolidated financial statements and, in the opinion of management, include all adjustments considered necessary for a fair presentation of our financial position and results of operations for such periods. The results from any interim period are not necessarily indicative of the results that may be expected for a full fiscal year. Historical results are not necessarily indicative of the results to be expected in the future.

The information presented below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the historical consolidated financial statements included elsewhere in this prospectus.

	Years Ended December 31,															Six Months Ended June 30,
	1998			1999			2000			2001			2002			2002			2003
	(dollars in thousands)
Statement of Operations Data:
Revenue:
Health Services	$	266,875		$	339,343		$	409,738		$	443,321		$	471,968		$	226,726		$	244,956
Network Services		135,805			158,022			162,596			185,267			230,299			113,489			123,511
Care Management Services		215,770			193,326			189,905			228,315			296,783			153,945			143,961
Total revenue		618,450			690,691			762,239			856,903			999,050			494,160			512,428
Cost of Services:
Health Services		208,575			274,362			335,939			375,565			406,164			198,112			202,350
Network Services		81,374			95,734			100,741			110,187			138,218			68,988			71,031
Care Management Services		186,742			173,672			170,899			200,166			267,054			134,031			127,238
Total cost of services		476,691			543,768			607,579			685,918			811,436			401,131			400,619
Gross profit		141,759			146,923			154,660			170,985			187,614			93,029			111,809
General and administrative expenses		45,326			65,291			66,491			81,631			106,222			49,625			58,054
Amortization of intangibles		8,119			12,960			14,628			15,746			3,776			1,863			2,002
Unusual charges (gains)		33,114			54,419			—			546			(1,200	)		—			—
Charges for acquisition of affiliate		—			—			—			5,519			—			—			—
Operating income		55,200			14,253			73,541			67,543			78,816			41,541			51,753
Interest expense, net		13,362			32,879			67,984			66,398			63,582			33,048			29,154
(Gain) loss on change in fair value of hedging arrangements		—			—			9,586			13,602			7,589			1,184			(4,413	)
Loss on early retirement of debt		—			—			—			—			7,894			—			—
(Income) loss on acquired affiliate, net of tax		—			(723	)		262			5,833			—			—			—
Other, net		44			(391	)		(1,931	)		(3,640	)		(1,275	)		(1,311	)		1,383
Income (loss) before taxes and cumulative effect of accounting change		41,794			(17,512	)		(2,360	)		(14,650	)		1,026			8,620			25,629
Provision for income taxes		19,308			8,269			4,362			3,757			4,579			4,987			5,545
Income (loss) before cumulative effect of accounting change		22,486			(25,781	)		(6,722	)		(18,407	)		(3,553	)		3,633			20,084
Cumulative effect of accounting change, net of tax		—			—			2,817			—			—			—			—
Net income (loss)	$	22,486		$	(25,781	)	$	(9,539	)	$	(18,407	)	$	(3,553	)	$	3,633		$	20,084
Other Financial Data:
Ratio of earnings to fixed charges(1)		2.6	x		0.6	x		1.0	x		0.8	x		1.0	x		1.2	x		1.8	x

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	At December 31,												At June 30,
	1998		1999			2000			2001		2002		2002		2003
	(dollars in thousands)
Balance Sheet Data:
Working capital	$	201,870	$	109,711		$	123,676		$	86,315	$	113,632	$	148,828	$	139,731
Total assets		656,794		680,180			692,899			880,024		888,638		920,265		915,956
Total debt		327,925		567,747			561,562			562,481		479,826		557,791		479,267
Total stockholder’s equity (deficit)		239,875		(13,197	)		(5,329	)		86,705		176,771		148,510		201,338

(1) For purposes of determining the ratio of earnings to fixed charges, earnings include income from continuing operations before income taxes, adjusted for fixed charges and equity in earnings of unconsolidated subsidiaries and related distributions. Fixed charges consist of cash and non-cash interest on debt, including amortization of debt issuance costs, and 25% of rent expenses, which we estimate as the interest component of such rentals. Our earnings were insufficient to cover fixed charges for the years ended December 31, 1999, 2000 and 2001 by $18.0 million, $3.6 million and $17.7 million, respectively.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis highlights information contained in this prospectus and is qualified in its entirety by the more detailed information and consolidated financial statements included elsewhere in this prospectus. This discussion and analysis is not complete and may not contain all of the information that you should consider before investing in the new notes. You should read this entire prospectus carefully, including “Risk Factors,” “Selected Historical Consolidated Financial Data,” “Selected Consolidated Financial and Other Data” and our consolidated financial statements included in this prospectus.

Overview

We are a leading provider of workers’ compensation and other occupational healthcare services in the United States. We offer our customers a broad range of services designed to improve patient recovery and to reduce the total costs of healthcare. In 2002, we serviced over five million patient visits, reviewed and repriced over $10.0 billion in medical bills and managed or reviewed over 337,000 cases. Our initial treatment of workplace injuries and illnesses accounts for approximately 7% of total reported workplace injuries in the United States. The knowledge we have developed in improving workers’ compensation results for our customers has enabled us to expand successfully into other industries, such as group health and auto insurance, where payors of healthcare and insurance benefits are also seeking to reduce costs.

We believe we are the largest outsource provider of occupational healthcare improvement and cost containment services in the nation. Through our nationwide network of occupational healthcare centers, we serve employers who have more than 114,000 locations. We also provide services to over 3,500 insurance companies, group health plans, third party administrators and other healthcare payors. These payors and our employer customers provide virtually all of our revenue, with less than 0.1% of our revenue derived from Medicare or Medicaid reimbursement.

We were formed in August 1997 by the merger of CRA Managed Care, Inc. and Occusystems, Inc. The name of our parent company after the merger was Concentra Managed Care, Inc., which we subsequently changed to Concentra Inc. In August 1999, Concentra Inc. was recapitalized in a transaction, which we call the 1999 recapitalization, led by Welsh, Carson, Anderson & Stowe, or WCAS. Prior to this date, Concentra Inc. was a publicly-traded company. Immediately following the 1999 recapitalization, 86% of Concentra Inc.’s common stock was held by WCAS, 7% of Concentra Inc.’s common stock was held by funds managed by Ferrer Freeman and Company, LLC, or FFC, and 7% of Concentra Inc.’s common stock was held by other investors. In order to finance the 1999 recapitalization and to effect the repurchase of all of Concentra Inc.’s then outstanding publicly-held shares, WCAS, FFC and the other investors contributed approximately $423.7 million in equity financing and raised $110.0 million of 14% senior discount debentures, $190.0 million of senior subordinated notes and $375.0 million of senior term debt. Concurrent with the 1999 recapitalization, Concentra Inc. retired $327.7 million of previously outstanding convertible subordinated notes and contributed all of its operating assets, liabilities and shares in its subsidiaries, with the exception of the 14% senior discount debentures, to us in exchange for all of our common stock. Our parent’s debt is not guaranteed by us. The 1999 recapitalization was valued at approximately $1.1 billion and was accounted for as a recapitalization transaction, with no changes to the historical cost basis of our parent’s or our assets or liabilities.

Business Segments

We provide our services through three operating segments: Health Services, Network Services and Care Management Services. Through our Health Services segment we treat workplace injuries and perform other occupational healthcare services. We provide these services through our 247 owned and managed centers, located in 79 markets within 34 states. Our services at these centers are performed by over 650 affiliated primary care physicians, as well as affiliated physical therapists, nurses and other healthcare providers. Our Network Services segment offers services designed to assist insurance companies and other payors in the review and reduction of the bills they receive from medical providers. During 2002, we estimate that this segment enabled our customers to eliminate approximately $1.5 billion in excess costs. Our Care Management Services segment offers services designed to monitor cases and facilitate the return to work of injured employees who have been out of work for an extended period of time due to a work-related illness or injury.

The following table provides certain information concerning our occupational healthcare centers:

	Year Ended December 31,			Six Months Ended June 30, 2003
	2000	2001	2002
Centers at the end of the period(1)	216	244	244	247
Centers acquired during the period(2)	8	15	3	2
Centers developed during the period(3)	—	12	1	1

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(1) Does not include the assets of the centers that were acquired and subsequently divested or consolidated into existing centers within the same market during the period. The service locations at December 31, 2001 have been restated to include the 12 centers acquired from OccMed Systems, Inc. in December 2002, as our financial results have been restated to include the results of OccMed Systems, Inc. in 2001 and 2002.

(2) Represents centers that were acquired during each period presented and not subsequently divested or consolidated into existing centers within the same market during the period. We acquired four centers and 12 centers that were subsequently consolidated into existing centers during the years ended December 31, 2002 and 2001, respectively.

(3) Includes the 12 centers developed by OccMed Systems, Inc. in 2001.

Significant Acquisitions

In December 2002, we acquired Em3 Corporation, a privately-held company located in Addison, Texas, in a transaction valued at $30.7 million. Following its inception in 2000, Em3 established a nationwide network of primary care physicians specializing in occupational healthcare, and its proprietary information systems and approach to the integration and management of workers’ compensation care attracted several large national employers as its clients. Em3’s business is complementary in nature to our businesses. Under the terms of the transaction, our parent issued approximately $30.1 million of its common stock to Em3’s equity holders through an exchange of its common stock for substantially all of the assets and liabilities of Em3. Concurrently with the closing of the acquisition, our parent contributed the assets and liabilities of Em3 to us and we subsequently repaid $0.6 million of Em3’s indebtedness to its largest stockholder, WCAS. The repayment of this indebtedness was financed through the use of cash on hand.

In December 2002, we also acquired OccMed Systems, Inc., a privately-held company located in Addison, Texas, in a transaction valued at $16.6 million. OccMed, established in 2001, developed 12 occupational healthcare centers across six geographic markets in the United States. Under the terms of the transaction, our parent issued approximately $12.8 million of its common stock for OccMed’s assets and liabilities. Concurrent with this acquisition, our parent contributed the OccMed assets and liabilities to us, and we repaid $1.0 million of OccMed’s indebtedness to its largest stockholder, WCAS, and $2.8 million of other indebtedness. This repayment was financed through the use of cash on hand.

Because we are controlled by our primary shareholder, WCAS, and because WCAS also owned approximately 66% of Em3 and 69% of OccMed, the acquisition accounting for both acquisitions was viewed as a reorganization of entities under common control. Accordingly, the historical costs of Em3’s and OccMed’s assets and liabilities have been utilized as if WCAS contributed its 66% and 69% respective interests in Em3 and OccMed to us at their historical cost. We accounted for the remaining 34% of Em3 and 31% of OccMed under the purchase method of accounting, whereby assets and liabilities were “stepped-up” to fair value with the remainder allocated to goodwill. The effective date of these acquisitions was December 1, 2002.

In accordance with existing accounting requirements, we accounted for these acquisitions in a manner similar to a pooling, whereby we retroactively restated our historical financial statements to consolidate the historical results of Em3 and OccMed beginning with the periods the entities were under the control of WCAS, which was 2000 for Em3 and 2001 for OccMed. The equity interests of other investors, which was 34% for Em3 and 31% for OccMed, has been reflected as a “minority interest” in our financial statements for periods prior to the date of the acquisitions. In connection with the Em3 acquisition, we expensed approximately $0.1 million in restructuring costs primarily associated with employee severance and facilities consolidation costs. This amount was expensed pursuant to the standards of entities under common control accounting, and is reflective of the proportionate ownership percentage of WCAS as applied to the total amount of restructuring liabilities that occurred in connection with the acquisition.

During 2003, we intend to integrate the operations and information systems of Em3 and OccMed within Health Services. We intend for this integration to involve both the primary operational activities and systems associated with the provision of Em3’s and OccMed’s services, as well as the general and administrative processes of these acquired companies, including their billing and accounts receivable systems. We currently believe that there will be no appreciable reductions in the overall combined costs of our services and in our general and administrative expenses as a result of this integration process.

In November 2001, we acquired all of the outstanding shares of capital stock of National Healthcare Resources, Inc., or NHR, a privately held company located in New York, New York, in a transaction valued at $141.8 million. NHR, founded in 1992, provided care management and network services to the workers’ compensation and auto insurance industries nationwide. NHR’s businesses were complementary in nature to and significantly expanded our Care Management Services and Network Services businesses. In connection with this acquisition, Concentra Inc. paid $84.0 million to NHR’s equity and option holders through cash payments totaling $1.0 million and an exchange of approximately 3.8 million shares of its common stock for all of the outstanding shares and

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share equivalents of NHR. Concurrently with the closing of the acquisition, our parent contributed the capital stock and share equivalents of NHR to our capital, and NHR repaid $57.8 million of its indebtedness. Of this $57.8 million, (1) $19.5 million was financed through our parent’s sale of new common stock and warrants, which were subsequently contributed to our capital and (2) the remainder was financed through the use of cash on hand and by drawing down our then-existing revolving credit line. Because our controlling stockholder, WCAS, owned approximately 48% of the common voting equity in NHR, the acquisition was accounted for as a reorganization of entities under common control. Accordingly, the historical costs of NHR’s assets and liabilities were utilized to the extent of WCAS’s proportionate ownership interest in NHR and the remainder of the acquisition was accounted for under the purchase method of accounting, whereby assets and liabilities are “stepped-up” to fair value with the remainder allocated to goodwill. We recognized NHR’s historical net income and loss as a non-operating item in proportion to WCAS’s investment in NHR utilizing the equity method of accounting from August 17, 1999 through October 31, 2001. NHR’s full results of operations are consolidated after November 1, 2001, the effective date of the acquisition.

In connection with the NHR acquisition, we recorded $6.0 million in asset write-downs and $6.8 million in restructuring costs, which were primarily associated with employee severance and facilities consolidation costs. Of this $12.8 million, $5.5 million was recognized in 2001 as a charge for the acquisition of affiliate and reflects WCAS’s proportionate ownership percentage in NHR as applied to the total amount of asset write-downs and restructuring liabilities that occurred in connection with the acquisition. We recorded unusual charges of $0.5 million to reflect employee severance and facility consolidation costs associated with our facilities. We recorded the remaining $6.8 million, which was reflective of the remaining non-WCAS proportionate ownership percentage in NHR as applied to the total amount of asset write-downs and restructuring liabilities that occurred in connection with the acquisition, under the purchase method of accounting. In the last half of 2002, we recorded an additional $0.6 million to the restructuring cost accrual due primarily to increased estimates for personnel and facility termination costs.

During 2002, we integrated portions of the operations and information systems of NHR with our Network Services and Care Management Services segments and will continue this integration in subsequent years. This integration involves both the primary operational activities and systems associated with the provision of NHR’s network and care management services, as well as the general and administrative processes of this acquired company, including its billing and accounts receivable systems. While this integration has resulted in reductions in the overall combined costs of our services and in our general and administrative expenses, the ultimate amount of that benefit is difficult to quantify.

In November 2001, we acquired all of the outstanding capital stock of HealthNetwork Systems LLC, or HNS, a privately held company located in Naperville, Illinois, in a transaction valued at approximately $30.9 million. HNS, founded in 1999, provided network management services such as provider bill repricing and provider data management for health plans and other payors working with multiple preferred provider organization networks. These services were complementary to our existing services. We financed this acquisition primarily through the sale of our parent’s equity. Our parent exchanged this cash and other consideration for all of HNS’s capital stock. Concurrent with the closing of the acquisition, our parent contributed the capital stock of HNS and $0.8 million of cash to us, and we repaid approximately $0.8 million of HNS’s indebtedness. Steven E. Nelson, one of our directors, was the President and Chief Executive Officer of HNS at the time of the acquisition. Mr. Nelson and certain other of our directors and management owned approximately 46.1% of the equity in HNS. All of HNS’s assets, including its contracts, equipment, intangibles and goodwill, as well as all of its liabilities, were transferred to us and were recorded at fair value utilizing the purchase method of accounting.

Critical Accounting Policies

A “critical accounting policy” is one that is both important to the portrayal of the company’s financial condition and results and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. The process of preparing financial statements in conformity with accounting principles generally accepted in the United States requires us to use estimates and assumptions to determine certain of our assets, liabilities, revenue and expenses. Our financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles in the United States. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses. We base these determinations upon the best information available to us during the period in which we are accounting for our results. Our estimates and assumptions could change materially as conditions within and beyond our control change or as further information becomes available. Further, these estimates and assumptions are affected by management’s application of accounting policies. Changes in our estimates are recorded in the period the change occurs. Our critical accounting policies include:

• revenue recognition;

• cost of services;

• contractual and bad debt allowances;

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• deferred income tax asset valuation allowance;

• goodwill and other intangible assets;

• professional liability insurance claims;

• hedging arrangements; and

• acquired assets and liabilities.

The following is a discussion of our critical accounting policies and the related management estimates and assumptions necessary in determining the value of related assets or liabilities. A full description of all of our significant accounting policies is included in note 2 to our audited consolidated financial statements included elsewhere in this prospectus.

Revenue Recognition

We generally recognize revenue when it has persuasive evidence of an arrangement, the services have been provided to the customer, the sales price is fixed or determinable and collectibility is reasonably assured. We reduce revenue for estimated contractual allowances. In addition to the aforementioned general policy, the following are the specific revenue recognition policies of each segment of our operations.

Health Services. Health Services consists of two primary components: (i) workers’ compensation injury care and related services; and (ii) non-injury healthcare services related to employer needs or statutory requirements. We recognize revenue for both of these services as the services are performed. The provider reimbursement methods for workers’ compensation injury care and related services vary on a state-by-state basis. Currently, 40 states have fee schedules pursuant to which all healthcare providers are uniformly reimbursed. The fee schedules are determined by each state and generally prescribe the maximum amounts that may be reimbursed for a designated procedure. In the states without fee schedules, healthcare providers are reimbursed based on usual, customary and reasonable fees charged in the particular state in which the services are provided. We include billings for services in states with fee schedules in revenue net of allowance for estimated differences between list prices and allowable fee schedule rates. We record adjustments to the allowance based on final payment from the states upon settlement. We record the net revenue amount as accounts receivable.

Network Services. We derive a portion of Network Services’ revenue from fee schedule auditing prior to the related invoices being paid by our clients. Our fees are normally based on the number and amount of charges reviewed and a percentage of savings achieved by our clients, who are then obligated to pay for these services. During the fee schedule audit process (i.e., medical bill review), each bill reviewed and audited is returned to the customer accompanied by an Explanation of Benefit (“EOB”). The EOB details the total savings with respect to the bill being reviewed as well as the amount owed to us as a percentage of savings identified and the line charge associated with the bill being reviewed. We recognize this portion of our Network Services’ revenue as the services are performed. Because the majority of insurance claims are reviewed by Network Services prior to the customer’s review and payment of these claims and because some claims may have certain, pre-existing discount arrangements or disqualifying situations, our customers will request a refund or chargeback for these amounts previously invoiced to them when these situations occur. Accordingly, we record contractual allowances to reduce the revenue recorded for these services based upon an estimate of these discounts and chargebacks. We utilize several methods to estimate unpresented discounts and chargebacks, including a review of our actual experience with contractual discounts and other factors.

Another portion of Network Services revenue relates to retrospective, or “post-payment” bill review services. In December 1999, the SEC issued Staff Accounting Bulletin No. 101 (“SAB 101”), Revenue Recognition in Financial Statements. SAB 101 provides additional guidance in applying generally accepted accounting principles for revenue recognition in financial statements. SAB 101 implementation guidance issued by the SEC in the fourth quarter of 2000 required us to recognize revenue from our post-payment bill review services effectively on a cash basis. Prior to adoption of this standard, we recognized this revenue as savings were identified for our clients. The cumulative charge recognized in 2000 from this change in accounting principle was $2.8 million, net of tax effect of $2.3 million.

Care Management Services. We recognize revenue for our case management and independent medical examinations businesses as the services are performed.

Cost of Services

Cost of services consist primarily of the compensation and fringe benefits of physician and therapy providers, licensed technicians, clinic support and other field personnel, medical malpractice insurance, medical and laboratory supplies, facility costs and

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bad debt expense. Historically, acquisitions and the costs associated with these additional personnel and facilities have been the most significant factor driving increases in our cost of services. More recently, we have seen substantial increases in our medical malpractice and other insurance costs.

Contractual and Bad Debt Allowances

We estimate potential contractual and bad debt allowances relative to current period service revenue. We analyze historical collection adjustment experience when evaluating the adequacy of the contractual and bad debt allowances. We must make significant management judgments and estimates in determining contractual and bad debt allowances in any accounting period. One significant uncertainty inherent in our analysis is whether our past experience will be indicative of future periods. Although we consider future projections when estimating contractual and bad debt allowances, we ultimately make our decisions based on the best information available to us at that time. Our provision for contractual and bad debt allowances amounted to $69.7 million in 2002. Our accounts receivable balance was $167.6 million, net of contractual and bad debt allowances of $42.2 million, as of December 31, 2002.

Deferred Income Tax Asset Valuation Allowance

Deferred income tax assets are recognized for deductible temporary differences, net operating loss carryforwards and credit carryforwards if it is more likely than not that the tax benefits will be realized. Realization of our deferred income tax assets is dependent on generating sufficient future taxable income prior to the expiration of the loss and tax credit carryforwards. We evaluate the recoverability of the deferred income tax assets and associated valuation allowance on a regular basis. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. We evaluate a variety of factors on a regular basis to determine the amount of deferred income tax assets to recognize in the financial statements, including our recent earnings history, projected future taxable income, the number of years our net operating loss and tax credits can be carried forward, the existence of taxable temporary differences and available tax planning strategies. Based upon our recent operating history and other factors, management determined that it is more likely than not that certain deferred income tax assets will not be realized. The valuation allowance recorded for deferred income tax assets was $32.0 million and $27.3 million as of December 31, 2002 and June 30, 2003, respectively.

Goodwill and Other Intangible Assets

We assess the impairment of intangible assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Important factors that could trigger an impairment review include:

• significant underperformance relative to expected historical or projected future operating results;

• significant changes in the manner of our use of the acquired assets or the strategy for our overall business;

• significant negative industry or economic trends;

• a significant decline in our public bond price for a sustained period; and

• a significant decline in our estimated market capitalization relative to net book value.

Under generally accepted accounting principles, we are required to write down our intangible assets if they are determined to be impaired. Under current accounting standards, an impairment of an intangible asset is considered to have occurred when the estimated undiscounted future cash flows related to the assets are less than the carrying value of the asset. Estimates of future cash flows involve consideration of numerous factors, depending upon the specific asset being assessed. Relevant factors in this assessment include estimates of future market growth rates, service acceptance and lifecycles, selling prices and volumes, responses by competitors, service delivery costs and assumptions as to other operating expenses. When we determine that the carrying value of intangible assets may not be recoverable based upon the existence of one or more of the above indicators of impairment, we measure any impairment based on a projected discounted cash flow method using a discount rate determined by our management to be commensurate with the risk inherent in our current business model. Our net identifiable intangible assets and goodwill amounted to $486.2 million as of December 31, 2002. The value of these projected discounted cash flows could be subject to change based on differences in the assumptions noted above.

In 2002, Statement of Financial Accounting Standards No. (“SFAS”) 142, Goodwill and Other Intangible Assets, became effective and, as a result, we ceased amortizing our goodwill. We recorded approximately $14.8 million of amortization on these amounts during 2001. In lieu of amortization, we were required to perform an initial impairment review of our goodwill in 2002 and an annual impairment review thereafter. Under SFAS 142, we were required to test all existing goodwill and indefinite life intangibles for impairment on a reporting unit basis. A reporting unit is the operating segment unless, at businesses one level below that operating

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segment (the component level), discrete financial information is prepared and regularly reviewed by management, and the businesses are not otherwise aggregated due to having certain common characteristics, in which case such component is the reporting unit. We use a fair value approach to test goodwill and indefinite life intangibles for impairment. We recognize an impairment charge for the amount, if any, by which the carrying amount of goodwill and indefinite life intangibles exceeds its fair value. We established fair values using projected cash flows. When available and as appropriate, we used comparative market multiples to corroborate projected cash flow results. We completed our initial review during the second quarter of 2002 and our annual impairment test in the third quarter of 2002. We did not record an impairment charge upon completion of these reviews. However, there can be no assurance that we will not record impairment charges in future periods.

Professional Liability Insurance Claims

We operate, along with virtually all health care providers, in an environment with medical malpractice and professional liability risks. The entire primary healthcare industry is experiencing a dramatic increase in professional liability costs because of the volume of claims and the large legal settlements based on alleged negligence in providing healthcare. Allowances for professional liability risks were $5.6 million and $6.2 million at December 31, 2002 and June 30, 2003, respectively. We base our provisions for losses related to professional liability risks upon actuarially determined estimates. Loss and loss expense allowances represent the estimated ultimate net cost of all reported and unreported losses incurred. We estimate the allowances for unpaid losses and loss expenses using individual case-basis valuations and statistical analyses. Trends in loss severity and frequency affect these estimates. We continually review and record adjustments for these estimates as experience develops or new information becomes known. Current operating results include the changes to the estimated allowances. Due to the considerable variability that is inherent in such estimates, there can be no assurance that the ultimate liability will not exceed our estimates.

Hedging Arrangements

We were party to certain arrangements that hedged a portion of our exposure to variable interest rates under our previous debt agreements. When accounting for our hedging arrangements, we are required by accounting standards to:

• recognize the fair value of hedging arrangements as assets or liabilities in the financial statements; and

• recognize changes in the fair value of these derivatives in our statements of operations.

Third parties, including major banking institutions, provided us with estimates of fair values of our hedging arrangements, which reflected several factors, including relevant future market conditions, current bid-offer spreads and other market conditions. Valuations based on other models or different assumptions, including yield curve shifts, could have resulted in significantly different valuation estimates and could have caused significant non-cash changes to our earnings relating to the change in the fair value of the interest rate hedges that we utilized. The fair value of these hedges at June 30, 2003 was a liability of $29.1 million. As part of the Refinancing Transactions, all of our previous hedging arrangements were terminated on August 13, 2003.

Acquired Assets and Liabilities

Our business has grown in part through several strategic acquisitions over the last few years. During 2001 and 2002, we acquired a total of 18 occupational healthcare centers, as well as HNS, NHR, Em3 and OccMed. The individual assets and liabilities of each acquired company must be recorded at fair value, reflecting amounts for tangible assets and liabilities and intangible assets.

In many cases, we prepare our own internal purchase price allocations and determine the lives of the acquired assets. However, we may also use independent appraisers to assist us in these efforts for our larger or more complex acquisitions. We use several valuation techniques in order to estimate fair values, including discounted cash flow analysis, replacement cost analysis and market comparables. These methods require significant assumptions regarding market conditions, operational integration issues and the utilization of the underlying assets, which could change in the future and result in a significant impact on our earnings. Additionally, we are required to make estimates of restructuring liabilities incurred in connection with these assets. These estimates involve assumptions relating to the timing and cost of personnel reductions, facility lease charges and other related exit costs. Because of the inherent nature of these assumptions and techniques, we could experience changes in estimated values that could be material to our earnings.

Recent Accounting Pronouncements

In July 2001, the FASB issued SFAS 143, Accounting for Asset Retirement Obligations. SFAS 143 addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. The statement requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it

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is incurred and capitalized as part of the carrying amount of the long-lived asset. We adopted SFAS 143 on January 1, 2003. The adoption did not have a material impact on our consolidated financial position, results of operations or cash flows.

In October 2001, the FASB issued SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets, which supersedes SFAS 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of. The statement provides a single accounting model for long-lived assets to be disposed of. We adopted SFAS 144 on January 1, 2002. The adoption did not have a material impact on our consolidated financial position, results of operations or cash flows.

In April 2002, the FASB issued SFAS 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections. SFAS 145 concludes that gains or losses from debt extinguishments used as part of a company’s risk management strategy should not be classified as an extraordinary item, effective for fiscal years beginning after May 15, 2002 with early adoption encouraged. SFAS 145 also requires sale-leaseback accounting for certain lease modifications that have economic effects that are similar to sale-leaseback transactions, effective for transactions occurring after May 15, 2002. This statement also amends other existing authoritative pronouncements to make various technical corrections, clarify meanings or describe their applicability under changed conditions, effective for financial statements issued on or after May 15, 2002. We adopted the provisions of this pronouncement for all related transactions in the second quarter of 2002. This adoption did not have a significant impact on our consolidated financial statements. We redeemed $47.5 million of our existing 13% senior subordinated notes in July 2002 and prepaid $25.0 million of our senior term indebtedness in November 2002. In accordance with SFAS 145, the related losses from debt extinguishment were included in income from continuing operations in the third and fourth quarters of 2002. For a further discussion, see note 5 in our audited consolidated financial statements included elsewhere in this prospectus.

In June 2002, the FASB issued SFAS 146, Accounting for Costs Associated with Exit or Disposal Activities. SFAS 146 addresses the accounting for costs to terminate a contract that is not a capital lease, costs to consolidate facilities and relocate employees, and involuntary termination benefits under one-time benefit arrangements that are not an ongoing benefit program or an individual deferred compensation contract. A liability for contract termination costs should be recognized and measured at fair value when either the contract is terminated or when the entity ceases to use the right conveyed by the contract. A liability for one-time termination benefits should be recognized and measured at fair value at the communication date if the employee would not be retained beyond a minimum retention period (i.e., either a legal notification period or 60 days, if no legal requirement exists). For employees who will be retained beyond the minimum retention period, a liability should be accrued ratably over the future service period. We adopted SFAS 146 on January 1, 2003. The adoption did not have a material impact on our consolidated financial position, results of operations or cash flows.

In November 2002, the FASB issued Interpretation No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others. FIN 45 elaborates on the existing disclosure requirements for most guarantees, including residual value guarantees issued in conjunction with operating lease agreements. It also clarifies that at the time a company issues a guarantee, the company must recognize an initial liability for the fair value of the obligation it assumes under that guarantee and must disclose that information in its interim and annual financial statements. The initial recognition and measurement provisions apply on a prospective basis to guarantees issued or modified after December 31, 2002. The disclosure requirements are effective for financial statements of interim or annual periods ending after December 15, 2002. Our adoption of FIN 45 did not have a material impact on our results of operations and financial position, as our previous credit agreement prohibited these types of guarantees.

In December 2002, the FASB issued SFAS 148, Accounting for Stock-Based Compensation—Transition and Disclosure. SFAS 148 amends SFAS 123, Accounting for Stock-Based Compensation (“SFAS 123”), to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS 148 amends the disclosure requirements of SFAS 123 to require more prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The additional disclosure requirements of SFAS 148 are effective for fiscal years ending after December 15, 2002. We have elected to continue to follow the intrinsic value method of accounting as prescribed by Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, to account for employee stock options. For the disclosures required by SFAS 148, see note 10 in our audited consolidated financial statements included elsewhere in this prospectus.

In January 2003, the FASB issued Interpretation No. 46, Consolidation of Variable Interest Entities. FIN 46 requires a variable interest entity to be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity’s activities or entitled to receive a majority of the entity’s residual returns or both. A variable interest entity is a corporation, partnership, trust or any other legal structure used for business purposes that either (1) does not have equity investors with voting rights or (2) has equity investors that do not provide sufficient financial resources for the entity to support its activities. A variable interest entity often holds financial assets, including loans or receivables, real estate or other property. A variable interest entity may be essentially passive or it may engage in research and development or other activities on behalf of another company. The consolidation requirements of FIN 46 apply immediately to variable interest entities created after January 31, 2003. The consolidation

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requirements apply to older entities in the first fiscal year or interim period beginning after June 15, 2003. Certain of the disclosure requirements apply to all financial statements issued after January 31, 2003, regardless of when the variable interest entity was established. We do not have any variable interest entities.

In April 2003, the FASB issued SFAS 149, Amendment of Statement of 133 on Derivative Instruments and Hedging Activities (“SFAS 149”). SFAS 149 amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under SFAS 133, Accounting for Derivative Instruments and Hedging Activities. SFAS 149 is generally effective for contracts entered into or modified after June 30, 2003 and is not expected to have a material impact on our financial statements.

In May 2003, the FASB issued SFAS 150, Accounting for Certain Instruments with Characteristics of Both Liability and Equity (“SFAS 150”). SFAS 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. SFAS 150 requires that an issuer classify a financial instrument that is within its scope, which may have previously been reported as equity, as a liability. This statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. We do not anticipate any financial impact upon the adoption of this statement.

Results of Operations

Three and Six Months Ended June 30, 2003 Compared to Three and Six Months Ended June 30, 2002

The following table provides the results of operations for the three and six months ended June 30, 2003 and 2002 ($ in millions):

	Three Months Ended						Change					Six Months Ended						Change
	June 30, 2003			June 30, 2002			$			%		June 30, 2003			June 30, 2002			$			%
Revenue:
Health Services	$	126.4		$	123.4		$	3.0		2.4	%	$	244.9		$	226.7		$	18.2		8.0	%
Network Services		61.8			56.3			5.5		9.8			123.5			113.5			10.0		8.8
Care Management Services		72.1			74.5			(2.4	)	(3.2	)		144.0			154.0			(10.0	)	(6.5	)
Total revenue	$	260.3		$	254.2		$	6.1		2.4	%	$	512.4		$	494.2		$	18.2		3.7	%
Cost of services:
Health Services	$	101.0		$	99.5		$	1.5		1.4	%	$	202.4		$	198.1		$	4.3		2.1	%
Network Services		36.2			35.4			0.8		2.3			71.0			69.0			2.0		3.0
Care Management Services		63.6			66.7			(3.1	)	(4.6	)		127.2			134.0			(6.8	)	(5.1	)
Total cost of services	$	200.8		$	201.6		$	(0.8	)	(0.4	%)	$	400.6		$	401.1		$	(0.5	)	(0.1	)%
Gross profit:
Health Services	$	25.5		$	23.9		$	1.6		6.6	%	$	42.6		$	28.6		$	14.0		48.9	%
Network Services		25.5			20.8			4.7		22.5			52.5			44.5			8.0		17.9
Care Management Services		8.5			7.8			0.7		8.7			16.7			19.9			(3.2	)	(16.0	)
Total gross profit	$	59.5		$	52.5		$	7.0		13.2	%	$	111.8		$	93.0		$	18.8		20.2	%
Gross profit margin:
Health Services		20.1	%		19.4	%				0.7	%		17.4	%		12.6	%				4.8	%
Network Services		41.3			37.0					4.3			42.5			39.2					3.3
Care Management Services		11.8			10.5					1.3			11.6			12.9					(1.3	)
Total gross profit margin		22.8	%		20.7	%				2.1	%		21.8	%		18.8	%				3.0	%

Revenue

The increase in revenue in the first three and six months of 2003 from the same periods in 2002 was primarily due to growth in our Health Services and Network Services businesses, partially offset by decreases in our Care Management Services business. Also, the revenue increase for the first half of 2003 from the first half of 2002 was partially due to a change in accounting estimate for accounts receivable reserves in the first quarter of 2002 whereby we increased contractual allowances and correspondingly reduced revenue by $5.4 million in that quarter. Following an extensive review of our accounts receivable history and collection experience using new data provided by recently implemented information systems, we determined that additional contractual allowances were required as of March 31, 2002. This increase in accounts receivable reserves related primarily to Health Services, which reduced its revenue by $7.9 million, and was partially offset by receivable reserve decreases of $1.3 million in Network Services and $1.2 million in Care Management Services.

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Health Services. Health Services’ revenue increase in the first three and six months of 2003 from the same periods in 2002 was primarily due to growth in average revenue per visit, partially offset by a decrease in visits. Increases in ancillary services also contributed significantly to this segment’s revenue growth as compared to the prior year. The first quarter 2002 revenue reduction of $7.9 million for the accounts receivable reserve increase also contributed to the revenue increase for the first half of 2003 from the first half of 2002. The number of total patient visits per day to our centers in the second quarter and first half of 2003 decreased 1.9% and 0.3% compared to the second quarter and first half of 2002, respectively, and decreased 2.2% and 0.9%, respectively, on a same-center basis. We believe these decreases in visits to our centers primarily relate to decreases in nationwide employment, particularly in jobs that are more prone to workplace injuries and illness. We have experienced some improvement in these growth trends as compared to the same-center decline of 4.1% we reported for the first six months of last year and anticipate that these rates of growth will generally improve further once job growth resumes to more traditional levels. Our “same-center” comparisons represent all centers that Health Services has operated for the previous two full years and includes the effects of any centers acquired and subsequently consolidated into existing centers. For the three months ended June 30, 2003 and 2002, Health Services derived 71.8% and 70.6% of its comparable same-center net revenue from the treatment of work-related injuries and illnesses, respectively, and 28.2% and 29.4% of its net revenue from non-injury and non-illness related medical services, respectively. For the six months ended June 30, 2003 and 2002, Health Services derived 72.3% and 71.0% of its comparable same-center net revenue from the treatment of work-related injuries and illnesses, respectively, and 27.7% and 29.0% of its net revenue from non-injury and non-illness related medical services, respectively. Excluding on-site and ancillary services, injury-related visits constituted 49.7% and 49.2% of same-center visits in the second quarter of 2003 and 2002, respectively, and 50.3% and 50.1% of same-center visits in first half of 2003 and 2002, respectively. On a same-center basis, average revenue per visit increased 2.6% and 3.5% for the first three months and six months of 2003 as compared to the same period in the prior year, respectively, primarily due to increases in the average prices charged for our services. We currently anticipate further price increases in our Health Services segment due to increases in the fee schedules that apply to our services in key states in which we do business. Same-center revenue was $111.8 million and $111.4 million for the first quarters of 2003 and 2002, respectively, while revenue from acquired and developed centers and ancillary services was $14.6 million and $12.0 million for the same respective periods. For the first half of 2003 and 2002, same-center revenue was $217.9 million and $212.3 million, respectively, while revenue from acquired and developed centers and ancillary services was $27.0 million and $14.4 million for the same respective periods.

Network Services. This segment’s revenue increased $5.5 million, or 9.8%, for the second quarter of 2003 and $11.3 million, or 10.1%, for the first half of 2003 from the same respective periods of 2002 due to growth in billings. The increase for the first half of 2003 was partially offset by the $1.3 million revenue increase due to the first quarter of 2002 accounts receivable reserve decrease. Our non-network medical providers’ bill review services provided the majority of the revenue increase due to an increase in the amount of gross charges reviewed as compared to the prior year and the amount of savings achieved through our review of medical charges. Increases in our workers’ compensation-based preferred provider organization and provider bill repricing and review services also contributed to the revenue increases. These increases related primarily to the addition of new customer accounts and business volumes in these lines of business.

Care Management Services. Revenue for our Care Management Services segment decreased by $2.4 million, or 3.2%, for the second quarter of 2003 and $8.8 million, or 5.8%, for the first half of 2003 from the same respective periods in the prior year due to lower billings. The $1.2 million revenue increase in the first quarter of 2002 for the accounts receivable reserve decrease also contributed to the 2003 year-to-date revenue decline. The billing decrease was due to declines in our case management and independent medical exams services.

Like our two other business segments, we provide a majority of our Care Management Services to clients in the workers’ compensation market. In a manner similar to our other business segments, we have experienced declines in referral trends, which we believe primarily relate to the overall drop in nationwide employment and related rates of workplace injuries. Generally, Health Services is the first segment to be affected by economic downturns and upturns since it sees patients at the time of initial injury. Network Services is the second segment to be affected since it involves the review of bills generated from injury-related visits. Care Management Services is the final segment to experience the effects of changing injury trends since it generally receives referrals for service a number of months after the initial injury occurs. Accordingly, we believe a primary cause of the decline in revenue experienced in Care Management Services in 2003 is related to the effects of declines in workplace injuries that we experienced in the Health Services business during 2002. As we are currently seeing gradual improvements in the relative visit amounts in our Health Services segment, we anticipate that we could experience a similar future recovery in the rates of referrals in Case Management Services based on the degree to which employment trends stabilize and return to historical rates of growth.

In addition to the economic effects described above, we have encountered, to a lesser extent, some revenue declines in our independent medical exams services associated with client referral volume decreases due to integration of acquired operations with our own and increased competition.

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Cost of Services

Total cost of services decreased in the second quarter of 2003 from the same period in the prior year due to decreased expenses in Care Management Services, partially offset by increased costs in Health Services and Network Services. The decrease in total cost of services in the first half of 2003 from the first half of 2002 was primarily due to adjustments to the accounts receivable reserves in the first quarter of 2002. As part of the review of our accounts receivable history and collection experience, Health Services recorded an adjustment of $1.7 million to bad debt expense in the first quarter of 2002 to increase its bad debt reserves. Total cost of services increased $1.2 million, or 0.3% in the first half of 2003 from the same period in 2002 due to increased costs in Health Services and Network Services, partially offset by decreased expenses in Care Management Services. The increase in costs was offset by the $1.7 million accounts receivable adjustment in the first quarter of 2002.

Gross Profit

The increase in the second quarter 2003 gross profit and gross profit margin from the second quarter of 2002 was primarily due to increases for all segments. The increases in the gross profit and gross profit margin for the first half of 2003 from the first half of 2002 were due to increases for Health Services and Network Services, partially offset by declines in Care Management Services. Our overall gross and operating margins were also improved during 2003 due to a reduction in total personnel by more than 400 positions since the second quarter of 2002. These reductions were primarily made in our Care Management Services segment and in certain information technology and administrative functions.

Health Services. Health Services’ gross profit and gross profit margin increase for the second quarter of 2003 from the same quarter of 2002 was primarily due to pricing increases and increases in the volume of higher-margin ancillary services, including on-site and managed pharmacy programs. The primary factor in Health Services’ gross profit increase in the first half of 2003 as compared to the first half of 2002 was a $9.6 million increase in accounts receivable reserves related to the change in accounting estimate in the first quarter of 2002, consisting of a $7.9 million reduction in revenue and a $1.7 million increase in cost of services. Health Services’ remaining gross profit increase of $4.4 million was primarily due to improved revenue, increases in ancillary services and our corresponding utilization of the fixed nature of our existing center facilities.

Network Services. Network Services’ gross profit and gross profit margin increases in the first three and six months of 2003 from the same periods in 2002 were primarily due to revenue growth in the first three and six months of 2003 and the relatively fixed nature of this segment’s expenses. This segment’s gross profit increase for the first half of 2003 compared to the first half of 2002 was partially offset by the $1.3 million accounts receivable adjustment in the first quarter of 2002.

Care Management Services. This segment’s gross profit and gross profit margin increases for the second quarter of 2003 from the same prior year period were primarily due to reductions of costs in excess of the declines in revenue. However, these cost reductions did not fully offset the revenue decrease on a year-to-date basis. Additionally, the $1.2 million accounts receivable reserve adjustment in the first quarter of 2002 contributed to the decrease for the first half of 2003 from the same prior year period.

General and Administrative Expenses

General and administrative expenses increased 8.9% in the second quarter of 2003 to $29.5 million from $27.1 million in the second quarter of 2002, or 11.3% and 10.7% as a percentage of revenue for the second quarters of 2003 and 2002, respectively. For the first half of 2003, general and administrative expenses increased 17.1% to $58.1 million from $49.6 million in the first half of 2003, or 11.3% and 10% as a percentage of revenue for the first half of 2003 and 2002, respectively. The increase in general and administrative expenses for the first three and six months of 2003 from the same periods of 2002 was primarily due to increased compensation and benefits costs in 2003, as well as higher depreciation and property and casualty costs in 2003. Additionally, the increase for the first six months of 2003 from the same period in 2002 was affected by a $3.9 million reduction in employee benefits in the first quarter of 2002 associated with a reduction in the amount of employee contributions we matched in our defined contribution plan as compared to prior years.

Interest Expense, Net

Interest expense decreased $2.0 million in the second quarter of 2003 to $14.6 million from $16.6 million in the second quarter of 2002. For the first six months of 2003 and 2002, interest expense was $29.2 million and $33.0 million, respectively. These decreases were primarily due to the redemption of $47.5 million of our existing 13% senior subordinated notes in July 2002 and the prepayment of $25.0 million of our previous credit facility in November 2002. As of June 30, 2003, approximately 69.9% of our debt bore interest at floating rates. Although we utilize interest rate hedges to manage a significant portion of this market exposure, rising interest rates would negatively impact our results. See “—Liquidity and Capital Resources.”

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Interest Rate Hedging Arrangements

In 2003 and 2002, we used interest rate collars to reduce our exposure to variable interest rates and because our previous credit agreement required them. These collars generally provided for certain ceilings and floors on interest payments as the three-month LIBOR rate increases and decreases, respectively. The changes in fair value of this combination of ceilings and floors were recognized each period in earnings. We recorded gains of $2.2 million and $4.4 million in the second quarter and first half of 2003, respectively, as compared to losses of $6.4 million and $1.2 million for the same respective periods of the prior year. These gains and losses were based upon the change in the fair value of our interest rate collar agreements. This earnings impact and any subsequent changes in our earnings as a result of the changes in the fair values of the interest rate collars are non-cash charges or credits and do not impact cash flows from operations or operating income. There had been periods with significant non-cash increases or decreases to our earnings relating to the change in the fair value of the interest rate collars. Further, if these collars were held to maturity (2004 and 2005), the earnings adjustments would have offset each other on a cumulative basis and ultimately would have equalled zero. These hedging arrangements were eliminated as part of the Refinancing Transactions, and the costs of terminating them that were less than or were in excess of amounts previously expensed in connection with recognizing changes in their fair market value were charged to expense in the period in which they were terminated.

Provision for Income Taxes

We recorded tax provisions of $3.2 million and $5.5 million in the second quarter and first six months of 2003, which reflected effective tax rates of 20.2% and 21.6%, respectively. For the second quarter and first six months of 2002, we recorded tax provisions of $1.4 million and $5.0 million, which reflected effective tax rates of 67.7% and 57.9%, respectively. The effective rate differed from the statutory rate for the first three and six months of 2003 from the same periods of 2002 primarily due to the impact of state income taxes and the deferred income tax valuation allowance. Due to our current relationship of taxable income as compared to net income, our effective tax rate can vary significantly from one period to the next depending on relative changes in net income. As such, we currently expect further variation in our effective tax rate in the last half of 2003. Due to our recent operating history and other factors, we have established a valuation allowance for certain of our deferred tax assets. To the extent that we achieve consistent levels of profitability in future periods, we may receive future benefits in our income tax provision associated with the reduction of these valuation allowances.

Year Ended December 31, 2002 Compared to Year Ended December 31, 2001

The following table provides the results of operations for years ended December 31, 2001 and 2002 ($ in millions):

	Year Ended December 31,						Change
	2001			2002			$			%
Revenue:
Health Services	$	443.3		$	472.0		$	28.7		6.5	%
Network Services		185.3			230.3			45.0		24.3
Care Management Services		228.3			296.8			68.5		30.0
Total revenue	$	856.9		$	999.1		$	142.2		16.6	%
Cost of services:
Health Services	$	375.5		$	406.1		$	30.6		8.1	%
Network Services		110.2			138.2			28.0		25.4
Care Management Services		200.2			267.1			66.9		33.4
Total cost of services	$	685.9		$	811.4		$	125.5		18.3	%
Gross profit:
Health Services	$	67.8		$	65.8		$	(2.0	)	(2.9	)%
Network Services		75.1			92.1			17.0		22.6
Care Management Services		28.1			29.7			1.6		5.7
Total gross profit	$	171.0		$	187.6		$	16.6		9.7	%
Gross profit margin:
Health Services		15.3	%		13.9	%				(1.4	)%
Network Services		40.5			40.0					(0.5	)
Care Management Services		12.3			10.0					(2.3	)
Total gross profit margin		20.0	%		18.8	%				(1.2	)%

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Revenue

The increase in revenue was due to growth in all of our segments. While Network Services and Care Management Services reflected significant growth in their reported revenue during the year, these revenue increases were largely due to our acquisition of NHR and, to a lesser extent, the effects of our acquisition of HNS, both of which occurred in November 2001.

Due to a change in accounting estimate for accounts receivable reserves, we increased contractual allowances and correspondingly reduced revenue by $5.4 million in the first quarter of 2002. Following an extensive review of our accounts receivable history and collection experience that used new data provided by recently implemented information systems, we determined that additional contractual allowances were required as of March 31, 2002. This increase in accounts receivable reserves related primarily to Health Services, which reduced its revenue by $7.9 million in the first quarter, and was partially offset by receivables reserve adjustments of $1.3 million in Network Services and $1.2 million in Care Management Services.

Total contractual provisions offset against revenue during the years ended December 31, 2002 and 2001 were $53.7 million and $35.9 million, respectively. The increase was primarily due to the accounts receivable reserve adjustment in 2002 and a full year impact of the NHR acquisition.

Health Services. Health Services’ revenue in 2002 increased $36.6 million, or 8.3%, due to the acquisition and development of centers, as well as growth in our on-site and ancillary services. This increase was partially offset by the effect of the $7.9 million accounts receivable reserve adjustment. The full year impact of the 15 centers acquired in 2001 and the 12 centers developed during 2001, as well as the three centers acquired during 2002, contributed to the revenue growth. A number of these centers were subsequently consolidated with other centers we previously owned in the same markets. The number of total patient visits per day to our centers in 2002 increased 3.6% compared with 2001 and decreased 2.2% on a same-center basis. For the years ended December 31, 2002 and 2001, Health Services derived 71.4% and 71.1% of its comparable same-center net revenue from the treatment of work-related injuries and illnesses, respectively, and 28.6% and 28.9% of its net revenue from non-injury and non-illness related medical services, respectively. Excluding on-site and ancillary services, injury-related visits constituted 49.9% of same-center visits in 2002, as compared to 51.4% for 2001. The slight increase in non-injury related visits in 2002 as compared to the prior year was primarily due to an increase in the number of new-hires made by our clients in 2002, mainly in the last half of the year, as compared to 2001, as well as hiring by new customers added during 2002. The new-hires activity affected the number of pre-employment drug screens and physical exams performed. In 2002, we experienced decreases in injury visits as compared to the prior year due primarily to a decline in the number of injuries occurring in our clients’ workplaces. On a same-center basis, average revenue per visit increased 1.3% for 2002 as compared to 2001, primarily due to increases in the average prices charged for our services, partially offset by a smaller percentage of our visits being injury visits in 2002. The average fees charged for injury visits are generally higher than those charged for non-injury related visits. Same-center revenue was $396.5 million and $378.0 million for 2002 and 2001 respectively, while revenue from acquired and developed centers and ancillary services was $83.4 million and $65.3 million for the same respective periods.

Network Services. The increase in Network Services’ revenue was primarily attributable to our acquisitions of NHR and HNS in November 2001. Additionally, we experienced growth in our non-network bill review services. This growth was primarily due to an increase in the amount of gross charges reviewed as compared to the prior year and the amount of savings achieved through our review of medical charges.

Care Management Services. Revenue growth for Care Management Services was due primarily to our NHR acquisition in November 2001. Revenue from existing customers experienced a slight decline from the prior year. Like our two other business segments, a majority of our Care Management Services are provided to clients in the workers’ compensation market. In a manner similar to our other business segments, we have experienced declines in referral trends, which we believe primarily relate to the overall drop in nationwide employment and related rates of workplace injuries. Generally, Health Services is the first segment to be affected by economic downturns and upturns since it sees patients at the initial time of injury. Network Services is the second segment to be affected since it involves the review of bills generated from injury-related visits. Care Management Services is the final segment to experience the effects of changing injury trends since it generally receives referrals for service a number of months after the initial injury occurs. Accordingly, we believe a primary cause of the decline in revenue experienced in Care Management Services in 2002 was related to the effects of declines in workplace injuries that we first experienced in the Health Services business during 2001.

In addition to the economic effects described above, we have encountered, to a lesser extent, some revenue declines in our independent medical exams services associated with client referral volume decreases due to the integration of NHR’s operations with our own.

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Cost of Services

The increase in total cost of services in 2002 from 2001 was primarily due to the acquisition of NHR and HNS in November 2001. Additionally, adjustments to the accounts receivable reserve in the first quarter of 2002 contributed to this increase. As part of the review of our accounts receivable history and collection experience, Health Services recorded an adjustment of $1.7 million in the first quarter of 2002 to increase its bad debt reserves.

Gross Profit

The increase in the gross profit was primarily due to the acquisitions of NHR and HNS in November 2001. The decrease in the gross profit margin was due primarily to revenue increases in Care Management and Network Services that did not proportionately offset the increases in our cost of services. The decrease in our gross profit percentage was also due to the change in our accounting estimate for accounts receivable reserves in the first quarter of 2002.

Health Services. Health Services’ gross profit decreased $2.0 million to $65.8 million in 2002 from $67.8 million in 2001, and its gross profit margin decreased by 1.4% to 13.9% from 15.3% for the same periods. The primary factor in this gross profit decrease for 2002 was a $9.6 million increase in accounts receivable reserves related to the change in accounting estimate in the first quarter of 2002, consisting of a $7.9 million reduction in revenue and a $1.7 million increase in cost of services. Health Services’ offsetting gross profit increase of $7.6 million was primarily due to improved revenue and the comparative improvement in the year-to-year performance of Em3 and OccMed.

Network Services. Network Services’ gross profit increase in 2002 from 2001 was primarily related to the acquisition of NHR in 2001. The slight decrease in the gross margin was due to higher proportionate growth in cost of services over the growth in revenue.

Care Management Services. Care Management Services’ gross profit increase in 2002 from 2001 was primarily due to the 2001 acquisition of NHR. Decreases in our comparative gross margin related primarily to reductions in revenue for which there were not corresponding reductions in costs. Additionally, costs within Care Management Services, and to a lesser extent in Network Services, were also affected during the year due to an increase in the staffing levels and physician costs associated with services provided to our auto insurance clients. These cost increases reflect both the expansion of the business in markets where we are seeking new business as well as increases in service levels to existing customer accounts. During the latter part of the third quarter and throughout the fourth quarter of 2002, we evaluated and implemented various cost reduction initiatives in an effort to lower the cost structure of our case management services and independent medical exams businesses. These initiatives generally seek to lower our staffing to levels more commensurate with current referral volume levels, and they could contribute to improvements in our Care Management Services margins as a whole. However, our margin will be dependent both on our ability to achieve and sustain the planned reductions as well as on the degree to which we achieve stable or growing revenue trends.

General and Administrative Expenses

General and administrative expenses for 2002 were $106.2 million, or 10.6% of revenue, compared to $81.6 million, or 9.5% of revenue, for 2001. This increase was primarily due to the acquisitions of NHR and HNS in 2001. Partially offsetting this increase was a 2002 decrease in general and administrative expenses related to a $2.4 million reduction in employee benefits associated with a reduction in the amount of employee contributions we matched in our defined contribution plan as compared to prior years. This decrease in expenses was offset by $2.1 million in expenses associated with the separation of our former chief operating officer, certain other officers and division management.

Amortization of Intangibles

Amortization of intangibles decreased in 2002 to $3.8 million from $15.7 million in 2001, or 0.4% and 1.8% as a percentage of revenue for 2002 and 2001, respectively. This decrease was primarily the result of the implementation of Statement of Financial Accounting Standards No. (“SFAS”) 142, Goodwill and Other Intangible Assets (“SFAS 142”) on January 1, 2002, which discontinued the amortization of goodwill and intangible assets with an indefinite life, partially offset by the amortization of other intangibles associated with the NHR acquisition in November 2001.

Unusual Charges

Due to a change in estimates, we reversed $1.7 million in restructuring costs in 2002 related to restructuring reserves from 1998 and 1999. Transaction costs of $0.5 million relating to the Em3 and OccMed acquisitions partially offset these expense reversals. For further discussion of our unusual charges, see “—Unusual Charge Reserves” below and note 4 to our audited consolidated financial statements included elsewhere in this prospectus.

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Interest Expense, Net

Interest expense decreased $2.8 million in 2002 to $63.6 million from $66.4 million in 2001. This decrease was due primarily to lower interest rates in 2002 and the redemption of $47.5 million of our existing 13% senior subordinated notes in July 2002. As of December 31, 2002, approximately 70.2% of our debt bore interest at floating rates. Although we utilize interest rate hedges to manage a significant portion of this market exposure, rising interest rates would negatively impact our results. See “—Liquidity and Capital Resources.”

Interest Rate Hedging Arrangements

In 2002 and 2001, we used interest rate collars to reduce our exposure to variable interest rates and because our previous senior secured credit agreement required them. These collars generally provided for certain ceilings and floors on interest payments as the three-month LIBOR rate increased and decreased, respectively. The changes in fair value of this combination of ceilings and floors were recognized each period in earnings. We recorded a loss of $7.6 million in 2002, as compared to a loss of $13.6 million for 2001. These losses were based upon the change in the fair value of our interest rate collar agreements. This earnings impact and any subsequent changes in our earnings as a result of the changes in the fair values of the interest rate collars were non-cash charges or credits and did not impact cash flows from operations or operating income. In connection with the Refinancing Transactions, we terminated these collars.

Early Retirement of Debt

We redeemed $47.5 million of our existing 13% senior subordinated notes in July 2002 and prepaid $25.0 million of our previous senior term debt in November 2002. In accordance with SFAS 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections, we included in income from continuing operations $7.4 million and $0.5 million of debt extinguishment costs in the third and fourth quarters of 2002, respectively. These costs were comprised of $6.2 million premium over the face amount of the redeemed existing 13% senior subordinated notes and $1.7 million of related existing deferred financing fees and other expenses.

Provision for Income Taxes

We recorded tax provisions of $4.6 million and $3.8 million in 2002 and 2001, which reflected effective tax rates of 446.3% and (25.6%), respectively. The effective rate differed from the statutory rate primarily due to the impact of state income taxes and the deferred income tax valuation allowance. Due to our current relationship of taxable income as compared to net income, our effective tax rate can vary significantly from one period to the next depending on relative changes in net income. As such, we currently expect further variation in our effective tax rate in 2003.

Due to our recent operating history and other factors, we have established a valuation allowance for certain of our deferred tax assets. To the extent that we achieve consistent levels of profitability in future periods, we may receive future benefits in our income tax provision associated with the reduction of these valuation allowances. For further discussion of our income taxes, see “—Critical Accounting Policies—Deferred Income Tax Asset Valuation Allowance” and note 7 in our audited consolidated financial statements included elsewhere in this prospectus.

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Year Ended December 31, 2001 Compared to Year Ended December 31, 2000

The following table provides the results of operations for years ended December 31, 2000 and 2001 ($ in millions):

	Year Ended December 31,						Change
	2000			2001			$			%
Revenue:
Health Services	$	409.7		$	443.3		$	33.6		8.2	%
Network Services		162.6			185.3			22.7		13.9
Care Management Services		189.9			228.3			38.4		20.2
Total revenue	$	762.2		$	856.9		$	94.7		12.4	%
Cost of services:
Health Services	$	335.9		$	375.5		$	39.6		11.8	%
Network Services		100.8			110.2			9.4		9.4
Care Management Services		170.9			200.2			29.3		17.1
Total cost of services	$	607.6		$	685.9		$	78.3		12.9	%
Gross profit:
Health Services	$	73.8		$	67.8		$	(6.0	)	(8.2	)%
Network Services		61.9			75.1			13.2		21.4
Care Management Services		19.0			28.1			9.1		48.1
Total gross profit	$	154.7		$	171.0		$	16.3		10.6	%
Gross profit margin:
Health Services		18.0	%		15.3	%				(2.7	)%
Network Services		38.0			40.5					2.5
Care Management Services		10.0			12.3					2.3
Total gross profit margin		20.3	%		20.0	%				(0.3	)%

Revenue

The increase in total revenue in 2001 from 2000 was due to growth in all business segments. Total contractual provisions offset against revenue during the years ended December 31, 2001 and 2000 were $35.9 million and $41.9 million, respectively.

Health Services. Health Services’ revenue growth resulted primarily from the acquisition and development of centers and an increase in average revenue per visit. Increased revenue from new center growth was a result of 15 new centers acquired and 12 centers developed in 2001 and a full year impact of the eight centers acquired in 2000. On a same-center basis, revenue increased 1.2% in 2001 as compared to 2000. This increase was the result of a 4.6% increase in the average revenue per same-center visit, offset by a 3.2% decrease in the number of same-center visits compared to 2000. For the years ended December 31, 2001 and 2000, Health Services derived 71.1% and 69% of its comparable same-center net revenue from the treatment of work-related injuries and illnesses, respectively, and 28.9% and 31% of its net revenue from non-injury and non-illness related medical services, respectively. During 2001, we experienced a decline in the rate of growth of non-injury related visits as compared to prior years, primarily due to the decrease in the number of new-hires being made by our clients and secondarily due to a decline in the number of injuries occurring in our clients’ workplaces. This lower level of new-hire activity reduced the number of pre-employment drug screens and physical exams from the levels we experienced when the economy was stronger. With respect to the 4.6% increase in our average revenue per same-center visit, in addition to increases in the average prices charged for our services, a higher relative mix of injury-related visits as compared to non-injury related visits contributed to this improvement. The average fees charged for injury visits are generally higher than those charged for non-injury related visits. Injury-related visits constituted 52% of total visits in 2001 as compared to 50.5% in 2000. For 2001 and 2000, same-center revenue was $378.0 million and $304.2 million, respectively, and revenue from acquired and developed centers and ancillary services was $65.3 million and $105.5 million for the same respective periods.

Network Services. The increase in Network Services’ revenue was attributable to growth in existing services, as well as revenue from the NHR acquisition. Our growth from existing services related primarily to our non-network review business. Growth in existing non-network group health medical bill review revenue was 16% in 2001 over 2000. This growth was primarily due to an increase in the amount of gross charges we reviewed as compared to the prior year and the rate of savings achieved through our review of medical charges. An increase in revenue from our existing retrospective medical bill review services also contributed to this growth. The acquisition of NHR in November 2001 increased Network Services’ revenue by 5.3% in 2001 over 2000.

Care Management Services. Revenue growth for Care Management Services was primarily due to increases in referral volume for our existing case management business and, to a lesser extent, increases in our existing independent medical examinations services. Higher referral rates and average hourly prices in 2001 as compared to the same periods in 2000 were the primary factors

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that contributed to our case management growth. The NHR acquisition in November 2001 also contributed an 8.7% increase in our Care Management Services’ revenue.

Cost of Services

Total cost of services increased in 2001 from 2000 due to increased expenses in all of our segments. Total gross profit and gross profit margin increased due to growth in Network Services and Care Management Services, partially offset by decreases in Health Services.

Gross Profit

Health Services. Health Services’ gross profit and gross profit margin experienced decreases in 2001 from the prior year. Economic and hiring trends impacted this segment, resulting in a slight decrease in its gross profit margin in 2001 as compared to 2000. Increases in insurance and information technology costs also affected this segment’s costs. Efforts to improve the management of expenses associated with physician costs and medical supplies did not fully offset the gross profit margin impact of the lower than anticipated volumes.

Network Services. Network Services’ gross profit and gross profit margin increases in 2001 from 2000 were primarily related to increased revenue from our existing non-network bill review services. The costs of providing these services are relatively stable irrespective of short-term revenue changes, which resulted in an increase in the relative gross profit achieved during the year. The acquisition of NHR in 2001 also contributed 3.6% to the Network Services’ gross profit increase in 2001.

Care Management Services. Care Management Services’ gross profit and gross profit margin increases in 2002 from the prior year were primarily due to increases in revenue from our existing case management services and independent medical exams. The 2001 acquisition of NHR supplied 13.9% of the 2001 gross profit increase.

General and Administrative Expenses

General and administrative expenses increased 22.8% in 2001 to $81.6 million from $66.5 million in 2000, or 9.5% and 8.7% as a percentage of revenue for 2001 and 2000, respectively. The increase in general and administrative expenses in 2001 was primarily due to our continued additions of personnel and information technology in order to support recent and planned growth.

Amortization of Intangibles

Amortization of intangibles increased 7.6% in 2001 to $15.7 million from $14.6 million in 2000, or 1.8% and 1.9% as a percentage of revenue for 2001 and 2000, respectively. The increase was the result of the amortization of additional intangible assets such as customer contracts, covenants not to compete and goodwill recorded prior to June 30, 2001 primarily associated with the 2001 acquisition of 15 healthcare centers by Health Services and our acquisition of NHR.

Unusual Charges and Charges for Acquisition of Affiliate

In connection with our NHR acquisition in the fourth quarter of 2001, we recorded $6.0 million in asset write-downs and $6.8 million in restructuring costs, which were primarily associated with employee severance and facilities consolidation costs. Of this $12.8 million, $5.5 million was recognized as a charge for the acquisition of affiliate and was reflective of WCAS’s proportionate ownership percentage in NHR as applied to the total amount of asset write-downs and restructuring liabilities that occurred in connection with the acquisition. Unusual charges of $0.6 million were recorded to reflect employee severance and facility consolidation costs associated with our facilities. For further discussion of our unusual charges, see “—Unusual Charge Reserves” below and note 4 to our audited consolidated financial statements included elsewhere in this prospectus.

Interest Expense, Net

Interest expense decreased $1.6 million in 2001 to $66.4 million from $68.0 million in 2000 due primarily to lower interest rates in 2001 and reduced borrowings on our revolving credit facility. As of December 31, 2001, approximately 66.1% of our debt bore interest at floating rates.

Interest Rate Hedging Arrangements

During 2001, we recorded losses of $13.6 million and $9.6 million in 2001 and 2000, respectively, based upon the change in the fair value of our interest rate collar agreements.

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Loss of Acquired Affiliate

Because the accounting for the NHR acquisition is considered a reorganization of entities under common control, we recognized NHR’s historical net income and loss as a non-operating item in proportion to WCAS’s investment in NHR utilizing the equity method of accounting. This inclusion of historical earnings from NHR resulted in an after tax charge of $5.8 million in 2001, which reflected the proportion of NHR’s loss through October 2001 as if we held WCAS’s investment in NHR. This loss increased over the 2000 loss of $0.3 million due primarily to compensation charges in 2001 related to NHR’s share award plan, which granted $9.4 million of NHR’s common stock to certain stock option holders.

Provision for Income Taxes

We recorded a tax provision of $3.8 million in 2001 versus $4.4 million in 2000. The effective tax rates were (25.6%) and (184.8%) in 2001 and 2000, respectively. The effective rate primarily differed from the statutory rate due to the non-deductibility of goodwill, the tax provision from the income/loss of acquired affiliate, the impact of state income taxes and the deferred income tax valuation allowance.

Unusual Charge Reserves

In connection with the NHR acquisition in November 2001, we recorded $6.0 million in asset write-downs and $6.8 million in restructuring costs, which were primarily associated with employee severance and facilities consolidation costs. Of this $12.8 million, $5.5 million was recognized in 2001 as a charge for the acquisition of affiliate and was reflective of WCAS’s proportionate ownership percentage in NHR as applied to the total amount of asset write-downs and restructuring liabilities that occurred in connection with the acquisition. Unusual charges of $0.5 million were recorded to reflect employee severance and facility consolidation costs associated with our facilities. The remaining $6.1 million, which was reflective of the remaining proportionate ownership percentage in NHR as applied to the total amount of asset write-downs and restructuring liabilities that occurred in connection with the acquisition, were recorded under the purchase method of accounting. Of the $12.8 million in restructuring and other acquisition costs, through December 31, 2002 we used $6.0 million associated with asset write-downs, and we had paid approximately $0.9 million for professional fees and services, including investment banking, legal, accounting and regulatory fees, $2.9 million in facility consolidations, $1.5 million in costs related to personnel reductions and $0.1 million for other unusual costs. In the last half of 2002, we recorded an additional $0.6 million to the restructuring cost accrual due to a change in estimates. At December 31, 2002, approximately $2.0 million of the unusual cost accrual remained for facility obligations with terms expiring through 2006, costs related to personnel reductions and other unusual charges. We anticipate that the majority of the liability will be paid over the next 12 months.

Acquisitions and Divestitures

Periodically, we evaluate opportunities to acquire or divest of businesses when we believe those actions will enhance our future growth and financial performance. Currently, to the extent we consider acquisitions, they are typically businesses that operate in the same markets or along the same service lines as those in which we currently operate. Our evaluations are subject to our availability of capital, our debt covenant requirements and a number of other financial and operating considerations. The process involved in evaluating, negotiating, gaining required approvals and other necessary activities associated with individual acquisition or divestiture opportunities can be extensive and involve a significant passage of time. It is also not uncommon for discussions to be called off and anticipated acquisitions or divestitures to be terminated shortly in advance of the date upon which they were to have been consummated. As such, we generally endeavor to announce material acquisitions and divestitures based on their relative size and anticipated effect on our company, once we believe they have reached a state in the acquisition or divestiture process where we believe that their consummation is reasonably certain and with consideration of other legal and general business practices.

Seasonality

Our business is seasonal in nature. Patient visits at our occupational healthcare centers are generally lower in the first and fourth quarters, primarily because fewer occupational injuries and illnesses occur during those time periods due to plant closings, vacations, weather and holidays. In addition, since employers generally hire fewer employees in the fourth quarter, the number of pre-placement physical examinations and drug and alcohol tests conducted at the centers during that quarter is further reduced. Additionally, Care Management Services’ revenue is usually lower in the fourth quarter compared to the third quarter due to the impact of vacations and holidays. Accordingly, our first and fourth quarters generally reflect lower revenue when compared to our second and third quarters. Additionally, absent the effects of business volume growth, revenue during the second half of the year is generally lower than the first.

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Liquidity and Capital Resources

The $150.0 million aggregate principal amount of the old notes was issued as part of the Refinancing Transactions. See “Description of the New Notes” for a discussion of the terms of the new notes. Concurrent with this offering of the old notes, we entered into a new $435.0 million senior secured term credit facility that consists of a $335.0 million term loan facility and a $100.0 million revolving loan facility. See “Description of Other Indebtedness—New Credit Facility” for further description of the terms of the new credit facility. The net proceeds from the old notes offering, together with borrowings under the new credit facility, were used to (1) repay the $335.2 million outstanding under our previous credit facility, (2) terminate the our existing hedging arrangements valued at $23.6 million, (3) transfer $141.2 million of cash proceeds to our parent, Concentra Inc., to enable it to redeem a portion of its 14% senior discount debentures, (4) pay $4.6 million of accrued interest on the existing credit facility and hedging arrangements and (5) pay approximately $11.3 million of related fees and expenses. In connection with the termination of the previous credit facility, we will record approximately $7.8 million of debt extinguishment costs in the third quarter of 2003 for the write-off of the related existing deferred financing fees and other expenses. As of June 30, 2003, after giving pro forma effect to the Refinancing Transactions, our total debt would have been $629.1 million, of which $335.0 million would have been senior indebtedness. After consummation of the Refinancing Transactions, our parent had $106.8 million of indebtedness outstanding.

We currently believe that our cash balances, the cash flow generated from operations and our borrowing capacity under our new revolving credit facility will be sufficient to fund our working capital, occupational healthcare center acquisitions and capital expenditure requirements for the immediately foreseeable future. Our long-term liquidity needs will consist of working capital and capital expenditure requirements, the funding of any future acquisitions, the repayment of borrowings under our revolving credit facility and the repayment of outstanding indebtedness, including the notes offered hereby. We intend to fund these long-term liquidity needs from the cash generated from operations, available borrowings under our new revolving credit facility and, if necessary, future debt or equity financing. However, our ability to generate cash is subject to our performance, general economic conditions, industry trends and other factors. Many of these factors are beyond our control or our ability to currently anticipate. Therefore, it is possible that our business will not generate sufficient cash flow from operations. Additionally, we cannot be certain that any future debt or equity financing will be available on terms favorable to us, or that our long-term cash generated from operations will be sufficient to meet our long-term obligations.

Cash Flows from Operating Activities. Cash flows from operating activities provided $36.0 million, $77.2 million and $54.0 million for the years ended December 31, 2000, 2001 and 2002, respectively. During 2000, changes in working capital used $7.5 million of cash primarily due to increases in accounts receivable of $6.3 million and prepaid expenses and other assets of $1.9 million. Accounts receivable increased primarily due to continued revenue growth, while prepaid expenses and other assets increased primarily due to the timing of payments. During 2001, $27.5 million of cash was provided by changes in working capital, primarily related to an increase in accounts payable and accrued expenses of $24.5 million, as well as decreases in prepaid expenses and other assets of $1.2 million and accounts receivable of $1.8 million. Accounts payable and accrued expenses increased primarily due to the timing of certain payments, including the payment of accrued interest on our debt and payroll-related items, while accounts receivable decreased due to improved collections. The decrease in cash flows from operating activities in 2002 as compared to 2001 was primarily a result of decreased accounts payable and accrued liabilities and increased prepaid expenses and other assets, partially offset by decreased accounts receivable. During 2002, $4.3 million of cash was provided by changes in working capital, primarily related to decreased accounts receivable of $13.1 million, partially offset by increased prepaid expenses and other assets of $3.2 million and decreased accounts payable and accrued expenses of $5.6 million. The 2002 decrease in net accounts receivable primarily related to a $7.1 million net adjustment to increase contractual and bad debt allowances in the first quarter of 2002 and other increases to contractual and bad debt allowances. The first quarter 2002 adjustment was a result of the change in accounting estimate for accounts receivable reserves. During 2002, prepaid expenses and other assets increased primarily due to growth in current and long-term deferred tax assets. Accounts payable and accrued expenses decreased due to the timing of certain payments, including payment of accrued interest on our debt.

Cash flows from operating activities provided $8.0 million and $36.9 million for the six months ended June 30, 2002 and 2003, respectively. The increase in cash flows from operating activities in the first half of 2003 as compared to the first half of 2002 was primarily a result of increased operating income and an increase in accounts payable and accrued liabilities, partially offset by increased accounts receivable and prepaid expenses and other assets. During the first half of 2003, $3.6 million of cash was used by changes in working capital, related to increased prepaid expenses and other assets of $7.8 million, increased accounts receivable of $7.3 million, partially offset by increased accounts payable and accrued expenses of $11.5 million. Prepaid expenses and other assets increased primarily due to the timing of payments, and accounts receivable increased primarily due to continued revenue growth. Accounts payable and accrued expenses increased due to the timing of certain payments. During the first half of 2002, $19.5 million of cash was used by changes in working capital, primarily related to a decrease in accounts payable and accrued expenses of $15.2 million and an increase in prepaid expenses and other assets of $6.0 million, partially offset by decreases in accounts receivable of $1.7 million. Accounts payable and accrued expenses decreased primarily due to the timing of certain payments, including payroll-related items. Prepaid expenses and other assets increased primarily due to the timing of payments. The decrease in net accounts receivable in 2002 primarily relates to a $7.1 million net adjustment to increase contractual and bad debt allowances in the first quarter

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of 2002, partially offset by increases in accounts receivable due to revenue growth. The 2002 adjustment was a result of the change in accounting estimate for accounts receivable discussed earlier.

Our days sales outstanding on accounts receivable, or DSO, was 78 days at December 31, 2000, as compared to 73 days at December 31, 2001 and 62 days at December 31, 2002. At June 30, 2003, our DSO was 61 days compared to 64 days at June 30, 2002. We calculated DSO based on accounts receivable, net of allowances, divided by the average revenue per day for the prior three months. The decrease in the DSO in 2003 from 2002, 2001 and 2000 was primarily due to our increased focus on collections and increased allowances on accounts receivable.

In 2002, we paid approximately $6.2 million related to unusual charges that occurred in the third quarter of 1998, fourth quarter of 1998, third quarter of 1999 and the fourth quarter of 2001. At December 31, 2002, approximately $2.2 million of the accrual for these unusual charges remained for facility lease obligations, personnel reduction costs and other payments. In the first half of 2003, we paid approximately $0.8 million related to unusual charges that occurred in the first quarter of 1998, fourth quarter of 1998, third quarter of 1999, fourth quarter of 2001 and fourth quarter of 2002. At June 30, 2003, approximately $1.4 million of the accrual for these unusual charges remained for facility lease obligations, personnel reduction costs and other payments. We anticipate that the majority of this liability will be paid over the next 12 months.

Cash Flows from Investing Activities. We used net cash of $9.7 million in connection with acquisitions and $32.0 million of cash to purchase property and equipment during 2000, the majority of which was spent on acquiring new computer hardware and software technology, and leasehold improvements, partially offset by $1.6 million of cash received from the sale of internally-developed software. In 2001, we used net cash of $107.2 million in connection with acquisitions and $33.1 million of cash to purchase property and equipment, the majority of which was spent on new computer hardware and software technology, and leasehold improvements. Cash flows from investing activities also included $1.1 million of cash received from the sale of internally-developed software. As required by accounting pronouncements, the proceeds from this sale were offset against the amount capitalized on the consolidated balance sheet and were not recognized as revenue. In 2002, we used net cash of $1.7 million in connection with acquisitions and $35.1 million of cash to purchase property, equipment and other assets, the majority of which was spent on new computer hardware and software technology, and leasehold improvements. Cash flows from investing activities also included $0.5 million of cash received from the sale of internally-developed software.

In the first half of 2002, we used net cash of $2.8 million in connection with acquisitions and $17.1 million of cash to purchase property, equipment and other assets, the majority of which was spent on new computer hardware and software technology, and leasehold improvements. Cash flows from investing activities in the first half of 2002 also included $0.5 million of cash received from the sale of internally-developed software. As required by accounting pronouncements, the proceeds from this sale were offset against the amount capitalized on the consolidated balance sheet and were not recognized as revenue. In the first six months of 2003, we used net cash of $3.7 million in connection with acquisitions and $14.4 million to purchase property, equipment and other assets, the majority of which was spent on new computer hardware and software technology, including $1.5 million of software acquired under a capital lease.

Cash Flows from Financing Activities. Cash flows provided by financing activities of $4.4 million in 2000 was due primarily to $7.7 million of contributions from our parent and $4.8 million of contributions from minority interests, partially offset by $4.0 million in payments on our existing revolving credit facility, $3.1 million in debt repayments and the payment of $1.7 million of deferred financing costs related to the March 2000 credit facility amendment. Cash flows provided by financing activities in 2001 of $68.6 million were primarily due to $49.7 million in net proceeds from the issuance of common stock by our parent and increased borrowing on our existing revolving credit facility of $6.0 million, $12.9 million of contributions from our parent and $5.1 million of contributions from minority interests, reduced by debt repayments of $5.1 million. The proceeds from our parent’s additional issuance of equity were used as a part of the financing for our fourth quarter 2001 acquisitions of NHR and HNS. Cash flows used in financing activities in 2002 of $7.7 million were primarily due to $80.6 million in debt repayments, partially offset by $53.0 million of proceeds from the issuance of 54 shares of common stock to our parent and $25.4 million in proceeds contributed to us from the issuance of common stock by our parent. In order to finance the purchase of the 54 shares of our common stock, our parent entered into a $55.0 million bridge loan agreement with affiliates of Salomon Smith Barney and Credit Suisse First Boston. This loan matures on June 24, 2004, requires no cash interest payments until maturity, and is guaranteed by WCAS and WCAS Capital Partners III, L.P. The repayment of debt primarily consisted of the third quarter 2002 redemption of $47.5 million of our existing 13% senior subordinated notes and $28.7 million in principal payments on our existing senior debt. Of the $28.7 million in principal payments, $25.0 million reflected a fourth quarter prepayment of debt made in connection with our amendment of the covenants under our previous credit facility, and the remainder reflected scheduled payments of principal. Additionally, cash flows from financing activities in 2002 reflect the payment of $3.3 million in deferred financing fees to our senior lenders in connection with gaining their approval for the redemption of a portion of our existing 13% senior subordinated notes and in an amendment of our previous credit facility covenants. Cash flows from financing activities for 2002 also reflected $4.0 million in net proceeds and payments from the issuance and repayment of short-term debt for Em3 and OccMed.

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Cash flows provided by financing activities in the first half of 2002 of $47.6 million were primarily due to $53.3 million of proceeds from the issuance of 54 shares of common stock to Concentra Holding and $2.5 million in proceeds from the issuance of short-term debt, partially offset by $6.0 million of decreased borrowing on our revolving credit facility, $1.2 million of payments of debt and $1.1 million of payments of deferred financing fees. Cash flows used in financing activities in the first half of 2003 of $1.8 million were primarily due to payments on debt of $3.5 million, partially offset by $1.5 million in proceeds from a capital lease. In February 2003, we entered into a five-year capital lease for software. We paid $1.5 million at the lease execution, with the remaining payment due in one year. Additionally, we repaid $2.0 million of long-term debt in the first half of 2003.

As necessary, we made short-term borrowings under our previous $100.0 million revolving credit facility for working capital and other purposes. Given the timing of our expenditures for payroll, interest payments, acquisitions and other significant outlays, our level of borrowing under our previous revolving credit facility varied substantially throughout the course of an operating period. Since January 1, 2001, the level of borrowings under our previous revolving credit facility has varied in the following manner (dollars in thousands):

	Borrowing Level
Quarter Ending	Minimum		Maximum		Average		Ending
March 31, 2001	$	—	$	31,500	$	10,644	$	17,000
June 30, 2001		—		21,500		16,126		—
September 30, 2001		—		10,000		1,652		—
December 31, 2001		—		28,000		9,223		6,000
March 31, 2002		6,000		35,000		22,389		21,500
June 30, 2002		—		29,000		19,082		—
September 30, 2002		—		28,500		12,821		6,000
December 31, 2002		—		12,500		1,957		—
March 31, 2003		—		9,500		1,961		—
June 30, 2003		—		—		—		—

Contractual Obligations. The following table sets forth our schedule of contractual obligations prior to the Refinancing Transactions including current maturities of our long-term debt at December 31, 2002, and future minimum lease payments due under non-cancelable operating leases (dollars in thousands):

	Total		2003		2004-05		2006-07		After 2007
Operating Leases	$	139,350	$	41,486	$	55,196	$	26,345	$	16,323
Revolving Credit Facility		—		—		—		—		—
Long-term Debt		479,826		3,825		60,283		273,218		142,500
Total	$	619,176	$	45,311	$	115,479	$	299,563	$	158,823

The following table sets forth our pro forma schedule of contractual obligations and future minimum lease payments due under non-cancelable operating leases as if the Refinancing Transactions had occurred on January 1, 2003. The pro forma table is based upon available information and certain assumptions we believe are reasonable. The following pro forma table is presented for informational purposes only and does not purport to represent what our contractual obligations actually would have been had the Refinancing Transactions occurred at that time (dollars in thousands):

	Total		2003		2004-05		2006-07		After 2007
Operating Leases	$	139,350	$	41,486	$	55,196	$	26,345	$	16,323
Revolving Credit Facility		—		—		—		—		—
Long-term Debt		627,886		3,678		6,758		6,700		610,750
Pro Forma Total	$	767,236	$	45,164	$	61,954	$	33,045	$	627,073

Debt Covenants.

Senior Subordinated Notes. The indenture related to our existing 13% senior subordinated notes and the indenture related to our new notes contain various restrictive operating and financial covenants, including several that are based on net income adjusted to exclude interest, taxes, depreciation and amortization, or “EBITDA,” which is further adjusted to exclude certain other items to determine “Covenant EBITDA.” Covenant EBITDA is identical to “Consolidated EBITDA” in these indentures. See “Description of the New Notes—Certain Definitions.” The indenture governing our existing 13% senior subordinated notes and the indenture that will govern the new notes offered hereby provide that, in order to enter into certain types of transactions, including the incurrence of additional indebtedness, the making of restricted payments and the consummation of mergers and consolidations, our ratio of Covenant EBITDA to fixed charges (as defined in these indentures) must be a minimum of 2.5 times. We were in compliance with this covenant at the time of the Refinancing Transactions.

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See “Description of Other Indebtedness—Our 13% Senior Subordinated Notes Due 2009,” “Description of the New Notes—Certain Covenants” and “Description of the New Notes—Certain Definitions.” Our computations of Covenant EBITDA may differ from computations of similarly-titled measures of other companies due to differences in the inclusion or exclusion of items in our computations as compared to those of others. EBITDA and Covenant EBITDA are measures that are not prescribed by generally accepted accounting principles, or “GAAP”. As such, we encourage investors not to use these measures as substitutes for the determination of net income, operating cash flow or other similar GAAP measures, and to use them primarily for the covenant compliance purposes described above.

The following table provides a reconciliation of net income to EBITDA and to Covenant EBITDA. The financial data for the twelve months ended June 30, 2003 were derived by adding our financial data for the year ended December 31, 2002 to our unaudited financial data for the six months ended June 30, 2003, and subtracting our financial data for the six months ended June 30, 2002. We included the financial data for the twelve months ended June 30, 2003 because we believe it provides useful information to investors regarding our current financial trends, which have been impacted by recent changes in general industry and economic conditions, certain increases in our market share and the integration of our recent acquisitions.

	Years Ended December 31,									Six Months Ended June 30,						Twelve Months Ended June 30, 2003
	2000			2001			2002			2002			2003
	(dollars in thousands)
Net income (loss)	$	(9,539	)	$	(18,407	)	$	(3,553	)	$	3,633		$	20,084		$	12,898
Provision for income taxes		4,362			3,757			4,579			4,987			5,545			5,137
Interest expense, net		67,984			66,398			63,582			33,048			29,154			59,688
Depreciation expense		26,193			32,820			42,957			20,678			22,895			45,174
Amortization of intangibles		14,628			15,746			3,776			1,863			2,002			3,915
EBITDA		103,628			100,314			111,341			64,209			79,680			126,812
Cumulative effect of accounting change, net of tax		2,817			—			—			—			—			—
(Gain) loss fair value of hedging arrangements		9,586			13,602			7,589			1,184			(4,413	)		1,992
Loss on early retirement of debt		—			—			7,894			—			—			7,894
Loss of acquired affiliate, net of tax		262			5,833			—			—			—			—
Charges for acquisition of affiliate		—			5,519			—			—			—			—
Unusual charges (gains)		—			546			(1,200	)		—			—			(1,200	)
Minority share of depreciation, amortization and interest		(759	)		(2,165	)		(2,195	)		(1,122	)		(380	)		(1,453	)
Covenant EBITDA	$	115,534		$	123,649		$	123,429		$	64,271		$	74,887		$	134,045

Senior Credit Facility. Our previous senior credit agreement required us to satisfy certain financial covenant ratio tests including leverage ratios, interest coverage ratios and fixed charge coverage ratios. In 2002, we were in compliance with our covenants, including our financial covenant ratio tests. The leverage ratio and interest coverage ratio requirements for the quarter ended December 31, 2002 were 4.40 to 1.00 and 1.80 to 1.00, respectively. These financial covenant ratio tests include the use of an EBITDA computation, which is defined in the senior credit agreement. This EBITDA computation adjusts net income to exclude interest, taxes, depreciation and amortization and is further adjusted to include and exclude certain other items. This EBITDA computation is similar to, but not the same as, that utilized in the indentures relating to our existing 13% senior subordinated notes and our new notes. Generally, due to the inclusion of certain additional items in the computation, EBITDA for senior credit agreement purposes has historically been higher than that provided by Covenant EBITDA as discussed above. In June 2002 and November 2002, we amended our credit agreement to include less restrictive financial covenant ratio tests as compared to our previous requirements. As part of the Refinancing Transactions, we entered into a new senior credit agreement that contains financial covenant ratio tests of a similar type that will also become increasingly more restrictive in future periods. Although we currently anticipate achieving these required covenant levels, our ability to be in compliance with these more restrictive ratios will be dependent on our ability to increase cash flows over current levels. For further discussion of our growth strategy, see “Business—Our Business Strategy.” At June 30, 2003, we had no borrowings outstanding under our previous $100.0 million revolving credit facility and $335.2 million in term loans outstanding under our previous credit agreement. Our total indebtedness outstanding was $479.3 million at June 30, 2003.

Our new credit facility contains prepayment requirements that apply if our financial performance exceeds certain prescribed levels. If we have excess cash flow, as defined in the applicable agreement, we are subject to mandatory principal repayments. We were not subject to these mandatory repayments under our previous credit facility in 2000, 2001 or 2002 or the first half of 2003.

Legal Proceedings

We are party to certain claims and litigation in the ordinary course of business. We are not involved in any legal proceedings that we believe will result, individually or in the aggregate, in a material adverse effect upon our financial condition or results of operations.

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BUSINESS

Overview

We are a leading provider of workers’ compensation and other occupational healthcare services in the United States. We offer our customers a broad range of services designed to improve patient recovery and to reduce the total costs of healthcare. In 2002, we serviced over five million patient visits, reviewed and repriced over $10.0 billion in medical bills and managed or reviewed over 337,000 cases. Our initial treatment of workplace injuries and illnesses accounts for approximately 7% of total reported workplace injuries in the United States. The knowledge we have developed in improving workers’ compensation results for our customers has enabled us to expand successfully into other industries, such as group health and auto insurance, where payors of healthcare and insurance benefits are also seeking to reduce costs.

We believe we are the largest outsource provider of occupational healthcare outcomes improvement and cost containment services in the nation. Through our nationwide network of occupational healthcare centers, we serve employers who have more than 114,000 locations. We also provide services to over 3,500 insurance companies, group health plans, third party administrators and other healthcare payors. These payors and our employer customers provide virtually all of our revenue, with less than 0.1% of our revenue derived from Medicare or Medicaid reimbursement.

We provide our services through three operating segments: Health Services, Network Services and Care Management Services. Through our Health Services segment we treat workplace injuries and perform other occupational healthcare services. We provide these services through our 247 owned and managed centers, located in 79 markets within 34 states. Our services at these centers are performed by over 650 affiliated primary care physicians, as well as affiliated physical therapists, nurses and other healthcare providers. During 2002, we estimate that this segment enabled our customers to eliminate approximately $1.5 billion in excess costs. Our Network Services segment offers services designed to assist insurance companies and other payors in the review and reduction of the bills they receive from medical providers. Our Care Management Services segment offers services designed to monitor cases and facilitate the return to work of injured employees who have been out of work for an extended period of time due to a work-related illness or injury.

The following chart provides an overview of our services and customer markets:

Our Competitive Strengths

We believe that we are distinguished by the following competitive strengths:

Leadership in Workers’ Compensation and Occupational Healthcare. We believe we are the nation’s largest provider specializing in the treatment of workplace injuries and other occupational healthcare needs. In 2002, we serviced over five million patient visits, accounting for approximately 7% of total workplace injuries in the United States. Our extensive treatment, bill review and care management experience, as well as our clinicians’ principal focus on occupational healthcare, enable us to deliver high-quality results and reduce workers’ compensation costs for our customers.

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Demonstrated Superior Clinical Expertise and Outcomes. We have developed a comprehensive set of clinical protocols for occupational injuries by collecting and analyzing data regarding treatment methodologies and outcomes achieved. By applying these clinical protocols consistently across our organization, we have produced superior patient outcomes and generated significant cost savings for our customers. For example, workplace injury patients we treated in 2001 were able to return to work in an average of 17 days, versus the national average of 23 days, as reported by the National Safety Council in 2001. Our track record of superior clinical outcomes allows us to demonstrate the value of our services to our current and prospective customers.

National Service Network. We currently operate 247 dedicated occupational healthcare centers across the United States, which we believe is the broadest national network of centers in the workers’ compensation industry. We have operations in 34 states, giving us a regional presence in 79 markets. In addition, to address the needs of large employers whose workforce extends beyond the geographic coverage of our centers, we expand the reach of our service offerings by giving these employers access to an additional network of select occupational healthcare providers. These providers use our proprietary software to benchmark treatment methodologies and outcomes achieved, thereby extending the delivery of consistent, high quality health services to our customers. We believe that our numerous centers and our broad geographic reach provide us with an advantage in serving national customers over single-market or regional service providers.

Comprehensive Scope of Services. Our broad service offerings enable us to offer our customers a single source for workers’ compensation, group health, and auto injury outcomes improvement and cost containment services. Our product offerings cover the continuum of services required to process a healthcare claim from the initial incident through its final resolution. For example, our Health Services segment provides services at the outset of a claim, including initial treatment and follow-up care. Through our Network Services segment we review healthcare bills to recover excess costs incurred on patient care, including cases in which a patient is treated by a non-network provider or a provider with whom the insurance company does not have a negotiated billing rate. Our Care Management Services segment helps our customers minimize the costs associated with workers’ compensation cases where workplace injuries or illnesses prevent employees from returning to work for an extended period of time. During 2002, we estimate that we enabled our customers to eliminate more than $1.5 billion in excess costs by using our combined service offerings.

Effective Use of Technology. We have developed and maintain sophisticated information systems and an extensive, proprietary database of patient outcomes, disability management information, treatment protocols, and complex regulatory provisions governing the workers’ compensation market. These resources currently enable us to generate cost savings for our customers by promptly identifying and addressing care being provided outside of recommended treatment parameters and generally reducing medical and administrative costs. In addition, our information systems enable us to automate certain administrative complexities in the markets we serve and allow our customers to more easily access the range of products and services we offer. These and other uses of technology enable us to deliver superior service quality and cost savings to our customers, as well as optimize our own operating efficiencies.

Established Base of Blue Chip Customers. Through our nationwide network of centers, we serve employers who have over 114,000 locations. We also provide services to over 3,500 insurance companies, group health plans, third party administrators and other healthcare payors. Nevertheless, no single customer represents more than 5% of our total annual revenue. We believe that we have been able to establish our strong customer base and achieve a solid rate of customer retention due to the significant name recognition that Concentra has achieved in the marketplace and due to our high quality performance.

Strong Cash Flow Generation. We believe our strong operating cash flow substantially enhances our competitive position in the markets we serve. During the twelve-month period ended June 30, 2003, we had cash flow from operating activities of $83.0 million. Our cash flow from operating activities is primarily a result of our focus on superior clinical care and outcomes, our economies of scale, and our advanced information systems. In addition, we believe our strong operating cash flow strengthens our ability to fund organic and external growth initiatives, which enhances our competitiveness relative to our smaller, regional competitors.

Our Business Strategy

Our goal is to further establish ourselves as a leading provider of healthcare outcomes improvement and cost containment services. We intend to achieve this goal by pursuing the following strategies:

Actively Target New Health Services Customers. We intend to continue to expand our Health Services operations by utilizing advanced database research techniques to identify potential new customers and new locations for our facilities. Qualified customers that could benefit from the services offered by one of our existing facilities are called on by one of our 250-person Health Services sales force. We also have a dedicated business development team that will continue to build and selectively acquire facilities in identified new and existing markets. By giving new customers access to high quality physicians employed by our affiliated physician groups, highly trained personnel and experience-based protocols, we intend to grow our patient visits and enhance our industry-leading position in occupational healthcare services.

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Intensify the Marketing of Our Network Services and Care Management Services. We believe that multi-state insurance carriers, third party administrators, and self-funded employers will continue to seek innovative ways to address rising healthcare and workers’ compensation costs, and will increasingly seek to outsource outcomes improvement and cost containment services to third parties. Across our three business segments, we have built a continuum of services that responds to these outsourcing needs. We intend to build on our reputation as a leading provider of workers’ compensation services to expand our network services and care management services by intensifying our marketing of these services to payors in the group health marketplace. We believe that our size and experience in the workers’ compensation industry has allowed us to build awareness and credibility with this customer base. In addition, we believe that our significant visibility among key decision makers within these organizations will enhance our ability to expand the services we provide these current and potential customers through our Network Services and Care Management Services segments. We believe that our growth will be further enhanced as our multi-state customers, in turn, gain market share, due in part to the outcomes and efficiencies they enjoy by using our services.

Continue Investing in Technology to Broaden Our Service Offerings and Increase Profitability. We have used technology effectively to deliver and demonstrate better outcomes at a more efficient cost. We intend to continue to invest in technology to identify and deliver further improvements in the treatment, management and administrative oversight of medical cases, thereby creating additional revenue opportunities for us from this proprietary resource. In 2002, we acquired a proprietary information system that allows our customers to track all aspects of services provided in the management of a given claim. In addition, we enhanced our bill repricing services by increasing the degree of automation in our bill review processes. We also intend to continue building electronic interfaces with payors in an effort to reduce their administrative burdens and reduce our operating expenses. Additionally, we will use our web-based applications to facilitate a payor’s ability to eliminate many costs associated with the management of their current paper-intensive claims process while making it easier for it to utilize our medical and disability cost management services.

Profitably Expand Our Outsourcing Services into the Group Health Market. We intend to expand our presence in the group health industry. Historically, our focus in this industry has been in services designed to reduce and limit non-network medical costs. We believe that we are the largest outsource provider of these services in the nation today, managing over $4.5 billion annually in medical claim volume. In late 2001, we expanded the services we perform for this industry to include network management services, consisting of processes required to maintain numerous preferred provider and other managed care networks. Our services enable payors to outsource components of the network management function, namely contract repricing and provider file management, in order to improve payment accuracy and cycle times, eliminate redundant cost, and improve network management efficiency. We also provide complementary services that reduce the medical and administrative costs associated with network and non-network medical care and assist our customers in meeting automatic claim-adjudication objectives. We believe we are uniquely positioned to capture greater market share as demand for such strategic outsourcing services grows.

Industry Overview

Health Services

Occupational healthcare consists of two primary components: workers’ compensation injury care and non-injury occupational healthcare services.

Workers’ Compensation Injury Care. Generally, workers’ compensation is a state-mandated, comprehensive insurance program for work-related injuries and illnesses. In the United States, each of the 50 states, the District of Columbia and, for federal employees, the federal government, maintains its own individual workers’ compensation program. Canada has a federal workers’ compensation program and similar workers’ insurance programs at the provincial level. Each political jurisdiction is responsible for implementing and regulating its own program. Consequently, workers’ compensation benefits and arrangements vary considerably among jurisdictions and are often highly complex.

Workers’ compensation legislation in the United States generally requires employers, either directly or indirectly through the use of insurance, to fund the total costs of an employee’s medical treatment and all lost wages, legal fees and other costs associated with a work-related injury or illness. Typically, work-related maladies are broadly defined, and injured or ill employees are entitled to extensive benefits. Employers are required to provide first-dollar coverage with no co-payment or deductible due from the injured or ill employee and, in many states, there is no lifetime limit on expenses any one employee can incur. In exchange for providing this coverage to employees, employers are not liable for benefits in excess of those provided under the relevant state statute. Employers provide this extensive benefits coverage, both for medical costs and lost wages, by purchasing commercial insurance from private insurance companies, participating in state-run insurance funds or self-insuring.

The amounts and methods of compensation for healthcare providers who perform workers’ compensation injury care services differ from state to state. As of March 1, 2003, 40 states had adopted fee schedules under which all healthcare providers are uniformly compensated within a particular state. The fee schedules are set by each state and generally prescribe the maximum amounts that may

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be paid for a designated procedure. In states without fee schedules, healthcare providers are reimbursed based on usual, customary and reasonable fees charged in the particular state in which the services are provided.

Limits on an employee’s right to select a specific workers’ compensation healthcare provider vary among states. According to the Workers’ Compensation Research Institute, as of December 31, 2002, 37 states limited employees’ initial choice of provider, and two states prohibited employees from changing providers. Furthermore, 45 states and the District of Columbia placed restrictions on employees’ ability to switch providers, including provisions requiring employer approval for any changes. Generally, an employer will also have the ability to direct its employees to particular providers when the employer is self-insured. It has been our experience that our results of operations and business prospects in a particular state do not materially differ as a result of state-to-state differences in the requirements regarding direction of care. We believe that employers greatly influence their employees’ choices of physicians even in states that permit employees to select their own providers.

Many employers have been slow to adopt cost savings techniques to control their workers’ compensation expenses until recently, primarily because the total costs involved are relatively small compared to those associated with group health benefits and because state-by-state regulations related to workers’ compensation are more complex than those related to group health benefits. However, in recent years, the dollar amount of workers’ compensation claims has increased significantly. According to the National Safety Council, total workers’ compensation costs to employers in the United States exceeded $132.1 billion in 2001.

Although total U.S. workers’ compensation costs have increased, work-related injury rates have declined recently due to improvements in workplace safety and general shifts in job composition toward less physical work activities. Historically, steady increases in the overall workforce have partially offset these declining injury rates. We believe the market for workers’ compensation and occupational healthcare will grow in future years primarily due to the following factors:

• premium increases for workers’ compensation insurance;

• broader definitions of work-related injuries and illnesses covered by workers’ compensation laws;

• the shifting of medical costs from group health plans to the workers’ compensation system as the result of an increase in the number of uninsured individuals and the first dollar coverage provided in workers’ compensation programs;

• an aging work force;

• medical cost inflation;

• the under-utilization to date of comprehensive cost containment programs in the workers’ compensation industry; and

• the recovery of employment growth rates within the United States.

Because workers’ compensation benefits are mandated by law and subject to extensive regulation, insurers, third party administrators and employers do not have the same flexibility to alter benefits as they have with other health benefit programs. In addition, workers’ compensation programs vary among jurisdictions, making it difficult for insurance companies and multi-state employers to adopt uniform policies to administer, manage and control the costs of benefits across states. As a result, managing the cost of workers’ compensation requires approaches that are tailored to the specific regulatory environments in which the employer operates.

Non-Injury Occupational Health Services. Non-injury occupational health services include occupational physical examinations, drug and alcohol testing, functional capacity testing and other related programs designed to meet specific employer, state or federal requirements. Non-injury occupational healthcare services also include programs to assist employers in complying with an increasing number of federal and state health and safety requirements, including hearing conservation programs, toxic chemical exposure surveillance and monitoring programs and physical examinations mandated by the Department of Transportation and Federal Aviation Administration. Federal laws governing health issues in the workplace, including the Americans with Disabilities Act, have increased employers’ demand for healthcare professionals who are experts in the delivery of these services.

Network Services and Care Management Services

Our network services are designed to assist payors in the review and reduction of medical bills. Our care management services are designed to monitor and facilitate the resolution of cases involving injured employees who have been out of work for an extended period of time due to a work-related illness or injury. We provide our network services and care management services to the following three industries:

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Workers’ Compensation Industry. As workers’ compensation costs continue to increase, employers are increasingly seeking assistance from strategic outsourcing providers to help control their costs. A number of states have adopted legislation encouraging the use of workers’ compensation managed care organizations in an effort to enable employers to control their workers’ compensation costs. State laws regulating managed care organizations generally provide employers with an opportunity to channel injured employees into provider networks.

Auto Insurance Industry. Auto insurance carriers have experienced increased costs associated with the reimbursement of medical expenses, lost wages and other essential services related to personal injury protection coverage. In most states, medical evaluations and peer reviews are the primary mechanisms used to manage care rendered to individuals injured in auto accidents. Provider bill review may also be used to determine the appropriate reimbursement rate for medical services provided to injured parties. A few states have adopted formal medical management regulations that endorse the use of provider networks or formal utilization review programs.

Group Health Industry. According to the Centers for Medicare and Medicaid Services, private health insurance expenditures for personal healthcare in the United States were estimated to total over $550.0 billion in 2002. In particular, healthcare payors are exposed to high costs when medical care under a group health plan is delivered on a non-contractual basis, commonly referred to as a non-network claim. These claims arise when services are provided outside of either a healthcare payor’s geographic coverage area or its network of providers. Non-network healthcare claims expose payors to a greater incidence of over-utilization, cost shifting, upcoding and billing errors than contracted or in-network claims do. Non-network bill review service providers produce savings for their customers by analyzing and applying cost savings techniques to non-network medical claims.

Services and Operations

We provide our services through three primary operating segments: Health Services, Network Services and Care Management Services. Our service offerings in these segments encompass the performance of necessary services for each stage of a healthcare claim, from the initial incident through its final resolution.

Health Services

Our health services include injury care services and other occupational healthcare services to assist our customers in maintaining healthy and safe workplaces. During 2002, approximately 50.5% of all patient visits to our centers were for the treatment of injuries or illnesses and 49.5% were for non-injury occupational healthcare services.

Our principal channel for delivering health services is through our 247 owned and managed occupational healthcare centers, located in 79 markets within 34 states. In response to the needs of large employers whose workforces extend beyond the geographic coverage available through our centers, we have expanded our healthcare service offerings to include a network of select occupational healthcare providers. These providers use our proprietary software to benchmark treatment methodologies and outcomes achieved, thereby extending the delivery of consistent, high quality health services to our customers.

By serving as an entry point for quality medical care in workers’ compensation cases, we can promptly identify for employers those cases that have the potential to result in significant recovery time and employer costs. Also, through our ancillary programs, such as physical examinations, Americans with Disabilities Act compliance assistance, substance abuse testing, job-specific return-to-work evaluation and related injury prevention services, we strengthen our relationships with employers and help prevent workplace injuries and illnesses from occurring.

We develop clusters of centers in new and existing geographic markets through acquisitions and internal development. In selected markets in which a hospital management company, hospital system or other healthcare provider has a significant presence, we focus our expansion efforts on strategic joint ventures or management agreements. In our joint venture relationships, we typically acquire a majority ownership interest in the venture and agree to manage the venture for a management fee based on net revenue.

Provider Arrangements. We manage physician-owned entities or groups that employ the physicians, physical therapists and other healthcare providers performing healthcare services at our centers. Our affiliated physician groups are independently organized professional corporations owned by physicians that hire these licensed providers to provide healthcare services to the centers’ patients. The physicians employed by our affiliated physician groups do not maintain other practices. Each of the physicians typically enters into a written employment agreement with one of our affiliated physician groups that prohibits the physician from competing with the group within a defined geographic area and from soliciting its employees and clients for a period of time after termination of employment. The enforceability of these restrictive covenants varies from state to state, but the physician groups attempt to structure and enforce all of them in compliance with applicable laws.

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We maintain long-term management agreements with our affiliated physician groups under which we exclusively manage all aspects of the operation other than the provision of medical services. Under each management agreement, we provide a wide array of business services to our affiliated physician groups, such as:

• non-medical support personnel;

• practice and facilities management;

• billing and collection;

• accounting;

• tax and financial management;

• human resources management;

• risk management;

• marketing and information-based services, such as process management and outcomes analysis; and

• assistance in the recruitment of physicians, nurses, physical therapists, and other healthcare providers.

We receive a management fee based on the services performed at the centers. The management fee is subject to renegotiation and may be adjusted from time to time to reflect industry practice, business conditions and actual expenses for contractual allowances and bad debts. Our affiliated physician groups operate in accordance with annual budgets. We consult with our affiliated physician groups to aid in establishing their budgets. The management agreements with our affiliated physician groups provide that we have no obligation to supply working capital out of our funds for our affiliated physician groups or their operations.

The physician owners of our affiliated physician groups retain sole responsibility for all medical decisions, as well as for hiring and managing physician employees, developing operating policies and procedures, implementing professional standards and controls and maintaining malpractice insurance. Subject to certain exceptions, each of our affiliated physician groups indemnifies us against any loss or expense arising from acts or omissions of the physician group, including claims for malpractice.

Information Systems. We use information systems and technology to enhance our delivery of occupational healthcare services. The backbone of our platform is a wide area network, or WAN, in each market in which we provide health services. All centers in a market use a patient administration system named OccuSource^™ that allows each center to access and share a common database for that market. The database contains employer protocols, patient records and other information regarding our operations in the market. We also have created a centralized repository of patient data to be used for clinical outcomes analysis, among other things. We believe that our commitment to continued development of our healthcare information system assists us in our delivery of high quality, cost-effective services.

We recently implemented a new application for our providers using wireless, touchscreen handheld devices in all of our centers. Our providers are now able to create and approve clinical notes in real time, which decreases the time spent on patient processing and invoice development.

We typically generate revenue from our health services on a fee-for-service basis. Revenue from healthcare services as a percentage of our total revenue was approximately 53.8% in 2000, 51.7% in 2001 and 47.2% in 2002.

Network Services

Our network services include:

• non-network bill review;

• provider bill repricing and review;

• access to provider networks; and

• first notice of loss or injury services.

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These services are designed to reduce medical and administrative costs by monitoring the timing, appropriateness and pricing of medical care. Our network services customers typically pay us an agreed-upon percentage of their savings generated by the performance of our services, except that our first notice of loss or injury customers reimburse us on a fee-for-service basis.

Although we perform all of our network services for the workers’ compensation and auto insurance markets, these markets predominantly use our provider bill repricing and review services, provider networks and first notice of loss or injury services. Currently, our principal customer base for our non-network bill review services is the group health market, but we continue to expand our non-network bill review services to the workers’ compensation and auto insurance markets.

We offer our network services both separately and on a bundled basis as a full-service cost containment program. Our comprehensive approach to cost containment serves the needs of a broad range of customers, from local to national accounts.

We believe that the demand for our network services will continue to increase as a result of:

• greater payor awareness of the availability of these techniques for controlling the costs of medical claims;

• verifiable savings obtained through application of cost containment techniques; and

• the need for enhanced claims processing efficiencies in each industry that we serve.

Non-Network Bill Review. Non-network claims arise when medical services are provided outside a healthcare payor’s geographic coverage area or its network of providers. This type of claim often exposes healthcare payors to very high costs. Our services focus on repricing of non-network medical providers’ bills and the reduction of administrative expenses associated with reviewing and analyzing medical bills.

We also perform network management services that enable our customers to outsource to us the processes required to maintain and apply the discounts for numerous preferred provider and other managed care networks. By performing these services for our customers, we improve payment accuracy and cycle times and eliminate redundant cost. Our customers reimburse us for these services on a fee-for-service basis according to the types of network management services we perform on their behalf.

We believe that we are the market leader in the non-network bill review business in the group health market and seek to further increase our presence in this market. We hope to expand our services in the workers’ compensation and auto insurance markets through performance of non-network provider bill repricing and review services.

Provider Bill Repricing and Review. We also review and reprice medical bills for workers’ compensation and auto insurance claims. Workers’ compensation claims are repriced to either the state-mandated fee schedule rates or, for non-fee schedule states, a percentage of the usual, customary and reasonable rates. Additionally, our automated bill review service enables us to identify duplicative billings and provide our customers with access to certain preferred provider pricing schedules, including those of our provider networks, to achieve additional savings below the fee schedules or the usual, customary and reasonable rates. Our customers compensate us for these services by providing us a percentage of the savings we achieve, a flat fee per bill reviewed, or a combination of these two compensation methods.

Access to Preferred Provider Networks. We also provide our customers with access to national provider networks. These provider networks offer high quality medical care at pre-negotiated discounts, enabling our customers to influence, or, in certain states, to direct, claimants into a provider network as a means of managing their healthcare costs. As of March 1, 2003, our national workers’ compensation provider network included over 397,000 individual providers and over 4,000 hospitals located in all 50 states and the District of Columbia. Our customers compensate us for access to provider networks by providing us a percentage of savings and paying us a flat fee.

First Notice of Loss or Injury Services. We provide a computerized first notice of loss or injury service using three centralized national call centers and a web-based intake platform. We provide our first notice of loss or injury services primarily to workers’ compensation carriers for first report of injuries and to the auto industry for first notice of loss reporting, as well as to property and casualty carriers that offer workers’ compensation and auto insurance. We receive claims from individuals, employers, agents, risk managers and insurance personnel. Upon receipt, we electronically transfer each report of a loss or injury to the appropriate state agency, the employer and the employer’s insurance company in accordance with applicable state requirements as well as the unique business rules of each customer.

Our first notice of loss or injury services assist our customers in the timely preparation and distribution of state-mandated injury reports, serve as an early intervention tool for claim management and provide us with cross-selling and referral opportunities. By

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receiving the initial reports of injuries or accidents, we are able to assist our customers in mitigating the costs associated with those events. For the performance of our first notice of loss or injury services, our customers pay us a flat fee.

Information Systems. We use a proprietary system to perform our non-network bill review services. We receive bills through multiple access points in order to minimize the administrative cost to our customers. Once a bill is entered into our system, we evaluate and analyze the bill, using our extensive database and applying our customers’ preferences or requirements to identify the type of claims review service with the greatest expected savings. We are compensated for these services on a percentage-of-savings basis.

For our first notice of loss or injury service line, we have developed and licensed to third parties a web-based reporting system for all lines of insurance that enables users to report first notices of loss or injury and obtain immediate access to customized networks and routing to appropriate and qualified healthcare providers. This application has increased the speed and efficiency of our reporting system.

The method by which we generate revenue from our network services is discussed above for each type of service in this business segment. Revenue from network services as a percentage of our total revenue was approximately 21.3% in 2000, 21.6% in 2001 and 23.1% in 2002.

Care Management Services

We provide care management services designed to monitor and resolve cases involving injured individuals who have been out of work for an extended period of time due to a work-related or auto injury. Our care management services include:

• field case management;

• telephonic case management;

• independent medical examinations;

• utilization management; and

• peer reviews.

We believe that continued growth of our care management services will occur principally due to the increased acceptance of care management techniques to help reduce the total cost of a claim and to facilitate an early return to work. We are able to identify at an early stage those cases for which cost savings may be achieved through the performance of care management services.

Field Case Management. We provide field case management services for the workers’ compensation industry through case managers working at the local level on a one-on-one basis with injured employees and their healthcare professionals, employers and insurance company adjusters. Our field case managers are located in all 50 states, the District of Columbia and parts of Canada.

Our field case managers focus on coordinating case activities to enable injured workers to recover and return to work as quickly and safely as possible through medical management and vocational rehabilitation services. The medical management services we offer include reviewing diagnoses, prognoses and treatment plans, coordinating the efforts of healthcare professionals, employers and insurance company adjusters and encouraging compliance and active participation on the part of the injured worker to increase the effectiveness of the medical care provided. Our vocational rehabilitation services include job analysis, work capacity assessments, labor market assessments, job placement assistance and return-to-work coordination.

Telephonic Case Management. Our telephonic case management services consist of telephonic management of workers’ compensation and auto injury claims, as well as of short-term disability, long-term disability and employee absences covered under FMLA. While similar to field case management in that telephonic case managers coordinate the efforts of individuals involved in a medical claim, telephonic case management is typically performed for claims of shorter duration. Most telephonic case management claims are completed within 30 to 90 days. Telephonic case management is an important component of early intervention that enables us to identify promptly those cases that require field case management or independent medical exams.

Independent Medical Examinations. We provide our customers with access to healthcare professionals who perform independent medical examinations to evaluate the medical condition and treatment plan of patients. We perform independent medical examination services for the occupational healthcare and auto industries. Through our extensive network of independent medical professionals, our customers can receive independent medical reviews for injured claimants nationwide. Our technology enables customers to make on-line referrals and check on the current status of cases.

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Utilization Management, Precertification and Concurrent Review. Customers use our precertification and concurrent review services to ensure that a physician or registered nurse reviews, and precertifies if appropriate, specified medical procedures for medical necessity and appropriateness. Our precertification and concurrent review determinations are only recommendations to the customer, and the customer’s claims adjuster makes the actual decision to approve or deny a request for medical services. After we precertify a treatment plan, we follow-up with the claimant to evaluate compliance and, as appropriate, discuss alternative treatment plans if the claimant does not respond to the initial plan.

Peer Reviews. Our peer review services consist of the review of medical files by a physician, therapist, chiropractor or other healthcare provider to determine if the care provided appears to be necessary and appropriate.

Information Systems. Our information systems enable us to improve our performance of care management services and our communications with our customers. Our principal proprietary care management allows immediate exchange of information among our case managers. We have recently enhanced our care management system to enable our customers to make on-line referrals and check on the current status of cases. Our principal case management and first notice of loss or injury reporting systems are integrated to enable immediate transmission of data into the case management system.

We have also recently undertaken a major technology initiative that we believe will streamline operations and enable significant business process improvement for our care management operations. This technology is based on a professional services automation product integrated with handheld personal digital devices to be deployed to all of our field case managers. This technology enables us to eliminate numerous redundant, non-value added activities, automate service delivery expectations for billing to customer contracts and collect and report on a daily basis management performance information.

Our customers compensate us for our care management services on a fee-for-service basis. The fees are typically flat fees determined in advance for each type of service we perform. For some of our care management services, including field and telephonic case management, the fees are typically based on the number of hours we dedicate to performing services. The fees for our independent medical examination, utilization management and peer review services vary according to the geographic location, specialty and type of medical provider performing the medical examination or review. Revenue from care management services as a percentage of our total revenue was approximately 24.9% in 2000, 26.7% in 2001 and 29.7% in 2002.

Customers

Through our nationwide network of centers, we serve employers with over 114,000 locations. We also serve more than 3,500 network services and care management customers across the United States and Canada, including major underwriters of workers’ compensation insurance, third party administrators, healthcare payors and self-insured employers.

Although no single customer represented more than 5% of our total revenue in 2002, our two largest customers represented 4% and 3%, respectively, of our total revenue in 2002. We do not have written agreements with most of our health services customers; however, many of our network services and care management relationships are based on written agreements (most of which are terminable by either party on short notice and without penalty). We typically do not assume risk of loss in connection with the services we provide. We have no capitated arrangements. Less than 0.1% of our revenue is dependent on Medicare or Medicaid reimbursement.

Sales and Marketing

We position ourselves as a quality service provider addressing the nation’s problem of rising workers’ compensation and medical costs. Our vision is to be our customers’ most valued partner by providing innovative, knowledge-based medical and cost savings solutions based on our:

• extensive clinical research and consistent performance of evidence-based medicine;

• knowledge and expertise in workers’ compensation and healthcare; and

• significant investments in technology to integrate our services and increase our productivity and efficiency in the delivery and management of healthcare services.

Our sales strategy is focused on selling our services at the national, regional and local levels. Our national sales force focuses on selling our integrated services to large, strategic accounts, including Fortune 1000 companies, third party administrators and insurance carriers and brokers. Our regional sales force focuses on regional customers and supports our national sales force at the regional level. The local sales force is also a key component of our strategy because customer decisions are often made at the local level.

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As part of our marketing and sales strategy, we conduct research on medical outcomes associated with different treatment plans. Some of our research has been published in national medical journals. We also provide our existing and potential customers with reports demonstrating medical outcomes and cost savings achieved by using our services.

Quality Assurance and Corporate Compliance Program

We routinely use internal reviews to test the quality of our services. We conduct audits of compliance with special instructions by our customers, completion of activities in a timely fashion, quality of reporting, accuracy of billing and professionalism in contacts with healthcare providers. We also conduct audits on a nationwide basis for particular customers or on a local office basis by randomly selecting files for review. We generate detailed reports outlining the audit findings and providing specific recommendations for service delivery improvements. When appropriate, we conduct follow-up audits to ensure that recommendations from the initial audit have been implemented.

We have a comprehensive, company-wide corporate compliance program. The key components of our compliance program include the following:

• a compliance officer and compliance committee responsible for oversight of our compliance program and reporting to our board of directors and the audit and compliance committee of our board of directors;

• a code of business conduct and ethics, addressing certain legal and ethical obligations of our directors and employees;

• employee education and training requirements;

• an internal system for reporting employees’ concerns;

• a hotline staffed by a third-party vendor for reporting employees’ concerns anonymously;

• an annual compliance survey distributed to certain management employees;

• ongoing auditing and monitoring programs, including periodic risk assessments and reviews;

• enforcement provisions if the compliance program policies are violated; and

• periodic reporting to and oversight by our board of directors and the audit and compliance committee of our board of directors.

Competition

Health Services

The market to provide occupational healthcare services is highly fragmented and competitive. Historically, our primary competitors have typically been independent physicians, hospital emergency departments and hospital-owned or hospital-affiliated medical facilities. As managed care techniques continue to gain acceptance in the occupational healthcare marketplace, however, we believe that our competitors will increasingly consist of nationally-focused workers’ compensation managed care service companies, specialized provider groups, insurance companies, health management organizations and other significant providers of managed care products. These organizations may be significantly larger and have greater financial and marketing resources than we do. We cannot assure you that we will be able to compete effectively against these organizations in the future.

Because we believe the barriers to entry in our geographic markets are not substantial and our current customers have the flexibility to move easily to new healthcare service providers, the addition of new competitors may occur relatively quickly. Some of our contracted physicians and other healthcare providers may elect to compete with us by offering their own products and services to our customers. In addition, significant merger and acquisition activity has occurred in our industry as well as in industries that supply products to us, such as the hospital, physician, pharmaceutical, medical device and health information systems industries. If competition within our industry intensifies, our ability to retain customers or physicians, or maintain or increase our revenue growth, pricing flexibility, control over medical cost trends and marketing expenses, may be compromised.

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Network Services and Care Management Services

The market for our network services and care management services is also fragmented and competitive. Our competitors include national managed care providers, preferred provider networks, smaller independent providers and insurance companies. Companies that offer one or more workers’ compensation managed care services on a national basis are our primary competitors. We also compete with many smaller vendors that generally provide unbundled services on a local level, particularly companies that have an established relationship with a local insurance company adjuster. In addition, several large workers’ compensation insurance carriers offer managed care services for their customers, either by performance of the services in-house or by outsourcing to organizations like ours. If these carriers increase their performance of these services in-house, our business could be adversely affected.

Government Regulation

General

As a provider of health, network and care management services, we are subject to extensive and increasing regulation by a number of governmental entities at the federal, state and local levels. We are also subject to laws and regulations relating to business corporations in general. In recent years, Congress and state legislatures have introduced an increasing number of proposals to make significant changes in the healthcare system. Changes in law and regulatory interpretations could reduce our revenue and profitability.

Workers’ Compensation Laws and Regulations

In performing services for the workers’ compensation industry, we must comply with applicable workers’ compensation laws. Workers’ compensation laws generally require employers to assume financial responsibility for medical costs, lost wages and related legal costs of work-related illnesses and injuries. These laws establish the rights of workers to receive benefits and to appeal benefit denials. Workers’ compensation laws generally prohibit charging medical co-payments or deductibles to employees. In addition, certain states restrict employers’ rights to select healthcare providers.

Several states have special requirements for physicians providing non-emergency care for workers’ compensation patients. These requirements frequently require registration with the state agency governing workers’ compensation, as well as special continuing education and training requirements. In those states, we must establish procedures to confirm that physicians providing services at our centers have completed these requirements.

At present, 25 states have treatment-specific fee schedules that set maximum reimbursement levels for our health services. The remaining states provide for a “reasonableness” review of medical costs paid or reimbursed by workers’ compensation. When not governed by a fee schedule, we adjust our charges to the usual, customary and reasonable levels accepted by the payor.

Some states limit the ability of the employer to direct an injured employee to a specific provider to receive non-emergency workers’ compensation medical care, while other states allow the employer to direct care to a specific provider. In other states, the employee is free to receive treatment from any qualified provider the employee chooses. Even in those states where the employer is permitted to direct an injured employee to a specific provider, the employer’s ability to direct care is frequently limited only to a certain timeframe and/or to a limited group of eligible providers. States typically also mandate administrative procedures for employees who desire to change providers. In some states that typically do not permit direction of care, the employer has the right to direct care if the employer participates in a managed care organization for workers’ compensation medical care.

Many states permit an employer to post a list of primary care physicians available to provide care to injured employees. Those states frequently place restrictions on the content of those postings, including the number and categories of providers that must be listed.

Many states have licensing and other regulatory requirements related to workers’ compensation that apply to our network services and care management business lines. Approximately half of the states have enacted laws that require licensing of businesses that provide medical review services. These laws typically establish minimum standards for qualifications of personnel, confidentiality, internal quality control and dispute resolution procedures. In addition, a number of states have adopted laws regulating the operation of managed care provider networks. These laws apply to managed care provider networks having contracts with us and, in some states, to provider networks that we are affiliated with and may affiliate with in the future. To the extent that we are governed by these regulations, we may be subject to additional licensing requirements, financial oversight and procedural standards for beneficiaries and providers.

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Corporate Practice of Medicine and Other Laws

We are not licensed to practice medicine. Most states limit the practice of medicine to licensed individuals or professional organizations comprised of licensed individuals. Business entities generally may not exercise control over the medical decisions of physicians. Many states also limit the scope of business relationships between business entities and medical professionals, particularly with respect to fee splitting. Most of the state fee-splitting laws only prohibit a physician from sharing medical fees with a referral source, but some states have interpreted certain management agreements between business entities and physicians as unlawful fee-splitting. Statutes and regulations relating to the practice of medicine, fee-splitting and similar issues vary widely from state to state. Because these laws are often vague, their application is frequently dependent on court rulings and attorney general opinions.

Under the management agreements with our affiliated physician groups, the groups retain sole responsibility for all medical decisions, as well as for hiring and managing physician employees, developing operating policies and procedures, implementing professional standards and controls and maintaining malpractice insurance. We attempt to structure all of our health services operations, including arrangements with our affiliated physician groups, to comply with applicable state statutes regarding corporate practice of medicine, fee-splitting and similar issues. However, there can be no assurance:

• that private parties, or courts or governmental officials with the power to interpret or enforce these laws and regulations, will not assert that we are in violation of such laws and regulations;

• that future interpretations of such laws and regulations will not require us to modify the structure and organization of our business; or

• that any such enforcement action, which could subject us and our affiliated physician groups to penalties or restructuring or reorganization of our business, will not adversely affect our business or result of operations.

Laboratory Regulation

We own a toxicology laboratory, Advanced Toxicology Network, that tests urine samples to determine drug and alcohol levels. These samples are obtained from our health services operations. Our laboratory is certified by the Substance Abuse and Mental Health Services Administration and maintains licensure in several states that require licensure for toxicology laboratory operations.

Anti-Kickback, Physician Self-Referral and Other Fraud and Abuse Laws

A federal law commonly referred to as the “Anti-Kickback Statute” prohibits the offer, payment, solicitation or receipt of any form of remuneration to induce, or in return for, the referral of Medicare or other governmental health program patients or patient care opportunities, or in return for the purchase, lease or order of items or services that are covered by Medicare or other federal governmental health programs. Because the prohibitions contained in the Anti-Kickback Statute apply to the furnishing of items or services for which payment is made in “whole or in part,” the Anti-Kickback Statute could be implicated if any portion of an item or service we provide is covered by any of the state or federal health benefit programs described above. Violation of these provisions constitutes a felony criminal offense and applicable sanctions include imprisonment of up to five years, criminal fines of up to $25,000, civil monetary penalties of up to $50,000 per act plus three times the amount claimed or remuneration offered and exclusion from the Medicare and Medicaid programs.

Section 1877 of the Social Security Act, referred to herein as the “Stark Law,” prohibits physicians, subject to certain exceptions described below, from referring Medicare or Medicaid patients to an entity providing “designated health services” in which the physician, or an immediate family member, has an ownership or investment interest or with which the physician, or an immediate family member, has entered into a compensation arrangement. These prohibitions, contained in the Omnibus Budget Reconciliation Act of 1993, commonly known as “Stark II,” amended prior federal physician self-referral legislation known as “Stark I” by expanding the list of designated health services to a total of 11 categories of health services. The physician groups with which we are affiliated provide one or more of these designated health services. Persons or entities that violate the Stark Law are subject to denial of payment for services furnished pursuant to an improper referral, civil monetary penalties of up to $15,000 for each improper claim and exclusion from the Medicare and Medicaid programs.

Final regulations interpreting Stark I, referred to herein as the “Stark I Regulations,” were issued on August 14, 1995. On January 4, 2001, the Centers for Medicare and Medicaid Services issued final regulations modifying the Stark I Regulations and interpreting parts of Stark II. These regulations are considered Phase I of a two-phase process, with the remaining regulations to be published at an unknown future date.

In addition to the Anti-Kickback Statute and the Stark Law, which generally only apply to certain federal and state health care programs, as part of the Health Insurance Portability And Accountability Act of 1996, Congress created five new categories of

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criminal federal offenses that apply to all healthcare benefit programs regardless of whether such programs are funded in whole or in part with federal funds. The five new categories of federal offenses created by HIPAA are: healthcare fraud; theft or embezzlement in connection with healthcare; false statements relating to healthcare matters; obstruction of criminal investigations of healthcare offenses; and money laundering. Violations of these provisions constitute felony criminal offenses and applicable sanctions include imprisonment and/or substantial monetary fines.

Many states also have enacted laws similar in scope and purpose to the Anti-Kickback Statute and, in more limited instances, the Stark Law, that are not limited to services for which Medicare or Medicaid payment is made. In addition, most states have statutes, regulations or professional codes that restrict a physician from accepting various kinds of remuneration in exchange for making referrals. These laws vary from state to state and have seldom been interpreted by the courts or regulatory agencies. In states that have enacted these statutes, we believe that regulatory authorities and state courts interpreting these statutes may regard federal law under the Anti-Kickback Statute and the Stark Law as persuasive.

We believe that our operations have been structured in an attempt to comply with the Anti-Kickback Statute, the Stark Law or similar federal or state laws addressing fraud and abuse. These laws are subject to modification and changes in interpretation and have not often been interpreted by appropriate authorities in a manner applicable to our business. Moreover, these laws are enforced by authorities vested with broad discretion. We also continually monitor developments in this area. If these laws are interpreted in a manner contrary to our interpretation or are reinterpreted or amended, or if new legislation is enacted with respect to healthcare fraud and abuse, illegal remuneration or similar issues, we may be required to restructure our affected operations to maintain our compliance with applicable law. We cannot assure you that this restructuring will be possible, or, if possible, will not adversely affect our business or results of operations.

HIPAA Administrative Simplification Provisions—Patient Privacy and Security

HIPAA requires the adoption of standards for the exchange of health information in an effort to encourage overall administrative simplification and to enhance the effectiveness and efficiency of the healthcare industry. Pursuant to HIPAA, the Secretary of the Department of Health and Human Services has issued final rules concerning the privacy and security of health information, the establishment of standard transactions and code sets and adoption of a unique employer identifier and proposed regulations regarding the establishment of a national provider identifier. Noncompliance with the administrative simplification provisions can result in civil monetary penalties up to $100 per violation as well as criminal penalties that include fines and imprisonment. The Department of Health and Human Services Office of Civil Rights is charged with implementing and enforcing the privacy standards, while the Centers for Medicare and Medicaid Services is responsible for implementing and enforcing the security standards, the transactions and code sets standards and the other HIPAA administrative simplification provisions.

The HIPAA requirements only apply to covered entities, which include health plans, healthcare clearinghouses and healthcare providers that transmit any health information in electronic form. Our business unit that provides occupational healthcare services is a covered entity under HIPAA. In addition, our business units that provide cost containment services may be subject to HIPAA obligations through business associate agreements with our customers. We are also indirectly regulated by HIPAA as a plan sponsor of a healthcare benefit plan for our own employees.

Of the HIPAA requirements, the privacy standards and the security standards have the most significant impact on our business operations. The final privacy rule was published on December 28, 2000, and was later amended by the final modifications published August 14, 2002. Compliance with the privacy standards was required by April 14, 2003. The privacy standards require covered entities to implement certain procedures to govern the use and disclosure of protected health information and to safeguard such information from inappropriate access, use or disclosure. Protected health information includes individually identifiable health information, such as an individual’s medical records, transmitted or maintained in any format, including paper and electronic records. The privacy standards establish the different levels of individual permission that are required before a covered entity may use or disclose an individual’s protected health information and establish new rights for the individual with respect to his or her protected health information.

The final security rule was recently published on February 20, 2003, with an effective date of April 21, 2003, and establishes security standards that apply to covered entities. The security standards are designed to protect health information against reasonably anticipated threats or hazards to the security or integrity of the information and to protect the information against unauthorized use or disclosure. The security standards establish a national standard for protecting the security and integrity of medical records when they are kept in electronic form. Compliance with the security standards is required by April 21, 2005.

The administrative simplification provisions of HIPAA require the use of uniform electronic data transmission standards for healthcare claims and payment transactions submitted or received electronically. In August 2000, the Department of Health and Human Services finalized the new transaction standards. The original compliance date was October 16, 2002; however, this compliance date has been delayed until October 16, 2003 due to our filing of a compliance extension plan with the Department of

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Health and Human Services. The transaction standards will require us to use standard code sets when we transmit health information in connection with certain transactions, including health claims and health payment and remittance advice. We believe that we have taken the appropriate actions in order to be substantially compliant with the HIPAA transaction and code set standards by the October 16, 2003 compliance date. Compliance with these rules, including the privacy and security standards, could require us to spend substantial sums of money, which could negatively impact our profitability.

Compliance with these standards has required significant commitment and action by us and we expect that it will continue to do so. Because the final regulations for the privacy standards have only recently been effective and final regulations for the security standards have only recently been issued, we cannot predict the total financial impact of the regulations on our operations.

Other Privacy and Confidentiality Laws

In addition to the HIPAA requirements described above, numerous other state and federal laws regulate the privacy of an individual’s health information. These laws specify the persons to whom health information can be disclosed and the conditions under which such disclosures can occur. Many states have requirements related to an individual’s right to access his own medical records, as well as requirements related to the use and content of consent or authorization forms. Also, because of employers’ economic interests in paying medical bills for injured employees and in the timing of the injured employees’ return to work, many states have enacted special confidentiality laws related to disclosures of medical information in workers’ compensation claims. These laws limit employer access to such information. To the extent state law affords greater protection of an individual’s health information than that provided under HIPAA, the state law will control.

The federal Financial Services Modernization Act, more commonly known as the Gramm-Leach-Bliley Act, sets forth requirements related to the disclosure of nonpublic personal financial information by financial institutions, including banks, securities firms and insurance companies. Although the statute expressly regulates the disclosure of personal financial information, some of our insurance company customers have required us to participate in their initiatives to comply with this Act.

In addition, many states have adopted some form of the National Association of Insurance Commissioners Privacy of Consumer Financial and Health Information Model Regulation, which requires that an individual elect to permit the disclosure of his health information. Where adopted, licensees of that state’s insurance department must enact procedures to secure compliance with these regulations. Other states, including New York and Colorado, have adopted new security regulations that impact licensees of the state insurance department and their service providers. Many of our insurance company customers who are subject to these regulations require us to adhere to their compliance programs and procedures to satisfy their obligations under these regulations.

We anticipate that there will be more regulation in the areas of privacy and confidentiality, particularly with respect to medical information. We currently monitor the privacy and confidentiality requirements that relate to our business, and we anticipate that we may have to modify our operating practices and procedures in order to comply with these requirements.

Cost Containment Services

Many of our cost containment services, including our case management services, involve prospective or concurrent review of requests for medical care or therapy. Approximately half of the states have enacted laws that require licensure, certification or other approval of businesses like ours that provide these types of medical review services. Some of these laws apply to medical review of care covered by workers’ compensation. These laws typically establish minimum standards for qualifications of personnel, confidentiality, internal quality control and dispute resolution procedures. Some states waive these registration requirements for entities accredited by specified recognized agencies, such as the Utilization Review Accreditation Commission.

In addition to these licensure requirements, many states regulate various aspects of utilization review services, such as our cost containment services. Some states mandate utilization review for specified procedures or for claims exceeding stated financial limits, establish time limits for utilization review decisions, establish guidelines for the communication of utilization review decisions and provide for the appeal of utilization review decisions. Some states require case managers to be licensed. These regulations may result in increased costs of operation for us, which may have an adverse impact on our ability to compete with other available alternatives for healthcare cost control.

Managed Care

Many states have passed laws expressly regulating the use of managed care arrangements in workers’ compensation. The definition of “managed care” varies from state to state; however, nearly all states provide that managed care involves the delivery and management of healthcare to injured employees. States that have adopted such laws typically require managed care plans to be certified, with the certification renewed every one or two years. States with managed care certification programs regulate both the types of services that must be included in a plan and specific requirements related to those services. Many states require that managed

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care entities perform the following types of services: reasonable access and availability of various specified types of healthcare providers; case management and utilization review; return to work programs; quality assurance programs; the use of treatment guidelines; and grievance processes.

These certifications often may be obtained from the regulatory agency with primary oversight over workers’ compensation. However, some states grant certification through various other agencies, such as the department of health or department of insurance. States frequently encourage employers and payors to adopt a managed care program by permitting direction of care and case management. Because we serve as a certified managed care organization in some states and implement portions, or all, of our customers’ managed care programs on their behalf, we are subject to these certification laws.

Use of Provider Networks

Our ability to provide comprehensive healthcare management and cost containment services depends in part on our ability to contract with provider networks consisting of healthcare providers who share our objectives, and to maintain our existing provider network. For some of our customers, we offer injured workers access to these provider networks. A number of states have adopted laws regulating the operation of managed care provider networks. These laws often apply to our provider network, managed care provider networks having contracts with us and, in some instances, provider networks that we may develop or acquire. To the extent these regulations apply to us, we may be subject to:

• additional licensing requirements;

• mandated provisions in provider contracts;

• financial oversight; and

• procedural standards for beneficiaries and providers.

In 2002, several states implemented legislation requiring the inclusion of certain language in provider contracts for group health plans that related to the timing of payments, the amount to be paid under the contracts and the payment methodology. These requirements currently impact our business for the contracts that we have with providers that relate to the performance of healthcare services that are reimbursable under group health plans. In addition, these contractual requirements may be extended to care reimbursable under workers’ compensation and/or auto insurance. We may be required to amend some of our provider contracts as a result of this legislation and future legislative initiatives.

One of the procedural standards that may apply in some states is the requirement for credentialing of all network providers. For workers’ compensation, some states require that workers’ compensation providers be on pre-approved lists in order to treat workers’ compensation patients. These credentialing and licensing requirements may adversely affect our ability to expand our provider network.

In addition, approximately half of the states have some type of “any willing provider” law. These laws require networks to accept as participating providers any qualified professional who is willing to meet the terms and conditions of the network. For example, networks cannot decline a provider admission to the network because the network believes it already has a sufficient number of providers in a given specialty. In all but two instances, these laws are applicable to group health networks only and do not apply to workers’ compensation networks. These laws could impact our ability to provide access to provider networks limited to healthcare providers who share our objectives.

These additional licensing requirements, financial oversight and procedural standards for beneficiaries and providers may adversely affect our ability to maintain or expand our operations to new markets and increase our cost of providing services.

Prompt Pay Laws

Many states are considering or have enacted legislation governing prompt payment for healthcare services. These laws generally define a process for the payment of claims and set a specific timeframe during which payors must remit payment for services rendered. Although we are not responsible for provider payment, our network and cost containment services customers typically do have that responsibility and may require assistance from us in performing our services within the prescribed time periods under these laws. Approximately half of the states have some form of prompt pay law for workers’ compensation, and an even greater number of states have implemented prompt pay laws for the provision of group health medical services.

In addition to mandating timeframes in which claims must be paid, these laws frequently define what constitutes a “clean claim.” A clean claim is a medical claim that contains all of the information deemed to be required under the law for the claim to be

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processed and paid. Typically, states with these laws require use of standardized forms and specify how various fields on those forms should be completed. These laws also typically detail the types of attachments that should be included with claims. If a claim is a clean claim under these requirements, then the timeframes of the prompt payment laws apply. If the claim is not “clean,” many states specify provider and payor responsibilities that must be met for proper handling of that claim. We may be subject to procedural requirements and may be responsible for the education of our customers in connection with prompt pay laws. These additional procedural requirements may increase our cost of services.

ERISA

The provision of our network services to certain types of employee health benefit plans is subject to the Employee Retirement Income Security Act, or ERISA, which is a complex set of laws and regulations subject to periodic interpretation by the Internal Revenue Service and the Department of Labor. ERISA regulates some aspects of the network services we provide for employers who maintain group health plans subject to ERISA. The Department of Labor is engaged in ongoing ERISA enforcement activities that may result in additional constraints on how ERISA-governed benefit plans conduct their activities. Changes in ERISA and judicial or regulatory interpretations of ERISA could adversely affect our business and profitability.

Environmental

We are subject to various federal, state and local laws and regulations relating to the protection of human health and the environment, including those governing the management and disposal of infectious medical waste and other waste generated at our occupational healthcare centers and the cleanup of contamination. If an environmental regulatory agency finds any of our facilities to be in violation of environmental laws, penalties and fines may be imposed for each day of violation and the affected facility could be forced to cease operations. We could also incur other significant costs, such as cleanup costs or claims by third parties, as a result of violations of or liabilities under environmental laws. Although we believe that our environmental practices, including waste handling and disposal practices, are in material compliance with applicable laws, future claims or violations, or changes in environmental laws, could have an adverse effect on our business.

Insurance

We and our affiliated physician groups maintain medical malpractice insurance in the amount of $1.0 million per medical incident and $3.0 million per provider in the aggregate per year, with a shared aggregate of $20.0 million. We also maintain an umbrella liability policy providing an additional liability limit of $20.0 million. We maintain a managed care organization errors and omissions liability insurance policy covering all aspects of our network and care management services. This policy has limits of $15.0 million per claim, with an annual aggregate of $15.0 million. Our directors and officers liability policy has a liability limit of $20.0 million per occurrence and in the aggregate, with an additional $10.0 million in limits provided through an excess liability policy. In addition, we maintain $1.0 million per occurrence and $3.0 million annual aggregate of commercial general liability insurance. Although we believe that our insurance coverage is adequate for our current operations, we cannot assure you that our coverage will cover all future claims or will be available in adequate amounts or at a reasonable cost.

Employees

We had approximately 10,000 employees at March 1, 2003. We have experienced no work stoppages and believe that our employee relations are good. All physicians, physical therapists and other healthcare providers performing professional services in our occupational healthcare centers are either employed by or are under contract with one of our affiliated physician groups.

Currently, none of our employees is subject to a collective bargaining agreement. However, in August 2000, several physicians employed by one of our affiliated physician groups in New Jersey petitioned the National Labor Relations Board to form a local collective bargaining unit of physicians. Although the New Jersey physicians voted on this issue in September 2000, the National Labor Relations Board has not determined the outcome of that vote. We have appealed a recent decision by the Newark, New Jersey regional National Labor Relations Board office regarding the status of the physicians and the appropriateness of their inclusion in a collective bargaining unit.

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MANAGEMENT

Directors and Executive Officers

Our directors and executive officers are the same as the persons identified below as directors and executive officers of our parent, Concentra Inc. Since August 17, 1999, they have served in these positions with us during the same periods they served in these positions with our parent, except as otherwise indicated.

Our executive officers and those of our parent are elected annually by the applicable board of directors and serve until their successors are duly elected and qualified. Our directors and those of our parent are elected annually by the applicable stockholders and serve until their successors are duly elected and qualified. There are no arrangements or understandings between any officer or director and any other person pursuant to which any officer or director was, or is to be, selected as an officer, director or nominee for officer or director. There are no family relationships between any of our executive officers or directors. The names, ages and positions of our executive officers and directors and those of Concentra Inc. are listed below.

Name	Age	Position
Daniel J. Thomas	44	Director and Chief Executive Officer
Frederick C. Dunlap	44	President and Chief Operating Officer
Thomas E. Kiraly	43	Executive Vice President, Chief Financial Officer and Treasurer
James M. Greenwood	42	Executive Vice President—Corporate Development
Richard A. Parr II	45	Executive Vice President, General Counsel and Corporate Secretary
Paul B. Queally	39	Chairman and Director
John K. Carlyle	48	Director
Carlos A. Ferrer	49	Director
James T. Kelly	56	Director
D. Scott Mackesy	35	Director
Steven E. Nelson	48	Director
Richard J. Sabolik	55	Director

Daniel J. Thomas has served as a director of our parent since January 1998 and of us since August 1999. He has served as Chief Executive Officer of our parent since September 1998. He served as President and Chief Executive Officer of our parent from January 1998 until August 2002. He served as President and Chief Operating Officer of our parent from January 1998 until September 1998. He served as Executive Vice President of our parent and President of Concentra Health Services, Inc. from August 1997 until January 1998. He served as a director of OccuSystems, Inc., or OccuSystems, one of our predecessor companies, and as its President and Chief Operating Officer from January 1997 to August 1997. From April 1993 through December 1996, Mr. Thomas served as OccuSystems’ Executive Vice President and Chief Operating Officer. Prior to joining OccuSystems in 1993, Mr. Thomas served in various capacities with Medical Care International, Inc., a national outpatient surgery center company, including Senior Vice President and Divisional Director. Mr. Thomas is a certified public accountant.

Frederick C. Dunlap has served as President and Chief Operating Officer of our parent since August 2002. Prior to that time, Mr. Dunlap served as Chief Executive Officer of Phycom Corporation, a healthcare service company, from September 2000 until March 2002. He served as President and Chief Executive Officer of FDWP Ventures, Inc., a company established to pursue investments in healthcare companies with an emphasis on technology, from March 2000 until its acquisition of Phycom Corporation in September 2000. From October 1996 to February 2000 Mr. Dunlap served as President of UnitedHealthcare of Florida/Puerto Rico, Inc., an affiliate of UnitedHealth Group, Inc. that operated four health benefit plans. He served as Vice President, Specialty Companies for UnitedHealth Group, Inc. from August 1994 to September 1996. Mr. Dunlap served as Senior Vice President of CIGNA Corporation from November 1991 to August 1994, and as Sales Vice President from July 1990 to October 1991. Prior to its acquisition by CIGNA Corporation in July 1990, Mr. Dunlap served in various capacities with Equicor, Inc., an employee benefits company, from 1982 to 1990, including Divisional Marketing Manager.

Thomas E. Kiraly has served as Executive Vice President, Chief Financial Officer and Treasurer of our parent since May 1999. Prior to that time, Mr. Kiraly served as the principal accounting and financial officer of BRC Holdings, Inc. from December 1988 to May 1999. BRC Holdings, Inc. was a diversified provider of specialized information systems and services to healthcare institutions and local governments and was acquired in February 1999 by Affiliated Computer Services, Inc., an information services provider. During his tenure at BRC Holdings, Inc., Mr. Kiraly held the titles of Executive Vice President and Chief Financial Officer from March 1994 through May 1999 and Vice President of Finance from December 1988 through March 1994. Prior to that time, Mr. Kiraly was a Senior Management Consultant with the national accounting firm of Touche Ross & Co., a predecessor to Deloitte & Touche L.L.P., from May 1985 until December 1988.

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James M. Greenwood has served as Executive Vice President—Corporate Development of our parent since February 1998 and as Senior Vice President—Corporate Development of our parent from August 1997 to February 1998. He served as OccuSystems’ Chief Financial Officer from 1993 until August 1997. Mr. Greenwood also served as a Senior Vice President of OccuSystems from May 1994 to August 1997. From 1988 until he joined OccuSystems in 1993, Mr. Greenwood served in numerous positions with Bank One, Texas, N.A., and its predecessors, including as Senior Vice President and Manager of Mergers and Acquisitions.

Richard A. Parr II has served as Executive Vice President, General Counsel and Corporate Secretary of our parent since August 1997. He served as OccuSystems’ Executive Vice President, General Counsel and Secretary from August 1996 to August 1997. Prior to joining OccuSystems, Mr. Parr served as Vice President and Assistant General Counsel of OrNda HealthCorp, a national hospital management company, from April 1993 through August 1996 and as Associate General Counsel of OrNda HealthCorp from September 1991 through March 1993. Mr. Parr serves on the board of directors of the American Society of Corporate Secretaries.

Paul B. Queally has served as a director and the Chairman of our parent and us since August 1999. He has served as a managing member or general partner of the respective sole general partner of WCAS and other associated investment partnerships since February 1996. Prior to joining WCAS in February 1996, Mr. Queally held various positions, including General Partner at The Sprout Group, a private equity affiliate of Credit Suisse First Boston Corporation, since 1987. He is a director of United Surgical Partners International, Inc., an ambulatory surgery center company, MedCath, Inc., a cardiac care management and cardiac specialty hospital company, LabOne, Inc., a clinical laboratory company, and several other private companies.

John K. Carlyle has served as a director of our parent since August 1997 and as a director of us since August 1999. He served as Chairman of our parent from August 1997 to January 1998 and from September 1998 until August 17, 1999. Mr. Carlyle served as Chief Executive Officer of MAGELLA Healthcare Corporation, a private physician practice management company devoted to the area of neonatology and perinatology, from July 2000 until its sale to Pediatrix Medical Group, Inc., in May 2001, and as President and Chief Executive Officer of MAGELLA from February 1998 through June 2000. Prior to joining MAGELLA, Mr. Carlyle served as OccuSystems’ Chairman and Chief Executive Officer from January 1997 until August 1997 and as the Chief Executive Officer and a director of OccuSystems from 1991 until August 1997. He joined OccuSystems in 1990 as its President and served in that capacity until December 1996. Mr. Carlyle also serves as a director of Pediatrix Medical Group, Inc., a neonatology and perinatology national group practice, Odyssey Healthcare, Inc., a national hospice services provider, and several other private healthcare companies.

Carlos A. Ferrer has served as a director of our parent and us since August 1999. He has served as a member of the general partner of Ferrer Freeman and Company, LLC, a private healthcare equity firm, since 1995. Prior to 1995, he was employed by Credit Suisse First Boston Corporation as a Managing Director. He is a director of AMERIGROUP Corporation, a Medicaid HMO company, and several private companies and is Vice Chairman of the Board of Trustees of the Cancer Research Institute.

James T. Kelly has served as a director of our parent and us since December 2001. From August 1998 to November 2001, he served as Chairman of National Healthcare Resources, Inc., a private network services and care management company that our parent acquired in November 2001. Previously, he served as Chairman of Lincare Holdings, Inc., a national respiratory therapy services company, from April 1994 through May 2000 and as President and Chief Executive Officer of Lincare Holdings, Inc. from June 1986 through December 1996. Mr. Kelly is a director of American Dental Partners, Inc., a provider of business services to multi-disciplinary dental groups, Ameripath, Inc., a national provider of cancer diagnostics and related services, and Health Management Systems, Inc., a national healthcare information technology company.

D. Scott Mackesy has served as a director of our parent and us since August 1999. Mr. Mackesy joined WCAS in early 1998 and has served as a general partner or managing member of the respective sole general partner of WCAS and other associated investment partnerships since 2001. Mr. Mackesy is a director of LabOne, Inc., a clinical laboratory company, United Surgical Partners International, Inc., an ambulatory surgery center company, and several other private companies.

Steven E. Nelson has served as a director of our parent and us since August 1999. From October 1999 to November 2001, he served as President of HealthNetwork Systems LLC, a private provider of network management services to the payor and PPO industries, until its acquisition in 2001 by Concentra Preferred Systems, Inc., an affiliate of Concentra Operating engaged in bill review services. Mr. Nelson served as President of Concentra Preferred Systems, Inc. from March 1997 to June 2000. From 1990 to March 1997, he served as President and Chief Executive Officer of Preferred Payment Systems, Inc., a provider of bill review services, until its acquisition by Concentra Inc. in 1998.

Richard J. Sabolik has served as a director of our parent and us since June 2003. He has served as Chief Executive Officer of ez-GT, Inc., an Internet-based transportation services company that he founded in March 2000. Prior to that time, he was a partner with KPMG LLP from July 1981 to January 2000, where he served large regional and national clients and was responsible for various regional KPMG health care practices and national service offerings. He also was a member of KPMG’s National Health Care Practice “Board of Directors” for more than 15 years. He is a member of the Executive Committee of the Board of Trustees of the Leukemia & Lymphoma Society and a member of the Governance Committee of CEO Netweavers. Mr. Sabolik is a certified public accountant.

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Executive Compensation

The following table summarizes the compensation paid or earned for the fiscal years 2002, 2001 and 2000 to our parent’s and our Chief Executive Officer and the four other most highly compensated executive officers of our parent and us whose individual compensation for services rendered to us or our parent exceeded $100,000 for fiscal 2002. These executive officers are referred to as the “named executive officers.”

	Annual Compensation					Long-Term Compensation Awards			All Other Compensation
Name and Principal Position	Year	Salary ($)(1)	Bonus ($)(2)	Other Annual Compensation ($)		Restricted Stock Awards ($)		Number of Securities Underlying Options	($)(3)
Daniel J. Thomas President and Chief Executive Officer, Director	2002 2001 2000	495,769 399,231 394,199	125,000 20,000 —	17,864 —   203,355	(4) (4)	1,237,500 —   —	(5)	207,000 174,000 369,057	3,650 3,640 3,267
William H. Comte(6) Executive Vice President, Chief Operating Officer	2002 2001 2000	406,219 350,000 14,808	75,000 —   —	—   —   —		—   —   —		—   75,000 125,000	156 3,201 10	(7) (8)
James M. Greenwood Executive Vice President— Corporate Development	2002 2001 2000	294,365 279,616 270,029	75,000 20,000 —	—   —   —		—   —   —		—   20,000 216,344	3,615 3,590 3,291
Thomas E. Kiraly Executive Vice President, Chief Financial Officer and Treasurer	2002 2001 2000	319,154 298,846 264,892	100,000 20,000 —	—   —   —		—   —   —		—   75,000 37,500	3,619 3,615 197
Richard A. Parr II Executive Vice President, General Counsel and Corporate Secretary	2002 2001 2000	277,823 262,019 250,035	75,000 20,000 —	—   —   —		—   —   —		—   15,000 59,813	3,628 3,618 3,315

(1) Salaries for the named executives officers, effective January 1, 2003, are $500,000 for Mr. Thomas, $295,000 for Mr. Greenwood, $320,000 for Mr. Kiraly and $278,500 for Mr. Parr.

(2) The bonus amounts paid each year were determined based on our performance, the performance of the individual and related factors for the immediately preceding year.

(3) Amounts shown represent, to the extent that the named executive officer participated in our parent’s 401(k) plan, (a) our parent’s matching provision under its 401(k) plan, if any, and (b) premiums paid by our parent for group term life insurance that is taxable compensation to the named executive officers.

(4) Amounts shown were for relocation-related costs and benefits paid to Mr. Thomas totaling $203,355 in 2000 associated with his relocation from Boston, Massachusetts to temporary housing in Dallas, Texas, and $17,864 in 2002 associated with his relocation from temporary to permanent housing in Dallas, Texas.

(5) Fair market value of securities underlying award for 75,000 shares based on the most recent third-party sale of our parent’s common stock at $16.50 per share. Neither our parent nor us has any class of equity securities registered pursuant to Section 12 of the Exchange Act.

(6) Mr. Comte resigned effective June 21, 2002.

(7) Excludes $10,000 paid to Mr. Comte in 2002 related to cancellation of his participation in our officer loan program.

(8) Excludes relocation related costs and benefits totaling $19,130 paid to Mr. Comte in 2001 associated with his relocation from San Diego, California to Dallas, Texas.

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Option Grants in Last Fiscal Year—Individual Grants

The following table sets forth certain information concerning grants by our parent of stock options to each of the named executive officers during 2002. In accordance with the rules of the SEC, the potential realizable values under such options are shown based on assumed rates of annual compound stock price appreciation of 5% and 10% over the full option term from the date the option was granted.

	Number of Securities Underlying Options Granted (1)	% of Options Granted to Employees in Fiscal Year		Exercise or Base Price ($/Share)	Expiration Date	Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Option Term ($)(2)
						5%	10%
Daniel J. Thomas	207,000	17.61	%	16.50	12/16/12	2,147,990	5,443,427
William H. Comte	—	—		—	—	—	—
James M. Greenwood	—	—		—	—	—	—
Thomas E. Kiraly	—	—		—	—	—	—
Richard A. Parr II	—	—		—	—	—	—

(1) The vesting of the option is cumulative, and no vested portion will expire until the expiration of the option. The option vests over a four-year period, with 25% of the option vesting and becoming exercisable on December 16 in each of 2004, 2005, 2006 and 2007.

(2) These amounts represent certain assumed rates of appreciation only and are based on an original fair market value of $16.50 per share, which is based on the most recent third party sale of our parent’s common stock. Actual gains, if any, on stock option exercises will depend upon the future market for our parent’s common stock and the price at which it can be sold.

Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End Option and Restricted Stock Values

The following table provides summary information about option exercises by the named executive officers during 2002 and the value realized by them. The table also provides information about the number and value of options held by the named executive officers at December 31, 2002.

Name	Shares Acquired on Exercise(#)	Value Realized($)	Number of Securities Underlying Unexercised Options at Fiscal Year End		Value of Unexercised In-The-Money Options at Fiscal Year End ($)(1)
			Unexercisable	Exercisable	Unexercisable	Exercisable
Daniel J. Thomas	—	—	585,390	154,667	—	—
William H. Comte	—	—	—	26,667	—	—
James M. Greenwood	—	—	145,667	90,667	—	—
Thomas E. Kiraly	—	—	145,249	56,334	—	—
Richard A. Parr II	—	—	49,746	25,067	—	—

(1) Fair market value of securities underlying in-the-money options is based on the most recent third-party sale of our parent’s common stock at $16.50 per share. Neither our parent nor us has any class of equity securities registered pursuant to Section 12 of the Exchange Act.

Compensation of Directors

Members of the board of directors who are also our officers or employees do not receive compensation for their services as directors. Each non-employee director receives $3,500 for each regular or special board of directors meeting and $1,000 for each regular or special standing board of directors committee meeting not held in conjunction with a board of directors meeting. Effective June 26, 2003, each non-employee director also receives a $10,000 annual retainer, payable in quarterly installments. The chairperson of each standing board of directors committee receives an additional fee of $500 for each regular or special standing board of directors committee meeting attended as chairperson, whether or not such meeting was held in conjunction with a board of directors meeting. In addition, the chairperson of the Audit and Compliance Committee receives a $10,000 annual fee payable in quarterly installments.

Each non-employee director receives certain awards of non-qualified stock options under our parent’s 1999 Stock Option and Restricted Stock Purchase Plan (the “1999 Stock Plan”). Each new non-employee director receives options to purchase 10,000 shares of common stock. This award is made on the next business day following their first election to the board of directors. On September 24, 2002, each non-employee director received an initial grant of 10,000 non-qualified stock options to purchase shares of our parent’s

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common stock at an exercise price of $16.50 per share. Each non-employee director also receives options to purchase 4,000 shares of common stock annually. This award is made on the next business day following each annual meeting of Concentra Inc. Each such non-employee director stock option has an exercise price equal to 100% of fair market value on the date of award and expires on the earlier of 10 years from the date of award or one year after the holder ceases to serve on the board of directors. All such stock option grants to non-employee directors are immediately exercisable.

Other Compensation Arrangements

Employment Agreements

Each of the named executive officers has entered into an employment agreement with our parent. The employment agreements were entered into in August 1999 for Messrs. Thomas, Kiraly, Greenwood and Parr, and in August 2002 for Mr. Dunlap. The principal terms of these employment agreements are as follows:

• each agreement has a term of two years, subject to automatic renewal for additional one-year terms, unless terminated in accordance with the agreement’s terms;

• each agreement provides for compensation consisting of base salary, bonuses at the discretion of the board of directors of our parent and participation in any group health plan adopted by us for our employees;

• each agreement provides for a severance payment in the event of (1) termination by our parent without cause or (2) resignation by the employee for good reason, consisting of two years’ base salary for Mr. Thomas, 18 months’ base salary for Mr. Dunlap and one year’s base salary for Messrs. Greenwood, Kiraly and Parr; and

• effective January 1, 2003, annual base salaries under the employment agreements are as follows: $500,000 for Mr. Thomas, $500,000 for Mr. Dunlap, $295,000 for Mr. Greenwood, $320,000 for Mr. Kiraly and $278,500 for Mr. Parr.

Relocation Loan

In 2001 we loaned Mr. Comte $200,000 to assist him with the purchase of a home in connection with his relocation to Dallas, Texas. The loan does not bear interest and was secured by any bonus or incentive compensation payable to Mr. Comte by us and any gains he might realize on exercise of our parent’s stock options. The loan was due on December 31, 2002. In conjunction with Mr. Comte’s resignation in June 2002, the parties amended the loan to provide that we would cancel the loan over a period of three years contingent upon Mr. Comte performing certain continuing obligations for such three-year period.

Life Insurance

In the past, our parent has paid the premiums for second-to-die life insurance policies on the lives of Messrs. Thomas, Greenwood, Kiraly and Parr and their respective spouses in the following face amounts: Mr. Thomas, $2,000,000; Mr. Greenwood, $1,000,000; Mr. Kiraly, $1,000,000; and Mr. Parr, $1,000,000. These policies provide that, upon the death of both insureds under each second-to-die policy, our parent will receive an amount equal to the premiums it paid, with the remaining proceeds going to the second-to-die decedent’s estate. However, our parent has not paid these premiums since the enactment of the Sarbanes-Oxley Act of 2002 and will not participate in such arrangements in the future, except in compliance with this act.

Compensation Plans

1999 Stock Plan

General. Our parent’s board of directors and stockholders approved our 1999 Stock Plan in August 1999 for the purpose of promoting the interests of our parent and its subsidiaries and the interests of our stockholders. The 1999 Stock Plan provides an opportunity for selected employees and officers of our parent and its subsidiaries and to other persons providing services to our parent and its subsidiaries to purchase our parent’s common stock. By encouraging such stock ownership, we seek to attract, retain and motivate such employees and other persons and to encourage such employees and other persons to devote their best efforts to our business and financial success. The following summary describes the principal features of the 1999 Stock Plan and is qualified in its entirety by reference to the specific provisions of the 1999 Stock Plan, which has been filed with the SEC.

Shares and Options Subject to Plan. The 1999 Stock Plan provides for the grant of options or awards to purchase an aggregate 5,250,000 shares of common stock, in the form of incentive stock options intended to meet the requirements of Section 422 of the Internal Revenue Code of 1986, or IRC, nonqualified stock options or restricted stock awards. The 1999 Stock Plan includes provisions for adjustment of the number of shares of common stock available for grant of award thereunder and in the number of

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shares of common stock underlying outstanding options in the event of any stock splits, stock dividends or other relevant changes in the capitalization of our parent.

Eligibility. Under the 1999 Stock Plan, employees, including officers, are eligible to receive grants of incentive stock options structured to qualify under Section 422 of the IRC, nonqualified stock options or restricted stock awards; neither of the two latter awards is intended to meet the requirements of the IRC Section 422. Non-employee directors are eligible to receive only nonqualified stock options and restricted stock awards.

Administration. Our Compensation Committee, which consists entirely of individuals who constitute “outside directors” for purposes of Section 162 of the IRC, administers the 1999 Stock Plan. Our Compensation Committee will designate the individuals to receive the awards, the nature of the awards, the number of shares subject to the awards and the terms and conditions of each award.

Terms of Options and Awards. Each option or award granted under the 1999 Stock Plan is evidenced by a stock option or restricted stock award agreement.

The exercise price of incentive stock options may not be less than 100% of the fair market value of the shares of our parent’s common stock, as determined by our parent’s board of directors or its Compensation Committee, as the case may be, on the date that the option is granted. The exercise price of nonqualified stock options may not be less than 100% of the fair market value of the shares of our parent’s common stock on the date the option is granted. In addition, the aggregate fair market value of the shares of our parent’s common stock with respect to which incentive stock options are exercisable for the first time by an optionee during any calendar year may not exceed $100,000. In addition, no incentive stock option may be granted to an optionee who owns more than 10% of the total combined voting power of all classes of stock of our parent, unless the exercise price is at least 110% of the fair market value of the shares of our parent’s common stock and the exercise period does not exceed five years.

Restricted stock awards granted under the 1999 Stock Plan will be in such amounts and at such times as determined by the Compensation Committee. The purchase price, as well as the vesting provisions, of such awards shall be determined by the Compensation Committee and the purchase price may be equal to, less than or more than the fair market value of the shares of our parent’s common stock to be awarded.

Term of the 1999 Stock Plan. The 1999 Stock Plan will continue in effect until August 17, 2009, unless terminated prior to such date by the board of directors of our parent.

Other Outstanding Options and Share Awards

In addition to the options and awards granted under the 1999 Stock Plan, our parent had, as of March 1, 2003, issued or assumed from its predecessors or acquired companies outstanding options to purchase an aggregate of 469,367 shares of common stock pursuant to separate agreements between our parent and the holders thereof.

The aggregate 4,725,836 options that were outstanding as of March 1, 2003, under the 1999 Stock Plan and all predecessor plans assumed from acquired companies, had a weighted average exercise price of approximately $16.76 per share, and remain subject to various vesting provisions.

Unexercised options and their exercise prices are subject to adjustment if there is a subdivision or consolidation of our parent’s common stock, the payment of a stock dividend or other increase or a decrease in the number of shares of our parent’s common stock outstanding. Our parent does not receive compensation for any such adjustments. In addition, the number and type of securities underlying an option are subject to adjustment if our parent is party to a merger or consolidation.

Certain Federal Income Tax Consequences of the 1999 Stock Plan

The tax consequences of incentive stock options, non-qualified stock options and restricted stock awards are complex. Therefore, the description of tax consequences set forth below is necessarily general in nature and does not purport to be complete. Moreover, statutory provisions are subject to change, as are their interpretations, and their application may vary in individual circumstances. Finally, the tax consequences under applicable state and local income tax laws may not be the same as under the federal income tax laws.

Incentive stock options granted pursuant to the 1999 Stock Plan are intended to qualify as “incentive stock options” within the meaning of Section 422 of the IRC. If an optionee does not dispose of the shares acquired pursuant to exercise of an incentive stock option within one year after the transfer of such shares to the optionee and within two years from grant of the option, such optionee will recognize no taxable income as a result of the grant or exercise of such option. However, for alternative minimum tax purposes the optionee will recognize as an item of tax preference the difference between the fair market value of the shares received upon

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exercise and the exercise price. Any gain or loss that is subsequently recognized upon a sale or exchange of the shares may be treated by the optionee as long-term capital gain or loss, as the case may be. Concentra Inc. will not be entitled to a deduction for federal income tax purposes with respect to the issuance of an incentive stock option, the transfer of shares upon exercise of the option or the ultimate disposition of such shares, provided that the holding period requirements are satisfied.

If shares received upon exercise of an incentive stock option are disposed of prior to satisfaction of the holding period requirements, the optionee generally will recognize taxable ordinary income, in the year in which such disqualifying disposition occurs, in an amount equal to the lesser of (1) the excess of the fair market value of the shares on the date of exercise over the exercise price and (2) the gain recognized on such disposition. Such amount will ordinarily be deductible by our parent for federal income tax purposes in the same year, provided that our parent satisfies certain federal income tax information reporting requirements. In addition, the excess, if any, of the amount realized by the exercise of the incentive stock option will be treated as capital gain, long-term or short-term, depending on whether, after exercise of the option, the shares were held for more than one year.

Nonqualified stock options may be granted under the 1999 Stock Plan. An optionee generally will not recognize any taxable income upon grant of a nonqualified stock option. The optionee will recognize taxable ordinary income at the time of exercise of such option in an amount equal to the excess of the fair market value of the shares on the date of exercise over the exercise price. Such amount will ordinarily be deductible by our parent in the same year, provided that our parent satisfies certain federal income tax information reporting requirements. Any gain or loss subsequently recognized by the optionee upon a sale or exchange of the shares will be capital gain or loss, long-term or short-term, depending on whether, after the exercise of the option, the shares were held for more than one year prior to such sale or exchange.

Restricted stock awards may also be granted under the 1999 Stock Plan. A recipient of a restricted stock award generally will not recognize taxable income upon the award of shares of such stock, unless he or she makes a timely election under Section 83(b) of the IRC. Such a recipient, however, would recognize taxable ordinary income and the holding period for such shares would commence at the time that such shares become vested, in an amount equal to the excess of the fair market value of the shares at the time over the purchase price paid for such shares, if any. If, on the other hand, the recipient makes a timely election under Section 83(b), he or she would recognize taxable ordinary income and the holding period for such shares would commence at the time of purchase or grant, in an amount equal to the excess of the fair market value of the shares at that time, determined without regard to any transfer restrictions imposed on the shares, vesting provisions or any restrictions imposed by the securities laws, over the purchase price paid for such shares, if any. In either case, our parent should be entitled to a deduction in an amount equal to the ordinary income recognized by the recipient in the same year that the recipient recognized such income, provided that it satisfies certain federal income tax information reporting requirements. Any gain or loss subsequently recognized by the recipient upon a sale or exchange of the shares will be recorded as capital gain or loss, long-term or short-term, depending on whether the shares were held for more than one year prior to such sale or exchange.

401(k) Plan

Our parent has a defined contribution plan that complies with Section 401(k) of the IRC. Substantially all employees of our parent and its subsidiaries, including certain officers and directors of our parent, are eligible to participate in the 401(k) plan once they have attained age 21 and completed 1,000 hours of service within a consecutive 12 month period of service. Generally, employees may contribute amounts up to a maximum of 25% of their pre-tax eligible compensation. Under the 401(k) plan, our parent has the option of matching a portion of the participants’ pretax contributions. For 2002 and 2001 we elected to match 25% of participants’ pretax contributions during the plan year, up to a maximum of 4% of each participant’s eligible compensation as defined in the 401(k) plan document, subject to a maximum of $30,000.

Compensation Committee Interlocks and Insider Participation

The Compensation Committee of our parent, since June 2002, has been composed of Messrs. Queally, Carlyle, Ferrer and Kelly. From January 2002 until June 2002 the Compensation Committee was composed of Messrs. Queally, Carlyle and Mackesy.

Mr. Carlyle, who served as the non-employee Chairman of our parent until August 1999, has served as a member of the Compensation Committee since December 1998.

Mr. Queally serves as the non-employee Chairman of our board of directors and that of our parent. Mr. Queally is a managing member, and Mr. Mackesy is a principal of the sole general partner, of WCAS. Because of these affiliations, Messrs. Queally and Mackesy may be deemed to have a material interest in the matters described under “Certain Relationships and Related Transactions—Equity Investor Agreements.”

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Indemnification of Directors and Officers

Our parent has entered into agreements to indemnify its directors and executive officers. Under these agreements, our parent is obligated to indemnify our directors and officers to the fullest extent permitted under the Delaware General Corporate Law for expenses, including attorneys’ fees, judgments, fines and settlement amounts, incurred by them in any action or proceeding arising out of their services as a director or officer. We believe that these agreements are helpful in attracting and retaining qualified directors and officers.

Committees of the Board

The board of directors of our parent has two standing committees, the Audit and Compliance Committee and the Compensation Committee. The members of the Audit and Compliance Committee are Messrs. Sabolik (Chairman), Carlyle, Mackesy and Nelson. The members of the Compensation Committee are Messrs. Kelly (Chairman), Carlyle, Queally and Ferrer.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

All of our issued and outstanding capital stock is owned by our parent, Concentra Inc. As of March 1, 2003, our parent had 35,525,406 shares of common stock outstanding. The table below contains information regarding the beneficial ownership of our parent’s common stock as of March 1, 2003, by:

• each stockholder who owns beneficially 5% or more of our parent’s common stock;

• each director of our parent;

• each named executive officer; and

• all directors and executive officers as a group.

We have determined beneficial ownership according to the rules of the SEC. Unless otherwise noted in the footnotes to this table, each of the stockholders named in this table has sole voting and investment power with respect to our parent’s common shares shown as beneficially owned, subject to applicable community property laws. The number of shares beneficially owned by a person includes shares of common stock that are subject to stock options or warrants that are either currently exercisable or exercisable within 60 days after March 1, 2003. These shares are also deemed outstanding for the purpose of computing the percentage of outstanding shares owned by the person. These shares are not deemed outstanding, however, for the purpose of computing the percentage ownership of any other person. Unless otherwise indicated, all stockholders set forth below have the same principal business address as us.

Additionally, Richard J. Sabolik was appointed to our board of directors and that of our parent on June 26, 2003. He was granted immediately-exercisable stock options to acquire 10,000 shares of our parent’s common stock in conjunction with this appointment.

Name	Beneficial Shares	Ownership Percent
Welsh, Carson, Anderson & Stowe VIII, L.P. (1) 320 Park Avenue, Suite 2500 New York, NY 10022	24,608,653	64.94	%
FFC Partners I, L.P. (2) c/o Ferrer Freeman and Company, LLC The Mill 10 Glenville Street Greenwich, CT 06831	2,283,381	6.03
Paul B. Queally (3) c/o Welsh, Carson, Anderson & Stowe 320 Park Avenue, Suite 2500 New York, NY 10022	23,836,949	62.91
Carlos A. Ferrer (4) c/o Ferrer Freeman and Company, LLC The Mill 10 Glenville Street Greenwich, CT 06831	2,283,381	6.03
D. Scott Mackesy (5) c/o Welsh, Carson, Anderson & Stowe 320 Park Avenue, Suite 2500 New York, NY 10022	23,823,386	62.87
John K. Carlyle (6)	58,466	*
James T. Kelly (7)	10,000	*
Daniel J. Thomas (8)	277,850	*
Thomas E. Kiraly (9)	93,973	*
James M. Greenwood (10)	145,130	*
Richard A. Parr II (11)	40,647	*
Steven E. Nelson (12)	82,591	*
All directors and executive officers as a group (10 individuals)	26,853,781	70.87

* Less than 1%.

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(1) Includes 1,168,307 shares that may be acquired pursuant to warrants that are presently exercisable or exercisable within 60 days and 20,000 shares that may be acquired pursuant to stock options awarded under incentive compensation plans that are presently exercisable or exercisable within 60 days. Certain of the shares reflected as owned by WCAS are owned of record by Welsh, Carson, Anderson & Stowe VI, L.P. (1,729,712), WCAS Healthcare Partners, L.P. (118,410), WCAS Capital Partners III, L.P. (619,356) and WCAS Management Corp. (256). An aggregate of 810,064 shares reflected as owned by WCAS are owned beneficially and of record by certain individuals, including Messrs. Mackesy and Queally, who are members of the limited liability company that serves as its sole general partner, or who are employed by its investment adviser. Except for 38,961 shares held by Mr. Queally and 24,797 shares held by Mr. Mackesy, such individuals disclaim beneficial ownership of such shares.

(2) Includes 60,560 shares that may be acquired pursuant to warrants that are presently exercisable or exercisable within 60 days and 10,000 shares that may be acquired pursuant to stock options awarded under incentive compensation plans that are presently exercisable or exercisable within 60 days. Certain of the shares reflected as owned by FFC Partners I, L.P. are owned beneficially and of record by FFC Partners II, L.P. (236,003) and FFC Executive Partners L.P. (2,526). Carlos A. Ferrer and David A. Freeman are the only members of the limited liability company that serves as the sole general partner of FFC Partners I, L.P., FFC Partners II, L.P. and FFC Executive Partners, L.P. These individuals may be deemed to share beneficial ownership of the shares owned of record by these entities. Except for 10,000 shares, Mr. Ferrer disclaims beneficial ownership of any such shares.

(3) Includes 1,143,268 shares that may be acquired pursuant to warrants that are presently exercisable or exercisable within 60 days and 10,000 shares that may be acquired pursuant to stock options awarded under incentive compensation plans that are presently exercisable or exercisable within 60 days. Certain of the shares reflected as owned by Mr. Queally are owned of record by WCAS (21,330,855), Welsh, Carson, Anderson & Stowe VI, L.P. (1,729,712), WCAS Healthcare Partners, L.P. (118,410), WCAS Capital Partners III, L.P. (619,356) and WCAS Management Corp. (256). Except for 10,000 shares, Mr. Queally disclaims beneficial ownership of such shares.

(4) Includes 60,560 shares that may be acquired pursuant to warrants that are presently exercisable or exercisable within 60 days and 10,000 shares that may be acquired pursuant to stock options awarded under incentive compensation plans that are presently exercisable or exercisable within 60 days. The shares reflected as owned by Mr. Ferrer are owned of record by FFC Executive Partners I, L.P. (2,034,852), FFC Partners II, L.P. (236,003) and FFC Executive Partners II, L.P. (2,526). Except for 10,000 shares, Mr. Ferrer disclaims beneficial ownership of such shares.

(5) Includes 1,142,734 shares that may be acquired pursuant to warrants that are presently exercisable or exercisable within 60 days and 10,000 shares that may be acquired pursuant to stock options awarded under incentive compensation plans that are presently exercisable or exercisable within 60 days. Certain of the shares reflected as owned by Mr. Mackesy are owned of record by WCAS (21,330,855), Welsh, Carson, Anderson & Stowe VI, L.P. (1,729,712), WCAS Healthcare Partners, L.P. (118,410), WCAS Capital Partners III, L.P. (619,356) and WCAS Management Corp. (256). Except for 10,000 shares, Mr. Mackesy disclaims beneficial ownership of such shares.

(6) Includes 50,000 shares that may be acquired pursuant to warrants that are presently exercisable or exercisable within 60 days.

(7) Includes 10,000 shares that may be acquired pursuant to stock options awarded under incentive compensation plans that are presently exercisable or exercisable within 60 days.

(8) Includes 3,082 shares that may be acquired pursuant to warrants that are presently exercisable or exercisable within 60 days, and 257,134 shares that may be acquired pursuant to stock options awarded under incentive compensation plans that are presently exercisable or exercisable within 60 days.

(9) Includes 585 shares that may be acquired pursuant to warrants that are presently exercisable or exercisable within 60 days, and 91,667 shares that may be acquired pursuant to stock options awarded under incentive compensation plans that are presently exercisable or exercisable within 60 days.

(10) Includes 134,334 shares that may be acquired pursuant to stock options awarded under incentive compensation plans that are presently exercisable or exercisable within 60 days.

(11) Includes 1,264 shares that may be acquired pursuant to warrants that are presently exercisable or exercisable within 60 days, and 34,334 shares that may be acquired pursuant to stock options awarded under incentive compensation plans that are presently exercisable or exercisable within 60 days.

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(12) Includes 3,082 shares that may be acquired pursuant to warrants that are presently exercisable or exercisable within 60 days, and 12,500 shares that may be acquired pursuant to stock options awarded under incentive compensation plans that are presently exercisable or exercisable within 60 days.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Equity Investor Agreements

Stockholders Agreement

Our parent, WCAS, investors affiliated with WCAS, which we refer to as the “WCAS Investors,” certain management investors (including certain executive officers of our parent and us) and FFC are parties to a stockholders agreement. The stockholders agreement provides:

• for limitations on the transfer of shares owned by the investors;

• for tag-along rights for FFC, the management investors and the WCAS Investors, other than WCAS, to participate in proposed dispositions of our parent’s common stock by WCAS;

• that in the event that WCAS receives a third-party offer to purchase a significant portion of our outstanding common stock, WCAS may require FFC, the WCAS Investors and the management investors to accept the offer and sell their shares of our parent to the third party; and

• for preemptive rights to the investors to participate, on a pro rata basis according to their ownership of our parent’s capital stock, in equity offerings of our parent with certain customary exceptions.

The stockholders agreement does not provide for any agreements among the WCAS Investors, the management investors and FFC with respect to voting of shares or management of our parent.

Registration Rights Agreement

At the same time they entered into the stockholders agreement, our parent, the WCAS Investors, the management investors and FFC also entered into a registration rights agreement. The registration rights agreement gives investors certain rights to require our parent to register their shares of our parent’s capital stock under the Securities Act and, upon request, to include their shares in any other registration of shares by our parent.

Class A Common Stock

Certain shares of our parent’s common stock held by FFC are designated Class A common stock. The Amended and Restated Certificate of Incorporation of our parent provides that the Class A common stock is identical in all respects to the rest of our parent’s common stock, except that, so long as any Class A common stock is outstanding, the holders of Class A common stock, voting as a class, have the right to elect one member of our parent’s board of directors. These holders have elected Carlos A. Ferrer as a member of our parent’s board of directors. All shares of Class A common stock automatically convert into shares of common stock upon the occurrence of certain events, including the completion of a firm commitment underwritten public offering of the common stock of Concentra Inc. resulting in gross proceeds to our parent of at least $30,000,000.

Concentra Inc. Debt and Equity Instruments

WCAS Capital Partners III, L.P., an investment partnership affiliated with WCAS, owns $83.9 million in accreted value at maturity of 14% senior discount debentures due 2011 of our parent and also holds warrants to acquire 619,356 shares of our parent’s common stock for $42.7 million. Messrs. Queally and Mackesy, who are members of WCAS, may be deemed to control WCAS Capital Partners III, L.P.

In November 2002, in connection with our parent’s $25.0 million equity financing, WCAS, Welsh, Carson, Anderson & Stowe VI, L.P., WCAS Management Corp., entities affiliated with WCAS and a number of individuals affiliated with WCAS (excluding Messrs. Queally and Mackesy, whose personal acquisitions are discussed below) purchased a total of 1,386,812 shares of our parent’s common stock at a price of $16.50 per share for an aggregate purchase price of $22,882,398. Messrs. Queally and Mackesy, who are members of WCAS, may be deemed to control the WCAS entities participating in this purchase.

In November 2002, in connection with our parent’s $25.0 million equity financing, the following directors of our parent and us purchased shares of our parent’s common stock as follows: Mr. Queally, 5,773 shares for an aggregate purchase price of $27,505.50; Mr. Mackesy, 852 shares for an aggregate purchase price of $14,058; and Mr. Nelson, 1,305 shares for an aggregate purchase price of $21,532.50.

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In December 2002, in connection with our acquisition of Em3, WCAS and WCAS Healthcare Partners, L.P., an entity affiliated with WCAS, as well as a number of individuals affiliated with WCAS (excluding Messrs. Queally and Mackesy, whose personal acquisitions are discussed below), acquired a total of 1,207,529 shares of our parent’s common stock in exchange for their Series A Preferred shares of Em3, valued at $16.50 per share, for an aggregate value of $19,924,228. Also in December 2002, in connection with the acquisition of OccMed by us, WCAS and WCAS Healthcare Partners, L.P., an entity affiliated with WCAS, as well as a number of individuals affiliated with WCAS (excluding Messrs. Queally and Mackesy, whose personal acquisitions are discussed below), acquired a total of 537,832 shares of our parent’s common stock in exchange for their common shares of OccMed, valued at $16.50 per share, for an aggregate value of $8,874,228. Messrs. Queally and Mackesy, who are members of WCAS, may be deemed to control the WCAS entities participating in these conversions.

In December 2002, in connection with our acquisition of Em3, FFC Partners I, L.P. and FFC Executive Partners I, L.P., entities affiliated with FFC, acquired a total of 121,559 shares of our parent’s common stock in exchange for their Series A Preferred shares of Em3, valued at $16.50 per share, for an aggregate value of $2,005,723.50. Also in December 2002, in connection with the acquisition of OccMed by us, FFC Partners I, L.P. and FFC Executive Partners I, L.P., entities affiliated with FFC, acquired a total of 58,748 shares of our parent’s common stock in exchange for their common shares of OccMed, valued at $16.50 per share, for an aggregate value of $969,342. Mr. Ferrer, who is a member of FFC, may be deemed to control the FFC entities participating in these conversions.

In December 2002, in connection with our acquisition of Em3, the following directors and executive officers of our parent and us acquired shares of our parent’s common stock valued at $16.50 per share in exchange for their Series A Preferred shares of Em3 Corporation, as follows: Mr. Queally, 1,498 shares for an aggregate value of $24,717; Mr. Mackesy, 768 shares for an aggregate value of $12,672; Mr. Carlyle, 8,466 shares for an aggregate value of $139,689; Mr. Thomas, 8,568 shares for an aggregate value of $141,372; Mr. Greenwood, 10,796 shares for an aggregate value of $178,134; and Mr. Parr, 1,336 shares for an aggregate value of $22,044. Also in December 2002, in connection with the acquisition of OccMed Systems, Inc. by us, the following directors and executive officers of our parent and us acquired shares of our parent’s common stock valued at $16.50 per share in exchange for their common shares of OccMed, as follows: Mr. Queally, 667 shares for an aggregate value of $11,005.50; and Mr. Mackesy, 342 shares for an aggregate value of $5,643.

In January 2002, Mr. Nelson acquired an aggregate of 10,000 shares of our parent’s common stock pursuant to exercises of stock options at an average exercise price of $10.17 per share, for an aggregate purchase price of $101,700.

WCAS and WCAS Capital Partners III, L.P. currently guarantee the obligations of our parent under its bridge loan agreement dated June 25, 2002. Our parent’s obligations under this bridge loan agreement are secured by a security interest in the current and future indebtedness owed by our parent to WCAS Capital Partners (including 14% debentures held by WCAS Capital Partners), except indebtedness that is subordinated to the bridge loan on terms acceptable to the bridge loan lenders. See “Description of Other Indebtedness—Concentra Inc.’s Bridge Loan Agreement.”

Other Related-Party Transactions

Agreements with the Physician Groups

W. Tom Fogarty, M.D., Senior Vice President and Chief Medical Officer of our parent and us, is the President, a director and a shareholder of Occupational Health Centers of the Southwest, P.A. (“OHCSW”), the largest of our affiliated physician groups, and a shareholder, officer and/or director of several other physician groups affiliated with us. We have entered into a 40-year management agreement with each of the physician groups. OHCSW paid approximately $178.7 million in management fees to one of our subsidiaries in 2002 under its management agreement with that subsidiary, and together our subsidiaries received an aggregate amount of $396.3 million in management fees from our affiliated physician groups. Dr. Fogarty receives no remuneration from any of the physician groups for serving as an officer or director.

Agreements With and Indebtedness of Certain Directors and Executive Officers

Certain executive officers and directors participated in our Officer Loan Program until October 2002, when they voluntarily terminated their participation in the program in response to the prohibition on corporate loans to directors and executive officers under the Sarbanes-Oxley Act of 2002. Although such individuals’ continued participation in the Officer Loan Program would have been permissible under the Sarbanes-Oxley Act of 2002 by virtue of having commenced prior to its enactment, they voluntarily terminated their participation in furtherance of, and in support of, the purposes underlying Congressional enactment of such Act.

Under this program, we made the following loans to finance the purchase of shares of our parent’s common stock at a purchase price of $16.50 per share (in each case, representing fair market value on the date of the purchase): the executive officers, including Mr. Thomas, $400,000 and 24,242 shares; Mr. Comte, $200,000 and 12,121 shares; Mr. Kiraly, $300,000 and 18,182 shares; and Mr.

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Parr $400,000 and 24,242 shares; and one director, Mr. Nelson, $200,000 and 12,121 shares. Each loan bore interest at the Applicable Federal Rate published by the Internal Revenue Service.

Mr. Comte’s participation in this program terminated upon his departure in June 2002. The shares pledged to secure repayment of Mr. Comte’s loan were canceled in payment of the outstanding principal balance of his loan, and we paid Mr. Comte $10,000 related to his termination in the program. Upon the voluntary termination of participation in this program by Messrs. Thomas, Kiraly, Parr and Nelson, the shares pledged to secure repayment of each loan were canceled in payment of, and were sufficient in value to repay, the outstanding principal balances of their respective loans.

Acquisition of Em3 Corporation

In December 2002, in a transaction valued at $30.7 million (consisting of $30.1 million in our parent’s common stock and assumption of $0.6 million in indebtedness owed to WCAS), we acquired Em3, a provider of information technology and a software-based system for the management of work-related injuries. Prior to the acquisition, we performed certain administrative services for Em3, including sub-contracting employees to Em3 Corporation and providing office space, access to certain of our software and systems and related administrative services. During the eleven-month period ending November 30, 2002, Em3 Corporation paid us $2.8 million for the administrative services and reimbursable expenses we provided.

The stockholders of Em3 were primarily the same as our parent’s principal stockholders. The percentage of total Em3 share ownership by our principal stockholders and by our directors and executive officers prior to the acquisition was as follows: WCAS-affiliated entities and individuals as a group, 66.24%; FFC entities, 6.65%; Mr. Queally, 0.08%; Mr. Mackesy, 0.04%; Mr. Carlyle, 0.46%; Mr. Thomas, 0.47%; Mr. Greenwood, 0.59%; and Mr. Parr, 0.07%. Messrs. Greenwood, Carlyle, Queally, Mackesy and Ferrer served on Em3’s board of directors.

Acquisition of OccMed Systems, Inc.

In December 2002, in a transaction valued at approximately $16.6 million (consisting of $12.8 million in our parent’s common stock, assumption of $1.0 million in indebtedness owed to WCAS and assumption of $2.8 million in other indebtedness), we acquired the assets of OccMed, a company engaged in developing new, free-standing primary care occupational healthcare centers. Prior to the acquisition, we were party to a management and administrative services agreement with OccMed and performed management services for the development and construction of OccMed’s occupational healthcare centers, sub-contracted employees to OccMed, recruited, hired and trained employees for its occupational healthcare centers and provided accounting, billing and collection services for its occupational healthcare centers.

The stockholders of OccMed were primarily the same as our parent’s principal stockholders and included certain of our directors. The percentage of total OccMed share ownership by our principal stockholders and by our directors prior to the acquisition was as follows: WCAS-affiliated entities and individuals as a group, 69.4%; FFC entities, 7.56%; Mr. Queally, 0.09%; and Mr. Mackesy, 0.04%. Messrs. Queally, Mackesy and Ferrer served on the OccMed board of directors.

Acquisition of National Healthcare Resources, Inc.

In November 2001, in a transaction valued at $141.8 million (consisting of $83.0 million of our parent’s common stock, $1.0 million in cash and the assumption of $57.8 million in NHR indebtedness), we acquired NHR, a provider of care management and network services to the workers’ compensation and auto insurance industries on a national level. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Significant Acquisitions.” Mr. Mackesy served on NHR’s board of directors.

Before the acquisition, entities and individuals affiliated with WCAS owned approximately 48% of NHR. In the transaction, entities and individuals affiliated with WCAS as a group received 1,740,803 shares of our parent’s common stock, representing 5.5% of the total amount of our parent’s common stock then outstanding.

Acquisition of HealthNetwork Systems LLC/Joint Marketing Agreement

In November 2001, in a transaction valued at approximately $30.9 million, we acquired HNS, a provider of network services such as provider bill repricing and provider data management for health plans and other payors. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Significant Acquisitions.” Mr. Nelson, one of our directors, was the President and Chief Executive Officer of HNS.

Messrs. Nelson, Queally and Mackesy, each of whom is one of our directors, and Mr. Thomas, one of our directors and executive officers, owned equity interests in HNS. For each, the percentage of total HNS equity ownership and the amount received in

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the transaction were as follows: Mr. Nelson, 19.84% and $5,389,750 (plus repayment of debt in the amount of $230,447); Mr. Thomas, 1.97% and $603,146; Mr. Queally, 0.55% and $169,419; and Mr. Mackesy, 0.53% and $162,747.

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DESCRIPTION OF OTHER INDEBTEDNESS

New Credit Facility

The issuance and offering of the old notes was part of a refinancing of certain of our existing indebtedness, including the indebtedness under our previous credit facility. In connection with this refinancing, we and certain of our subsidiaries entered into a new credit facility with a syndicate of banks and other financial institutions. JPMorgan Chase Bank acted as Administrative Agent, Deutsche Banc Alex Brown acted as Documentation Agent, and Citicorp North America, Inc. and Credit Suisse First Boston acted as Co-Syndication Agents.

The following sets forth a description of some of the terms of our new credit facility.

Loans and Interest Rates. Our new credit facility consists of (1) a $100.0 million revolving loan facility, of which $35.0 million is available in the form of letters of credit, and (2) a $335.0 million term loan facility. Borrowings under the revolving loan facility and term loan facility bear interest, at our option, at either (1) the alternate base rate plus a margin initially equal to 2.25% for the loans under the revolving loan facility and 2.75% for the term loan facility or (2) the reserve-adjusted Eurodollar rate plus a margin initially equal to 3.25% for the loans under the revolving loan facility and 3.75% for the term loan facility. The margins for borrowings under the revolving loan facility will be subject to reduction based on changes in our leverage ratios and certain other performance criteria. The default rate under our new credit facility is 2.0% above the otherwise applicable rate.

Maturity and Amortization. Loans under the revolving loan facility are available on a revolving basis for a period of five years after the closing date of the facility. The term loan facility is payable in nominal quarterly installments of $837,500 for the first five years of the facility, with the balance due in the final year of the facility.

Availability and Use of Proceeds. We used the net proceeds from the offering of the old notes and the initial borrowings under our new credit facility to repay all outstanding amounts under our previous credit facility and to make payments in connection with the termination of our previous interest rate hedging arrangements. The remaining net proceeds were transferred to Concentra Inc., our parent, to enable it to redeem a portion of its existing 14% senior discount debentures. See “Use of Proceeds.” The undrawn portion of the revolving loan facility is available to us for general corporate purposes as revolving loans.

Security. Our new credit facility is secured by a first-priority lien on (1) 100% of the issued and outstanding capital stock of our company held by Concentra Inc., our parent, (2) 100% of the issued and outstanding capital stock of our direct and indirect, wholly-owned domestic subsidiaries, other than certain permitted joint ventures, (3) 65% of the issued and outstanding capital stock of any future foreign subsidiaries and (4) all of our other present and future assets and properties and the present and future assets and properties of our subsidiaries, other than certain permitted joint ventures.

Guarantors. Our new credit facility is guaranteed by our parent and each of our current and future, direct and indirect, wholly-owned domestic subsidiaries.

Prepayments. Our new credit facility provides for mandatory repayments, subject to stated exceptions, of the term loan facility and commitment reductions in the revolving loan facility, based on certain net asset sales outside the ordinary course of business, from the net proceeds of specified debt and equity issuances, and excess cash flow. Outstanding loans under our new credit facility may be prepaid voluntarily, except that we will bear any Eurodollar rate breakage costs and must pay a prepayment premium of 1% the amount of any term loans prepaid during the first year the loans are outstanding.

Conditions. The obligations of the lenders to make loans under our new credit facility are subject to the satisfaction of certain conditions precedent customary for financings of this type.

Affirmative Covenants. Our new credit facility contains affirmative covenants customary for financings of this type.

Negative Covenants. Our new credit facility contains negative covenants that limit our ability and the ability of our subsidiaries to, among other things:

• incur additional indebtedness or contingent obligations, issue guarantees or enter into operating leases;

• grant liens or negative pledges;

• make fundamental changes in our business, corporate structure or capital structure, including, among other things, entering into any merger, consolidation or amalgamation, or liquidating, winding up or dissolving;

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• sell assets;

• make specified restricted payments;

• make capital expenditures;

• make investments, including the advancing of loans or extensions of credit, enter into joint ventures or make acquisitions of assets constituting a business unit or the capital stock of another entity;

• prepay, redeem or repurchase subordinated indebtedness, including the notes offered hereby, or amend documents relating to other existing indebtedness, including the notes offered hereby, or amend documents relating to other existing indebtedness or other material documents; and

• enter into transactions with affiliates.

The negative covenants also include financial covenants that require us to maintain certain financial ratios.

Events of Default. Our new credit facility also contains events of default that are customary for financings of this type, including, without limitation, and subject to certain exceptions, those related to:

• default in payment of principal and interest;

• materially incorrect representations or warranties;

• default in observance or performance of any of the affirmative or negative covenants included in our new credit agreement or related security documents;

• cross-default in the payment of other indebtedness of more than $10.0 million;

• specified events of bankruptcy;

• specified ERISA events;

• specified judgments or decrees involving more than $5.0 million;

• failure of the applicable new credit facility documents or any material provisions thereof, the guarantees, security documents or any related documents to be enforceable and in full force and effect;

• certain change of control events;

• conduct of our parent’s business; and

• failure of the subordination of the notes and the subsidiary guarantees to the right of payment of the lenders under our new credit facility to be valid.

Our 13% Senior Subordinated Notes due 2009

In August 1999, we issued $190.0 million in principal amount of 13% senior subordinated notes, of which approximately $142.5 million in principal amount was outstanding as of June 30, 2003. The 13% notes mature on August 15, 2009, with interest payable semi-annually in arrears on each February 15 and August 15. The 13% notes are senior or pari passu in right of payment to all of our existing and future subordinated indebtedness and are pari passi in right of payment to the notes offered hereby. The 13% notes are unconditionally guaranteed on a senior subordinated basis by all of our restricted subsidiaries, other than our joint ventures. The payment of principal of, premium, if any, and interest on the 13% notes is subordinated to the prior payment in full of all our senior indebtedness.

We have the option to redeem the outstanding 13% notes on or after August 15, 2004 at a price equal to 106.5% of the principal amount of the notes, plus accrued and unpaid interest to the redemption date. This redemption premium will decrease annually to 100% of the principal amount beginning on August 15, 2008. Holders of the 13% notes may require us to redeem all or a part of the notes upon a change of control of us at a price equal to 101% of the principal amount of the 13% notes repurchased, plus accrued and unpaid interest on these notes. In addition, any asset sales by us or our restricted subsidiaries must meet certain requirements and,

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when the aggregate amount of excess proceeds from asset sales exceeds $15.0 million, we must offer to repurchase outstanding 13% notes using our excess proceeds before offering to purchase the notes offered hereby. See “Description of the New Notes—Asset Sales.”

The indenture governing the 13% notes contains covenants that restrict, among other things, our and our restricted subsidiaries’ ability to:

• incur additional indebtedness or issue preferred stock;

• make restricted payments;

• create or permit to exist certain liens on assets;

• create or permit to exist consensual restrictions on our or our restricted subsidiaries’ ability to make certain distributions or other payments to us or our restricted subsidiaries;

• merge, consolidate or sell assets;

• enter into transactions with our affiliates;

• incur debt that is senior in right of payment to the 13% notes and junior in right of payment to any senior debt;

• enter into sale and leaseback transactions; and

• issue equity interests in our restricted subsidiaries.

The indenture provides that, in order to enter into certain types of transactions, including the incurrence of indebtedness, the making of restricted payments and the consummation of mergers and consolidations, our Fixed Charge Coverage Ratio (as defined in the indenture) must be at least 2.50 to 1. In addition, it contains events of default that are customary for this type of security.

Concentra Inc.’s 14% Senior Discount Debentures due 2011

In August 1999, Concentra Inc., our parent, issued 14% senior discount debentures for an aggregate initial offering price of $110.0 million, all of which are outstanding. As of June 30, 2003, the accreted value of these 14% debentures was approximately $185.9 million. As part of the Refinancing Transactions, we transferred $141.2 million to our parent to enable it to redeem a portion of the 14% debentures.

In July 2003, our parent entered into a supplemental indenture with the holders of the 14% debentures to, among other things, extend the maturity of the 14% debentures until February 15, 2011, decrease the minimum required period for notices of redemption, permit conditional notices of redemption and modify the redemption price for redemptions occurring prior to August 15, 2003.

The 14% debentures will not accrue cash interest until August 15, 2004. The 14% debentures mature on February 15, 2011, with interest payable semi-annually in arrears each February 15 and August 15 beginning on February 15, 2005. These debentures will bear interest at the rate of 15% per annum on any overdue principal at maturity and premium, if any, and on any overdue installment of interest, if any, until paid.

On February 15, 2005, and on subsequent interest payment dates, our parent will also pay to the holders of 14% debentures that amount that is necessary to ensure the current and full tax deductibility of the accrued discount on these debentures. If our parent fails to pay this amount, then any such nonpayment will not be an event of default under the indenture for the 14% debentures, but these debentures will bear interest at a rate of 15% during any period of nonpayment.

Our parent has the option to redeem all or a portion of the 14% debentures at specified premiums. In addition, our parent may redeem all of the 14% debentures at 100% of their accreted value on the redemption date, plus accrued and unpaid interest, if any, with the proceeds of any of its unsecured debt issued to refinance the outstanding 14% debentures. Holders of the 14% debentures may require us to redeem all or a part of the notes upon a change of control of our parent.

The 14% debentures are not guaranteed by us or any of our subsidiaries. The indenture governing the 14% debentures contains other covenants and events of default that are customary for this type of security.

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Concentra Inc.’s Bridge Loan Agreement

On June 25, 2002, Concentra Inc., our parent, entered into a bridge loan agreement providing for $55.0 million in bridge loans. The bridge loan agreement requires our parent to repay the entire unpaid principal amount of the bridge loans within two years of the date these bridge loans were made.

The bridge loans bear interest at a rate per annum equal to, at our parent’s option, either the defined base rate or the defined Eurodollar rate, in each case plus the following applicable margins:

• 0.50% per annum, in the case of base rate loans; and

• 1.50% per annum, in the case of Eurodollar rate loans.

Interest under the bridge loan agreement is due and payable (1) on the first day of each fiscal quarter, in the case of base rate loans, or (2) at the end of the applicable interest period and, in the case of any interest period longer than three months, on each successive date three months after the first day of such interest period, in the case of Eurodollar rate loans.

Our parent is required to prepay the bridge loans with:

• 100% of the net proceeds of any sale or issuance of equity after the closing date of the bridge loan agreement by our parent, us or any of its other subsidiaries, subject to limited exceptions; and

• 100% of the net proceeds of any incurrence of indebtedness after the closing date of the bridge loan agreement by our parent, us or any of its other subsidiaries, subject to limited exceptions.

Our parent may, at its option, prepay the bridge loans without premium or penalty, subject to reimbursement of the bridge loan lenders’ breakage costs in the case of prepayment of Eurodollar rate loans.

The repayment of up to $68,000,000 of our parent’s obligations under the bridge loan agreement is guaranteed by Welsh, Carson, Anderson & Stowe VIII, L.P. and WCAS Capital Partners III, L.P. Additionally, our parent’s obligations under the bridge loan agreement are secured by a security interest in the current and future indebtedness owed by our parent to WCAS Capital Partners (including the 14% debentures held by WCAS Capital Partners), except indebtedness that is subordinated to the bridge loans on terms acceptable to the bridge loan lenders.

The bridge loan agreement contains customary restrictions on the activities of our parent and any of its subsidiaries, including restrictions on prepayments of debt under the indenture governing our parent’s 14% debentures, the indenture governing our 13% notes and the new credit facility, subject to certain exceptions. Our parent obtained a waiver of certain of these restrictions which would otherwise prohibit some of the Refinancing Transactions, including our parent’s obligation to cause us to use 100% of the net proceeds of the offering of the old notes and borrowings under our new credit facility to repay the bridge loans. Receipt of this waiver was a condition to the closing of the offering of the old notes. The Bridge Loan Agreement also contains customary events of default.

The outstanding principal amount of the bridge loans as of June 30, 2003 was $56.8 million, and accrued but unpaid interest on the bridge loans was approximately $27,000.

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DESCRIPTION OF THE NEW NOTES

The form and terms of the new notes are the same as the form and terms of the old notes, except that the new notes have been registered under the Securities Act, will not bear legends restricting the transfer thereof, will not be entitled to registration rights under the Registration Rights Agreement, and will not contain provisions relating to additional interest. You can find the definitions of certain terms used in this description under the caption “—Certain Definitions.” In this description, the word “Company” refers only to Concentra Operating Corporation, a Nevada corporation, and not to any of its Subsidiaries. As used in this section, the term “notes” refers to both the old notes and the new notes.

The Company will issue the notes under an indenture (the “Indenture”) among itself, the Guarantors and The Bank of New York, as trustee (the “Trustee”). The terms of the notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”).

The old notes, the new notes and any additional notes issued from time to time in accordance with the terms of the indenture will constitute a single class of debt securities under the indenture. If the exchange offer is consummated, holders of old notes who do not exchange new notes for their old notes will vote together with holders of the new notes and, if applicable, any holders of additional notes for all relevant purposes under the indenture. Accordingly, in determining whether the required holders have given any notice, consent or waiver or taken any other action permitted under the indenture, any old notes that remain outstanding after the exchange offer will be aggregated with the new notes and, if applicable, any additional notes, and the holders of the old notes, the new notes and the additional notes will vote together as a single class. All references in this prospectus to specified percentages in aggregate principal amount of the notes that are outstanding means, at any time after the exchange offer is consummated, the percentage in aggregate principal amount of the old notes, the new notes and the additional notes then outstanding.

The following description is a summary of the material provisions of the Indenture. It does not restate that agreement in its entirety. We urge you to read the Indenture and the Registration Rights Agreement because they, and not this description, define your rights as holders of these notes. Copies of the Indenture and Registration Rights Agreement are available as set forth below under the caption “—Additional Information.”

Brief Description of the Notes and the Subsidiary Guarantees

The Notes

The notes:

• are general unsecured obligations of the Company;

• are subordinated in right of payment to all existing and future Senior Indebtedness of the Company;

• are pari passu in right of payment to the Company’s existing 13% Senior Subordinated Notes;

• are senior or pari passu in right of payment to all existing and future subordinated Indebtedness of the Company; and

• are unconditionally guaranteed by the Guarantors.

The Subsidiary Guarantees

These notes are jointly and severally guaranteed by each Restricted Subsidiary of the Company, except the Permitted Joint Ventures.

The Subsidiary Guarantees of these notes:

• are general unsecured obligations of each Guarantor;

• are subordinated in right of payment to all existing and future Senior Indebtedness of each Guarantor;

• are pari passu in right of payment to the Guarantees of the Company’s 13% Senior Subordinated Notes; and

• are senior or pari passu in right of payment to all existing and future subordinated Indebtedness of each Guarantor.

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As of June 30, 2003, after giving pro forma effect to the offering of the old notes and the application of the net proceeds thereof, the Company and the Guarantors would have had total Senior Indebtedness of approximately $336.6 million. As indicated above and as discussed in detail below under the caption “—Subordination,” payments on the notes and under the Subsidiary Guarantees will be subordinated to the payment of Senior Indebtedness. The Indenture permits us and the Guarantors to incur additional Senior Indebtedness.

As of the Issue Date, all of our Subsidiaries were “Restricted Subsidiaries.” However, under the circumstances described below under the caption “—Certain Covenants—Designation of Restricted and Unrestricted Subsidiaries,” we are permitted to designate certain of our subsidiaries as “Unrestricted Subsidiaries.” Unrestricted Subsidiaries will not be subject to many of the restrictive covenants in the Indenture. Unrestricted Subsidiaries will not guarantee the notes. In addition, Foreign Restricted Subsidiaries, Permitted Joint Ventures and Receivables Entities will not guarantee the notes unless and until they guarantee other Indebtedness of the Company or certain other Subsidiaries. See “—Additional Guarantees.”

Principal, Maturity and Interest

The Company will issue the notes initially with a maximum aggregate principal amount of $150.0 million. The notes will mature on August 15, 2010. The Company will issue notes in denominations of $1,000 and integral multiples of $1,000. Additional notes (“Additional Notes”) may be issued from time to time after the Offering in an unlimited amount, subject to the provisions of the Indenture described below under the caption “—Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred Stock.” The notes and any Additional Notes subsequently issued under the Indenture will be treated as a single class for all purposes under the Indenture, including, without limitation, waivers, amendments, redemptions and offers to purchase. Unless the context otherwise requires, for all purposes of the Indenture and the “Description of the New Notes,” references to the notes include any Additional Notes actually issued.

The notes will bear interest at the rate of 9 ¹/2%per annum and interest will be payable in cash semi-annually in arrears on February 15 and August 15, commencing on February 15, 2004. The Company will make each interest payment to the holders of record on the immediately preceding February 1 and August 1.

Interest on the notes will accrue from the date of original issuance or, if interest has already been paid, from the date it was most recently paid. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.

Methods of Receiving Payments on the Notes

If a holder has given wire transfer instructions to the Company, the Company will make all principal, premium and interest payments on the holder’s notes in accordance with those instructions. All other payments on the notes will be made at the office or agency of the Paying Agent and Registrar within the City and State of New York unless the Company elects to make interest payments by check mailed to the holders at their address set forth in the register of holders.

Paying Agents and Registrar for the Notes

The Trustee will initially act as Paying Agent and Registrar. The Company may change the Paying Agent or Registrar without prior notice to the holders of the notes, and the Company or any of its Subsidiaries may act as Paying Agent or Registrar.

Transfer and Exchange

A holder may transfer or exchange notes in accordance with the Indenture. The Registrar and the Trustee may require a holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a holder to pay any taxes and fees required by law or permitted by the Indenture. The Company is not required to transfer or exchange any note selected for redemption. Also, the Company is not required to transfer or exchange any note for a period of 15 days before a selection of notes to be redeemed.

The registered holder of a note will be treated as its owner for all purposes.

Subordination

The payment of principal of, premium, if any, and interest on the notes will be subordinated to the prior payment in full of all Senior Indebtedness of the Company.

The holders of Senior Indebtedness will be entitled to receive payment in full in cash of all amounts due or to become due in respect of Senior Indebtedness before the holders of notes will be entitled to receive any payment with respect to the notes (except that

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holders of notes may receive Reorganization Securities and payments made from the trust described under the caption “—Legal Defeasance and Covenant Defeasance”) in the event of any distribution to creditors of the Company in any Insolvency or Liquidation Proceeding with respect to the Company. Upon any such Insolvency or Liquidation Proceeding, any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities (other than Reorganization Securities), to which the holders of the notes or the Trustee would be entitled will be paid by the Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other person making such payment or distribution, or by the holders of the notes or by the Trustee if received by them, directly to the holders of Senior Indebtedness (pro rata to such holders on the basis of the amounts of Senior Indebtedness held by such holders) or their Representative or Representatives, as their interests may appear, for application to the payment of the Senior Indebtedness remaining unpaid until all such Senior Indebtedness has been paid in full in cash, after giving effect to any concurrent payment, distribution or provision therefor to or for the holders of Senior Indebtedness.

The Company also may not make any payment in respect of the notes (except in Reorganization Securities) if:

• a payment default on Designated Senior Indebtedness occurs and is continuing; or

• any other default occurs and is continuing on Designated Senior Indebtedness that permits holders of the Designated Senior Indebtedness to accelerate its maturity and the Trustee receives a notice of such default (a “Payment Blockage Notice”) from the Credit Agent or the holders or the Representative of any Designated Senior Indebtedness.

Payments on the notes may and shall be resumed:

• in the case of a payment default, upon the date on which such default is cured or waived; and

• in case of a nonpayment default, the earlier of

(1) the date on which such nonpayment default is cured or waived;

(2) 179 days after the date on which the applicable Payment Blockage Notice is received; or

(3) the date on which the Trustee receives written notice from the Credit Agent or the Representative for such Designated Senior Indebtedness, as the case may be, rescinding the applicable Payment Blockage Notice, unless the maturity of any Designated Senior Indebtedness has been accelerated.

No new Payment Blockage Notice may be delivered unless and until 181 days have elapsed since the effectiveness of the immediately prior Payment Blockage Notice.

No event of default that existed or was continuing on the date of delivery of any Payment Blockage Notice to the Trustee shall be, or be made, the basis for a subsequent Payment Blockage Notice unless such default shall have been cured or waived for a period of not less than 90 days.

As a result of the subordination provisions described above, in the event of a bankruptcy, liquidation or reorganization of the Company, holders of the notes may recover less ratably than creditors of the Company who are holders of Senior Indebtedness. See “Risk Factors—Risks Relating to the Exchange Offer and the New Notes—Your right to receive payments on the notes is junior to most of our existing indebtedness and possibly most of our future borrowings. Further, the subsidiary guarantees will be junior to most of the subsidiary guarantors’ existing indebtedness and possibly to all of their future borrowings. Additionally, claims of creditors of our non-guarantor subsidiaries will generally have priority with respect to the assets and earnings of those subsidiaries over claims of holders of the notes.” The Company and its Restricted Subsidiaries will be subject to certain financial tests limiting the amount of additional Indebtedness, including Senior Indebtedness, that the Company and its Restricted Subsidiaries can incur. See “—Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred Stock.”

Subsidiary Guarantees

Each of the Company’s Domestic Restricted Subsidiaries (other than Permitted Joint Ventures and Receivables Entities) will jointly and severally guarantee, on a senior subordinated basis, the Company’s obligations under the notes. Each Subsidiary Guarantee will be subordinated to the prior payment in full of all Senior Indebtedness of that Guarantor. As of the Issue Date, each of our subsidiaries that guarantees our existing 13% Senior Subordinated Notes will guarantee the notes.

Each Guarantor that makes a payment under its Guarantee will be entitled upon payment in full of all guaranteed obligations under the Indenture to a contribution from each other Guarantor in an amount equal to such other Guarantor’s pro rata portion of such payment based on the respective net assets of all the Guarantors at the time of such payment determined in accordance with GAAP.

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If a Guarantee were rendered voidable, it could be subordinated by a court to all other indebtedness (including, without limitation, guarantees and other contingent liabilities) of a Guarantor, as applicable, and depending on the amount of such indebtedness, a Guarantor’s liability on its Guarantee could be reduced to zero. See “Risk Factors—Risks Relating to the Exchange Offer and the New Notes—Federal and state statutes allow courts, under specific circumstances, to void subsidiary guarantees and require holders of the notes to return payments received from subsidiary guarantors.”

A Guarantor may not sell or otherwise dispose of all or substantially all of its assets, or consolidate with or merge with or into (whether or not such Guarantor is the surviving Person), another Person unless:

(1) immediately after giving effect to that transaction, no Default or Event of Default exists; and

(2) either:

(a) the Person acquiring the property in any such sale or disposition or the Person formed by or surviving any such consolidation or merger assumes all the obligations of that Guarantor pursuant to a supplemental indenture satisfactory to the Trustee; or

(b) the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of the Indenture.

The Subsidiary Guarantee of a Guarantor will be released:

(1) in connection with any sale or other disposition of all or substantially all of the assets of that Guarantor (including by way of merger or consolidation) if the Company applies the Net Proceeds of that sale or other disposition in accordance with the applicable provisions of the Indenture; or

(2) in connection with the sale of all of the Capital Stock of a Guarantor if the Company applies the Net Proceeds of that sale in accordance with the applicable provisions of the Indenture; or

(3) if the Company designates any Restricted Subsidiary that is a Guarantor as an Unrestricted Subsidiary.

The Net Proceeds of an Asset Sale may be used by the Company to make an offer to holders for the repurchase of notes. See “—Repurchase at the Option of Holders—Asset Sales.”

Optional Redemption

At any time prior to August 15, 2006, the Company may on one or more occasions redeem up to 35% of the aggregate principal amount of notes (including Additional Notes, if any) originally issued under the Indenture at a redemption price of 109.500% of the principal amount thereof, plus accrued and unpaid interest to the redemption date, with the net cash proceeds of one or more Equity Offerings; provided that:

• at least 65% of the aggregate principal amount of notes (including Additional Notes, if any) remains outstanding immediately after the occurrence of such redemption (excluding notes held by the Company and its Subsidiaries); and

• each such redemption occurs within 90 days of the date of the closing of the related Equity Offering.

Prior to August 15, 2007, we may at our option redeem all, but not less than all, of the notes (including Additional Notes, if any) at a redemption price equal to 100% of the principal amount of the notes plus the Applicable Premium as of, and accrued and unpaid interest to, the redemption date (subject to the right of Holders on the relevant record date to receive interest due on the relevant interest payment date). Notice of such redemption must be mailed by first-class mail to each Holder’s registered address, not less than 30 nor more than 60 days prior to the redemption date.

“Applicable Premium” means with respect to a note at any redemption date, the greater of (i) 1.00% of the principal amount of such note and (ii) the excess of (A) the present value at such redemption date of (1) the redemption price of such note on August 15, 2007 (such redemption price being described below exclusive of any accrued interest) plus (2) all required remaining scheduled interest payments due on such note through August 15, 2007 (but excluding accrued and unpaid interest to the redemption date), computed using a discount rate equal to the Adjusted Treasury Rate, over (B) the principal amount of such note on such redemption date.

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“Adjusted Treasury Rate” means, with respect to any redemption date, (i) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release designated “H.15(519)” or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded United States Treasury securities adjusted to constant maturity under the caption “Treasury Constant Maturities”, for the maturity corresponding to the Comparable Treasury Issue (if no maturity is within three months before or after August 15, 2007, yields for the two published maturities most closely corresponding to the Comparable Treasury Issue shall be determined and the Adjusted Treasury Rate shall be interpolated or extrapolated from such yields on a straight line basis, rounding to the nearest month) or (ii) if such release (or any successor release) is not published during the week preceding the calculation date or does not contain such yields, the rate per year equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date, in each case calculated on the third Business Day immediately preceding the redemption date, plus 0.50%.

“Comparable Treasury Issue” means the United States Treasury security selected by the Quotation Agent as having a maturity comparable to the remaining term of the notes from the redemption date to August 15, 2007, that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of a maturity most nearly equal to August 15, 2007.

“Comparable Treasury Price” means, with respect to any redemption date, if clause (ii) of the Adjusted Treasury Rate is applicable, the average of three, or such lesser number as is obtained by the Trustee, Reference Treasury Dealer Quotations for such redemption date.

“Quotation Agent” means the Reference Treasury Dealer selected by the Trustee after consultation with the Company.

“Reference Treasury Dealer” means Credit Suisse First Boston LLC and its successors and assigns and two other nationally recognized investment banking firms selected by the Company that are primary U.S. Government securities dealers.

“Reference Treasury Dealer Quotations” means with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue, expressed in each case as a percentage of its principal amount, quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m., New York City time, on the third Business Day immediately preceding such redemption date.

On or after August 15, 2007, the Company may redeem all or a part of the notes (including Additional Notes, if any), upon not less than 30 nor more than 60 days’ notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest thereon, to the applicable redemption date, if redeemed during the twelve-month period beginning on August 15 of the years indicated below:

Year	Percentage
2007	104.750	%
2008	102.375	%
2009 and thereafter	100.000	%

Selection and Notice

If less than all of the notes are to be redeemed at any time, the Trustee will select notes for redemption as follows:

• if the notes are listed, in compliance with the requirements of the principal national securities exchange on which the notes are listed; or

• if the notes are not so listed, on a pro rata basis, by lot or by such method as the Trustee shall deem fair and appropriate.

No notes of $1,000 or less shall be redeemed in part. Notices of redemption shall be mailed by first class mail at least 30 but not more than 60 days before the redemption date to each holder of notes to be redeemed at its registered address. Notices of redemption may not be conditional.

If any note is to be redeemed in part only, the notice of redemption that relates to that note shall state the portion of the principal amount thereof to be redeemed. A new note in principal amount equal to the unredeemed portion of the original note will be issued in

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the name of the holder thereof upon cancellation of the original note. Notes called for redemption become due on the date fixed for redemption. On and after the redemption date, interest ceases to accrue on notes or portions of them called for redemption.

Mandatory Redemption

Except as set forth under the caption “—Repurchase at the Option of Holders,” the Company is not required to make mandatory redemption or sinking fund payments with respect to the notes. The Company may at any time and from time to time purchase notes in the open market or otherwise.

Repurchase at the Option of Holders

Change of Control

If a Change of Control occurs, each holder of the notes will have the right to require the Company to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of that holder’s notes pursuant to the offer described below (the “Change of Control Offer”). In the Change of Control Offer, the Company will offer a Change of Control Payment in cash equal to 101% of the aggregate principal amount of notes repurchased plus accrued and unpaid interest thereon, if any, to the date of purchase. Within 60 business days following any Change of Control, the Company will mail a notice to each holder describing the transaction or transactions that constitute the Change of Control and offering to repurchase notes on a specified date no later than five Business Days after the termination of the Change of Control Offer (the “Change of Control Payment Date”), pursuant to the procedures required by the Indenture and described in such notice. The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of the notes as a result of a Change of Control.

On the Change of Control Payment Date, the Company will, to the extent lawful:

• accept for payment all notes or portions thereof properly tendered pursuant to the Change of Control Offer;

• deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all notes or portions thereof so tendered; and

• deliver or cause to be delivered to the Trustee the notes so accepted together with an Officers’ Certificate stating the aggregate principal amount of notes or portions thereof being purchased by the Company.

The Paying Agent will promptly mail to each holder of notes so tendered the Change of Control Payment for such notes, and the Trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each holder a new note equal in principal amount to any unpurchased portion of the notes surrendered, if any; provided that each such new note will be in a principal amount of $1,000 or an integral multiple thereof.

Prior to complying with any of the provisions of this “—Repurchase at the Option of Holders—Change of Control” covenant, but in any event within 90 days following a Change of Control, the Company will either repay all outstanding Senior Indebtedness or obtain the requisite consents, if any, under all agreements governing outstanding Senior Indebtedness to permit the repurchase of notes required by this covenant. The Company will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date.

The provisions described above that require the Company to make a Change of Control Offer following a Change of Control will be applicable regardless of whether or not any other provisions of the Indenture are applicable. Except as described above with respect to a Change of Control, the Indenture does not contain provisions that permit the holders of the notes to require that the Company repurchase or redeem the notes in the event of a takeover, recapitalization or similar transaction.

The Company’s outstanding Senior Indebtedness currently prohibits the Company from purchasing any notes, and also provides that certain change of control events with respect to Holdings and/or the Company would constitute a default under the agreements governing the Senior Indebtedness. Any future credit agreements or other agreements relating to Senior Indebtedness to which the Company becomes a party may contain similar restrictions and provisions. In the event a Change of Control occurs at a time when the Company is prohibited from purchasing notes, the Company could seek the consent of its senior lenders to the purchase of notes or could attempt to refinance the borrowings that contain such prohibition. If the Company does not obtain such a consent or repay such borrowings, the Company will remain prohibited from purchasing notes. In such case, the Company’s failure to purchase tendered notes would constitute an Event of Default under the Indenture which would, in turn, constitute a default under such Senior Indebtedness. In such circumstances, the subordination provisions in the Indenture would likely restrict payments to the holders of notes.

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The Company will not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Change of Control Offer made by the Company and purchases all notes validly tendered and not withdrawn under such Change of Control Offer.

The definition of Change of Control includes a phrase relating to the sale, lease, transfer, conveyance or other disposition of “all or substantially all” of the assets of the Company and its Subsidiaries taken as a whole. Although there is a limited body of case law interpreting the phrase “substantially all,” there is no precise established definition of the phrase under applicable law. Accordingly, the ability of a holder of notes to require the Company to repurchase such notes as a result of a sale, lease, transfer, conveyance or other disposition of less than all of the assets of the Company and its Subsidiaries taken as a whole to another Person or group may be uncertain.

The provisions under the Indenture relative to the Company’s obligation to make an offer to repurchase the notes as a result of a Change of Control may be waived or modified with the consent of the holders of a majority in principal amount of the notes.

Asset Sales

The Company will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless:

• the Company (or the Restricted Subsidiary, as the case may be) receives consideration at the time of such Asset Sale at least equal to the fair market value of the assets or Equity Interests issued or sold or otherwise disposed of;

• such fair market value is determined by the Company’s Board of Directors and evidenced by a resolution of the Board of Directors set forth in an Officers’ Certificate delivered to the Trustee; and

• at least 75% of the consideration therefor received by the Company or such Restricted Subsidiary is in the form of cash or Cash Equivalents. For purposes of this provision, each of the following shall be deemed to be cash:

(1) any liabilities (as shown on the Company’s or the Restricted Subsidiary’s most recent balance sheet) of the Company or any Restricted Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinated to the notes or any Subsidiary Guarantee), that are assumed by the transferee of any such assets pursuant to a customary novation agreement that releases the Company or such Restricted Subsidiary from further liability;

(2) any securities, notes or other obligations received by the Company or any such Restricted Subsidiary from such transferee that are contemporaneously (subject to ordinary settlement periods) converted by the Company or such Restricted Subsidiary into cash or Cash Equivalents (to the extent of the cash received in that conversion); and

(3) any Permitted Business Assets (so long as such Permitted Business Assets are acquired for fair market value, as determined in good faith by the Board of Directors of the Company, in connection with the transaction giving rise to such Asset Sale; provided that the Board of Directors’ determination must be based on an opinion or appraisal issued by an independent accounting, appraisal or investment baking firm of national standing if such fair market value exceeds $25 million), which Permitted Business Assets shall be deemed to have been acquired pursuant to the second succeeding paragraph in connection with such Asset Sale.

The 75% limitation referred to above will not apply to any Asset Sale in which the cash or Cash Equivalents portion of the consideration received therefrom, determined in accordance with the preceding sentence, is equal to or greater than what the after-tax proceeds would have been had such Asset Sale complied with the 75% limitation.

Within 365 days after the receipt of any Net Proceeds from an Asset Sale, the Company or any such Restricted Subsidiary may apply such Net Proceeds, at its option:

• to repay or repurchase Senior Indebtedness of the Company or any Restricted Subsidiary;

• to the extent any proceeds remain after the prepayment of all outstanding Senior Indebtedness, if any, that is prepayable at the option of the Company or such Restricted Subsidiary, to repay or repurchase the Company’s 13% Senior Subordinated Notes pursuant to the terms of the “Asset Sales” covenant in the indenture governing the 13% Senior Subordinated Notes;

• to acquire all or substantially all the assets of, or a majority of the Voting Stock of, another Permitted Business;

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• to make a capital expenditure in a Permitted Business;

• to acquire other assets (other than securities) that are used or useful in a Permitted Business; or

• to make an Asset Sale Offer, treating the Net Proceeds as Excess Proceeds for all purposes.

Any Net Proceeds from Asset Sales that are not applied or invested as provided in the preceding paragraph will constitute “Excess Proceeds”. When the aggregate amount of Excess Proceeds exceeds $15 million, the Company will be required to make an offer to all holders of notes (an “Asset Sale Offer”) and other pari passu Indebtedness of the Company or any Guarantor (other than the 13% Senior Subordinated Notes) to the extent required pursuant to the terms of that pari passu Indebtedness to purchase the maximum principal amount of such notes or other pari passu Indebtedness that may be purchased out of the Excess Proceeds. The offer price in any Asset Sale Offer will be equal to 100% of the principal amount (or, in the case of such other pari passu Indebtedness that was issued with significant original issue discount, 100% of the accreted value thereof) plus accrued and unpaid interest, if any, to the date of purchase, and will be payable in cash (or in the case of such pari passu Indebtedness, such lesser price, if any, as may be provided for by the terms of such other pari passu Indebtedness). If any Excess Proceeds remain after consummation of an Asset Sale Offer, the Company may use such Excess Proceeds for general corporate purposes. If the aggregate principal amount of notes tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the Trustee shall select the notes to be purchased on a pro rata basis. Upon completion of each Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.

The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of the notes as a result of an Asset Sale Offer.

Certain Covenants

The Indenture contains covenants including, among others, the following:

Restricted Payments

The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly:

(1) declare or pay any dividend or make any other payment or distribution on account of the Company’s or any of its Restricted Subsidiaries’ Equity Interests (including, without limitation, any payment on such Equity Interests in connection with any merger or consolidation involving the Company) or to the direct or indirect holders of the Company’s or any of its Restricted Subsidiaries’ Equity Interests in their capacity as such (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the Company or to the Company or a Restricted Subsidiary of the Company);

(2) purchase, redeem or otherwise acquire or retire for value (including without limitation, in connection with any merger or consolidation involving the Company) any Equity Interests of the Company or any direct or indirect parent of the Company or any Restricted Subsidiary of the Company (other than any such Equity Interests owned by the Company or any Restricted Subsidiary of the Company);

(3) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness of the Company or any Guarantor that is subordinate or junior in right of payment to the Notes or any Subsidiary Guarantee, as applicable, except scheduled payments of interest or principal at Stated Maturity thereof; or

(4) make any Restricted Investment (all such payments and other actions set forth in clauses (1) through (4) above being collectively referred to as “Restricted Payments”),

unless, at the time of and after giving effect to such Restricted Payment:

(1) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof;

(2) the Company would, after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described below under the caption “—Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred Stock”; and

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(3) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Company and its Restricted Subsidiaries after the Reference Date (excluding Restricted Payments permitted by clauses (1) through (6), (9), (12), (14) and (15) of the next succeeding paragraph), is less than the sum, without duplication, of:

(a) 50% of the Consolidated Net Income of the Company for the period (taken as one accounting period) from the beginning of the first full fiscal quarter commencing after the Reference Date to the end of the Company’s most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit); plus

(b) 100% of the aggregate net proceeds (including the fair-market value of property other than cash, provided, that fair market value of property other than cash shall be determined in good faith by the Board of Directors whose resolution with respect thereto shall be delivered to the Trustee and such determination must be based upon an opinion or appraisal issued by an accounting, appraisal or investment banking firm of national standing if such fair market value exceeds $35 million) received by the Company as a contribution to the Company’s capital or received by the Company from the issue or sale since the Reference Date of Equity Interests of the Company (other than Disqualified Stock) or of Disqualified Stock or debt securities of the Company that have been converted subsequent to the Reference Date into such Equity Interests (other than Equity Interests (or Disqualified Stock or debt securities) sold to a Restricted Subsidiary of the Company and other than Disqualified Stock or convertible debt securities that have been converted into Disqualified Stock); plus

(c) to the extent that any Restricted Investment in any Person that was made after the Reference Date is sold for cash or otherwise liquidated or repaid for cash, or an Unrestricted Subsidiary is designated a Restricted Subsidiary, the lesser of (i) the cash return of capital with respect to such Restricted Investment (less the cost of disposition, if any), or the portion (proportionate to the Company’s equity interest in such Subsidiary) of the fair market value of the net assets of such Unrestricted Subsidiary upon becoming a Restricted Subsidiary, as the case may be, and (ii) the initial amount of such Restricted Investment made after the Reference Date in such Person or Unrestricted Subsidiary; plus

(d) the amount by which Indebtedness of the Company or its Restricted Subsidiaries is reduced on the Company’s balance sheet upon the conversion or exchange subsequent to the Reference Date of any Indebtedness of the Company convertible or exchangeable for Equity Interests (other than Disqualified Stock) of the Company (less the amount of any cash, or other property, distributed by the Company or any Restricted Subsidiary upon such conversion or exchange); plus

(e) if any Unrestricted Subsidiary pays any cash dividends or cash distributions to the Company or any of its Restricted Subsidiaries, 100% of any such cash dividends or cash distributions made after the Reference Date.

So long as no Default has occurred and is continuing or would be caused thereby, the preceding provisions will not prohibit:

(1) the payment of any dividend within 60 days after the date of declaration thereof, if at said date of declaration such payment would have complied with the provisions of the Indenture;

(2) the redemption, repurchase, retirement, defeasance or other acquisition of any subordinated Indebtedness or Equity Interests of the Company or any Restricted Subsidiary in exchange for, or out of the net cash proceeds of the substantially concurrent sale or issuance (other than to a Subsidiary of the Company) of, other Equity Interests of the Company (other than Disqualified Stock); provided that the amount of any such net cash proceeds that are utilized for such redemption, repurchase, retirement, defeasance or other acquisition shall be excluded from clause (3)(b) of the preceding paragraph;

(3) the defeasance, redemption, repurchase or other acquisition of Indebtedness of the Company or any Guarantor that is subordinate or junior in right of payment to the Notes or any Subsidiary Guarantee, as applicable, with the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness;

(4) the payment of any dividend by a Restricted Subsidiary of the Company to the holders of its Equity Interests on a pro rata basis regardless of whether any Default has occurred or is continuing;

(5) the redemption, repurchase, acquisition or retirement of Equity Interests in a Permitted Joint Venture of the Company or of any of the Company’s Restricted Subsidiaries in accordance with the organizational documents for, and agreements among holders of Equity Interests in, such Permitted Joint Venture or Restricted Subsidiary, provided that as a result of such redemption, repurchase, acquisition or retirement of Equity Interests in any such Permitted Joint Venture, any such Permitted Joint Venture shall become a Wholly Owned Restricted Subsidiary of the Company and a Guarantor under the Indenture;

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(6) the redemption, repurchase, acquisition or retirement of Equity Interests in and Indebtedness of the Development Corporations in accordance with the respective securities purchase agreements entered into and notes issued by such Development Corporations; provided that as a result of such redemption, repurchase, acquisition or retirement, such Development Corporations will become Wholly Owned Restricted Subsidiaries of the Company and Guarantors under the Indenture;

(7) the purchase, redemption or other acquisition, cancellation or retirement for value of Equity Interests of the Company or any Restricted Subsidiary of the Company or any parent of the Company held by any existing or former employees of the Company or Holdings or any Subsidiary of the Company or their assigns, estates or heirs, in each case in connection with the repurchase provisions under employee stock option or stock purchase agreements or other agreements to compensate management employees; provided that such redemptions or repurchases pursuant to this clause will not exceed $2 million in any calendar year subsequent to the Reference Date with unused amounts in any calendar year being carried over to succeeding calendar years subject to a maximum of $10 million in any calendar year; provided that the amount of any such payments will be included in calculations of the amount of Restricted Payments subsequent to the Reference Date;

(8) loans or advances to employees or directors of the Company or Holdings or any Subsidiary of the Company made in the ordinary course of business subsequent to the Reference Date the proceeds of which are used to purchase Capital Stock of the Company or Holdings, in an aggregate amount not to exceed $5 million at any one time outstanding; provided that the amount of any such payments will be included in calculations of the amount of Restricted Payments subsequent to the Reference Date;

(9) repurchases of Capital Stock subsequent to the Reference Date deemed to occur upon the exercise of stock options if such Capital Stock represents a portion of the exercise price thereof;

(10) if immediately before and immediately after giving effect thereto, no Default or Event of Default has occurred and the Company would have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described below under the caption “—Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred Stock”, payments of cash dividends, or loans or other payments, to Holdings in an amount sufficient to enable Holdings to make semi-annual payments after August 15, 2004 of cash interest not in excess of 14% per annum on the principal amount of Holdings Senior Discount Debentures (or 100 basis points higher if required to be made in respect of the Holdings Senior Discount Debentures in accordance with the terms thereof in effect on the Issue Date); provided that Holdings is otherwise unable to pay such interest and such dividends, loans or other payments are applied directly to the payment of such interest; and provided further, that the amount of any such payments will be included in calculations of the amount of Restricted Payments subsequent to the Reference Date (see “Description of Other Indebtedness—Concentra Inc.’s 14% Senior Discount Debentures due 2011”);

(11) if immediately before and immediately after giving effect thereto no Default or Event of Default has occurred, payments subsequent to the Reference Date of principal, interest, premium (if any) or payment due upon redemption, repurchase, conversion, acquisition or retirement of Holdings’ 6.0% Convertible Subordinated Notes due 2001 and 4.5% Convertible Subordinated Notes due 2003 in accordance with the respective terms thereof in effect on the Reference Date; provided that the amount of any such payments will be included in calculations of the amount of Restricted Payments subsequent to the Reference Date;

(12) payments to Holdings in an amount equal to the amount of income tax that the Company and the Restricted Subsidiaries would have paid had they filed consolidated tax returns on a separate Company basis in any given year, less the amount of such taxes paid or to be paid directly by the Company and the Restricted Subsidiaries for such years;

(13) an amount not to exceed $1.0 million in any fiscal year subsequent to the Reference Date to permit Holdings to pay:

(i) franchise taxes and other fees required to maintain its legal existence; and

(ii) its corporate overhead expenses incurred in the ordinary course of business, its audit expenses, any filing fees required by the Commission and to pay salaries or other compensation of employees who perform services for both Holdings and the Company;

provided that the amount of any such payments will be included in calculations of the amount of Restricted Payments subsequent to the Reference Date;

(14) Permitted Investments;

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(15) distributions to fund the 1999 Transactions; and

(16) other Restricted Payments subsequent to the Reference Date in an aggregate amount not to exceed $5 million at any one time; provided that the amount of any such payments will be included in calculations of the amount of Restricted Payments subsequent to the Reference Date.

The amount of all Restricted Payments (other than cash) shall be the fair market value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the Company or such Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair market value of any non-cash Restricted Payment shall be determined in good faith by the Board of Directors whose resolution with respect thereto shall be delivered to the Trustee. Not later than the date of making any Restricted Payment, the Company shall deliver to the Trustee an Officers’ Certificate stating that such Restricted Payment is permitted and setting forth the basis upon which the calculations required by this “— Restricted Payments” covenant were computed, together with a copy of any fairness opinion or appraisal required by the Indenture.

Incurrence of Indebtedness and Issuance of Preferred Stock

The Company will not, and will not permit any of its Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt) and the Company will not issue any Disqualified Stock and will not permit any of its Restricted Subsidiaries to issue any Disqualified Stock or preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock and the Company’s Restricted Subsidiaries may incur Indebtedness (including Acquired Debt) and issue Disqualified Stock or preferred stock if the Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or preferred stock is issued would have been at least 2.50 to 1; determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred, or the Disqualified Stock or preferred stock, as applicable, had been issued, as the case may be, at the beginning of such four-quarter period.

The first paragraph of this covenant will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):

(l) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness and letters of credit pursuant to the Senior Credit Facilities; provided that the aggregate amount of all Indebtedness of the Company and the Guarantors outstanding under the Senior Credit Facilities after giving effect to such incurrence does not exceed an amount equal to $475.0 million at any one time;

(2) the incurrence by the Company and its Restricted Subsidiaries of Existing Indebtedness;

(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the notes and the Subsidiary Guarantees;

(4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case incurred for the purpose of financing all or any part of the purchase price or cost of construction or improvement of property, plant or equipment used in the business of the Company or such Restricted Subsidiary (whether through the direct purchase of assets or the Capital Stock of any Person owning such Assets), in an aggregate principal amount or accreted value, as applicable, not to exceed $15 million at any time outstanding;

(5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance or replace Indebtedness (other than intercompany Indebtedness) that was permitted by the Indenture to be incurred under the first paragraph of this covenant or clauses (2), (3) or (14) of this paragraph;

(6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:

(a) if the Company or any Guarantor is the obligor on such Indebtedness, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations with respect to the notes, in the case of the Company, or the Subsidiary Guarantee of such Guarantor, in the case of a Guarantor; and

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(b) (i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Wholly Owned Restricted Subsidiary and (ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Wholly Owned Restricted Subsidiary shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);

(7) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations that are incurred for the purpose of hedging interest rate risk with respect to any Indebtedness that is permitted by the terms of the Indenture to be outstanding;

(8) the Guarantee by the Company or any of its Restricted Subsidiaries of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this covenant;

(9) the incurrence by the Company’s Unrestricted Subsidiaries of Non-Recourse Debt; provided, however, that if any such Indebtedness ceases to be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be deemed to constitute an incurrence of Indebtedness by a Restricted Subsidiary of the Company that was not permitted by this clause (9);

(10) Indebtedness incurred by the Company or any of its Restricted Subsidiaries constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including without limitation in respect of workers’ compensation claims or self-insurance, or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims; provided, however, that upon the drawing of such letters of credit or the incurrence of such Indebtedness, such obligations are reimbursed within 30 days following such drawing or incurrence;

(11) Indebtedness arising from agreements of the Company or a Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligations, in each case, incurred or assumed in connection with the disposition of any business, asset or Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Subsidiary for the purpose of financing such acquisition; provided that (a) such Indebtedness is not reflected on the balance sheet of the Company or any Restricted Subsidiary (contingent obligations referred to in a footnote or footnotes to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected on such balance sheet for purposes of this clause (a) and (b) the maximum aggregate liability in respect of such Indebtedness shall at no time exceed the gross proceeds including non-cash proceeds (the fair market value of such non-cash proceeds being measured at the time received and without giving effect to any such subsequent changes in value) actually received by the Company and/or such Restricted Subsidiary in connection with such disposition;

(12) obligations in respect of performance, surety and similar bonds and completion guarantees provided by the Company or any Restricted Subsidiary in the ordinary course of business;

(13) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument (except in the case of daylight overdrafts) drawn against insufficient funding in the ordinary course of business, provided, however, that such Indebtedness is extinguished within five business days of incurrence; and

(14) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness, in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any other Indebtedness incurred pursuant to this clause (14), not to exceed $25 million.

For purposes of determining compliance with this “—Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred Stock” covenant, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (14) above or is entitled to be incurred pursuant to the first paragraph of this covenant, the Company will be permitted to classify such item of Indebtedness in any manner that complies with this covenant. In addition, the Company may, at any time, change the classification of an item of Indebtedness (or any portion thereof) to any other clause or to the first paragraph hereof provided that the Company would be permitted to incur such item of Indebtedness (or the portion thereof) pursuant to such other clause or the first paragraph hereof, as the case may be, at such time of reclassification. Accrual of interest, accretion or amortization of original issue discount and the accretion of accreted value will not be deemed to be an incurrence of Indebtedness for purposes of this covenant.

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Liens

The Company will not, and will not permit any of its Restricted Subsidiaries to, create, incur, assume or otherwise cause or suffer to exist or become effective any Lien of any kind securing trade payables or Indebtedness that does not constitute Senior Indebtedness (other than Permitted Liens) upon any of their property or assets, now owned or hereafter acquired unless:

• in the case of Liens securing Indebtedness that is expressly subordinated or junior in right of payment to the notes, the notes are secured on a senior basis to the obligations so secured until such time as such obligations are no longer secured by a Lien; and

• in all other cases, the notes are secured on an equal and ratable basis with the obligations so secured until such time as such obligations are no longer secured by a Lien.

Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries

The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or permit to exist or become effective any consensual encumbrance or consensual restriction on the ability of any Restricted Subsidiary to:

• pay dividends or make any other distributions to the Company or any of its Restricted Subsidiaries (i) on its Capital Stock or (ii) with respect to any other interest or participation in, or measured by, its profits;

• pay any Indebtedness owed to the Company or any of the Company’s Restricted Subsidiaries;

• make loans or advances to the Company or any of the Company’s Restricted Subsidiaries; or

• transfer any of its properties or assets to the Company or any of the Company’s Restricted Subsidiaries.

However, the preceding restrictions will not apply to encumbrances or restrictions existing under or by reason of:

• any encumbrance or restriction pursuant to an agreement in effect at or entered into on the Issue Date, including:

(1) the Senior Credit Facilities as in effect as of the Issue Date, and any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings thereof, provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are no more restrictive, taken as a whole (as determined in the good faith judgment of the Company’s Board of Directors), with respect to such dividend and other payment restrictions than those contained in the Senior Credit Facilities as in effect on the Issue Date; and

(2) the Indenture and the notes;

• any applicable law, rule, regulation or order;

• any instrument governing Indebtedness or Capital Stock of a Person acquired by the Company or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired, provided that, in the case of Indebtedness, such Indebtedness was permitted by the terms of the Indenture to be incurred;

• customary non-assignment provisions in leases entered into in the ordinary course of business and consistent with past practices;

• any Purchase Money Note or other Indebtedness or contractual requirements incurred with respect to a Qualified Receivables Transaction relating exclusively to a Receivables Entity that, in the good faith determination of the Board of Directors of the Company, are necessary to effect such Qualified Receivables Transaction;

• purchase money obligations for property acquired in the ordinary course of business that impose restrictions on the property so acquired of the nature described in the last clause of the preceding paragraph;

• restrictions with respect solely to a Restricted Subsidiary of the Company imposed pursuant to a binding agreement which has been entered into for the sale or disposition of all or substantially all of the Capital Stock or assets of such Restricted

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Subsidiary, provided that such restrictions apply solely to the Capital Stock or assets being sold of such Restricted Subsidiary;

• provisions with respect to the disposition or distribution of assets or property in connection with Permitted Joint Ventures entered into in accordance with past practice made in the ordinary course of business;

• Permitted Refinancing Indebtedness, provided that the material restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are no more restrictive, in the good faith judgment of the Company’s board of directors, taken as a whole, to the holders of notes than those contained in the agreements governing the Indebtedness being refinanced; and

• restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business.

Merger, Consolidation or Sale of Assets

The Company may not: (1) consolidate or merge with or into another Person (whether or not the Company is the surviving corporation); or (2) sell, assign, transfer, convey or otherwise dispose of all or substantially all of its properties or assets, in one or more related transactions, to another Person unless:

(1) either: (a) the Company is the surviving corporation; or (b) the Person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, conveyance or other disposition shall have been made is a corporation organized or existing under the laws of the United States, any state thereof or the District of Columbia;

(2) the Person formed by or surviving any such consolidation or merger (if other than the Company) or the Person to which such sale, assignment, transfer, conveyance or other disposition shall have been made expressly assumes all the obligations of the Company under the notes and the Indenture pursuant to a supplemental indenture in a form reasonably satisfactory to the Trustee;

(3) immediately after giving pro forma effect to such transaction no Default or Event of Default exists; and

(4) the Company or Person formed by or surviving any such consolidation or merger (if other than the Company), or to which such sale, assignment, transfer, conveyance or other disposition shall have been made,

(a) will, after giving pro forma effect thereto as if such transaction had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described above under the caption “— Certain Covenants —Incurrence of Indebtedness and Issuance of Preferred Stock”; or

(b) would (together with its Restricted Subsidiaries) have a higher Fixed Charge Coverage Ratio immediately after such transaction (after giving pro forma effect thereto as if such transaction had occurred at the beginning of the applicable four-quarter period) than the Fixed Charge Coverage Ratio of the Company and its Subsidiaries immediately prior to the transaction.

The preceding clause (4) will not prohibit:

(a) a merger between the Company and a Wholly Owned Subsidiary; or

(b) a merger between the Company and an Affiliate incorporated solely for the purpose of reincorporating the Company in another state of the United States; so long as, in each case, the amount of Indebtedness of the Company and its Restricted Subsidiaries is not increased thereby.

In addition, the Company may not, directly or indirectly, lease all or substantially all of its properties or assets, in one or more related transactions, to any other Person. This “—Merger, Consolidation or Sale of Assets” covenant will not be applicable to a sale, assignment, transfer, conveyance or other disposition of assets between or among the Company and any of its Wholly Owned Restricted Subsidiaries.

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Transactions with Affiliates

The Company will not, and will not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate or any affiliated professional associations or professional corporations which employ physicians and other professionals who provide healthcare services for the Company’s occupational and health services centers (each, an “Affiliate Transaction”), unless:

(1) such Affiliate Transaction is on terms that are no less favorable to the Company or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary made on an arm’s-length basis with an unrelated Person; and

(2) the Company delivers to the Trustee:

(a) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $5 million, a resolution of the Board of Directors set forth in an Officers’ Certificate certifying that such Affiliate Transaction complies with clause (1) above and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors; and

(b) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $15 million, an opinion as to the fairness to the holders of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of national standing.

The following items shall not be deemed to be Affiliate Transactions and, therefore, will not be subject to the provisions of the prior paragraph:

(1) customary directors’ fees to Persons who are not otherwise Affiliates of the Company;

(2) transactions between or among the Company and/or its Restricted Subsidiaries;

(3) the payment of Affiliate Management Fees in an amount in any calendar year not to exceed the greater of (a) $1 million and (b) 1% of Consolidated EBITDA;

(4) payments by the Company or any of its Restricted Subsidiaries to Welsh Carson, Ferrer Freeman and their respective Affiliates made for any financial advisory, financing, underwriting or placement services or in respect of other investment banking activities, including, without limitation, in connection with acquisitions or divestitures, which payments are approved in good faith by a majority of the Board of Directors of the Company or a committee thereof consisting of disinterested members;

(5) loans or advances to employees in accordance with past practice made in the ordinary course of business which are approved in good faith by a majority of the Board of Directors of the Company or a committee thereof consisting of disinterested members;

(6) any agreement as in effect on the Issue Date or any amendment thereto (so long as any such amendment is no less favorable to the Company and its Restricted Subsidiaries);

(7) any payment pursuant to any tax sharing agreement between the Company and Holdings or any other Person with which the Company is required or permitted to file a consolidated tax return or with which the Company is or could be part of a consolidated, combined or unitary group for tax purposes; provided that in no event shall the amount permitted to be paid pursuant to all such agreements exceed the tax liabilities attributable solely to the Company and its Restricted Subsidiaries (whether as a consolidated, combined or unitary group);

(8) Restricted Payments that are permitted by the provisions of the Indenture described above under the caption “—Certain Covenants—Restricted Payments”;

(9) customary fees and compensation paid to, and indemnity provided on behalf of, officers, directors, employees or consultants of the Company or any of its Restricted Subsidiaries;

(10) any transaction involving ordinary course investment banking, merchant banking, commercial banking or related activities; and

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(11) issuances or sales by the Company of Equity Interests (other than Disqualified Stock) or any contribution to the capital of the Company or any Restricted Subsidiary.

Notwithstanding the foregoing, the holders of notes will be entitled to receive payment in full in cash of all amounts due or to become due in respect of the notes before any payment is made with respect to Affiliate Management Fees in the event of any distribution to creditors of the Company in any Insolvency or Liquidation Proceeding with respect to the Company. No payments of Affiliate Management Fees shall be made by the Company or any of its Restricted Subsidiaries if the Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which Affiliate Management Fees are to be paid is less than 1.75 to 1; provided, however, that such payments due but not paid shall accrue and shall be paid only after such time as the Fixed Charge Coverage Ratio for a four full fiscal quarter period is no longer less than or equal to 1.75 to 1.

For the avoidance of doubt, in connection with any transaction between Holdings and the Company, a member of the Board of Directors of the Company shall not cease to be a disinterested director solely because such director also serves on the board of directors of Holdings.

Designation of Restricted and Unrestricted Subsidiaries

The Board of Directors may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if that designation would not cause a Default. If a Restricted Subsidiary is designated as an Unrestricted Subsidiary, all outstanding Investments owned by the Company and its Restricted Subsidiaries (except to the extent repaid in cash) in the Subsidiary so designated will be deemed to be Restricted Payments made at the time of such designation (to the extent not designated a Permitted Investment) and will reduce the amount available for Restricted Payments under the first paragraph of the covenant described above under the caption “—Certain Covenants—Restricted Payments.” All such outstanding Investments will be valued at their fair market value at the time of such designation, as determined in good faith by the Board of Directors. That designation will only be permitted if such Restricted Payment would be permitted at that time and if such Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. The Board of Directors may redesignate any Unrestricted Subsidiary to be a Restricted Subsidiary if the redesignation would not cause a Default.

Anti-Layering

The Company will not, and will not permit any Guarantor to, incur, create, issue, assume, guarantee or otherwise become liable for any Indebtedness that is both:

• subordinate or junior in right of payment to any Senior Indebtedness; and

• senior in any respect in right of payment to the notes.

No Guarantor will incur, create, issue, assume, guarantee or otherwise become liable for any Indebtedness that is both:

• subordinate or junior in right of payment to any Senior Indebtedness of such Guarantor; and

• senior in any respect in right of payment to the Subsidiary Guarantees.

Limitation on Issuances and Sales of Equity Interests in Restricted Subsidiaries

The Company will not, and will not permit any of its Restricted Subsidiaries to, transfer, convey, sell, lease or otherwise dispose of any Equity Interests in any Restricted Subsidiary or to issue any of its Equity Interests (other than, if necessary, Equity Interests constituting directors’ qualifying shares) to any Person except:

(1) to the Company or a Wholly Owned Subsidiary (other than a Receivables Entity); or

(2) in compliance with the covenant described above under the caption “—Repurchase at the Option of Holders—Asset Sales” and immediately after giving effect to such issuance or sale, such Restricted Subsidiary would continue to be a Restricted Subsidiary.

Notwithstanding the preceding paragraph, the Company may sell all the Equity Interests of a Restricted Subsidiary as long as the Company complies with the terms of the covenant described under the caption “—Repurchase at the Option of Holders—Asset Sales.”

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Limitations on Issuances of Guarantees of Indebtedness

The Company will not permit any Restricted Subsidiary, directly or indirectly, to incur Indebtedness or Guarantee or pledge any assets to secure the payment of any Indebtedness of the Company or any Restricted Subsidiary unless either such Restricted Subsidiary (1) is a Guarantor or (2) simultaneously executes and delivers a supplemental indenture to the Indenture and becomes a Guarantor, which Guarantee shall (a) with respect to any Guarantee of Senior Indebtedness, be subordinated in right of payment on the same terms as the notes are subordinated to such Senior Indebtedness and (b) with respect to any Guarantee of any other Indebtedness, be senior to or pari passu with such Restricted Subsidiary’s other Indebtedness or Guarantee of or pledge to secure such other Indebtedness.

Notwithstanding the preceding paragraph, any Subsidiary Guarantee of the notes shall provide by its terms that it shall be automatically and unconditionally released and discharged under the circumstances described above under the caption “—Subsidiary Guarantees.” The form of the Guarantee will be attached as an exhibit to the Indenture.

Additional Guarantees

If (a) the Company shall acquire or create a Domestic Restricted Subsidiary (other than a Permitted Joint Venture or a Receivables Entity) after the Issue Date, or (b) any Subsidiary of the Company becomes (1) a Domestic Restricted Subsidiary (other than a Permitted Joint Venture or a Receivables Entity) or (2) guarantees any Indebtedness of the Company or a Domestic Restricted Subsidiary, then, in each case, such newly acquired or created Restricted Subsidiary or such other Subsidiary, as the case may be, shall become a Guarantor and execute a supplemental indenture and deliver an opinion of counsel, in accordance with the terms of the Indenture.

Business Activities

The Company will not, and will not permit any Restricted Subsidiary to, engage in any business other than a Permitted Business.

Advances to Subsidiaries

All advances to Restricted Subsidiaries made by the Company after the Issue Date will be evidenced by intercompany notes in favor of the Company. Each intercompany note will be payable upon demand and will bear interest at the same rate as the notes. A form of intercompany note will be attached as an exhibit to the Indenture.

Payments for Consents

The Company will not, and will not permit any of its Subsidiaries to, directly or indirectly, pay or cause to be paid any consideration to or for the benefit of any holder of notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of the Indenture or the notes unless such consideration is offered to be paid and is paid to all holders of the notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement.

Reports

Whether or not required by the Commission, so long as any notes are outstanding, the Company will furnish or make available to the holders of notes, within the time periods specified in the Commission’s rules and regulations:

(l) all quarterly and annual financial information that would be required to be contained in a filing with the Commission on Forms 10-Q and 10-K if the Company were required to file such Forms, including a “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and, with respect to the annual information only, a report on the annual financial statements by the Company’s certified independent accountants; and

(2) all current reports that would be required to be filed with the Commission on Form 8-K if the Company were required to file such reports.

If the Company has designated any of its Subsidiaries as Unrestricted Subsidiaries, then the quarterly and annual financial information required by the preceding paragraph shall include a reasonably detailed presentation, either on the face of the financial statements or in the footnotes thereto, and in the “Management’s Discussion and Analysis of Financial Condition and Results of

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Operations” section, of the financial condition and results of operations of the Company and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of the Company.

In addition, whether or not required by the Commission, the Company will file a copy of all the information and reports referred to in clauses (1) and (2) above with the Commission for public availability within the time periods specified in the Commission’s rules and regulations (unless the Commission will not accept such a filing) and make such information available to securities analysts and prospective investors upon request. In addition, the Company has agreed that, for so long as any notes remain outstanding, it will furnish to the holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d) (4) under the Securities Act.

Events of Default and Remedies

Each of the following is an Event of Default:

(1) default for 30 days in the payment when due of interest on the notes whether or not prohibited by the subordination provisions of the Indenture;

(2) default in payment when due of the principal of or premium, if any, on the notes, whether or not prohibited by the subordination provisions of the Indenture;

(3) failure by the Company to comply with the provisions described under the caption “Certain Covenants—Merger, Consolidation or Sale of Assets;”

(4) failure by the Company for 30 days after notice from the Trustee or holders of at least 25% in principal amount of the notes then outstanding to comply with the provisions described under the captions “—Repurchase at the Option of Holders—Change of Control”, “—Repurchase at the Option of Holders—Asset Sales”, “—Certain Covenants—Restricted Payments” or “—Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred Stock;”

(5) failure by the Company for 60 days after notice from the Trustee or holders of at least 25% in principal amount of the notes then outstanding to comply with any of its other agreements in the Indenture or the notes;

(6) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for borrowed money or Guarantee by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries), whether such Indebtedness or Guarantee now exists, or is created after the Issue Date, if that default:

(a) is caused by a failure to pay principal of or premium, if any, on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of such default (a “Payment Default”); or

(b) results in the acceleration of such Indebtedness prior to its express maturity, and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $20 million or more;

(7) failure by the Company or any of its Restricted Subsidiaries to pay final judgments aggregating in excess of $20 million, which judgments are not paid, discharged or stayed for a period of 60 days;

(8) except as permitted by the Indenture, any Subsidiary Guarantee of a Significant Subsidiary shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Guarantor that is a Significant Subsidiary, or any Person acting on behalf of any such Guarantor, shall deny or disaffirm such Guarantor’s obligations under the Subsidiary Guarantee of such Guarantor; and

(9) certain events of bankruptcy or insolvency with respect to the Company or any of the Company’s Significant Subsidiaries.

In the event of a declaration of acceleration of the notes because an Event of Default has occurred and is continuing as a result of the acceleration of any Indebtedness described in clause (6) of the preceding paragraph, the declaration of acceleration of the notes shall be automatically annulled if the holders of any Indebtedness described in clause (6) of the preceding paragraph have rescinded the declaration of acceleration in respect of such Indebtedness within 30 days of the date of such declaration and if:

• the annulment of the acceleration of notes would not conflict with any judgment or decree of a court of competent jurisdiction; and

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• all existing Events of Default, except nonpayment of principal or interest on the notes that became due solely because of the acceleration of the notes, have been cured or waived.

If any Event of Default occurs and is continuing, the Trustee or the holders of at least 25% in principal amount of the outstanding notes may declare the principal of the notes to be due and payable immediately; provided, that so long as any Indebtedness permitted to be incurred pursuant to the Senior Credit Facilities shall be outstanding, such acceleration shall not be effective until the earlier of:

• an acceleration of any such Indebtedness under the Senior Credit Facilities; or

• five business days after receipt by the Company and Credit Agent on the Issue Date (or to such other Credit Agent as the Trustee may hereafter be notified in writing) of written notice of such acceleration (provided that the notification of the replacement Credit Agent and its address should be received by the Trustee prior to the issuance of such notice of acceleration).

If payment of the notes is accelerated because of an Event of Default, the Company shall promptly notify the holders of the Senior Indebtedness of the acceleration.

Notwithstanding the preceding paragraph, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, with respect to the Company or any of its Subsidiaries, the principal and any accrued but unpaid interest on all outstanding notes shall become due and payable immediately without further action or notice.

Holders of the notes may not enforce the Indenture or the notes except as provided in the Indenture. Subject to certain limitations, holders of a majority in principal amount of the then outstanding notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from holders of the notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest.

In the case of any Event of Default occurring on or after August 15, 2007, by reason of any willful action or inaction taken or not taken by or on behalf of the Company with the intention of avoiding payment of the premium that the Company would have had to pay if the Company then had elected to redeem the notes pursuant to the optional redemption provisions of the Indenture, an equivalent premium shall also become and be immediately due and payable to the extent permitted by law upon the acceleration of the notes. If an Event of Default occurs prior to August 15, 2007 by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding the prohibition on redemption of the notes prior to August 15, 2007, then the premium specified in the Indenture shall also become immediately due and payable to the extent permitted by law upon the acceleration of the notes.

The holders of a majority in aggregate principal amount of the notes then outstanding by notice to the Trustee may on behalf of the holders of all of the notes waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of interest or premium, if any, on, or the principal of, the notes.

The Company is required to deliver to the Trustee annually a statement regarding compliance with the Indenture. Upon becoming aware of any Default or Event of Default, the Company is required to deliver to the Trustee a statement specifying such Default or Event of Default.

No Personal Liability of Directors, Officers, Employees and Stockholders

No director, officer, employee, incorporator or stockholder of the Company, or any Guarantor, as such, shall have any liability for any obligations of the Company or the Guarantors under the notes, the Indenture, the Subsidiary Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each holder of notes by accepting a note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the notes. The waiver may not be effective to waive liabilities under the federal securities laws.

Legal Defeasance and Covenant Defeasance

The Company may, at its option and at any time, elect to have all of its obligations discharged with respect to the outstanding notes and all obligations of the Guarantors discharged with respect to their Subsidiary Guarantees (“Legal Defeasance”) except for:

• the rights of holders of outstanding notes to receive payments in respect of the principal of, premium, if any, and interest on such notes when such payments are due from the trust referred to below;

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• the Company’s obligations with respect to the notes concerning issuing temporary notes, registration of notes, mutilated, destroyed, lost or stolen notes and the maintenance of an office or agency for payment and money for security payments held in trust;

• the rights, powers, trusts, duties and immunities of the Trustee, and the Company’s obligations in connection therewith; and

• the Legal Defeasance provisions of the Indenture.

In addition, the Company may, at its option and at any time, elect to have the obligations of the Company and the Guarantors released with respect to certain covenants that are described in the Indenture (“Covenant Defeasance”) and thereafter any omission to comply with those covenants shall not constitute a Default or Event of Default with respect to the notes. In the event Covenant Defeasance occurs, certain events (not including non-payment, bankruptcy, receivership, rehabilitation and insolvency events) described under the caption “—Events of Default and Remedies” will no longer constitute an Event of Default with respect to the notes.

In order to exercise either Legal Defeasance or Covenant Defeasance:

• the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the holders of the notes, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and interest on the outstanding notes on the stated maturity or on the applicable redemption date, as the case may be, and the Company must specify whether the notes are being defeased to maturity or to a particular redemption date;

• in the case of Legal Defeasance, the Company shall have delivered to the Trustee an opinion of counsel in the United States reasonably acceptable to the Trustee confirming that (a) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (b) since the Issue Date, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion of counsel shall confirm that, subject to customary assumptions and exclusions, the holders of the outstanding notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;

• in the case of Covenant Defeasance, the Company shall have delivered to the Trustee an opinion of counsel in the United States reasonably acceptable to the Trustee confirming that, subject to customary assumptions and exclusions, the holders of the outstanding notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;

• no Default or Event of Default shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit);

• such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than the Indenture) to which the Company or any of its Restricted Subsidiaries is a party or by which the Company or any of its Restricted Subsidiaries is bound;

• the Company must deliver to the Trustee an Officers’ Certificate stating that the deposit was not made by the Company with the intent of preferring the holders of notes over the other creditors of the Company with the intent of defeating, hindering, delaying or defrauding creditors of the Company or others;

• no event which is, or after notice or lapse of time or both would become, an Event of Default with respect to such notes or any other notes shall have occurred and be continuing at the time of such deposit or, with regard to any such event specified in paragraphs (7) and (8) under the above caption “—Events of Default and Remedies”, at any time on or prior to the 90th day after the date of such deposit (it being understood that this condition shall not be deemed satisfied until after such 90th day); and

• the Company must deliver to the Trustee an Officers’ Certificate and an opinion of counsel, which opinion may be subject to customary assumptions and exclusions, each stating that all conditions precedent relating to the Legal Defeasance or the Covenant Defeasance have been complied with.

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Amendment, Supplement and Waiver

With the consent of the holders of not less than a majority in principal amount of the notes at the time outstanding (including consents obtained in connection with a purchase of or tender offer or exchange offer for the notes), the Company and Trustee are permitted to amend or supplement the Indenture or any supplemental indenture or modify the rights of the holders and any existing Default or Event of Default or compliance with any provision of the Indenture or the notes may be waived; provided that without the consent of each holder affected, no amendment, supplement, modification or waiver may:

• reduce the principal amount of notes whose holders must consent to an amendment, supplement or waiver;

• reduce the principal of or change the fixed maturity of any note or alter the provisions with respect to the redemption of the notes (other than provisions relating to the covenants described above under the caption “—Repurchase at the Option of Holders”);

• reduce the rate of or change the time for payment of interest on any Note;

• waive a Default or Event of Default in the payment of principal of or premium, if any, or interest on the notes (except a rescission of acceleration of the notes by the holders of at least a majority in aggregate principal amount of the notes and a waiver of the payment default that resulted from such acceleration);

• make any note payable in money other than that stated in the notes;

• make any change in the provisions of the Indenture relating to waivers of past Defaults or the rights of holders of notes to receive payments of principal of or premium, if any, or interest on the notes;

• waive a redemption payment with respect to any note (other than a payment required by one of the covenants described above under the caption “—Repurchase at the Option of Holders”);

• make any change in the preceding amendment and waiver provisions; or

• release any Guarantor from any of its obligations under its Guarantee of the notes or the Indenture, except in accordance with the terms of the Indenture.

In addition, any amendment to, or waiver of the provisions of the Indenture relating to subordination that adversely affects the rights of the holders of the notes will require the consent of the holders of at least 75% in aggregate principal amount of the notes then outstanding.

Notwithstanding the preceding, without the consent of any holder of notes, the Company and the Trustee may amend or supplement the Indenture or the notes:

• to cure any ambiguity, defect or inconsistency;

• to provide for uncertificated notes in addition to or in place of certificated notes;

• to provide for the assumption of the Company’s obligations to holders of notes in the case of a merger or consolidation or the sale of all or substantially all of the Company’s assets;

• to make any change that would provide any additional rights or benefits to the holders of notes or that does not adversely affect in any material respect the legal rights under the Indenture of any such holder;

• to comply with requirements of the Commission in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act;

• to provide for the issuance of additional notes in accordance with the limitations set forth in the Indenture; or

• to allow any Subsidiary to guarantee the notes.

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Concerning the Trustee

If the Trustee becomes a creditor of the Company or any Guarantor, the Indenture limits the Trustee’s right to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The Trustee will be permitted to engage in other transactions; however, if it acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the Commission for permission to continue or resign.

The holders of a majority in principal amount of the then outstanding notes will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee, subject to certain exceptions. The Indenture provides that in case an Event of Default shall occur and be continuing, the Trustee will be required, in the exercise of its power, to use the degree of care of a prudent man in the conduct of his own affairs. Subject to such provisions, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request of any holder of notes, unless such holder shall have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense.

Additional Information

Anyone who receives this Offering Memorandum may obtain a copy of the Indenture and Registration Rights Agreement without charge by writing to Concentra Operating Corporation, 5080 Spectrum Drive, Suite 400 West Tower, Addison, TX 75001; Attention: General Counsel.

Book-Entry

We will issue the new notes in the form of one or more global notes (the “Global Notes”). The Global Notes will be deposited with, or on behalf of, The Depository Trust Company (“DTC”) and initially registered in the name of DTC or its nominee.

Except as set forth below, the Global Notes may be transferred, in whole and not in part, only to another nominee of DTC or to a successor of DTC or its nominee. Beneficial interests in the Global Notes may not be exchanged for notes in certificated form except in the limited circumstances described below. See “—Exchange of Global Notes for Certificated Notes.”

Depository Procedures

The following description of the operations and procedures of DTC is provided solely as a matter of convenience. These operations and procedures are solely within the control of the respective settlement systems and are subject to changes by them. We take no responsibility for these operations and procedures and urge investors to contact the system or their participants directly to discuss these matters.

DTC has advised us that DTC is a limited-purpose trust company created to hold securities for its participating organizations (collectively, the “Participants”) and to facilitate the clearance and settlement of transactions in those securities between Participants through electronic book-entry changes in accounts of its Participants. The Participants include securities brokers and dealers (including the initial purchasers), banks, trust companies, clearing corporations and certain other organizations. Access to DTC’s system is also available to other entities such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Participant, either directly or indirectly (collectively, the “Indirect Participants”). Persons who are not Participants may beneficially own securities held by or on behalf of DTC only through the Participants or the Indirect Participants. The ownership interests in, and transfers of ownership interests in, each security held by or on behalf of DTC are recorded on the records of the Participants and Indirect Participants.

DTC has also advised us that, pursuant to procedures established by it:

(1) upon deposit of the Global Notes, DTC will credit the accounts of Participants designated by the Initial Purchasers with portions of the principal amount of the Global Notes; and

(2) ownership of these interests in the Global Notes will be shown on, and the transfer of ownership of these interests will be effected only through, records maintained by DTC (with respect to the Participants) or by the Participants and the Indirect Participants (with respect to other owners of beneficial interests in the Global Notes).

Investors in the Global Notes who are Participants in DTC’s system may hold their interests therein directly through DTC. Investors in the Global Notes who are not Participants may hold their interests therein indirectly through organizations which are Participants in such system. All interests in a Global Note may be subject to the procedures and requirements of DTC. The laws of some states require that certain Persons take physical delivery in definitive form of securities that they own. Consequently, the ability to transfer beneficial interests in a Global Note to such Persons will be limited to that extent. Because DTC can act only on behalf of

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Participants, which in turn act on behalf of Indirect Participants, the ability of a Person having beneficial interests in a Global Note to pledge such interests to Persons that do not participate in the DTC system, or otherwise take actions in respect of such interests, may be affected by the lack of a physical certificate evidencing such interests.

Except as described below, owners of an interest in the Global Notes will not have notes registered in their names, will not receive physical delivery of notes in certificated form and will not be considered the registered owners or “Holders” thereof under the Indenture for any purpose.

Payments in respect of the principal of, and interest and premium and additional interest, if any, on a Global Note registered in the name of DTC or its nominee will be payable to DTC in its capacity as the registered Holder under the Indenture. Under the terms of the Indenture, the Company and the Trustee will treat the Persons in whose names the notes, including the Global Notes, are registered as the owners of the notes for the purpose of receiving payments and for all other purposes. Consequently, neither the Company, the Trustee nor any agent of the Company or the Trustee has or will have any responsibility or liability for:

(1) any aspect of DTC’s records or any Participant’s or Indirect Participant’s records relating to or payments made on account of beneficial ownership interest in the Global Notes or for maintaining, supervising or reviewing any of DTC’s records or any Participant’s or Indirect Participant’s records relating to the beneficial ownership interests in the Global Notes; or

(2) any other matter relating to the actions and practices of DTC or any of its Participants or Indirect Participants.

DTC has advised us that its current practice, upon receipt of any payment in respect of securities such as the notes (including principal and interest), is to credit the accounts of the relevant Participants with the payment on the payment date unless DTC has reason to believe it will not receive payment on such payment date. Each relevant Participant is credited with an amount proportionate to its beneficial ownership of an interest in the principal amount of the relevant security as shown on the records of DTC. Payments by the Participants and the Indirect Participants to the beneficial owners of notes will be governed by standing instructions and customary practices and will be the responsibility of the Participants or the Indirect Participants and will not be the responsibility of DTC, the Trustee or the Company. Neither the Company nor the Trustee will be liable for any delay by DTC or any of its Participants in identifying the beneficial owners of the notes, and the Company and the Trustee may conclusively rely on and will be protected in relying on instructions from DTC or its nominee for all purposes.

Subject to certain restrictions transfers between Participants in DTC will be effected in accordance with DTC’s procedures, and will be settled in same-day funds.

DTC has advised the Company that it will take any action permitted to be taken by a Holder of notes only at the direction of one or more Participants to whose account DTC has credited the interests in the Global Notes and only in respect of such portion of the aggregate principal amount of the notes as to which such Participant or Participants has or have given such direction. However, if there is an Event of Default under the notes, DTC reserves the right to exchange the Global Notes for legended notes in certificated form, and to distribute such notes to its Participants.

Neither the Company nor the Trustee nor any of their respective agents will have any responsibility for the performance by DTC or its participants or indirect participants of their respective obligations under the rules and procedures governing their operations.

Exchange of Global Notes for Certificated Notes

A Global Note is exchangeable for Certificated Notes if:

(1) DTC (a) notifies the Company that it is unwilling or unable to continue as depositary for the Global Notes and DTC fails to appoint a successor depositary or (b) has ceased to be a clearing agency registered under the Exchange Act;

(2) the Company, at its option, notifies the Trustee in writing that it elects to cause the issuance of the Certificated Notes; or

(3) there has occurred and is continuing a Default with respect to the notes.

In addition, beneficial interests in a Global Note may be exchanged for Certificated Notes upon prior written notice given to the Trustee by or on behalf of DTC in accordance with the Indenture. In all cases, Certificated Notes delivered in exchange for any Global Note or beneficial interests in Global Notes will be registered in the names, and issued in any approved denominations, requested by or on behalf of the depositary (in accordance with its customary procedures).

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Same Day Settlement and Payment

The Company will make payments in respect of the notes represented by the Global Notes (including principal, premium, if any, interest and additional interest, if any) by wire transfer of immediately available funds to the accounts specified by the Global Note Holder. The Company will make all payments of principal, interest and premium and additional interest, if any, with respect to Certificated Notes by wire transfer of immediately available funds to the accounts specified by the Holders of the Certificated Notes or, if no such account is specified, by mailing a check to each such Holder’s registered address. The notes represented by the Global Notes are expected to be eligible to trade in the DTC’s Same-Day Funds Settlement System, and any permitted secondary market trading activity in such notes will, therefore, be required by DTC to be settled in immediately available funds. The Company expects that secondary trading in any Certificated Notes will also be settled in immediately available funds.

Certain Definitions

Set forth below are certain defined terms used in the Indenture. Reference is made to the Indenture for a full disclosure of all such terms, as well as any other capitalized terms used herein for which no definition is provided.

“13% Senior Subordinated Notes” means the Company’s 13% Series A Senior Subordinated Notes due 2009 and Series B Senior Subordinated Notes due 2009.

“1999 Transactions” refers to the occurrence of each of the following transactions which were completed in 1999:

(a) the merger of Yankee Acquisition Corp, a wholly owned subsidiary of Welsh Carson, with and into Holdings (the “Merger”);

(b) the solicitation and repurchase of $230.0 million principal amount of Holdings’ outstanding 4.5% Convertible Subordinated Notes due 2003 and $97.8 million principal amount of Holdings’ outstanding 6.0% Convertible Subordinated Notes due 2001 conditional upon the Merger,

(c) the contribution of all Holdings’ assets and shares in its subsidiaries to the Company;

(d) the $190.0 million offering of our 13% Senior Subordinated Notes;

(e) the $216.4 million offering by Holdings of the Holdings Senior Discount Debentures;

(f) the $375.0 million of borrowings by the Company under its senior credit facilities at the time of the other 1999 Transactions;

(g) the equity investment in Holdings of approximately $370.1 million by Welsh Carson and some of its affiliates, including the value, on the date of the Merger, of shares and 4.5% Convertible Subordinated Notes due 2003 already owned by Welsh Carson;

(h) the cash equity investment in Holdings of approximately $30.6 million by affiliates of Ferrer Freeman;

(i) the equity investment in Holdings of approximately $23.0 million by Chase Capital Partners, certain officers and employees of Donaldson, Lufkin & Jenrette Securities Corporation, certain members of Holdings’ management and potentially other investors; and

(j) the payment in full and termination of the Company’s then existing $100.0 million amended and restated credit agreement.

“Acquired Debt” means, with respect to any specified Person:

• Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Restricted Subsidiary of such specified Person or assumed in connection with the acquisition of assets from such Person, whether or not such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Restricted Subsidiary of such specified Person or such acquisition; and

• Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.

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“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control,” as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise, provided that beneficial ownership of 10% or more of the Voting Stock of a Person shall be deemed to be control. For purposes of this definition, the terms “controlling,” “controlled by” and “under common control with” shall have correlative meanings; provided that any affiliated professional associations and professional corporations which employ physicians and other professionals who provide health care services for the Company’s occupational health services centers shall not be deemed to be an Affiliate of the Company, Holdings or any of their Subsidiaries.

“Affiliate Management Fees” means any management, consulting, monitoring or advisory fees, and related expenses, payable to Welsh Carson, Ferrer Freeman or their respective Affiliates.

“Asset Sale” means:

(1) the sale, lease (other than an operating lease entered into in the ordinary course of business), conveyance or other disposition (a “Disposition”) of any assets or rights (other than the licensing of its non-exclusive intellectual property rights) (including, without limitation, by way of a sale and leaseback), provided that the Disposition of all or substantially all of the assets of the Company and its Restricted Subsidiaries taken as a whole will be governed by the provisions of the Indenture described above under the caption “—Repurchase at the Option of Holders—Change of Control” and/or the provisions described above under the caption “—Certain Covenants—Merger, Consolidation or Sale of Assets” and not by the provisions described above under the caption “—Repurchase at the Option of Holders—Asset Sales”; and

(2) the issue or sale by the Company or any of its Restricted Subsidiaries of Equity Interests of any of the Company’s Restricted Subsidiaries (other than directors’ qualifying shares);

that, in the case of either clause (1) or (2) and whether in a single transaction or a series of related transactions:

(a) has a fair market value in excess of $5 million; or

(b) is for net proceeds to the Company and its Restricted Subsidiaries in excess of $5 million.

Notwithstanding the preceding, the following items shall not be deemed to be Asset Sales:

(1) a transfer of assets among the Company, its Wholly Owned Restricted Subsidiaries and its Permitted Joint Ventures;

(2) an issuance of Equity Interests by a Wholly Owned Restricted Subsidiary to the Company or to another Wholly Owned Restricted Subsidiary;

(3) a Restricted Payment that is permitted by the covenant described above under the caption “—Certain Covenants—Restricted Payments” or a Permitted Investment;

(4) the sale of Cash Equivalents in the ordinary course of business;

(5) a disposition of inventory in the ordinary course of business;

(6) sales of accounts receivable and related assets or an interest therein of the type specified in the definition of “Qualified Receivables Transaction” to a Receivables Entity;

(7) a disposition relating to the foreclosure of a Permitted Lien;

(8) the sale and leaseback of any assets within 90 days of the acquisition thereof;

(9) any exchange of property pursuant to Section 1031 of the Internal Revenue Code of 1986, as amended, for use in a Permitted Business;

(10) any sale, transfer or other disposition of property that is idle, damaged, worn out, obsolete or no longer suitable for use in the ordinary course of business; and

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(11) sales or grants of licenses or sublicenses to use intellectual property of the Company or any of its Restricted Subsidiaries to the extent such sale, license or sublicense does not interfere in any material respect with the business of the Company and its Restricted Subsidiaries.

“Capital Lease Obligation” means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be required to be capitalized on a balance sheet in accordance with GAAP.

“Capital Stock” means:

• in the case of a corporation, corporate stock;

• in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;

• in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and

• any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person.

“Cash Equivalents” means:

(1) Government Securities having maturities of not more than six months from the date of acquisition;

(2) certificates of deposit and eurodollar time deposits with maturities of six months or less from the date of acquisition, bankers’ acceptances with maturities not exceeding six months and overnight bank deposits, in each case with any lender party to the Senior Credit Facilities or with any domestic commercial bank having capital and surplus in excess of $500 million and whose long-term debt, or whose parent holding company’s long-term debt, is rated “A” (or such similar equivalent rating) or higher by at least one nationally recognized statistical rating organization (as defined in Rule 436 under the Securities Act);

(3) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (1) and (2) above entered into with any financial institution meeting the qualifications specified in clause (2) above;

(4) commercial paper having the rating of “P-1” (or higher) from Moody’s Investors Service, Inc. or “A-1” (or higher) from Standard & Poor’s Corporation and in each case maturing within six months after the date of acquisition; and

(5) money market funds investing substantially in investments which constitute Cash Equivalents of the kinds described in clauses (1) through (4) of this definition.

“Certificated Notes” means notes in registered certificated form.

“Change of Control” means the occurrence of any of the following:

(1) the sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of either (x) the Company and its Subsidiaries taken as a whole or (y) Holdings to any “person” (as such term is used in Section 13(d) (3) of the Exchange Act) other than the Principals or a Related Party of any of the Principals;

(2) the adoption of a plan relating to the liquidation or dissolution of the Company;

(3) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any “person” (as defined above), other than the Principals and their Related Parties, becomes the “beneficial owner” (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the Voting Stock of the Company (measured by voting power rather than number of shares);

(4) the first day on which a majority of the members of the Board of Directors of the Company are not Continuing Directors; or

(5) the Company or Holdings consolidates with, or merges with or into, any Person, or any Person consolidates with, or merges with or into, the Company or Holdings, in any such event pursuant to a transaction in which any of the outstanding Voting

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Stock of the Company or Holdings, as the case may be, is converted into or exchanged for cash, securities or other property, other than any such transaction where the Voting Stock of the Company or Holdings, as the case may be, outstanding immediately prior to such transaction is converted into or exchanged for Voting Stock (other than Disqualified Stock) of the surviving or transferee Person constituting a majority of the outstanding shares of such Voting Stock of such surviving or transferee Person immediately after giving effect to such issuance.

“Consolidated EBITDA” means, with respect to any Person, for any period, the Consolidated Net Income of such Person for such period adjusted to add thereto (to the extent deducted from net revenues in determining Consolidated Net Income), without duplication, the sum of

• consolidated income taxes;

• consolidated depreciation and amortization (including amortization of debt issuance costs in connection with any Indebtedness of such Person and its Restricted Subsidiaries and depreciation and amortization attributable to the Permitted Joint Ventures existing at the Reference Date which were not consolidated);

• Fixed Charges;

• expenditures paid prior to or contemporaneously with and related to the 1999 Transactions which are paid or otherwise accounted for within 90 days of the consummation of the 1999 Transactions;

• expenditures paid prior to or contemporaneously with and related to any actual or proposed financing, mergers or dispositions or acquisitions permitted to be incurred by the Indenture (including, without limitation, financing and legal fees and costs incurred with any such mergers, acquisitions or dispositions);

• the restructuring charge of $20.6 million incurred in the fourth quarter of 1998; and

• all other non-cash charges (excluding any such non-cash charge to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period);

provided that consolidated income taxes, depreciation and amortization of a Subsidiary of such Person that is not a Wholly Owned Subsidiary shall only be added to the extent of the Equity Interest of such Person in such Subsidiary.

“Consolidated Interest Expense” means, with respect to any Person for any period, the sum of, without duplication:

• the interest expense of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP (including, without limitation, amortization of original issue discount, non-cash interest payments, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers’ acceptance financings, and net payments, if any, pursuant to Hedging Obligations; provided that in no event shall any amortization of deferred financing costs be included in Consolidated Interest Expense); plus

• the consolidated capitalized interest of such Person and its Restricted Subsidiaries for such period, whether paid or accrued; plus

• the cash contributions to any employee stock ownership plan or similar trust to the extent such contributions are used by such plan or trust to pay interest or fees to such plan or trust; provided, however, that there will be excluded therefrom any such interest expense of any Unrestricted Subsidiary to the extent the related Indebtedness is not Guaranteed or paid by the Company or any Restricted Subsidiary.

Notwithstanding the preceding, the Consolidated Interest Expense with respect to any Restricted Subsidiary that is not a Wholly Owned Restricted Subsidiary shall be included only to the extent (and in the same proportion) that the net income of such Restricted Subsidiary was included in calculating Consolidated Net Income.

“Consolidated Net Income” means, with respect to any Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided that

(1) the Net Income (but not loss) of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of dividends or distributions paid in cash to the referent Person or a Wholly Owned Subsidiary thereof;

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(2) the Net Income of any Restricted Subsidiary shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary or its stockholders;

(3) the Net Income of any Person acquired in a transaction accounted for in a manner similar to a pooling of interests (including any common control acquisition) for any period prior to the date of such acquisition shall be excluded; and

(4) the cumulative effect of a change in accounting principles shall be excluded.

“Continuing Directors” means, as of any date of determination, any member of the Board of Directors of the Company who:

• was a member of such Board of Directors on the Issue Date;

• was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board at the time of such nomination or election; or

• was nominated by the Principals.

“Credit Agent” means JPMorgan Chase Bank, in its capacity as Administrative Agent for the lenders party to the Senior Credit Facilities, or any successor thereto or any person otherwise appointed.

“Default” means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default.

“Designated Senior Indebtedness” means any Indebtedness outstanding under the Senior Credit Facilities.

“Development Corporation” means any corporation, association, limited liability company or other business (other than a partnership) existing at the Issue Date managed by the Company but owned by a Person (who is not the Company or an Affiliate or a Subsidiary of the Company), engaged in the development of occupational health centers and financed by the issue of Equity Interests and notes under securities purchase agreements to third party investors.

“Disqualified Stock” means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder thereof, in whole or in part, on or prior to the date that is 91 days after the date on which the notes mature. Notwithstanding the preceding sentence, any Capital Stock that would not constitute Disqualified Stock but for change of control or asset sale provisions shall not constitute Disqualified Stock if the provisions are not more favorable to the holders of such Capital Stock than the provisions described under “—Repurchase at the Option of Holders—Change of Control” and “—Repurchase at the Option of Holders—Asset Sales.”

“Domestic Restricted Subsidiary” means any Restricted Subsidiary other than (a) a Foreign Restricted Subsidiary or (b) a Subsidiary of a Foreign Restricted Subsidiary.

“Equity Interests” means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock).

“Equity Offering” means an offering of the Equity Interests (other than Disqualified Stock) of Holdings or the Company; provided that in the event of an offering by Holdings, Holdings contributes to the capital of the Company the portion of the net cash proceeds of such offering necessary to pay the aggregate redemption price (plus accrued interest to the redemption date) of the notes to be redeemed pursuant to the provisions described in the first paragraph under “—Optional Redemption”.

“Existing Indebtedness” means Indebtedness of the Company and its Subsidiaries (other than Indebtedness under the Senior Credit Facilities) in existence on the Issue Date, until such amounts are repaid.

“Ferrer Freeman” means Ferrer Freeman Thompson & Co. LLC and its Affiliates.

“Fixed Charge Coverage Ratio” means with respect to any Person as of any date of determination, the ratio of the Consolidated EBITDA of such Person for the period of the most recent four consecutive fiscal quarters ending prior to the date of such determination and as to which internal financial statements are available to the Fixed Charges of such Person for such period. In the

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event that the Company or any of its Restricted Subsidiaries incurs, assumes, Guarantees, repays, repurchases, defeases, redeems or otherwise discharges any Indebtedness (other than revolving credit borrowings) or issues or redeems preferred stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the “Calculation Date”), then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such incurrence, assumption, Guarantee, repayment, repurchase, defeasance, redemption or discharge of Indebtedness, or such issuance or redemption of preferred stock, as if the same had occurred at the beginning of the applicable four-quarter reference period.

In addition, for purposes of calculating the Fixed Charge Coverage Ratio:

(1) acquisitions or dispositions that have been made by the Company or any of its Restricted Subsidiaries, including through mergers or consolidations and including any related financing transactions, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date shall be calculated to include the Consolidated EBITDA of the acquired entities on a pro forma basis (to be calculated in accordance with Article 11-02 of Regulation S-X, as in effect from time to time), shall be deemed to have occurred on the first day of the four-quarter reference period and Consolidated EBITDA for such reference period shall be calculated without giving effect to clause (3) of the proviso set forth in the definition of Consolidated Net Income;

(2) the Consolidated EBITDA attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded if greater than zero; and

(3) the Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded, but only to the extent that the obligations giving rise to such Fixed Charges will not be obligations of the specified Person or any of its Restricted Subsidiaries following the Calculation Date.

For purposes of this definition, whenever pro forma effect is to be given to an Investment or an acquisition or disposition of assets, the amount of income or earnings relating thereto and the amount of Consolidated Interest Expense associated with any Indebtedness incurred in connection therewith, or any other calculation under this definition, the pro forma calculations will be determined in good faith by a responsible financial or accounting officer of the Company (including pro forma expense and cost reductions calculated on a basis consistent with Regulation S-X under the Securities Act). If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest expense on such Indebtedness will be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire period (taking into account any interest rate agreement applicable to such Indebtedness if such interest rate agreement has a remaining term in excess of 12 months).

“Fixed Charges” means, with respect to any Person for any period, the sum, without duplication, of:

(1) the Consolidated Interest Expense of such Person for such period, minus the interest income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; plus

(2) any interest expense on Indebtedness of another Person that is Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries, whether or not such Guarantee or Lien is called upon; plus

(3) the product of (a) all dividend payments, whether or not in cash, on any series of preferred stock of such Person or any of its Restricted Subsidiaries, other than dividend payments on Equity Interests payable solely in Equity Interests of the Company, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of such Person, expressed as a decimal, in each case, on a consolidated basis and in accordance with GAAP.

“Foreign Restricted Subsidiary” means any Restricted Subsidiary (a) that is not organized under the laws of the United States of America or any State thereof or the District of Columbia and (b) with respect to which more than 80% of any of its sales, earnings or assets (determined on a consolidated basis in accordance with GAAP) are located in, operated from or derived from operations located in territories outside of the United States of America and jurisdictions outside the United States of America.

“GAAP” means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect on the Issue Date; provided that for all calculations involving the period from the Reference

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Date to and including the Issue Date, GAAP means for such period such generally accepted accounting principals as were in effect on the Reference Date.

“Government Securities” means direct obligations of, or obligations guaranteed by, the United States of America for the payment of which guarantee or obligations the full faith and credit of the United States is pledged.

“Guarantee” means a guarantee other than by endorsement of negotiable instruments for collection in the ordinary course of business, direct or indirect, in any manner including, without limitation, letters of credit and reimbursement agreements in respect thereof, of all or any part of any Indebtedness.

“Guarantors” means each Subsidiary of the Company that executes a Subsidiary Guarantee in accordance with the provisions of the Indenture, and their respective successors and assigns.

“Hedging Obligations” means, with respect to any Person, the obligations of such Person under:

• interest rate swap agreements, interest rate cap agreements and interest rate collar agreements; and

• other agreements or arrangements designed to protect such Person against fluctuations in interest rates or currency exchange rates.

“Holdings” means Concentra, Inc.

“Holdings Senior Discount Debentures” means the 14% Senior Discount Debentures due 2011 issued by Holdings on the Reference Date and any Indebtedness of Holdings issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund such Senior Discount Debentures due 2010; provided that such Indebtedness complies with clauses (1), (2) and (3) of the definition of “Permitted Refinancing Indebtedness”.

“Indebtedness” means, with respect to any specified Person, any indebtedness of such Person, in respect of:

• borrowed money;

• evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof);

• bankers’ acceptances;

• representing Capital Lease Obligations; or

• the balance deferred and unpaid of the purchase price of any property (which purchase price is due more than 60 days after the date of placing such property in service or taking delivery and title thereto) or representing any Hedging Obligations, except any such balance that constitutes an accrued expense or trade payable, if and to the extent any of the preceding items (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of the specified Person prepared in accordance with GAAP. In addition, the term “Indebtedness” includes all Indebtedness of others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified Person) and, to the extent not otherwise included, the Guarantee by such Person of any indebtedness of any other Person.

The amount of any Indebtedness outstanding as of any date shall be:

• the accreted value thereof, in the case of any Indebtedness that does not require current payments of interest; and

• the principal amount thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness.

“Insolvency or Liquidation Proceedings” means:

• any insolvency or bankruptcy case or proceeding, or any receivership, liquidation, reorganization or other similar case or proceeding, relative to the Company or to the creditors of the Company, as such, or to the assets of the Company;

• any liquidation, dissolution, reorganization or winding up of the Company, whether voluntary or involuntary, and involving insolvency or bankruptcy; or

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• any assignment for the benefit of creditors or any other marshaling of assets and liabilities of the Company.

“Investments” means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the forms of direct or indirect loans (including guarantees of Indebtedness or other obligations), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business), or purchases or other acquisitions of or the transfer of assets for consideration of, Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. If the Company or any Restricted Subsidiary of the Company sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted Subsidiary of the Company such that, after giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary of the Company, the Company shall be deemed to have made an Investment on the date of any such sale or disposition equal to the fair market value of the Equity Interests of such Restricted Subsidiary not sold or disposed of in an amount determined as provided in the final paragraph of the covenant described above under the caption “—Certain Covenants—Restricted Payments.”

“Issue Date” means the date on which the notes are first issued under the Indenture.

“Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.

“Net Income” means, with respect to any Person, the net income (loss) of such Person, determined in accordance with GAAP, excluding, however:

• any gain (loss), together with any related provision for taxes on such gain (loss), realized in connection with:

(1) any Asset Sale; or

(2) the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries; and

• any extraordinary or nonrecurring gain (loss), together with any related provision for taxes on such extraordinary or nonrecurring gain (loss).

“Net Proceeds” means the aggregate cash proceeds received by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of the direct costs relating to such Asset Sale (including, without limitation, legal, accounting and investment banking fees, and sales commissions) and any relocation expenses incurred as a result thereof, taxes paid or payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements), the amounts required to be applied to the payment of Indebtedness (other than Indebtedness incurred pursuant to the Senior Credit Facilities) secured by a Lien on the asset or assets that were the subject of the Asset Sale, distributions and other payments required to be made to minority interest holders in Restricted Subsidiaries as a result of such Asset Sale and the deduction of appropriate amounts provided by the seller as a reserve, in accordance with GAAP, for adjustments in respect of the sale price of the assets that were the subject of such Asset Sale or as a reserve, in accordance with GAAP, against any liabilities associated with the property or other assets disposed in such Asset Sale and retained by the Company or any Restricted Subsidiary after such Asset Sale.

“Non-Recourse Debt” means Indebtedness:

• as to which neither the Company nor any of its Restricted Subsidiaries:

(1) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness);

(2) is directly or indirectly liable as a guarantor or otherwise; or

(3) constitutes the lender;

• no default with respect to which (including any rights that the holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit upon notice, lapse of time or both any holder of any other Indebtedness (other than

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the notes) of the Company or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity; and

• as to which the lenders have been notified in writing that they will not have any recourse to the stock or assets of the Company or any of its Restricted Subsidiaries.

“Obligations” means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness.

“Permitted Business” means any business in which the Company and its Restricted Subsidiaries are engaged on the Issue Date or any business reasonably related, incidental or ancillary thereto.

“Permitted Business Assets” means assets used or useful in a Permitted Business.

“Permitted Investments” means:

(l) any Investment in the Company or in a Restricted Subsidiary (other than a Permitted Joint Venture);

(2) any Investment in cash or Cash Equivalents;

(3) any Investment in receivables owing to the Company or any Restricted Subsidiary created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided, however, that such trade terms may include such concessionary trade terms as the Company or any such Restricted Subsidiary deems reasonable under the circumstances;

(4) any Investment received by the Company or any Restricted Subsidiary as consideration for the settlement of any litigation, arbitration or claim of bankruptcy or in partial or full satisfaction of accounts receivable owed by a financially troubled Person to the extent reasonably necessary in order to prevent or limit any loss by the Company or any of its Restricted Subsidiaries in connection with such accounts receivable;

(5) Investments in existence on the Reference Date;

(6) Hedging Obligations entered into in the ordinary course of business which transactions or obligations are incurred in compliance with the covenant described above under the caption “—Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred Stock”;

(7) Guarantees issued in accordance with the covenant described above under the caption “—Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred Stock”;

(8) any Investment by the Company or a Restricted Subsidiary in a Receivables Entity or any Investment by a Receivables Entity in any other Person, in each case, in connection with a Qualified Receivables Transaction; provided, however, that any Investment in any such Person is in the form of a Purchase Money Note, or any equity interest or interests in accounts receivable and related assets generated by the Company or a Restricted Subsidiary and transferred to any Person in connection with a Qualified Receivables Transaction or any such Person owning such accounts receivable;

(9) any Investment by the Company or any Restricted Subsidiary of the Company (other than a Permitted Joint Venture) in a Person, if as a result of such Investment:

(a) such Person becomes a Restricted Subsidiary (other than a Permitted Joint Venture) of the Company or of a Restricted Subsidiary of the Company (other than a Permitted Joint Venture); or

(b) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company or a Restricted Subsidiary of the Company (other than a Permitted Joint Venture);

(10) any Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with the covenant described above under the caption “—Repurchase at the Option of Holders—Asset Sales”;

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(11) any acquisition of assets solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Company;

(12) any Investment in any Permitted Joint Venture after the Reference Date in an aggregate amount not to exceed $40 million, such aggregate amount to be increased as a result of any management fees, software fees and development fees received from such Permitted Joint Ventures in the ordinary course of business and any payment of any dividend or distribution received on a pro rata basis from any Permitted Joint Ventures as a holder of its Equity Interests; and

(13) any Investment in any Person after the Issue Date in an aggregate amount, taken together with all other Investments made pursuant to this clause (13) that are at the time outstanding, not to exceed $5 million.

“Permitted Joint Venture” means, with respect to any Person:

(1) any corporation, association or other business entity (other than a partnership):

(a) of which more than 50% (or in the case of any such business entity in which the Company or any Restricted Subsidiary has an Investment before the Issue Date, 50% or more) of the Voting Stock is at the time of determination owned or controlled, directly or indirectly, by such Person or one or more of the Restricted Subsidiaries of that Person or a combination thereof; and

(b) which is either managed or controlled by such Person or any of its Restricted Subsidiaries; and

(2) any partnership, joint venture, limited liability company or similar entity:

(a) of which more than 50% (or in the case of any such entity in which the Company or any Restricted Subsidiary has an Investment before the Issue Date, 50% or more) of the capital accounts, distribution rights, total equity and voting interests or general or limited partnership interests are owned or controlled, directly or indirectly, by such Person or one or more of the Restricted Subsidiaries of that Person or a combination thereof; and

(b) which is either managed or controlled by such Person or any of its Restricted Subsidiaries,

and which in the case of each of clauses (1) and (2),

(A) is engaged in a Permitted Business;

(B) only incurs Indebtedness to the Company;

(C) does not enter into any Guarantee; and

(D) distributes all cash pro rata in accordance with the Equity Interests therein at least annually (other than cash required to be reserved on its balance sheet in accordance with GAAP consistent with past practice).

“Permitted Liens” means:

(1) Liens that secure up to an aggregate principal amount of $475 million of Senior Indebtedness and Guarantees incurred pursuant to the Senior Credit Facilities;

(2) Liens in favor of the Company or any Restricted Subsidiary;

(3) Liens on property of a Person existing at the time such Person becomes a Restricted Subsidiary or is merged into or consolidated with the Company or any Restricted Subsidiary of the Company, provided that such Liens were not incurred in contemplation of such event, merger or consolidation and do not extend to any assets other than those of the Person that becomes a Restricted Subsidiary or is merged into or consolidated with the Company or any Restricted Subsidiary;

(4) Liens on property existing at the time of acquisition thereof by the Company or any Restricted Subsidiary of the Company, provided that such Liens were not incurred in contemplation of such acquisition;

(5) Liens to secure the performance of statutory obligations, surety or appeal bonds, performance bonds or other obligations of a like nature incurred in the ordinary course of business;

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(6) Liens existing on the Issue Date;

(7) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded, provided that any reserve or other appropriate provision as shall be required in conformity with GAAP shall have been made therefor;

(8) Liens to secure Indebtedness (including Capital Lease Obligations) permitted by clause (4) of the second paragraph of the covenant described above under the caption “—Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred Stock”;

(9) Liens securing Permitted Refinancing Indebtedness where the Liens securing the Indebtedness being refinanced were permitted under the Indenture;

(10) Liens incurred in the ordinary course of business of the Company or any Restricted Subsidiary of the Company with respect to obligations that do not exceed $5 million at any one time outstanding and that: (a) are not incurred in connection with the borrowing of money or the obtaining of advances or credit (other than trade credit in the ordinary course of business) and (b) do not in the aggregate materially detract from the value of the property or materially impair the use thereof in the operation of business by the Company or such Restricted Subsidiary;

(11) Liens on assets of Unrestricted Subsidiaries that secure Non-Recourse Debt of Unrestricted Subsidiaries;

(12) easements, rights-of-way, zoning and similar restrictions and other similar encumbrances or title defects incurred or imposed, as applicable, in the ordinary course of business and consistent with industry practices;

(13) any interest or title of a lessor under any Capital Lease Obligation;

(14) Liens securing reimbursement obligations with respect to commercial letters of credit which encumber documents and other property relating to such letters of credit and products and proceeds thereof;

(15) Liens encumbering deposits made to secure obligations arising from statutory, regulatory, contractual or warranty requirements of the Company or any of its Restricted Subsidiaries, including rights of offset and set-off;

(16) Liens securing Hedging Obligations which Hedging Obligations relate to Indebtedness that is otherwise permitted under the Indenture;

(17) deposits by such Person, in each case incurred in the ordinary course of business:

(a) under workmen’s compensation laws, unemployment insurance and other types of social security legislation (other than any Lien imposed by the Employer Retirement Income Security Act of 1974, as amended);

(b) made in good faith in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party;

(c) to secure public or statutory obligations of such Person or deposits or cash or Cash Equivalents to secure surety or appeal bonds to which such Person is a party; or

(d) as security for contested taxes or import or customs duties or for the payment of rent;

(18) Liens imposed by law, including carriers’, warehousemen’s and mechanics’ Liens, in each case for sums not yet delinquent or being contested in good faith by appropriate proceedings if a reserve or other appropriate provisions, if any, as shall be required by GAAP shall have been made in respect thereof;

(19) judgment Liens not giving rise to an Event of Default so long as such Lien is adequately bonded and any appropriate legal proceedings which may have been duly initiated for the review of such judgment have not been finally terminated or the period within which such proceedings may be initiated has not expired;

(20) Liens securing Indebtedness of a Restricted Subsidiary owing to the Company or a Wholly Owned Restricted Subsidiary (other than a Receivables Entity);

(21) Liens securing the notes and Subsidiary Guarantees under the Indenture;

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(22) Liens on assets transferred to a Receivables Entity or on assets of a Receivables Entity, in either case incurred in connection with a Qualified Receivables Transaction;

(23) leases or subleases granted to others that do not materially interfere with the ordinary course of business of the Company and its Restricted Subsidiaries; and

(24) Liens arising from filing Uniform Commercial Code financing statements regarding leases.

“Permitted Refinancing Indebtedness” means any Indebtedness of the Company or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund other Indebtedness of the Company or any of its Restricted Subsidiaries; provided that:

(1) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount of (or accreted value, if applicable), plus accrued interest on, the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded (plus the amount of reasonable expenses incurred in connection therewith) except, in the case of the Senior Credit Facilities, the principal amount of such Permitted Refinancing Indebtedness does not exceed the greater of:

(i) the principal amount of Indebtedness permitted (whether or not borrowed) under clause (1) of the second paragraph of the covenant described above under the caption “—Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred Stock”; and

(ii) the amount actually borrowed or available to be borrowed under the Senior Credit Facilities;

(2) such Permitted Refinancing Indebtedness has a final maturity date no earlier than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and

(3) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the notes, such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and is subordinated in right of payment to, the notes on terms at least as favorable to the holders of notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded.

“Person” means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization or government or agency or political subdivision thereof (including any subdivision or ongoing business of any such entity or substantially all of the assets of any such entity, subdivision or business).

“Principals” means Welsh Carson, Ferrer Freeman and their respective Affiliates.

“Purchase Money Note” means a promissory note of a Receivables Entity evidencing a line of credit, which may be irrevocable, from the Company or any Restricted Subsidiary of the Company in connection with a Qualified Receivables Transaction to a Receivables Entity, which note is repayable from cash available to the Receivables Entity, other than amounts required to be established as reserves pursuant to agreements, amounts paid to investors and amounts owing to such investors and amounts paid in connection with the purchase of newly generated accounts receivable.

“Qualified Receivables Transaction” means any transaction or series of transactions that may be entered into by the Company or any of its Restricted Subsidiaries on an arms’ length basis with the Standard Securitization Undertakings pursuant to which the Company or any of its Restricted Subsidiaries may sell, convey or otherwise transfer to

(1) a Receivables Entity (in the case of a transfer by the Company or any of its Restricted Subsidiaries); or

(2) any other Person (in the case of a transfer by a Receivables Entity)

or may grant a security interest in, any accounts receivable (whether now existing or arising in the future) of the Company or any of its Restricted Subsidiaries, and any assets related thereto including, without limitation, all collateral securing such accounts receivable, all contracts and all guarantees or other obligations in respect of such accounts receivable, the proceeds of such receivables and other assets which are customarily transferred, or in respect of which security interests are customarily granted in connection with asset securitization involving accounts receivable; provided that the aggregate consideration received in each such sale is at least equal to the aggregate fair market value of the receivables transferred.

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“Receivables Entity” means a Wholly Owned Subsidiary of the Company (or another Person in which the Company or any Restricted Subsidiary of the Company makes an Investment and to which the Company or any Restricted Subsidiary of the Company enters into a Qualified Receivables Transaction) which engages in no activities other than the financing of a Qualified Receivables Transaction and which is designated by the Board of Directors of the Company (as provided below) as a Receivables Entity:

(1) no portion of Indebtedness or any other obligations (contingent or otherwise) of such Person of which:

(a) is guaranteed by the Company or any Restricted Subsidiary of the Company (excluding guarantees of Obligations (other than the principal, and interest, on Indebtedness) pursuant to Standard Securitization Undertakings);

(b) has recourse to or obligates the Company or any Restricted Subsidiary of the Company in any way other than pursuant to Standard Securitization Undertakings; and

(c) subjects any property or asset of the Company or any Restricted Subsidiary of the Company, directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to Standard Securitization Undertakings;

(2) with which neither the Company nor any Restricted Subsidiary of the Company has any contract, agreement, arrangement or understanding other than

(a) a Qualified Receivables Transaction in the ordinary course of business; and

(b) fees payable in the ordinary course of business in connection with servicing accounts receivable both of which shall be on terms no less favorable to the Company or such Restricted Subsidiary than those that might be obtained at the time from Persons that are not Affiliates of the Company; and

(3) to which neither the Company nor any Restricted Subsidiary of the Company has any obligation to

(a) subscribe for additional shares of Capital Stock or other Equity Interests therein or make any additional capital contributions or similar payments or transfer thereto other than in connection with a Qualified Receivables Transaction; or

(b) maintain or preserve such entity’s solvency, any balance sheet term, financial condition, level of income or cause such entity to achieve certain levels of operating results.

Any such designation by the Board of Directors of the Company shall be evidenced to the Trustee by filing with the Trustee a certified copy of the resolution of the Board of Directors of the Company giving effect to such designation and an Officers’ Certificate certifying that such designation complied with the foregoing conditions.

“Reference Date” means August 17, 1999, the date of the indenture governing the Company’s existing 13% Senior Subordinated Notes.

“Related Party” with respect to any Principal means:

• any controlling stockholder or partner, 80% (or more) owned Subsidiary, or spouse or immediate family member (in the case of an individual) of such Principal; or

• any trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners, owners or Persons beneficially holding a 51% or more controlling interest of which consist of such Principal and/or such other Persons referred to in the immediately preceding clause.

“Reorganization Securities” means securities distributed to holders of the notes in an Insolvency or Liquidation Proceeding pursuant to a plan of reorganization consented to by each class of the Senior Indebtedness, but only if in such plan of reorganization the holders of the notes on the one hand and the holders of the Senior Indebtedness on the other hand are placed in separate and distinct classes from each other and from the classes of other claimants and the class of the holders of the notes is junior to the class of the holders of the Senior Indebtedness and only if all of the terms and conditions of such securities including, without limitation, term, tenor, interest, amortization, subordination, standstills, covenants and defaults are at least as favorable (and provide the same relative benefits) to the holders of Senior Indebtedness and to the holders of any security distributed in such Insolvency or Liquidation Proceeding on account of any such Senior Indebtedness as the terms and conditions of the notes and the Indenture are, and provide, to the holders of Senior Indebtedness.

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“Representative” means the Trustee, agent or representative for any Senior Indebtedness.

“Restricted Investment” means an Investment other than a Permitted Investment.

“Restricted Subsidiary” of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary.

“Rule 144A” means Rule 144A promulgated under the Securities Act.

“Senior Credit Facilities” means the Credit Agreement, to be entered into on the Issue Date, among the Company, Holdings, the several lenders from time to time parties thereto and JPMorgan Chase Bank, as Administrative Agent, providing for revolving credit borrowings, term loans and letters of credit, including any related notes, guarantees, collateral documents, instruments and agreements executed in connection therewith, and in each case as amended, modified, renewed, refunded, replaced or refinanced (whether or not with the original administrative agent and lenders or another administrative agent or agents or other lenders) from time to time including increases in principal amount.

“Senior Indebtedness” means:

(1) all Indebtedness outstanding under the Senior Credit Facilities, including any Guarantees thereof and all Hedging Obligations with respect thereto;

(2) any other Indebtedness permitted to be incurred by the Company under the terms of the Indenture, unless the instrument under which such Indebtedness is incurred expressly provides that it is on a parity with or subordinated in right of payment to the notes; and

(3) all Obligations with respect to the preceding clauses (1) and (2).

Notwithstanding anything to the contrary in the preceding, Senior Indebtedness will not include:

(1) any liability for federal, state, local or other taxes owed or owing by the Company;

(2) any Indebtedness of the Company to any of its Subsidiaries or other Affiliates;

(3) any trade payables; or

(4) any Indebtedness that is incurred in violation of the Indenture.

“Significant Subsidiary” means any Restricted Subsidiary that would be a “significant subsidiary” of the Company within the meaning of Rule 1-02 under Regulation S-X promulgated by the Commission.

“Standard Securitization Undertakings” means the interest rate, representations, warranties, covenants, the events of default and indemnities entered into by the Company or any Restricted Subsidiary of the Company which shall be customary in securitization of accounts receivable transactions and on market terms.

“Stated Maturity” means, with respect to any security, the date specified in such security as the fixed date on which payment of or principal on such security is due and payable in the original documentation governing such securities, and shall not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof.

“Stockholders Agreement” means the Stockholders Agreement, dated as of August 17, 1999, among the Principals, Chase Capital Partners, certain officers and employees of Donaldson, Lufkin & Jenrette Securities Corporation, certain members of Holdings’ management and Holdings.

“Subsidiary” means, with respect to any Person:

(1) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person (or a combination thereof);

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(2) any partnership or limited liability company (a) the sole general partner or the managing general partner or managing member of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are such Person or of one or more Subsidiaries of such Person (or any combination thereof); and

(3) any Permitted Joint Venture of such Person.

“Subsidiary Guarantee” means a Guarantee provided by a Restricted Subsidiary.

“Unrestricted Subsidiary” means (a) any Subsidiary that is designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a resolution of the Board of Directors and (b) any Subsidiary of an Unrestricted Subsidiary, but, in each case, only to the extent that such Subsidiary:

(1) has no Indebtedness other than Non-Recourse Debt;

(2) is not party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary of the Company unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Company or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Company;

(3) is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results; and

(4) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Company or any of its Restricted Subsidiaries.

Any designation of a Subsidiary of the Company as an Unrestricted Subsidiary shall be evidenced to the Trustee by filing with the Trustee a certified copy of the resolution of the Board of Directors giving effect to such designation and an Officers’ Certificate certifying that such designation complied with the preceding conditions and was permitted by the covenant described above under the caption “—Certain Covenants—Restricted Payments.” If, at any time, any Unrestricted Subsidiary would fail to meet the preceding requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of the Indenture and any Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the Company as of such date and, if such Indebtedness is not permitted to be incurred as of such date under the covenant described under the caption “—Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred Stock,” the Company shall be in default of such covenant. The Board of Directors of the Company may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such designation shall be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation shall be permitted only if: (1) such Indebtedness is permitted under the covenant described under the caption “—Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred Stock,” and (2) no Default or Event of Default would be in existence following such designation.

“Voting Stock” of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the board of directors or similar governing board or group of such Person.

“Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the number of years obtained by dividing:

(1) the sum of the products obtained by multiplying: (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment, by

(2) the then outstanding principal amount of such Indebtedness.

“Welsh Carson” means Welsh, Carson, Anderson & Stowe VIII, L.P. and its Affiliates.

“Wholly Owned Subsidiary” of any Person means a Subsidiary of such Person all of the outstanding Capital Stock or other ownership interests of which (other than directors’ qualifying shares) shall at the time be owned by such Person and/or by one or more Wholly Owned Subsidiaries of such Person.

“Wholly Owned Restricted Subsidiary” of the Company means a Wholly Owned Subsidiary which is a Restricted Subsidiary of the Company.

127

UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

The following discussion summarizes certain U.S. federal income tax considerations that may be relevant to the exchange of the old notes for the new notes, but does not purport to be a complete analysis of all potential tax effects. This discussion is based upon the provisions of the IRC, applicable Treasury Regulations promulgated thereunder, judicial authority and administrative interpretations, as of the date hereof, all of which are subject to change, possibly with retroactive effect, or are subject to different interpretations. This discussion does not address the tax considerations arising under the laws of any foreign, state, local, or other jurisdiction.

We believe that the exchange of the old notes for the new notes should not be an exchange or otherwise a taxable event to a holder for the U.S. federal income tax purposes. Accordingly, a holder should have the same adjusted issue price, adjusted basis and holding period in the new notes as it had in the old notes immediately before the exchange.

PLAN OF DISTRIBUTION

Based on interpretations by the staff of the SEC in no action letters issued to third parties, we believe that you may transfer new notes issued under the exchange offer in exchange for the old notes if:

• you acquire the new notes in the ordinary course of your business; and

• you are not engaged in, and do not intend to engage in, and have no arrangement or understanding with any person to participate in, a distribution of such new notes.

You may not participate in the exchange offer if you are:

• our “affiliate” within the meaning of Rule 405 under the Securities Act of 1933; or

• a broker-dealer that acquired old notes directly from us.

Each broker-dealer that receives new notes for its own account pursuant to the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of such new notes. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of new notes received in exchange for old notes where such old notes were acquired as a result of market-making activities or other trading activities. We have agreed that for a period of 180 days after the expiration date of the exchange offer, we will make this prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. In addition, until                 , 200    , all dealers effecting transactions in the new notes may be required to deliver a prospectus.

If you wish to exchange new notes for your old notes in the exchange offer, you will be required to make representations to us as described in “Exchange Offer—Purpose and Effect of the Exchange Offer” and “—Procedures for Tendering—Your Representations to Us” in this prospectus. As indicated in the letter of transmittal, you will be deemed to have made these representations by tendering your old notes in the exchange offer. In addition, if you are a broker-dealer who receives new notes for your own account in exchange for old notes that were acquired by you as a result of market-making activities or other trading activities, you will be required to acknowledge, in the same manner, that you will deliver a prospectus in connection with any resale by you of such new notes.

We will not receive any proceeds from any sale of new notes by broker-dealers. New notes received by broker-dealers for their own account pursuant to the exchange offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the new notes or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any such resale may be made directly to purchasers or to, or through, brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer or the purchasers of any such new notes. Any broker-dealer that resells new notes that were received by it for its own account pursuant to the exchange offer and any broker or dealer that participates in a distribution of such new notes may be deemed to be an “underwriter” within the meaning of the Securities Act and any profit on any such resale of new notes and any commission or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The letter of transmittal states that by acknowledging that it will deliver and by delivering a prospectus, the broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.

128

For a period of 180 days after the expiration date of the exchange offer, we will promptly send additional copies of this prospectus and any amendment or supplement to this prospectus to any broker-dealer that requests such documents in the letter of transmittal. We have agreed to pay all expenses incident to the exchange offer (including the expenses of one counsel for the holders of the old notes) other than commissions or concessions of any brokers or dealers and will indemnify the holders of the old notes (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act.

LEGAL MATTERS

The validity of the new notes offered in this exchange offer will be passed upon for us by Vinson & Elkins L.L.P., Dallas, Texas.

INDEPENDENT AUDITORS

The consolidated financial statements as of December 31, 2002 and 2001 and for each of the three years in the period ended December 31, 2002, included in this prospectus, have been audited by PricewaterhouseCoopers LLP, independent auditors, as stated in their report appearing herein.

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and current reports and other information with the SEC. Our filings with the SEC are also available to the public from the SEC’s website at http://www.sec.gov. These reports do not constitute a part of this prospectus, and we are not incorporating by reference any of the reports we file with the SEC. The public may read and copy any reports or other information that we file with the SEC’s public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. The public may obtain information on the public reference room by calling the SEC at 1-800-SEC-0330.

In addition, pursuant to the indenture governing the notes, we have agreed to the extent permitted by the SEC to file with the SEC and in all events to distribute to the trustee (under the indenture) our annual reports containing audited annual consolidated financial statements and our quarterly reports containing our unaudited consolidated financial statements for each of the three first quarters of each fiscal year. We will do this without regard to whether we are subject to the informational requirements of the Exchange Act.

We maintain an internet web site at www.concentra.com. The information on this site does not form a part of this prospectus.

While any notes remain outstanding, we will make available, upon request, to any beneficial owner and any prospective purchaser of notes the information required pursuant to Rule 144A(d)(4) under the Securities Act during any period in which we are not subject to Section 13 or 15(d) of the Exchange Act. Any such request should be directed to Investor Relations, Concentra, at West Tower, Suite 400, 5080 Spectrum Drive, Addison, Texas 75001.

129

CONCENTRA OPERATING CORPORATION

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES

	Page
Report of Independent Auditors	F-3
Consolidated Balance Sheets at December 31, 2002 and 2001	F-4
Consolidated Statements of Operations for the Three Years Ended December 31, 2002, 2001 and 2000	F-5
Consolidated Statements of Cash Flows for the Three Years Ended December 31, 2002, 2001 and 2000	F-6
Consolidated Statements of Stockholder’s Equity for the Three Years Ended December 31, 2002, 2001 and 2000	F-7
Notes to Consolidated Financial Statements	F-8
Supplemental Schedule: Valuation and Qualifying Accounts	F-39
Condensed Consolidated Balance Sheets at June 30, 2003 (Unaudited) and December 31, 2002	F-41
Consolidated Statements of Operations (Unaudited) for the Three and Six Months Ended June 30, 2003 and 2002	F-42
Consolidated Statements of Cash Flows (Unaudited) for the Six Months Ended June 30, 2003 and 2002	F-43
Notes to Consolidated Financial Statements (Unaudited)	F-44
Computation of Ratios	F-54

F-1

Concentra Operating Corporation

Consolidated Financial Statements as of

December 31, 2002 and 2001 and for the

Years Ended December 31, 2002, 2001 and 2000

F-2

REPORT OF INDEPENDENT AUDITORS

To Board of Directors and Stockholder

of Concentra Operating Corporation:

In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Concentra Operating Corporation and its subsidiaries (the “Company”) at December 31, 2002 and 2001, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2002 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the accompanying index presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company’s management; our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 2(g) to the consolidated financial statements, effective January 1, 2002, the Company adopted the provisions of Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets, and ceased amortization of certain intangible assets.

/S/    PRICEWATERHOUSECOOPERS LLP

PricewaterhouseCoopers LLP

Dallas, Texas

February 11, 2003, Except for Note 14,

as to which the date is July 13, 2003

F-3

CONCENTRA OPERATING CORPORATION

CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

	December 31,
	2002			2001
ASSETS
Current assets:
Cash and cash equivalents	$	19,002		$	8,950
Accounts receivable, net		167,561			181,757
Prepaid expenses and other current assets		15,806			19,366
Deferred income taxes		23,601			17,311
Total current assets		225,970			227,384
Property and equipment, net		134,981			142,244
Goodwill and other intangible assets, net		486,231			475,671
Other assets		41,456			34,725
Total assets	$	888,638		$	880,024
LIABILITIES AND STOCKHOLDER’S EQUITY
Current liabilities:
Revolving credit facility	$	—		$	6,000
Current portion of long-term debt		3,825			4,211
Accounts payable		9,168			18,626
Accrued expenses		50,968			64,635
Accrued compensation		48,377			47,597
Total current liabilities		112,338			141,069
Long-term debt, net		476,001			552,270
Deferred income taxes		49,506			30,516
Other liabilities		40,550			43,581
Fair value of hedging arrangements		33,472			25,883
Total liabilities		711,867			793,319
Commitments and contingencies (See Note 8)
Stockholder’s equity:
Common stock, par value $.01 per share:
Authorized shares—10,000 Issued and outstanding shares—1,054 and 1,000, respectively		—			—
Paid-in capital		311,077			188,678
Retained deficit		(134,306	)		(101,973	)
Total stockholder’s equity		176,771			86,705
Total liabilities and stockholder’s equity	$	888,638		$	880,024

The accompanying notes are an integral part of these consolidated financial statements.

F-4

CONCENTRA OPERATING CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands)

	Years Ended December 31,
	2002			2001			2000
Revenue:
Health Services	$	471,968		$	443,321		$	409,738
Network Services		230,299			185,267			162,596
Care Management Services		296,783			228,315			189,905
Total revenue		999,050			856,903			762,239
Cost of services:
Health Services		406,164			375,565			335,939
Network Services		138,218			110,187			100,741
Care Management Services		267,054			200,166			170,899
Total cost of services		811,436			685,918			607,579
Total gross profit		187,614			170,985			154,660
General and administrative expenses		106,222			81,631			66,491
Amortization of intangibles		3,776			15,746			14,628
Unusual charges (gains)		(1,200	)		546			—
Charges for acquisition of affiliate		—			5,519			—
Operating income		78,816			67,543			73,541
Interest expense, net		63,582			66,398			67,984
Loss on change in fair value of hedging arrangements		7,589			13,602			9,586
Loss on early retirement of debt		7,894			—			—
Loss of acquired affiliate, net of tax		—			5,833			262
Other, net		(1,275	)		(3,640	)		(1,931	)
Income (loss) before income taxes and cumulative effect of accounting change		1,026			(14,650	)		(2,360	)
Provision for income taxes		4,579			3,757			4,362
Loss before cumulative effect of accounting change		(3,553	)		(18,407	)		(6,722	)
Cumulative effect of accounting change, net of tax		—			—			2,817
Net loss	$	(3,553	)	$	(18,407	)	$	(9,539	)

The accompanying notes are an integral part of these consolidated financial statements.

F-5

CONCENTRA OPERATING CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Years Ended December 31,
	2002			2001			2000
Operating Activities:
Net loss	$	(3,553	)	$	(18,407	)	$	(9,539	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation of property and equipment		42,957			32,517			25,889
Amortization of intangibles		3,776			15,746			14,628
Loss on change in fair value of hedging arrangements		7,589			13,602			9,586
Write-off of fixed assets		135			107			238
Charges for acquisition of affiliate		—			5,519			—
Unusual charges (gains)		(1,200	)		546			—
Cumulative effect of accounting change		—			—			2,817
Gain on sale of assets		—			—			(100	)
Changes in assets and liabilities, net of acquired assets and liabilities:
Accounts receivable, net		13,118			1,786			(6,309	)
Prepaid expenses and other assets		(3,177	)		1,208			(1,949	)
Accounts payable and accrued expenses		(5,614	)		24,543			764
Net cash provided by operating activities		54,031			77,167			36,025
Investing Activities:
Purchases of property, equipment and other assets		(35,074	)		(45,837	)		(32,044	)
Acquisitions, net of cash acquired		(1,726	)		(107,174	)		(9,737	)
Proceeds from the licensing of internally-developed software		515			1,103			1,625
Proceeds from sale of property and equipment and other		—			—			400
Net cash used in investing activities		(36,285	)		(151,908	)		(39,756	)
Financing Activities:
Proceeds from issuance of common stock to parent		52,955			—			—
Contribution from issuance of common stock by parent		25,370			49,746			—
Proceeds from the issuance of short-term and long-term debt		3,960			—			764
Payment of deferred financing costs		(3,321	)		—			(1,681	)
Borrowings (payments) under revolving credit facilities, net		(6,000	)		6,000			(4,000	)
Repayments of short-term and long-term debt		(80,615	)		(5,137	)		(3,141	)
Contribution from primary stockholder		—			12,865			7,654
Contribution from minority interest		—			5,135			4,846
Other		(43	)		—			—
Net cash provided by (used in) financing activities		(7,694	)		68,609			4,442
Net Increase (Decrease) in Cash and Cash Equivalents		10,052			(6,132	)		711
Cash and Cash Equivalents, beginning of year		8,950			15,082			14,371
Cash and Cash Equivalents, end of year	$	19,002		$	8,950		$	15,082
Supplemental Disclosure of Cash Flow Information:
Interest paid	$	63,382		$	62,332		$	69,732
Income taxes paid (received), net	$	(861	)	$	(1,623	)	$	(6,050	)
Liabilities and debt assumed in acquisitions	$	258		$	50,275		$	7,191
Net asset contribution from parent	$	42,964		$	74,564		$	—

The accompanying notes are an integral part of these consolidated financial statements.

F-6

CONCENTRA OPERATING CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY

(in thousands, except share amounts)

	$0.01 Par Value Common Stock
	Number of Shares	Value		Paid-in Capital			Retained Deficit			Stockholder’s Equity
Balance, December 31, 1999	1,000	$	—	$	29,878		$	(43,075	)	$	(13,197	)
Amortization of deferred compensation	—		—		—			802			802
Restricted stock retirement	—		—		(508	)		—			(508	)
Tax benefits from parent (see Note 7)	—		—		9,459			—			9,459
Equity contribution from primary stockholder	—		—		7,654			—			7,654
Net loss	—		—		—			(9,539	)		(9,539	)
Balance, December 31, 2000	1,000		—		46,483			(51,812	)		(5,329	)
Amortization of deferred compensation	—		—		—			398			398
Restricted stock retirement	—		—		(495	)		—			(495	)
Tax benefits from parent (see Note 7)	—		—		5,515			—			5,515
Contribution from issuance of common stock by parent	—		—		124,310			—			124,310
Equity contribution from primary stockholder	—		—		12,865			—			12,865
Deemed dividend from acquisition of affiliate (see Note 4)	—		—		—			(32,152	)		(32,152	)
Net loss	—		—		—			(18,407	)		(18,407	)
Balance, December 31, 2001	1,000		—		188,678			(101,973	)		86,705
Amortization of deferred compensation	—		—		—			69			69
Tax benefits from parent (see Note 7)	—		—		211			—			211
Contribution from issuance of common stock by parent	—		—		68,334			—			68,334
Shares issued to parent	54		—		52,955			—			52,955
Modification of stock options and other	—		—		899			—			899
Deemed dividend from acquisition of affiliate (see Note 4)	—		—		—			(28,849	)		(28,849	)
Net loss	—		—		—			(3,553	)		(3,553	)
Balance, December 31, 2002	1,054	$	—	$	311,077		$	(134,306	)	$	176,771

The accompanying notes are an integral part of these consolidated financial statements

F-7

CONCENTRA OPERATING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

Concentra Operating Corporation (the “Company” or “Concentra Operating”) is a leading comprehensive outsource solution for containing healthcare and disability costs. Serving the occupational, auto and group healthcare markets, Concentra Operating provides employers, insurers and payors with a series of integrated services which include employment-related injury and occupational health care, in-network and out-of-network medical claims review and re-pricing, access to specialized preferred provider organizations, first notice of loss or injury services, case management and other cost containment services. The Company provides these services through its health services (“Health Services”), network services (“Network Services”) and care management services (“Care Management Services”) segments. (See “Note 11, Segment Information”). Earnings per share has not been reported for the periods presented, as Concentra Operating is a wholly-owned subsidiary of Concentra Inc. (“Concentra Holding”) and has no publicly held shares.

The Company was formed in August 1997 by the merger of CRA Managed Care, Inc. and Occusystems, Inc. The name of the Company after the merger was Concentra Managed Care, Inc., which was subsequently changed to Concentra Inc. In August 1999, Concentra Holding was recapitalized in a transaction (the “1999 Recapitalization”) led by Welsh, Carson, Anderson & Stowe (“WCAS”). Prior to this date, Concentra Holding was a publicly-traded company. Immediately following the 1999 Recapitalization, Concentra Holding’s common stock was held by the following: WCAS—86%; funds managed by Ferrer Freeman and Company, LLC (“FFC”)—7%; and other investors—7%. In order to finance this acquisition and to effect the repurchase of all of Concentra Holding’s then outstanding publicly-held shares, WCAS, FFC and other investors contributed approximately $423.7 million in equity financing and raised $110.0 million of 14% senior discount debentures, $190.0 million of senior subordinated notes, and $375.0 million of senior term debt. Concurrent with the 1999 Recapitalization, Concentra Holding retired the assumed $327.7 million of convertible subordinated notes and contributed all of its operating assets, liabilities, and shares in its subsidiaries, with the exception of the 14% senior discount debentures, to Concentra Operating in exchange for all of Concentra Operating’s common stock. Concentra Holding’s debt is not guaranteed by Concentra Operating. The 1999 Recapitalization was valued at approximately $1.1 billion and was accounted for as a recapitalization transaction, with no changes to the historical cost basis of Concentra Holding or Concentra Operating assets or liabilities.

2. Summary of Significant Accounting Policies

(a) Consolidation

The consolidated financial statements include the accounts of all subsidiaries and joint ventures in which a controlling interest is held. Investments in certain joint ventures where the Company owns a 50% or less interest are accounted for on an equity basis and, accordingly, consolidated income includes the Company’s share of their income. For joint ventures where the Company owns a more than 50% interest, minority interests of $17.6 million and $20.8 million were included in other liabilities at December 31, 2002 and 2001, respectively. All significant intercompany accounts and transactions are eliminated in consolidation.

Physician and physical therapy services are provided at the Health Services centers under management agreements with affiliated physician groups (the “Physician Groups”), which are independently organized professional corporations that hire licensed physicians and physical therapists to provide medical services to the centers’ patients. The management agreements have original terms of 40-years and provide for the wide array of services that Health Services offers to the physician groups, such as: providing nurses and other medical support personnel, practice and facilities management, billing and collection, accounting, tax and financial management, human resource management, risk management, and marketing and information-based services. Health Services has a nominee shareholder relationship with the Physician Groups as defined in Emerging Issues Task Force Issue No. 97-2, Application of FASB Statement No. 94 and APB Opinion No. 16 to Physician Practice

Management Entities and Certain Other Entities with Contractual Management Arrangements, and as a result, the financial statements of the Physician Groups are consolidated. The Company’s management fees from the Physician Groups are calculated as a percentage of collected revenue net of compensation, benefits and other expenses incurred by the Physician Groups.

(b) Cash and Cash Equivalents

The Company considers all highly liquid debt instruments purchased with original maturities of three months or less to be cash equivalents. The carrying amount approximates fair value due to the short maturity of those instruments.

F-8

CONCENTRA OPERATING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(c) Revenue Recognition

The Company generally recognizes revenue when it has persuasive evidence of an arrangement, the services have been provided to the customer, the sales price is fixed or determinable and collectibility is reasonably assured. The Company reduces revenue for estimated contractual allowances. In addition to the aforementioned general policy, the following are the specific revenue recognition policies of each segment of our operations.

Health Services

Health Services consists of two primary components: (i) workers’ compensation injury care and related services; and (ii) non-injury healthcare services related to employer needs or statutory requirements. Revenue for both of these services is recognized as the services are performed. The provider reimbursement methods for workers’ compensation injury care and related services vary on a state-by-state basis. Currently, 40 states have fee schedules pursuant to which all healthcare providers are uniformly reimbursed. The fee schedules are determined by each state and generally prescribe the maximum amounts that may be reimbursed for a designated procedure. In the states without fee schedules, healthcare providers are reimbursed based on usual, customary and reasonable fees charged in the particular state in which the services are provided. Billings for services in states with fee schedules are included in revenue net of allowance for estimated differences between list prices and allowable fee schedule rates. Adjustments to the allowance based on final payment from the states are recorded upon settlement. The Company records the net revenue amount as accounts receivable.

Network Services

A portion of Network Services’ revenue is derived from fee schedule auditing prior to the related invoices being paid by the Company’s clients. The Company’s fees are normally based on the number and amount of charges reviewed and a percentage of savings achieved the Company’s our clients, who are then obligated to pay for these services. During the fee schedule audit process (i.e., medical bill review), each bill reviewed and audited is returned to the customer accompanied by an Explanation of Benefit (“EOB”). The EOB details the total savings with respect to the bill being reviewed as well as the amount owed to the Company as a percentage of savings identified and the line charge associated with the bill being reviewed. Because the majority of insurance claims are reviewed by Network Services prior to the customer’s review and payment of these claims and because some claims may have certain, pre-existing discount arrangements or disqualifying situations, the Company’s customers will request a refund or chargeback for these amounts previously invoiced to them when these situations occur. Accordingly, the Company records contractual allowances to reduce the revenue recorded for these services based upon an estimate of these discounts and chargebacks. The Company utilizes several methods to estimate unpresented discounts and chargebacks, including a review of our actual experience with contractual discounts and other factors.

Another portion of Network Services revenue relates to retrospective, or “post-payment” bill review services. In December 1999, the Securities and Exchange Commission (“SEC”) issued Staff Accounting Bulletin No. 101 (“SAB 101”), Revenue Recognition in Financial Statements. SAB 101 provides additional guidance in applying generally accepted accounting principles for revenue recognition in financial statements. SAB 101 implementation guidance issued by the SEC in the fourth quarter of 2000 required the Company to recognize revenue from its post-payment bill review services effectively on a cash basis. Prior to adoption of this standard, the Company recognized this revenue as savings were identified for its clients. The cumulative charge recognized in 2000 from this change in accounting principle was $2.8 million, net of tax effect of $2.3 million.

Care Management Services

Revenue for the Company’s case management and independent medical examinations businesses is recognized as the services are performed.

(d) Contractual and Bad Debt Allowances

Management estimates potential contractual and bad debt allowances relative to current period service revenue. Management analyzes historical collection adjustment experience when evaluating the adequacy of the contractual and bad debt allowances. Management must make significant judgments and estimates in determining contractual and bad debt allowances in any accounting period. One significant uncertainty in management’s analysis is whether the Company’s past experience will be indicative of future periods. Although management considers future projections when estimating contractual and bad debt allowances, they ultimately make their decisions based on the best information available to them at that time. The Company’s total bad debt provision charged to expense during the years ended December 31, 2002, 2001 and 2000, was $15.9 million, $12.7 million and $10.1 million, respectively.

F-9

CONCENTRA OPERATING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company’s total contractual provision offset against revenue during the years ended December 31, 2002, 2001 and 2000, was $53.7 million, $35.9 million and $41.9 million, respectively.

Accounts receivable, net of related allowances, was comprised of the following at December 31 (in thousands):

	2002			2001
Accounts receivable	$	209,734		$	211,465
Bad debt allowances		(13,261	)		(9,333	)
Contractual allowances		(28,912	)		(20,375	)
Total allowances		(42,173	)		(29,708	)
Accounts receivable, net	$	167,561		$	181,757

(e) Inventories

Inventories primarily consist of medical supplies and related products held for resale and are valued at the lower of cost (first-in, first-out method) or market. Inventories are included in prepaid expenses and other current assets on the consolidated balance sheet.

(f) Property and Equipment

Property and equipment are recorded at cost or fair market value at the date of acquisition. Major expenditures for property, plant and equipment and those that substantially increase useful lives are capitalized.

Direct internal and external costs of developing software for internal use, including programming and enhancements, are capitalized and amortized over the estimated useful lives once the software is placed in service. Software training costs, maintenance and repairs are expensed as incurred. When assets are sold or otherwise disposed of, costs and related accumulated depreciation are removed from the financial statements and any resulting gains or losses are included in operating income. Property and equipment were comprised of the following, as of December 31 (in thousands):

	2002			2001
Land	$	2,612		$	2,775
Buildings and improvements		6,266			6,746
Leasehold improvements		65,198			57,974
Furniture and equipment		63,434			60,600
Computer hardware		78,372			72,468
Computer software		82,531			64,362
		298,413			264,925
Accumulated depreciation and amortization		(163,432	)		(122,681	)
	$	134,981		$	142,244

The Company provides for depreciation on property and equipment using straight-line and accelerated methods by charges to operations in amounts that allocate the cost of depreciable assets over their estimated lives as follows:

Asset Classification	Estimated Useful Life
Buildings and improvements	30–40 years
Leasehold improvements	The shorter of the life of lease or asset life
Furniture and equipment	7 years
Computer hardware	3–7 years
Computer software	3–5 years

(g) Goodwill and Other Intangible Assets

The Company assesses the impairment of intangible assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors the Company considers important which could trigger an impairment review include the following:

• significant underperformance relative to expected historical or projected future operating results;

• significant changes in the manner of use of the acquired assets or the strategy for the overall business;

F-10

CONCENTRA OPERATING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

• significant negative industry or economic trends;

• significant decline in the Company’s public bond price for a sustained period; and

• significant decline in the Company’s estimated market capitalization relative to net book value.

Under generally accepted accounting principles, the Company is required to write down intangible assets if such assets are determined to be impaired. Under current accounting standards, an impairment of an intangible asset is considered to have occurred when the estimated undiscounted future cash flows related to the assets are less than the carrying value of the asset. Estimates of future cash flows involve consideration of numerous factors, depending upon the specific asset being assessed. Relevant factors in this assessment include estimates of future market growth rates, product acceptance and lifecycles, selling prices and volumes, responses by competitors, service delivery costs and assumptions as to other operating expenses. When the Company determines that the carrying value of intangible assets may not be recoverable based upon the existence of one or more of the above indicators of impairment, it measures any impairment based on a projected discounted cash flow method using a discount rate determined by management to be commensurate with the risk inherent in the Company’s current business model. Net identifiable intangible assets and goodwill amounted to $486.2 million as of December 31, 2002. The value of these projected discounted cash flows could be subject to change based on differences in the assumptions noted above.

In July 2001, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. (“SFAS”) 141, Business Combinations (“SFAS 141”) and SFAS 142, Goodwill and Other Intangible Assets (“SFAS 142”). SFAS 141 addresses the initial recognition and measurement of goodwill and other intangible assets acquired in a business combination. SFAS 142 addresses the initial recognition and measurement of intangible assets acquired outside of a business combination, whether acquired individually or with a group of other assets, and the accounting and reporting for goodwill and other intangibles subsequent to their acquisition. These standards require all business combinations subsequent to June 30, 2001 to be accounted for using the purchase method of accounting. The Company adopted SFAS 141 and SFAS 142 effective January 1, 2002; however, certain provisions of these new standards also apply to any acquisitions concluded subsequent to June 30, 2001. Accordingly, the Company accounted for acquisitions subsequent to that date under provisions of these new standards. Under SFAS 142, goodwill and indefinite life intangible assets, such as the Company’s trademarks, are no longer amortized, but are subject to annual impairment tests. Impairment testing may be more frequent if there are interim “triggering” events, such as adverse revenue trends or adverse economic conditions. Other intangible assets with finite lives, such as customer lists and non-compete agreements, will continue to be amortized over their useful lives. In addition, assembled workforce is no longer defined as an acquired intangible asset under SFAS 141. Accordingly, the Company reclassified assembled workforce to goodwill in the first quarter of 2002 and, effective January 1, 2002, ceased amortizing goodwill and assembled workforce.

Under SFAS 142, the Company was required to test all existing goodwill and indefinite life intangibles for impairment as of January 1, 2002, on a reporting unit basis. A reporting unit is the operating segment unless, at businesses one level below that operating segment (the component level), discrete financial information is prepared and regularly reviewed by management, and the businesses are not otherwise aggregated due to having certain common characteristics, in which case such component is the reporting unit. A fair value approach is used to test goodwill and indefinite life intangibles for impairment. An impairment charge is recognized for the amount, if any, by which the carrying amount of goodwill and indefinite life intangibles exceeds its fair value. Fair values were established using projected cash flows. When available and as appropriate, comparative market multiples were used to corroborate projected cash flow results.

The Company completed the transitional implementation tests on a reporting unit basis under SFAS 142 for intangible assets with indefinite lives and goodwill and determined that no impairment existed at January 1, 2002. Additionally, SFAS 142 requires an annual goodwill impairment test be performed. The Company completed its 2002 annual impairment test of goodwill and determined that no impairment existed at July 1, 2002. The Company recorded no goodwill impairment charges during 2002, 2001 or 2000. The Company’s future earnings may periodically be affected in a materially adverse manner should particular segments of its goodwill balances become impaired pursuant to the valuation methodology.

F-11

CONCENTRA OPERATING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

A reconciliation of the previously reported net income for the years ended December 31, 2001 and 2000 to the amounts adjusted for the reduction of amortization expense, is as follows (in thousands):

	Years Ended December 31,
	2001			2000
Net income (loss):
As reported	$	(18,407	)	$	(9,539	)
Add: amortization expense adjustment		14,906			14,334
As adjusted	$	(3,501	)	$	4,795

The net carrying value of goodwill and other intangible assets is comprised of the following, as of December 31 (in thousands):

	2002			2001
Amortized intangible assets, gross:
Customer contracts	$	6,190		$	5,886
Covenants not to compete		4,305			4,728
Customer lists		3,420			3,470
Servicing contracts		3,293			3,293
Licensing and royalty agreements		285			285
		17,493			17,662
Accumulated amortization of amortized intangible assets:
Customer contracts		(1,770	)		(252	)
Covenants not to compete		(1,411	)		(222	)
Customer lists		(2,430	)		(1,923	)
Servicing contracts		(384	)		(55	)
Licensing and royalty agreements		(123	)		(17	)
		(6,118	)		(2,469	)
Amortized intangible assets, net		11,375			15,193
Non-amortized intangible assets:
Goodwill		474,702			460,032
Assembled workforce		—			292
Trademarks		154			154
	$	486,231		$	475,671

The change in the net carrying amount of goodwill during the year ended December 31, 2002 is due to the reclassification of assembled workforce to goodwill of $0.3 million and $14.4 million of goodwill for acquisitions. The decrease in the net carrying amount of amortized intangible assets is primarily due to amortization.

The net carrying value of goodwill by operating segment is as follows, as of December 31 (in thousands):

	2002		2001
Health Services	$	243,726	$	226,376
Network Services		184,902		187,011
Care Management Services		46,074		46,645
	$	474,702	$	460,032

Amortization expense for intangible assets with finite lives was $3.8 million, $0.8 million and $0.3 million, respectively, for the years ended December 31, 2002, 2001 and 2000. Estimated amortization expense on intangible assets with finite lives for the five succeeding fiscal years is as follows (in thousands):

Years Ended December 31,
2003	$	3,900
2004		3,305
2005		2,031
2006		483
2007		393

F-12

CONCENTRA OPERATING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The value of goodwill and other intangible assets acquired was recorded at fair value. Through December 31, 2001, goodwill for acquisitions concluded through June 30, 2001 was amortized on a straight-line basis in accordance with Accounting Principles Board (“APB”) Opinion No. 16, Business Combinations over a period not to exceed 25 years. In accordance with SFAS 142, goodwill was not amortized for acquisitions concluded subsequent to June 30, 2001. Other intangibles were amortized on a straight-line basis over their estimated lives as follows:

Asset Classification	Estimated Useful Life
Customer contracts	2.5-4.0years
Covenants not to compete	3.0-5.0years
Servicing contracts	10.0years
Customer lists	7.0years
Assembled workforce	5.0years
Licensing and royalty agreements	2.7years
Trademarks	Indeterminate life

(h) Deferred Finance Costs

The Company capitalizes deferred finance costs and amortizes them on a straight-line basis over the life of the indebtedness. In conjunction with the issuance of certain 1999 Recapitalization indebtedness, the Company incurred $18.1 million in deferred finance costs, consisting primarily of underwriting fees. As part of the amendment of its credit facility in March 2000, the Company was required to pay a fee of $1.7 million to its lenders. Additionally, the Company paid $0.5 million in November 2001 for revisions of its credit facility covenants due to the acquisition of National Healthcare Resources, Inc. (“NHR”). The Company also paid $1.1 million and $2.2 million in June 2002 and November 2002, respectively, for credit facility amendments. In June 2002, the Company expensed $1.2 million of deferred financing fees, net of accumulated amortization, related to the early redemption of the Company’s 13% Senior Subordinated Notes. The Company expensed additional deferred financing fees of $0.4 million, net of accumulated amortization, in November 2002 related to prepayments on its credit facility. Deferred finance costs, net of accumulated amortization, of $12.7 million and $13.7 million were included in other assets at December 31, 2002 and 2001, respectively.

(i) Valuation of Hedging Arrangements

The Company has entered into certain arrangements that hedge a portion of its exposure to variable interest rates under the current debt agreements. As required by accounting standards, the Company:

• recognizes the fair value of hedging arrangements as assets or liabilities in the financial statements, and

• recognizes changes in the fair value of these derivatives in the statements of operations.

Third parties, including major banking institutions, provide the Company with estimates of fair values of the Company’s hedging arrangements, which reflect several factors, including relevant future market conditions, current bid-offer spreads and other market conditions. Valuations based on other models or different assumptions, including yield curve shifts, may result in significantly different valuation estimates and could cause significant non-cash charges to earnings relating to the change in the fair value of the interest rate hedges that the Company utilizes. The fair value of these hedges at December 31, 2002 and 2001 was a liability $33.5 million and $25.9 million, respectively.

(j) Valuation of Acquired Assets and Liabilities

Concentra Operating has grown through several strategic acquisitions over the last few years. In many cases, the Company utilizes in-house expertise to prepare internal purchase price allocations and determine the lives of the acquired assets. However, the Company may also utilize independent appraisers to assist in these efforts for larger or more complex acquisitions. The Company utilizes several valuation techniques in order to facilitate the estimates of these fair values, including: discounted cash flow analysis, replacement cost analysis and market comparables. These methods require significant assumptions regarding market conditions, operational integration issues, and the utilization of the underlying assets, which could change in the future and result in a significant impact on our earnings. Additionally, the Company is required to make estimates of restructuring liabilities incurred in connection with these assets. These estimates involve assumptions relating to the timing and cost of personnel reductions, facility lease charges and other related exit costs. Because of the inherent nature of these assumptions and techniques, it is reasonably possible that the Company could experience changes in estimated values, which could be material to earnings.

F-13

CONCENTRA OPERATING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

During 2001 and 2002, the Health Services segment acquired a total of 18 occupational healthcare centers, in addition to the 12 centers obtained in the acquisition of substantially all of the assets and liabilities of OccMed Systems, Inc. (“OccMed”) on December 2, 2002 in a transaction valued at $16.6 million. Also on December 2, 2002, the Health Services segment acquired substantially all of the assets and liabilities of Em3 Corporation (“Em3”) in a transaction valued at $30.7 million. On November 12, 2001, the Network Services segment acquired the capital stock of HealthNetwork Systems LLC (“HNS”) in a transaction valued at $30.9 million. On November 20, 2001, the Company acquired all of the capital stock of NHR, in a transaction valued at $141.8 million. The individual assets and liabilities of each acquired company were recorded at fair value, reflecting amounts for (i) tangible assets and liabilities and (ii) intangible assets.

(k) Investments in Joint Ventures

Effective December 31, 2001, the Company paid $0.5 million to acquire a controlling interest in the two joint ventures that had historically been accounted for under the equity method. Accordingly, beginning January 1, 2002, the results for these joint ventures are consolidated with those of the Company. For the years ended December 31, 2001 and 2000, revenue for these entities was $7.4 million and $7.2 million, gross profit was $1.2 million and $1.5 million, and net income was $0.2 million and $0.4 million, respectively.

(l) Self-Insurance

The Company is self-insured for a portion of the current and prior years’ losses related to workers’ compensation, professional liability, general liability, automobile and certain employee health benefits. The Company’s self-insurance retention liability on a per claim basis ranges from $500 to $500,000. Liabilities in excess of these amounts are the responsibility of the insurer. The Company is self-insured for a portion of healthcare claims for eligible participating employees, subject to certain deductibles and limitations. The Company’s policy is to accrue reserve amounts for all reported claims and an estimate of reserves for claims incurred but not yet reported.

(m) Professional Liability Insurance Claims

Allowances for professional liability risks were $5.6 million at December 31, 2002. Provisions for losses related to professional liability risks are based upon actuarially determined estimates. Loss and loss expense allowances represent the estimated ultimate net cost of all reported and unreported losses incurred. The allowances for unpaid losses and loss expenses are estimated using individual case-basis valuations and statistical analyses. Those estimates are subject to the effects of trends in loss severity and frequency. The estimates are continually reviewed and adjustments are recorded as experience develops or new information becomes known. The changes to the estimated allowances are included in current operating results. Due to the considerable variability that is inherent in such estimates, there can be no assurance that the ultimate liability will not exceed management’s estimates.

(n) Foreign Currency Translation

All assets and liabilities of the Company’s Canadian offices are translated at the year-end exchange rate, while revenue and expenses are translated at the average exchange rate in effect at the time of the transaction. Cumulative translation adjustments were immaterial for the years ended December 31, 2002, 2001 and 2000.

(o) Income Taxes

The Company accounts for income taxes using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred income tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred income tax assets are recognized for deductible temporary differences, net operating loss carryforwards and tax credit carryforwards if it is more likely than not that the tax benefits will be realized. To the extent a deferred income tax asset cannot be recognized under the preceding criteria, a valuation allowance has been established. We evaluate the recoverability of the deferred income tax assets and associated valuation allowance on a regular basis. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. We evaluate a variety of factors on a regular basis to determine the amount of deferred income tax assets to recognize in the financial statements, including our recent earnings history, projected future taxable income, the number of years our net operating loss and tax credits can be carried forward, the existence of taxable temporary differences, and available tax planning strategies.

F-14

CONCENTRA OPERATING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(p) Use of Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Actual amounts could differ from those estimates. Changes in estimates are recorded during the period of change.

(q) Reclassifications

Certain reclassifications have been made in the 2001 and 2000 financial statements to conform to classifications used in 2002. The Company’s bad debt expense for 2001 and 2000 of $12.7 million and $10.1 million, respectively, have been reclassified from revenue to cost of services to conform to the classifications used in 2002. This reclassification resulted from a change in 2002 in the Company’s process and methodology for estimating bad debt and contractual allowances. Following an extensive review of the Company’s accounts receivable history and collection experience that used new data provided by recently implemented information systems, the Company determined that additional contractual and bad debt allowances of $7.1 million were required as of March 31, 2002. This reserve increase related primarily to the Company’s Health Services segment, offset by reserve reductions in other segments. Total contractual and bad debt allowances on the Company’s accounts receivable were $42.2 million and $29.7 million at December 31, 2002 and 2001, respectively.

The consolidated balance sheet at December 31, 2001 and the consolidated statements of operations and cash flows for the years ended December 31, 2001 and 2000, have been adjusted to include recognition of a minority interest by the Company in the net loss of NHR. Effective November 1, 2001, the Company acquired all of the outstanding shares of capital stock of NHR. Because the Company’s controlling stockholder, WCAS, owned approximately 48% of the common voting equity in NHR, the acquisition was accounted for as a reorganization of entities under common control. Accordingly, the historical costs of NHR’s assets and liabilities were utilized to the extent of WCAS’ proportionate ownership interest in NHR and the remainder of the acquisition was accounted for under the purchase method of accounting, whereby assets and liabilities are “stepped-up” to fair value with the remainder allocated to goodwill. The Company recognized NHR’s historical net income and loss as a non-operating item in proportion to WCAS’ investment in NHR utilizing the equity method of accounting from August 17, 1999 through October 31, 2001.

Additionally, the consolidated balance sheet at December 31, 2001 and the consolidated statements of operations and cash flows for the years ended December 31, 2001 and 2000, have been adjusted to include the historical results of Em3 and OccMed. Effective December 1, 2002, the Company acquired substantially all of the assets and liabilities of Em3 and OccMed. Because the Company’s controlling stockholder, WCAS, also controlled these two acquired companies, the accounting for these acquisitions is viewed as a reorganization of entities under common control. Accordingly, the historical costs of the acquired companies’ assets and liabilities have been utilized as if WCAS contributed their interest in the acquired companies to the Company at their historical cost. The remainder acquired by the Company was accounted for under the purchase method of accounting in accordance with SFAS 141, whereby assets and liabilities are “stepped-up” to fair value with the remainder allocated to goodwill. Accordingly, the Company has consolidated Em3 and OccMed’s historical financial statements with those of the Company, and the equity interest of other investors, which are 34% for Em3 and 31% for OccMed, have been reflected as a minority interest in the Company’s financial statements for periods prior to December 1, 2002. The Company’s net loss for the eleven months ended November 30, 2002 and for the years ended December 31, 2001 and 2000 was increased by $6.6 million, $8.7 million and $2.7 million, respectively, as a result of the historical restatements for the Em3 and OccMed acquisitions.

As a result of items described above, the amounts reported in the consolidated financial statements of the Company differ from amounts previously reported in the Company’s Forms 10-K for the years ended December 31, 2001, and 2000 and Forms 10-Q for the quarters ended March 31, June 30 and September 30, 2002, 2001 and 2000. See “Note 4. Recent Acquisitions and Unusual Charges.”

3. Recent Accounting Pronouncements

In July 2001, the FASB issued SFAS 143, Accounting for Asset Retirement Obligations (“SFAS 143”). SFAS 143 addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. The statement requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred and capitalized as part of the carrying amount of the long-lived asset. The statement will be effective for fiscal years beginning after June 15, 2002. The Company does not anticipate any material financial impact upon the adoption of this statement.

In October 2001, the FASB issued SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets, (“SFAS 144”) which supersedes SFAS 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of. The

F-15

CONCENTRA OPERATING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

statement provides a single accounting model for long-lived assets to be disposed. The Company adopted SFAS 144 on January 1, 2002. The adoption did not have a material impact on the Company’s consolidated financial positions, results of operations or cash flows.

In April 2002, the FASB issued SFAS 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections (“SFAS 145”). SFAS 145 concludes that gains or losses from debt extinguishments used as part of a company’s risk management strategy should not be classified as an extraordinary item, effective for fiscal years beginning after May 15, 2002 with early adoption encouraged. SFAS 145 also requires sale-leaseback accounting for certain lease modifications that have economic effects that are similar to sale-leaseback transactions, effective for transactions occurring after May 15, 2002. This statement also amends other existing authoritative pronouncements to make various technical corrections, clarify meanings or describe their applicability under changed conditions, effective for financial statements issued on or after May 15, 2002. The Company adopted the provisions of this pronouncement for all related transactions in the second quarter of 2002. This adoption did not have a significant impact on the consolidated financial statements. The Company redeemed $47.5 million of its 13% Senior Subordinated Notes in July 2002 and prepaid $25.0 million of its senior term indebtedness in November 2002. In accordance with SFAS 145, the related losses from debt extinguishment were included in income from continuing operations in the third and fourth quarters of 2002. See “Note 5. Revolving Credit Facility and Long-Term Debt” for further discussion of this transaction.

In June 2002, the FASB issued SFAS 146, Accounting for Costs Associated with Exit or Disposal Activities (“SFAS 146”). SFAS 146 addresses the accounting for costs to terminate a contract that is not a capital lease, costs to consolidate facilities and relocate employees, and involuntary termination benefits under one-time benefit arrangements that are not an ongoing benefit program or an individual deferred compensation contract. A liability for contract termination costs should be recognized and measured at fair value when either the contract is terminated or when the entity ceases to use the right conveyed by the contract. A liability for one-time termination benefits should be recognized and measured at fair value at the communication date if the employee would not be retained beyond a minimum retention period (i.e., either a legal notification period or 60 days, if no legal requirement exists). For employees who will be retained beyond the minimum retention period, a liability should be accrued ratably over the future service period. The provisions of SFAS 146 will be effective for disposal activities initiated after December 31, 2002. The Company does not anticipate any material financial impact upon the adoption of this statement.

In November 2002, the FASB issued Interpretation No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (“FIN 45”). FIN 45 elaborates on the existing disclosure requirements for most guarantees, including residual value guarantees issued in conjunction with operating lease agreements. It also clarifies that at the time a company issues a guarantee, the company must recognize an initial liability for the fair value of the obligation it assumes under that guarantee and must disclose that information in its interim and annual financial statements. The initial recognition and measurement provisions apply on a prospective basis to guarantees issued or modified after December 31, 2002. The disclosure requirements are effective for financial statements of interim or annual periods ending after December 15, 2002. The Company’s adoption of FIN 45 did not have a material impact on its results of operations and financial position, as the Company’s credit agreements prohibit these types of guarantees.

In December 2002, the FASB issued SFAS 148, Accounting for Stock-Based Compensation—Transition and Disclosure (“SFAS 148”). SFAS 148 amends SFAS 123, Accounting for Stock-Based Compensation (“SFAS 123”) to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS 148 amends the disclosure requirements of SFAS 123 to require more prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The additional disclosure requirements of SFAS 148 are effective for fiscal years ending after December 15, 2002. The Company has elected to continue to follow the intrinsic value method of accounting as prescribed by APB Opinion No. 25, Accounting for Stock Issued to Employees, to account for employee stock options. See “Note 10, Stock Option Plans” for the disclosures required by SFAS 148.

In January 2003, the FASB issued Interpretation No. 46, Consolidation of Variable Interest Entities (“FIN 46”). FIN 46 requires a variable interest entity to be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity’s activities or entitled to receive a majority of the entity’s residual returns or both. A variable interest entity is a corporation, partnership, trust, or any other legal structures used for business purposes that either (a) does not have equity investors with voting rights or (b) has equity investors that do not provide sufficient financial resources for the entity to support its activities. A variable interest entity often holds financial assets, including loans or receivables, real estate or other property. A variable interest entity may be essentially passive or it may engage in research and development or other activities on behalf of another company. The consolidation requirements of FIN 46 apply immediately to variable interest entities created after January 31, 2003. The consolidation requirements apply to older entities in the first fiscal year or interim period beginning after June 15, 2003. Certain of the disclosure

F-16

CONCENTRA OPERATING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

requirements apply to all financial statements issued after January 31, 2003, regardless of when the variable interest entity was established. The Company does not have any variable interest entities.

4. Recent Acquisitions and Unusual Charges

In December 2002, the Company acquired Em3, a privately-held company located in Addison, Texas. Since its inception in 2000, Em3 established a nationwide network of primary care physicians specializing in occupational healthcare. Its proprietary information systems and approach to the integration and management of workers’ compensation care attracted several large national employers as its clients. Em3’s business is complementary in nature to the Company’s businesses. Under the terms of the transaction, Concentra Holding issued approximately $30.1 million of its common stock to Em3’s equity holders through an exchange of Concentra Holding’s common stock for substantially all of the assets and liabilities of Em3. Because there has been no active trading market for Concentra Holding’s common stock, the board of directors relied upon independent valuation analyses, internal and other financial analyses and negotiation with the principal stockholders of Em3 to determine the fair value of the common stock and number of shares to issue in the transaction. Concurrently with the closing of the acquisition, Concentra Holding contributed the assets and liabilities of Em3 to the Company and subsequently repaid $0.6 million of Em3’s indebtedness to its largest stockholder, WCAS. This acquisition was financed through the use of cash on hand.

In December 2002, Concentra Holding also acquired OccMed, a privately-held company located in Addison, Texas, in a transaction valued at $16.6 million. OccMed, established in 2001, developed 12 occupational healthcare centers across six geographic markets in the United States. Under the terms of the transaction, Concentra Holding issued approximately $12.8 million of its common stock for OccMed’s assets and liabilities. Concurrent with this acquisition, Concentra Holding contributed the OccMed assets and liabilities to the Company and repaid $1.0 million of OccMed’s indebtedness to its largest stockholder, WCAS, and $2.8 million of other indebtedness. Because there has been no active trading market for Concentra Holding’s common stock, the board of directors relied upon independent valuation analyses, internal and other financial analyses and negotiation with the principal shareholders of OccMed to determine the fair value of the Company’s common stock and number of shares to issue in the transaction. This acquisition was financed through the use of cash on hand.

Because the Company is controlled by its primary stockholder, WCAS, and because WCAS also owned approximately 66% of Em3 and 69% of OccMed, the acquisition accounting for these transactions is viewed as a reorganization of entities under common control. Accordingly, the historical costs of Em3’s and OccMed’s assets and liabilities have been utilized as if WCAS contributed their 66% and 69% respective interests in Em3 and OccMed to the Company at their historical cost. The Company accounted for the remaining 34% of Em3 and 31% of OccMed under the purchase method of accounting in accordance with SFAS 141, whereby assets and liabilities are “stepped-up” to fair value; any purchase price in excess of the amounts allocated to identifiable intangible assets acquired was allocated to goodwill. The purchase price allocations for these acquisitions are preliminary and further refinements are likely to be made in 2003 based on additional information becoming available. The effective date of these acquisitions is December 1, 2002.

As the Company accounted for the acquisitions in a manner similar to a pooling, it retroactively restated its historical financial statements to consolidate the historical results of Em3 and OccMed beginning with the periods the entities were under the control of WCAS, which was 2000 for Em3 and 2001 for OccMed. The equity interests of other investors, which was 34% for Em3 and 31% for OccMed, was reflected as a “minority interest” in the Company’s financial statements for periods prior to the date of acquisition. Due to their historical net losses, the minority interest adjustments relating to the benefit associated with Em3’s and OccMed’s minority shareholder losses increased the Company’s other income by $3.3 million, $4.5 million and $1.2 million for the years ended December 31, 2002, 2001 and 2000, respectively. In connection with the Em3 acquisition, the Company expensed approximately $0.1 million in restructuring costs primarily associated with Em3’s employee severance and facilities consolidation costs. This amount was expensed pursuant to the standards of entities under common control accounting, and is reflective of the proportionate ownership percentage of WCAS as applied to the total amount of restructuring liabilities that occurred in connection with the acquisition.

Pursuant to the acquisition accounting discussed above, portions of the acquired assets were recorded at historical values and the remaining portion was “stepped up” to fair value. To reflect the deemed dividend to WCAS for their receipt of a portion of Em3’s and OccMed’s acquisition consideration, goodwill and retained earnings were both reduced by $20.0 million and $8.9 million, respectively. No contingent consideration exists related to this transaction.

F-17

CONCENTRA OPERATING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table summarizes the recorded values of the Em3 and OccMed assets acquired and liabilities assumed at the date of acquisition, as determined by internal and third-party valuations ($ in thousands):

	Em3			OccMed
	Amortization life (in years)	As of December 1, 2002		Amortization life (in years)	As of December 1, 2002
Current assets		$	261		$	2,532
Property and equipment, net			2,791			5,070
Identifiable intangible assets:
Customer contracts	5		304			—
Customer lists			—	3		163
Goodwill			8,924			3,026
Other assets			2,667			28
			14,947			10,819
Current liabilities			940			4,517
Other long-term liabilities			3,400			173
Total liabilities assumed			4,340			4,690
Net assets acquired		$	10,607		$	6,129

The goodwill for Em3 and OccMed was assigned to the Health Services segment. The primary items that generated this goodwill are the synergies between the acquired businesses and the Company. None of the goodwill is expected to be deductible for tax purposes. These transactions occurred after June 30, 2001, and therefore, the acquired goodwill is not subject to amortization.

The following unaudited pro forma summary presents information as if Em3 and OccMed had been acquired as of the beginning of the periods presented. The pro forma amounts include certain adjustments, primarily to reflect the acquisition of the remaining equity interests from the minority stockholders, and do not reflect any benefits from economies that might be achieved from combining operations. The pro forma information does not necessarily reflect the actual results that would have occurred nor is it necessarily indicative of future results of operations of the combined companies. (in thousands)

	2002			2001
Pro forma revenue	$	999,050		$	856,903
Pro forma net loss		(6,790	)		(22,789	)

In connection with the Em3 acquisition, the Company recorded $0.5 million in restructuring costs primarily associated with professional fees, facilities consolidation costs and personnel reductions. Unusual charges of $0.5 million have been recorded to reflect transaction costs associated with the Em3 and OccMed acquisitions. Through December 31, 2002, the Company had paid approximately $0.3 million for professional fees and services, including legal and accounting fees. At December 31, 2002, approximately $0.1 million of the restructuring cost accrual remained for facility obligations with terms expiring through December 2003 and costs related to personnel reductions. The Company anticipates that the majority of the remaining liability will be used over the next 12 months.

In November 2001, the Company acquired all of the outstanding shares of capital stock of NHR, a privately held company located in New York City, in a transaction valued at $141.8 million. NHR, founded in 1992, provides care management and network services to the workers’ compensation and auto insurance industries on a national level. NHR’s businesses are complementary in nature to the Company’s Care Management and Network Services businesses. Concentra Holding issued $84.0 million of consideration to NHR’s equity and option holders through cash payments totaling $1.0 million and an exchange of approximately 3.8 million shares of its common stock for all of the outstanding shares and share equivalents of NHR. Because there has been no active trading market for Concentra Holding’s common stock, the board of directors relied upon independent valuation analyses, internal financial analyses and negotiation with the principal shareholders of NHR to determine the fair value of the common stock and number of shares to issue in the transaction. Concurrently with the closing of the acquisition, Concentra Holding contributed the capital stock and share equivalents of NHR to the Company and repaid $57.8 million of NHR’s indebtedness. Of this $57.8 million, (i) $19.5 million was financed through Concentra Holding’s sale of new common stock and warrants, which were subsequently contributed to the Company; and (ii) the remainder was financed through the use of cash on hand and by drawing down the Company’s existing revolving credit line.

Because the Company’s controlling stockholder, WCAS, owned approximately 48% of the common voting equity in NHR, the acquisition was accounted for as a reorganization of entities under common control. Accordingly, the historical costs of NHR’s assets and liabilities were utilized to the extent of WCAS’ proportionate ownership interest in NHR and the remainder of the acquisition was

F-18

CONCENTRA OPERATING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

accounted for under the purchase method of accounting, whereby assets and liabilities are “stepped-up” to fair value with the remainder allocated to goodwill. The Company recognized NHR’s historical net income and loss as a non-operating item in proportion to WCAS’ investment in NHR utilizing the equity method of accounting from August 17, 1999 through October 31, 2001. Additionally, for financial statement purposes, WCAS’ historical equity interest in NHR as of August 17, 1999, was treated as a deemed contribution of equity to the Company, which has reflected the historical value of its presumed equity interest in NHR as a long-term investment in other assets on its consolidated balance sheet through the date of its acquisition of NHR on November 1, 2001. The presumed equity contribution as of August 17, 1999 was predicated on the premise that WCAS could have contributed its interest in NHR to the Company at the time it undertook its recapitalization transaction. NHR’s full results of operations are consolidated after November 1, 2001, the effective date of the acquisition.

Pursuant to the acquisition accounting discussed above, a portion of the acquired assets was recorded at historical values and the remaining portion was “stepped up” to fair value. To reflect the deemed dividend to WCAS for their receipt of a portion of NHR’s acquisition consideration, goodwill and retained earnings were both reduced by $32.2 million. No contingent consideration exists related to this transaction. The following table summarizes the recorded values of the assets acquired and liabilities assumed at the date of acquisition, as determined by internal and third-party valuations ($ in thousands).

	Amortization life (in years)	As of November 1, 2001
Current assets		$	32,878
Property and equipment			16,307
Identifiable intangible assets:
Customer contracts	4		5,611
Covenants not to compete	3		2,016
Servicing contracts	10		3,293
Trademarks and other	Indefinite		153
Goodwill			100,357
			160,615
Current liabilities			31,080
Long-term debt			56,984
Other long-term liabilities			20,202
Total liabilities assumed			108,266
Net assets acquired		$	52,349

The weighted average life of the amortizable intangible assets purchased from NHR is 5.5 years. The $100.4 million of goodwill was assigned to the Network Services and Care Management Services segments in the amounts of $53.7 million and $46.7 million, respectively. The primary items that generated this goodwill are the value of the acquired assembled workforce and the synergies between the acquired business and the Company. None of the goodwill is expected to be deductible for tax purposes. The transaction occurred after June 30, 2001, and therefore, the acquired goodwill is not subject to amortization. Liabilities assumed in the acquisition include a long-term liability of $9.4 million, which requires Concentra Holding to deliver a specified number of shares of its common stock to certain individuals who were stock option holders of NHR on the earlier of six months after an initial public offering by Concentra Holding or the passage of seven years. This liability is reflected on the Company’s consolidated balance sheet as an other long-term liability.

The following unaudited pro forma summary presents information as if NHR had been acquired as of the beginning of the periods presented. The pro forma amounts include certain adjustments, primarily to recognize depreciation and amortization based on the allocated purchase price of NHR’s assets, and do not reflect any benefits from economies which might be achieved from combining operations. The pro forma information does not necessarily reflect the actual results that would have occurred nor is it necessarily indicative of future results of operations of the combined companies. (in thousands)

	2001			2000
Pro forma revenue	$	977,623		$	901,802
Pro forma net loss		(18,471	)		(9,272	)

In connection with the NHR acquisition, the Company recorded $6.0 million in asset write-downs and $6.8 million in restructuring costs primarily associated with employee severance and facilities consolidation costs. Of this $12.8 million, $5.5 million was recognized in 2001 as a charge for the acquisition of affiliate and reflects WCAS’ proportionate ownership percentage in NHR as applied to the total amount of asset write-downs and restructuring liabilities that occurred in connection with the acquisition. The

F-19

CONCENTRA OPERATING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Company recorded unusual charges of $0.5 million to reflect employee severance and facility consolidation costs associated with the Company’s facilities. The Company recorded the remaining $6.8 million, which is reflective of the remaining non-WCAS proportionate ownership percentage in NHR as applied to the total amount of asset write-downs and restructuring liabilities that occurred in connection with the acquisition, under the purchase method of accounting. Through December 31, 2002, the Company used $6.0 million associated with asset write-downs and had paid approximately $0.9 million for professional fees and services, including legal, accounting and regulatory fees, $2.9 million in facility consolidations, $1.5 million in costs related to personnel reductions and $0.1 million for other unusual costs. In the last half of 2002, the Company recorded an additional $0.6 million to the restructuring cost accrual due primarily to increased estimates for personnel and facility termination costs. At December 31, 2002, approximately $2.0 million of the restructuring cost accrual remained for facility obligations with terms expiring through February 2006, costs related to personnel reductions and other unusual charges. The Company anticipates that the majority of the remaining liability will be used over the next 12 months.

In November 2001, the Company acquired all of the outstanding capital stock of HNS, a privately held company located in Naperville, Illinois, in a transaction valued at approximately $30.9 million. Concentra Holding financed this acquisition primarily through the sale of its equity. Concentra Holding exchanged this cash and other consideration for all of HNS’ capital stock. Concurrent with the closing of the acquisition, Concentra Holding contributed the capital stock of HNS and $0.8 million of cash to the Company, and the Company repaid approximately $0.8 million of HNS’ indebtedness. HNS, founded in 1999, provided network management services such as provider bill re-pricing and provider data management for health plans and other payors working with multiple preferred provider organization networks. These services are complementary to the Company’s existing services. Steven E. Nelson, one of the Company’s directors, was the President and Chief Executive Officer of HNS. Mr. Nelson and certain other of the Company’s directors and management owned approximately 46.1% of the equity in HNS. All of HNS’ assets, including its contracts, equipment, intangibles and goodwill, as well as all of its liabilities, have become the Company’s and were recorded at fair value utilizing the purchase method of accounting. The fair values of the acquired assets and liabilities were determined by internal financial analyses and third-party valuations. The $26.1 million of goodwill was assigned to the Network Services segment and was reduced by $1.5 million in 2002 primarily due to certain purchase adjustments. The primary items that generated this goodwill are the value of the acquired assembled workforce and the synergies between the acquired business and the Company. The goodwill is expected to be deductible for tax purposes. The transaction occurred after June 30, 2001, and therefore, the acquired goodwill is not subject to amortization.

Health Services acquired three centers in two transactions in 2002 and 15 centers in six transactions in 2001. The Company paid approximately $2.8 million and $25.8 million, net of cash acquired, and recorded approximately $3.0 million and $27.0 million for goodwill in 2002 and 2001, respectively. No contingent consideration exists related to these transactions. All of the acquisitions have been accounted for using the purchase method of accounting and, accordingly, the purchase price has been allocated to the tangible and intangible assets acquired and liabilities assumed based on the estimated fair values at the dates of acquisition. Some of those estimates are preliminary and subject to further adjustment.

The following are rollforwards of the unusual cost reserves related to the acquisitions of NHR in 2001 and Em3 and OccMed in 2002 recorded by the Company in 2001 and 2002 (in thousands):

	Beginning Of Year		Accrued		Usage			End Of Year
Fourth Quarter 2001 Accrual
2001	$	—	$	6,723	$	(1,050	)	$	5,673
2002		5,673		621		(4,300	)		1,994
Fourth Quarter 2002 Accrual
2002	$	—	$	454	$	(304	)	$	150
Total
2001	$	—	$	6,723	$	(1,050	)	$	5,673
2002		5,673		1,075		(4,604	)		2,144

F-20

CONCENTRA OPERATING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

5. Revolving Credit Facility and Long-Term Debt

The Company’s long-term debt as of December 31, 2002 and 2001 consisted of the following (in thousands):

	December 31,
	2002			2001
Term Facilities:
Tranche B due 2006	$	224,626		$	243,750
Tranche C due 2007		112,314			121,875
13.0% Senior Subordinated Notes due 2009		142,500			190,000
Other		386			856
		479,826			556,481
Less: Current maturities		(3,825	)		(4,211	)
Long-term debt, net	$	476,001		$	552,270

The Company had no revolving credit borrowings at December 31, 2002 and revolving credit borrowings of $6.0 million at December 31, 2001. As of December 31, 2002 and 2001, accrued interest was $11.4 million and $13.7 million, respectively.

On August 17, 1999, the Company entered into a $475 million credit agreement (the “Credit Facility”) with a consortium of banks, providing for $375 million in term loans and a $100 million revolving credit facility (the “Revolving Credit Facility”). The $375 million in term loans were issued as a $250 million term loan (the “Tranche B Term Loan”) and a $125 million term loan (the “Tranche C Term Loan”) bearing interest, at the Company’s option, at the Applicable Base Rate (“ABR”), as defined, plus 2.25% and 2.50%, respectively, or the one, two, three, or six month Eurodollar Rate, as defined, plus 3.25% and 3.50%, respectively. The Tranche B Term Loan matures on June 30, 2006, and requires quarterly principal payments of $0.6 million through June 30, 2005, and $58.8 million for each of the remaining four quarters. The Tranche C Term Loan matures on June 30, 2007, and requires quarterly principal payments of $0.3 million through June 30, 2006, and $29.1 million for each of the remaining four quarters. The Revolving Credit Facility provides for borrowing up to $100 million and matures on August 17, 2005. The Credit Facility contains prepayment requirements that occur if the Company’s financial performance exceeds certain prescribed levels. If the Company has excess cash flow, as defined in the agreement, the Company is subject to mandatory principal repayments. The Company has not been required to make prepayments under this provision. However, management anticipates that the Company may meet these requirements in future periods, based upon their financial projections.

On March 21, 2000, the Company and its lenders amended and restated the Credit Facility. Under the terms of the amended agreement, the financial compliance ratios were modified to allow for increased leverage through September 2003 and decreased interest coverage through September 2004, as compared to the original agreement. In order to receive these amended ratios, the amended agreement provides for an interest rate increase of 0.75% on outstanding borrowings under the Credit Facility. Under the terms of the amended Credit Facility, the Tranche B Term Loan and Tranche C Term Loan bear interest, at the Company’s option, at the ABR, as defined, plus 3.00% and 3.25%, respectively, or the Eurodollar Rate, as defined, plus 4.00% and 4.25%, respectively. Interest on borrowings under the amended Revolving Credit Facility is payable, at the Company’s option, at ABR or the Eurodollar Rate plus a margin, which is based on the Company’s leverage ratio. The margins on outstanding borrowings under the Revolving Credit Facility at December 31, 2001, were 2.25% and 3.25% over ABR and the Eurodollar Rate, respectively. As a part of the amendment, the Company was also required to pay a fee of $1.7 million to lenders approving the amendment. The amendment fee was capitalized as deferred financing costs and will be amortized over the remaining life of the Credit Facility.

On June 14, 2002, the Company and its lenders further amended the Credit Facility. Under the terms of the amended agreement, the financial compliance ratios were modified to allow for increased leverage coverage through September 2004 and decreased interest coverage through December 2004, as compared to the previously amended agreement. As part of the amendment, the Company was also required to pay a fee of $1.1 million to lenders approving the agreement. The amendment fee was capitalized as deferred financing costs and will be amortized over the remaining life of the Credit Facility.

On November 20, 2002, the Company and its lenders executed a third amendment to the Credit Facility. Under the terms of the amended agreement, the financial compliance ratios were modified to allow for increased leverage coverage through June 2005 and decreased interest coverage through June 2005, as compared to the previously amended agreement. The amendment also included provisions that enabled the Company to proceed with its acquisitions of Em3 and OccMed. As part of the amendment, the Company was also required to pay a fee of $2.2 million to lenders approving the agreement. The amendment fee was capitalized as deferred financing costs and will be amortized over the remaining life of the Credit Facility. A failure to comply with these and other financial compliance ratios could cause an event of default under the Credit Facility which could result in an acceleration of the related indebtedness before the terms of that indebtedness otherwise require the Company to pay that indebtedness. Such an acceleration

F-21

CONCENTRA OPERATING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

would also constitute an event of default under the indentures relating to the Company’s 13% Senior Subordinated Notes (“13% Subordinated Notes”) and could also result in an acceleration of the 13% Subordinated Notes before the indentures otherwise require the Company to pay the notes.

Also on November 20, 2002 in connection with the amendment of Concentra Operating’s Credit Facility, Concentra Holding completed the sale of $25.0 million of its common stock to its primary equity sponsors and contributed the proceeds to Concentra Operating. The Company subsequently prepaid $16.7 million and $8.3 million of its Tranche B Term Loan and Tranche C Term Loan, respectively, on November 25, 2002, and expensed previously capitalized deferred financing fees of $0.4 million, net of accumulated amortization.

The ABR, as defined, and the Eurodollar Rate, as defined, were 4.25% and 1.4%, respectively, at December 31, 2002, and 4.75% and 1.9%, respectively, at December 31, 2001. Commitment fees on the unused Revolving Credit Facility borrowings are 0.5% per annum. The weighted-average interest rates for the borrowings under the Tranche B Term Loan were 5.4% and 6.0% and under the Tranche C Term Loan were 5.7% and 6.3% at December 31, 2002 and 2001, respectively. The weighted-average interest rate for the borrowings under the Revolving Credit Facility was 7.0% at December 31, 2001.

The Credit Facility requires the Company to enter into interest rate hedge agreements for the purpose of reducing the effect of variable interest rate fluctuations on a certain portion of the Credit Facility. Accordingly, the Company entered into an interest rate collar agreement on November 17, 1999, which it subsequently amended on May 17, 2000. The interest rate collar agreement converts $200 million of certain variable rate debt to fixed rates. This agreement expires November 17, 2004. Under the agreement, the Company generally pays and receives the three month LIBOR rate (the “Swap Rate”) to and from the counterparty on the notional amount subject to the following limitations: the minimum rate the Company pays is 6.3% when the Swap Rate is less than 5.9%; the maximum rate the Company pays is 6.3%, unless the Swap Rate is greater than 7.5% and less than 8.5%; and, if the Swap Rate was greater than 8.5%, the Company paid 8.5% until November 17, 2002. After November 17, 2002 through the maturity of the agreement, there is no maximum rate the Company pays if the Swap Rate exceeds 7.5%.

The Company entered into an additional interest rate collar agreement on May 17, 2000. This agreement converts $100 million of certain variable rate debt to fixed rates and expires on May 17, 2005. Under the terms of this agreement, the Company generally pays and receives the Swap Rate to and from the counterparty on the notional amount subject to the following restrictions: the minimum rate the Company pays is 7.05% when the Swap Rate is less than 6.0%; the maximum rate the Company pays is 7.05%, unless the Swap Rate is greater than 8.25%. Through the maturity of the agreement, there is no maximum rate the Company pays if the Swap Rate exceeds 8.25%.

In connection with the NHR acquisition in November 2001, the Company assumed an interest rate collar agreement, which converts $23.6 million of certain variable rate debt to fixed rates and expires on May 19, 2003. Under the terms of this agreement, the Company generally pays and receives the Swap Rate to and from the counterparty on the notional amount subject to the following restrictions: the minimum rate the Company pays is 6.5% when the Swap Rate is less than that amount; the maximum rate the Company pays is 8.0% when the Swap Rate is greater than that amount; and if the Swap Rate is between 6.5% and 8.0%, the Company pays the Swap Rate. At May 19, 2003, the counterparty has the option, for one day, to fix the interest rate at 7.11% for an additional two years.

In June 1998, the FASB issued SFAS 133, Accounting for Derivative Instruments and Hedging Activities (“SFAS 133”), as amended, which is effective for fiscal years beginning after June 15, 2000, unless adopted earlier. SFAS 133 establishes additional accounting and reporting standards for derivative instruments and hedging activities and requires that an entity recognize the fair value of all hedging arrangements as assets or liabilities in the financial statements. It also requires the recognition of changes in the fair value of these derivatives. These market value adjustments are to be included either in the income statement or other comprehensive income (equity), depending on the nature of the hedged transaction.

During 2000, the Company adopted SFAS 133, and, as a result, subsequent changes in the fair value of its interest rate hedging arrangements, including the Company’s interest rate collar agreements, will be recognized each period in earnings. All earnings adjustments resulting from changes in the fair values of the interest rate collars are non-cash charges or credits and do not impact cash flows from operations or operating income. There have been, and may continue to be, periods with significant non-cash increases or decreases to the Company’s earnings relating to the change in the fair value of the interest rate collars. Further, if the Company holds each of these collars to maturity (2004 and 2005), the earnings adjustments will offset each other on a cumulative basis and will ultimately equal zero. In 2000, the Company reduced its interest expense by $0.6 million through net cash received from the counterparty payments under these collars. In 2001 and 2002, the Company increased its interest expense by $6.6 million and $15.5 million, respectively through net cash paid to the counterparty under these collars.

F-22

CONCENTRA OPERATING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The 13% Subordinated Notes were issued on August 5, 1999 for $190 million and are general unsecured indebtedness with semi-annual interest payments due on February 15 and August 15 commencing on February 15, 2000. On July 24, 2002, as allowed by the indenture to the 13% Subordinated Notes and as elected by the Company, the Company redeemed 25% of the original face value of the 13% Subordinated Notes through payment of an amount equal to 113% of the face value of the notes redeemed. The redemption is described more fully below. The Company can also redeem the remaining $142.5 million principal balance of the 13% Subordinated Notes on or after August 15, 2004 at 106.5% of the principal amount with the redemption premium decreasing annually to 100.0% of the principal amount on August 15, 2008.

On June 25, 2002, Concentra Holding entered into a $55.0 million bridge loan agreement (“Bridge Loan”) with affiliates of Salomon Smith Barney and Credit Suisse First Boston. The loans bear interest, at Concentra Holding’s option, at the Base Rate, as defined, plus 0.50%, or the Eurodollar Rate, as defined, plus 1.5%. The Bridge Loan matures on June 24, 2004 and requires no cash interest payments until maturity. The Bridge Loan is guaranteed by WCAS and WCAS Capital Partners III, L.P. As part of the agreement, Concentra Holding was required to pay fees of $1.0 million to the lenders approving the agreement and $0.7 million to the loan guarantors. These fees were capitalized by Concentra Holding as deferred financing costs and will be amortized over the life of the Bridge Loan. Pursuant to action by the Company’s board of directors, Concentra Operating then issued 54 shares of its common stock to Concentra Holding for $53.3 million of cash. On July 24, 2002, these proceeds were used to redeem 25%, or $47.5 million, of the Company’s outstanding 13% Subordinated Notes, pursuant to the provisions of the indenture. In connection with the July redemption, the Company paid a $6.2 million premium over the face value of the redeemed bonds and accrued interest of $2.7 million. Concurrently, the Company expensed approximately $1.2 million of related existing deferred financing fees and other expenses associated with this early redemption. In accordance with SFAS 145, these debt extinguishment costs were included in income from continuing operations in the third quarter of 2002.

The 13% Subordinated Notes are guaranteed on a joint and several basis by each and every current wholly-owned subsidiary, the results of which are consolidated in the results of the Company. The guarantees are full and unconditional. The Company has certain subsidiaries that are not wholly-owned and do not guarantee the 13% Subordinated Notes. Separate financial statements for the guarantor and non-guarantor subsidiaries are not presented as management believes such financial statements would not be meaningful to investors. See “Note 14. Condensed Consolidating Financial Information.”

The Credit Facility and the 13% Subordinated Notes contain certain customary covenants, including, without limitation, restrictions on the incurrence of indebtedness, the sale of assets, certain mergers and acquisitions, the payment of dividends on the Company’s capital stock, the repurchase or redemption of capital stock, transactions with affiliates, investments, cross default provisions with other indebtedness of Concentra Operating and Concentra Holding, capital expenditures and changes in control of the Company. Under the Credit Facility, the Company is also required to satisfy certain financial covenant ratio tests including leverage ratios, interest coverage ratios and fixed charge coverage ratios. The Company was in compliance with its covenants, including its financial covenant ratio tests, in 2001 and 2002. While less restrictive than previous requirements, these amended ratio tests become more restrictive for future quarters compared to the levels that the Company was required to meet for 2001 and the first three quarters of 2002. The Company’s ability to be in compliance with these more restrictive ratios will be dependent on its ability to increase its cash flows over current levels. The Company’s obligations under the Credit Facility are secured by a pledge of stock in the Company’s subsidiaries and a pledge of the Company’s and its subsidiaries’ assets. The Company believes it will be in compliance with the covenants for the next twelve months.

On February 15, 2002, OccMed entered into a $2.5 million revolving promissory note. OccMed could request advances against the note through January 31, 2003. The note was to mature February 14, 2003 at which time all principal and accrued interest was due. Interest accrued on outstanding note advances at an annual rate of 18%. Subsequent to the OccMed acquisition, the Company repaid the outstanding principal and accrued interest balance of $2.8 million on December 2, 2002.

On October 1, 2002, Em3 and OccMed entered into revolving promissory notes for $1.0 million and $1.2 million, respectively, with their largest stockholder, WCAS. Em3 and OccMed could request advances against the notes through January 31, 2003. The notes were to mature April 1, 2003 at which time all principal and accrued interest was due. Interest accrued on outstanding note advances at an annual rate of 18%. Subsequent to the Em3 and OccMed acquisitions, the Company repaid on December 2, 2002 the outstanding principal and accrued interest balances for Em3 and OccMed of $0.6 million and $1.0 million, respectively.

6. Financial Instruments

The carrying amounts of cash and cash equivalents, accounts receivable, other current assets, and accounts payable, approximate fair value because of the short maturity of those instruments. The fair value of the Company’s borrowings under the Credit Facility was $323.5 million and $372.6 million, as of December 31, 2002 and 2001, respectively. The fair value of the Company’s 13% Subordinated Notes was $143.2 million and $207.1 million at December 31, 2002 and 2001, respectively. As determined by

F-23

CONCENTRA OPERATING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

estimating the amount the Company would pay or receive to terminate the interest swap agreement, the fair value of the interest rate collar agreements at December 31, 2002 and 2001 was a $33.5 million liability and a $25.9 million liability, respectively. The fair values of the financial instruments were determined utilizing available market information. The use of different market assumptions or estimation methodologies could have a material effect on the estimated fair value amounts.

The financial instrument that potentially subjects the Company to concentrations of credit risk is accounts receivable. Mitigating factors related to the Company’s accounts receivable are that they are spread over a large customer base and various product lines that the Company offers. Further, the Company does monitor the financial performance and credit worthiness of its large customers, and regularly reviews outstanding accounts receivable balances.

7. Income Taxes

The provision for income taxes from continuing operations consisted of the following for the years ended December 31 (in thousands):

	2002			2001			2000
Current:
Federal	$	211		$	5,515		$	(1,834	)
State		3,490			2,506			2,619
		3,701			8,021			785
Deferred:
Federal		1,556			(6,176	)		3,379
State		(678	)		(867	)		604
		878			(7,043	)		3,983
Total	$	4,579		$	978		$	4,768

Income taxes were allocated as follows for the years ended December 31 (in thousands):

	2002		2001		2000
Continuing operations	$	4,579	$	978	$	4,768
Cumulative effect of accounting change		—		—		2,333
Total income taxes	$	4,579	$	978	$	7,101

Significant items included in deferred income tax liabilities and deferred income tax assets were as follows at December 31 (in thousands):

	2002			2001
Deferred income tax assets:
Bad debt allowances	$	14,230		$	7,883
Depreciation		12,010			2,415
Net operating loss carryforwards		30,925			13,685
Fair value of hedging arrangements		13,131			10,155
Accrued expenses and reserves		6,349			7,803
Other		5,320			4,830
		81,965			46,771
Valuation allowance		(31,994	)		(11,484	)
Deferred income tax assets	$	49,971		$	35,287
Deferred income tax liabilities:
Goodwill	$	25,607		$	19,090
Software development costs		23,900			12,168
Other		464			2,512
Deferred income tax liabilities	$	49,971		$	33,770
Net deferred income tax asset	$			$	1,517

The consolidated balance sheets include in other assets $26.3 million and $17.7 million of long-term deferred income tax assets at December 31, 2002 and 2001, respectively.

F-24

CONCENTRA OPERATING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The valuation allowance for deferred income tax assets was $32.0 million and $11.5 million as of December 31, 2002 and 2001, respectively. The net change in the total valuation allowance was $20.5 million and $4.6 million for the years ended December 31, 2002 and 2001, respectively. The valuation allowance of $32.0 million at December 31, 2002, includes $3.1 million which, if reversed in future periods, would reduce goodwill. The Company evaluates the recoverability of the deferred income tax assets and associated valuation allowance on a regular basis. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company evaluates a variety of factors on a regular basis to determine the amount of deferred income tax assets to recognize in the financial statements, including the Company’s recent earnings history, projected future taxable income, the number of years the Company’s net operating loss and tax credits can be carried forward, the existence of taxable temporary differences, and available tax planning strategies.

The Company’s tax provision attributable to continuing operations differs from the federal statutory rate as follows for the years ended December 31 (in thousands):

	2002		%	2001			%		2000			%
Tax provision (benefit) at federal statutory rate	$	359	35.0	$	(5,128	)	(35.0	)	$	(826	)	(35.0	)
Non-deductible expenses		551	53.7		2,710		18.5			2,974		126.0
State taxes (net of federal effect)		2,232	217.5		1,032		7.0			2,009		85.1
Deferred income tax asset valuation allowance		1,385	135.0		3,041		20.8			954		40.4
Other items, net		52	5.1		(677	)	(4.6	)		(343	)	(14.5	)
Effective income tax provision and rate prior to tax provision (benefit) from income (loss) of acquired affiliate		4,579	446.3		978		6.7			4,768		202.0
Tax provision (benefit) from income (loss) of acquired affiliate		—	—		2,779		19.0			(406	)	(17.2	)
Total income tax provision and effective rate	$	4,579	446.3	$	3,757		25.7		$	4,362		184.8

These financial statements reflect a tax provision for the Company as if it filed its own tax return. The Company, however, is included in the consolidated tax return of Concentra Holding. The Company’s deferred tax asset reflects the tax benefit of losses generated by Concentra Holding, as this deferred tax asset was contributed to the Company in 2002 and 2001 by Concentra Holding and permanently reduces the Company’s taxes payable.

The Company has available net operating losses carryforwards for federal income tax purposes of $88.4 million that will be available to reduce future taxable income. The utilization of the net operating losses (“NOL’s”) is subject to certain limitations under federal income tax laws. In certain instances, such NOL’s may only be used to reduce future taxable income of the respective entity that generated the NOL’s. The NOL’s have a carryforward period of fifteen to twenty years depending on the year generated. No NOL’s expire in 2003 to 2007, $0.7 million of NOL’s expire in 2008 to 2017, and $87.7 million of NOL’s expire in 2018 to 2022.

8. Commitments and Contingencies

The Company leases certain corporate office space, operating and medical facilities, and office and medical equipment under various non-cancelable operating and capital lease agreements. Certain facility leases require the Company to pay operating costs and real estate taxes.

The following is a schedule of rent expense by major category for the years ended December 31 (in thousands):

	2002		2001		2000
Facilities	$	38,698	$	31,656	$	27,457
Office equipment		5,071		4,667		3,864
Automobiles		1,924		2,237		2,193
Total rent expense	$	45,693	$	38,560	$	33,514

F-25

CONCENTRA OPERATING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following is a schedule of future minimum lease payments under noncancelable operating leases for the years ending December 31 (in thousands):

2003	$	41,486
2004		32,636
2005		22,560
2006		15,735
2007		10,610
Thereafter		16,323
	$	139,350

The Company is party to certain claims and litigation initiated in the ordinary course of business. The Company is not involved in any legal proceeding that it believes will result, individually or in the aggregate, in a material adverse effect upon its financial condition or results of operations.

9. Employee Benefit Plans

(a) Concentra 401(k) Plan

The Company has a defined contribution plan (the “Concentra 401(k) Plan”) pursuant to which employees who are at least 21 years of age and who have completed at least six months of service are eligible to participate. Effective January 1, 2001, employees who are 21 years of age and who have completed 1,000 hours of service within a consecutive 12 month period of service are immediately eligible to participate in the Concentra 401(k) Plan. For 2002, participants in the Concentra 401(k) Plan may not contribute more than the lesser of a specified statutory amount or 25% of his or her pretax eligible compensation. For 2001 and 2000, participants in the Concentra 401(k) Plan could not contribute more than the lesser of a specified statutory amount or 15% of his or her pretax eligible compensation.

Under the Concentra 401(k) Plan, the Company has the option of matching a portion of the participants’ pretax contributions. The Concentra 401(k) Plan permits, but does not require, additional matching contributions of up to 50% of participants’ pretax contributions up to a maximum of 6% of compensation by the Company. Employees are 100% vested in their own contributions, while Company contributions vest 20% per year of service with employees being fully vested after 5 years. For 2002 and 2001, the Company elected to match 25% of elective deferral contributions up to a maximum, in the case of each eligible employee, of 4% of such employee’s eligible compensation subject to a maximum eligible compensation of $30,000. For the 2000 plan year, the Company elected to match 50% of elective deferral contributions up to a maximum, in the case of each eligible employee, of 4% of such employee’s eligible compensation.

The Company has expensed $1.0 million, $3.5 million and $3.5 million for the years ended December 31, 2002, 2001 and 2000, respectively, for matching contributions to the Concentra 401(k) Plan. In the first quarter of 2002, the Company reversed $2.9 million of the 2001 expense, due to a change in estimate in the matching contribution paid in 2002 from the amount anticipated at the end of 2001.

(b) NHR 401(k) Plan

NHR had a defined contribution plan (the “NHR 401(k) Plan”) with terms similar to the Concentra 401(k) Plan. This plan merged into the Concentra 401(k) Plan on July 1, 2002. The Company expensed $0.1 million in 2001 for matching contributions to the NHR 401(k) Plan.

10. Stock Option Plans

All information presented below relates to Concentra Holding stock and stock option activity.

(a) Concentra 1997 Long-Term Incentive Plan

Concentra Holding granted certain awards with respect to shares under Concentra Holding’s 1997 Long-Term Incentive Plan (the “1997 Incentive Plan”). The awards granted under the 1997 Incentive Plan included stock options that do not qualify as incentive stock options and restricted stock. Generally each stock option grant vested ratably over a five year period, subject to continued employment, with a ten year term. The 108,000 restricted shares granted under the 1997 Incentive Plan that remained at December 31, 2002 were to vest on August 1, 2003. However, on March 27, 2003, Concentra Holding’s board and stockholders deferred the vesting

F-26

CONCENTRA OPERATING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

for these shares to the earlier of an initial public offering of Concentra Holdings or August 1, 2005. For the years ended December 31, 2001 and 2000, the Company recorded amortization of $0.4 million and $0.8 million, respectively, in connection with the deferred compensation associated with the restricted stock grants. Simultaneous with the 1999 Recapitalization, no additional awards can be made under the 1997 Incentive Plan. Only that number of shares of Concentra Holding stock issuable upon exercise of awards granted under the 1997 Incentive Plan as of the 1999 Recapitalization were reserved for issuance by Concentra Holding. During 2002, 2001 and 2000, 6,375, 57,250 and 68,250 options were canceled, respectively under the 1997 Incentive Plan. During 2002 and 2001, 40,875 and 15,000 options were exercised, respectively. No options were exercised in 2000 under the 1997 Incentive Plan.

(b) Concentra 1999 Long-Term Incentive Plan

Concentra Holding’s board and stockholders approved its 1999 Stock Option and Restricted Stock Purchase Plan (“the 1999 Stock Plan”) in August 1999. The 1999 Stock Plan originally provided for the grant of options or awards to purchase an aggregate 3,750,000 shares of Concentra Holding common stock, either in the form of incentive stock options qualified as such under the U.S. Federal Income Tax Laws, nonqualified stock options or restricted stock purchase awards. The 1999 Stock Plan includes provisions for adjustment of the number of shares of common stock available for grant of award thereunder and in the number of shares of common stock underlying outstanding options in the event of any stock splits, stock dividends or other relevant changes in the capitalization of Concentra Holding. Under the 1999 Stock Plan, employees, including officers, are eligible to receive grants of either incentive stock options or nonqualified stock options and restricted stock purchase awards. Non-employee directors are eligible to be granted only nonqualified options and awards.

During 2002, Concentra Holding granted 125,000 shares of restricted common stock under the 1999 Stock Plan that were valued at $2.1 million based upon the market value of the shares at the time of issuance. The restricted stock grants have an exercisable period of ten years from the date of grant and vest upon the earlier of the achievement of certain share price levels following an initial public offering of Concentra Holdings, the occurrence of a change in control, as defined, or five years following the date of the grant. During 2002, the Company recorded amortization of $0.1 million in connection with the deferred compensation associated with these restricted stock grants.

On June 20, 2002, Concentra Holding’s board and shareholders approved amendments to (1) increase the maximum total number of shares of Concentra Holding common stock for which awards may be granted thereunder to 5,250,000, and (2) increase the maximum number of shares of Concentra Holding common stock that may be granted thereunder to an individual in a calendar year. On September 24, 2002, the Concentra Holding’s board and stockholders approved an amendment to the 1999 Stock Plan to provide for the automatic award of the following non-qualified stock options under the 1999 Stock Plan to non-employee members of Concentra Holding’s board: 1) an initial option to purchase 10,000 shares of Concentra Holding common stock on the next business day following the date of his or her initial election to the board (or on September 24, 2002, if serving as a director on that date), and 2) an annual option to purchase 4,000 shares of Concentra Holding common stock on the next business day following each annual meeting of stockholders at which such non-employee director is elected as a director. The exercise price of each director option will be 100% of the fair market value at the time of grant. Initial options will be immediately exercisable. Annual option awards will become exercisable ratably on each of the four annual anniversary dates following the date of grant. The exercise period will not exceed ten years from the date of grant; provided that, no director option may be exercised more than 1 year after the optionee ceases to serve as a director of the corporation.

A portion of the stock options granted to employees in 2002 vest over a four year period (25% annually) and a portion vest over a five year period (20% annually), subject to continued employment. Stock options granted to non-employee directors in 2002 totaled 60,000 and vested immediately. Stock options granted in 2001 vest over a five year period (20% annually), subject to continued employment. A portion of the stock options granted prior to 2001 vest over a five year period (20% annually), the remaining portion was to be subject to cliff vesting in seven years with provisions allowing for accelerated vesting based upon specific performance criteria. However, in December 2001 the Company modified the vesting for a portion of the stock options that allowed for accelerated vesting based upon performance criteria to become vested over a three year period (33 1/3% annually) beginning in 2002. In December 2002, the remaining stock options with performance based vesting criteria were modified to become vested over a four year period (25% annually) beginning in 2004. The Company recognized compensation expense related to the accelerated vesting of these options of $0.5 million for each of the years ended December 31, 2002 and 2001, respectively. Prior to vesting, all options are subject to forfeiture upon termination of employment. The exercise period is ten years from the date of grant. The exercise price of incentive and nonqualified stock options granted may not be less than 100% of the fair market value of the shares of common stock, as determined by Concentra Holding’s board of directors or the compensation committee, as the case may be, on the date the option is granted. In addition, the aggregate fair market value of the shares of stock with respect to which incentive stock options are exercisable for the first time by an optionee during any calendar year shall not exceed $100,000. In addition, no incentive stock option shall be granted to an optionee who owns more than 10% of the total combined voting power for all classes of stock of Concentra

F-27

CONCENTRA OPERATING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Holding, unless the exercise price is at least 110% of the fair market value of the shares of Concentra Holding’s common stock and the exercise period does not exceed five years.

The Company granted 1,175,500 and 1,218,500 options and canceled due to forfeiture 546,261 and 282,245 options under the 1999 Stock Plan in 2002 and 2001, respectively. Restricted stock purchase awards granted under the 1999 Stock Plan will continue in effect until August 17, 2009, unless terminated prior to such date by the Board.

A summary of the status for all outstanding options at December 31, 2000, 2001 and 2002, and changes during the years then ended is presented in the table below:

	Number of Options		Weighted Average Exercise Price Per Share
Balance, December 31, 1999	1,459,142		$	10.60
Granted	1,916,257			16.50
Exercised	—			—
Canceled	(134,822	)		9.89
Balance, December 31, 2000	3,240,577			14.12
Granted	1,218,500			21.77
Exercised	(29,448	)		9.39
Canceled	(339,495	)		7.89
Balance, December 31, 2001	4,090,134			16.95
Granted	1,175,500			16.70
Exercised	(43,375	)		8.55
Canceled	(552,636	)		18.89
Balance, December 31, 2002	4,669,623		$	16.74

Using the Black-Scholes option valuation model, the weighted average fair market value of options granted in 2002, 2001 and 2000 were $5.12, $7.19 and $4.52, respectively. There were 1,410,714, 890,453 and 667,324 exercisable options outstanding with a weighted average exercise price of $13.55, $13.07 and $12.37 as of December 31, 2002, 2001 and 2000, respectively. A further breakdown of the outstanding options at December 31, 2002 is as follows:

Range of Exercise Prices	Number of Options	Weighted Average Price		Weighted Average Contractual Life (Years)	Number of Exercisable Options	Weighted Average Price of Exercisable Options
$4.23–$8.06	491,779	$	8.02	5.78	491,779	$	8.02
$16.50–$18.00	3,238,861		16.52	8.12	918,935		16.51
$22.06	938,983		22.06	8.98	—		0.00
	4,669,623	$	16.74	8.04	1,410,714	$	13.55

(c) SFAS 123, Accounting for Stock-Based Compensation, Disclosures

The Company accounts for these plans under APB Opinion No. 25, Accounting for Stock Issued to Employees, under which no compensation cost has been recognized related to stock option grants when the exercise price is equal to the market price on the date of grant.

The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because our employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options.

For purposes of disclosures pursuant to SFAS 123, as amended by SFAS 148, the estimated fair value of options is amortized to expense over the options’ vesting period. Had compensation cost for these plans been determined consistent with SFAS 123, the Company’s net loss would have been increased to the following supplemental pro forma net loss amounts (in thousands):

F-28

CONCENTRA OPERATING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	2002			2001			2000
Net loss:
As reported	$	(3,553	)	$	(18,407	)	$	(9,539	)
Deduct: Incremental stock-based employee compensation expense determined under the fair value method for all awards, net of related tax effects		(3,356	)		(2,431	)		(665	)
Supplemental pro forma	$	(6,909	)	$	(20,838	)	$	(10,204	)

The fair value of each option granted is estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions used:

	2002		2001		2000
Risk-free interest rates	3.1	%	4.7	%	6.1	%
Expected volatility	28.8	%	21.9	%	0.0	%
Expected dividend yield	—		—		—
Expected weighted average life of options in years	4.8		6.0		5.0

11. Segment Information

Operating segments represent components of the Company’s business that are evaluated regularly by key management in assessing performance and resource allocation. The Company’s comprehensive services are organized into the following segments: Health Services, Network Services and Care Management Services.

Health Services provides specialized injury and occupational healthcare services to employers through its health centers. Health Services delivers primary and rehabilitative care, including the diagnosis, treatment and management of work-related injuries and illnesses. Health Services also provides non-injury, employment-related health services, including physical examinations, pre-placement substance abuse testing, job-specific return to work evaluations and other related programs. To meet the requirements of large employers whose workforce extends beyond the geographic coverage available to the Company’s centers, this segment has also developed a network of select occupational healthcare providers that use the Company’s proprietary technology to benchmark treatment methodologies and outcomes achieved. Health Services, and the joint ventures Health Services controls, own all the operating assets of the occupational healthcare centers, including leasehold interests and medical equipment.

The Network Services segment reflects those businesses that involve the review and repricing of provider bills. For these services, the Company is primarily compensated based on the degree to which the Company achieves savings for its clients, as well as on a fee per bill or claims basis. This segment includes the specialized preferred provider organization, provider bill repricing and review, out-of-network bill review and first report of injury services.

Care Management Services reflects the Company’s professional services aimed at curtailing the cost of workers’ compensation and auto claims through field case management, telephonic case management, independent medical examinations and utilization management. These services also concentrate on monitoring the timing and appropriateness of medical care.

Revenue from individual customers, revenue between business segments, and revenue, operating profit and identifiable assets of foreign operations are not significant.

F-29

CONCENTRA OPERATING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company’s statements of operations on a segment basis were as follows (in thousands):

	2002			2001			2000
Revenue:
Health Services	$	471,968		$	443,321		$	409,738
Network Services		230,299			185,267			162,596
Care Management Services		296,783			228,315			189,905
		999,050			856,903			762,239
Gross profit:
Health Services		65,804			67,756			73,799
Network Services		92,081			75,080			61,855
Care Management Services		29,729			28,149			19,006
		187,614			170,985			154,660
Operating income:
Health Services		38,154			30,958			41,021
Network Services		61,169			52,433			44,690
Care Management Services		4,231			12,326			8,088
Corporate general and administrative expenses		(25,938	)		(22,109	)		(20,258	)
Unusual charges (gains)		1,200			(6,065	)		—
		78,816			67,543			73,541
Interest expense, net		63,582			66,398			67,984
Loss on change in fair value of hedging arrangements		7,589			13,602			9,586
Loss on early retirement of debt		7,894			—			—
Loss of acquired affiliate, net of tax		—			5,833			262
Other, net		(1,275	)		(3,640	)		(1,931	)
Income (loss) before income taxes and cumulative effect of accounting change		1,026			(14,650	)		(2,360	)
Provision for income taxes		4,579			3,757			4,362
Loss before cumulative effect of accounting change		(3,553	)		(18,407	)		(6,722	)
Cumulative effect of accounting change, net of tax		—			—			2,817
Net loss	$	(3,553	)	$	(18,407	)	$	(9,539	)

The Company’s segment depreciation and amortization, capital expenditures and identifiable assets were as follows (in thousands):

	2002		2001		2000
Depreciation and amortization:
Health Services	$	21,482	$	28,670	$	22,516
Network Services		14,006		13,607		12,681
Care Management Services		10,054		5,164		4,386
Corporate		1,191		822		934
	$	46,733	$	48,263	$	40,517
Capital expenditures:
Health Services	$	13,588	$	28,147	$	15,827
Network Services and Care Management Services(1)		19,128		14,652		15,706
Corporate		2,308		2,863		510
	$	35,024	$	45,662	$	32,043
Identifiable assets:
Health Services	$	441,722	$	426,474	$	409,033
Network Services and Care Management Services(1)		378,413		400,073		245,325
Corporate		68,503		53,477		38,541
	$	888,638	$	880,024	$	692,899

(1) Capital expenditures and identifiable assets are not separately reported within the Network Services and Care Management Services groups.

F-30

CONCENTRA OPERATING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Management utilizes multiple indicators and views to measure segment performance and to allocate resources to the segments. The primary indicators are pretax income along with cash flows and overall economic returns. The Company is managed among multiple product lines within each segment.

12. Related Party Transactions

W. Tom Fogarty, M.D., an executive officer of Concentra Holding and Concentra Operating, is the President, a director and a shareholder of Occupational Health Centers of the Southwest, P.A. (“OHCSW”), and a shareholder, officer, and/or director of several other of the physician groups. The Company has entered into a 40-year management agreement with each of the physician groups. OHCSW paid approximately $178.7 million, $184.2 million and $190.6 million in management fees to a subsidiary of Concentra Operating in the years ended December 31, 2002, 2001 and 2000, respectively, under its management agreement with that subsidiary. Dr. Fogarty receives no remuneration from any of the physician groups for serving as an officer or director.

Acquisition of National Healthcare Resources, Inc.

In November 2001, in a transaction valued at $141.8 million (consisting of $83.0 million in Concentra Holding common stock, $1.0 million in cash, and assumption of $57.8 million in NHR indebtedness), the Company acquired NHR, a provider of care management and network services to the workers’ compensation and auto insurance industries on a national level. NHR’s businesses are complementary in nature to and significantly expand the Company’s care management and network services businesses. See “Note 4, Recent Acquisitions and Unusual Charges.” D. Scott Mackesy, a director of Concentra Holding and Concentra Operating, served on NHR’s board of directors.

Entities and individuals affiliated with WCAS, the Company’s primary stockholder, owned approximately 48% of NHR. In the NHR transaction, WCAS entities and individuals as a group received 1,740,803 shares of Concentra Holding common stock, representing 5.5% of total outstanding Concentra Holding common stock.

Acquisition of HealthNetwork Systems, L.L.C./Joint Marketing Agreement

In November 2001, in a transaction valued at approximately $30.9 million, the Company acquired HNS, a provider of network services such as provider bill repricing and provider data management for health plans and other payors. See “Note 4, Recent Acquisitions and Unusual Charges.” HNS’ services are complementary to the Company’s existing services. Steven E. Nelson, a director of Concentra Operating and of Concentra Holding, was the President and Chief Executive Officer of HNS prior to this acquisition by the Company.

Mr. Nelson, Paul B. Queally and Mr. Mackesy, each of whom is a director of Concentra Holding and Concentra Operating, and Daniel J. Thomas, a director and executive officer of Concentra Holding and Concentra Operating, owned equity interests in HNS. For each, the percentage of total HNS equity ownership and the amount received in the transaction were as follows: Mr. Nelson, 19.8% and $5.4 million (plus repayment of debt of $0.2 million); Mr. Thomas, 2.0% and $0.6 million; Mr. Queally, 0.6% and $0.2 million; and Mr. Mackesy, 0.5% and $0.2 million.

Until the Company’s acquisition of HNS, the Company was party to a Joint Marketing Agreement with HNS, pursuant to which HNS performed marketing and sales services for certain of the Company’s network services businesses. The Company paid HNS approximately $0.7 million and $0.5 million in 2001 and 2000, respectively, pursuant to the Joint Marketing Agreement.

Acquisition of Em3 Corporation

In December, 2002, in a transaction valued at $30.7 million (consisting of $30.1 million in Concentra Holding common stock and assumption of $0.6 million of indebtedness to WCAS), the Company acquired Em3, a provider of information technology and a software-based system for the management of work-related injuries. Prior to the acquisition, the Company provided certain administrative services to Em3, including leasing employees to Em3, providing office space, providing access to certain of the Company’s software and systems and related administrative services. During the eleven-month period ending November 20, 2002, Em3 paid the Company $2.8 million, for the administrative services and reimbursable expenses the Company provided. During the twelve-month period ending December 31, 2001 and 2000, Em3 paid the Company $7.4 million and $1.4 million, respectively, for the administrative services and reimbursable expenses the Company provided. See “Note 4, Recent Acquisitions and Unusual Charges.”

The stockholders of Em3 were primarily the same as Concentra Holding’s principal stockholders. Paul B. Queally, D. Scott Mackesy, and John K. Carlyle, each of whom is a director of Concentra Holding and Concentra Operating, Daniel J. Thomas, a director and executive officer of Concentra Holding and Concentra Operating, and James M. Greenwood and Richard A. Parr II, each

F-31

CONCENTRA OPERATING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

of whom is an executive officer of Concentra Holding and Concentra Operating, owned equity interests in Em3. The percentage of total Em3 share ownership by the Company’s principal stockholders and by the Company’s directors and executive officers prior to the acquisition was as follows: WCAS-affiliated entities and individuals as a group, 66.24%; FFC entities, 6.65%; Mr. Queally, 0.08%; Mr. Mackesy, 0.04%; Mr. Carlyle, 0.46%; Mr. Thomas, 0.47%; Mr. Greenwood, 0.59%; and Mr. Parr, 0.07%. Carlos A. Ferrer, a director of Concentra Holding and Concentra Operating, and Messrs. Greenwood, Carlyle, Queally and Mackesy served on Em3’s board of directors.

Acquisition of OccMed Systems, Inc.

In December 2002, in a transaction valued at $16.6 million (consisting of $12.8 million in Concentra Holding common stock, assumption of $1.0 million in indebtedness to WCAS, and assumption of $2.8 million of other indebtedness), the Company acquired the assets of OccMed, a company engaged in developing new, free-standing, primary care occupational healthcare centers. Prior to the acquisition, the Company was party to a management and administrative services agreement with OccMed and performed management services for the development and construction of OccMed’s occupational healthcare centers, leased employees to OccMed, recruited, hired and trained employees for its occupational healthcare centers, and provided accounting, billing and collection services for its occupational healthcare centers. As of December 31, 2001, OccMed owed the Company $2.2 million for the management and administrative services and reimbursable expenses provided for the year then ended. This amount was paid in full in January 2002. During the eleven-month period ending November 20, 2002, OccMed paid the Company $6.0 million, for the administrative services and reimbursable expenses the Company provided in 2002, net of $3.0 million of OccMed receivables balances collected by the Company. See “Note 4, Recent Acquisitions and Unusual Charges.”

The stockholders of OccMed are primarily the same as Concentra Holding’s principal stockholders and include certain of the Company’s directors. The percentage of total OccMed share ownership by the Company’s principal stockholders and by the Company’s directors prior to the date of acquisition was as follows: WCAS-affiliated entities and individuals as a group, 69.40%; FFC entities, 7.56%; Mr. Queally, 0.09%; and Mr. Mackesy, 0.04%. Messrs. Queally, Mackesy and Ferrer served on OccMed’s board of directors.

    Other Related Party Transactions

The Company derives revenue in the normal course of business from other companies owned or controlled by or affiliated with related parties. Health Services revenue from related parties totaled $0.3 million, $0.2 million and $0.1 million during 2002, 2001 and 2000, respectively. Care Management Services revenue from related parties totaled $0.1 million in both 2002 and 2001 and a nominal amount in 2000.

The Company also purchases services in the normal course of business from other companies owned or controlled by or affiliated with related parties. These services include local phone service in certain geographic regions, information technology consulting, administration of open enrollment for employee benefits and third party laboratory services. The Company made payments to related parties for these services totaling $0.7 million, $1.7 million and $0.6 million during 2002, 2001 and 2000, respectively.

In the normal course of business, the Company and Concentra Holding engage in certain intercompany transactions to permanently reduce state and local income taxes. Since the Company is included in the consolidated federal, state and local tax returns of Concentra Holding (see Note 7, Income Taxes), all intercompany state and local income tax transactions between the Company and Concentra Holding have been eliminated in the consolidated financial statements.

13. Selected Quarterly Operating Results (Unaudited)

The following table sets forth certain unaudited quarterly results of operations for the years ended December 31, 2002, and 2001. In management’s opinion, this unaudited information has been prepared on the same basis as the annual financial statements and includes all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the information for the quarters presented, when read in conjunction with the financial statements and notes thereto included elsewhere in this document. The operating results for any quarter are not necessarily indicative of results for any subsequent quarter. Certain amounts in the table below have been adjusted to conform to the current presentation, which is different than previously reported on Form 10-Q (see “Note 2. Summary of Significant Accounting Policies, (q) Reclassifications.”) Amounts are stated in thousands.

F-32

CONCENTRA OPERATING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	Quarters Ended
	March 31, 2002			June 30, 2002			September 30, 2002			December 31, 2002
Revenue	$	240,001		$	254,159		$	254,798		$	250,092
Cost of services		199,490			201,641			206,296			204,009
Gross profit		40,511			52,518			48,502			46,083
General and administrative expenses		22,498			27,127			27,880			28,717
Amortization of intangibles		932			931			853			1,060
Unusual gains		—			—			—			(1,200	)
Operating income		17,081			24,460			19,769			17,506
Interest expense, net		16,434			16,614			15,507			15,027
Other, net		(5,878	)		5,751			14,984			(649	)
Provision (benefit) for income taxes		3,569			1,418			(3,544	)		3,136
Net income (loss)	$	2,956		$	677		$	(7,178	)	$	(8	)
	Quarters Ended
	March 31, 2001			June 30, 2001			September 30, 2001			December 31, 2001
Revenue	$	200,758		$	214,882		$	212,658		$	228,605
Cost of services		160,516			167,021			168,780			189,601
Gross profit		40,242			47,861			43,878			39,004
General and administrative expenses		18,671			20,133			18,729			24,098
Amortization of intangibles		3,677			3,813			3,828			4,428
Unusual charge(1)		—			—			—			546
Charges for acquisition of affiliate(1)		—			—			—			5,519
Operating income		17,894			23,915			21,321			4,413
Interest expense, net		16,805			16,692			16,492			16,409
Other, net		7,552			(3,956	)		13,271			(1,072	)
Provision (benefit) for income taxes		(554	)		5,802			(309	)		(1,182	)
Net income (loss)	$	(5,909	)	$	5,377		$	(8,133	)	$	(9,742	)

(1) These amounts relate to the acquisition of NHR. See “Note 4. Recent Acquisitions and Unusual Charges.”

14. Condensed Consolidating Financial Information

As discussed in Note 5, Revolving Credit Facility and Long-Term Debt, the 13% Subordinated Notes and the Credit Facility are unconditionally guaranteed by each and every current wholly-owned subsidiary. The Company has certain subsidiaries that are not wholly-owned and do not guarantee the 13% Subordinated Notes and the Credit Facility. Presented below are condensed consolidating balance sheets as of December 31, 2002 and 2001, the condensed consolidating statements of operations for the years ended December 31, 2002, 2001 and 2000, and the condensed consolidating statements of cash flow for the years ended December 31, 2002, 2001 and 2000 of Concentra Operating (Parent and Issuer), guarantor subsidiaries (Guarantor Subsidiaries) and the subsidiaries that are not guarantors (Non-Guarantor Subsidiaries).

Investments in subsidiaries are accounted for by each Parent using the equity method of accounting. The financial information for the guarantor and non-guarantor subsidiaries are each presented on a combined basis. The elimination entries primarily eliminate investments in subsidiaries and intercompany balances and transactions. Intercompany management fees of $4.4 million, $4.3 million and $3.8 million are included in general and administrative expenses of the non-guarantor subsidiaries for the years ended December 31, 2002, 2001 and 2000, respectively. These amounts are reflected as a reduction of general and administrative expenses for the guarantor subsidiaries. Separate financial statements for the guarantor and non-guarantor subsidiaries are not presented because management believes such financial statements would not be meaningful to investors. All information in the tables below is presented in thousands.

F-33

CONCENTRA OPERATING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Condensed Consolidating Balance Sheets:

	As of December 31, 2002
	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
Current assets:
Cash and cash equivalents	$	—		$	13,060		$	5,942		$	—		$	19,002
Accounts receivable, net		—			156,751			10,810			—			167,561
Prepaid expenses and other current assets		867			37,183			1,357			—			39,407
Total current assets		867			206,994			18,109			—			225,970
Investment in subsidiaries		715,524			31,713			—			(747,237	)		—
Property and equipment, net		—			126,250			8,731			—			134,981
Goodwill and other intangible assets, net		—			462,240			23,991			—			486,231
Other assets		24,785			16,576			95			—			41,456
Total assets	$	741,176		$	843,773		$	50,926		$	(747,237	)	$	888,638
Current liabilities:
Revolving credit facility	$	—		$	—		$	—		$	—		$	—
Current portion of long-term debt		3,492			333			—			—			3,825
Accounts payable and accrued expenses		11,694			94,050			2,769			—			108,513
Total current liabilities		15,186			94,383			2,769			—			112,338
Long-term debt, net		475,948			53			—			—			476,001
Deferred income taxes and other liabilities		12,470			60,195			—			17,391			90,056
Fair value of hedging arrangements		33,472			—			—			—			33,472
Intercompany		27,329			(26,382	)		(947	)		—			—
Total liabilities		564,405			128,249			1,822			17,391			711,867
Stockholder’s equity		176,771			715,524			49,104			(764,628	)		176,771
Total liabilities and stockholder’s equity	$	741,176		$	843,773		$	50,926		$	(747,237	)	$	888,638
	As of December 31, 2001
	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
Current assets:
Cash and cash equivalents	$	—		$	5,722		$	3,228		$	—		$	8,950
Accounts receivable, net		—			170,677			11,080			—			181,757
Prepaid expenses and other current assets		435			35,143			1,099			—			36,677
Total current assets		435			211,542			15,407			—			227,384
Investment in subsidiaries		653,639			28,985			—			(682,624	)		—
Property and equipment, net		—			132,557			9,687			—			142,244
Goodwill and other intangible assets, net		—			451,022			24,649			—			475,671
Other assets		26,076			8,554			95			—			34,725
Total assets	$	680,150		$	832,660		$	49,838		$	(682,624	)	$	880,024
Current liabilities:
Revolving credit facility	$	6,000		$	—		$	—		$	—		$	6,000
Current portion of long-term debt		3,750			461			—			—			4,211
Accounts payable and accrued expenses		12,618			114,264			3,976			—			130,858
Total current liabilities		22,368			114,725			3,976			—			141,069
Long-term debt, net		551,875			395			—			—			552,270
Deferred income taxes and other liabilities		11,119			44,614			—			18,364			74,097
Fair value of hedging arrangements		25,883			—			—			—			25,883
Intercompany		(17,800	)		19,287			(1,487	)		—			—
Total liabilities		593,445			179,021			2,489			18,364			793,319
Stockholder’s equity		86,705			653,639			47,349			(700,988	)		86,705
Total liabilities and stockholder’s equity	$	680,150		$	832,660		$	49,838		$	(682,624	)	$	880,024

F-34

CONCENTRA OPERATING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Condensed Consolidating Statements of Operations:

	Year Ended December 31, 2002
	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
Total revenue	$	—		$	933,337		$	74,275		$	(8,562	)	$	999,050
Total cost of services		—			760,658			59,340			(8,562	)		811,436
Total gross profit		—			172,679			14,935			—			187,614
General and administrative expenses		69			100,234			5,919			—			106,222
Amortization of intangibles		—			3,765			11			—			3,776
Unusual gains		(140	)		(1,060	)		—			—			(1,200	)
Operating income		71			69,740			9,005			—			78,816
Interest expense, net		63,316			306			(40	)		—			63,582
Loss on change in fair value of hedging arrangements		7,589			—			—			—			7,589
Loss on early retirement of debt		7,894			—			—			—			7,894
Other, net		—			(1,275	)		—			—			(1,275	)
Income (loss) before income taxes		(78,728	)		70,709			9,045			—			1,026
Provision (benefit) for income taxes		(27,555	)		32,134			—			—			4,579
Income (loss) before equity earnings		(51,173	)		38,575			9,045			—			(3,553	)
Equity earnings in subsidiaries		(47,620	)		—			—			47,620			—
Net income (loss)	$	(3,553	)	$	38,575		$	9,045		$	(47,620	)	$	(3,553	)
	Year Ended December 31, 2001
	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
Total revenue	$	—		$	794,711		$	70,501		$	(8,309	)	$	856,903
Total cost of services		—			637,139			57,088			(8,309	)		685,918
Total gross profit		—			157,572			13,413			—			170,985
General and administrative expenses		400			75,313			5,918			—			81,631
Amortization of intangibles		—			14,571			1,175			—			15,746
Unusual charges		—			546			—			—			546
Charges for acquisition of affiliate		—			5,519			—			—			5,519
Operating income (loss)		(400	)		61,623			6,320			—			67,543
Interest expense, net		66,832			(325	)		(109	)		—			66,398
Loss on change in fair value of hedging arrangements		13,602			—			—			—			13,602
Loss of acquired affiliate, net of tax		—			5,833			—			—			5,833
Other, net		—			(3,640	)		—			—			(3,640	)
Income (loss) before income taxes		(80,834	)		59,755			6,429			—			(14,650	)
Provision (benefit) for income taxes		(28,292	)		32,049			—			—			3,757
Income (loss) before equity earnings		(52,542	)		27,706			6,429			—			(18,407	)
Equity earnings in subsidiaries		(34,135	)		—			—			34,135			—
Net income (loss)	$	(18,407	)	$	27,706		$	6,429		$	(34,135	)	$	(18,407	)

F-35

CONCENTRA OPERATING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	Year Ended December 31, 2000
	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
Total revenue	$	—		$	708,808		$	59,906		$	(6,475	)	$	762,239
Total cost of services		—			564,213			49,841			(6,475	)		607,579
Total gross profit		—			144,595			10,065			—			154,660
General and administrative expenses		425			60,390			5,676			—			66,491
Amortization of intangibles		—			13,466			1,162			—			14,628
Operating income (loss)		(425	)		70,739			3,227			—			73,541
Interest expense, net		68,429			(206	)		(239	)		—			67,984
Loss on change in fair value of hedging arrangements		9,586			—			—			—			9,586
Loss of acquired affiliate, net of tax		—			262			—			—			262
Other, net		(40	)		(1,891	)		—			—			(1,931	)
Income (loss) before income taxes		(78,400	)		72,574			3,466			—			(2,360	)
Provision (benefit) for income taxes		(27,440	)		31,802			—			—			4,362
Income (loss) before cumulative effect of accounting change and equity earnings		(50,960	)		40,772			3,466			—			(6,722	)
Cumulative effect of accounting change, net of tax		—			2,817			—			—			2,817
Income (loss) before equity earnings		(50,960	)		37,955			3,466			—			(9,539	)
Equity earnings in subsidiaries		(41,421	)		—			—			41,421			—
Net income (loss)	$	(9,539	)	$	37,955		$	3,466		$	(41,421	)	$	(9,539	)
Condensed Consolidating Statements of Cash Flows:
	Year Ended December 31, 2002
	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
Operating Activities:
Net cash provided by (used in) operating activities	$	(37,905	)	$	81,756		$	10,180		$	—		$	54,031
Investing Activities:
Purchases of property, equipment and other assets		—			(34,362	)		(712	)		—			(35,074	)
Acquisitions, net of cash acquired		—			(1,726	)		—			—			(1,726	)
Proceeds from the licensing of internally developed software		—			515			—			—			515
Net cash used in investing activities		—			(35,573	)		(712	)		—			(36,285	)
Financing Activities:
Proceeds from issuance of common stock to parent		52,955			—			—			—			52,955
Contribution from issuance of common stock by parent		25,370			—			—			—			25,370
Proceeds from the issuance of short-term and long-term debt		—			3,960			—			—			3,960
Payment of deferred financing costs		(3,321	)		—			—			—			(3,321	)
Borrowings (payments) under the revolving credit facilities, net		(6,000	)		—			—			—			(6,000	)
Repayments of short-term and long-term debt		(76,185	)		(4,430	)		—			—			(80,615	)
Other		(43	)		—			—			—			(43	)
Intercompany, net		45,129			(45,669	)		540			—			—
Receipt (payment) of equity distributions		—			7,294			(7,294	)		—			—
Net cash provided by (used in) financing activities		37,905			(38,845	)		(6,754	)		—			(7,694	)
Net Increase in Cash and Cash Equivalents		—			7,338			2,714			—			10,052
Cash and Cash Equivalents, beginning of year		—			5,722			3,228			—			8,950
Cash and Cash Equivalents, end of year	$	—		$	13,060		$	5,942		$	—		$	19,002

F-36

CONCENTRA OPERATING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	Year Ended December 31, 2001
	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations		Total
Operating Activities:
Net cash provided by (used in) operating activities	$	(99,105	)	$	165,961		$	10,311		$	—	$	77,167
Investing Activities:
Purchases of property, equipment and other assets		—			(44,259	)		(1,578	)		—		(45,837	)
Acquisitions, net of cash acquired		—			(105,460	)		(1,714	)		—		(107,174	)
Proceeds from the licensing of internally developed software		—			1,103			—			—		1,103
Net cash used in investing activities		—			(148,616	)		(3,292	)		—		(151,908	)
Financing Activities:
Contribution from issuance of common stock by parent		49,746			—			—			—		49,746
Borrowings (payments) under revolving credit facilities, net		6,000			—			—			—		6,000
Repayments of short-term and long-term debt		(4,701	)		(330	)		(106	)		—		(5,137	)
Contribution from primary shareholder		12,865			—			—			—		12,865
Contribution from minority interest		—			5,135			—			—		5,135
Intercompany, net		35,195			(34,695	)		(500	)		—		—
Receipt (payment) of equity distributions		—			7,100			(7,100	)		—		—
Net cash provided by (used in) financing activities		99,105			(22,790	)		(7,706	)		—		68,609
Net Increase (Decrease) in Cash and Cash Equivalents		—			(5,445	)		(687	)		—		(6,132	)
Cash and Cash Equivalents, beginning of year		—			11,167			3,915			—		15,082
Cash and Cash Equivalents, end of year	$	—		$	5,722		$	3,228		$	—	$	8,950
	Year Ended December 31, 2000
	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations		Total
Operating Activities:
Net cash provided by (used in) operating activities	$	(28,412	)	$	63,581		$	856		$	—	$	36,025
Investing Activities:
Purchases of property, equipment and other assets		—			(30,092	)		(1,952	)		—		(32,044	)
Acquisitions, net of cash acquired		—			(9,737	)		—			—		(9,737	)
Proceeds from the licensing of internally developed software		—			1,625			—			—		1,625
Proceeds from sales of property and equipment and other		—			400			—			—		400
Net cash used in investing activities		—			(37,804	)		(1,952	)		—		(39,756	)
Financing Activities:
Proceeds from the issuance of short-term and long-term debt		—			658			106			—		764
Payment of deferred financing costs		—			(1,681	)		—			—		(1,681	)
Borrowings (payments) under revolving credit facilities, net		(4,000	)		—			—			—		(4,000	)
Repayments of short-term and long-term debt		(2,812	)		(329	)		—			—		(3,141	)
Contribution from primary shareholder		7,654			—			—			—		7,654
Contribution from minority interest		—			4,846			—			—		4,846
Intercompany, net		27,570			(26,777	)		(793	)		—		—
Receipt (payment) of equity distributions		—			141			(141	)		—		—
Net cash provided by (used in) financing activities		28,412			(23,142	)		(828	)		—		4,442
Net Increase (Decrease) in Cash and Cash Equivalents		—			2,635			(1,924	)		—		711
Cash and Cash Equivalents, beginning of year		—			8,532			5,839			—		14,371
Cash and Cash Equivalents, end of year	$	—		$	11,167		$	3,915		$	—	$	15,082

15. Subsequent Event (Unaudited)

On August 13, 2003, the Company completed a series of refinancing transactions that included issuing $150.0 million aggregate principal amount of 9½% senior subordinated notes and entering into a new $435.0 million senior secured term credit facility. The new credit facility consists of a $335.0 million term loan facility and a $100.0 million revolving loan facility. The proceeds from the senior subordinated notes offering and the new credit facility together with cash on hand were used to: (1) repay the $335.2 million outstanding under the Company’s existing credit facility, (2) terminate the Company’s existing interest rate hedging arrangements valued at $23.6 million (3) transfer $141.2 million of cash proceeds to the Company’s parent, Concentra Holding, to enable it to

F-37

CONCENTRA OPERATING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

redeem a portion of its 14% senior discount debentures, (4) pay $4.6 million of accrued interest on the existing credit facility and hedging arrangements and (5) pay approximately $11.3 million of related fees and expenses. In connection with the termination of the existing credit facility, the Company will record approximately $7.8 million of debt extinguishment costs in the third quarter of 2003 for the write-off of the related existing deferred financing fees and other expenses.

F-38

Supplemental Schedule

CONCENTRA OPERATING CORPORATION

Valuation and Qualifying Accounts

For the Years Ended December 31, 2002, 2001 and 2000

(in thousands)

	Beginning Balance		Charged To Income		Acquisitions		Net Deductions From Reserves		Ending Balance
Bad Debt Allowances
2000	$	7,420	$	10,078	$	1,688	$	11,330	$	7,856
2001		7,856		12,684		2,190		13,397		9,333
2002		9,333		15,925		787		12,784		13,261
Contractual Allowances
2000	$	21,100	$	41,924	$	570	$	46,557	$	17,037
2001		17,037		35,941		3,351		35,954		20,375
2002		20,375		53,737		305		45,505		28,912

Unusual charge breakout by major category was as follows:

	Professional Fees			Facility Consolidations			Personnel Related			Other			Total
Balance, December 31, 1999	$	954		$	3,555		$	152		$	2,030		$	6,691
2000 Usage:
First Quarter 1998 Charge		(2	)		(175	)		—			(2	)		(179	)
Fourth Quarter 1998 Charge		—			(494	)		(49	)		(184	)		(727	)
Third Quarter 1999 Charge		(949	)		(708	)		(140	)		(163	)		(1,960	)
Third Quarter 1999 Charge—Change in Estimates		100			(499	)		90			309			—
Total 2000 Usage		(851	)		(1,876	)		(99	)		(40	)		(2,866	)
Balance, December 31, 2000		103			1,679			53			1,990			3,825
2001 Provision:
Fourth Quarter 2001 Accrual		716			4,115			1,892			—			6,723
2001 Usage:
First Quarter 1998 Charge		—			(51	)		—			(70	)		(121	)
Fourth Quarter 1998 Charge		—			(388	)		—			(567	)		(955	)
Third Quarter 1999 Charge		(45	)		(375	)		—			(33	)		(453	)
Fourth Quarter 2001 Accrual		(688	)		(226	)		(136	)		—			(1,050	)
Total 2001 Usage		(733	)		(1,040	)		(136	)		(670	)		(2,579	)
Balance, December 31, 2001		86			4,754			1,809			1,320			7,969
2002 Provision:
Fourth Quarter 2002 Accrual		304			100			50			—			454
2002 Usage:
First Quarter 1998 Charge		—			(27	)		—			—			(27	)
First Quarter 1998 Charge – Change in Estimates		(23	)		(83	)		—			—			(106	)
Fourth Quarter 1998 Charge		—			(284	)		—			—			(284	)
Fourth Quarter 1998 Charge – Change in Estimates		—			(221	)		(53	)		(1,226	)		(1,500	)
Third Quarter 1999 Charge		—			(147	)		—			—			(147	)
Third Quarter 1999 Charge – Change in Estimates		(5	)		(64	)		—			(71	)		(140	)
Fourth Quarter 2001 Accrual		(183	)		(2,715	)		(1,402	)		—			(4,300	)
Fourth Quarter 2001 Accrual – Change in Estimates		155			156			310			—			621
Fourth Quarter 2002 Accrual		(304	)		—			—			—			(304	)
Total 2002 Usage		(360	)		(3,385	)		(1,145	)		(1,297	)		(6,187	)
Balance, December 31, 2002	$	30		$	1,469		$	714		$	23		$	2,236

39

Concentra Operating Corporation

Consolidated Financial Statements as of

June 30, 2003 and December 31, 2002 and for the

Three and Six Months Ended June 30, 2003 and 2002

F-40

CONCENTRA OPERATING CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

	June 30, 2003			December 31, 2002
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	35,979		$	19,002
Accounts receivable, net		175,173			167,561
Prepaid expenses and other current assets		44,669			39,407
Total current assets		255,821			225,970
Property and equipment, net		128,585			134,981
Goodwill and other intangible assets, net		487,518			486,231
Other assets		44,032			41,456
Total assets	$	915,956		$	888,638
LIABILITIES AND STOCKHOLDER’S EQUITY
Current liabilities:
Revolving credit facility	$	—		$	—
Current portion of long-term debt		5,065			3,825
Accounts payable and accrued expenses		111,025			108,513
Total current liabilities		116,090			112,338
Long-term debt, net		474,202			476,001
Deferred income taxes and other liabilities		95,267			90,056
Fair value of hedging arrangements		29,059			33,472
Total liabilities		714,618			711,867
Stockholder’s equity:
Common stock		—			—
Paid-in capital		315,345			311,077
Retained deficit		(114,007	)		(134,306	)
Total stockholder’s equity		201,338			176,771
Total liabilities and stockholder’s equity	$	915,956		$	888,638

The accompanying notes are an integral part of these consolidated financial statements.

F-41

CONCENTRA OPERATING CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in thousands)

	Three Months Ended June 30,						Six Months Ended June 30,
	2003			2002			2003			2002
Revenue:
Health Services	$	126,435		$	123,429		$	244,956		$	226,726
Network Services		61,781			56,260			123,511			113,489
Care Management Services		72,061			74,470			143,961			153,945
Total revenue		260,277			254,159			512,428			494,160
Cost of Services:
Health Services		100,977			99,545			202,350			198,112
Network Services		36,264			35,437			71,031			68,988
Care Management Services		63,572			66,659			127,238			134,031
Total cost of services		200,813			201,641			400,619			401,131
Total gross profit		59,464			52,518			111,809			93,029
General and administrative expenses		29,516			27,127			58,054			49,625
Amortization of intangibles		967			931			2,002			1,863
Operating income		28,981			24,460			51,753			41,541
Interest expense, net		14,610			16,614			29,154			33,048
(Gain) loss on change in fair value of hedging arrangements		(2,226	)		6,374			(4,413	)		1,184
Other, net		736			(623	)		1,383			(1,311	)
Income before income taxes		15,861			2,095			25,629			8,620
Provision for income taxes		3,210			1,418			5,545			4,987
Net income	$	12,651		$	677		$	20,084		$	3,633

The accompanying notes are an integral part of these consolidated financial statements.

F-42

CONCENTRA OPERATING CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

	Six Months Ended June 30,
	2003			2002
Operating Activities:
Net income	$	20,084		$	3,633
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property and equipment		22,895			20,678
Amortization of intangibles		2,002			1,863
(Gain) loss on change in fair value of hedging arrangements		(4,413	)		1,184
Write-off of fixed assets		(33	)		83
Changes in assets and liabilities, net of acquired assets and liabilities:
Accounts receivable, net		(7,290	)		1,781
Prepaid expenses and other assets		(7,799	)		(6,013	)
Accounts payable and accrued expenses		11,461			(15,229	)
Net cash provided by operating activities		36,907			7,980
Investing Activities:
Purchases of property, equipment and other assets		(14,379	)		(17,098	)
Acquisitions, net of cash acquired		(3,735	)		(2,810	)
Proceeds from the licensing of internally-developed software		—			515
Net cash used in investing activities		(18,114	)		(19,393	)
Financing Activities:
Borrowings (payments) under the revolving credit facility, net		—			(6,000	)
Payment of deferred financing costs		—			(1,135	)
Repayments of debt		(3,458	)		(1,190	)
Proceeds from the issuance of debt		1,500			2,500
Contribution from issuance of common stock by parent		242			162
Proceeds from the issuance of common stock to parent		—			53,274
Other		(100	)		(43	)
Net cash provided by (used in) financing activities		(1,816	)		47,568
Net Increase in Cash and Cash Equivalents		16,977			36,155
Cash and Cash Equivalents, beginning of period		19,002			8,950
Cash and Cash Equivalents, end of period	$	35,979		$	45,105
Supplemental Disclosure of Cash Flow Information:
Interest paid, net	$	27,452		$	31,408
Income taxes paid, net	$	1,885		$	1,427
Liabilities and debt assumed in acquisitions	$	435		$	400
Noncash Investing and Financing Activities:
Capital lease obligations	$	1,355		$	—

The accompanying notes are an integral part of these consolidated financial statements.

F-43

CONCENTRA OPERATING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The accompanying unaudited consolidated financial statements have been prepared by Concentra Operating Corporation (the “Company” or “Concentra Operating”) pursuant to the rules and regulations of the Securities and Exchange Commission, and reflect all adjustments (each of which is of a normal, recurring nature) which, in the opinion of management, are necessary for a fair statement of the results of the interim periods presented. Results for interim periods should not be considered indicative of results for a full year. These consolidated financial statements do not include all disclosures associated with the annual consolidated financial statements and, accordingly, should be read in conjunction with the attached Management’s Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements and footnotes for the year ended December 31, 2002, included in the Company’s 2002 Form 10-K/A, where certain terms have been defined. Earnings per share has not been reported for all periods presented, as Concentra Operating is a wholly-owned subsidiary of Concentra Inc. (“Concentra Holding”) and has no publicly held shares.

(1) Reclassifications and Business Combinations

Certain reclassifications have been made in the 2002 financial statements to conform to classifications used in 2003. The consolidated statements of operations for the three months and six months ended June 30, 2002 and the consolidated statements of cash flows for the six months ended June 30, 2002 have been adjusted to include the historical results of Em3 Corporation (“Em3”) and OccMed Systems, Inc. (“OccMed”). Effective December 1, 2002, the Company acquired substantially all of the assets and liabilities of Em3 and OccMed. Because the Company’s controlling stockholder, Welsh, Carson, Anderson & Stowe (“WCAS”), also controlled these two acquired companies, the accounting for these acquisitions was viewed as a reorganization of entities under common control. Accordingly, the historical costs of the acquired companies’ assets and liabilities were utilized as if WCAS contributed their interest in the acquired companies to the Company at their historical cost. The remainder acquired by the Company was accounted for under the purchase method of accounting in accordance with Statement of Financial Accounting Standards No. (“SFAS”) 141, Business Combinations (“SFAS 141”) whereby assets and liabilities are “stepped-up” to fair value with the remainder allocated to goodwill. Accordingly, the Company has consolidated Em3 and OccMed’s historical financial statements with those of the Company, and the equity interest of other investors, which were 34% for Em3 and 31% for OccMed, have been reflected as a minority interest in the Company’s financial statements for periods prior to December 1, 2002. The Company’s net income for the three months and six months ended June 30, 2002 was reduced by $1.8 million and $4.0 million, respectively, as a result of the historical restatement for the Em3 and OccMed acquisitions. As a result, the amounts reported in the accompanying consolidated financial statements of the Company differ from amounts previously reported in the Company’s Form 10-Q for the quarter ended June 30, 2002.

(2) Stock Based Compensation Plans

Concentra Holding issues stock options to the Company’s employees and outside directors. The Company accounts for these plans under APB Opinion No. 25, Accounting for Stock Issued to Employees, under which no compensation cost has been recognized related to stock option grants when the exercise price is equal to the market price on the date of grant.

The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because our employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options.

For purposes of disclosures pursuant to SFAS 123, as amended by SFAS 148, the estimated fair value of options is amortized to expense over the options’ vesting period. Had compensation cost for these plans been determined consistent with SFAS 123, the Company’s net income would have been decreased to the following supplemental pro forma net income (loss) amounts (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2003			2002			2003			2002
Net income:
As reported	$	12,651		$	677		$	20,084		$	3,633
Deduct: Incremental stock-based employee compensation expense determined under the fair value method for all awards, net of related tax effects		(1,193	)		(751	)		(2,303	)		(1,644	)
Supplemental pro forma	$	11,458		$	(74	)	$	17,781		$	1,989

F-44

CONCENTRA OPERATING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

For purposes of this disclosure, the fair value of each option granted is estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions used:

	Three Months Ended June 30,				Six Months Ended June 30,
	2003		2002		2003		2002
Risk-free interest rates	2.3	%	4.4	%	2.7	%	4.6	%
Expected volatility	18.4	%	28.8	%	18.4	%	28.8	%
Expected dividend yield	—		—		—		—
Expected weighted average life of options in years	5.0		6.0		5.0		6.0

(3) Recent Accounting Pronouncements

In July 2001, the Financial Accounting Standards Board (the “FASB”) issued SFAS 143, Accounting for Asset Retirement Obligations (“SFAS 143”). SFAS 143 addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. The statement requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred and capitalized as part of the carrying amount of the long-lived asset. The Company adopted SFAS 143 on January 1, 2003. The adoption did not have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

In June 2002, the FASB issued SFAS 146, Accounting for Costs Associated with Exit or Disposal Activities (“SFAS 146”). SFAS 146 addresses the accounting for costs to terminate a contract that is not a capital lease, costs to consolidate facilities and relocate employees and involuntary termination benefits under one-time benefit arrangements that are not an ongoing benefit program or an individual deferred compensation contract. A liability for contract termination costs should be recognized and measured at fair value when either the contract is terminated or the entity ceases to use the right conveyed by the contract. A liability for one-time termination benefits should be recognized and measured at fair value at the communication date if the employee would not be retained beyond a minimum retention period (i.e., either a legal notification period or 60 days if no legal requirement exists). For employees who will be retained beyond the minimum retention period, a liability should be accrued ratably over the future service period. The Company adopted SFAS 146 on January 1, 2003. The adoption did not have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

In December 2002, the FASB issued SFAS 148, Accounting for Stock-Based Compensation—Transition and Disclosure (“SFAS 148”). SFAS 148 amends SFAS 123, Accounting for Stock-Based Compensation (“SFAS 123”), to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS 148 amends the disclosure requirements of SFAS 123 to require more prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The additional disclosure requirements of SFAS 148 are effective for fiscal years ending after December 15, 2002. The Company has elected to continue to follow the intrinsic value method of accounting as prescribed by Accounting Principles Board (“APB”) Opinion No. 25, Accounting for Stock Issued to Employees, to account for employee stock options. See “Note 2, Stock Based Compensation Plans” for the disclosures required by SFAS 148.

In April 2003, the FASB issued SFAS 149, Amendment of Statement of 133 on Derivative Instruments and Hedging Activities (“SFAS 149”). SFAS 149 amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under SFAS 133, Accounting for Derivative Instruments and Hedging Activities. SFAS 149 is generally effective for contracts entered into or modified after June 30, 2003 and is not expected to have a material impact on the Company’s financial statements.

In May 2003, the FASB issued SFAS 150, Accounting for Certain Instruments with Characteristics of Both Liability and Equity (“SFAS 150”). SFAS 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. SFAS 150 requires that an issuer classify a financial instrument that is within its scope, which may have previously been reported as equity, as a liability. This statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. The Company does not anticipate any financial impact upon the adoption of this statement.

F-45

CONCENTRA OPERATING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

(4) Goodwill and Other Intangible Assets

The net carrying value of goodwill and other intangible assets is comprised of the following (in thousands):

	June 30, 2003			December 31, 2002
Amortized intangible assets, gross:
Customer contracts	$	6,190		$	6,190
Covenants not to compete		4,305			4,305
Customer lists		3,420			3,420
Servicing contracts		3,293			3,293
Licensing and royalty agreements		285			285
		17,493			17,493
Accumulated amortization of amortized intangible assets:
Customer contracts		(2,556	)		(1,770	)
Covenants not to compete		(2,018	)		(1,411	)
Customer lists		(2,823	)		(2,430	)
Servicing contracts		(549	)		(384	)
Licensing and royalty agreements		(176	)		(123	)
		(8,122	)		(6,118	)
Amortized intangible assets, net		9,371			11,375
Non-amortized intangible assets:
Goodwill		477,993			474,702
Trademarks		154			154
	$	487,518		$	486,231

The change in the net carrying amount of amortized intangible assets is due to amortization.

The net carrying value of goodwill by operating segment is as follows (in thousands):

	June 30, 2003		December 31, 2002
Health Services	$	247,017	$	243,726
Network Services		184,902		184,902
Care Management Services		46,074		46,074
	$	477,993	$	474,702

Amortization expense for intangible assets with finite lives was $1.0 million and $0.9 million for the three months ended June 30, 2003 and 2002, respectively and $2.0 million and $1.9 million for the six months ended June 30, 2003 and 2002, respectively. Estimated amortization expense on intangible assets with finite lives for the five succeeding fiscal years ending December 31 is as follows (in thousands):

2003	$	3,912
2004		3,293
2005		2,031
2006		483
2007		393

(5) Revolving Credit Facility and Long-Term Debt

The Company’s long-term debt as of June 30, 2003, and December 31, 2002, consisted of the following (in thousands):

	June 30, 2003			December 31, 2002
Term Facilities:
Tranche B due 2006	$	223,462		$	224,626
Tranche C due 2007		111,732			112,314
13.0% Senior Subordinated Notes due 2009		142,500			142,500
Other		1,573			386
		479,267			479,826
Less: Current maturities		(5,065	)		(3,825	)
Long-term debt, net	$	474,202		$	476,001

F-46

CONCENTRA OPERATING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

The Company had no revolving credit borrowings at June 30, 2003 and December 31, 2002, respectively. As of June 30, 2003, and December 31, 2002, accrued interest was $11.4 million.

In February 2003, the Company entered into a five-year capital lease for software. The Company paid $1.5 million to the lessor at the lease execution, with the remaining $1.5 million to be paid in February 2004. At the end of the five-year term, the Company has the option to extend the term of the agreement. The software will be amortized over the primary term of the lease.

The Company has a credit agreement (the “Credit Facility”) with a consortium of banks, providing for term loans and a $100 million revolving credit facility. The term loans were issued as a $250 million term loan (the “Tranche B Term Loan”) and a $125 million term loan (the “Tranche C Term Loan”) bearing interest, at the Company’s option, at the Applicable Base Rate (“ABR”), as defined, plus 2.25% and 2.50%, respectively, or the one, two, three, or six month Eurodollar Rate, as defined, plus 3.25% and 3.50%, respectively. In 2000, the Company and its lenders amended and restated the Credit Facility whereby the Tranche B Term Loan and the Tranche C Term Loan bear interest, at the Company’s option, at the ABR, as defined, plus 3.00% and 3.25%, respectively, or the Eurodollar Rate, as defined, plus 4.00% and 4.25%, respectively. In 2002, the Company prepaid $16.7 million and $8.3 million of its Tranche B Term Loan and Tranche C Term Loan, respectively. The Tranche B Term Loan matures on June 30, 2006, and requires quarterly principal payments of $0.6 million through June 30, 2005, and $54.7 million for each of the remaining four quarters or until all principal is repaid. The Tranche C Term Loan matures on June 30, 2007, and requires quarterly principal payments of $0.3 million through June 30, 2006, and $27.1 million for each of the remaining four quarters or until all principal is repaid. The Revolving Credit Facility provides for borrowing up to $100 million and matures on August 17, 2005.

The Credit Facility and the 13% senior subordinated notes (the “13% Subordinated Notes”) contain certain customary covenants, including, without limitation, restrictions on the incurrence of indebtedness, the sale of assets, certain mergers and acquisitions, the payment of dividends on the Company’s capital stock, the repurchase or redemption of capital stock, transactions with affiliates, investments, cross default provisions with other indebtedness of Concentra Operating and Concentra Holding, capital expenditures and changes in control of the Company. Under the Credit Facility, the Company is also required to satisfy certain financial covenant ratio tests including leverage ratios, interest coverage ratios and fixed charge coverage ratios. The Company was in compliance with its covenants, including its financial covenant ratio tests, for the two quarters of 2003. These ratio tests become more restrictive for future quarters through the third quarter of 2005 compared to the levels that the Company was required to meet for 2002 and the first half of 2003. The anticipated new senior credit agreement will also contain financial covenant ratio tests of a similar type, that will also become increasingly more restrictive in future periods. The Company’s ability to be in compliance with these more restrictive ratios will be dependent on its ability to increase its cash flows over current levels. The Company believes it will be in compliance with the covenants for the next twelve months.

The Company’s Credit Facility also contains prepayment requirements that occur if the Company’s financial performance exceeds certain prescribed levels. If the Company has excess cash flow, as defined in the agreement, it is subject to mandatory principal repayments. The Company was not subject to these mandatory repayments in the first six months of 2002 or 2003.

The fair value of the Company’s borrowings under the Credit Facility was $334.4 million and $323.5 million, as of June 30, 2003 and December 31, 2002, respectively. The fair value of the Company’s 13% Subordinated Notes was $154.6 million and $143.2 million at June 30, 2003 and December 31, 2002, respectively. The fair values of the financial instruments were determined utilizing available market information. The use of different market assumptions or estimation methodologies could have a material effect on the estimated fair value amounts.

(6) Subsequent Event

On August 13, 2003, the Company completed a series of refinancing transactions that included issuing $150.0 million aggregate principal amount of 9½% senior subordinated notes and entering into a new $435.0 million senior secured term credit facility. The new credit facility consists of a $335.0 million term loan facility and a $100.0 million revolving loan facility. The proceeds from the senior subordinated notes offering and the new credit facility together with cash on hand were used to: (1) repay the $335.2 million outstanding under the Company’s existing credit facility, (2) terminate the Company’s existing interest rate hedging arrangements valued at $23.6 million (3) transfer $141.2 million of cash proceeds to the Company’s parent, Concentra Holding, to enable it to redeem a portion of its 14% senior discount debentures, (4) pay $4.6 million of accrued interest on the existing credit facility and hedging arrangements and (5) pay approximately $11.3 million of related fees and expenses. In connection with the termination of the existing credit facility, the Company will record approximately $7.8 million of debt extinguishment costs in the third quarter of 2003 for the write-off of the related existing deferred financing fees and other expenses.

F-47

CONCENTRA OPERATING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

(7) Unusual Charge Reserves

During the six months ended June 30, 2003, the Company paid approximately $0.8 million related to the unusual charges that occurred in the first quarter of 1998, fourth quarter of 1998, third quarter of 1999, fourth quarter of 2001 and fourth quarter of 2002. At June 30, 2003, approximately $1.4 million of the unusual cost accrual remained for facility obligations with terms expiring through 2006, costs related to personnel reductions and other unusual charges. The Company anticipates that the majority of this liability will be paid over the next 12 months.

(8) Changes in Stockholder’s Equity

In addition to the effects on Stockholder’s Equity from the Company’s 2003 results of operations that decreased the retained deficit, the Company’s paid-in capital increased in 2003 on a year to date basis primarily due to $3.9 million of tax benefits from Concentra Holding.

(9) Segment Information

Operating segments represent components of the Company’s business that are evaluated regularly by key management in assessing performance and resource allocation. The Company’s comprehensive services are organized into the following segments: Health Services, Network Services and Care Management Services.

Health Services provides specialized injury and occupational healthcare services to employers through its centers. Health Services delivers primary and rehabilitative care, including the diagnosis, treatment and management of work-related injuries and illnesses. Health Services also provides non-injury, employment-related health services, including physical examinations, pre-placement substance abuse testing, job-specific return to work evaluations and other related programs. To meet the requirements of large employers whose workforce extends beyond the geographic coverage available to the Company’s centers, this segment has also developed a network of select occupational healthcare providers that use the Company’s proprietary technology to benchmark treatment methodologies and outcomes achieved. Health Services, and the joint ventures Health Services controls, own all the operating assets of the occupational healthcare centers, including leasehold interests and medical equipment.

The Network Services segment includes those businesses that primarily involve the review and repricing of medical provider bills. For these services, the Company is primarily compensated based on the degree to which the Company achieves savings for its clients, as well as on a fee per bill or claims basis. This segment includes the Company’s specialized preferred provider organization, provider bill repricing and review, out-of-network bill review and first report of injury services.

Care Management Services includes the Company’s professional services aimed at curtailing the cost of workers’ compensation and auto insurance claims through field case management, telephonic case management, independent medical examinations and utilization management. These services also concentrate on monitoring the timing and appropriateness of medical care.

Revenue from individual customers, revenue between business segments and revenue, operating profit and identifiable assets of foreign operations are not significant.

F-48

CONCENTRA OPERATING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

The Company’s unaudited financial data on a segment basis were as follows (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2003			2002			2003			2002
Revenue:
Health Services	$	126,435		$	123,429		$	244,956		$	226,726
Network Services		61,781			56,260			123,511			113,489
Care Management Services		72,061			74,470			143,961			153,945
		260,277			254,159			512,428			494,160
Health Services		25,458			23,884			42,606			28,614
Network Services		25,517			20,823			52,480			44,501
Care Management Services		8,489			7,811			16,723			19,914
		59,464			52,518			111,809			93,029
Operating income (loss):
Health Services		18,147			16,622			28,313			15,356
Network Services		16,010			13,304			33,573			29,766
Care Management Services		1,545			1,168			3,372			8,002
Corporate general and administrative expenses		(6,721	)		(6,634	)		(13,505	)		(11,583	)
		28,981			24,460			51,753			41,541
Interest expense, net		14,610			16,614			29,154			33,048
(Gain) loss on change in fair value of hedging arrangements		(2,226	)		6,374			(4,413	)		1,184
Other, net		736			(623	)		1,383			(1,311	)
Income before income taxes		15,861			2,095			25,629			8,620
Provision for income taxes		3,210			1,418			5,545			4,987
Net income	$	12,651		$	677		$	20,084		$	3,633

(10) Condensed Consolidating Financial Information

As discussed in Note 5, Revolving Credit Facility and Long-Term Debt, the 13% Subordinated Notes and the Credit Facility are unconditionally guaranteed by, and secured by a pledge of stock and assets of, each and every current wholly-owned subsidiary. The Company has certain subsidiaries that are not wholly-owned and do not guarantee the 13% Subordinated Notes and the Credit Facility. Presented below are condensed consolidating balance sheets as of June 30, 2003 and December 31, 2002, the condensed consolidating statements of operations for the six months ended June 30, 2003 and 2002, and the condensed consolidating statements of cash flows for the six months ended June 30, 2003 and 2002 of Concentra Operating (Parent and Issuer), guarantor subsidiaries (Guarantor Subsidiaries) and the subsidiaries that are not guarantors (Non-Guarantor Subsidiaries).

Investments in subsidiaries are accounted for by each Parent using the equity method of accounting. The financial information for the guarantor and non-guarantor subsidiaries are each presented on a combined basis. The elimination entries primarily eliminate investments in subsidiaries and intercompany balances and transactions. Intercompany management fees of $2.3 million are included in general and administrative expenses of the non-guarantor subsidiaries for the six months ended June 30, 2003 and 2002, respectively. These amounts are reflected as a reduction of general and administrative expenses for the guarantor subsidiaries. Separate financial statements for the guarantor and non-guarantor subsidiaries are not presented because management believes such financial statements would not be meaningful to investors. All information in the tables below is presented in thousands.

F-49

CONCENTRA OPERATING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Condensed Consolidating Balance Sheets:

	At June 30, 2003
	Parent		Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminations			Total
Current assets:
Cash and cash equivalents	$	—	$	26,312		$	9,667	$	—		$	35,979
Accounts receivable, net		—		163,073			12,100		—			175,173
Prepaid expenses and other current assets		866		42,446			1,357		—			44,669
Total current assets		866		231,831			23,124		—			255,821
Investment in subsidiaries		751,759		32,083			—		(783,842	)		—
Property and equipment, net		—		120,630			7,955		—			128,585
Goodwill and other intangible assets, net		—		463,532			23,986		—			487,518
Other assets		24,211		19,725			96		—			44,032
Total assets	$	776,836	$	867,801		$	55,161	$	(783,842	)	$	915,956
Current liabilities:
Revolving credit facility	$	—	$	—		$	—	$	—		$	—
Current portion of long-term debt		3,492		1,573			—		—			5,065
Accounts payable and accrued expenses		11,367		96,346			3,312		—			111,025
Total current liabilities		14,859		97,919			3,312		—			116,090
Long-term debt, net		474,202		—			—		—			474,202
Deferred income taxes and other liabilities		12,470		65,044			—		17,753			95,267
Fair value of hedging arrangements		29,059		—			—		—			29,059
Intercompany		44,908		(46,921	)		2,013		—			—
Total liabilities		575,498		116,042			5,325		17,753			714,618
Stockholder’s equity		201,338		751,759			49,836		(801,595	)		201,338
Total liabilities and stockholder’s equity	$	776,836	$	867,801		$	55,161	$	(783,842	)	$	915,956

	At December 31, 2002
	Parent		Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
Current assets:
Cash and cash equivalents	$	—	$	13,060		$	5,942		$	—		$	19,002
Accounts receivable, net		—		156,751			10,810			—			167,561
Prepaid expenses and other current assets		867		37,183			1,357			—			39,407
Total current assets		867		206,994			18,109			—			225,970
Investment in subsidiaries		715,524		31,713			—			(747,237	)		—
Property and equipment, net		—		126,250			8,731			—			134,981
Goodwill and other intangible assets, net		—		462,240			23,991			—			486,231
Other assets		24,785		16,576			95			—			41,456
Total assets	$	741,176	$	843,773		$	50,926		$	(747,237	)	$	888,638
Current liabilities:
Revolving credit facility	$	—	$	—		$	—		$	—		$	—
Current portion of long-term debt		3,492		333			—			—			3,825
Accounts payable and accrued expenses		11,694		94,050			2,769			—			108,513
Total current liabilities		15,186		94,383			2,769			—			112,338
Long-term debt, net		475,948		53			—			—			476,001
Deferred income taxes and other liabilities		12,470		60,195			—			17,391			90,056
Fair value of hedging arrangements		33,472		—			—			—			33,472
Intercompany		27,329		(26,382	)		(947	)		—			—
Total liabilities		564,405		128,249			1,822			17,391			711,867
Stockholder’s equity		176,771		715,524			49,104			(764,628	)		176,771
Total liabilities and stockholder’s equity	$	741,176	$	843,773		$	50,926		$	(747,237	)	$	888,638

F-50

CONCENTRA OPERATING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Condensed Consolidating Statements of Operations:

	Three Months Ended June 30, 2003
	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
Total revenue	$	—		$	242,119		$	20,560		$	(2,402	)	$	260,277
Total cost of services		—			187,220			15,995			(2,402	)		200,813
Total gross profit		—			54,899			4,565			—			59,464
General and administrative expenses		109			27,826			1,581			—			29,516
Amortization of intangibles		—			965			2			—			967
Operating income (loss)		(109	)		26,108			2,982			—			28,981
Interest expense, net		14,583			36			(9	)		—			14,610
Gain on change in fair value of hedging arrangements		(2,226	)		—			—			—			(2,226	)
Other, net		—			736			—			—			736
Income (loss) before income taxes		(12,466	)		25,336			2,991			—			15,861
Provision (benefit) for income taxes		(4,363	)		7,573			—			—			3,210
Income (loss) before equity earnings		(8,103	)		17,763			2,991			—			12,651
Equity earnings in subsidiaries		(20,754	)		—			—			20,754			—
Net income (loss)	$	12,651		$	17,763		$	2,991		$	(20,754	)	$	12,651
	Three Months Ended June 30, 2002
	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
Total revenue	$	—		$	237,725		$	18,635		$	(2,201	)	$	254,159
Total cost of services		—			188,833			15,009			(2,201	)		201,641
Total gross profit		—			48,892			3,626			—			52,518
General and administrative expenses		—			25,529			1,598			—			27,127
Amortization of intangibles		—			928			3			—			931
Operating income		—			22,435			2,025			—			24,460
Interest expense, net		16,535			87			(8	)		—			16,614
Loss on change in fair value of hedging arrangements		6,374			—			—			—			6,374
Other, net		—			(623	)		—			—			(623	)
Income (loss) before income taxes		(22,909	)		22,971			2,033			—			2,095
Provision (benefit) for income taxes		(8,018	)		9,436			—			—			1,418
Income (loss) before equity earnings		(14,891	)		13,535			2,033			—			677
Equity earnings in subsidiaries		(15,568	)		—			—			15,568			—
Net income (loss)	$	677		$	13,535		$	2,033		$	(15,568	)	$	677

F-51

CONCENTRA OPERATING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

	Six Months Ended June 30, 2003
	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
Total revenue	$	—		$	477,601		$	39,303		$	(4,476	)	$	512,428
Total cost of services		—			374,005			31,090			(4,476	)		400,619
Total gross profit		—			103,596			8,213			—			111,809
General and administrative expenses		223			54,806			3,025			—			58,054
Amortization of intangibles		—			1,997			5			—			2,002
Operating income (loss)		(223	)		46,793			5,183			—			51,753
Interest expense, net		29,038			129			(13	)		—			29,154
Gain on change in fair value of hedging arrangements		(4,413	)		—			—			—			(4,413	)
Other, net		—			1,383			—			—			1,383
Income (loss) before income taxes		(24,848	)		45,281			5,196			—			25,629
Provision (benefit) for income taxes		(8,697	)		14,242			—			—			5,545
Income (loss) before equity earnings		(16,151	)		31,039			5,196			—			20,084
Equity earnings in subsidiaries		(36,235	)		—			—			36,235			—
Net income (loss)	$	20,084		$	31,039		$	5,196		$	(36,235	)	$	20,084
	Six Months Ended June 30, 2002
	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
Total revenue	$	—		$	462,408		$	35,804		$	(4,052	)	$	494,160
Total cost of services		—			375,951			29,232			(4,052	)		401,131
Total gross profit		—			86,457			6,572			—			93,029
General and administrative expenses		—			46,521			3,104			—			49,625
Amortization of intangibles		—			1,857			6			—			1,863
Operating income		—			38,079			3,462			—			41,541
Interest expense, net		32,988			77			(17	)		—			33,048
Loss on change in fair value of hedging arrangements		1,184			—			—			—			1,184
Other, net		—			(1,311	)		—			—			(1,311	)
Income (loss) before income taxes		(34,172	)		39,313			3,479			—			8,620
Provision (benefit) for income taxes		(11,960	)		16,947			—			—			4,987
Income (loss) before equity earnings		(22,212	)		22,366			3,479			—			3,633
Equity earnings in subsidiaries		(25,845	)		—			—			25,845			—
Net income (loss)	$	3,633		$	22,366		$	3,479		$	(25,845	)	$	3,633

F-52

CONCENTRA OPERATING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Condensed Consolidating Statement of Cash Flows:

	Six Months Ended June 30, 2003
	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations		Total
Operating Activities:
Net cash provided by (used in) operating activities	$	(15,975	)	$	47,551		$	5,331		$	—	$	36,907
Investing Activities:
Purchases of property, equipment and other assets		—			(14,279	)		(100	)		—		(14,379	)
Acquisitions, net of cash acquired		—			(3,735	)		—			—		(3,735	)
Net cash used in investing activities		—			(18,014	)		(100	)		—		(18,114	)
Financing Activities:
Repayments of debt		(1,746	)		(1,712	)		—			—		(3,458	)
Proceeds from the issuance of debt		—			1,500			—			—		1,500
Contribution from issuance of common stock by parent		242			—			—			—		242
Other		(100	)		—			—			—		(100	)
Intercompany, net		17,579			(20,538	)		2,959			—		—
Receipt (payment) of equity distributions		—			4,465			(4,465	)		—		—
Net cash provided by (used in) financing activities		15,975			(16,285	)		(1,506	)		—		(1,816	)
Net Increase in Cash and Cash Equivalents		—			13,252			3,725			—		16,977
Cash and Cash Equivalents, beginning of period		—			13,060			5,942			—		19,002
Cash and Cash Equivalents, end of period	$	—		$	26,312		$	9,667		$	—	$	35,979
	Six Months Ended June 30, 2002
	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations		Total
Operating Activities:
Net cash provided by (used in) operating activities	$	(14,981	)	$	18,516		$	4,445		$	—	$	7,980
Investing Activities:
Purchases of property, equipment and other assets		—			(16,534	)		(564	)		—		(17,098	)
Acquisitions, net of cash acquired		—			(2,810	)		—			—		(2,810	)
Proceeds from licensing of internally-developed software		—			515			—			—		515
Net cash used in investing activities		—			(18,829	)		(564	)		—		(19,393	)
Financing Activities:
Borrowings (payments) under revolving credit facility, net		(6,000	)		—			—			—		(6,000	)
Payment of deferred financing costs		(1,135	)		—			—			—		(1,135	)
Repayments of debt		(937	)		(253	)		—			—		(1,190	)
Proceeds from the issuance of debt		—			2,500			—			—		2,500
Contribution from issuance of common stock by parent		162			—			—			—		162
Proceeds from issuance of common stock to parent		53,274			—			—			—		53,274
Other		(43	)		—			—			—		(43	)
Intercompany, net		9,671			(9,205	)		(466	)		—		—
Receipt (payment) of equity distributions		—			2,532			(2,532	)		—		—
Net cash provided by (used in) financing activities		54,992			(4,426	)		(2,998	)		—		47,568
Net Increase in Cash and Cash Equivalents		40,011			(4,739	)		883			—		36,155
Cash and Cash Equivalents, beginning of period		—			5,722			3,228			—		8,950
Cash and Cash Equivalents, end of period	$	40,011		$	983		$	4,111		$	—	$	45,105

F-53

CONCENTRA OPERATING CORPORATION

COMPUTATION OF RATIOS

Ratio of Pro Forma Earnings to Fixed Charges

(Unaudited)

	Year Ended December 31, 2002			Twelve Months Ended June 30, 2003
	(dollars in thousands)
Pro Forma Earnings:
Income (loss) before income taxes	$	6,940		$	24,739
Less: Equity in earnings of unconsolidated subsidiaries net of related distributions		(850	)		1,617
Fixed charges		69,646			64,749
Total pro forma earnings(1)	$	75,736		$	91,105
Pro Forma Fixed Charges:
Interest expense	$	58,067		$	53,305
Interest portion of rent expense		11,579			11,444
Total fixed charges	$	69,646		$	64,749
Ratio of pro forma earnings to fixed charges		1.1x			1.4x

(1) For purposes of determining the ratio of earnings to fixed charges, earnings include income from continuing operations before income taxes adjusted for fixed charges and equity in earnings of unconsolidated subsidiaries and related distributions. Fixed charges consist of interest on debt, including amortization of debt issuance costs, and one-fourth of rent expenses, which we estimate as the interest component of such rentals.

F-54

CONCENTRA OPERATING CORPORATION

COMPUTATION OF RATIOS

Ratio of Earnings to Fixed Charges

(Unaudited)

	Years Ended December 31,															Six Months Ended June 30,
	1998			1999			2000			2001			2002			2002			2003
	(dollars in thousands)
Earnings:
Income (loss) before income taxes	$	41,794		$	(17,512	)	$	(2,360	)	$	(14,650	)	$	1,026		$	8,620		$	25,629
Less: Equity in earnings of unconsolidated subsidiaries net of related distributions		(218	)		(474	)		(1,210	)		(3,015	)		(850	)		(1,055	)		1,412
Fixed charges		25,282			44,126			77,438			77,042			75,560			39,111			35,003
Total earnings(1)	$	66,858		$	26,140		$	73,868		$	59,377		$	75,736		$	46,676		$	62,044
Fixed Charges:
Interest expense	$	18,021		$	35,779		$	68,932		$	67,250		$	63,981		$	33,256		$	29,284
Interest portion of rent expense		7,261			8,347			8,506			9,792			11,579			5,855			5,719
Total fixed charges	$	25,282		$	44,126		$	77,438		$	77,042		$	75,560		$	39,111		$	35,003
Ratio of earnings to fixed charges		2.6x			0.6x			1.0x			0.8x			1.0x			1.2x			1.8x

(1) For purposes of determining the ratio of earnings to fixed charges, earnings include income from continuing operations before income taxes adjusted for fixed charges and equity in earnings of unconsolidated subsidiaries and related distributions. Fixed charges consist of interest on debt, including amortization of debt issuance costs, and one-fourth of rent expenses, which we estimate as the interest component of such rentals.

F-55

ANNEX A

LETTER OF TRANSMITTAL

TO TENDER

OUTSTANDING 9½% SENIOR SUBORDINATED NOTES DUE 2010

OF

CONCENTRA OPERATING CORPORATION

PURSUANT TO THE EXCHANGE OFFER AND PROSPECTUS DATED                          , 2003

THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON                     , 2003 (THE “EXPIRATION DATE”), UNLESS THE EXCHANGE OFFER IS EXTENDED BY THE COMPANY.

The Exchange Agent for the Exchange Offer is:

The Bank of New York

Corporate Trust Operations Reorganization Unit

101 Barclay Street 7 East

New York, New York 10286

Attention: Corporate Trust Operations Reorganization Unit

IF YOU WISH TO EXCHANGE CURRENTLY OUTSTANDING 9½% SENIOR SUBORDINATED NOTES DUE 2010 (THE “OLD NOTES”) FOR AN EQUAL AGGREGATE PRINCIPAL AMOUNT OF NEW 9½% SENIOR SUBORDINATED NOTES DUE 2010 PURSUANT TO THE EXCHANGE OFFER, YOU MUST VALIDLY TENDER (AND NOT WITHDRAW) OLD NOTES TO THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE BY CAUSING AN AGENT’S MESSAGE TO BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO SUCH TIME.

A-1

The undersigned hereby acknowledges receipt and review of the Prospectus, dated             , 2003 (the “Prospectus”), of Concentra Operating Corporation, a Nevada corporation (the “Company”), and this Letter of Transmittal (the “Letter of Transmittal”), which together describe the Company’s offer to exchange (the “Exchange Offer”) its 9½% Senior Subordinated Notes due 2010 (the “New Notes”) that have been registered under the Securities Act of 1933, as amended (the “Securities Act”), for a like principal amount of its issued and outstanding 9½% Senior Subordinated Notes due 2010 (the “Old Notes”). Capitalized terms used but not defined herein have the respective meaning given to them in this Prospectus.

The Company reserves the right, at any time or from time to time, to extend the Exchange Offer at its discretion, in which event the term “Expiration Date” shall mean the latest date to which the Exchange Offer is extended. The Company shall notify the Exchange Agent and each registered holder of the Old Notes of any extension by oral or written notice prior to 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date.

This Letter of Transmittal is to be used by holders of the Old Notes. Tender of Old Notes is to be made according to the Automated Tender Offer Program (“ATOP”) of the Depository Trust Company (“DTC”) pursuant to the procedures set forth in the prospectus under the caption “The Exchange Offer—Procedures for Tendering.” DTC participants that are accepting the Exchange Offer must transmit their acceptance to DTC, which will verify the acceptance and execute a book-entry delivery to the Exchange Agent’s DTC account. DTC will then send a computer generated message known as an “agent’s message” to the exchange agent for its acceptance. For you to validly tender your Old notes in the Exchange Offer, the Exchange Agent must receive prior to the Expiration Date, an agent’s message under the ATOP procedures that confirms that:

• DTC has received your instructions to tender your Old Notes; and

• You agree to be bound by the terms of this Letter of Transmittal

BY USING THE ATOP PROCEDURES TO TENDER OLD NOTES, YOU WILL NOT BE REQUIRED TO DELIVER THIS LETTER OF TRANSMITTAL TO THE EXCHANGE AGENT. HOWEVER, YOU WILL BE BOUND BY ITS TERMS, AND YOU WILL BE DEEMED TO HAVE MADE THE ACKNOWLEDGMENTS AND THE REPRESENTATIONS AND WARRANTIES IT CONTAINS, JUST AS IF YOU HAD SIGNED IT.

A-2

PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.

Ladies and Gentlemen:

1. By tendering Old Notes in the Exchange Offer, you acknowledge receipt of the Prospectus and this Letter of Transmittal.

2. By tendering Old Notes in the Exchange Offer, you represent and warrant that you have full authority to tender the Old Notes described above and will, upon request, execute and deliver any additional documents deemed by the Company to be necessary or desirable to complete the tender of Old Notes.

3. The tender of the Old Notes pursuant to all of the procedures set forth in the Prospectus will constitute an agreement between you and the Company as to the terms and conditions set forth in the Prospectus.

4. The Exchange Offer is being made in reliance upon interpretations contained in no-action letters issued to third parties by the staff of the Securities and Exchange Commission (the “SEC”), including Exxon Capital Holdings Corp., SEC No-Action Letter (available April 13, 1989), Morgan Stanley & Co., Inc., SEC No-Action Letter (available June 5, 1991) and Shearman & Sterling, SEC No-Action Letter (available July 2, 1993), that the New Notes issued in exchange for the Old Notes pursuant to the Exchange Offer may be offered for resale, resold and otherwise transferred by holders thereof (other than a broker-dealer who purchased Old Notes exchanged for such New Notes directly from the Company to resell pursuant to Rule 144A or any other available exemption under the Securities Act of 1933, as amended (the “Securities Act”) and any such holder that is an “affiliate” of the Company within the meaning of Rule 405 under the Securities Act, provided that such New Notes are acquired in the ordinary course of such holders’ business and such holders are not participating in, and have no arrangement with any person to participate in, the distribution of such New Notes.

5. By tendering Old Notes in the Exchange Offer, you represent and warrant that:

a. the New Notes acquired pursuant to the Exchange Offer are being obtained in the ordinary course of your business, whether or not you are the holder;

b. neither you nor any such other person is engaging in or intends to engage in a distribution of such New Notes;

c. neither you nor any such other person has an arrangement or understanding with any person to participate in the distribution of such New Notes; and

d. neither the holder nor any such other person is an “affiliate,” as such term is defined under Rule 405 promulgated under the Securities Act, of the Company.

6. You may, if you are unable to make all of the representations and warranties contained in Item 5 above and as otherwise permitted in the Registration Rights Agreement (as defined below), elect to have your Old Notes registered in the shelf registration statement described in the Registration Rights Agreement, dated as of August 13, 2003 (the “Registration Rights Agreement”), by and among the Company, the Guarantors (as defined therein) and the Initial Purchasers (as defined therein). Such election may be made only by notifying the Company in writing at 5080 Spectrum Drive, Suite 400 West, Addison, Texas 75001, Attention: General Counsel. By making such election, you agree, as a holder of Old Notes participating in a shelf registration, to indemnify and hold harmless the Company, each of the directors of the Company, each of the officers of the Company who signs such shelf registration statement, each person who controls the Company within the meaning of either the Securities Act or the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and each other holder of Old Notes, from and against any and all losses, claims, damages or liabilities caused by any untrue statement or alleged untrue statement of a material fact contained in any shelf registration statement or prospectus, or in any supplement thereto or amendment thereof, or caused by the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; but only with respect to information relating to the undersigned furnished in writing by or on behalf of the undersigned expressly for use in a shelf registration statement, a prospectus or any amendments or supplements thereto. Any such indemnification shall be governed by the terms and subject to the conditions set forth in the Registration Rights Agreement, including, without limitation, the provisions regarding notice, retention of counsel, contribution and payment of expenses set forth therein. The above summary of the indemnification provision of the Registration Rights Agreement is not intended to be exhaustive and is qualified in its entirety by the Registration Rights Agreement.

7. If you are a broker-dealer that will receive New Notes for its own account in exchange for Old Notes that were acquired as a result of market-making activities or other trading activities, you acknowledge, by tendering Old Notes in the Exchange Offer, that you will deliver a prospectus in connection with any resale of such New Notes; however, by so acknowledging and by delivering a prospectus, you will not be deemed to admit that you are an “underwriter” within the meaning of the Securities Act. If you are a broker-

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dealer and Old Notes held for your own account were not acquired as a result of market-making or other trading activities, such Old Notes cannot be exchanged pursuant to the Exchange Offer.

8. Any of your obligations hereunder shall be binding upon your successors, assigns, executors, administrators, trustees in bankruptcy and legal and personal representatives of the undersigned.

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INSTRUCTIONS

FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER

1. Book-Entry confirmations.

Any confirmation of a book-entry transfer to the Exchange Agent’s account at DTC of Old Notes tendered by book-entry transfer (a “Book-Entry Confirmation”), as well as an agent’s message, and any other documents required by this Letter of Transmittal, must be received by the Exchange Agent at its address set forth herein prior to 5:00 P.M., New York City time, on the Expiration Date.

2. Partial Tenders.

Tenders of Old Notes will be accepted only in integral multiples of $1,000. The entire principal amount of Old Notes delivered to the exchange agent will be deemed to have been tendered unless otherwise communicated to the exchange agent. If the entire principal amount of all Old Notes is not tendered, then Old Notes for the principal amount of Old Notes not tendered and notes issued in exchange for any Old Notes accepted will be delivered to the holder via the facilities of DTC promptly after the Old Notes are accepted for exchange.

3. Validity of Tenders.

All questions as to the validity, form, eligibility (including time of receipt), acceptance, and withdrawal of tendered Old Notes will be determined by the Company, in its sole discretion, which determination will be final and binding. The Company reserves the absolute right to reject any or all tenders not in proper form or the acceptance for exchange of which may, in the opinion of counsel for the Company, be unlawful. The Company also reserves the absolute right to waive any of the conditions of the Exchange Offer or any defect or irregularity in the tender of any Old Notes. The Company’s interpretation of the terms and conditions of the Exchange Offer (including the instructions on this Letter of Transmittal) will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Old Notes must be cured within such time as the Company shall determine,. Although the Company intends to notify holders of defects or irregularities with respect to tenders of Old Notes, neither the Company, the Exchange Agent, nor any other person shall be under any duty to give such notification of any defects or irregularities in tenders or incur any liability for failure to give such notification. Tenders of Old Notes will not be deemed to have been made until such defects or irregularities have been cured or waived. Any Old Notes received by the Exchange Agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned by the Exchange Agent to the tendering holders via the facilities of DTC, as soon as practicable following the Expiration Date.

4. Waiver of Conditions.

The Company reserves the absolute right to waive, in whole or part, up to the expiration of the exchange offer any of the conditions of the Exchange Offer set forth in the Prospectus or in this Letter of Transmittal.

5. No Conditional Tender.

No alternative, conditional, irregular or contingent tender of Old Notes will be accepted.

6. Request for Assistance or Additional Copies.

Requests for assistance or for additional copies of the Prospectus or this Letter of Transmittal may be directed to the Exchange Agent at the address or telephone number set forth on the cover page of this Letter of Transmittal. Holders may also contact their broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Exchange Offer.

7. Withdrawal.

Tenders may be withdrawn only pursuant to the limited withdrawal rights set forth in the Prospectus under the caption “Exchange Offer—Withdrawal of Tenders.”

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8. No Guarantee of Late Delivery.

There is no procedure for guarantee of late delivery in the Exchange Offer.

IMPORTANT: BY USING THE ATOP PROCEDURES TO TENDER OLD NOTES, YOU WILL NOT BE REQUIRED TO DELIVER THIS LETTER OF TRANSMITTAL TO THE EXCHANGE AGENT. HOWEVER, YOU WILL BE BOUND BY ITS TERMS, AND YOU WILL BE DEEMED TO HAVE MADE THE ACKNOWLEDGEMENTS AND THE REPRESENTATIONS AND WARRANTIES IT CONTAINS, JUST AS IF YOU HAD SIGNED IT.

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[Back Cover]

Until                     , 2003, all dealers that effect transactions in the new notes, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

[Concentra Operating Corporation Logo]

CONCENTRA OPERATING CORPORATION

Offer to Exchange up to

$150,000,000 9½% Senior Subordinated Notes due 2010

For

$150,000,000 9½% Senior Subordinated Notes due 2010

that have been registered under the Securities Act of 1933

                    , 2003

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item20. Indemnification of Directors and Officers

Section 78.7502 (1) of the Nevada Revised Statutes (the “NRS”) provides that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the right of the corporation, by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses, including attorneys’ fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with the action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful.

Section 78.7502 (2) of the NRS provides that a corporation may similarly indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses, including amounts paid in settlement and attorneys’ fees actually and reasonably incurred by him in connection with the defense or settlement of the action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such a person has been adjudged by a court of competent jurisdiction, after exhaustion of all appeals therefrom, to be liable to the corporation or for amounts paid in settlement to the corporation, unless and only to the extent that the court in which the action or suit was brought or other court of competent jurisdiction determines upon application that in view of all the circumstances of the case, the person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper.

Section 78.7502(3) of the NRS provides that to the extent a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in subsections (1) and (2), or in defense of any claim, issue or matter therein, the corporation shall indemnify such person against expenses, including attorneys’ fees, actually and reasonably incurred by him or her in connection with the defense.

Section 78.751(1) of the NRS provides that any discretionary indemnification under Section 78.7502, unless ordered by a court or advanced pursuant to subsection 2 of Section 78.751, may be made by the corporation only as authorized in the specific case upon determination that indemnification of such director, officer, employee or agent is proper in the circumstances. The determination must be made (a) by the stockholders; (b) by the board of directors by majority vote of quorum consisting of directors who were not parties to the action, suit or proceeding; (c) if a majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding so orders, by independent legal counsel in a written opinion; or (d) if a quorum consisting of directors who were not parties to the action, suit or proceeding cannot be obtained, by independent legal counsel in a written opinion.

Section 78.751(2) of the NRS provides that the articles of incorporation, bylaws or an agreement made by the corporation may provide that the expenses of officers and directors incurred in defending a civil or criminal action, suit or proceeding must be paid by the corporation as they are incurred and in advance of the final disposition of the action, suit or proceeding, upon receipt of an undertaking by or on behalf of the director or officer to repay the amount if it is ultimately determined by a court of competent jurisdiction that he or she is not entitled to be indemnified by the corporation. Such provision does not affect any rights to advancement of expenses to which corporate personnel other than directors or officers may be entitled under any contract or otherwise by law.

Section 78.751(3) of the NRS provides that the indemnification pursuant to Section 78.7502 of the NRS and advancement of expenses authorized in, or ordered by, a court pursuant to Section78.751, (a) does not exclude any other rights to which a person seeking indemnification or advancement of expenses may be entitled under the articles of incorporation or any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, for either an action in his official capacity or an action in another capacity while holding his office, except that indemnification, unless ordered by a court pursuant to Section 78.7502 of the NRS or for the advancement of expenses made pursuant to Section 78.751 (2), may not be made to or on behalf of any director or officer if a final adjudication establishes that his acts or omissions involved intentional misconduct, fraud or a knowing violation of the law and was material to the cause of action; and (b) continues for a person who has ceased to be a director, officer, employee or agent and inures to the benefit of the heirs, executors and administrators of such a person.

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Section 78.752 of the NRS provides that a Nevada corporation may purchase and maintain insurance or make other financial arrangements on behalf of any person who acted in any of the capacities set forth above for any liability asserted against such person for any liability asserted against him or her and liability and expenses incurred by him or her in any such capacity or arising out of his or her status as such, whether or not the corporation has the authority to indemnify him or her against such liabilities and expenses.

The by-laws of Concentra Operating Corporation, a Nevada corporation (“Concentra Operating”) provide that every person serving as its director or officer and every such director or officer serving at the request of Concentra Operating as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise shall be indemnified by Concentra Operating in accordance with and to the fullest extent permitted by law for the defense of, in connection with, any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative.

Concentra Operating’s parent, Concentra Inc., a Delaware corporation (“Concentra Inc.”), has entered into indemnity agreements with the directors and officers of Concentra Inc. and its wholly owned, direct and indirect, subsidiaries, including the Registrants. Pursuant to such agreements, Concentra Inc. will, to the extent permitted by applicable law, indemnify such persons against all expenses, judgments, fines and penalties incurred in connection with the defense or settlement of any actions brought against them by reason of the fact that they were directors or officers of such Registrant or assumed certain responsibilities at the direction of such Registrant. In addition, Concentra Inc. has purchased and maintains insurance to protect persons entitled to indemnification pursuant to its by-laws or the applicable law against expenses, judgments, fines and amounts paid in settlement, to the fullest extent permitted by the Delaware General Corporation Law. Such insurance covers the directors and officers of the Registrants.

Item 21. Exhibits and Financial Statement Schedules

(a) Exhibits

Exhibit Number	Description
1.1*	— Purchase Agreement, dated August 5, 2003, by and among Concentra Operating, each of the subsidiary guarantors listed on the signature pages thereto, Credit Suisse First Boston LLC, Citigroup Global Markets Inc., Deutsche Bank Securities Inc., J.P. Morgan Securities Inc. and Banc One Capital Markets, Inc.
3.1	— Articles of Incorporation of Concentra Operating (incorporated by reference to Concentra Operating’s Registration Statement on Form S-4, initially filed on November 12, 1999).
3.2	— Amended and Restated By-Laws of Concentra Operating, as further amended June 20, 2002 (incorporated by reference to Exhibit 3.1 to Concentra Operating’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2002).
4.1	— Indenture dated as of August 17, 1999, by and between Concentra Operating and United States Trust Company of New York, as Trustee, relating to the 13% Senior Subordinated Notes due 2009 of Concentra Operating (incorporated by reference to Concentra Operating’s Registration Statement on Form S-4, initially filed on November 12, 1999).
4.2	— Supplemental Indenture dated as of November 5, 2001, among Concentra Operating, HealthNetwork Systems LLC, Medical Network Systems LLC, and The Bank of New York, as Trustee, relating to the 13% Senior Subordinated Notes due 2009 of Concentra Operating (incorporated by reference to Exhibit 4.2 to Concentra Operating’s Annual Report on Form 10-K for the year ended December 31, 2001).
4.3	— Supplemental Indenture dated as of November 20, 2001, among Concentra Operating, National Healthcare Resources, Inc., and The Bank of New York, as Trustee, relating to the 13% Senior Subordinated Notes due 2009 of Concentra Operating (incorporated by reference to Exhibit 4.3 to Concentra Operating’s Annual Report on Form 10-K for the year ended December 31, 2001).
4.4	— Indenture dated as of August 17, 1999, by and between Concentra Inc. and United States Trust Company of New York, as Trustee, relating to Concentra Inc.’s 14% Senior Discount Debentures due 2010 (incorporated by reference to Concentra Operating’s Registration Statement on Form S-4, initially filed on November 12, 1999).

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4.5	— Supplemental Indenture dated as of June 25, 2002 by and among Concentra Inc., The Bank of New York, as successor to United States Trust Company of New York as trustee, and the other parties listed on the signature pages thereto (incorporated by reference to Exhibit 4.1 to Concentra Operating’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2002).
4.6	— Supplemental Indenture dated as of July 28, 2003 among Concentra Inc., The Bank of New York as Trustee and the holders of Concentra Inc.’s 14% Senior Discount Debentures due 2011 (incorporated by reference to Exhibit 4.1 to Concentra Operating’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003)
4.7*	— Indenture dated as of August 13, 2003, by and among Concentra Operating, The Bank of New York, as Trustee, and the guarantors named therein relating to Concentra Operating’s 9½% Senior Subordinated Notes due 2010.
4.8	— Warrant Agreement dated as of August 17, 1999, by and among Concentra Inc. and the several persons named on Schedule I thereto (incorporated by reference to Concentra Operating’s Registration Statement on Form S-4, initially filed on November 12, 1999).
4.9	— Amendment No. 1 to Warrant Agreement dated as of November 1, 2001, by and among Concentra Inc. and the several warrant holders that are signatories thereto (incorporated by reference to Exhibit 4.6 to Concentra Operating’s Annual Report on Form 10-K for the year ended December 31, 2001).
4.10	— Form of 13% Series B Senior Subordinated Notes due 2009 of Concentra Operating (included as an exhibit to Exhibit 4.1).
4.11	— Form of 14% Senior Discount Debentures due 2010 of Concentra Inc. (included as an exhibit to Exhibit 4.4).
4.12	— Form of Warrant to acquire Concentra Inc. common stock (included as an exhibit to Exhibit 4.8).
4.13*	— Registration Rights Agreement dated as of August 13, 2003 by and among Concentra Operating, each of the subsidiary guarantors listed on the signature pages thereto, Credit Suisse First Boston LLC, Citigroup Global Markets Inc., Deutsche Bank Securities Inc., J.P. Morgan Securities Inc. and Banc One Capital Markets, Inc.
4.14	— Warrant Agreement dated as of November 1, 2001, by and among Concentra Inc. and the several persons that are signatories thereto (incorporated by reference to Exhibit 4.11 to Concentra Operating’s Annual Report on Form 10-K for the year ended December 31, 2001).
4.15	— Form of Warrant to acquire Concentra Inc. common stock (included as an exhibit to Exhibit 4.14).
4.16	— Registration Rights Agreement dated as of August 17, 1999 by and among Concentra Inc. and the persons named in Schedules I and II thereto (incorporated by reference to Concentra Operating’s Registration Statement on Form S-4, initially filed on November 12, 1999).
4.17	— Amendment No. 1 to Registration Rights Agreement dated as of November 1, 2001, by and among Concentra Inc. and the persons named in Schedules I and II thereto (incorporated by reference to Exhibit 4.14 to Concentra Operating’s Annual Report on Form 10-K for the year ended December 31, 2001).
4.18	— Amendment No. 2 to Registration Rights Agreement dated as of November 5, 2001, by and among Concentra Inc. and the several persons that are signatories thereto (incorporated by reference to Exhibit 4.15 to Concentra Operating’s Annual Report on Form 10-K for the year ended December 31, 2001).

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4.19	— Amendment No. 3 to Registration Rights Agreement dated as of November 20, 2002, by and among Concentra Inc. and the several persons that are signatories thereto (incorporated by reference to Exhibit 4.17 to Concentra Operating’s Annual Report on Form 10-K for the year ended December 31, 2002).
4.20	— Amendment No. 4 to Registration Rights Agreement dated as of December 1, 2002, by and among Concentra Inc. and the several persons that are signatories thereto (incorporated by reference to Exhibit 4.18 to Concentra Operating’s Annual Report on Form 10-K for the year ended December 31, 2002).
4.21	— Bridge Loan Agreement dated as of June 25, 2002 by and among Concentra Inc., the Lenders that are parties thereto, and Citicorp North America, Inc. (incorporated by reference to Exhibit 10.1 to Concentra Operating’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2002).
4.22	— Waiver No. 1 to Bridge Loan Agreement dated as of October 23, 2002 by and among Concentra Inc., the Lenders that are parties thereto, and Citicorp North America, Inc. (incorporated by reference to Exhibit 4.20 to Concentra Operating’s Annual Report on Form 10-K for the year ended December 31, 2002).
4.23	— Forms of Global Notes for 9½% Senior Subordinated Notes of Concentra Operating (included as exhibits to Exhibit 4.7 hereto).
5.1*	— Opinion of Vinson & Elkins L.L.P.
10.1	— Securities Purchase Agreement dated November 1, 2001, by and among Concentra Inc. and the several purchasers named on Schedule I thereto, relating to the issuance and sale of 2,266,546 shares of Concentra Inc. common stock and warrants to purchase 771,277 shares of Concentra Inc. common stock (incorporated by reference to Exhibit 10.2 to Concentra Operating’s Annual Report on Form 10-K for the year ended December 31, 2001).
10.2*	— Credit Agreement dated as of August 13, 2003, by and among Concentra Inc., Concentra Operating, the several lenders from time to time parties thereto, JPMorgan Chase Bank, as Administrative Agent, Deutsche Banc Alex Brown, as Documentation Agent, and Credit Suisse First Boston and Citicorp North America, Inc., as Co-Syndication Agents.
10.3	— Concentra Managed Care, Inc. 1999 Stock Option and Restricted Stock Purchase Plan (incorporated by reference to Concentra Operating’s Registration Statement on Form S-4, initially filed on November 12, 1999).
10.4	— Concentra Managed Care, Inc. 1999 Stock Option and Restricted Stock Purchase Plan, as amended through June 20, 2002 (incorporated by reference to Exhibit 10.3 to Concentra Operating’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2002).
10.5	— Concentra Managed Care, Inc. 1999 Stock Option and Restricted Stock Purchase Plan as Amended Through September 24, 2002 (incorporated by reference to Exhibit 10.1 to Concentra Operating’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2002).
10.6	— Concentra Managed Care, Inc. 1997 Long-Term Incentive Plan (incorporated by reference to Appendix G to the Joint Proxy Statement/Prospectus forming a part of Concentra Inc.’s Registration Statement on Form S-4 filed on July 31, 1997).
10.7	— Employment Agreement dated as of August 17, 1999, between Concentra Inc. and James M. Greenwood (incorporated by reference to Concentra Operating’s Registration Statement on Form S-4, initially filed on November 12, 1999).
10.8	— Employment Agreement dated as of August 17, 1999, between Concentra Inc. and Richard A. Parr II (incorporated by reference to Concentra Operating’s Registration Statement on Form S-4, initially filed on November 12, 1999).

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10.9	— Employment Agreement dated as of August 17, 1999, between Concentra Inc. and Daniel J. Thomas (incorporated by reference to Concentra Operating’s Registration Statement on Form S-4, initially filed on November 12, 1999).
10.10	— Employment Agreement dated as of August 17, 1999, between Concentra Inc. and Thomas E. Kiraly (incorporated by reference to Concentra Operating’s Registration Statement on Form S-4, initially filed on November 12, 1999).
10.11	— Employment Agreement dated as of August 5, 2002 between Concentra Inc. and Frederick C. Dunlap (incorporated by reference to Exhibit 10.4 to Concentra Operating’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2001.)
10.12	— Indemnification Agreement dated as of June 26, 2003 between Concentra Inc. and Daniel J. Thomas (identical agreements were executed as of June 26, 2003 between Concentra Inc. and each of the following: John K. Carlyle, Frederick C. Dunlap, Carlos A. Ferrer, James M. Greenwood, James T. Kelly, Thomas E. Kiraly, D. Scott Mackesy, Steven E. Nelson, Richard A. Parr, Paul B. Queally and Richard J. Sabolik) (incorporated by reference to Exhibit 10.1 to Concentra Operating’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003).
10.13	— Occupational Medicine Center Management and Consulting Agreement dated as of December 31, 1993, between Concentra Health Services, Inc. (formerly OccuCenters, Inc.) (“CHS”) and Occupational Health Centers of Southwest, P.A., an Arizona professional association (incorporated by reference to Exhibit 10.7 to the Annual Report on Form 10-K of OccuSystems Inc., a Delaware corporation (“OccuSystems”), for the year ended December 31, 1995).
10.14	— Occupational Medicine Center Management and Consulting Agreement dated as of December 31, 1993, between CHS and Occupational Health Centers of New Jersey, a New Jersey professional association (incorporated by reference to Exhibit 10.8 to OccuSystems’ Registration Statement on Form S-1 filed on March 28, 1996).
10.15	— Amended and Restated Occupational Medicine Center Management and Consulting Agreement dated as of July 30, 2003 between Concentra Health Services, Inc. and Occupational Health Centers of the Southwest, P.A. (incorporation by reference to Exhibit 10.2 to Concentra Operating’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003).
10.16	— Stockholders Agreement dated as of August 17, 1999, by and among Concentra Inc. and the several persons named in Schedules I and II thereto (incorporated by reference to Concentra Operating’s Registration Statement on Form S-4, initially filed on November 12, 1999).
10.17	— Amendment No. 1 to Stockholders Agreement dated as of November 1, 2001, by and among Concentra Inc. and the several persons named in Schedules I and II thereto (incorporated by reference to Exhibit 10.26 to Concentra Operating’s Annual Report on Form 10-K for the year ended December 31, 2001).
10.18	— Amendment No. 2 to Stockholders Agreement dated as of November 20, 2002, by and among Concentra Inc. and the several persons named in Schedules I and II thereto (incorporated by reference to Exhibit 10.30 to Concentra Operating’s Annual Report on Form 10-K for the year ended December 31, 2002).
10.19	— Amendment No. 3 to Stockholders Agreement dated as of December 1, 2002, by and among Concentra Inc. and the several persons named in Schedules I and II thereto (incorporated by reference to Exhibit 10.31 to Concentra Operating’s Annual Report on Form 10-K for the year ended December 31, 2002).

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10.20	— Stockholders Agreement dated as of November 20, 2001, by and among Concentra Inc., Welsh, Carson, Anderson & Stowe VIII, L.P., certain holders of common stock and warrants to purchase common stock of Concentra Inc., certain stockholders of National Healthcare Resources, Inc., and Ferrer Freeman and Company, LLC, formerly known as Ferrer, Freeman, Thompson & Co., LLC (incorporated by reference to Exhibit 10.27 to Concentra Operating’s Annual Report on Form 10-K for the year ended December 31, 2001).
10.21	— Agreement and Plan of Reorganization dated August 29, 1997, by and among CRA Managed Care, Inc., OccuSystems, Inc., and Concentra Inc., formerly known as Concentra Managed Care, Inc. (incorporated by reference to Exhibit 2.1 to Concentra Inc.’s Annual Report on Form 10-K for the year ended December 31, 1997).
10.22	— Agreement and Plan of Merger dated March 2, 1999, by and between Yankee Acquisition Corp. and Concentra Inc. (incorporated by reference to Exhibit 2.1 to Concentra Inc.’s Current Report on Form 8-K filed on March 3,1999).
10.23	— Amended and Restated Agreement and Plan of Merger dated March 24, 1999, by and between Yankee Acquisition Corp. and Concentra Inc. (incorporated by reference to Exhibit 2.1 to Concentra Inc.’s Current Report on Form 8-K filed on July 14, 1999).
10.24	— Agreement and Plan of Merger dated as of November 2, 2001, by and among Concentra Inc., NHR Acquisition Company, Inc., and National Healthcare Resources, Inc. (incorporated by reference to Exhibit 2.5 to Concentra Operating’s Annual Report on Form 10-K for the year ended December 31, 2001).
10.25	— Asset Purchase Agreement among Concentra Inc., Concentra Operating and Em3 Corporation dated as of December 1, 2002 (incorporated by reference to Exhibit 10.1 to Concentra Operating’s Current Report on Form 8-K filed on December 13, 2002).
12.1*	— Computation of Ratio of Earnings to Fixed Charges.
21.1*	— Subsidiaries of Concentra Operating.
23.l*	— Consent of Vinson & Elkins L.L.P. (included in Exhibit 5.1).
23.2*	— Consent of Schreck Brignone (included in Annex A to Exhibit 5.1).
23.3*	— Consent of McDermott, Will & Emery (included in Annex B to Exhibit 5.1).
23.4*	— Consent of Richard A. Parr II (included in Annex C to Exhibit 5.1).
23.5*	— Consent of PricewaterhouseCoopers LLP.
24.1*	— Powers of Attorney (included on the signature pages of this Registration Statement).
25.1*	— Statement of Eligibility (Form T-1) of The Bank of New York, as trustee.

* Filed herewith

(b) Financial Statement Schedules

All financial statements, financial statement schedules and reports of independent accountants are included in the Prospectus.

Item 22. Undertakings

The undersigned registrants hereby undertake:

(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i) to include any prospectus required by section 10(a)(3) of the Securities Act of 1933 (the “Act”);

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(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually, or in the aggregate, represent a fundamental change in the information set forth in the registration statement;

(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; and

(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrants pursuant to the foregoing provisions, or otherwise, the registrants have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrants of expenses incurred or paid by a director, officer or controlling person of the registrants in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrants will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

The undersigned registrants hereby undertake to respond to requests for information that is incorporated by reference into this prospectus pursuant to Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.

The undersigned registrants hereby undertake to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in this registration statement when it became effective.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dallas, State of Texas, on the 28th day of August, 2003.

CONCENTRA OPERATING CORPORATION
By:	/s/ DANIEL J. THOMAS
	Daniel J. Thomas
	Chief Executive Officer

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Richard A. Parr II and Thomas E. Kiraly and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including pre-and post-effective amendments) to this Registration Statement and any additional registration statement pursuant to Rule 462(b) under the Securities Act of 1933, and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that each of said attorneys-in-fact and agents or their substitute or substitutes may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated:

Signature	Title	Date
/s/ DANIEL J. THOMAS Daniel J. Thomas	Director and Chief Executive Officer	August 28, 2003
/s/ THOMAS E. KIRALY Thomas E. Kiraly	Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer)	August 28, 2003
/s/ PAUL B. QUEALLY Paul B. Queally	Chairman and Director	August 28, 2003
/s/ JOHN K. CARLYLE John K. Carlyle	Director	August 28, 2003
/s/ CARLOS A. FERRER Carlos A. Ferrer	Director	August 28, 2003

II-8

/s/ JAMES T. KELLY James T. Kelly	Director	August 28, 2003
/s/ D. SCOTT MACKESY D. Scott Mackesy	Director	August 28, 2003
/s/ STEVEN E. NELSON Steven E. Nelson	Director	August 28, 2003
/s/ RICHARD J. SABOLIK Richard J. Sabolik	Director	August 28, 2003

II-9

Pursuant to the requirements of the Securities Act of 1933, each registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dallas, State of Texas, on the 28th day of August, 2003.

CONCENTRA HEALTH SERVICES, INC.
By:	/s/ RICHARD A. PARR II
	Name:     Richard A. Parr II
	Title:       Executive Vice President, General                 Counsel and Corporate Secretary

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Richard A. Parr II and Thomas E. Kiraly and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including pre-and post-effective amendments) to this Registration Statement and any additional registration statement pursuant to Rule 462(b) under the Securities Act of 1933, and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that each of said attorneys-in-fact and agents or their substitute or substitutes may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated:

Signature	Title	Date
/s/ DANIEL J. THOMAS Daniel J. Thomas	Chairman of the Board and Director	August 28, 2003
/s/ W. KEITH NEWTON W. Keith Newton	President	August 28, 2003
/s/ THOMAS E. KIRALY Thomas E. Kiraly	Executive Vice President, Chief Financial Officer, Treasurer and Director (Principal Financial Officer and Principal Accounting Officer)	August 28, 2003

II-10

Pursuant to the requirements of the Securities Act of 1933, each registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dallas, State of Texas, on the 28th day of August, 2003.

CONCENTRA LABORATORY, L.L.C.
By:	Concentra Health Services, Inc., its sole member
	By:	/s/ RICHARD A. PARR II
		Name:	Richard A. Parr II
		Title:	Executive Vice President, General Counsel and Corporate Secretary

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Richard A. Parr II and Thomas E. Kiraly and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including pre-and post-effective amendments) to this Registration Statement and any additional registration statement pursuant to Rule 462(b) under the Securities Act of 1933, and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that each of said attorneys-in-fact and agents or their substitute or substitutes may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated:

Signature	Title	Date
/s/ W. KEITH NEWTON W. Keith Newton	President	August 28, 2003
/s/ THOMAS E. KIRALY Thomas E. Kiraly	Vice President and Treasurer (Principal Financial Officer and Principal Accounting Officer)	August 28, 2003

(The limited liability company is member-managed, and does not have any directors)

II-11

Pursuant to the requirements of the Securities Act of 1933, each registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dallas, State of Texas, on the 28th day of August, 2003.

CONCENTRA PREFERRED SYSTEMS, INC.
By:	/s/ RICHARD A. PARR II
	Name:	Richard A. Parr II
	Title:	Executive Vice President, General Counsel and Corporate Secretary

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Richard A. Parr II and Thomas E. Kiraly and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including pre-and post-effective amendments) to this Registration Statement and any additional registration statement pursuant to Rule 462(b) under the Securities Act of 1933, and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that each of said attorneys-in-fact and agents or their substitute or substitutes may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated:

Signature	Title	Date
/s/ DANIEL J. THOMAS Daniel J. Thomas	Chairman of the Board and Director	August 28, 2003
/s/ THOMAS BARTLETT Thomas Bartlett	President	August 28, 2003
/s/ THOMAS E. KIRALY Thomas E. Kiraly	Executive Vice President, Treasurer and Director (Principal Financial Officer and Principal Accounting Officer)	August 28, 2003

II-12

Pursuant to the requirements of the Securities Act of 1933, each registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dallas, State of Texas, on the 28th day of August, 2003.

MEDICAL NETWORK SYSTEMS LLC
By:	Concentra Preferred Systems, Inc., its sole member
	By:	/s/ RICHARD A. PARR II
		Name:	Richard A. Parr II
		Title:	Executive Vice President, General Counsel and Corporate Secretary

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Richard A. Parr II and Thomas E. Kiraly and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including pre-and post-effective amendments) to this Registration Statement and any additional registration statement pursuant to Rule 462(b) under the Securities Act of 1933, and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that each of said attorneys-in-fact and agents or their substitute or substitutes may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated:

Signature	Title	Date
/s/ RANA MENDICINO Rana Mendicino	President	August 28, 2003
/s/ THOMAS E. KIRALY Thomas E. Kiraly	Vice President and Treasurer (Principal Financial Officer and Principal Accounting Officer)	August 28, 2003

(The limited liability company is member-managed, and does not have any directors)

II-13

Pursuant to the requirements of the Securities Act of 1933, each registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dallas, State of Texas, on the 28th day of August, 2003.

CONCENTRA INTEGRATED SERVICES, INC.
By:	/s/ RICHARD A. PARR II
		Name:     Richard A. Parr II
		Title:       Executive Vice President and Clerk

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Richard A. Parr II and Thomas E. Kiraly and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including pre-and post-effective amendments) to this Registration Statement and any additional registration statement pursuant to Rule 462(b) under the Securities Act of 1933, and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that each of said attorneys-in-fact and agents or their substitute or substitutes may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated:

Signature	Title	Date
/s/ DANIEL J. THOMAS Daniel J. Thomas	Chairman of the Board and Director	August 28, 2003
/s/ FREDERICK C. DUNLAP Frederick C. Dunlap	President	August 28, 2003
/s/ THOMAS E. KIRALY Thomas E. Kiraly	Executive Vice President, Treasurer and Director (Principal Financial Officer and Principal Accounting Officer)	August 28, 2003

II-14

Pursuant to the requirements of the Securities Act of 1933, each registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dallas, State of Texas, on the 28th day of August, 2003.

CONCENTRA MANAGED CARE BUSINESS TRUST CONCENTRA PREFERRED BUSINESS TRUST FOCUS HEALTHCARE BUSINESS TRUST
By:	/s/ DANIEL J. THOMAS
	Daniel J. Thomas
	Trustee

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Richard A. Parr II and Thomas E. Kiraly and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including pre-and post-effective amendments) to this Registration Statement and any additional registration statement pursuant to Rule 462(b) under the Securities Act of 1933, and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that each of said attorneys-in-fact and agents or their substitute or substitutes may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated:

Signature	Title	Date
/s/ DANIEL J. THOMAS Daniel J. Thomas	Trustee	August 28, 2003

(The trustee is an individual, and these trusts do not have any directors or officers)

II-15

Pursuant to the requirements of the Securities Act of 1933, each registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dallas, State of Texas, on the 28th day of August, 2003.

CONCENTRA MANAGEMENT SERVICES, INC.
NHR WASHINGTON, INC.
By:	/s/ RICHARD A. PARR II
	Name:	Richard A. Parr II
	Title:	Vice President and Corporate Secretary

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Richard A. Parr II and Thomas E. Kiraly and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including pre-and post-effective amendments) to this Registration Statement and any additional registration statement pursuant to Rule 462(b) under the Securities Act of 1933, and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that each of said attorneys-in-fact and agents or their substitute or substitutes may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated:

Signature	Title	Date
/s/ DANIEL J. THOMAS Daniel J. Thomas	President and Director	August 28, 2003
/s/ THOMAS E. KIRALY Thomas E. Kiraly	Vice President, Treasurer and Director (Principal Financial Officer and Principal Accounting Officer)	August 28, 2003

II-16

Pursuant to the requirements of the Securities Act of 1933, each registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dallas, State of Texas, on the 28th day of August, 2003.

FIRST NOTICE SYSTEMS, INC.
By:	/s/ RICHARD A. PARR II
	Name:	Richard A. Parr II
	Title:	Vice President and Corporate Secretary

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Richard A. Parr II and Thomas E. Kiraly and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including pre-and post-effective amendments) to this Registration Statement and any additional registration statement pursuant to Rule 462(b) under the Securities Act of 1933, and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that each of said attorneys-in-fact and agents or their substitute or substitutes may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated:

Signature	Title	Date
/s/ DANIEL J. THOMAS Daniel J. Thomas	Chairman of the Board and Director	August 28, 2003
/s/ WILL FULTON Will Fulton	President	August 28, 2003
/s/ THOMAS E. KIRALY Thomas E. Kiraly	Vice President, Treasurer and Director (Principal Financial Officer and Principal Accounting Officer)	August 28, 2003

II-17

Pursuant to the requirements of the Securities Act of 1933, each registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dallas, State of Texas, on the 28th day of August, 2003.

FOCUS HEALTHCARE MANAGEMENT, INC.
By:	/s/ RICHARD A. PARR II
		Name:	Richard A. Parr II
		Title:	Vice President and Corporate Secretary

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Richard A. Parr II and Thomas E. Kiraly and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including pre-and post-effective amendments) to this Registration Statement and any additional registration statement pursuant to Rule 462(b) under the Securities Act of 1933, and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that each of said attorneys-in-fact and agents or their substitute or substitutes may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated:

Signature	Title	Date
/s/ DANIEL J. THOMAS Daniel J. Thomas	Director	August 28, 2003
/s/ THOMAS COX Thomas Cox	President	August 28, 2003
/s/ THOMAS E. KIRALY Thomas E. Kiraly	Vice President, Treasurer and Director (Principal Financial Officer and Principal Accounting Officer)	August 28, 2003

II-18

Pursuant to the requirements of the Securities Act of 1933, each registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dallas, State of Texas, on the 28th day of August, 2003.

CRA MANAGED CARE OF WASHINGTON, INC.
CRA-MCO, INC.
By:	/s/ RICHARD A. PARR II
		Name:	Richard A. Parr II
		Title:	Executive Vice President and Corporate Secretary

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Richard A. Parr II and Thomas E. Kiraly and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including pre-and post-effective amendments) to this Registration Statement and any additional registration statement pursuant to Rule 462(b) under the Securities Act of 1933, and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that each of said attorneys-in-fact and agents or their substitute or substitutes may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated:

Signature	Title	Date
/s/ DANIEL J. THOMAS Daniel J. Thomas	Chairman of the Board and Director	August 28, 2003
/s/ FREDERICK C. DUNLAP Frederick C. Dunlap	President	August 28, 2003
/s/ THOMAS E. KIRALY Thomas E. Kiraly	Executive Vice President, Treasurer and Director (Principal Financial Officer and Principal Accounting Officer)	August 28, 2003

II-19

Pursuant to the requirements of the Securities Act of 1933, each registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dallas, State of Texas, on the 28th day of August, 2003.

HEALTHNETWORK SYSTEMS LLC
By:	/s/ RICHARD A. PARR II
	Name:	Richard A. Parr II
	Title:	Vice President, General Counsel and Corporate Secretary

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Richard A. Parr II and Thomas E. Kiraly and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including pre-and post-effective amendments) to this Registration Statement and any additional registration statement pursuant to Rule 462(b) under the Securities Act of 1933, and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that each of said attorneys-in-fact and agents or their substitute or substitutes may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated:

Signature	Title	Date
/s/ DANIEL J. THOMAS Daniel J. Thomas	Chairman of the Board and Manager	August 28, 2003
/s/ THOMAS BARTLETT Thomas Bartlett	President	August 28, 2003
/s/ THOMAS E. KIRALY Thomas E. Kiraly	Vice President and Treasurer; Manager (Principal Financial Officer and Principal Accounting Officer)	August 28, 2003

II-20

Pursuant to the requirements of the Securities Act of 1933, each registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dallas, State of Texas, on the 28th day of August, 2003.

NATIONAL HEALTHCARE RESOURCES, INC.
By:	/s/ RICHARD A. PARR II
	Name:	Richard A. Parr II
	Title:	Senior Vice President and Corporate Secretary

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Richard A. Parr II and Thomas E. Kiraly and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including pre-and post-effective amendments) to this Registration Statement and any additional registration statement pursuant to Rule 462(b) under the Securities Act of 1933, and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that each of said attorneys-in-fact and agents or their substitute or substitutes may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated:

Signature	Title	Date
/s/ DANIEL J. THOMAS Daniel J. Thomas	Director	August 28, 2003
/s/ THOMAS COX Thomas Cox	President and Director	August 28, 2003
/s/ MICHAEL A. ANGST Michael A. Angst	Senior Vice President—Operations and Director	August 28, 2003
/s/ THOMAS E. KIRALY Thomas E. Kiraly	Senior Vice President, Chief Financial Officer, Treasurer and Director (Principal Financial Officer and Principal Accounting Officer)	August 28, 2003

II-21

Pursuant to the requirements of the Securities Act of 1933, each registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dallas, State of Texas, on the 28th day of August, 2003.

METRACOMP, INC.
By:	/s/ RICHARD A. PARR II
	Name:	Richard A. Parr II
	Title:	Vice President and Corporate Secretary

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Richard A. Parr II and Thomas E. Kiraly and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including pre-and post-effective amendments) to this Registration Statement and any additional registration statement pursuant to Rule 462(b) under the Securities Act of 1933, and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that each of said attorneys-in-fact and agents or their substitute or substitutes may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated:

Signature	Title	Date
/s/ DANIEL J. THOMAS Daniel J. Thomas	Director	August 28, 2003
/s/ THOMAS COX Thomas Cox	President and Director	August 28, 2003
/s/ MICHAEL A. ANGST Michael A. Angst	Senior Vice President—Operations and Director	August 28, 2003
/s/ THOMAS E. KIRALY Thomas E. Kiraly	Vice President, Treasurer and Director (Principal Financial Officer and Principal Accounting Officer)	August 28, 2003

II-22

Pursuant to the requirements of the Securities Act of 1933, each registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dallas, State of Texas, on the 28th day of August, 2003.

OCCUCENTERS I, L.P.
By:	Concentra Health Services, Inc., its general partner
	By:	/s/ RICHARD A. PARR II
		Name:	Richard A. Parr II
		Title:	Executive Vice President, General Counsel and Corporate Secretary

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Richard A. Parr II and Thomas E. Kiraly and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including pre-and post-effective amendments) to this Registration Statement and any additional registration statement pursuant to Rule 462(b) under the Securities Act of 1933, and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that each of said attorneys-in-fact and agents or their substitute or substitutes may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated:

Signature	Title	Date
/s/ DANIEL J. THOMAS Daniel J. Thomas	Chairman of the Board and Director of the General Partner	August 28, 2003
/s/ W. KEITH NEWTON W. Keith Newton	President of the General Partner	August 28, 2003
/s/ THOMAS E. KIRALY Thomas E. Kiraly	Executive Vice President, Chief Financial Officer, Treasurer and Director of the General Partner (Principal Financial Officer and Principal Accounting Officer)	August 28, 2003

II-23

Pursuant to the requirements of the Securities Act of 1933, each registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dallas, State of Texas, on the 28th day of August, 2003.

OCI HOLDINGS, INC.
By:	/s/ GARY CHEDEKEL
	Gary Chedekel
	Corporate Secretary and Treasurer

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Richard A. Parr II and Thomas E. Kiraly and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including pre-and post-effective amendments) to this Registration Statement and any additional registration statement pursuant to Rule 462(b) under the Securities Act of 1933, and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that each of said attorneys-in-fact and agents or their substitute or substitutes may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated:

Signature	Title	Date
/s/ THOMAS SEXTON Thomas Sexton	President and Director (Principal Financial Officer and Principal Accounting Officer)	August 28, 2003
/s/ GARY CHEDEKEL Gary Chedekel	Corporate Secretary, Treasurer and Director	August 28, 2003

II-24

Exhibit Index

Exhibit Number	Description
1.1*	— Purchase Agreement, dated August 5, 2003, by and among Concentra Operating, each of the subsidiary guarantors listed on the signature pages thereto, Credit Suisse First Boston LLC, Citigroup Global Markets Inc., Deutsche Bank Securities Inc., J.P. Morgan Securities Inc. and Banc One Capital Markets, Inc.
3.1	— Articles of Incorporation of Concentra Operating (incorporated by reference to Concentra Operating’s Registration Statement on Form S-4, initially filed on November 12, 1999).
3.2	— Amended and Restated By-Laws of Concentra Operating, as further amended June 20, 2002 (incorporated by reference to Exhibit 3.1 to Concentra Operating’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2002).
4.1	— Indenture dated as of August 17, 1999, by and between Concentra Operating and United States Trust Company of New York, as Trustee, relating to the 13% Senior Subordinated Notes due 2009 of Concentra Operating (incorporated by reference to Concentra Operating’s Registration Statement on Form S-4, initially filed on November 12, 1999).
4.2	— Supplemental Indenture dated as of November 5, 2001, among Concentra Operating, HealthNetwork Systems LLC, Medical Network Systems LLC, and The Bank of New York, as Trustee, relating to the 13% Senior Subordinated Notes due 2009 of Concentra Operating (incorporated by reference to Exhibit 4.2 to Concentra Operating’s Annual Report on Form 10-K for the year ended December 31, 2001).
4.3	— Supplemental Indenture dated as of November 20, 2001, among Concentra Operating, National Healthcare Resources, Inc., and The Bank of New York, as Trustee, relating to the 13% Senior Subordinated Notes due 2009 of Concentra Operating (incorporated by reference to Exhibit 4.3 to Concentra Operating’s Annual Report on Form 10-K for the year ended December 31, 2001).
4.4	— Indenture dated as of August 17, 1999, by and between Concentra Inc. and United States Trust Company of New York, as Trustee, relating to Concentra Inc.’s 14% Senior Discount Debentures due 2010 (incorporated by reference to Concentra Operating’s Registration Statement on Form S-4, initially filed on November 12, 1999).
4.5	— Supplemental Indenture dated as of June 25, 2002 by and among Concentra Inc., The Bank of New York, as successor to United States Trust Company of New York as trustee, and the other parties listed on the signature pages thereto (incorporated by reference to Exhibit 4.1 to Concentra Operating’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2002).
4.6	— Supplemental Indenture dated as of July 28, 2003 among Concentra Inc., The Bank of New York as Trustee and the holders of Concentra Inc.’s 14% Senior Discount Debentures due 2011 (incorporated by reference to Exhibit 4.1 to Concentra Operating’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003)
4.7*	— Indenture dated as of August 13, 2003, by and among Concentra Operating, The Bank of New York, as Trustee, and the guarantors named therein relating to Concentra Operating’s 9½% Senior Subordinated Notes due 2010.
4.8	— Warrant Agreement dated as of August 17, 1999, by and among Concentra Inc. and the several persons named on Schedule I thereto (incorporated by reference to Concentra Operating’s Registration Statement on Form S-4, initially filed on November 12, 1999).

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Exhibit Number	Description
4.9	— Amendment No. 1 to Warrant Agreement dated as of November 1, 2001, by and among Concentra Inc. and the several warrant holders that are signatories thereto (incorporated by reference to Exhibit 4.6 to Concentra Operating’s Annual Report on Form 10-K for the year ended December 31, 2001).
4.10	— Form of 13% Series B Senior Subordinated Notes due 2009 of Concentra Operating (included as an exhibit to Exhibit 4.1).
4.11	— Form of 14% Senior Discount Debentures due 2010 of Concentra Inc. (included as an exhibit to Exhibit 4.4).
4.12	— Form of Warrant to acquire Concentra Inc. common stock (included as an exhibit to Exhibit 4.8).
4.13*	— Registration Rights Agreement dated as of August 13, 2003 by and among Concentra Operating, each of the subsidiary guarantors listed on the signature pages thereto, Credit Suisse First Boston LLC, Citigroup Global Markets Inc., Deutsche Bank Securities Inc., J.P. Morgan Securities Inc. and Banc One Capital Markets, Inc.
4.14	— Warrant Agreement dated as of November 1, 2001, by and among Concentra Inc. and the several persons that are signatories thereto (incorporated by reference to Exhibit 4.11 to Concentra Operating’s Annual Report on Form 10-K for the year ended December 31, 2001).
4.15	— Form of Warrant to acquire Concentra Inc. common stock (included as an exhibit to Exhibit 4.14).
4.16	— Registration Rights Agreement dated as of August 17, 1999 by and among Concentra Inc. and the persons named in Schedules I and II thereto (incorporated by reference to Concentra Operating’s Registration Statement on Form S-4, initially filed on November 12, 1999).
4.17	— Amendment No. 1 to Registration Rights Agreement dated as of November 1, 2001, by and among Concentra Inc. and the persons named in Schedules I and II thereto (incorporated by reference to Exhibit 4.14 to Concentra Operating’s Annual Report on Form 10-K for the year ended December 31, 2001).
4.18	— Amendment No. 2 to Registration Rights Agreement dated as of November 5, 2001, by and among Concentra Inc. and the several persons that are signatories thereto (incorporated by reference to Exhibit 4.15 to Concentra Operating’s Annual Report on Form 10-K for the year ended December 31, 2001).
4.19	— Amendment No. 3 to Registration Rights Agreement dated as of November 20, 2002, by and among Concentra Inc. and the several persons that are signatories thereto (incorporated by reference to Exhibit 4.17 to Concentra Operating’s Annual Report on Form 10-K for the year ended December 31, 2002).
4.20	— Amendment No. 4 to Registration Rights Agreement dated as of December 1, 2002, by and among Concentra Inc. and the several persons that are signatories thereto (incorporated by reference to Exhibit 4.18 to Concentra Operating’s Annual Report on Form 10-K for the year ended December 31, 2002).
4.21	— Bridge Loan Agreement dated as of June 25, 2002 by and among Concentra Inc., the Lenders that are parties thereto, and Citicorp North America, Inc. (incorporated by reference to Exhibit 10.1 to Concentra Operating’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2002).

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Exhibit Number	Description
4.22	— Waiver No. 1 to Bridge Loan Agreement dated as of October 23, 2002 by and among Concentra Inc., the Lenders that are parties thereto, and Citicorp North America, Inc. (incorporated by reference to Exhibit 4.20 to Concentra Operating’s Annual Report on Form 10-K for the year ended December 31, 2002).
4.23	— Forms of Global Notes for 9½% Senior Subordinated Notes of Concentra Operating (included as exhibits to Exhibit 4.7 hereto).
5.1*	— Opinion of Vinson & Elkins L.L.P.
10.1	— Securities Purchase Agreement dated November 1, 2001, by and among Concentra Inc. and the several purchasers named on Schedule I thereto, relating to the issuance and sale of 2,266,546 shares of Concentra Inc. common stock and warrants to purchase 771,277 shares of Concentra Inc. common stock (incorporated by reference to Exhibit 10.2 to Concentra Operating’s Annual Report on Form 10-K for the year ended December 31, 2001).
10.2*	— Credit Agreement dated as of August 13, 2003, by and among Concentra Inc., Concentra Operating, the several lenders from time to time parties thereto, JPMorgan Chase Bank, as Administrative Agent, Deutsche Banc Alex Brown, as Documentation Agent, and Credit Suisse First Boston and Citicorp North America, Inc., as Co-Syndication Agents.
10.3	— Concentra Managed Care, Inc. 1999 Stock Option and Restricted Stock Purchase Plan (incorporated by reference to Concentra Operating’s Registration Statement on Form S-4, initially filed on November 12, 1999).
10.4	— Concentra Managed Care, Inc. 1999 Stock Option and Restricted Stock Purchase Plan, as amended through June 20, 2002 (incorporated by reference to Exhibit 10.3 to Concentra Operating’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2002).
10.5	— Concentra Managed Care, Inc. 1999 Stock Option and Restricted Stock Purchase Plan as Amended Through September 24, 2002 (incorporated by reference to Exhibit 10.1 to Concentra Operating’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2002).
10.6	— Concentra Managed Care, Inc. 1997 Long-Term Incentive Plan (incorporated by reference to Appendix G to the Joint Proxy Statement/Prospectus forming a part of Concentra Inc.’s Registration Statement on Form S-4 filed on July 31, 1997).
10.7	— Employment Agreement dated as of August 17, 1999, between Concentra Inc. and James M. Greenwood (incorporated by reference to Concentra Operating’s Registration Statement on Form S-4, initially filed on November 12, 1999).
10.8	— Employment Agreement dated as of August 17, 1999, between Concentra Inc. and Richard A. Parr II (incorporated by reference to Concentra Operating’s Registration Statement on Form S-4, initially filed on November 12, 1999).
10.9	— Employment Agreement dated as of August 17, 1999, between Concentra Inc. and Daniel J. Thomas (incorporated by reference to Concentra Operating’s Registration Statement on Form S-4, initially filed on November 12, 1999).
10.10	— Employment Agreement dated as of August 17, 1999, between Concentra Inc. and Thomas E. Kiraly (incorporated by reference to Concentra Operating’s Registration Statement on Form S-4, initially filed on November 12, 1999).
10.11	— Employment Agreement dated as of August 5, 2002 between Concentra Inc. and Frederick C. Dunlap (incorporated by reference to Exhibit 10.4 to Concentra Operating’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2001.)

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Exhibit Number	Description
10.12	— Indemnification Agreement dated as of June 26, 2003 between Concentra Inc. and Daniel J. Thomas (identical agreements were executed as of June 26, 2003 between Concentra Inc. and each of the following: John K. Carlyle, Frederick C. Dunlap, Carlos A. Ferrer, James M. Greenwood, James T. Kelly, Thomas E. Kiraly, D. Scott Mackesy, Steven E. Nelson, Richard A. Parr, Paul B. Queally and Richard J. Sabolik) (incorporated by reference to Exhibit 10.1 to Concentra Operating’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003).
10.13	— Occupational Medicine Center Management and Consulting Agreement dated as of December 31, 1993, between Concentra Health Services, Inc. (formerly OccuCenters, Inc.) (“CHS”) and Occupational Health Centers of Southwest, P.A., an Arizona professional association (incorporated by reference to Exhibit 10.7 to the Annual Report on Form 10-K of OccuSystems Inc., a Delaware corporation (“OccuSystems”), for the year ended December 31, 1995).
10.14	— Occupational Medicine Center Management and Consulting Agreement dated as of December 31, 1993, between CHS and Occupational Health Centers of New Jersey, a New Jersey professional association (incorporated by reference to Exhibit 10.8 to OccuSystems’ Registration Statement on Form S-1 filed on March 28, 1996).
10.15	— Amended and Restated Occupational Medicine Center Management and Consulting Agreement dated as of July 30, 2003 between Concentra Health Services, Inc. and Occupational Health Centers of the Southwest, P.A. (incorporation by reference to Exhibit 10.2 to Concentra Operating’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003).
10.16	— Stockholders Agreement dated as of August 17, 1999, by and among Concentra Inc. and the several persons named in Schedules I and II thereto (incorporated by reference to Concentra Operating’s Registration Statement on Form S-4, initially filed on November 12, 1999).
10.17	— Amendment No. 1 to Stockholders Agreement dated as of November 1, 2001, by and among Concentra Inc. and the several persons named in Schedules I and II thereto (incorporated by reference to Exhibit 10.26 to Concentra Operating’s Annual Report on Form 10-K for the year ended December 31, 2001).
10.18	— Amendment No. 2 to Stockholders Agreement dated as of November 20, 2002, by and among Concentra Inc. and the several persons named in Schedules I and II thereto (incorporated by reference to Exhibit 10.30 to Concentra Operating’s Annual Report on Form 10-K for the year ended December 31, 2002).
10.19	— Amendment No. 3 to Stockholders Agreement dated as of December 1, 2002, by and among Concentra Inc. and the several persons named in Schedules I and II thereto (incorporated by reference to Exhibit 10.31 to Concentra Operating’s Annual Report on Form 10-K for the year ended December 31, 2002).
10.20	— Stockholders Agreement dated as of November 20, 2001, by and among Concentra Inc., Welsh, Carson, Anderson & Stowe VIII, L.P., certain holders of common stock and warrants to purchase common stock of Concentra Inc., certain stockholders of National Healthcare Resources, Inc., and Ferrer Freeman and Company, LLC, formerly known as Ferrer, Freeman, Thompson & Co., LLC (incorporated by reference to Exhibit 10.27 to Concentra Operating’s Annual Report on Form 10-K for the year ended December 31, 2001).
10.21	— Agreement and Plan of Reorganization dated August 29, 1997, by and among CRA Managed Care, Inc., OccuSystems, Inc., and Concentra Inc., formerly known as Concentra Managed Care, Inc. (incorporated by reference to Exhibit 2.1 to Concentra Inc.’s Annual Report on Form 10-K for the year ended December 31, 1997).

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Exhibit Number	Description
10.22	— Agreement and Plan of Merger dated March 2, 1999, by and between Yankee Acquisition Corp. and Concentra Inc. (incorporated by reference to Exhibit 2.1 to Concentra Inc.’s Current Report on Form 8-K filed on March 3,1999).
10.23	— Amended and Restated Agreement and Plan of Merger dated March 24, 1999, by and between Yankee Acquisition Corp. and Concentra Inc. (incorporated by reference to Exhibit 2.1 to Concentra Inc.’s Current Report on Form 8-K filed on July 14, 1999).
10.24	— Agreement and Plan of Merger dated as of November 2, 2001, by and among Concentra Inc., NHR Acquisition Company, Inc., and National Healthcare Resources, Inc. (incorporated by reference to Exhibit 2.5 to Concentra Operating’s Annual Report on Form 10-K for the year ended December 31, 2001).
10.25	— Asset Purchase Agreement among Concentra Inc., Concentra Operating and Em3 Corporation dated as of December 1, 2002 (incorporated by reference to Exhibit 10.1 to Concentra Operating’s Current Report on Form 8-K filed on December 13, 2002).
12.1*	— Computation of Ratio of Earnings to Fixed Charges.
21.1*	— Subsidiaries of Concentra Operating.
23.l*	— Consent of Vinson & Elkins L.L.P. (included in Exhibit 5.1)
23.2*	— Consent of Schreck Brignone (included in Annex A to Exhibit 5.1).
23.3*	— Consent of McDermott, Will & Emery (included in Annex B to Exhibit 5.1).
23.4*	— Consent of Richard A. Parr II (included in Annex C to Exhibit 5.1).
23.5*	— Consent of PricewaterhouseCoopers LLP.
24.1*	— Powers of Attorney (included on the signature pages of this Registration Statement).
25.1*	— Statement of Eligibility (Form T-1) of The Bank of New York, as trustee.

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EX-1.1

Exhibit 1.1

EXECUTION COPY

$150,000,000

CONCENTRA OPERATING CORPORATION

9 ¹/2% Senior Subordinated Notes due 2010

PURCHASE AGREEMENT

August 5, 2003

CREDIT SUISSE FIRST BOSTON LLC

CITIGROUP GLOBAL MARKETS INC.,

As Representatives of the Initial Purchasers

listed on Schedule A hereto,

c/o Credit Suisse First Boston LLC,

Eleven Madison Avenue,

New York, N.Y. 10010-3629

Dear Sirs:

1. Introductory. Concentra Operating Corporation, a Nevada corporation (the “Company”), proposes, subject to the terms and conditions stated herein, to issue and sell to the several initial purchasers named in Schedule A hereto (the “Purchasers”) $150,000,000 principal amount of its 9 ¹/2% Senior Subordinated Notes due 2010 (“Offered Securities”) to be issued under an indenture to be dated as of August 13, 2003 (the “Indenture”), among the Company, the Guarantors (as defined below) and The Bank of New York, as Trustee, on a private placement basis pursuant to an exemption under Section 4(2) of the United States Securities Act of 1933 (the “Securities Act”), and hereby agrees with the several Purchasers as follows:

The Company’s obligations under the Offered Securities, including the due and punctual payment of interest on the Offered Securities, shall be unconditionally guaranteed (each, a “Guarantee” and, collectively, the “Guarantees”) on a senior subordinated basis by each of the Company’s domestic subsidiaries listed on Schedule B hereto (together, the “Guarantors”).

The holders of the Offered Securities will be entitled to the benefits of a Registration Rights Agreement dated the Closing Date (as defined below) among the Company, the Guarantors and the Purchasers (the “Registration Rights Agreement”), in substantially the form of Exhibit A hereto, pursuant to which the Company agrees to file a registration statement with the Securities Exchange Commission (the “Commission”) registering the resale of the Offered Securities under the Securities Act.

Concurrently with the consummation of the issue and sale of the Offered Securities as set forth in this Agreement, the Company and certain of its subsidiaries will enter into a credit agreement (the “Credit Agreement”) that will provide for a new revolving loan facility and a new term loan facility (together, the “Facilities”).

2. Representations and Warranties of the Company. The Company represents and warrants to, and agrees with, the several Purchasers that:

(a) A preliminary offering circular and an offering circular relating to the Offered Securities has been prepared by the Company. Such preliminary offering circular (the “Preliminary Offering Circular”) and offering circular (the “Offering Circular”), as supplemented as of the date of this Agreement, together with any other document approved in writing by the Company for use in connection with the contemplated resale of

the Offered Securities, are hereinafter collectively referred to as the “Offering Document”. On the date of this Agreement, the Offering Document does not, and on the Closing Date the Offering Document will not, include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The preceding sentence does not apply to statements in or omissions from the Offering Document based upon written information furnished to the Company by any Purchaser through Credit Suisse First Boston LLC (“CSFB”) and Citigroup Global Markets, Inc. (together with CSFB, the “Representatives”) specifically for use therein, it being understood and agreed that the only such information is that described as such in Section 8(b) hereof.

(b) The Offered Securities have been duly authorized by the Company and each Guarantor and, when delivered and paid for pursuant to this Agreement and the Indenture, will have been duly executed, authenticated, issued and delivered and (assuming due authentication of the Offered Securities by the Trustee) will constitute valid and legally binding obligations of the Company and each Guarantor, entitled to the benefits provided in the Indenture and enforceable in accordance with their terms.

(c) The Company has been duly incorporated and is an existing corporation in good standing under the laws of the State of Nevada, with power and authority (corporate and other) to own its properties and conduct its business as described in the Offering Document; and the Company is duly qualified to do business as a foreign corporation in good standing in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification, except where the failure to be so qualified or in good standing would not individually or in the aggregate have a material adverse effect on the condition (financial or otherwise), business, properties or results of operations of the Company and its subsidiaries taken as a whole (“Material Adverse Effect”).

(d) Each subsidiary of the Company has been duly incorporated or otherwise organized and is an existing corporation, limited liability company or other entity in good standing under the laws of the jurisdiction of its incorporation or organization, with power and authority (corporate, limited liability company or other, as applicable) to own its properties and conduct its business as described in the Offering Document; and each subsidiary of the Company is duly qualified to do business as a foreign corporation or other business entity in good standing in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification, except where the failure to be so qualified or in good standing would not, individually or in the aggregate, have a Material Adverse Effect; all of the issued and outstanding capital stock or other equity interests of each subsidiary of the Company has been duly authorized and validly issued and is fully paid and, in the case of corporate subsidiaries, nonassessable; and, after giving effect to the Refinancing Transactions (as defined in the Offering Document), the capital stock or other equity interests of each subsidiary owned by the Company, directly or through subsidiaries, is owned free from liens, encumbrances and defects other than as described in the Offering Document. A list of all subsidiaries of the Company, including their respective legal names, jurisdictions of formation or organization, the Company’s direct or indirect ownership therein and whether they are Guarantors is attached hereto as Schedule C.

(e) The Indenture has been duly authorized by the Company and each Guarantor; when the Offered Securities are delivered and paid for pursuant to this Agreement on the Closing Date, the Indenture will have been duly executed and delivered, such Offered Securities will have been duly executed, authenticated, issued and delivered (assuming due authorization, execution and delivery of the Indenture by the Trustee and due authentication of the Offered Securities by the Trustee) and the Indenture and such Offered Securities will conform in all material respects to the description thereof contained in the Offering Document, and (assuming due authorization, execution and delivery of the Indenture by the Trustee) the Indenture will constitute valid and legally binding obligations of the Company and each Guarantor, enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws relating to or affecting creditors’ rights generally and to general equity principles.

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(f) The Guarantee to be endorsed on the Offered Securities by each of the Guarantors has been duly authorized by such Guarantor and, on the Closing Date, will have been duly executed and delivered by each such Guarantor and will conform in all material respects to the description thereof contained in the Offering Document; when the Offered Securities have been issued, executed and authenticated in accordance with the Indenture and delivered to and paid for by the Purchasers in accordance with the terms of this Agreement, the Guarantee of each Guarantor endorsed thereon (assuming due authorization, execution and delivery of the Indenture by the Trustee and due authentication of the Offered Securities by the Trustee) will constitute valid and legally binding obligations of such Guarantor enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws relating to or affecting creditors’ rights generally and to general equity principles.

(g) On the Closing Date, the Indenture will conform in all material respects to the requirements of the Trust Indenture Act of 1939, as amended (the “TIA” or “Trust Indenture Act”), and the rules and regulations of the Securities and Exchange Commission (the “Commission”) applicable to an indenture which is qualified thereunder.

(h) On the Closing Date, the Exchange Securities and Private Exchange Securities (each as defined in the Registration Rights Agreement) will have been duly authorized by the Company and the Guarantors; and when the Exchange Securities and Private Exchange Securities are issued, executed and authenticated in accordance with the terms of the Exchange Offer (as defined in the Registration Rights Agreement) and the Indenture, the Exchange Securities and Private Exchange Securities will constitute valid and legally binding obligations of the Company, enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws relating to or affecting creditors’ rights generally and to general equity principles.

(i) The guarantee to be endorsed on the Exchange Securities and Private Exchange Securities by each Guarantor has been duly authorized by such Guarantor and, when issued, will have been duly executed and delivered by each such Guarantor; and when the Exchange Securities and Private Exchange Securities have been issued, executed and authenticated in accordance with the terms of the Exchange Offer and the Indenture, the guarantee of each Guarantor endorsed thereon will constitute valid and legally binding obligations of such Guarantor, enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws relating to or affecting creditors’ rights generally and to general equity principles.

(j) The Registration Rights Agreement has been duly authorized by the Company and each of the Guarantors and, on the Closing Date, will have been duly executed and delivered by the Company and each of the Guarantors. When the Registration Rights Agreement has been duly executed and delivered, the Registration Rights Agreement (assuming due authorization, execution and delivery thereof by each other party thereto other than the Company and the Guarantors) will be a valid and binding agreement of the Company and each of the Guarantors, enforceable against the Company and each Guarantor in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws relating to or affecting creditors’ rights generally and to general equity principles and, as to rights of indemnification or contribution, to principles of public policy or Federal or state securities laws relating thereto. On the Closing Date, the Registration Rights Agreement will conform in all material respects to the description thereof in the Offering Document.

(k) Neither the Company nor any of the Subsidiaries is (i) in violation of its respective charter or by-laws or (ii) in default in the performance of any obligation, agreement, covenant or condition contained in any indenture, loan agreement, mortgage, lease or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries or their respective

3

property is bound, except in each case for such violations or defaults under clause (ii) above that would not, individually or in the aggregate, have a Material Adverse Effect.

(l) There are no contracts, agreements or understandings between the Company or any Guarantor and any person granting such person the right to require the Company or such Guarantor to include any securities in any registration statement required to be filed pursuant to the Registration Rights Agreement.

(m) Except as disclosed in the Offering Document, there are no contracts, agreements or understandings between the Company or any subsidiary and any person (other than the Purchasers) that would give rise to a valid claim against the Company, any subsidiary or any Purchaser for a brokerage commission, finder’s fee or other like payment with respect to the Offered Securities or otherwise as a result of the transactions contemplated by this Agreement.

(n) No consent, approval, authorization, or order of, or filing with, any governmental agency or body or any court is required for the consummation of the transactions contemplated by this Agreement and the Registration Rights Agreement in connection with the issuance and sale of the Offered Securities, the Exchange Securities or the Private Exchange Securities by the Company or the issuance of the Guarantees or the guarantees related to the Exchange Securities or Private Exchange Securities by the Guarantors, except (i) for the filing of the Exchange Offer Registration Statement or the Shelf Registration Statement with the Commission and the order of the Commission declaring the Exchange Offer Registration Statement or the Shelf Registration Statement (each as defined in the Registration Rights Agreement) effective, (ii) as may be required by the Trust Indenture Act or (iii) for any consent, approval, authorization, order or filing required pursuant to state “blue sky” laws for foreign securities laws.

(o) The execution, delivery and performance of the Indenture, the Guarantees, this Agreement and the Registration Rights Agreement by the Company and the Guarantors, and the issuance and sale of the Offered Securities by the Company and the issuance of the Guarantees by the Guarantors, and compliance in each case with the terms and provisions thereof will not result in a breach or violation of any of the terms and provisions of, or constitute a default under, (i) any statute, rule, regulation or order of any governmental agency or body or any court, domestic or foreign, having jurisdiction over the Company or any subsidiary or any of their respective properties, (ii) any agreement or instrument to which the Company or any such subsidiary is a party or by which the Company or any such subsidiary is bound or to which any of the properties of the Company or any such subsidiary is subject or (iii) the charter or by-laws of the Company or any such subsidiary, in each case as contemplated by this Agreement, except in each case for such breaches, violations or defaults under clause (ii) above that would not, individually or in the aggregate, have a Material Adverse Effect; and the Company has full corporate power and authority to authorize, issue and sell the Offered Securities, the Exchange Securities and the Private Exchange Securities and the Guarantors have the corporate, limited liability company or other power and authority to issue the Guarantees and the guarantees related to the Exchange Securities and the Private Exchange Securities.

(p) This Agreement has been duly authorized, executed and delivered by the Company and each of the Guarantors.

(q) Except as disclosed in the Offering Document, the Company and its subsidiaries have good and marketable title to all real properties and all other properties and assets owned by them and which are material to the business of the Company and its subsidiaries as currently conducted, in each case free from liens, encumbrances and defects that would materially interfere with their ability to conduct their business as currently conducted or utilize such property or asset for its intended purpose; and, except as disclosed in the Offering Document, the Company and its subsidiaries hold any leased real or personal property under valid and enforceable leases with no exceptions that would materially interfere with their ability to conduct their business as currently conducted or utilize such property for its intended purpose.

4

(r) The Company and its subsidiaries own, possess, or can acquire on reasonable terms adequate trademarks, trade names and other rights to inventions, know-how, patents, copyrights, confidential information and other intellectual property (collectively, “Intellectual Property Rights”) necessary to conduct the business now operated by them, or presently employed by them, except for such failures to own or possess or such inability to acquire as would not, individually or in the aggregate, have a Material Adverse Effect, and have not received any notice of infringement of or conflict with asserted rights that, if determined adversely to the Company or any of its subsidiaries, would individually or in the aggregate have a Material Adverse Effect.

(s) Except as disclosed in the Offering Document, neither the Company nor any of its subsidiaries (i) is in violation of any statute, rule, regulation, decision or order of any governmental agency or body or any court, domestic or foreign, relating to the use, disposal or release of hazardous or toxic substances or relating to the protection or restoration of the environment or human exposure to hazardous or toxic substances (collectively, “Environmental Laws”), (ii) owns or operates any real property contaminated with any substance that is subject to any Environmental Laws, (iii) is liable for any off-site disposal or contamination pursuant to any Environmental Laws or (iv) is subject to any claim relating to any Environmental Laws, which violation, contamination, liability or claim would individually or in the aggregate have a Material Adverse Effect; and the Company is not aware of any pending investigation which might lead to such a claim.

(t) Except as disclosed in the Offering Document, there are no pending actions, suits or proceedings against or affecting the Company, any of its subsidiaries or any of their respective properties that, if determined adversely to the Company or any of its subsidiaries, would individually or in the aggregate have a Material Adverse Effect, or would materially and adversely affect the ability of the Company to perform its obligations under the Indenture or this Agreement, or the Registration Rights Agreement, or which are otherwise material in the context of the sale of the Offered Securities; and no such actions, suits or proceedings are, to the Company’s knowledge, threatened or contemplated.

(u) The financial statements included in the Offering Document, taken together with the notes thereto, present fairly the financial position of the Company and its consolidated subsidiaries as of the dates shown and their results of operations and cash flows for the periods shown, and such financial statements have been prepared in conformity with the generally accepted accounting principles in the United States applied on a consistent basis; and the assumptions used in preparing the pro forma financial data included in the Offering Document provide a reasonable basis for presenting the significant effects directly attributable to the transactions or events described therein, the related pro forma adjustments give appropriate effect in all material respects to those assumptions and the pro forma columns therein reflect the proper application of the adjustments to the corresponding historical financial statement amounts.

(v) Except as disclosed in the Offering Document, since the date of the latest audited financial statements included in the Offering Document there has been no material adverse change, nor any development or event that would reasonably be expected to cause a material adverse change, in the condition (financial or otherwise), business, properties or results of operations of the Company and its subsidiaries taken as a whole, and, except as disclosed in or contemplated by the Offering Document, there has been no dividend or distribution of any kind declared, paid or made by the Company on any class of its capital stock.

(w) The Company is subject to the reporting requirements of either Section 13 or Section 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) and files reports with the Commission on the Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system.

(x) The Company is not an open-end investment company, unit investment trust or face-amount certificate company that is or is required to be registered under Section 8 of the United States Investment Company Act of 1940 (the “Investment Company Act”); and the Company is not and, after giving effect to the offering and sale of the Offered Securities and the application of the proceeds thereof as described in the Offering Document, will not be an “investment company” as defined in the Investment Company Act.

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(y) The Company has such permits, licenses, consents, exemptions, franchises, authorizations and other approvals (“Permits”) of, and has made all filings with and notice to, all governmental or regulatory authorities and self-regulatory organizations and all courts and other tribunals, including, without limitation, under any applicable Environmental Laws, laws relating to the provisions of occupational healthcare services, medical review services and the operation of managed care provider networks as are necessary to own, lease, license and operate its properties and to conduct its business, except where the failure to have any such Permit or to make any such filing or notice would not, singly or in the aggregate, have a Material Adverse Effect. Each such Permit is valid and in full force and effect and the Company is in compliance with all the terms and conditions of its permits and with the rules and regulations of the authorities and governing bodies having jurisdiction with respect thereto; no event has occurred (including the receipt of any notice from any authority or governing body) which allows or, after notice or elapse of time or both, would allow revocation, suspension or termination of any such Permit, or results or, after notice or lapse of time or both, would result in any other impairment of the rights of the holder of any such Permit; and such Permits contain no restrictions that are unduly burdensome to the Company, except, in each case, where such failure to be valid and in full force and effect or to be in compliance, the occurrence of any such event or the presence of any such restriction would not, singly or in the aggregate, have a Material Adverse Effect.

(z) To the Company’s knowledge, neither the Company nor any affiliated entity, including, without limitation, any professional corporation, partnership or association, with which the Company or any affiliated entity contracts and through which services are provided (each a “Group Member” or collectively, the “Group Members”) has received any indication or notice, written or oral, from representatives of state workers’ compensation bureaus or organizations or the Medicare, Medicaid or CHAMPUS programs (each, a “Program” and, collectively, the “Programs”) or any other federal or state agency that any of the Group Members’ agreements or arrangements are contrary to any federal or state fraud and abuse laws or regulations or federal or state self-referral laws or regulations.

(aa) Except as set forth in the Offering Document or except for such violations which, singly or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, to the Company’s knowledge, neither the Company nor any affiliated professional corporation, partnership or association has violated any federal, state or local statutes, rules or regulations or permit requirements relating to fraud and abuse, self-referral, fee-splitting, the corporate practice of medicine, the Programs, workers’ compensation, automobile insurance and other laws that regulate the ownership or operation of managed care provider networks or the provision of occupational healthcare services, cost containment services or medical review services or healthcare services generally or require licensing, certification or other approval of such services provided (collectively, the “Relevant Healthcare Laws”). Except for such violations which, singly or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, to the Company’s knowledge, neither the Company, nor any affiliated professional corporation, partnership or association has engaged in a pattern or practice of making payments intended to obtain or induce patient referrals for any of their operations.

(bb) All Group Members that provide items and services reimbursed by the Programs are eligible to participate in the Programs.

(cc) The Group Members employ personnel familiar with the various laws and regulations governing workers’ compensation and reimbursement under the Programs and conduct periodic audits of the Group Members’ billing and collection procedures. To the best of the Company’s knowledge, (i) each Group Member is in substantial compliance with those laws and regulations; and (ii) except as otherwise indicated in the Offering Document, no Group Member has received any indication or notice, written or oral, from representatives of the Programs or any other federal or state agency that any of the Group Members’ billing procedures will be audited.

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(dd) To the Company’s knowledge, the Group Members are in compliance with the laws and regulations pertaining to (i) physician licensure and (ii) physician fee-splitting in all states in which they are organized and otherwise authorized to conduct business, and are not engaged, either directly or indirectly, in either the unauthorized or unlicensed practice of medicine or in prohibited physician fee-splitting arrangements, except where such failure to be in compliance, singly or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

(ee) To the Company’s knowledge, no Group Member, or any individual or business entity with which a Group Member contracts and through which services are provided, has received any indication or notice, written or oral, from representatives of the United States Department of Health and Human Services or any other federal or state agency or accrediting body regarding any matters, including, but not limited to, the revocation, suspension, termination or modification of any applicable licenses, certifications, accreditations or supplier numbers, which has had or could have with the passage of time a Material Adverse Effect.

(ff) No securities of the same class (within the meaning of Rule 144A(d)(3) under the Securities Act) as the Offered Securities are listed on any national securities exchange registered under Section 6 of the Exchange Act or quoted in a U.S. automated inter-dealer quotation system.

(gg) Subject to the accuracy of the Purchasers’ representations and warranties and their compliance with their agreements and the procedures in Section 4 of this Agreement, the offer and sale of the Offered Securities by the Company to the several Purchasers in the manner contemplated by this Agreement will be exempt from the registration requirements of the Securities Act by reason of Section 4(2) thereof and Regulation S thereunder and it is not necessary to qualify an indenture in respect of the Offered Securities under the TIA.

(hh) Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf (other than the Purchasers, as to which the Company and the Guarantors make no representation or warranty) (i) has, within the six-month period prior to the date hereof, offered or sold in the United States or to any U.S. person (as such terms are defined in Regulation S under the Securities Act) the Offered Securities or any security of the same class or series as the Offered Securities or (ii) has offered or will offer or sell the Offered Securities (A) in the United States by means of any form of general solicitation or general advertising within the meaning of Rule 502(c) under the Securities Act or (B) with respect to any securities sold in reliance on Rule 903 of Regulation S, by means of any directed selling efforts within the meaning of Rule 902(c) of Regulation S. The Company has not entered and will not enter into any contractual arrangement with respect to the distribution of the Offered Securities except for this Agreement.

(ii) None of the transactions contemplated by this Agreement (including, without limitation, the use of the proceeds from the sale of the Offered Securities) will violate Regulation T, Regulation U or Regulation X of the Board of Governors of the Federal Reserve System.

(jj) No “nationally recognized statistical rating organization” as such term is defined for purposes of Rule 436(g)(2) under the Securities Act (i) has imposed (or has informed the Company or any Guarantor that it is considering imposing) any condition (financial or otherwise) on the Company’s or any Guarantor’s retaining any rating assigned to the Company or any Guarantor, any securities of the Company or any Guarantor or (ii) has indicated to the Company or any Guarantor that it is considering (a) the downgrading, suspension, or withdrawal of, or any review for a possible change that does not indicate the direction of the possible change in, any rating so assigned or (b) any change in the outlook for any rating of the Company, any Guarantor or any securities of the Company or any Guarantor.

(kk) None of the company, the Guarantors nor any of their respective affiliates or any person acting on its or their behalf (other than the Purchasers, as to whom the Company and the Guarantors make no representation or warranty) has engaged or will engage in any directed selling efforts within the meaning

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of Regulation S under the Securities Act (“Regulation S”) with respect to the Offered Securities or the Guarantees.

(ll) The Offered Securities offered and sold in reliance on Regulation S have been and will be offered and sold only in offshore transactions, assuming the accuracy of the Purchaser’s representations set forth in Section 4 hereof.

(mm) The sale of the Offered Securities pursuant to Regulation S is not part of a plan or scheme by the Company or the Guarantors to evade the registration provisions of the Securities Act.

(nn) No form of general solicitation or general advertising (as defined in Regulation D under the Securities Act) was used by the Company, the Guarantors or any of their respective representatives (other than the Purchasers, as to whom the Company and the Guarantors make no representation or warranty) in connection with the offer and sale of the Offered Securities contemplated hereby, including, but not limited to, articles, notices or other communications published in any newspaper, magazine, or similar medium or broadcast over television or radio, or any seminar or meeting whose attendees have been invited by any general solicitation or general advertising. No securities of the same class as the Offered Securities have been issued and sold by the Company within the six-month period immediately prior to the date hereof.

(oo) No registration under the Securities Act of the Offered Securities or the Guarantees is required for the sale of the Offered Securities and the Guarantees to the Purchasers as contemplated hereby or for the exempt resales by the Initial Purchasers, assuming the accuracy of the Purchaser’s representations set forth in Section 4 hereof.

3. Purchase, Sale and Delivery of Offered Securities. On the basis of the representations, warranties and agreements herein contained, but subject to the terms and conditions herein set forth, the Company agrees to sell to the Purchasers, and the Purchasers agree, severally and not jointly, to purchase from the Company, at a purchase price of 9½% of the principal amount thereof plus accrued interest from August 13, 2003 to the Closing Date the respective principal amounts of Offered Securities set forth opposite the names of the several Purchasers in Schedule A hereto.

The Company will deliver against payment of the purchase price the Offered Securities to be offered and sold by the Purchasers in reliance on Regulation S (the “Regulation S Securities”) in the form of one or more temporary global Securities in registered form without interest coupons (the “Temporary Regulation S Global Securities”) which will be deposited with the Trustee as custodian for The Depository Trust Company (“DTC”) and registered in the name of Cede & Co., as nominee for DTC. The Company will deliver against payment of the purchase price the Offered Securities to be purchased by each Purchaser hereunder and to be offered and sold by each Purchaser in reliance on Rule 144A under the Securities Act (the “144A Securities”) in the form of one or more permanent global securities in definitive form without interest coupons (the “Restricted Global Securities”) deposited with the Trustee as custodian for DTC and registered in the name of Cede & Co., as nominee for DTC. The Temporary Regulation S Global Securities and the Restricted Global Securities shall be assigned separate CUSIP numbers. The Restricted Global Securities shall include the legend regarding restrictions on transfer set forth under “Transfer Restrictions” in the Offering Document. Interests in any permanent global Securities will be held only in book-entry form through DTC, except in the limited circumstances described in the Offering Document.

Payment for the Temporary Regulation S Securities and the 144A Securities shall be made by the Purchasers in Federal (same day) funds by wire transfer to an account of the Company or an account as the Company may direct at a bank acceptable to the representatives, at the office of Cravath, Swaine & Moore LLP at 9:30 a.m. (New York time) on August 13, 2003, or at such other time not later than seven full business days thereafter as the Representatives and the Company determine, such time being herein referred to as the “Closing Date”, against delivery to the Trustee as custodian for DTC of (i) the Temporary Regulation S Global Securities representing all of

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the Regulation S Securities and (ii) the Restricted Global Securities representing all of the 144A Securities. The Temporary Regulation S Global Securities and the Restricted Global Securities will be made available for checking at the office of Cravath, Swaine & Moore LLP at least 24 hours prior to the Closing Date.

4. Representations by Purchasers; Resale by Purchasers.

(a) Each Purchaser severally represents and warrants to the Company that it is an “accredited investor” within the meaning of Regulation D under the Securities Act.

(b) Each Purchaser severally acknowledges that the Offered Securities have not been registered under the Securities Act and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except in accordance with Regulation S or pursuant to an exemption from the registration requirements of the Securities Act. Each Purchaser severally represents and agrees that it has offered and sold the Offered Securities and will offer and sell the Offered Securities (i) as part of their distribution at any time and (ii) otherwise until 40 days after the later of the commencement of the offering and the Closing Date, only in accordance with Rule 144A (“Rule 144A”) or Rule 903 under the Securities Act. Accordingly, neither the such Purchaser nor its affiliates, nor any persons acting on its or their behalf, have engaged or will engage in any directed selling efforts with respect to the Offered Securities, and such Purchaser, its affiliates and all persons acting on its or their behalf have complied and will comply with the offering restrictions requirement of Regulation S. Each Purchaser severally agrees that, at or prior to confirmation of sale of the Offered Securities, other than a sale pursuant to Rule 144A, such Purchaser will have sent to each distributor, dealer or person receiving a selling concession, fee or other remuneration that purchases the Offered Securities from it during the restricted period a confirmation or notice to substantially the following effect:

“The Securities covered hereby have not been registered under the U.S. Securities Act of 1933 (the “Securities Act”) and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons (i) as part of their distribution at any time or (ii) otherwise until 40 days after the later of the date of the commencement of the offering and the closing date, except in either case in accordance with Regulation S (or Rule 144A if available) under the Securities Act. Terms used above have the meanings given to them by Regulation S.”

Terms used in this subsection (b) have the meanings given to them by Regulation S.

(c) Each Purchaser severally agrees that it and each of its affiliates has not entered and will not enter into any contractual arrangement with respect to the distribution of the Offered Securities except for any such arrangements with the other Purchasers or affiliates of the other Purchasers or with the prior written consent of the Company.

(d) Each Purchaser severally agrees that it and each of its affiliates will not offer or sell the Offered Securities by means of any form of general solicitation or general advertising, within the meaning of Rule 502(c) under the Securities Act, including, but not limited to (i) any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or broadcast over television or radio, or (ii) any seminar or meeting whose attendees have been invited by any general solicitation or general advertising. Each Purchaser severally agrees, with respect to resales made in reliance on Rule 144A of any of the Offered Securities, to deliver either with the confirmation of such resale or otherwise prior to settlement of such resale a notice to the effect that the resale of such Offered Securities has been made in reliance upon the exemption from the registration requirements of the Securities Act provided by Rule 144A.

5. Certain Agreements of the Company. The Company agrees with the several Purchasers that:

(a) The Company will advise the Representatives promptly of any proposal to amend or supplement the Offering Document and will not effect such amendment or supplementation without the Representatives’

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consent, which consent will not be reasonably withheld or delayed. If, at any time prior to the completion of the resale of the Offered Securities by the Purchasers any event occurs as a result of which the Offering Document as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Company promptly will notify the Representatives of such event and promptly will prepare, at its own expense, an amendment or supplement which will correct such statement or omission or effect such compliance. Neither the Representatives’ consent to, nor the Purchasers’ delivery to offerees or investors of, any such amendment or supplement shall constitute a waiver of any of the conditions set forth in Section 6.

(b) The Company will furnish to the Representatives copies of the Preliminary Offering Circular, the Offering Document and all amendments and supplements to such documents, in each case as soon as available and in such quantities as the Representatives reasonably request. At any time when the Company is not subject to Section 13 or 15(d) of the Exchange Act and any of the Offered Securities remain outstanding, the Company will promptly furnish or cause to be furnished to the Representatives (and, upon request, to each of the other Purchasers) and, upon request of holders and prospective purchasers of the Offered Securities, to such holders and purchasers, copies of the information required to be delivered to holders and prospective purchasers of the Offered Securities pursuant to Rule 144A(d)(4) under the Securities Act (or any successor provision thereto) in order to permit compliance with Rule 144A in connection with resales by such holders of the Offered Securities. The Company will pay the expenses of printing and distributing to the Purchasers all such documents.

(c) The Company will arrange for the qualification of the Offered Securities for sale and the determination of their eligibility for investment under the laws of such states in the United States as the Representatives reasonably designate and will continue such qualifications in effect so long as required for the resale of the Offered Securities by the Purchasers provided that the Company will not be required to qualify as a foreign corporation or to file a general consent to service of process in any such state.

(e) During the period of two years after the Closing Date, the Company will, upon request, furnish to the Representatives, each of the other Purchasers and any holder of Offered Securities a copy of the restrictions on transfer applicable to the Offered Securities.

(f) During the period of two years after the Closing Date, the Company will not, and will not permit any of its affiliates (as defined in Rule 144 under the Securities Act) to, resell any of the Offered Securities that have been reacquired by any of them.

(g) During the period of two years after the Closing Date, the Company will not be or become, an open-end investment company, unit investment trust or face-amount certificate company that is or is required to be registered under Section 8 of the Investment Company Act.

(h) The Company will pay all expenses incidental to the performance of its obligations under this Agreement, the Indenture and the Registration Rights Agreement including (i) the fees and expenses of Trustee and its professional advisers; (ii) all expenses in connection with the execution, issue, authentication, packaging and initial delivery of the Offered Securities and, as applicable, the Exchange Securities (as defined in the Registration Rights Agreement), the preparation and printing of this Agreement, the Registration Rights Agreement, the Offered Securities, the Indenture, the Offering Document and amendments and supplements thereto, and any other document relating to the issuance, offer, sale and delivery of the Offered Securities and as applicable the Exchange Securities (iii) the cost of qualifying the Offered Securities for trading in The Portal^SM Market (“PORTAL”) of The Nasdaq Stock Market, Inc. and any expenses incidental thereto, (iv) the cost of any advertising approved by the Company in connection with the issue of the Offered Securities, (v) for any expenses (including fees and disbursements of counsel) incurred in connection with qualification of the Offered Securities or the Exchange Securities for sale under the laws of such jurisdictions as the

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Representatives designate and the printing of memoranda relating thereto, (vi) for any fees charged by investment rating agencies for the rating of the Securities or the Exchange Securities, and (vii) for expenses incurred in distributing preliminary offering circulars and the Offering Document (including any amendments and supplements thereto) to the Purchasers. The Company will reimburse the Purchasers for all travel expenses of the Purchasers and the Company’s officers and employees and any other expenses of the Purchasers and the Company in connection with attending or hosting meetings with prospective purchasers of the Offered Securities.

(i) In connection with the offering, until the Representatives shall have notified the Company and the other Purchasers of the completion of the resale of the Offered Securities, neither the Company nor any of its affiliates has or will, either alone or with one or more other persons, bid for or purchase for any account in which it or any of its affiliates has a beneficial interest any Offered Securities or attempt to induce any person to purchase any Offered Securities; and neither it nor any of its affiliates will make bids or purchases for the purpose of creating actual, or apparent, active trading in, or of raising the price of, the Offered Securities.

(j) For a period of 90 days after the date of the initial offering of the Offered Securities by the Purchasers, the Company will not offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any United States dollar-denominated debt securities issued or guaranteed by the Company and having a maturity of more than one year from the date of issue without the prior written consent of the Representatives, or publicly disclose the intention to make any such offer, sale, pledge or disposition, without the prior written consent of the Representatives, which consent shall not be unreasonably withheld or delayed; provided that this provision shall not prohibit the filing of any Registration Statement, the issuance of the Exchange Securities, borrowings under the credit facilities existing on the date hereof or secured financings of accounts receivables and inventory. The Company will not at any time offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any securities under circumstances where such offer, sale, pledge, contract or disposition would cause the exemption afforded by Section 4(2) of the Securities Act to cease to be applicable to the offer and sale of the Securities.

6. Conditions of the Obligations of the Purchasers. The obligations of the several Purchasers to purchase and pay for the Offered Securities on the Closing Date will be subject to the accuracy of the representations and warranties on the part of the Company herein, as of the date hereof and as of the Closing Date, to the accuracy of the statements of officers of the Company made pursuant to the provisions hereof, to the performance by the Company of its obligations hereunder and to the following additional conditions precedent:

(a) The Purchasers shall have received a letter, dated the date of this Agreement, of PricewaterhouseCoopers confirming that they are independent public accountants under Rule 101 of the American Institute of Certified Public Accountants Code of Professional Conduct, and its interpretations and rulings, and to the effect that:

(i) In their opinion the consolidated financial statements and financial statement schedules audited by them and included in the Offering Circular comply as to form in all material respects with the applicable accounting requirements of the Securities Act and the applicable rules and regulations thereunder (the “Rules and Regulations”);

(ii) they have performed the procedures specified by the American Institute of Certified Public Accountants for a review of interim financial information as described in Statement of Auditing Standards No. 100, Interim Financial Information, on the unaudited financial statements included in the Offering Circular;

(iii) on the basis of the review referred to in clause (ii) above, a reading of the latest available interim financial statements of the Company, inquiries of officials of the Company who have

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responsibility for financial and accounting matters and other specified procedures, nothing came to their attention that caused them to believe that:

(A) the unaudited financial statements included in the Offering Circular do not comply as to form in all material respects with the applicable accounting requirements of the Exchange Act and the related published Rules and Regulations or any material modifications should be made to such unaudited condensed financial statements for them to be in conformity with generally accepted accounting principles;

(B) at the date of the latest available balance sheet read by such accountants, or at a subsequent specified date not more than three business days prior to the date of this Agreement, there was any change in the capital stock or any increase in short-term indebtedness or long-term debt of the Company and its consolidated subsidiaries or, at the date of the latest available balance sheet read by such accountants, there was any decrease in consolidated net current assets (working capital) or net assets, as compared with amounts shown on the latest balance sheet included in the Offering Circular ; or

(C) for the period from the closing date of the latest income statement included in the Offering Circular to the closing date of the latest available income statement read by such accountants there were any decreases, as compared with the corresponding period of the previous year in consolidated net sales, net operating income or consolidated net income or total income;

except in all cases set forth in clauses (B) and (C) above for changes, increases or decreases which the Offering Circular disclose have occurred or may occur or which are described in such letter; and

(iv) they have compared specified dollar amounts (or percentages derived from such dollar amounts) and other financial information contained in the Offering Circular (in each case to the extent that such dollar amounts, percentages and other financial information are derived from the general accounting records of the Company and its subsidiaries subject to the internal controls of the Company’s accounting system or are derived directly from such records by analysis or computation) with the results obtained from inquiries, a reading of such general accounting records and other procedures specified in such letter and have found such dollar amounts, percentages and other financial information to be in agreement with such results, except as otherwise specified in such letter.

(b) Subsequent to the execution and delivery of this Agreement, there shall not have occurred (i) any change, or any development or event involving a prospective change, in the condition (financial or otherwise), business, properties or results of operations of the Company and its subsidiaries taken as one enterprise which, in the reasonable judgment of the Representatives is material and adverse and makes it impractical or inadvisable to proceed with completion of the offering or the sale of and payment for the Offered Securities; (ii) any downgrading in the rating of any debt securities of the Company by any “nationally recognized statistical rating organization” (as defined for purposes of Rule 436(g) under the Securities Act), or any public announcement that any such organization has under surveillance or review its rating of any debt securities of the Company (other than an announcement with positive implications of a possible upgrading, and no implication of a possible downgrading, of such rating) or any announcement that the Company has been placed on negative outlook; (iii) any change in U.S. or international financial, political or economic conditions or currency exchange rates or exchange controls as would, in the reasonable judgment of the Representatives, be likely to prejudice materially the success of the proposed issue, sale or distribution of the Offered Securities, whether in the primary market or in respect of dealings in the secondary market; (iv) any material suspension or material limitation of trading in securities generally on the New York Stock Exchange or any setting of minimum prices for trading on such exchange, or any suspension of trading of any securities of the Company

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on any exchange or in the over-the-counter market; (v) any banking moratorium declared by U.S. Federal, New York authorities; (vi) any major disruption of settlements of securities or clearance services in the United States or (vii) any attack on, outbreak or escalation of hostilities or act of terrorism involving the United States, any declaration of war by Congress or any other national or international calamity or emergency if, in the reasonable judgment of the Representatives, the effect of any such attack, outbreak, escalation, act, declaration, calamity or emergency makes it impractical or inadvisable to proceed with completion of the offering or sale of and delivery and payment for the Offered Securities.

(c) The Purchasers shall have received an opinion, dated as of the Closing Date, of Vinson & Elkins L.L.P., counsel for the Company, that:

(i) The Indenture, the Guarantees and the Offered Securities conform in all material respects to the description thereof contained in the Offering Circular; and (assuming due authorization, execution and delivery of the Indenture by the Trustee, due authentication of the Offered Securities by the Trustee and delivery of the Offered Securities against payment therefor in accordance with the Purchase Agreement) the Indenture, the Guarantee and the Offered Securities constitute valid and legally binding obligations of the Company and of the Guarantors enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws relating to or affecting creditors’ rights generally and to general equity principles;

(ii) The Company is not and, after giving effect to the offering and sale of the Offered Securities and the application of the proceeds thereof as described in the Offering Circular, will not be an “investment company” as defined in the Investment Company Act;

(iii) The Indenture conforms in all material respects to the requirements of the Trust Indenture Act and the rules and regulations of the Commission applicable to an indenture which is qualified thereunder;

(iv) No consent, approval, authorization or order of, or filing with, any governmental agency or body or any court is required for the consummation of the transactions contemplated by this Agreement and the Registration Rights Agreement in connection with the issuance or sale of the Offered Securities by the Company or the issuance of the Guarantees or the guarantees related to the Exchange Securities or Private Exchange Securities by the Guarantors, except (i) for the filing of the Exchange Offer Registration Statement or the Shelf Registration Statement with the Commission and the order of the Commission declaring the Exchange Offer Registration Statement or the Shelf Registration Statement effective, (ii) as may be required by the Trust Indenture Act or (iii) for any consent, approval, authorization, order, or filing required pursuant to federal or state securities or “blue sky” laws of foreign securities laws;

(v) The execution, delivery and performance of the Indenture, the Guarantees, this Agreement and the Registration Rights Agreement by the Company and the Guarantors, and the issuance and sale of the Offered Securities by the Company and the issuance of the Guarantees by the Guarantors, the application of the net proceeds therefrom and compliance in each case with the terms and provisions thereof will not result in a breach or violation of any of the terms and provisions of, or constitute a default under, the Facilities to be entered into as part of the Refinancing Transactions or the indenture governing the Company’s 13% Senior Subordinated Notes;

(vi) The Registration Rights Agreement has been duly authorized, executed and delivered by the Company and by each of the Guarantors and (assuming due authorization, execution and delivery by the Purchasers) constitutes a valid and legally binding obligation of the Company and of the Guarantors enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent

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transfer, reorganization, moratorium and similar laws relating to or affecting creditors’ rights generally and to general equity principles and public policy considerations with respect to any rights of indemnity or contribution;

(vii) The Exchange Securities and Private Exchange Securities have been duly authorized by the Company and each of the Guarantors; and when the Exchange Securities and Private Exchange Securities are issued, executed and authenticated in accordance with the terms of the Exchange Offer and the Indenture, the Exchange Securities and Private Exchange Securities will constitute valid and legally binding obligations of the Company, enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws relating to or affecting creditors’ rights generally and to general equity principles;

(viii) The Guarantee to be endorsed on the Offered Securities by each Guarantor has been duly authorized by such Guarantor and conforms in all material respects to the description thereof in the Offering Circular; and when the Exchange Securities and Private Exchange Securities have been issued, executed and authenticated in accordance with the terms of the Exchange Offer and the Indenture, the guarantee of each Guarantor endorsed thereon will constitute the valid and legally binding obligation of such Guarantor, enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws relating to or affecting creditors’ rights generally and to general equity principles;

(ix) The Guarantee to be endorsed on the Exchange Securities and Private Exchange Securities by each Guarantor has been duly authorized by such Guarantor and has been duly executed and delivered by each such Guarantor; and when the Exchange Securities and Private Exchange Securities have been issued, executed and authenticated in accordance with the terms of the Exchange Offer and the Indenture, the guarantee of each Guarantor endorsed thereon will constitute the valid and legally binding obligation of such Guarantor, enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws relating to or affecting creditors’ rights generally and to general equity principles; and

(x) Assuming the accuracy of the Purchaser’s representations and warranties set forth in this Agreement, it is not necessary in connection with (i) the offer, sale and delivery of the Offered Securities by the Company to the several Purchasers pursuant to this Agreement or (ii) the resales of the Offered Securities by the several Purchasers in the manner contemplated hereby to register the Offered Securities under the Securities Act or to qualify an indenture in respect thereof under the TIA.

In addition, such counsel shall state in a letter to the Purchasers that such counsel has no reason to believe that the Offering Circular, or any amendment or supplement thereto, as of the date hereof and as of the Closing Date, contained any untrue statement of a material fact or omitted to state any material fact necessary to make the statements therein in the light of the circumstances under which they were made, not misleading; it being understood that such counsel need express no opinion as to the financial statements or other financial data contained in the Offering Circular. In rendering its opinion pursuant to this Section, Vinson & Elkins L.L.P. shall be entitled to rely (i) as to matters involving the application of laws of any jurisdiction other than the State of Texas, the State of Delaware, the State of New York or the Federal laws of the United States, to the extent they deem proper and specified in such opinion, upon the opinion of other counsel of good standing whom they believe to be reliable and who are reasonably satisfactory to counsel for the Purchasers; and (ii) as to matters of fact, to the extent they deem proper, on certificates of responsible officers of the Company and public officials. In addition, in rendering its opinion pursuant to this Section, Vinson & Elkins L.L.P. shall be permitted to assume the due authorization, execution and delivery of the documents and securities referenced in paragraphs (i) through (x) above.

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(d) The Purchasers shall have received an opinion, dated as of the Closing Date, of Richard A. Parr II, General Counsel to the Company, that:

(i) The Indenture has been duly authorized, executed and delivered by the Company and each Guarantor; the Guarantees have been duly authorized, executed and delivered by the applicable Guarantor; the Offered Securities have been duly authorized, executed, issued and delivered by the Company;

(ii) This Agreement has been duly authorized, executed and delivered by the Company and by each of the Guarantors;

(iii) The Registration Rights Agreement has been duly authorized, executed and delivered by the Company and by each of the Guarantors;

(iv) The Exchange Securities and Private Exchange Securities have been duly authorized by the Company and each of the Guarantors;

(v) The Guarantee to be endorsed on the Offered Securities by each Guarantor has been duly authorized by each such Guarantor;

(vi) The Guarantee to be endorsed on the Exchange Securities and Private Exchange Securities by each Guarantor has been duly authorized by such Guarantor and has been duly executed and delivered by each such Guarantor;

(vii) The Company is an existing corporation in good standing under the laws of the State of Nevada, with corporate power and authority to own its properties and conduct its business as described in the Offering Circular; and the Company is duly qualified to do business as a foreign corporation in good standing in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification, except where the failure to be so qualified or in good standing would not have a Material Adverse Effect;

(viii) Each subsidiary of the Company is an existing corporation, limited liability company or other entity in good standing under the laws of the jurisdiction of its incorporation or organization, with power and authority (corporate, limited liability company and other, as applicable) to own its properties and conduct its business as described in the Offering Circular; and each subsidiary of the Company is duly qualified to do business as a foreign corporation or other business entity in good standing in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification, except where the failure to be so qualified or in good standing would not have a Material Adverse Effect; all of the issued and outstanding capital stock of each subsidiary of the Company has been duly authorized and validly issued and is fully paid and, in the case of corporate subsidiaries, nonassessable;

(ix) To such counsel’s knowledge, there are no contracts, agreements or understandings between the Company or any Guarantor and any person granting such person the right to require the Company or such Guarantor to include any securities in any registration statement required to be filed pursuant to the Registration Rights Agreement.

(x) To such counsel’s knowledge, except as set forth in the Offering Circular, there are no pending actions, suits or proceedings against or affecting the Company, any of its subsidiaries or any of their respective properties that, if determined adversely to the Company or any of its subsidiaries, would individually or in the aggregate have a Material Adverse Effect, or would

15

materially and adversely affect the ability of the Company to perform its obligations under the Indenture, this Agreement, or the Registration Rights Agreement, or which are otherwise material in the context of the sale of the Offered Securities; and no such actions, suits or proceedings are, to such counsel’s knowledge, threatened or contemplated;

(xi) The execution, delivery and performance of the Indenture, the Guarantees, this Agreement and the Registration Rights Agreement and the issuance and sale of the Offered Securities, the application of the net proceeds therefrom and compliance with the terms and provisions thereof will not result in a breach or violation of any of the terms and provisions of, or constitute a default under, any statute, rule or regulation or, to such counsel’s knowledge, any order of any governmental agency or body or any court having jurisdiction over the Company or any subsidiary of the Company or any of their properties, including, without limitation, any Environmental Law, any Relevant Healthcare Law, any Program or the rules and regulations promulgated thereunder, or any agreement or instrument to which the Company or any such subsidiary is a party or by which the Company or any such subsidiary is bound or to which any of the properties of the Company or any such subsidiary is subject and which has been filed with the Commission in connection with the Company’s most recent annual report on Form 10-K, as amended to the date of this agreement, or the charter or by-laws of the Company or any such subsidiary, except that no opinion need be expressed pursuant to this paragraph related to securities or other anti-fraud statutes, rules or regulations; and the Company has full corporate power and authority to authorize, issue and sell the Offered Securities, the Exchange Securities and the Private Exchange Securities, and the Guarantors have the corporate, limited liability company or other power and authority to issue the Guarantees and the guarantees related to the Exchange Securities and the Private Exchange Securities, in each case as contemplated by this Agreement;

(xii) The statements in the Offering Circular set forth under the headings “Risk Factors—Changes in state laws, rules and regulations, including those governing the corporate practice of medicine, fee splitting, worker’s compensation and insurance laws, rules and regulations, may affect our ability to expand all of our operations into other states and, therefore, our profitability,” “Risk Factors—New federal and state legislative and regulatory initiatives relating to patient privacy and new federal legislative and regulatory initiatives relating to the use of standard transaction code sets have required us and will continue to require us to expend substantial sums of money on the acquisition and implementation of new information systems, which could negatively impact our profitability,” “Risk Factors—Changes in the federal Anti-Kickback Statute and Stark Law and/or similar state laws, rules and regulations could adversely affect our profitability and ability to expand our operations,” “Business—Government Regulation,” “Certain Relationships and Related Transactions,” “Description of Other Indebtedness” and “United States Federal Income Tax Considerations,” insofar as such statements purport to constitute a summary of the legal matters referred to therein or the terms of the contracts referred to therein are accurate in all material respects and fairly summarize the matters set forth therein;

(xiii) To such counsel’s knowledge, the Company has such Permits of, and has made all filings with and notice to, all governmental or regulatory authorities and self-regulatory organizations and all courts and other tribunals, including, without limitation, under any applicable Environmental Laws, laws relating to the provisions of occupational healthcare services, medical review services and the operation of managed care provider networks as are necessary to own, lease, license and operate its properties and to conduct its business, except where the failure to have any such Permit or to make any such filing or notice would not, singly or in the aggregate, have a Material Adverse Effect; to such counsel’s knowledge, each such Permit is valid and in full force and effect and the Company is in compliance with all the terms and conditions of its permits and with the rules and regulations of the authorities and governing bodies having jurisdiction with

16

respect thereto; to such counsel’s knowledge, no event has occurred (including the receipt of any notice from any authority or governing body) which allows or, after notice or elapse of time or both, would allow revocation, suspension or termination of any such Permit, or results or, after notice or lapse of time or both, would result in any other impairment of the rights of the holder of any such permit; and to such counsel’s knowledge, such Permits contain no restrictions that are unduly burdensome to the Company, except, in each case, where such failure to be valid and in full force and effect or to be in compliance, the occurrence of any such event or the presence of any such restriction would not, singly or in the aggregate, have a Material Adverse Effect;

(xiv) To such counsel’s knowledge, neither the Company nor any Group Member has received any indication or notice, written or oral, from representatives of any Program or any other federal or state agency that any of the Group Members’ agreements or arrangements are contrary to any federal or state fraud and abuse laws or regulations or federal or state self-referral laws or regulations;

(xv) Except as set forth in the Offering Circular or except for such violations which, singly or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, to such counsel’s knowledge, neither the Company nor any affiliated professional corporation, partnership or association has violated any Relevant Healthcare Law; except for such violations which, singly or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, to such counsel’s knowledge, neither the Company, nor any affiliated professional corporation, partnership or association has engaged in a pattern or practice of making payments intended to obtain or induce patient referrals for any of their operations;

(xvi) To such counsel’s knowledge, all Group Members that provide items and services reimbursed by the Programs are eligible to participate in the Programs;

(xvii) To such counsel’s knowledge, the Group Members employ personnel familiar with the various laws and regulations governing workers’ compensation and reimbursement under the Programs and conduct periodic audits of the Group Members’ billing and collection procedures; to such counsel’s knowledge, (i) each Group Member is in substantial compliance with those laws and regulations; and (ii) except as otherwise indicated in the Offering Circular, no Group Member has received any indication or notice, written or oral, from representatives of the Programs or any other federal or state agency that any of the Group Members’ billing procedures will be audited;

(xviii) To such counsel’s knowledge, the Group Members are in compliance with the laws and regulations pertaining to (i) physician licensure and (ii) physician fee-splitting in all states in which they are organized and otherwise authorized to conduct business, and are not engaged, either directly or indirectly, in either the unauthorized or unlicensed practice of medicine or in prohibited physician fee-splitting arrangements, except where such failure to be in compliance, singly or in the aggregate, could not reasonably be expected to have a Material Adverse Effect; and

(xix) To such counsel’s knowledge, no Group Member, or any individual or business entity with which a Group Member contracts and through which services are provided, has received any indication or notice, written or oral, from representatives of the United States Department of Health and Human Services or any other federal or state agency or accrediting body regarding any matters, including, but not limited to, the revocation, suspension, termination or modification of any applicable licenses, certifications, accreditations or supplier numbers, which has had or could have with the passage of time a Material Adverse Effect.

17

In addition, such counsel shall state in a letter to the Purchasers that such counsel has no reason to believe that the Offering Circular, or any amendment or supplement thereto, as of the date hereof and as of the Closing Date, contained any untrue statement of a material fact or omitted to state any material fact necessary to make the statements therein in the light of the circumstances under which they were made, not misleading; it being understood that such counsel need express no opinion as to the financial statements or other financial data contained in the Offering Circular. In rendering his opinion pursuant to this Section, the Company’s General Counsel shall be entitled to rely (i) as to matters involving the application of laws of any jurisdiction other than the State of Texas or the Federal laws of the United States, to the extent he deems proper and specified in such opinion, upon the opinion of other counsel of good standing whom he believes to be reliable and who are reasonably satisfactory to counsel for the Purchasers; and (ii) as to matters of fact, to the extent he deems proper, on certificates of responsible officers of the Company and public officials.

(e) The Purchasers shall have received an opinion, dated the Closing Date, from counsel reasonably satisfactory to the Representatives with respect to the incorporation and good standing of the Company, the valid existence and good standing of any subsidiary incorporated or organized under the laws of the State of Nevada, the valid existence and good standing of any subsidiary incorporated or organized under the laws of the State of Massachusetts and the valid existence and good standing of each other subsidiary for which an opinion will be delivered for the benefit of the lenders under the Facilities.

(f) The Purchasers shall have received from Cravath, Swaine & Moore LLP, counsel for the Purchasers, such opinion or opinions, dated the Closing Date, with respect to the validity of the Offered Securities, the Offering Circular, the exemption from registration for the offer and sale of the Offered Securities by the Company to the several Purchasers and the resales by the several Purchasers as contemplated hereby and other related matters as the Representatives may require, and the Company shall have furnished to such counsel such documents as they reasonably request for the purpose of enabling them to pass upon such matters.

(g) The Purchasers shall have received a certificate, dated the Closing Date, of the President or any Vice President and a principal financial or accounting officer of the Company in which such officers, to their knowledge after reasonable investigation, shall state that the representations and warranties of the Company in this Agreement are true and correct, that the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder at or prior to the Closing Date, and that, subsequent to the dates of the most recent financial statements in the Offering Circular there has been no material adverse change, nor any development or event that would reasonably be expected to cause a material adverse change, in the condition (financial or otherwise), business, properties or results of operations of the Company and its subsidiaries taken as a whole except as set forth in the Offering Circular (exclusive of any amendment or supplement thereto on or after the date of this Agreement).

(h) The Purchasers shall have received a letter, dated the Closing Date, of PricewaterhouseCoopers which meets the requirements of subsection (a) of this Section, except that the specified date referred to in such subsection will be a date not more than three days prior to the Closing Date for the purposes of this subsection.

(i) The Company, the Guarantors and the Trustee shall have entered into the Indenture and the Purchasers shall have received counterparts, conformed as executed, thereof.

(j) The Company and the Guarantors shall have entered into the Registration Rights Agreement and the Purchasers shall have received counterparts, conformed as executed, thereof.

(k) The Refinancing Transactions (other than the sale and issuance of the Offered Securities) shall have been consummated, subject to customary settlement periods.

The Company will furnish the Purchasers with such conformed copies of such opinions, certificates, letters and documents as the Purchasers reasonably request. The Representatives may in their sole discretion waive on

18

behalf of the Purchasers compliance with any conditions to the obligations of the Purchasers hereunder, whether in respect of an Optional Closing Date or otherwise.

7. Conditions of the Obligations of the Company and the Guarantors. The obligations of the Company and the Guarantors to issue and sell the Offered Securities on the Closing Date will be subject to the condition precedent that the Refinancing Transactions (other than the sale and issuance of the Offered Securities) shall have been consummated, subject to customary settlement periods.

8. Indemnification and Contribution. (a) The Company and the Guarantors will, jointly and severally, indemnify and hold harmless each Purchaser, its partners, directors and officers and each person, if any, who controls such Purchaser within the meaning of Section 15 of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which such Purchaser may become subject, under the Securities Act or the Exchange Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Offering Document, or any amendment or supplement thereto, or any related preliminary offering circular, or arise out of or are based upon the omission or alleged omission to state therein a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, including any losses, claims, damages or liabilities arising out of or based upon the Company’s failure to perform its obligations under Section 5(a) of this Agreement, and will reimburse each Purchaser for any out-of-pocket legal or other expenses reasonably incurred by such Purchaser in connection with investigating or defending any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement in or omission or alleged omission from any of such documents in reliance upon and in conformity with written information furnished to the Company by any Purchaser through the Representatives specifically for use therein, it being understood and agreed that the only such information consists of the information described as such in subsection (b) below; provided further, however, that the foregoing indemnity agreement with respect to losses, claims, damages or liabilities shall not inure to the benefit of any Purchaser (or any person controlling any Purchaser) with respect to any losses, claims damages or liabilities arising out of our based upon (x) any untrue statement or alleged untrue statement of any material fact in the Preliminary Offering Circular or (y) the omission or alleged omission to state in the Preliminary Offering Circular a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, if (1) the Company furnished to the Purchasers sufficient copies of the Offering Circular on a timely basis to permit delivery of the written confirmation of the sale of the Offered Securities to such persons; (2) the person asserting such losses, claims, damages or liabilities purchased Offered Securities from such Purchaser in the initial resale by such Purchaser (each person an “Initial Resale Purchaser”) and a copy of the Offering Circular was not sent or given by or on behalf of such Purchaser to such Initial Resale Purchaser at or prior to the delivery of the written confirmation of such sale; and (3) the Offering Circular would have cured the effect giving rise to such losses, claims, damages or liabilities.

(b) Each Purchaser will severally and not jointly indemnify and hold harmless the Company, its directors and officers and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act, against any losses, claims, damages or liabilities to which the Company may become subject, under the Securities Act or the Exchange Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Offering Document, or any amendment or supplement thereto, or any related preliminary offering circular, or arise out of or are based upon the omission or the alleged omission to state therein a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company by such Purchaser through the Representatives specifically for use therein, and will reimburse any legal or other expenses reasonably incurred by the Company in connection with investigating or defending any such loss,

19

claim, damage, liability or action as such expenses are incurred, it being understood and agreed that the only such information furnished by any Purchaser consists of the following information in the Offering Document furnished on behalf of each Purchaser: the third, sixth, eleventh and twelfth paragraphs under the caption “Plan of Distribution” and the paragraph on the cover page regarding the delivery of the Offered Securities; provided however, that the Purchasers shall not be liable for any losses, claims, damages or liabilities arising out of or based upon the Company’s failure to perform its obligations under Section 5(a) of this Agreement.

(c) Promptly after receipt by an indemnified party under this Section of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under subsection (a) or (b) above, notify the indemnifying party of the commencement thereof; but the failure to notify the indemnifying party shall not relieve it from any liability that it may have under subsection (a) or (b) above except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and provided further that the failure to notify the indemnifying party shall not relieve it from any liability that it may have to an indemnified party otherwise than under subsection (a) or (b) above. In case any such action is brought against any indemnified party and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, such consent not to be unreasonably withheld or delayed be counsel to the indemnifying party), and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party under this Section for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation. In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the contrary; (ii) the indemnifying party has failed within a reasonable time to retain counsel reasonably satisfactory to the indemnified party; (iii) the indemnified party shall have reasonably concluded, based on the advice of legal counsel, that there may be legal defenses available to it that are different from or in addition to those available to the indemnifying party; or (iv) the named parties in any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood and agreed that the indemnifying party shall not, in connection with any proceeding or related proceeding in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all indemnified parties, and that all such fees and expenses shall be reimbursed as they are incurred. Any such separate firm for any Purchaser, its affiliates, directors and officers and any control persons of such Purchaser shall be designated in writing by CSFB and any such separate firm for the Company, the Guarantors, their directors and officers and any control persons of the Company and the Guarantors shall be designated in writing by the Company. In no event will the indemnifying party be required to pay the fees and expenses of more than one counsel for the indemnified parties in any jurisdiction. No indemnified party shall effect any settlement of any pending or threatened action for which indemnification is provided without the prior written consent of the indemnifying parties, such consent not to be unreasonably withheld or delayed. No indemnifying party shall, without the prior written consent of the indemnified party, such consent not to be unreasonably withheld or delayed, effect any settlement of any pending or threatened action in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party unless such settlement includes (i) an unconditional release of such indemnified party from all liability on any claims that are the subject matter of such action and (ii) does not include a statement as to or an admission of fault, culpability or failure to act by or on behalf of any indemnified party.

(d) If the indemnification provided for in this Section is unavailable or insufficient to hold harmless an indemnified party under subsection (a) or (b) above, other than unavailability caused by the express provisions of subsections (a), (b) or (c), then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities referred to in subsection (a) or (b) above

20

(i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Purchasers on the other from the offering of the Offered Securities or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and the Purchasers on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Purchasers on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Company bear to the total discounts and commissions received by the Purchasers from the Company under this Agreement. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Purchasers and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any action or claim which is the subject of this subsection (d). Notwithstanding the provisions of this subsection (d) no Purchaser shall be required to contribute any amount in excess of the amount by which the total discounts, fees and commissions received by such Purchaser exceeds the amount of any damages which such Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. The Purchasers’ obligations in this subsection (d) to contribute are several in proportion to their respective purchase obligations and not joint.

(e) The obligations of the Company under this Section shall be in addition to any liability which the Company may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls any Purchaser within the meaning of the Securities Act or the Exchange Act; and the obligations of the Purchasers under this Section shall be in addition to any liability which the respective Purchasers may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act.

9. Default of Purchasers. If any Purchaser or Purchasers default in their obligations to purchase Securities hereunder and the aggregate principal amount of the Offered Securities that such defaulting Purchaser or Purchasers agreed but failed to purchase does not exceed 10% of the total principal amount of the Offered Securities, the Representatives may make arrangements satisfactory to the Company for the purchase of such Offered Securities by other persons (provided that such persons shall not cause the offer, sale or issuance of the Offered Securities to require registration under the Securities Act, other than pursuant to the Registration Rights Agreement, or make the exemptions provided by Rule 144A and/or Regulation S unavailable for the offer, sale and issuance of the Offered Securities), including any of the Purchasers, but if no such arrangements are made by the Closing Date, the non-defaulting Purchasers shall be obligated severally, in proportion to their respective commitments hereunder, to purchase the Offered Securities that such defaulting Purchasers agreed but failed to purchase. If any Purchaser or Purchasers so default and the aggregate principal amount of the Offered Securities with respect to which such default or defaults occur exceeds 10% of the total principal amount of the Offered Securities and arrangements satisfactory to the Representatives and the Company for the purchase of such Offered Securities by other persons are not made within 36 hours after such default, this Agreement will terminate without liability on the part of any non-defaulting Purchaser or the Company, except as provided in Section 10. As used in this Agreement, the term “Purchaser” includes any person substituted for a Purchaser under this Section. Nothing herein will relieve a defaulting Purchaser from liability for its default.

10. Survival of Certain Representations and Obligations. The respective indemnities, agreements, representations, warranties and other statements of the Company or its officers and of the several Purchasers set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation, or statement as to the results thereof, made by or on behalf of any Purchaser, the Company or any of their respective representatives, officers or directors or any controlling person, and will survive delivery of and payment for the Offered Securities. If this Agreement is terminated pursuant to Section 9 or if for any reason the purchase of the

21

Offered Securities by the Purchasers is not consummated, the Company shall remain responsible for the expenses to be paid or reimbursed by it pursuant to Section 5 (provided that nothing shall prohibit the Company from seeking damages from any defaulting Purchaser) and the respective obligations of the Company and the Purchasers pursuant to Section 8 shall remain in effect. If the purchase of the Offered Securities by the Purchasers is not consummated for any reason other than solely because of the termination of this Agreement pursuant to Section 9 or the occurrence of any event specified in clause (iii), (iv), (v), (vi) or (vii) of Section 6(b), the Company will reimburse the Purchasers for all out-of-pocket expenses (including fees and disbursements of counsel) reasonably incurred by them in connection with the offering of the Offered Securities.

11. Notices. All communications hereunder will be in writing and, if sent to the Purchasers will be mailed, delivered or telegraphed and confirmed to the Purchasers, c/o Credit Suisse First Boston LLC, Eleven Madison Avenue, New York, N.Y. 10010-3629, Attention: Transactions Advisory Group, and c/o Citigroup Global Markets Inc., 338 Greenwich Street, 32nd Floor, New York, NY 10013, Attention: Legal—Addison Crawford, or, if sent to the Company, will be mailed, delivered or telegraphed and confirmed to it at Concentra Operating Corporation, 5080 Spectrum Drive, Suite 400-West Tower, Addison, TX 75001, Attention: Richard Parr, Esq.; provided, however, that any notice to a Purchaser pursuant to Section 8 will be mailed, delivered or telegraphed and confirmed to such Purchaser.

12. Successors. This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and the controlling persons referred to in Section 8, and no other person will have any right or obligation hereunder, except that holders of Offered Securities shall be entitled to enforce the agreements for their benefit contained in the second and third sentences of Section 5(b) hereof against the Company as if such holders were parties hereto.

13. Representation of Purchasers. You will act for the several Purchasers in connection with this purchase, and any action under this Agreement taken by you jointly or by the Representatives will be binding upon all the Purchasers.

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

15. Applicable Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.

The Company hereby submits to the non-exclusive jurisdiction of the Federal and state courts in the Borough of Manhattan in The City of New York in any suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.

[The remainder of this page is blank.]

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If the foregoing is in accordance with the Purchasers’ understanding of our agreement, kindly sign and return to the Company one of the counterparts hereof, whereupon it will become a binding agreement between the Company and the several Purchasers in accordance with its terms.

Very truly yours,
CONCENTRA OPERATING CORPORATION
	by
		/s/    RICHARD A. PARR
		Name:	Richard A. Parr II
		Title:	Executive Vice President, General Counsel and Corporate Secretary
CONCENTRA HEALTH SERVICES, INC.,
	by
		/s/    RICHARD A. PARR
		Name:	Richard A. Parr II
		Title:	Executive Vice President, General Counsel and Corporate Secretary
CONCENTRA INTEGRATED SERVICES, INC.,
	by
		/s/    RICHARD A. PARR
		Name:	Richard A. Parr II
		Title:	Executive Vice President and Clerk
CONCENTRA LABORATORY, L.L.C.,
	by
		/s/    RICHARD A. PARR
		Name:	Richard A. Parr II
		Title:	Vice President and Corporate Secretary
CONCENTRA MANAGED CARE BUSINESS TRUST,
	by
		/s/    DANIEL J. THOMAS
		Name:	Daniel J. Thomas
		Title:	Trustee

CONCENTRA MANAGEMENT SERVICES, INC.,
	by
		/s/    RICHARD A. PARR
		Name:	Richard A. Parr II
		Title:	Vice President and Corporate Secretary
CONCENTRA PREFERRED SYSTEMS, INC.,
	by
		/s/    RICHARD A. PARR
		Name:	Richard A. Parr
		Title:	Executive Vice President, General Counsel and Corporate Secretary
CONCENTRA PREFERRED BUSINESS TRUST,
	by
		/s/    DANIEL J. THOMAS
		Name:	Daniel J. Thomas
		Title:	Trustee
CRA MANAGED CARE OF WASHINGTON, INC.,
	by
		/s/    RICHARD A. PARR
		Name:	Richard A. Parr II
		Title:	Executive Vice President and Corporate Secretary
CRA-MCO, INC.,
	by
		/s/    RICHARD A. PARR
		Name:	Richard A. Parr II
		Title:	Executive Vice President and Corporate Secretary
FIRST NOTICE SYSTEMS, INC.,
	by
		/s/    RICHARD A. PARR
		Name:	Richard A. Parr II
		Title:	Vice President and Corporate Secretary

24

FOCUS HEALTHCARE BUSINESS TRUST,
	by
		/s/    DANIEL J. THOMAS
		Name:	Daniel J. Thomas
		Title:	Trustee
FOCUS HEALTHCARE MANAGEMENT, INC.,
	by
		/s/    RICHARD A. PARR
		Name:	Richard A. Parr II
		Title:	Vice President and Corporate Secretary
HEALTHNETWORK SYSTEMS LLC,
	by
		/s/    RICHARD A. PARR
		Name:	Richard A. Parr II
		Title:	Vice President, General Counsel and Corporate Secretary
MEDICAL NETWORK SYSTEMS LLC,
	by
		/s/    RICHARD A. PARR
		Name:	Richard A. Parr II
		Title:	Vice President, General Counsel and Corporate Secretary
METRACOMP INC.,
	by
		/s/    RICHARD A. PARR
		Name:	Richard A. Parr II
		Title:	Vice President and Corporate Secretary
NATIONAL HEALTHCARE RESOURCES, INC.,
	by
		/s/    RICHARD A. PARR
		Name:	Richard A. Parr II
		Title:	Senior Vice President and Corporate Secretary

25

NHR WASHINGTON, INC.,
	by
		/s/    RICHARD A. PARR
		Name:	Richard A. Parr II
		Title:	Vice President and Corporate Secretary
OCCUCENTERS I, L.P.
By its general partner
CONCENTRA HEALTH SERVICES INC.,
	by
		/s/    RICHARD A. PARR
		Name:	Richard A. Parr II
		Title:	Executive Vice President, General Counsel and Corporate Secretary
OCI HOLDINGS, INC.,
	by
		/s/    GARY CHEDEKEL
		Name:	Gary Chedekel
		Title:	Corporate Secretary and Treasurer

The foregoing Purchase Agreement is hereby confirmed and accepted as of the date first written above.
CREDIT SUISSE FIRST BOSTON LLC
		Acting on behalf of itself and as the Representative of the several Purchasers
CREDIT SUISSE FIRST BOSTON LLC
	by	/s/    HAROLD BOGLE
		Name:	Harold Bogle
		Title:	Managing Director
CITIGROUP GLOBAL MARKETS, INC.
		Acting on behalf of itself and as the Representative of the several Purchasers
CITIGROUP GLOBAL MARKETS, INC.
	by	/s/    TIMOTHY P. DILWORTH
		Name:	Timothy P. Dilworth
		Title:	Vice-President

26

EXHIBIT A

[Form of Registration Rights Agreement]

27

SCHEDULE A

Purchaser	Principal Amount of Offered Securities
Credit Suisse First Boston LLC	$	54,000,000
Citigroup Global Markets Inc.		54,000,000
Deutsche Bank Securities Inc.		17,250,000
J.P. Morgan Securities Inc.		17,250,000
Banc One Capital Markets, Inc.		7,500,000
Total	$	150,000,000

SCHEDULE B

Concentra Health Services, Inc.

Concentra Integrated Services, Inc.

Concentra Laboratory, L.L.C.

Concentra Managed Care Business Trust

Concentra Management Services, Inc.

Concentra Preferred Systems, Inc.

Concentra Preferred Business Trust

CRA Managed Care of Washington, Inc.

CRA-MCO, Inc.

First Notice Systems, Inc.

Focus Healthcare Business Trust

Focus Healthcare Management, Inc.

Healthnetwork Systems LLC

Medical Network Systems LLC

Metracomp Inc.

National Healthcare Resources, Inc.

NHR Washington, Inc.

Occucenters I, L.P.

OCI Holdings, Inc.

SCHEDULE C

NAME OF ENTITY	DOMESTIC STATE	CONCENTRA OWNER	% OWNED	GUARANTOR
CONCENTRA AKRON, L.L.C.	Delaware	Concentra Health Services, Inc.	51%	NO
CONCENTRA ARKANSAS, L.L.C.	Delaware	Concentra Health Services, Inc.	51%	NO
CONCENTRA BIRMINGHAM, L.L.C.	Delaware	Concentra Health Services, Inc.	51%	NO
CONCENTRA HEALTH SERVICES, INC.	Nevada	Concentra Operating Corporation	100%	YES
CONCENTRA INTEGRATED SERVICES, INC.	Massachusetts	National Healthcare Resources, Inc.	100%	YES
CONCENTRA LABORATORY, L.L.C.	Delaware	Concentra Health Services, Inc.	100%	YES
CONCENTRA MANAGED CARE BUSINESS TRUST	Massachusetts	CRA Managed Care of Washington, Inc.	100%	YES
CONCENTRA MANAGEMENT SERVICES, INC.	Nevada	Concentra Operating Corporation	100%	YES
CONCENTRA NEW ORLEANS, L.L.C.	Delaware	Concentra Health Services, Inc.	51%	NO
CONCENTRA OCCUPATIONAL HEALTHCARE HARRISBURG, L.P.	Pennsylvania	Concentra Health Services, Inc.	51%	NO
CONCENTRA PREFERRED SYSTEMS, INC.	Delaware	Concentra Operating Corporation	100%	YES
CONCENTRA PREFERRED BUSINESS TRUST	Massachusetts	Concentra Preferred Systems, Inc.	100%	YES
CONCENTRA SOUTH CAROLINA, L.L.C.	Delaware	Concentra Health Services, Inc.	51%	NO
CONCENTRA ST. LOUIS, L.L.C.	Delaware	Concentra Health Services, Inc.	51%	NO
CONCENTRA-UPMC, L.L.C.	Delaware	Concentra Health Services, Inc.	51%	NO
CONCENTRA/VANDERBILT, L.L.C.	Delaware	Concentra Health Services, Inc.	51%	NO
CONCENTRA WINSTON-SALEM, L.L.C.	Delaware	Concentra Health Services, Inc.	51%	NO
CRA MANAGED CARE OF WASHINGTON, INC.	Washington	Concentra Integrated Services, Inc.	100%	YES
CRA-MCO, INC.	Nevada	Concentra Integrated Services, Inc.	100%	YES
FIRST NOTICE SYSTEMS, INC.	Delaware	Concentra Integrated Services, Inc.	100%	YES
FOCUS HEALTHCARE BUSINESS TRUST	Massachusetts	Focus Healthcare Management, Inc.	100%	YES
FOCUS HEALTHCARE MANAGEMENT, INC.	Tennessee	Concentra Integrated Services, Inc.	100%	YES
HEALTHNETWORK SYSTEMS LLC	Delaware	Concentra Preferred Systems, Inc.	100%	YES
MANAGED PRESCRIPTION PROGRAM	Arizona	Concentra Health Services, Inc.	94%	NO
MEDICAL NETWORK SYSTEMS LLC	Delaware	Concentra Preferred Systems, Inc.	100%	YES
METRACOMP INC.	Connecticut	National Healthcare Resources, Inc.	100%	YES
NATIONAL HEALTHCARE RESOURCES, INC.	Delaware	Concentra Operating Corporation	100%	YES
NHR WASHINGTON, INC.	Delaware	National Healthcare Resources, Inc.	100%	YES
OCCUCENTERS I, L.P.	Texas	Concentra Health Services, Inc. (GP) OCI Holdings, Inc. (LP)	1% 99%	YES
OCCUPATIONAL HEALTH VENTURES, L.L.C.	Pennsylvania	Concentra Health Services, Inc.	51%	NO
OCI HOLDINGS, INC.	Nevada	Concentra Health Services, Inc.	100%	YES

OHC OF OKLAHOMA, L.L.C.	Oklahoma	Concentra Health Services, Inc.	51%	NO
TUCSON OCCUPATIONAL MEDICINE PARTNERSHIP	Arizona	Concentra Health Services, Inc.	95%	NO

31

EX-4.7

Exhibit 4.7

EXECUTION COPY

CONCENTRA OPERATING CORPORATION

and

THE GUARANTORS NAMED HEREIN

TO

THE BANK OF NEW YORK

as Trustee

Indenture

Dated as of August 13, 2003

9½% Senior Subordinated Notes due 2010

Reconciliation and tie between Trust Indenture Act of 1939 and Indenture, dated as of August 13, 2003.^¹

Trust Indenture Act Section		Indenture Section
§ 310	(a)(1)	609
	(a)(2)	609
	(a)(3)	Not Applicable
	(a)(4)	Not Applicable
	(b)	608, 610
§ 311	(a)	613
	(b)	613
§ 312	(a)	701, 702(a)
	(b)	702(b)
	(c)	702(c)
§ 313	(a)	703(a)
	(b)	703(a)
	(c)	703(a)
	(d)	703(f)
§ 314	(a)	704
	(b)	Not Applicable
	(c)(1)	102
	(c)(2)	102
	(c)(3)	Not Applicable
	(d)	Not Applicable
	(e)	102
§ 315	(a)	601(a)
	(b)	602, 703(a)(6)
	(c)	601(a)
	(d)	601(c)
	(d)(1)	601(a)(1)
	(d)(2)	601(c)(2)
	(d)(3)	601(c)(3)
	(e)	514
§ 316	(a)	512
	(a)(1)(A)	512
	(a)(1)(B)	513
	(a)(2)	Not Applicable
	(b)	508
§ 317	(a)(1)	503
	(a)(2)	504
	(b)	1003
§ 318	(a)	107

¹ Note: This reconciliation and tie shall not, for any purpose, be deemed to be a part of the Indenture.

TABLE OF CONTENTS

		Page
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101.	Definitions.	1
SECTION 102.	Compliance Certificates and Opinions	32
SECTION 103.	Form of Documents Delivered to Trustee	33
SECTION 104.	Acts of Holders; Record Date.	33
SECTION 105.	Notices, Etc., to Trustee and Company	35
SECTION 106.	Notice to Holders; Waiver	36
SECTION 107.	Conflict with Trust Indenture Act	36
SECTION 108.	Effect of Headings and Table of Contents	36
SECTION 109.	Successors and Assigns	36
SECTION 110.	Separability Clause	37
SECTION 111.	Benefits of Indenture	37
SECTION 112.	Governing Law	37
SECTION 113.	Legal Holidays	37
SECTION 114.	No Personal Liability of Directors, Officers, Employees and Stockholders	37
ARTICLE TWO
SECURITY FORMS
SECTION 201.	Forms Generally	37
ARTICLE THREE
THE SECURITIES
SECTION 301.	Title and Terms	38
SECTION 302.	Denominations	39
SECTION 303.	Execution, Authentication, Delivery and Dating	39
SECTION 304.	Temporary Securities	40
SECTION 305.	Register; Transfer and Exchange	40
SECTION 306.	Mutilated, Destroyed, Lost and Stolen Securities	41
SECTION 307.	Payment of Interest; Interest Rights Preserved	41
SECTION 308.	Persons Deemed Owners	42
SECTION 309.	Cancellation	43
SECTION 310.	CUSIP and ISIN Numbers	43

ii

ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401.	Satisfaction and Discharge of Indenture	43
SECTION 402.	Application of Trust Money	44
ARTICLE FIVE
REMEDIES
SECTION 501.	Events of Default	45
SECTION 502.	Acceleration of Maturity; Rescission and Annulment	47
SECTION 503.	Collection of Indebtedness and Suits for Enforcement by Trustee.	49
SECTION 504.	Trustee May File Proofs of Claim	50
SECTION 505.	Trustee May Enforce Claims Without Possession of Securities	50
SECTION 506.	Application of Money Collected	50
SECTION 507.	Limitation on Suits	51
SECTION 508.	Unconditional Right of Holders to Receive Principal, Premium and Interest	51
SECTION 509.	Restoration of Rights and Remedies	52
SECTION 510.	Rights and Remedies Cumulative	52
SECTION 511.	Delay or Omission Not Waiver	52
SECTION 512.	Control by Holders	52
SECTION 513.	Waiver of Past Defaults	52
SECTION 514.	Undertaking for Costs	53
SECTION 515.	Waiver of Usury, Stay or Extension Laws	53
ARTICLE SIX
THE TRUSTEE
SECTION 601.	Certain Duties and Responsibilities.	53
SECTION 602.	Notice of Defaults	54
SECTION 603.	Certain Rights of Trustee.	54
SECTION 604.	Not Responsible for Recitals or Issuance of Securities	56
SECTION 605.	May Hold Securities	56
SECTION 606.	Money Held in Trust	56
SECTION 607.	Compensation and Reimbursement	56
SECTION 608.	Disqualification; Conflicting Interests	57
SECTION 609.	Corporate Trustee Required; Eligibility	57
SECTION 610.	Resignation and Removal; Appointment of Successor	57
SECTION 611.	Acceptance of Appointment by Successor	59
SECTION 612.	Merger, Conversion, Consolidation or Succession to Business	59
SECTION 613.	Preferential Collection of Claims Against Company	59

iii

ARTICLE SEVEN
HOLDERS’ LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701.	Company to Furnish Trustee Names and Addresses of Holders	59
SECTION 702.	Preservation of Information; Communications to Holders.	60
SECTION 703.	Reports by Trustee.	60
SECTION 704.	Reports by Company	60
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801.	Limitation on Merger, Consolidation or Sale of Assets	61
SECTION 802.	Successor Substituted	62
SECTION 803.	Transfer of Subsidiary Assets	63
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901.	Supplemental Indentures Without Consent of Holders	63
SECTION 902.	Supplemental Indentures with Consent of Holders	64
SECTION 903.	Execution of Supplemental Indentures	65
SECTION 904.	Effect of Supplemental Indentures	65
SECTION 905.	Conformity With Trust Indenture Act	65
SECTION 906.	Reference in Securities to Supplemental Indentures	65
ARTICLE TEN
COVENANTS
SECTION 1001.	Payment of Principal, Premium and Interest	65
SECTION 1002.	Maintenance of Office or Agency	65
SECTION 1003.	Money for Security Payments to be Held in Trust	66
SECTION 1004.	Existence	67
SECTION 1005.	Maintenance of Properties	67
SECTION 1006.	Payment of Taxes and Other Claims	68
SECTION 1007.	Maintenance of Insurance	68
SECTION 1008.	Limitation on Incurrence of Indebtedness and Issuance of Preferred Stock	68
SECTION 1009.	Limitation on Restricted Payments	71
SECTION 1010.	Limitations on Dividends and Other Payment Restrictions Affecting Restricted Subsidiaries	76
SECTION 1011.	Limitation on Liens Securing Indebtedness	78
SECTION 1012.	Limitation on Transactions With Affiliates	78

iv

SECTION 1013.	Limitation on Issuances and Sales of Equity Interests in Restricted Subsidiaries	80
SECTION 1014.	Repurchase of Securities at the Option of the Holder Upon a Change of Control.	81
SECTION 1015.	Repurchase of Securities at the Option of the Holder Upon an Asset Sale	83
SECTION 1016.	Investment Company	86
SECTION 1017.	Limitations on Issuances of Guarantees of Indebtedness	86
SECTION 1018.	Additional Guarantees	86
SECTION 1019.	Limitation on Lines of Business	87
SECTION 1020.	Anti-Layering	87
SECTION 1021.	[NOT USED]	87
SECTION 1022.	[NOT USED]	87
SECTION 1023.	Designation of Restricted and Unrestricted Subsidiaries	87
SECTION 1024.	Advances to Subsidiaries	87
SECTION 1025.	Payments for Consents	88
SECTION 1026.	Statement by Officers as to Default; Compliance Certificates	88
SECTION 1027.	Waiver of Covenants	88
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101.	[NOT USED]	89
SECTION 1102.	Applicability of Article	89
SECTION 1103.	Election to Redeem; Notice to Trustee	89
SECTION 1104.	Selection by Trustee of Securities to be Redeemed	89
SECTION 1105.	Notice of Redemption	90
SECTION 1106.	Deposit of Redemption Price	90
SECTION 1107.	Securities Payable on Redemption Date	91
SECTION 1108.	Securities Redeemed in Part	91
ARTICLE TWELVE
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1201.	Company’s Option to Effect Legal Defeasance or Covenant Defeasance	91
SECTION 1202.	Legal Defeasance and Discharge	91
SECTION 1203.	Covenant Defeasance	92
SECTION 1204.	Conditions to Legal or Covenant Defeasance	92
SECTION 1205.	Deposited Money and U.S. Government Obligations to be Held in Trust; Other Miscellaneous Provisions	94
SECTION 1206.	Reinstatement	94

v

ARTICLE THIRTEEN
SUBORDINATION
SECTION 1301.	Agreement to Subordinate	95
SECTION 1302.	Liquidation; Dissolution; Bankruptcy	95
SECTION 1303.	Default on Senior Indebtedness	95
SECTION 1304.	Acceleration of Securities	97
SECTION 1305.	When Distribution Must be Paid Over	97
SECTION 1306.	Notice by Company	98
SECTION 1307.	Subrogation	98
SECTION 1308.	Relative Rights	98
SECTION 1309.	Subordination May Not be Impaired by Company	98
SECTION 1310.	Rights of Trustee and Paying Agent	99
SECTION 1311.	Authorization to Effect Subordination	99
SECTION 1312.	Amendments	99
SECTION 1313.	Trustee Not Fiduciary for Holders of Senior Indebtedness	100
ARTICLE FOURTEEN
SUBSIDIARY GUARANTEES
SECTION 1401.	Subsidiary Guarantees	100
SECTION 1402.	Execution and Delivery of Subsidiary Guarantees	101
SECTION 1403.	Guarantors May Consolidate, etc., on Certain Terms.	102
SECTION 1404.	Releases Following Sale of Assets	103
SECTION 1405.	Limitation of Guarantor’s Liability	103
SECTION 1406.	Application of Certain Terms and Provisions to the Guarantors	104
SECTION 1407.	Release of Subsidiary Guarantees	104
SECTION 1408.	Subordination of Subsidiary Guarantees	104
SECTION 1409.	Waiver of Subrogation	105
SECTION 1410.	Immediate Payment	105
SECTION 1411.	No Set-Off	105
SECTION 1412.	Obligations Absolute	106
SECTION 1413.	Obligations Continuing	106
SECTION 1414.	Obligations Not Reduced	106
SECTION 1415.	Obligations Reinstated	106
SECTION 1416.	Obligations Not Affected	106
SECTION 1417.	Dealing With the Company and Others	107
SECTION 1418.	Default and Enforcement	108
SECTION 1419.	Costs and Expenses	108
SECTION 1420.	No Waiver; Cumulative Remedies	108
SECTION 1421.	Representation and Warranty of Each Guarantor	109
SECTION 1422.	Successors and Assigns	109
SECTION 1423.	Contribution	109
RULE 144A	REGULATION S/IAI APPENDIX

vi

EXHIBIT 1	FORM OF INITIAL SECURITY
EXHIBIT 2	FORM OF EXCHANGE SECURITY OR PRIVATE EXCHANGE SECURITY
EXHIBIT 3	FORM OF TRANSFEREE LETTER OF REPRESENTATION
EXHIBIT A	FORM OF ENDORSEMENT OF SUBSIDIARY GUARANTORS	A-1
EXHIBIT B	FORM OF INTERCOMPANY NOTE	B-1

vii

INDENTURE, dated as of August 13, 2003, among CONCENTRA OPERATING CORPORATION, a corporation duly organized and existing under the laws of the State of Nevada (herein called the “Company”), having its principal office at 5080 Spectrum Drive, Suite 400—West Tower, Addison, Texas 75001, the GUARANTORS and THE BANK OF NEW YORK, a New York banking corporation, as Trustee (herein called the “Trustee”).

Each party agrees as follows for the benefit of each other and for the equal and ratable benefit of the Holders of the Initial Securities and, if and when issued pursuant to a registered exchange for Initial Securities, the Exchange Securities and, if and when issued pursuant to a private exchange for Initial Securities, the Private Exchange Securities:

ARTICLE ONE

Definitions and Other Provisions

of General Application

SECTION 101. Definitions.

For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires:

(1) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular;

(2) all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein;

(3) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP;

(4) unless otherwise specifically set forth herein, all calculations or determinations of a Person shall be performed or made on a consolidated basis in accordance with GAAP; and

(5) the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision.

Certain terms, used principally in Article Six, are defined in that Article.

“13% Senior Subordinated Notes” means the Company’s 13% Series A Senior Subordinated Notes due 2009 and Series B Senior Subordinated Notes due 2009.

1

“1999 Transactions” refers to the occurrence of each of the following transactions which were completed in 1999:

(a) the merger of Yankee Acquisition Corp, a wholly owned subsidiary of Welsh Carson, with and into Holdings (the “Merger”);

(b) the solicitation and repurchase of $230.0 million principal amount of Holdings’ outstanding 4.5% Convertible Subordinated Notes due 2003 and $97.8 million principal amount of Holdings’ outstanding 6.0% Convertible Subordinated Notes due 2001 conditional upon the Merger,

(c) the contribution of all Holdings’ assets and shares in its subsidiaries to the Company;

(d) the $190.0 million offering of the 13% Senior Subordinated Notes;

(e) the $216.4 million offering by Holdings of the Holdings Senior Discount Debentures;

(f) the $375.0 million of borrowings by the Company under its senior credit facilities at the time of the other 1999 Transactions;

(g) the equity investment in Holdings of approximately $370.1 million by Welsh Carson and some of its affiliates, including the value, on the date of the Merger, of shares and 4.5% Convertible Subordinated Notes due 2003 already owned by Welsh Carson;

(h) the cash equity investment in Holdings of approximately $30.6 million by affiliates of Ferrer Freeman;

(i) the equity investment in Holdings of approximately $23.0 million by Chase Capital Partners, certain officers and employees of Donaldson, Lufkin & Jenrette Securities Corporation, certain members of Holdings’ management and potentially other investors; and

(j) the payment in full and termination of the Company’s then existing $100.0 million amended and restated credit agreement.

“Acquired Debt” means, with respect to any specified Person:

(1) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Restricted Subsidiary of such specified Person or assumed in connection with the acquisition of assets from such Person, whether or not such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Restricted Subsidiary of such specified Person or such acquisition, and

2

(2) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.

“Act,” when used with respect to any Holder, has the meaning specified in Section 104.

“Additional Interest” has the meaning set forth in the Registration Rights Agreement.

“Additional Securities” means Securities issued under this Indenture after the Issue Date and in compliance with Section 301 and 1008, it being understood that any Securities issued in exchange for or replacement of any Initial Security issued on the Issue Date shall not be an Additional Security, including any such Securities issued pursuant to a Registration Rights Agreement.

“Adjusted Treasury Rate” means, with respect to any Redemption Date, (i) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release designated “H.15(519)” or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System and which established yields on actively traded United States Treasury securities adjusted to constant maturity under the caption “Treasury Constant Maturities” for the maturity corresponding to the Comparable Treasury Issue (if no maturity is within three months before or after August 15, 2007, yields for the two published maturities most closely corresponding to the Comparable Treasury Issue shall be determined and the Adjusted Treasury Rate shall be interpolated or extrapolated from such yields on a straight line basis, rounding to the nearest month) or (ii) is such release (or any successor release) is not published during the week preceding the calculation date or does not contain such yields, the rate per year equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date, in each case calculated on the third Business Day immediately preceding the Redemption Date, plus 0.50%.

“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control,” as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise; provided that beneficial ownership of 10% or more of the Voting Stock of a Person shall be deemed to be control. For purposes of this definition, the terms “controlling,” “controlled by” and “under common control with” shall have correlative meanings; provided that any affiliated professional associations and professional corporations which employ physicians and other professionals who provide health care services for the Company’s occupational health services centers shall not be deemed to be an Affiliate of the Company, Holdings or any of their Subsidiaries.

3

“Affiliate Management Fees” means any management, consulting, monitoring or advisory fees, and related expenses, payable to Welsh Carson, Ferrer Freeman or their respective Affiliates.

“Affiliate Transaction” has the meaning set forth in Section 1012.

“Appendix” has the meaning set forth in Section 201.

“Applicable Premium” means with respect to a Security at any Redemption Date, the greater of (i) 1.00% of the principal amount of such Security and (ii) the excess of (A) the present value at such redemption date of (1) the redemption price of such Security on August 15, 2007 (such redemption price being described below exclusive of any accrued interest) plus (2) all required remaining scheduled interest payments due on such Security through August 15, 2007 (but excluding accrued and unpaid interest to the Redemption Date), computed using a discount rate equal to the Adjusted Treasury Rate, over (B) the principal amount of such Security on such Redemption Date.

“Asset Sale” means:

(1) the sale, lease (other than an operating lease entered into in the ordinary course of business), conveyance or other disposition (a “Disposition”) of any assets or rights (other than the licensing of its non-exclusive intellectual property rights) (including, without limitation, by way of a sale and leaseback); provided that the Disposition of all or substantially all of the assets of the Company and its Restricted Subsidiaries taken as a whole shall be governed by Section 1014 and/or by Section 801 and not by Section 1015; and

(2) the issue or sale by the Company or any of its Restricted Subsidiaries of Equity Interests of any of the Company’s Restricted Subsidiaries (other than directors’ qualifying shares);

that, in the case of either clause (1) or (2) and whether in a single transaction or a series of related transactions:

(a) has a fair market value in excess of $5 million; or

(b) is for net proceeds to the Company and its Restricted Subsidiaries in excess of $5 million.

Notwithstanding the preceding, the following items shall not be deemed to be Asset Sales:

(1) a transfer of assets among the Company, its Wholly Owned Restricted Subsidiaries and its Permitted Joint Ventures;

(2) an issuance of Equity Interests by a Wholly Owned Restricted Subsidiary to the Company or to another Wholly Owned Restricted Subsidiary;

4

(3) a Restricted Payment that is permitted by Section 1009 or a Permitted Investment;

(4) the sale of Cash Equivalents in the ordinary course of business;

(5) a disposition of inventory in the ordinary course of business;

(6) sales of accounts receivable and related assets or an interest therein of the type specified in the definition of “Qualified Receivables Transaction” to a Receivables Entity;

(7) a disposition relating to the foreclosure of a Permitted Lien;

(8) the sale and leaseback of any assets within 90 days of the acquisition thereof;

(9) any exchange of property pursuant to Section 1031 of the Internal Revenue Code of 1986, as amended, for use in a Permitted Business;

(10) any sale, transfer or other disposition of property that is idle, damaged, worn out, obsolete or no longer suitable for use in the ordinary course of business; and

(11) sales or grants of licenses or sublicenses to use intellectual property of the Company or any of its Restricted Subsidiaries to the extent such sale, license or sublicense does not interfere in any material respect with the business of the Company and its Restricted Subsidiaries.

“Asset Sale Offer” has the meaning set forth in Section 1015.

“Bankruptcy Law” means Title 11, U.S. Code or any Federal or State bankruptcy, insolvency, reorganization or other similar law.

“Board of Directors” means, with respect to any Person, the board of directors of such Person, or any committee of the Board of Directors of such Person authorized, with respect to any particular matters, to exercise the power of such board of directors of such Person.

“Board Resolution” means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors of the Company and to be in full force and effect on the date of such certification, and delivered to the Trustee.

“Business Day” means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in New York, New York are authorized or obligated by law or executive order to close.

5

“Calculation Date” has the meaning set forth in the definition of “Fixed Charge Coverage Ratio.”

“Capital Lease Obligation” means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be required to be capitalized on a balance sheet in accordance with GAAP.

“Capital Stock” means:

(1) in the case of a corporation, corporate stock;

(2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;

(3) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and

(4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person.

“Cash Equivalents” means:

(1) Government Securities having maturities of not more than six months from the date of acquisition;

(2) certificates of deposit and eurodollar time deposits with maturities of six months or less from the date of acquisition, bankers’ acceptances with maturities not exceeding six months and overnight bank deposits, in each case with any lender party to the Senior Credit Facilities or with any domestic commercial bank having capital and surplus in excess of $500 million and whose long-term debt, or whose parent holding company’s long-term debt, is rated “A” (or such similar equivalent rating) or higher by at least one nationally recognized statistical rating organization (as defined in Rule 436 under the Securities Act);

(3) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (1) and (2) above entered into with any financial institution meeting the qualifications specified in clause (2) above;

(4) commercial paper having the rating of “P-1” (or higher) from Moody’s Investors Service, Inc. or “A-1” (or higher) from Standard & Poor’s Rating Service and in each case maturing within six months after the date of acquisition; and

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(5) money market funds investing substantially in investments which constitute Cash Equivalents of the kinds described in clauses (1) through (4) of this definition.

“Certificated Securities” means Securities in registered certificated form.

“Change of Control” means the occurrence of any of the following:

(1) the sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of either (x) the Company and its Subsidiaries taken as a whole or (y) Holdings to any “person” (as such term is used in Section 13(d) (3) of the Exchange Act) other than the Principals or a Related Party of any of the Principals;

(2) the adoption of a plan relating to the liquidation or dissolution of the Company;

(3) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any “person” (as defined above), other than the Principals and their Related Parties, becomes the “beneficial owner” (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the Voting Stock of the Company (measured by voting power rather than number of shares);

(4) the first day on which a majority of the members of the Board of Directors of the Company are not Continuing Directors; or

(5) the Company or Holdings consolidates with, or merges with or into, any Person, or any Person consolidates with, or merges with or into, the Company or Holdings, in any such event pursuant to a transaction in which any of the outstanding Voting Stock of the Company or Holdings, as the case may be, is converted into or exchanged for cash, securities or other property, other than any such transaction where the Voting Stock of the Company or Holdings, as the case may be, outstanding immediately prior to such transaction is converted into or exchanged for Voting Stock (other than Disqualified Stock) of the surviving or transferee Person constituting a majority of the outstanding shares of such Voting Stock of such surviving or transferee Person immediately after giving effect to such issuance.

“Change of Control Offer” has the meaning set forth in Section 1014.

“Change of Control Payment” has the meaning set forth in Section 1014.

“Commission” means the Securities and Exchange Commission as from time to time constituted, created under the Exchange Act, or, if at any time after the execution of this instrument such Commission is not existing and performing the duties

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now assigned to it under the Trust Indenture Act, then the body performing such duties at such time.

“Company” means the Person named as the “Company” in the first paragraph of this instrument until a successor Person shall have become such pursuant to the applicable provisions of this Indenture and thereafter “Company” shall mean such successor Person.

“Company Request” or “Company Order” means a written request or order signed in the name of the Company by its Chairman of the Board, its President or a Vice President, and by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to the Trustee.

“Comparable Treasury Issue” means the United States Treasury security selected by the Quotation Agent as having a maturity comparable to the remaining term of the Securities from the Redemption Date to August 15, 2007, that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of a maturity most nearly equal to August 15, 2007.

“Comparable Treasury Price” means, with respect to any Redemption Date, if clause (ii) of the Adjusted Treasury Rate is applicable, the average of three, or such lesser number as is obtained by the Trustee, Reference Treasury Dealer Quotations for such Redemption Date.

“consolidated” means, with respect to any Person, the consolidated accounts of such Person and its Subsidiaries with those of such Person, all in accordance with GAAP; provided that “consolidated” shall not include consolidation of the accounts of any Unrestricted Subsidiary with the accounts of the Company.

“Consolidated EBITDA” means, with respect to any Person, for any period, the Consolidated Net Income of such Person for such period adjusted to add thereto (to the extent deducted from net revenues in determining Consolidated Net Income), without duplication, the sum of

(1) consolidated income taxes;

(2) consolidated depreciation and amortization (including amortization of debt issuance costs in connection with any Indebtedness of such Person and its Restricted Subsidiaries and depreciation and amortization attributable to the Permitted Joint Ventures existing at the Reference Date which were not consolidated);

(3) Fixed Charges;

(4) expenditures paid prior to or contemporaneously with and related to the 1999 Transactions which are paid or otherwise accounted for within 90 days of the consummation of the 1999 Transactions;

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(5) expenditures paid prior to or contemporaneously with and related to any actual or proposed financing, mergers or dispositions or acquisitions permitted to be incurred by this Indenture (including, without limitation, financing and legal fees and costs incurred with any such mergers, acquisitions or dispositions);

(6) the restructuring charge of $20.6 million incurred in the fourth quarter of 1998; and

(7) all other non-cash charges (excluding any such non-cash charge to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period);

provided that consolidated income taxes, depreciation and amortization of a Subsidiary of such Person that is not a Wholly Owned Subsidiary shall only be added to the extent of the Equity Interest of such Person in such Subsidiary.

“Consolidated Interest Expense” means, with respect to any Person for any period, the sum of, without duplication:

(1) the interest expense of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP (including, without limitation, amortization of original issue discount, non-cash interest payments, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers’ acceptance financings, and net payments, if any, pursuant to Hedging Obligations; provided that in no event shall any amortization of deferred financing costs be included in Consolidated Interest Expense); plus

(2) the consolidated capitalized interest of such Person and its Restricted Subsidiaries for such period, whether paid or accrued; plus

(3) the cash contributions to any employee stock ownership plan or similar trust to the extent such contributions are used by such plan or trust to pay interest or fees to such plan or trust; provided, however, that there shall be excluded therefrom any such interest expense of any Unrestricted Subsidiary to the extent the related Indebtedness is not Guaranteed or paid by the Company or any Restricted Subsidiary.

Notwithstanding the preceding, the Consolidated Interest Expense with respect to any Restricted Subsidiary that is not a Wholly Owned Restricted Subsidiary shall be included only to the extent (and in the same proportion) that the net income of such Restricted Subsidiary was included in calculating Consolidated Net Income.

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“Consolidated Net Income” means, with respect to any Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided that

(1) the Net Income (but not loss) of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of dividends or distributions paid in cash to the referent Person or a Wholly Owned Subsidiary thereof;

(2) the Net Income of any Restricted Subsidiary shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary or its stockholders;

(3) the Net Income of any Person acquired in a transaction accounted for in a manner similar to a pooling of interests (including any common control acquisition) for any period prior to the date of such acquisition shall be excluded; and

(4) the cumulative effect of a change in accounting principles shall be excluded.

“Continuing Directors” means, as of any date of determination, any member of the Board of Directors of the Company who:

(1) was a member of such Board of Directors on the Issue Date;

(2) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board at the time of such nomination or election; or

(3) was nominated by the Principals.

“Corporate Trust Office” shall be at the address of the Trustee specified in Section 105 hereof or such other address as to which the Trustee may give notice to the Company.

“Covenant Defeasance” has the meaning specified in Section 1203.

“Credit Agent” means JPMorgan Chase Bank, in its capacity as Administrative Agent for the lenders party to the Senior Credit Facilities, or any successor thereto or any person otherwise appointed.

“Default” means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default.

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“Defaulted Interest” has the meaning specified in Section 307.

“Designated Senior Indebtedness” means any Indebtedness outstanding under the Senior Credit Facilities.

“Development Corporation” means any corporation, association, limited liability company or other business (other than a partnership) existing at the Issue Date managed by the Company but owned by a Person (who is not the Company or an Affiliate or a Subsidiary of the Company), engaged in the development of occupational health centers and financed by the issue of Equity Interests and notes under securities purchase agreements to third party investors.

“Disqualified Stock” means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder thereof, in whole or in part, on or prior to the date that is 91 days after the date on which the Securities mature. Notwithstanding the preceding sentence, any Capital Stock that would not constitute Disqualified Stock but for change of control or asset sale provisions shall not constitute Disqualified Stock if the provisions are not more favorable to the holders of such Capital Stock than the provisions under Section 1014 and Section 1015.

“Domestic Restricted Subsidiary” means any Restricted Subsidiary other than (a) a Foreign Restricted Subsidiary or (b) a Subsidiary of a Foreign Restricted Subsidiary.

“Equity Interests” means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock).

“Equity Offering” means an offering of the Equity Interests (other than Disqualified Stock) of Holdings or the Company; provided that in the event of an offering by Holdings, Holdings contributes to the capital of the Company the portion of the net cash proceeds of such offering necessary to pay the aggregate redemption price (plus accrued interest to the redemption date) of the Securities to be redeemed pursuant to the provisions of paragraph 5 of the Securities ..

“Event of Default” has the meaning specified in Section 501.

“Excess Proceeds” has the meaning set forth in Section 1015.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Exchange Securities” has the meaning set forth in the Appendix.

“Existing Indebtedness” means Indebtedness of the Company and its Subsidiaries (other than Indebtedness under the Senior Credit Facilities) in existence on the Issue Date, until such amounts are repaid.

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“Expiration Date” has the meaning set forth in Section 104.

“Ferrer Freeman” means Ferrer Freeman Thompson & Co. LLC and its Affiliates.

“Fixed Charge Coverage Ratio” means with respect to any Person as of any date of determination, the ratio of the Consolidated EBITDA of such Person for the period of the most recent four consecutive fiscal quarters ending prior to the date of such determination and as to which internal financial statements are available to the Fixed Charges of such Person for such period. In the event that the Company or any of its Restricted Subsidiaries incurs, assumes, Guarantees, repays, repurchases, defeases, redeems or otherwise discharges any Indebtedness (other than revolving credit borrowings) or issues or redeems preferred stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the “Calculation Date”), then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such incurrence, assumption, Guarantee, repayment, repurchase, defeasance, redemption or discharge of Indebtedness, or such issuance or redemption of preferred stock, as if the same had occurred at the beginning of the applicable four-quarter reference period.

In addition, for purposes of calculating the Fixed Charge Coverage Ratio:

(1) acquisitions or dispositions that have been made by the Company or any of its Restricted Subsidiaries, including through mergers or consolidations and including any related financing transactions, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date shall be calculated to include the Consolidated EBITDA of the acquired entities on a pro forma basis (to be calculated in accordance with Article 11-02 of Regulation S-X, as in effect from time to time), shall be deemed to have occurred on the first day of the four-quarter reference period and Consolidated EBITDA for such reference period shall be calculated without giving effect to clause (3) of the proviso set forth in the definition of Consolidated Net Income;

(2) the Consolidated EBITDA attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded if greater than zero; and

(3) the Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded, but only to the extent that the obligations giving rise to such Fixed Charges shall not be obligations of the specified Person or any of its Restricted Subsidiaries following the Calculation Date.

For purposes of this definition, whenever pro forma effect is to be given to an Investment or an acquisition or disposition of assets, the amount of income or earnings

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relating thereto and the amount of Consolidated Interest Expense associated with any Indebtedness incurred in connection therewith, or any other calculation under this definition, the pro forma calculations shall be determined in good faith by a responsible financial or accounting officer of the Company (including pro forma expense and cost reductions calculated on a basis consistent with Regulation S-X under the Securities Act). If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest expense on such Indebtedness shall be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire period (taking into account any interest rate agreement applicable to such Indebtedness if such interest rate agreement has a remaining term in excess of 12 months).

“Fixed Charges” means, with respect to any Person for any period, the sum, without duplication, of:

(1) the Consolidated Interest Expense of such Person for such period, minus the interest income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; plus

(2) any interest expense on Indebtedness of another Person that is Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries, whether or not such Guarantee or Lien is called upon; plus

(3) the product of (a) all dividend payments, whether or not in cash, on any series of preferred stock of such Person or any of its Restricted Subsidiaries, other than dividend payments on Equity Interests payable solely in Equity Interests of the Company, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of such Person, expressed as a decimal, in each case, on a consolidated basis and in accordance with GAAP.

“Foreign Restricted Subsidiary” means any Restricted Subsidiary (a) that is not organized under the laws of the United States of America or any State thereof or the District of Columbia and (b) with respect to which more than 80% of any of its sales, earnings or assets (determined on a consolidated basis in accordance with GAAP) are located in, operated from or derived from operations located in territories outside of the United States of America and jurisdictions outside the United States of America.

“GAAP” means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect on the Issue Date; provided that for all calculations involving the period from the Reference Date to and including the Issue Date, GAAP means for such period such generally accepted accounting principles as were in effect on the Reference Date.

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“Government Securities” means direct obligations of, or obligations guaranteed by, the United States of America for the payment of which guarantee or obligations the full faith and credit of the United States is pledged.

“Guarantee” means a guarantee other than by endorsement of negotiable instruments for collection in the ordinary course of business, direct or indirect, in any manner including, without limitation, letters of credit and reimbursement agreements in respect thereof, of all or any part of any Indebtedness.

“Guarantors” means each Subsidiary of the Company that executes a Subsidiary Guarantee in accordance with the provisions of this Indenture, and their respective successors and assigns.

“Hedging Obligations” means, with respect to any Person, the obligations of such Person under:

(1) interest rate swap agreements, interest rate cap agreements and interest rate collar agreements; and

(2) other agreements or arrangements designed to protect such Person against fluctuations in interest rates or currency exchange rates.

“Holder” means a Person in whose name a Security is registered in the Note Register.

“Holdings” means Concentra, Inc.

“Holdings Senior Discount Debentures” means the 14% Senior Discount Debentures due 2011 issued by Holdings on the Reference Date and any Indebtedness of Holdings issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund such Senior Discount Debentures due 2011; provided that such Indebtedness complies with clauses (1), (2) and (3) of the definition of “Permitted Refinancing Indebtedness”.

“incur” has the meaning set forth in Section 1008.

“Indebtedness” means, with respect to any specified Person, any indebtedness of such Person, in respect of:

(1) borrowed money;

(2) evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof);

(3) bankers’ acceptances;

(4) representing Capital Lease Obligations; or

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(5) the balance deferred and unpaid of the purchase price of any property (which purchase price is due more than 60 days after the date of placing such property in service or taking delivery and title thereto) or representing any Hedging Obligations, except any such balance that constitutes an accrued expense or trade payable,

if and to the extent any of the preceding items (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of the specified Person prepared in accordance with GAAP. In addition, the term “Indebtedness” includes all Indebtedness of others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified Person) and, to the extent not otherwise included, the Guarantee by such Person of any indebtedness of any other Person.

The amount of any Indebtedness outstanding as of any date shall be:

(a) the accreted value thereof, in the case of any Indebtedness that does not require current payments of interest; and

(b) the principal amount thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness.

“Indenture” means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof including, for all purposes of this instrument and any such supplemental indenture, the provisions of the Trust Indenture Act that are deemed to be a part of and govern this instrument and any such supplemental indenture, respectively.

“Initial Securities” has the meaning set forth in the Appendix.

“Insolvency or Liquidation Proceedings” means:

(1) any insolvency or bankruptcy case or proceeding, or any receivership, liquidation, reorganization or other similar case or proceeding, relative to the Company or to the creditors of the Company, as such, or to the assets of the Company;

(2) any liquidation, dissolution, reorganization or winding up of the Company, whether voluntary or involuntary, and involving insolvency or bankruptcy; or

(3) any assignment for the benefit of creditors or any other marshaling of assets and liabilities of the Company.

“Interest Payment Date” means each February 15 and August 15, commencing on February 15, 2004.

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“Investments” means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the forms of direct or indirect loans (including guarantees of Indebtedness or other obligations), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business), or purchases or other acquisitions of or the transfer of assets for consideration of, Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. If the Company or any Restricted Subsidiary of the Company sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted Subsidiary of the Company such that, after giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary of the Company, the Company shall be deemed to have made an Investment on the date of any such sale or disposition equal to the fair market value of the Equity Interests of such Restricted Subsidiary not sold or disposed of in an amount determined as provided in the final paragraph of Section 1009.

“Issue Date” means the date on which the Securities are first issued under this Indenture.

“Legal Defeasance” has the meaning specified in Section 1202.

“Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.

“Maturity,” when used with respect to any Security, means the date on which the principal of such Security becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise.

“Net Income” means, with respect to any Person, the net income (loss) of such Person, determined in accordance with GAAP, excluding, however:

(1) any gain (loss), together with any related provision for taxes on such gain (loss), realized in connection with:

(a) any Asset Sale; or

(b) the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries; and

(2) any extraordinary or nonrecurring gain (loss), together with any related provision for taxes on such extraordinary or nonrecurring gain (loss).

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“Net Proceeds” means the aggregate cash proceeds received by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of the direct costs relating to such Asset Sale (including, without limitation, legal, accounting and investment banking fees, and sales commissions) and any relocation expenses incurred as a result thereof, taxes paid or payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements), the amounts required to be applied to the payment of Indebtedness (other than Indebtedness incurred pursuant to the Senior Credit Facilities) secured by a Lien on the asset or assets that were the subject of the Asset Sale, distributions and other payments required to be made to minority interest holders in Restricted Subsidiaries as a result of such Asset Sale and the deduction of appropriate amounts provided by the seller as a reserve, in accordance with GAAP, for adjustments in respect of the sale price of the assets that were the subject of such Asset Sale or as a reserve, in accordance with GAAP, against any liabilities associated with the property or other assets disposed in such Asset Sale and retained by the Company or any Restricted Subsidiary after such Asset Sale.

“Non-Recourse Debt” means Indebtedness:

(1) as to which neither the Company nor any of its Restricted Subsidiaries:

(a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness),

(b) is directly or indirectly liable as a guarantor or otherwise, or

(c) constitutes the lender;

(2) no default with respect to which (including any rights that the holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit upon notice, lapse of time or both any holder of any other Indebtedness (other than the Securities) of the Company or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity; and

(3) as to which the lenders have been notified in writing that they shall not have any recourse to the stock or assets of the Company or any of its Restricted Subsidiaries.

“Notes Register” or “Notes Registrar” have the respective meanings set forth in Section 305.

“Obligations” means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness.

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“Officer” means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the Secretary, any Assistant Secretary or any Vice-President of such Person.

“Officers’ Certificate” means a certificate signed by the Chairman of the Board, the President or a Vice President, and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, of the Company, and delivered to the Trustee. One of the officers signing an Officer’s Certificate given pursuant to Section 1026 shall be the principal executive, financial or accounting officer of the Company.

“Opinion of Counsel” means a written opinion of counsel, who may be counsel for the Company, and who shall be acceptable to the Trustee.

“Outstanding”, when used with respect to Securities, means, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except:

(i) Securities theretofore canceled by the Trustee or delivered to the Trustee for cancellation;

(ii) Securities for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Securities; provided that, if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; and

(iii) Securities which have been paid pursuant to Section 306 or in exchange for or in lieu of which other Securities have been authenticated and delivered pursuant to this Indenture, other than any such Securities in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Securities are held by a bona fide purchaser in whose hands such Securities are valid obligations of the Company;

provided that in determining whether the Holders of the requisite principal amount of the Outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities which a Responsible Officer of the Trustee knows to be so owned shall be so disregarded. Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right so to act with respect to such Securities

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and that the pledgee is not the Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor.

“pari passu”, when used with respect to the ranking of any Indebtedness of any Person in relation to other Indebtedness of such Person, means that each such Indebtedness (a) either (i) is not subordinated in right of payment to any other Indebtedness of such Person or (ii) is subordinate in right of payment to the same Indebtedness of such Person as is the other and is so subordinate to the same extent and (b) is not subordinate in right of payment to the other or to any Indebtedness of such Person as to which the other is not so subordinate.

“Paying Agent” means any Person authorized by the Company to pay the principal of (and premium, if any) or interest (and Additional Interest, if any) on any Securities on behalf of the Company.

“Payment Blockage Period” has the meaning set forth in Section 1303.

“Payment Default” has the meaning set forth in Section 501.

“Payment Notice” has the meaning set forth in Section 1303.

“Permitted Business” means any business in which the Company and its Restricted Subsidiaries are engaged on the Issue Date or any business reasonably related, incidental or ancillary thereto.

“Permitted Business Assets” means assets used or useful in a Permitted Business.

“Permitted Debt” has the meaning set forth in Section 1008.

“Permitted Investments” means:

(1) any Investment in the Company or in a Restricted Subsidiary (other than a Permitted Joint Venture);

(2) any Investment in cash or Cash Equivalents;

(3) any Investment in receivables owing to the Company or any Restricted Subsidiary created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided, however, that such trade terms may include such concessionary trade terms as the Company or any such Restricted Subsidiary deems reasonable under the circumstances;

(4) any Investment received by the Company or any Restricted Subsidiary as consideration for the settlement of any litigation, arbitration or claim of bankruptcy or in partial or full satisfaction of accounts receivable owed by a financially troubled Person to the extent reasonably necessary in order to

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prevent or limit any loss by the Company or any of its Restricted Subsidiaries in connection with such accounts receivable;

(5) Investments in existence on the Reference Date;

(6) Hedging Obligations entered into in the ordinary course of business which transactions or obligations are incurred in compliance with Section 1008;

(7) Guarantees issued in accordance with Section 1008;

(8) any Investment by the Company or a Restricted Subsidiary in a Receivables Entity or any Investment by a Receivables Entity in any other Person, in each case, in connection with a Qualified Receivables Transaction; provided, however, that any Investment in any such Person is in the form of a Purchase Money Note, or any equity interest or interests in accounts receivable and related assets generated by the Company or a Restricted Subsidiary and transferred to any Person in connection with a Qualified Receivables Transaction or any such Person owning such accounts receivable;

(9) any Investment by the Company or any Restricted Subsidiary of the Company (other than a Permitted Joint Venture) in a Person, if as a result of such Investment:

(a) such Person becomes a Restricted Subsidiary (other than a Permitted Joint Venture) of the Company or of a Restricted Subsidiary of the Company (other than a Permitted Joint Venture); or

(b) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company or a Restricted Subsidiary of the Company (other than a Permitted Joint Venture);

(10) any Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with Section 1015;

(11) any acquisition of assets solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Company;

(12) any Investment in any Permitted Joint Venture after the Reference Date in an aggregate amount not to exceed $40 million, such aggregate amount to be increased as a result of any management fees, software fees and development fees received from such Permitted Joint Ventures in the ordinary course of business and any payment of any dividend or distribution received on a pro rata basis from any Permitted Joint Ventures as a holder of its Equity Interests; and

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(13) any Investment in any Person after the Issue Date in an aggregate amount, taken together with all other Investments made pursuant to this clause (13) that are at the time outstanding, not to exceed $5 million.

“Permitted Joint Venture” means, with respect to any Person:

(1) any corporation, association or other business entity (other than a partnership):

(a) of which more than 50% (or in the case of any such business entity in which the Company or any Restricted Subsidiary has an Investment before the Issue Date, 50% or more) of the Voting Stock is at the time of determination owned or controlled, directly or indirectly, by such Person or one or more of the Restricted Subsidiaries of that Person or a combination thereof; and

(b) which is either managed or controlled by such Person or any of its Restricted Subsidiaries; and

(2) any partnership, joint venture, limited liability company or similar entity:

(a) of which more than 50% (or in the case of any such entity in which the Company or any Restricted Subsidiary has an Investment before the Issue Date, 50% or more) of the capital accounts, distribution rights, total equity and voting interests or general or limited partnership interests are owned or controlled, directly or indirectly, by such Person or one or more of the Restricted Subsidiaries of that Person or a combination thereof;

(b) which is either managed or controlled by such Person or any of its Restricted Subsidiaries,

and which in the case of each of clauses (1) and (2),

(A) is engaged in a Permitted Business;

(B) only incurs Indebtedness to the Company;

(C) does not enter into any Guarantee; and

(D) distributes all cash pro rata in accordance with the Equity Interests therein at least annually (other than cash required to be reserved on its balance sheet in accordance with GAAP consistent with past practice).

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“Permitted Liens” means:

(1) Liens that secure up to an aggregate principal amount of $475 million of Senior Indebtedness and Guarantees incurred pursuant to the Senior Credit Facilities;

(2) Liens in favor of the Company or any Restricted Subsidiary;

(3) Liens on property of a Person existing at the time such Person becomes a Restricted Subsidiary or is merged into or consolidated with the Company or any Restricted Subsidiary of the Company; provided that such Liens were not incurred in contemplation of such event, merger or consolidation and do not extend to any assets other than those of the Person that becomes a Restricted Subsidiary or is merged into or consolidated with the Company or any Restricted Subsidiary;

(4) Liens on property existing at the time of acquisition thereof by the Company or any Restricted Subsidiary of the Company, provided such Liens were not incurred in contemplation of such acquisition;

(5) Liens to secure the performance of statutory obligations, surety or appeal bonds, performance bonds or other obligations of a like nature incurred in the ordinary course of business;

(6) Liens existing on the Issue Date;

(7) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded; provided that any reserve or other appropriate provision as shall be required in conformity with GAAP shall have been made therefor;

(8) Liens to secure Indebtedness (including Capital Lease Obligations) permitted by clause (4) of the second paragraph of Section 1008;

(9) Liens securing Permitted Refinancing Indebtedness where the Liens securing the Indebtedness being refinanced were permitted under this Indenture;

(10) Liens incurred in the ordinary course of business of the Company or any Restricted Subsidiary of the Company with respect to obligations that do not exceed $5 million at any one time outstanding and that: (a) are not incurred in connection with the borrowing of money or the obtaining of advances or credit (other than trade credit in the ordinary course of business) and (b) do not in the aggregate materially detract from the value of the property or materially impair the use thereof in the operation of business by the Company or such Restricted Subsidiary;

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(11) Liens on assets of Unrestricted Subsidiaries that secure Non-Recourse Debt of Unrestricted Subsidiaries;

(12) easements, rights-of-way, zoning and similar restrictions and other similar encumbrances or title defects incurred or imposed, as applicable, in the ordinary course of business and consistent with industry practices;

(13) any interest or title of a lessor under any Capital Lease Obligation;

(14) Liens securing reimbursement obligations with respect to commercial letters of credit which encumber documents and other property relating to such letters of credit and products and proceeds thereof;

(15) Liens encumbering deposits made to secure obligations arising from statutory, regulatory, contractual or warranty requirements of the Company or any of its Restricted Subsidiaries, including rights of offset and set-off;

(16) Liens securing Hedging Obligations which Hedging Obligations relate to Indebtedness that is otherwise permitted under this Indenture;

(17) deposits by such Person, in each case incurred in the ordinary course of business:

(a) under workmen’s compensation laws, unemployment insurance and other types of social security legislation (other than any Lien imposed by the Employer Retirement Income Security Act of 1974, as amended);

(b) made in good faith in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party;

(c) to secure public or statutory obligations of such Person or deposits or cash or Cash Equivalents to secure surety or appeal bonds to which such Person is a party; or

(d) as security for contested taxes or import or customs duties or for the payment of rent;

(18) Liens imposed by law, including carriers’, warehousemens’ and mechanics’ Liens, in each case for sums not yet delinquent or being contested in good faith by appropriate proceedings if a reserve or other appropriate provisions, if any, as shall be required by GAAP shall have been made in respect thereof;

(19) judgment Liens not giving rise to an Event of Default so long as such Lien is adequately bonded and any appropriate legal proceedings which may have been duly initiated for the review of such judgment have not been finally

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terminated or the period within which such proceedings may be initiated has not expired;

(20) Liens securing Indebtedness of a Restricted Subsidiary owing to the Company or a Wholly Owned Restricted Subsidiary (other than a Receivables Entity);

(21) Liens securing the Securities and Subsidiary Guarantees under this Indenture;

(22) Liens on assets transferred to a Receivables Entity or on assets of a Receivables Entity, in either case incurred in connection with a Qualified Receivables Transaction;

(23) leases or subleases granted to others that do not materially interfere with the ordinary course of business of the Company and its Restricted Subsidiaries; and

(24) Liens arising from filing Uniform Commercial Code financing statements regarding leases.

“Permitted Refinancing Indebtedness” means any Indebtedness of the Company or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund other Indebtedness of the Company or any of its Restricted Subsidiaries; provided that:

(1) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount of (or accreted value, if applicable), plus accrued interest on, the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded (plus the amount of reasonable expenses incurred in connection therewith) except, in the case of the Senior Credit Facilities, the principal amount of such Permitted Refinancing Indebtedness does not exceed the greater of:

(a) the principal amount of Indebtedness permitted (whether or not borrowed) under clause (1) of the second paragraph of Section 1008; and

(b) the amount actually borrowed or available to be borrowed under the Senior Credit Facilities;

(2) such Permitted Refinancing Indebtedness has a final maturity date no earlier than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and

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(3) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the Securities, such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and is subordinated in right of payment to, the Securities on terms at least as favorable to the Holders of Securities as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded.

“Person” means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization or government or agency or political subdivision thereof (including any subdivision or ongoing business of any such entity or substantially all of the assets of any such entity, subdivision or business).

“Predecessor Security” of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 306 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security.

“Principals” means Welsh Carson, Ferrer Freeman and their respective Affiliates.

“Private Exchange Securities” has the meaning set forth in the Appendix.

“pro forma” includes, with respect to an acquisition or the incurrence of Indebtedness in connection therewith, all adjustments, permitted or required to be included pursuant to Article 11 of Regulation S-X and subject to agreed-upon procedures to be performed by the Company’s independent accountants to determine whether the pro forma calculations are made in accordance with Article 11 of Regulation S-X.

“Purchase Date” means the settlement date specified by the Company in an Asset Sale Offer or Change of Control Offer, which shall be within five Business Days of the expiration date specified in such offer.

“Purchase Money Note” means a promissory note of a Receivables Entity evidencing a line of credit, which may be irrevocable, from the Company or any Restricted Subsidiary of the Company in connection with a Qualified Receivables Transaction to a Receivables Entity, which note is repayable from cash available to the Receivables Entity, other than amounts required to be established as reserves pursuant to agreements, amounts paid to investors and amounts owing to such investors and amounts paid in connection with the purchase of newly generated accounts receivable.

“Qualified Receivables Transaction” means any transaction or series of transactions that may be entered into by the Company or any of its Restricted Subsidiaries on an arms’ length basis with the Standard Securitization Undertakings

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pursuant to which the Company or any of its Restricted Subsidiaries may sell, convey or otherwise transfer to:

(1) a Receivables Entity (in the case of a transfer by the Company or any of its Restricted Subsidiaries); or

(2) any other Person (in the case of a transfer by a Receivables Entity)

or may grant a security interest in, any accounts receivable (whether now existing or arising in the future) of the Company or any of its Restricted Subsidiaries, and any assets related thereto including, without limitation, all collateral securing such accounts receivable, all contracts and all guarantees or other obligations in respect of such accounts receivable, the proceeds of such receivables and other assets which are customarily transferred, or in respect of which security interests are customarily granted in connection with asset securitization involving accounts receivable; provided that the aggregate consideration received in each such sale is at least equal to the aggregate fair market value of the receivables transferred.

“Quotation Agent” means the Reference Treasury Dealer selected by the Trustee after consultation with the Company.

“Receivables Entity” means a Wholly Owned Subsidiary of the Company (or another Person in which the Company or any Restricted Subsidiary of the Company makes an Investment and to which the Company or any Restricted Subsidiary of the Company enters into a Qualified Receivables Transaction) which engages in no activities other than the financing of a Qualified Receivables Transaction and which is designated by the Board of Directors of the Company (as provided below) as a Receivables Entity:

(1) no portion of Indebtedness or any other obligations (contingent or otherwise) of such Person of which:

(a) is guaranteed by the Company or any Restricted Subsidiary of the Company (excluding guarantees of Obligations (other than the principal, and interest, on Indebtedness) pursuant to Standard Securitization Undertakings);

(b) has recourse to or obligates the Company or any Restricted Subsidiary of the Company in any way other than pursuant to Standard Securitization Undertakings; and

(c) subjects any property or asset of the Company or any Restricted Subsidiary of the Company, directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to Standard Securitization Undertakings;

(2) with which neither the Company nor any Restricted Subsidiary of the Company has any contract, agreement, arrangement or understanding other than

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(a) a Qualified Receivables Transaction in the ordinary course of business; and

(b) fees payable in the ordinary course of business in connection with servicing accounts receivable,

both of which shall be on terms no less favorable to the Company or such Restricted Subsidiary than those that might be obtained at the time from Persons that are not Affiliates of the Company; and

(3) to which neither the Company nor any Restricted Subsidiary of the Company has any obligation to

(a) subscribe for additional shares of Capital Stock or other Equity Interests therein or make any additional capital contributions or similar payments or transfers thereto other than in connection with a Qualified Receivables Transaction; or

(b) maintain or preserve such entity’s solvency, any balance sheet term, financial condition, level of income or cause such entity to achieve certain levels of operating results.

Any such designation by the Board of Directors of the Company shall be evidenced to the Trustee by filing with the Trustee a certified copy of the resolution of the Board of Directors of the Company giving effect to such designation and an Officers’ Certificate certifying that such designation complied with the foregoing conditions.

“Redemption Date,” when used with respect to any Security to be redeemed, means the date fixed for such redemption pursuant to this Indenture (including paragraph 5 of the Securities).

“Redemption Price,” when used with respect to any Security to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture (including paragraph 5 of the Securities).

“Reference Date” means August 17, 1999, the date of the indenture governing the Company’s existing 13% Senior Subordinated Notes.

“Reference Treasury Dealer” means Credit Suisse First Boston LLC and its successors and assigns and two other nationally recognized investment banking firm selected by the Company that are primary U.S. Government securities dealers.

“Reference Treasury Dealer Quotations” means with respect to each Reference Treasury Dealer and any Redemption Date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue, expressed in each case as a percentage of its principal amount, quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m., New York City time, on the third Business Day immediately preceding such Redemption Date.

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“Registration Rights Agreement” means the Registration Rights Agreement, dated as of August 13, 2003, by and among the Company, the Guarantors, Credit Suisse First Boston LLC, Citigroup Global Markets, Inc. and the other parties named on the signature pages thereof, as such agreement may be amended, modified or supplemented from time to time.

“Regular Record Date” means each February 1 and August 1.

“Related Party” with respect to any Principal means:

(1) any controlling stockholder or partner, 80% (or more) owned Subsidiary, or spouse or immediate family member (in the case of an individual) of such Principal; or

(2) any trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners, owners or Persons beneficially holding a 51% or more controlling interest of which consist of such Principal and/or such other Persons referred to in the immediately preceding clause.

“Reorganization Securities” means securities distributed to Holders of the Securities in an Insolvency or Liquidation Proceeding pursuant to a plan of reorganization consented to by each class of the Senior Indebtedness, but only if in such plan of reorganization the Holders of the Securities on the one hand and the holders of the Senior Indebtedness on the other hand are placed in separate and distinct classes from each other and from the classes of other claimants and the class of the Holders of the Securities is junior to the class of the holders of the Senior Indebtedness and only if all of the terms and conditions of such securities, including, without limitation, term, tenor, interest, amortization, subordination, standstills, covenants and defaults, are at least as favorable (and provide the same relative benefits) to the holders of Senior Indebtedness and to the holders of any security distributed in such Insolvency or Liquidation Proceeding on account of any such Senior Indebtedness as the terms and conditions of the Securities and this Indenture are, and provide, to the holders of Senior Indebtedness.

“Representative” means the Trustee, agent or representative for any Senior Indebtedness.

“Responsible Officer” when used with respect to the Trustee, means any Vice President, the treasurer, any assistant treasurer, any trust officer or assistant trust officer or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject and who shall have direct responsibility for the administration of this Indenture.

“Restricted Investment” means an Investment other than a Permitted Investment.

“Restricted Payment” has the meaning set forth in Section 1009.

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“Restricted Subsidiary” of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary.

“Securities” means the Securities issued under this Indenture, including the Initial Securities, the Exchange Securities, the Private Exchange Securities and any Additional Securities but excluding the Subsidiary Guarantees.

“Securities Act” means the Securities Act of 1933, as amended.

“Senior Credit Facilities” means the Credit Agreement, to be entered into on the Issue Date, among the Company, Holdings, the several lenders from time to time parties thereto and JPMorgan Chase Bank, as Administrative Agent, providing for revolving credit borrowings, term loans and letters of credit, including any related notes, guarantees, collateral documents, instruments and agreements executed in connection therewith, and in each case as amended, modified, renewed, refunded, replaced or refinanced (whether or not with the original administrative agent and lenders or another administrative agent or agents or other lenders) from time to time including increases in principal amount.

“Senior Indebtedness” means:

(1) all Indebtedness outstanding under the Senior Credit Facilities, including any Guarantees thereof and all Hedging Obligations with respect thereto;

(2) any other Indebtedness permitted to be incurred by the Company under the terms of this Indenture, unless the instrument under which such Indebtedness is incurred expressly provides that it is on a parity with or subordinated in right of payment to the Securities; and

(3) all Obligations with respect to the preceding clauses (1) and (2).

Notwithstanding anything to the contrary in the preceding, Senior Indebtedness shall not include:

(1) any liability for federal, state, local or other taxes owed or owing by the Company;

(2) any Indebtedness of the Company to any of its Subsidiaries or other Affiliates;

(3) any trade payables; or

(4) any Indebtedness that is incurred in violation of this Indenture.

“Senior Indebtedness” of any Guarantor has a correlative meaning.

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“Significant Subsidiary” means any Restricted Subsidiary that would be a “significant subsidiary” of the Company within the meaning of Rule 1-02 under Regulation S-X promulgated by the Commission.

“Special Record Date” for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 307.

“Standard Securitization Undertakings” means the interest rate, representations, warranties, covenants, the events of default and indemnities entered into by the Company or any Restricted Subsidiary of the Company which shall be customary in securitization of accounts receivable transactions and on market terms.

“Stated Maturity” means, with respect to any security, the date specified in such security as the fixed date on which payment of or principal on such security is due and payable in the original documentation governing such securities, and shall not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof.

“Stockholders Agreement” means the Stockholders Agreement, dated as of August 17, 1999, among the Principals, Chase Capital Partners, certain officers and employees of Donaldson, Lufkin & Jenrette Securities Corporation, certain members of Holdings’ management and Holdings.

“Subsidiary” means, with respect to any Person:

(1) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person (or a combination thereof);

(2) any partnership or limited liability company (a) the sole general partner or the managing general partner or managing member of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are such Person or of one or more Subsidiaries of such Person (or any combination thereof); and

(3) any Permitted Joint Venture of such Person.

“Subsidiary Guarantee” means a Guarantee provided by a Restricted Subsidiary.

“Trust Indenture Act” means the Trust Indenture Act of 1939 as in force at the date as of which this instrument was executed; provided, however, that in the event the Trust Indenture Act of 1939 is amended after such date, “Trust Indenture Act” means, to the extent required by any such amendment, the Trust Indenture Act of 1939 as so amended.

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“Trustee” means the party named as such in the preamble to this Indenture until a successor replaces it in accordance with the applicable provisions of this Indenture and thereafter means the successor serving hereunder.

“Unrestricted Subsidiary” means (a) any Subsidiary that is designated by the Board of Directors of the Company as an Unrestricted Subsidiary pursuant to a resolution of the Board of Directors and (b) any Subsidiary of an Unrestricted Subsidiary, but, in each case, only to the extent that such Subsidiary:

(1) has no Indebtedness other than Non-Recourse Debt;

(2) is not party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary of the Company unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Company or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Company;

(3) is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results; and

(4) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Company or any of its Restricted Subsidiaries.

Any designation of a Subsidiary of the Company as an Unrestricted Subsidiary shall be evidenced to the Trustee by filing with the Trustee a certified copy of the resolution of the Board of Directors giving effect to such designation and an Officers’ Certificate certifying that such designation complied with the preceding conditions and was permitted by Section 1009. If, at any time, any Unrestricted Subsidiary would fail to meet the preceding requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the Company as of such date and, if such Indebtedness is not permitted to be incurred as of such date under Section 1008, the Company shall be in default of such covenant. The Board of Directors of the Company may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such designation shall be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation shall be permitted only if: (1) such Indebtedness is permitted under Section 1008 and (2) no Default or Event of Default would be in existence following such designation.

“U.S. Government Obligations” means direct non-callable obligations of, or noncallable obligations guaranteed by, the United States of America for the payment

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of which obligation or guarantee the full faith and credit of the United States of America is pledged.

“Vice President,” when used with respect to the Company or the Trustee, means any vice president, whether or not designated by a number or a word or words added before or after the title “vice president.”

“Voting Stock” of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the board of directors or other similar governing board or group of such Person.

“Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the number of years obtained by dividing:

(1) the sum of the products obtained by multiplying: (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that shall elapse between such date and the making of such payment, by

(2) the then outstanding principal amount of such Indebtedness.

“Welsh Carson” means Welsh, Carson, Anderson & Stowe VIII, L.P. and its Affiliates.

“Wholly Owned Subsidiary” of any Person means a Subsidiary of such Person all of the outstanding Capital Stock or other ownership interests of which (other than directors’ qualifying shares) shall at the time be owned by such Person and/or by one or more Wholly Owned Subsidiaries of such Person.

“Wholly Owned Restricted Subsidiary” of the Company means a Wholly Owned Subsidiary which is a Restricted Subsidiary of the Company.

SECTION 102. Compliance Certificates and Opinions. Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee such certificates and opinions as it may reasonably request or as may be required under the Trust Indenture Act. Each such certificate or opinion shall be given in the form of an Officers’ Certificate, if to be given by an officer of the Company, or an Opinion of Counsel, if to be given by counsel, and shall comply with the requirements of the Trust Indenture Act and any other requirement set forth in this Indenture.

Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include:

(1) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto;

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(2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

(3) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and

(4) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with.

SECTION 103. Form of Documents Delivered to Trustee. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.

Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous.

Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.

SECTION 104. Acts of Holders; Record Date.

(a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of

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this Indenture and (subject to Section 601) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section.

(b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient.

(c) The ownership of Securities shall be proved by the Notes Register.

(d) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Security.

(e) The Company may set any day as a record day for the purpose of determining the Holders of Outstanding Securities entitled to give, make or take any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given, made or taken by Holders; provided that the Company may not set a record date for, and the provisions of this paragraph shall not apply with respect to, the giving or making of any notice, declaration, request or direction referred to in the next paragraph. If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities on such record date, and no other Holders, shall be entitled to take the relevant action, whether or not such Holders remain Holders after such record date; provided that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date by Holders of the requisite principal amount of Outstanding Securities on such record date. Nothing in this paragraph shall be construed to prevent the Company from setting a record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be canceled and of no effect), and nothing in this paragraph shall be construed to render ineffective any action taken by Holders of the requisite principal amount of Outstanding Securities on the date such action is taken. Promptly after any record date is set pursuant to this paragraph, the Company, at its own expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Trustee in writing and to each Holder in the manner set forth in Section 106.

The Trustee may set any day as a record date for the purpose of determining the Holders of Outstanding Securities entitled to join in the giving or making of (i) any notice of Default, (ii) any declaration of acceleration referred to in Section 502,

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(iii) any request to institute proceedings referred to in Section 507(2) or (iv) any direction referred to in Section 512. If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities on such record date, and no other Holders, shall be entitled to join in such notice, declaration, request or direction, whether or not such Holders remain Holders after such record date; provided that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date by Holders of the requisite principal amount of Outstanding Securities on such record date. Nothing in this paragraph shall be construed to prevent the Trustee from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be canceled and of no effect), and nothing in this paragraph shall be construed to render ineffective any action taken by Holders of the requisite principal amount of Outstanding Securities on the date such action is taken. Promptly after any record date is set pursuant to this paragraph, the Trustee, at the Company’s expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Company in writing and to each Holder in the manner set forth in Section 106.

With respect to any record date set pursuant to this Section, the party hereto which sets such record dates may designate any day as the “Expiration Date” and from time to time may change the Expiration Date to any earlier or later day; provided that no such change shall be effective unless notice of the proposed new Expiration Date is given to the other party hereto in writing, and to each Holder in the manner set forth in Section 106, on or prior to the existing Expiration Date. If an Expiration Date is not designated with respect to any record date set pursuant to this Section, the party hereto which set such record date shall be deemed to have initially designated the 180th day after such record date as the Expiration Date with respect thereto, subject to its right to change the Expiration Date as provided in this paragraph.

(f) Without limiting the foregoing, a Holder entitled hereunder to take any action hereunder with regard to any particular Security may do so with regard to all or any part of the principal amount of such Security or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any part of such principal amount.

(g) Notwithstanding any provision herein to the contrary, all Securities issued under this Indenture shall vote and consent together on all matters (as to which the Holders may vote or consent) as one class and no series of Securities will have the right to vote or consent as a separate class on any matter.

SECTION 105. Notices, Etc., to Trustee and Company. Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with,

(1) the Trustee by any Holder or by the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing (which

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may be via facsimile) to or with the Trustee at its Corporate Trust Office at The Bank of New York, 101 Barclay Street, Fl. 8W, New York, New York 10286, Attention: Corporate Trust Administration, or

(2) the Company by the Trustee or by any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to the Company addressed to it at the address of its principal office specified in the first paragraph of this instrument or at any other address previously furnished in writing to the Trustee by the Company.

Notice to the Trustee shall not be effective until it is actually received by a Responsible Officer.

SECTION 106. Notice to Holders; Waiver. Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder affected by such event, at his address as it appears in the Note Register, not later than the latest date (if any), and not earlier than the earliest date (if any), prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.

In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder.

SECTION 107. Conflict with Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with a provision of the Trust Indenture Act that is required under such Act to be part of and govern this Indenture, the latter provision shall control. If any provision of this Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the latter provision shall be deemed to apply to this Indenture as so modified or to be excluded, as the case may be.

SECTION 108. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof.

SECTION 109. Successors and Assigns. All covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether so expressed or not.

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SECTION 110. Separability Clause. In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

SECTION 111. Benefits of Indenture. Nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder and the Holders, any benefit or any legal or equitable right, remedy or claim under this Indenture.

SECTION 112. Governing Law. This Indenture, the Securities and the Subsidiary Guarantees shall be governed by and construed in accordance with the laws of the State of New York.

SECTION 113. Legal Holidays. In any case where any Interest Payment Date, Redemption Date, Purchase Date or Stated Maturity of any Security shall not be a Business Day, then (notwithstanding any other provision of this Indenture or of the Securities) payment of interest or principal (and premium, if any) need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the Interest Payment Date, Redemption Date or Purchase Date, or at the Stated Maturity; provided that to the extent such payment is made on such next succeeding Business Day, no interest shall accrue for the period from and after such Interest Payment Date, Redemption Date, Purchase Date or Stated Maturity, as the case may be.

SECTION 114. No Personal Liability of Directors, Officers, Employees and Stockholders. No director, officer, employee, incorporator or stockholder of the Company or any Guarantor, as such, shall have any liability for any obligations of the Company or the Guarantors under the Securities, the Subsidiary Guarantees, this Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Security waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Securities.

ARTICLE TWO

Security Forms

SECTION 201. Forms Generally. Provisions relating to the Initial Securities, the Private Exchange Securities and the Exchange Securities are set forth in the Rule 144A/Regulation S/IAI Appendix attached hereto (the “Appendix”) which is hereby incorporated in, and expressly made a part of, this Indenture. The Initial Securities and the Trustee’s certificate of authentication shall be substantially in the form of Exhibit 1 to the Appendix which is hereby incorporated in, and expressly made a part of, this Indenture. The Exchange Securities, the Private Exchange Securities and the Trustee’s certificate of authentication shall be substantially in the form of Exhibit 2, which is hereby incorporated in and expressly made a part of this Indenture. The Securities may have notations, legends or endorsements required by law, stock exchange

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rule, agreements to which the Company is subject, if any, or usage (provided that any such notation, legend or endorsement is in a form acceptable to the Company). Each Security shall be dated the date of its authentication. The terms of the Securities set forth in the Appendix and Exhibit 1 are part of the terms of this Indenture.

The Subsidiary Guarantees shall be in substantially the form set forth in Exhibit A attached hereto.

ARTICLE THREE

The Securities

SECTION 301. Title and Terms. Except as set forth in the next paragraph, the aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is limited to $150,000,000 million, except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities pursuant to Section 304, 305, 306, 906 or 1108 or in connection with an Asset Sale Offer or Change of Control Offer pursuant to Sections 1015 or 1014, respectively.

After the Issue Date, the Company shall be entitled, subject to its compliance with Section 1008, to issue Additional Securities under this Indenture, which Securities shall have identical terms as the Initial Securities issued on the Issue Date, other than with respect to the date of issuance and issue price. All the Securities issued under this Indenture shall be treated as a single class for all purposes of this Indenture.

With respect to any Additional Securities, the Company shall set forth in a resolution of the Board of Directors, an Officers’ Certificate and a supplemental indenture pursuant to Section 901, a copy of each which shall be delivered to the Trustee, the following information:

(1) the aggregate principal amount of such Additional Securities to be authenticated and delivered pursuant to this Indenture and the provision of Section 1008 that the Company is relying on to issue such Additional Securities;

(2) the issue price, the issue date and the CUSIP number of such Additional Securities; provided, however, that no Additional Securities may be issued at a price that would cause such Additional Securities to have “original issue discount” within the meaning of Section 1273 of the Internal Revenue Code of 1986, as amended; and

(3) whether such Additional Securities shall be Initial Securities or shall be issued in the form of Exchange Securities as set forth in Exhibit 2.

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The Securities shall be known and designated as the “9½% Senior Subordinated Notes due 2010” of the Company.

The Securities are general senior subordinated unsecured obligations of the Company, are subordinated in right of payment to all existing and future Senior Indebtedness of the Company and shall rank senior or pari passu in right of payment to all existing and future subordinated Indebtedness of the Company and are unconditionally guaranteed by the Guarantors.

Holders shall be entitled to the benefits of the Subsidiary Guarantees. The Subsidiary Guarantees are general unsecured obligations of each Guarantor, are subordinated in right of payment to all existing and future Senior Indebtedness of each Guarantor, are pari passu in right of payment to the Guarantees of the Company’s 13% Senior Subordinated Notes and are senior or pari passu in right of payment to all existing and future subordinated Indebtedness of each Guarantor.

If a Holder has given wire transfer instructions to the Company, the Company shall make all principal, premium and interest payment on the Holder’s Securities in accordance with such instruction. All other payments of the principal of (and premium, if any) and interest (and Additional Interest, if any) on the Securities shall be payable at the office or agency of the Paying Agent and Notes Registrar within the City and State of New York maintained for such purpose and at any other office or agency maintained by the Company for such purpose; provided, however, that at the option of the Company payment of interest may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Securities Register.

The Company initially appoints the Trustee as the Paying Agent and the Notes Registrar. The Company may change the Paying Agent or Notes Registrar without prior notice to the Holders, and the Company or any of its Subsidiaries may act as Paying Agent or Notes Registrar. The Company shall promptly notify the Trustee in writing of the name and address of any Notes Registrar or Paying Agent not a party to this Indenture.

SECTION 302. Denominations. The Securities shall be issuable only in registered form without coupons and only in denominations of $1,000 and any integral multiple thereof.

SECTION 303. Execution, Authentication, Delivery and Dating. The Securities shall be executed on behalf of the Company by its Chairman of the Board, its President, its Chief Executive Officer or one of its Vice Presidents. The signature of any of these officers on the Securities may be manual or facsimile.

Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities.

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At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities; and the Trustee in accordance with such Company Order shall authenticate and deliver such Securities as provided in this Indenture and not otherwise.

No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by the Trustee by manual signature, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder.

SECTION 304. Temporary Securities. Pending the preparation of definitive Securities, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Securities which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as evidenced by their execution of such Securities.

If temporary Securities are issued, the Company shall cause definitive Securities to be prepared without unreasonable delay. After the preparation of definitive Securities, the temporary Securities shall be exchangeable for definitive Securities upon surrender of the temporary Securities at any office or agency of the Company designated pursuant to Section 1002, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive Securities of authorized denominations. Until so exchanged the temporary Securities shall in all respects be entitled to the same benefits under this Indenture as definitive Securities.

SECTION 305. Register; Transfer and Exchange. The Company shall cause to be kept at the Corporate Trust Office of the Trustee a register (the register maintained in such office and in any other office or agency designated pursuant to Section 1002 being herein sometimes collectively referred to as the “Note Register”) in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Securities and of transfers of Securities. The Trustee is hereby appointed “Notes Registrar” for the purpose of registering Securities and transfers of Securities as herein provided.

The Securities shall be issued in registered form and shall be transferable only upon the surrender of a Security for registration of transfer. When a Security is presented to the Notes Registrar with a request to register a transfer, the Notes Registrar shall register the transfer as requested if the requirements of this Indenture and Section 8-401(1) of the Uniform Commercial Code are met. When Securities are

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presented to the Notes Registrar with a request to exchange them for an equal principal amount of Securities of other denominations, the Notes Registrar shall make the exchange as requested if the same requirements are met. The Securities shall be subject to the transfer and exchange provisions set forth in the Appendix.

SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities. If any mutilated Security is surrendered to the Trustee, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Security of like tenor and principal amount and bearing a number not contemporaneously outstanding.

If there shall be delivered to the Company and the Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Security and (ii) such security or indemnity as may be required by them to save each of them and any agent of either of them harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and upon its request the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security, a new Security of like tenor and principal amount and bearing a number not contemporaneously outstanding.

In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security.

Upon the issuance of any new Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.

Every new Security issued pursuant to this Section in lieu of any mutilated, destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the mutilated, destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities duly issued hereunder.

The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities.

SECTION 307. Payment of Interest; Interest Rights Preserved. Interest on any Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date immediately preceding such Interest Payment Date.

Any interest on any Security which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called “Defaulted Interest”) shall forthwith cease to be payable to the Holder on the relevant Regular Record Date by

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virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in clause (1) or (2) below:

(1) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this clause provided. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to each Holder at his address as it appears in the Note Register, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following clause (2).

(2) The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such manner of payment shall be deemed practicable by the Trustee.

Subject to the foregoing provisions of this Section, each Security delivered under this Indenture upon registration or transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security.

SECTION 308. Persons Deemed Owners. Prior to due presentment of a Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Security is registered as the owner of such Security for the purpose of receiving payment of principal of (and premium, if any) and (subject to Section 309) interest (and Additional Interest, if any) on

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such Security and for all other purposes whatsoever, whether or not such Security be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary.

SECTION 309. Cancellation. The Company at any time may deliver Securities to the Trustee for cancellation. The Notes Registrar and Paying Agent shall forward to the Trustee any Securities surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel and dispose of (subject to the record retention requirements of the Exchange Act) all Securities surrendered for registration of transfer, exchange, payment or cancellation and deliver a certificate of such destruction to the Company unless the Company directs the Trustee to deliver canceled Securities to the Company. The Company may not issue new Securities to replace Securities it has redeemed, paid or delivered to the Trustee for cancellation.

SECTION 310. CUSIP and ISIN Numbers. The Company in issuing Securities may use “CUSIP” and “ISIN” numbers (if then generally in use) in addition to serial numbers; if so, the Trustee shall use such “CUSIP” and “ISIN” numbers in addition to serial numbers in notices of redemption and repurchase as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such CUSIP and ISIN numbers either as printed on the Securities or as contained in any notice of a redemption or repurchase and that reliance may be placed only on the serial or other identification numbers printed on the Securities, and any such redemption or repurchase shall not be affected by any defect in or omission of such CUSIP and ISIN numbers. The Company shall promptly notify the Trustee of any change in the CUSIP numbers.

ARTICLE FOUR

Satisfaction and Discharge

SECTION 401. Satisfaction and Discharge of Indenture. This Indenture shall cease to be of further effect (except as to any surviving rights of registration of transfer or exchange of Securities herein expressly provided for), and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when

(1) either

(A) all Securities theretofore authenticated and delivered (other than (i) Securities which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 306 and (ii) Securities for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 1003) have been delivered to the Trustee for cancellation; or

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(B) all such Securities not theretofore delivered to the Trustee for cancellation

(i) have become due and payable, or

(ii) shall become due and payable at their Stated Maturity within one year, or

(iii) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company,

and the Company, in the case of (i), (ii) or (iii) above, has deposited or caused to be deposited with the Trustee as trust funds in trust for the purpose an amount sufficient to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal (and premium, if any) and interest (and Additional Interest, if any) to the date of such deposit (in the case of Securities which have become due and payable) or to the Stated Maturity or Redemption Date, as the case may be;

(2) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and

(3) the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with.

Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 607 and, if money shall have been deposited with the Trustee pursuant to subclause (B) of clause (1) of this Section, the obligations of the Trustee under Section 402, the provisions of Sections 303, 305 and 306 and the last paragraph of Section 1003 shall survive such satisfaction and discharge.

SECTION 402. Application of Trust Money. Subject to the provisions of the last paragraph of Section 1003, all money deposited with the Trustee pursuant to Section 401 shall be held in trust and applied by it, in accordance with the provisions of the Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest (and Additional Interest, if any) for whose payment such money has been deposited with the Trustee.

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ARTICLE FIVE

Remedies

SECTION 501. Events of Default. “Event of Default”, wherever used herein, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):

(1) default for 30 days in the payment when due of interest on the Securities whether or not prohibited by Article Thirteen;

(2) default in payment when due of the principal of or premium, if any, on the Securities, whether or not prohibited by Article Thirteen;

(3) failure by the Company to comply with Section 801;

(4) failure by the Company for 30 days after notice by the Trustee or Holders of at least 25% in principal amount of the Securities then outstanding to comply with Section 1008, Section 1009, Section 1014 and Section 1015;

(5) failure by the Company for 60 days after notice from the Trustee or Holders of at least 25% in principal amount of the Securities then outstanding to comply with any of its other agreements in this Indenture or the terms of the Securities;

(6) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for borrowed money or Guarantee by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries), whether such Indebtedness or Guarantee now exists, or is created after the Issue Date, if that default:

(a) is caused by a failure to pay principal of or premium, if any, on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date such default (a “Payment Default”); or

(b) results in the acceleration of such Indebtedness prior to its express maturity,

and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness

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under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $20 million or more;

(7) failure by the Company or any of its Restricted Subsidiaries to pay final judgments aggregating in excess of $20 million, which judgments are not paid, discharged or stayed for a period of 60 days;

(8) except as permitted by this Indenture, any Subsidiary Guarantee of a Significant Subsidiary shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Guarantor that is a Significant Subsidiary, or any Person acting on behalf of such Guarantor, shall deny or disaffirm such Guarantor’s obligations under the Subsidiary Guarantee of such Guarantor;

(9) the entry by a court having jurisdiction in the premises of (A) a decree or order for relief in respect of the Company or any of its Restricted Subsidiaries that are Significant Subsidiaries of Company in an involuntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or (B) a decree or order adjudging the Company or any such Significant Subsidiary a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company or any such Significant Subsidiary under any applicable Federal or State law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or any such Significant Subsidiary or of any substantial part of the property of the Company or any such Significant Subsidiary, or ordering the winding up or liquidation of the affairs of the Company or any such Significant Subsidiary, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 60 consecutive days; and

(10) the commencement by the Company or any of its Restricted Subsidiaries that are Significant Subsidiaries of the Company of a voluntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by the Company or any such Significant Subsidiary to the entry of a decree or order for relief in respect of the Company or any of its Restricted Subsidiaries that are Significant Subsidiaries of the Company in an involuntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or to the

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commencement of any bankruptcy or insolvency case or proceeding against the Company or any such Significant Subsidiary of the Company, or the filing by the Company or any such Significant Subsidiary of a petition or answer or consent seeking reorganization or relief under any Federal or State law, or the consent by the Company or any such Significant Subsidiary to the filing of such or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or similar official of the Company or any of its Restricted Subsidiaries that are Significant Subsidiaries of the Company or of any substantial part of the property of the Company or any of its Restricted Subsidiaries that are Significant Subsidiaries of the Company, or the making by the Company or any of its Restricted Subsidiaries that are Significant Subsidiaries of Company of an assignment for the benefit of creditors, or the admission by the Company or any such Significant Subsidiary in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the Company or any such Significant Subsidiary in furtherance of any such action.

In the event of a declaration of acceleration of the Securities because an Event of Default has occurred and is continuing as a result of the acceleration of any Indebtedness described in clause (6) of this Section 501, the declaration of acceleration of the Securities shall be automatically annulled if the holders of any Indebtedness described in clause (6) of this Section 501 have rescinded the declaration of acceleration in respect of such Indebtedness within 30 days of the date of such declaration and if:

(a) the annulment of the acceleration of Securities would not conflict with any judgment or decree of a court of competent jurisdiction; and

(b) all existing Events of Default, except nonpayment of principal or interest on the Securities that became due solely because of the acceleration of the Securities, have been cured or waived.

SECTION 502. Acceleration of Maturity; Rescission and Annulment. If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the Outstanding Securities may declare the principal of the Securities to be due and payable immediately; provided that so long as any Indebtedness permitted to be incurred pursuant to the Senior Credit Facilities shall be outstanding, such acceleration shall not be effective until the earlier of:

(1) an acceleration of any such Indebtedness under the Senior Credit Facilities, or

(2) five business days after receipt by the Company and the Credit Agent on the Issue Date (or to such other Credit Agent as the Trustee may hereafter be notified in writing) of written notice of

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such acceleration (provided that the notification of the replacement Credit Agent and its address shall be received by the Trustee prior to the issuance of such notice of acceleration).

Notwithstanding the preceding paragraph, in the case of an Event of Default described in clause (9) or (10) of Section 501, with respect to the Company or any of its Significant Subsidiaries, the principal and unpaid interest on all Outstanding Securities shall become due immediately without further action or notice.

In the case of any Event of Default occurs on or after August 15, 2007 by reason of any willful action or inaction taken or not taken by or on behalf of the Company with the intention of avoiding payment of the premium that the Company would have had to pay if the Company then had elected to redeem the Securities pursuant to paragraph 5 of the Securities an equivalent premium shall also become and be immediately due and payable to the extent permitted by law upon the acceleration of the Securities. If an Event of Default occurs prior to August 15, 2007 by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding the prohibition on redemption of the Securities prior to August 15, 2007, then, an additional premium shall also become immediately due and payable to the extent permitted by law upon acceleration of the Securities in an amount, for each of the years beginning on August 15 of the years set forth below, as set forth below (such total amount due is expressed as a percentage of the principal amount of the Securities on the date of payment that would otherwise be due but for the provisions of this sentence):

Year	Percentage
2003	109.500	%
2004	108.313	%
2005	107.126	%
2006	105.939	%

At any time after such a declaration of acceleration has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of a majority in aggregate principal amount of the Outstanding Securities or the holders of a supermajority in aggregate principal amount of the Securities with respect to a default in respect of any provision requiring a supermajority for an amendment to such provision, as the case may be, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if (1) the Company has paid or deposited with the Trustee a sum sufficient to pay (A) all overdue interest on the Securities, (B) the principal of (and premium, if any, on) any Securities which have become due otherwise than by such declaration of acceleration (including any Securities required to have been purchased on the Purchase Date pursuant to an offer to purchase made by the Company) and interest thereon at the rate provided therefor in the Securities, (C) interest upon

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overdue interest at the rate provided therefor in the Securities and (D) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel and (2) all existing Events of Default, other than the non-payment of the principal of, premium, if any, and interest (and Additional Interest, if any) on the Securities which have become due solely by such declaration of acceleration, have been cured or waived as provided in Section 513.

No such rescission shall affect any subsequent Default or impair any right consequent thereon.

SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee.

The Company covenants that if

(1) Default is made in the payment of any interest (and Additional Interest, if any) on any Security when such interest (and Additional Interest, if any) becomes due and payable and such Default continues for a period of 30 days, or

(2) Default is made in the payment of the principal of (or premium, if any, on) any Security at the Maturity thereof or, with respect to any Security required to have been purchased pursuant to an Asset Sale Offer or Change of Control Offer made by the Company, at the Purchase Date thereof,

the Company shall, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal (and premium, if any) and interest (and Additional Interest, if any), and, to the extent that payment of such interest shall be legally enforceable, interest on any overdue principal (and premium, if any) and on any overdue interest and Additional Interest, at the rate provided by the Securities, and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.

If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company or any other obligor upon the Securities and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon the Securities, wherever situated.

If an Event of Default occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders by such judicial proceedings as the Trustee shall deem appropriate, whether for the specific

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enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy.

SECTION 504. Trustee May File Proofs of Claim. In case of any judicial proceeding relative to the Company (or any other obligor upon the Securities), its property or its creditors, the Trustee shall be entitled and empowered, by intervention in such proceeding or otherwise, to take any and all actions authorized under the Trust Indenture Act in order to have claims of the Holders and the Trustee allowed in any such proceeding. In particular, the Trustee shall be authorized to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized and directed by each Holder to make such payments to the Trustee and, in the event that the Trustee requests the making of such payments directly to the Holders, is authorized and directed to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 607.

No provision of this Indenture shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding; provided, however, that the Trustee may, on behalf of the Holders, vote for the election of a Trustee in bankruptcy or similar official and be a member of a creditors’ or other similar committee.

SECTION 505. Trustee May Enforce Claims Without Possession of Securities. All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered.

SECTION 506. Application of Money Collected. Any money collected by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal (or premium, if any) or interest (or Additional Interest, if any), upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid:

FIRST: To the payment of all amounts due the Trustee under Section 607;

SECOND: To the payment of the amounts then due and unpaid for principal of (and premium, if any) and interest (and Additional Interest, if any) on

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the Securities in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities for principal (and premium, if any) and interest (and Additional Interest, if any), respectively; and

THIRD: To the Company or to such party as a court of competent jurisdiction may direct.

SECTION 507. Limitation on Suits. No Holder of any Security shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless

(1) such Holder has previously given written notice to the Trustee of a continuing Event of Default;

(2) the Holders of not less than 25% in principal amount of the Outstanding Securities shall have made written request to the Trustee institute proceedings in respect of such Event of Default in its own name as Trustee hereunder;

(3) such Holder or Holders have offered to the Trustee indemnity reasonably satisfactory to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such request;

(4) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and

(5) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the Outstanding Securities;

it being understood and intended that no one or more Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders, or to obtain or to seek to obtain priority or preference over any other Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all the Holders.

SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and Interest. Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of (and premium, if any) and (subject to Section 307) interest (and Additional Interest, if any) on such Security on the respective Stated Maturities expressed in such Security (or, in the case of redemption, on the Redemption Date or in the case of an Asset Sale Offer or Change of Control Offer made by the Company and required to be accepted as to such Security, on the Purchase Date) and to institute suit for

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the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder.

SECTION 509. Restoration of Rights and Remedies. If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted.

SECTION 510. Rights and Remedies Cumulative. Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in the last paragraph of Section 306, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

SECTION 511. Delay or Omission Not Waiver. No delay or omission of the Trustee or of any Holder of any Security to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be.

SECTION 512. Control by Holders. The Holders of a majority in aggregate principal amount of the Outstanding Securities shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee; provided that:

(1) such direction shall not be in conflict with any rule of law or with this Indenture or involve the Trustee in personal liability, and

(2) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction.

SECTION 513. Waiver of Past Defaults. The Holders of not less than a majority in aggregate principal amount of the Outstanding Securities may on behalf of the Holders of all the Securities waive any existing Default or Event of Default hereunder and its consequences hereunder, except

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(1) a Default or Event of Default with respect to any provision requiring a supermajority to amend, which Default or Event of Default may only be waived by such a supermajority,

(2) a continuing Default or Event of Default in the payment of the principal of (or premium, if any) or interest (or Additional Interest, if any) on any Security (including any Security which is required to have been purchased pursuant to an Asset Sale Offer or Change of Control Offer which has been made by the Company), or

(3) a Default or Event of Default in respect of a covenant or provision hereof which under Article Nine cannot be modified or amended without the consent of the Holder of each Outstanding Security affected.

Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon.

SECTION 514. Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, a court may require any party litigant in such suit to file an undertaking to pay the costs of such suit, and may assess costs, including reasonable attorney’s fees and expenses, against any such party litigant, in the manner and to the extent provided in the Trust Indenture Act; provided, that neither this Section nor the Trust Indenture Act shall be deemed to authorize any court to require such an undertaking or to make such an assessment in any suit instituted by the Trustee or the Company.

SECTION 515. Waiver of Usury, Stay or Extension Laws. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it shall not hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law had been enacted.

ARTICLE SIX

The Trustee

SECTION 601. Certain Duties and Responsibilities.

(a) The duties and responsibilities of the Trustee shall be as provided by the Trust Indenture Act. Notwithstanding the foregoing, no provision of this Indenture

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shall require the Trustee to expend or risk own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to provisions of this Section. In case an Event of Default shall occur and be continuing, the Trustee will be required, in the exercise of its power, to use the degree of care of a prudent man in the conduct of his own affairs.

(b) Except during the continuance of a Default or an Event of Default:

(1) The Trustee need undertake to perform only those duties as are specifically set forth in this Indenture and no covenants or obligations shall be implied in this Indenture against the Trustee.

(2) In the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, in the case of certificates or opinions specifically required by any provision hereof to be furnished to it, the Trustee shall examine such certificates or opinions to determine whether or not they conform to the requirements of this Indenture.

(c) The Trustee shall have no liability except for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:

(1) This paragraph does not limit the effect of paragraph (b) of this Section 601.

(2) The Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts.

(3) The Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 512.

SECTION 602. Notice of Defaults. If a Default or Event of Default occurs and is continuing and if it is known to the Trustee, the Trustee shall mail to Holders a notice of the Default or Event of Default within 90 days after it occurs. Except in the case of a Default or Event of Default in payment of principal of, premium, if any, or interest on any Security, the Trustee may withhold the notice if and so long as the board of directors, the executive committee or a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of the Holders.

SECTION 603. Certain Rights of Trustee.

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Subject to the provisions of Section 601:

(a) the Trustee may conclusively rely and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, security, note, other evidence of indebtedness or other paper or document (whether in original or facsimile form) believed by it to be genuine and to have been signed or presented by the proper party or parties;

(b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors of the Company may be sufficiently evidenced by a Board Resolution;

(c) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers’ Certificate;

(d) the Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon;

(e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity reasonably satisfactory to it against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction;

(f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, Security, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled, upon reasonable prior notice, to examine the books, records and premises of the Company, personally or by agent or attorney, at such reasonable times as reasonably requested at the expense of the Company;

(g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care;

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(h) the Trustee shall not be liable for any action taken, suffered, or omitted to be taken by it in good faith and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture;

(i) the Trustee shall not be deemed to have notice of any Default or Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a Default is received by the Trustee at the Corporate Trust Office of the Trustee, and such notice references the Securities and this Indenture; and

(j) the rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and each agent, custodian and other Person employed by the Trustee to act hereunder.

SECTION 604. Not Responsible for Recitals or Issuance of Securities. The recitals contained herein and in the Securities, except the Trustee’s certificates of authentication, shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities. The Trustee shall not be accountable for the use or application by the Company of the Securities or the proceeds thereof.

SECTION 605. May Hold Securities. The Trustee, any Paying Agent, any Notes Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Securities and, subject to Sections 608 and 613, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Paying Agent, Notes Registrar or such other agent.

SECTION 606. Money Held in Trust. Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed in writing with the Company.

SECTION 607. Compensation and Reimbursement. Each of the Company and the Guarantors, jointly and severally agrees

(1) to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust);

(2) except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement

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or advance as shall be determined to have been caused by its own negligence or willful misconduct; and

(3) to indemnify the Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence or willful misconduct on its part, arising out of or in connection with the acceptance or administration of this trust, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder.

The Trustee, upon its receipt of written notice thereof, shall notify the Company promptly of any claim for which it may seek indemnity. The Company need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld.

To secure the Company’s payment obligations in this Section 607, the Trustee shall have a lien prior to the Securities on all assets held or collected by the Trustee, in its capacity as Trustee, except assets held in trust to pay principal of or interest on particular Securities.

When the Trustee incurs expenses or renders services after an Event of Default specified in Section 501(9) or (10) occurs, the expenses and the compensation for the services are intended to constitute expenses of administration under any Bankruptcy Law. This Section 607 shall survive the satisfaction and discharge of the Indenture.

SECTION 608. Disqualification; Conflicting Interests. If the Trustee has or shall acquire a conflicting interest within the meaning of the Trust Indenture Act, the Trustee shall eliminate such conflict within 90 days, apply to the Commission for permission to continue or resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Indenture.

SECTION 609. Corporate Trustee Required; Eligibility. There shall at all times be a Trustee hereunder which shall be a Person that is eligible pursuant to the Trust Indenture Act to act as such and has a combined capital and surplus of at least $50,000,000 and a Corporate Trust Office in the Borough of Manhattan, The City of New York. If such Person publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article.

SECTION 610. Resignation and Removal; Appointment of Successor. (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee under Section 611.

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(b) The Trustee may resign at any time by giving written notice thereof to the Company. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition, at the expense of the Company, any court of competent jurisdiction for the appointment of a successor Trustee.

(c) The Trustee may be removed at any time by Act of the Holders of a majority in principal amount of the Outstanding Securities, delivered to the Trustee and to the Company. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Trustee within 30 days after the giving of such notice of removal, the removed Trustee may petition, at the expense of the Company, any court of competent jurisdiction for the appointment of a successor Trustee.

(d) If at any time:

(1) the Trustee shall fail to comply with Section 608 after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Security for at least six months, or

(2) the Trustee shall cease to be eligible under Section 609 and shall fail to resign after written request therefor by the Company or by any such Holder, or

(3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its of property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation,

then, in any such case, (i) the Company by a Board Resolution may remove the Trustee, or (ii) subject to Section 514, any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

(e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, the Company, by a Board Resolution, shall promptly appoint a successor Trustee. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Securities delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment, become the successor Trustee and supersede the successor Trustee appointed by the Company. If no successor Trustee shall have been so appointed by the Company or the Holders and accepted appointment in the manner hereinafter provided, any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee.

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(f) The Company shall give notice of each resignation and each removal of the Trustee and each appointment of a successor Trustee to all Holders in the manner provided in Section 106. Each notice shall include the name of the successor Trustee and the address of its Corporate Trust Office.

SECTION 611. Acceptance of Appointment by Successor. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder. Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts.

No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article.

SECTION 612. Merger, Conversion, Consolidation or Succession to Business. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided that such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities.

SECTION 613. Preferential Collection of Claims Against Company. If and when the Trustee shall be or become a creditor of the Company or any Guarantor (or any other obligor under the Securities), the Trustee shall be subject to the provisions of the Trust Indenture Act regarding the collection of claims against the Company (or any such other obligor).

ARTICLE SEVEN

Holders’ Lists and Reports by Trustee and Company

SECTION 701. Company to Furnish Trustee Names and Addresses of Holders. The Company shall furnish or cause to be furnished to the Trustee

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(a) semi-annually, not more than 15 days after each Regular Record Date a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders as of such Regular Record Date, and

(b) at such other times as the Trustee may request in writing, within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished;

excluding from any such list names and addresses received by the Trustee in its capacity as Notes Registrar.

SECTION 702. Preservation of Information; Communications to Holders.

(a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in Section 701 and the names and addresses of Holders received by the Trustee in its capacity as Notes Registrar. The Trustee may destroy any list furnished to it as provided in Section 701 upon receipt of a new list so furnished.

(b) The rights of Holders to communicate with other Holders with respect to their rights under this Indenture or under the Securities and the corresponding rights and duties of the Trustee, shall be provided by the Trust Indenture Act.

(c) Every Holder of Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of either of them shall be held accountable by reason of any disclosure of information as to the names and addresses of Holders made pursuant to the Trust Indenture Act.

SECTION 703. Reports by Trustee.

(a) The Trustee shall transmit to Holders such reports concerning the Trustee and its actions under this Indenture as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant thereto.

(b) A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each stock exchange upon which the Securities are listed, with the Commission and with the Company. The Company shall promptly notify the Trustee when the Securities are listed on any stock exchange and any delisting thereof.

SECTION 704. Reports by Company. Whether or not required by the Commission, so long as any Securities are outstanding, the Company shall furnish or make available to the Holders, within the time periods specified in the Commission’s rules and regulations:

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(1) all quarterly and annual financial information that would be required to be contained in a filing with the Commission on Forms 10-Q and 10-K if the Company were required to file such Forms, including a “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and with respect to the annual information only, a report on the annual financial statements by the Company’s certified independent accountants; and

(2) all current reports that would be required to be filed with the Commission on Form 8-K if the Company were required to file such reports.

If the Company has designated any of its Subsidiaries as Unrestricted Subsidiaries, then the quarterly and annual financial information required by the preceding paragraph shall include a reasonably detailed presentation, either on the face of the financial statements or in the footnotes thereto, and in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section, of the financial condition and results of operations of the Company and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of the Company.

In addition, following the consummation of the Exchange Offer contemplated by the Registration Rights Agreement, whether or not required by the Commission, the Company shall file a copy of all the information and reports referred to in clauses (1) and (2) above with the Commission for public availability within the time periods specified in the Commission’s rules and regulations (unless the Commission shall not accept such a filing) and make such information available to securities analysts and prospective investors upon request.

In addition, the Company shall, for so long as any Securities remain outstanding, furnish to the Holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.

ARTICLE EIGHT

Consolidation, Merger, Conveyance, Transfer or Lease

SECTION 801. Limitation on Merger, Consolidation or Sale of Assets. The Company may not: (1) consolidate or merge with or into another Person (whether or not the Company is the surviving corporation); or (2) sell, assign, transfer, convey or otherwise dispose of all or substantially all of its properties or assets, in one or more related transactions, to another Person unless:

(1) either: (a) the Company is the surviving corporation; or (b) the Person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, conveyance or other disposition shall have been made is a corporation organized or existing under the laws of the United States, any state thereof or the District of Columbia;

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(2) the Person formed by or surviving any such consolidation or merger (if other than the Company) or the Person to which such sale, assignment, transfer, conveyance or other disposition shall have been made expressly assumes all the obligations of the Company under the Securities and this Indenture pursuant to a supplemental indenture in a form reasonably satisfactory to the Trustee;

(3) immediately after giving pro forma effect to such transaction no Default or Event of Default exists; and

(4) the Company or Person formed by or surviving any such consolidation or merger (if other than the Company), or to which such sale, assignment, transfer, conveyance or other disposition shall have been made,

(a) shall, after giving pro forma effect thereto as if such transaction had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of Section 1008; or

(b) would (together with its Restricted Subsidiaries) have a higher Fixed Charge Coverage Ratio immediately after such transaction (after giving pro forma effect thereto as if such transaction had occurred at the beginning of the applicable four-quarter period) than the Fixed Charge Coverage Ratio of the Company and its Subsidiaries immediately prior to the transaction.

The preceding clause (4) shall not prohibit:

(a) a merger between the Company and a Wholly Owned Subsidiary; or

(b) a merger between the Company and an Affiliate incorporated solely for the purpose of reincorporating the Company in another state of the United States;

so long as, in each case, the amount of Indebtedness of the Company and its Restricted Subsidiaries is not increased thereby.

In addition, the Company may not, directly or indirectly, lease all or substantially all of its properties or assets, in one or more related transactions, to any other Person. This Section 801 is not applicable to a sale, assignment, transfer, conveyance or other disposition of assets between or among the Company and any of its Wholly Owned Restricted Subsidiaries.

SECTION 802. Successor Substituted. Upon any consolidation of the Company with, or merger of the Company into, any other Person or any transfer, conveyance, sale, lease or other disposition of all or substantially all of the properties and

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assets of the Company as an entirety in accordance with Section 801, the successor corporation formed by such consolidation or into which the Company is merged or to which such transfer, conveyance, sale, lease or other disposition is made shall succeed to and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor corporation had been named therein as the Company herein, and thereafter (except in the case of a lease), the predecessor Person shall be relieved of all obligations and covenants under this Indenture and the Securities.

SECTION 803. Transfer of Subsidiary Assets. For purposes of the foregoing, the transfer (by lease, assignment, sale or otherwise) of all or substantially all of the properties and assets of one or more Subsidiaries, the Company’s interest in which constitutes all or substantially all of the properties and assets of the Company, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Company.

ARTICLE NINE

Supplemental Indentures

SECTION 901. Supplemental Indentures Without Consent of Holders. Subject to Section 1312, without the consent of any Holders, the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes:

(1) to cure any ambiguity, defect or inconsistency;

(2) to provide for uncertificated Securities in addition to or in place of certificated Securities;

(3) to provide for the assumption of the Company’s obligations to Holders in the case of a merger or consolidation or the sale of all or substantially all of the Company’s assets;

(4) to make any change that would provide any additional rights or benefits to the Holders or that does not adversely affect in any material respect the legal rights under this Indenture of any such Holder;

(5) to comply with requirements of the Commission in order to effect or maintain the qualification of this Indenture under the Trust Indenture Act;

(6) to provide for the issuance of Additional Securities in accordance with Section 301, Section 1008 and the other limitations set forth in this Indenture; or

(7) to allow any Subsidiary to guarantee the Securities.

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SECTION 902. Supplemental Indentures with Consent of Holders. Subject to Section 1312, with the consent of the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities (including consents obtained in connection with a purchase of or tender offer or exchange offer for the Securities), by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of amending or supplementing this Indenture or any supplemental indenture or the Securities or modifying the rights of the Holders, and any existing Default or Event of Default or compliance with any provision of the Indenture or the Securities may be waived; provided, however, that no such modification or waiver may, without the consent of Holders of at least 75% in aggregate principal amount of Securities at the time outstanding, modify or waive the provisions of Article Thirteen in a manner adverse to the Holders; and provided that no such modification or waiver may, without the consent of each Holder thereby:

(1) reduce the principal amount of Securities whose Holders must consent to an amendment, supplement or waiver;

(2) reduce the principal of or change the Stated Maturity of any Security or alter the provisions with respect to the redemption of the Securities (other than Sections 1014 or 1015);

(3) reduce the rate of or change the time for payment of interest on any Security;

(4) waive a Default or Event of Default in the payment principal of or premium, if any, or interest on the Securities (except a rescission of acceleration of the Securities by the Holders of at least a majority in aggregate principal amount of the Securities and a waiver of the payment default that resulted from such acceleration);

(5) make any Security payable in money other than that stated in the Securities;

(6) make any change in the provisions of this Indenture relating to waivers of past Defaults or the rights Holders to receive payments of principal of or premium, if any, or interest on the Securities;

(7) waive a redemption payment with respect to any Security (other than a payment under Sections 1014 or 1015);

(8) make any change in the preceding amendment and waiver provisions; or

(9) release any Guarantor from any of its obligations under its Guarantee of the Securities or this Indenture, except in accordance with the terms of this Indenture.

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It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof.

SECTION 903. Execution of Supplemental Indentures. In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be provided with, and (subject to Section 601) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise.

SECTION 904. Effect of Supplemental Indentures. Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder theretofore or thereafter authenticated and delivered hereunder shall be bound thereby.

SECTION 905. Conformity With Trust Indenture Act. Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act.

SECTION 906. Reference in Securities to Supplemental Indentures. Securities authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities so modified as to conform, in the opinion of the Trustee and the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities.

ARTICLE TEN

Covenants

SECTION 1001. Payment of Principal, Premium and Interest. The Company shall duly and punctually pay the principal of (and premium, if any) and any interest (and Additional Interest, if any) on the Securities in accordance with the terms of the Securities and this Indenture.

SECTION 1002. Maintenance of Office or Agency. The Company shall maintain in the Borough of Manhattan, The City of New York, an office or agency where Securities may be presented or surrendered for payment, where Securities may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Securities and this Indenture may be served. The Company shall give prompt written notice to the Trustee of the location, and any change

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in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands.

The Company may also from time to time designate one or more other offices or agencies (in or outside the Borough of Manhattan, The City of New York) where the Securities may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, The City of New York, for such purposes. The Company shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.

SECTION 1003. Money for Security Payments to be Held in Trust. If the Company shall at any time act as its own Paying Agent, it shall, on or before each due date of the principal of (and premium, if any) or interest (and Additional Interest, if any) on any of the Securities, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal (and premium, if any) or interest (and Additional Interest, if any) so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and shall promptly notify the Trustee of its action or failure so to act.

Whenever the Company shall have one or more Paying Agents, it shall, prior to each due date of the principal of (and premium, if any) or interest (and Additional Interest, if any) on any Securities, deposit with a Paying Agent a sum sufficient to pay the principal (and premium, if any) or interest (and Additional Interest, if any) so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal, premium, interest or Additional Interest, and (unless such Paying Agent is the Trustee) the Company shall promptly notify the Trustee of its action or failure so to act.

The Company shall cause each Paying Agent other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent shall:

(1) hold all sums held by it for the payment of the principal of (and premium, if any) or interest (and Additional Interest, if any) on Securities in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided;

(2) give the Trustee notice of any Default by the Company (or any other obligor upon the Securities) in the making of any payment of principal (and premium, if any) or interest (and Additional Interest, if any); and

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(3) at any time during the continuance of any such Default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent.

The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money.

Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of (and premium, if any) or interest (and Additional Interest, if any) on any Security and remaining unclaimed for two years after such principal (and premium, if any) or interest has become due and payable shall be paid to the Company on Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in The City of New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining shall be repaid to the Company.

SECTION 1004. Existence. Subject to Article Eight and Section 1015, the Company and its Restricted Subsidiaries shall do or cause to be done all things necessary to preserve and keep in full force and effect their existence, rights (charter and statutory) and franchises; provided, however, that the Company and its Restricted Subsidiaries shall not be required to preserve any such right or franchise if the Board of Directors of the Company in good faith shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company or its Restricted Subsidiaries and that the loss thereof is not disadvantageous in any material respect to the Holders.

SECTION 1005. Maintenance of Properties. The Company shall cause all properties used or useful in the conduct of its business or the business of any Restricted Subsidiary of the Company to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and shall cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Company may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, however, that nothing in this Section shall prevent the Company from

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discontinuing the operation or maintenance of any of such properties if such discontinuance is, as determined by the Board of Directors of the Company in good faith, desirable in the conduct of its business or the business of any Subsidiary and not disadvantageous in any material respect to the Holders.

SECTION 1006. Payment of Taxes and Other Claims. The Company shall pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (1) all taxes, assessments and governmental charges levied or imposed upon the Company or any of its Restricted Subsidiaries or upon the income, profits or property of the Company or any of its Restricted Subsidiaries, and (2) all lawful claims for labor, materials and supplies which, if unpaid, might by law become a lien upon the property of the Company or any of its Restricted Subsidiaries; provided, however, that the Company shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings or where the failure to effect such payment is not adverse in any material respect to the Holders.

SECTION 1007. Maintenance of Insurance. The Company shall, and shall cause its Restricted Subsidiaries to, keep at all times all of their properties which are of an insurable nature insured against loss or damage with insurers believed by the Company to be responsible or in the case of insurance coverage, to self insure in each case to the extent, in the judgment of the Company, to do so comports with good business practice.

SECTION 1008. Limitation on Incurrence of Indebtedness and Issuance of Preferred Stock. The Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt) and the Company shall not issue any Disqualified Stock and shall not permit any of its Restricted Subsidiaries to issue any Disqualified Stock or preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock and the Company’s Restricted Subsidiaries may incur Indebtedness (including Acquired Debt) and issue Disqualified Stock or preferred stock if the Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or preferred stock is issued would have been at least 2.50 to 1; determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred, or the Disqualified Stock or preferred stock, as applicable, had been issued, as the case may be, at the beginning of such four-quarter period.

The first paragraph of this Section 1008 shall not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):

(1) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness and letters of credit pursuant to the Senior Credit

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Facilities; provided that the aggregate amount of all Indebtedness of the Company and the Guarantors outstanding under the Senior Credit Facilities after giving effect to such incurrence does not exceed an amount equal to $475.0 million at any one time;

(2) the incurrence by the Company and its Restricted Subsidiaries of Existing Indebtedness;

(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Securities (other than any Additional Securities) and the Subsidiary Guarantees;

(4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case incurred for the purpose of financing all or any part of the purchase price or cost of construction or improvement of property, plant or equipment used in the business of the Company or such Restricted Subsidiary (whether through the direct purchase of assets or the Capital Stock of any Person owning such Assets), in an aggregate principal amount or accreted value, as applicable, not to exceed $15 million at any time outstanding;

(5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance or replace Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under the first paragraph of this covenant or clauses (2), (3) or (14) of this Section 1008;

(6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:

(a) if the Company or any Guarantor is the obligor on such Indebtedness, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations with respect to the Securities, in the case of the Company, or the Subsidiary Guarantee of such Guarantor, in the case of a Guarantor; and

(b) (i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Wholly Owned Restricted Subsidiary and (ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Wholly Owned Restricted Subsidiary shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);

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(7) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations that are incurred for the purpose of hedging interest rate risk with respect to any Indebtedness that is permitted by the terms of this Indenture to be outstanding;

(8) the Guarantee by the Company or any of its Restricted Subsidiaries of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 1008;

(9) the incurrence by the Company’s Unrestricted Subsidiaries of Non-Recourse Debt; provided, however, that if any such Indebtedness ceases to be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be deemed to constitute an incurrence of Indebtedness by a Restricted Subsidiary of the Company that was not permitted by this clause (9);

(10) Indebtedness incurred by the Company or any of its Restricted Subsidiaries constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including without limitation in respect of workers’ compensation claims or self-insurance, or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims; provided, however, that upon the drawing of such letters of credit or the incurrence of such Indebtedness, such obligations are reimbursed within 30 days following such drawing or incurrence;

(11) Indebtedness arising from agreements of the Company or a Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligations, in each case, incurred or assumed in connection with the disposition of any business, asset or Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Subsidiary for the purpose of financing such acquisition; provided that (a) such Indebtedness is not reflected on the balance sheet of the Company or any Restricted Subsidiary (contingent obligations referred to in a footnote or footnotes to financial statements and otherwise reflected on the balance sheet shall not deemed to be reflected on such balance sheet for purposes of this clause (a)) and (b) the maximum aggregate liability in respect of such Indebtedness shall at no time exceed the gross proceeds including non-cash proceeds (the fair market value of such non-cash proceeds being measured at the time and without giving effect to any such subsequent changes in value) actually received by the Company and/or such Restricted Subsidiary in connection with such disposition;

(12) obligations in respect of performance, surety and similar bonds and completion guarantees provided by the Company or any Restricted Subsidiary in the ordinary course of business;

(13) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument (except in the case of daylight overdrafts) drawn against insufficient funding in the ordinary course of business;

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provided, however, that such Indebtedness is extinguished within five business days of incurrence; and

(14) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any other Indebtedness incurred pursuant to this clause (14), not to exceed $25 million.

For purposes of determining compliance with this Section 1008, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (14) above or is entitled to be incurred pursuant to the first paragraph of this covenant, the Company shall be permitted to classify such item of Indebtedness in any manner that complies with this covenant. In addition, the Company may, at any time, change the classification of an item of Indebtedness (or any portion thereof) to any other clause or to the first paragraph hereof, provided that the Company would be permitted to incur such item of Indebtedness (or the portion thereof) pursuant to such other clause or the first paragraph hereof, as the case may be, at such time of reclassification. Accrual of interest, accretion or amortization of original issue discount and the accretion of accreted value shall not be deemed to be an incurrence of Indebtedness for purposes of this covenant.

SECTION 1009. Limitation on Restricted Payments. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly:

(1) declare or pay any dividend or make any other payment or distribution on account of the Company’s or any its Restricted Subsidiaries’ Equity Interests (including, without limitation, any payment on such Equity Interests in connection with any merger or consolidation involving the Company) or to the direct or indirect holders of the Company’s or any of its Restricted Subsidiaries’ Equity Interests in their capacity as such (other than dividends or distributions payable in Equity Interests (other Disqualified Stock) of the Company or to the Company or a Restricted Subsidiary of the Company);

(2) purchase, redeem or otherwise acquire or retire for value (including without limitation, in connection with any merger or consolidation involving the Company) any Equity Interests of the Company or any direct or indirect parent of the Company or any Restricted Subsidiary of the Company (other than any such Equity Interests owned by the Company or any Restricted Subsidiary of the Company);

(3) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness of the Company or any Guarantor that is subordinate or junior in right of payment to the Securities or any Subsidiary Guarantee, as applicable, except scheduled payments of interest or principal at Stated Maturity thereof; or

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(4) make any Restricted Investment (all such payments other actions set forth in clauses (1) through (4) above being collectively referred to as “Restricted Payments”),

unless, at the time of and after giving effect to such Restricted Payment:

(1) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof;

(2) the Company would, after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of Section 1008; and

(3) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Company and its Restricted Subsidiaries after the Reference Date (excluding Restricted Payments permitted by clauses (1) through (6), (9), (12), (14) and (15) of the next succeeding paragraph), is less than the sum, without duplication, of:

(a) 50% of the Consolidated Net Income of the Company for the period (taken as one accounting period) from the beginning of the first full fiscal quarter commencing after the Reference Date to the end of the Company’s most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit); plus

(b) 100% of the aggregate net proceeds (including the fair-market value of property other than cash; provided that fair market value of property other than cash shall be determined in good faith by the Board of Directors whose Board Resolution with respect thereto shall be delivered to the Trustee and such determination must be based upon an opinion or appraisal issued by an accounting, appraisal or investment banking firm of national standing if such fair market value exceeds $35 million) received by the Company as a contribution to the Company’s capital or received by the Company from the issue or sale since the Reference Date of Equity Interests of the Company (other than Disqualified Stock) or of Disqualified Stock or debt securities of the Company that have been converted subsequent to the Reference Date into such Equity Interests (other than Equity Interests (or Disqualified Stock or debt securities) sold to a Restricted Subsidiary of the Company and other than Disqualified Stock or convertible debt securities that have been converted into Disqualified Stock); plus

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(c) to the extent that any Restricted Investment in any Person that was made after the Reference Date is sold for cash or otherwise liquidated or repaid for cash, or an Unrestricted Subsidiary is designated a Restricted Subsidiary, the lesser of (i) the cash return of capital with respect to such Restricted Investment (less the cost of disposition, if any), or the portion (proportionate to the Company’s equity interest in such Subsidiary) of the fair market value of the net assets of such Unrestricted Subsidiary upon becoming a Restricted Subsidiary, as the case may be, and (ii) the initial amount of such Restricted Investment made after the Reference Date in such Person or Unrestricted Subsidiary; plus

(d) the amount by which Indebtedness of the Company or its Restricted Subsidiaries is reduced on the Company’s balance sheet upon the conversion or exchange subsequent to the Reference Date of any Indebtedness of the Company convertible or exchangeable for Equity Interests (other than Disqualified Stock) of the Company (less the amount of any cash, or other property, distributed by the Company or any Restricted Subsidiary upon such conversion or exchange); plus

(e) if any Unrestricted Subsidiary pays any cash dividends or cash distributions to the Company or any of its Restricted Subsidiaries, 100% of any such cash dividends or cash distributions made after the Reference Date.

So long as no Default has occurred and is continuing or would be caused thereby, the preceding provisions shall not prohibit:

(1) the payment of any dividend within 60 days after the date of declaration thereof, if at said date of declaration such payment would have complied with the provisions of this Indenture;

(2) the redemption, repurchase, retirement, defeasance or other acquisition of any subordinated Indebtedness or Equity Interests of the Company or any Restricted Subsidiary in exchange for, or out of the net cash proceeds of the substantially concurrent sale or issuance (other than to a Subsidiary of the Company) of, other Equity Interests of the Company (other than Disqualified Stock); provided that the amount of any such net cash proceeds that are utilized for such redemption, repurchase, retirement, defeasance or other acquisition shall be excluded from clause (3)(b) of the preceding paragraph;

(3) the defeasance, redemption, repurchase or other acquisition of Indebtedness of the Company or any Guarantor that is subordinate or junior in right of payment to the Securities or any Subsidiary Guarantee, as applicable, with the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness;

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(4) the payment of any dividend by a Restricted Subsidiary of the Company to the holders of its Equity Interests on a pro rata basis regardless of whether any Default has occurred or is continuing;

(5) the redemption, repurchase, acquisition or retirement of Equity Interests in a Permitted Joint Venture of the Company or of any of the Company’s Restricted Subsidiaries in accordance with the organizational documents for, and agreements among holders of Equity Interests in, such Permitted Joint Venture or Restricted Subsidiary, provided that as a result of such redemption, repurchase, acquisition or retirement of Equity Interests in any such Permitted Joint Venture, any such Permitted Joint Venture shall become a Wholly Owned Restricted Subsidiary of the Company and a Guarantor under this Indenture;

(6) the redemption, repurchase, acquisition or retirement of Equity Interests in and Indebtedness of the Development Corporations in accordance with the respective securities purchase agreements entered into and notes issued by such Development Corporations; provided that as a result of such redemption, repurchase, acquisition or retirement, such Development Corporations shall become Wholly Owned Restricted Subsidiaries of the Company and Guarantors under this Indenture;

(7) the purchase, redemption or other acquisition, cancellation or retirement for value of Equity Interests of the Company or any Restricted Subsidiary of the Company or any parent of the Company held by any existing or former employees of the Company or Holdings or any Subsidiary of the Company or their assigns, estates or heirs, in each case in connection with the repurchase provisions under employee stock option or stock purchase agreements or other agreements to compensate management employees; provided that such redemptions or repurchases pursuant to this clause shall not exceed $2 million in any calendar year subsequent to the Reference Date with unused amounts in any calendar year being carried over to succeeding calendar years subject to a maximum of $10 million in any calendar year; provided that the amount of any such payments will be included in calculations of the amount of Restricted Payments subsequent to the Reference Date;

(8) loans or advances to employees or directors of the Company or Holdings or any Subsidiary of the Company made in the ordinary course of business subsequent to the Reference Date the proceeds of which are used to purchase Capital Stock of the Company or Holdings, in an aggregate amount not to exceed $5 million at any one time outstanding; provided that the amount of any such payments will be included in calculations of the amount of Restricted Payments subsequent to the Reference Date;

(9) repurchases of Capital Stock subsequent to the Reference Date deemed to occur upon exercise of stock options if such Capital Stock represents a portion of the exercise price thereof;

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(10) if immediately before and immediately after giving effect thereto, no Default or Event of Default has occurred and the Company would have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of Section 1008, payments of cash dividends, or loans or other payments, to Holdings in an amount sufficient to enable Holdings to make semi-annual payments after August 15, 2004 of cash interest not in excess of 14% per annum on the principal amount of Holdings Senior Discount Debentures (or 100 basis points higher if required to be made in respect of the Holdings Senior Discount Debentures in accordance with the terms thereof in effect on the Issue Date); provided that Holdings is otherwise unable to pay such interest and such dividends, loans or other payments are applied directly to the payment of such interest; and provided further, that the amount of any such payments shall be included in calculations of the amount of Restricted Payments subsequent to the Reference Date;

(11) if immediately before and immediately after giving effect thereto no Default or Event of Default has occurred, payments subsequent to the Reference Date of principal, interest, premium (if any) or payment due upon redemption, repurchase, conversion, acquisition or retirement of Holdings’ 6.0% Convertible Subordinated Notes due 2001 and 4.5% Convertible Subordinated Notes due 2003 in accordance with the respective terms thereof in effect on the Reference Date; provided that the amount of any such payments shall be included in calculations of the amount of Restricted Payments subsequent to the Reference Date;

(12) payments to Holdings in an amount equal to the amount of income tax that the Company and the Restricted Subsidiaries would have paid had they filed consolidated tax returns on a separate Company basis in any given year, less the amount of such taxes paid or to be paid directly by the Company and the Restricted Subsidiaries for such years;

(13) an amount not to exceed $1.0 million in any fiscal year subsequent to the Reference Date to permit Holdings to pay:

(i) franchise taxes and other fees required to maintain its legal existence; and

(ii) its corporate overhead expenses incurred in the ordinary course of business, its audit expenses, any filing fees required by the Commission and to pay salaries or other compensation of employees who perform services for both Holdings and the Company;

provided that the amount of any such payments will be included in calculations of the amount of Restricted Payments subsequent to the Reference Date;

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(14) Permitted Investments;

(15) distributions to fund the 1999 Transactions; and

(16) other Restricted Payments subsequent to the Reference Date in an aggregate amount not to exceed $5 million at any one time; provided that the amount of any such payments will be included in calculations of the amount of Restricted Payments subsequent to the Reference Date.

The amount of all Restricted Payments (other than cash) shall be the fair market value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the Company or such Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair market value of any non-cash Restricted Payment shall be determined in good faith by the Board of Directors whose resolution with respect thereto shall be delivered to the Trustee. Not later than the date of making any Restricted Payment, the Company shall deliver to the Trustee an Officers’ Certificate stating that such Restricted Payment is permitted and setting forth the basis upon which the calculations required by this Section 1009 were computed, together with a copy of any fairness opinion or appraisal required by this Indenture.

SECTION 1010. Limitations on Dividends and Other Payment Restrictions Affecting Restricted Subsidiaries. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create or permit to exist or become effective any consensual encumbrance or consensual restriction on the ability of any Restricted Subsidiary to:

(1) pay dividends or make any other distributions to the Company or any of its Restricted Subsidiaries (i) on its Capital Stock or (ii) with respect to any other interest or participation in, or measured by, its profits;

(2) pay any Indebtedness owed to the Company or any of the Company’s Restricted Subsidiaries;

(3) make loans or advances to the Company or any of the Company’s Restricted Subsidiaries; or

(4) transfer any of its properties or assets to the Company or any of the Company’s Restricted Subsidiaries.

However, the preceding restrictions shall not apply to encumbrances or restrictions existing under or by reason of:

(1) any encumbrance or restriction pursuant to an agreement in effect at or entered into on the Issue Date, including:

(a) the Senior Credit Facilities as in effect as of the Issue Date, and any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings thereof, provided

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that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are no more restrictive, taken as a whole (as determined in the good faith judgment of the Company’s Board of Directors), with respect to such dividend and other payment restrictions than those contained in the Senior Credit Facilities as in effect on the Issue Date; and

(b) this Indenture and the Securities;

(2) any applicable law, rule, regulation or order;

(3) any instrument governing Indebtedness or Capital Stock of a Person acquired by the Company or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired; provided that, in the case of Indebtedness, such Indebtedness was permitted by the terms of this Indenture to be incurred;

(4) customary non-assignment provisions in leases entered into in the ordinary course of business and consistent with past practices;

(5) any Purchase Money Note or other Indebtedness or contractual requirements incurred with respect to a Qualified Receivables Transaction relating exclusively to a Receivables Entity that, in the good faith determination of the Board of Directors of the Company, are necessary to effect such Qualified Receivables Transaction;

(6) purchase money obligations for property acquired in the ordinary course of business that impose restrictions on the property so acquired of the nature described in the last clause of the preceding paragraph;

(7) restrictions with respect solely to a Restricted Subsidiary of the Company imposed pursuant to a binding agreement which has been entered into for the sale or disposition of all or substantially all of the Capital Stock or assets of such Restricted Subsidiary; provided that such restrictions apply solely to the Capital Stock or assets being sold of such Restricted Subsidiary;

(8) provisions with respect to the disposition or distribution of assets or property in connection with Permitted Joint Ventures entered into in accordance with past practice made in the ordinary course of business;

(9) Permitted Refinancing Indebtedness, provided that the material restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are no more restrictive, in the good faith judgment of the Company’s Board of Directors, taken as a whole, to the Holders than those contained in the agreements governing the Indebtedness being refinanced; and

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(10) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business.

Notwithstanding the foregoing, neither (a) customary provisions restricting subletting or assignment of any lease entered into in the ordinary course of business, consistent with industry practice, nor (b) Liens permitted under the terms of this Indenture shall in and of themselves be considered a restriction on the ability of the applicable Restricted Subsidiary to transfer such agreement or assets, as the case may be.

SECTION 1011. Limitation on Liens Securing Indebtedness. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, create, incur, assume or otherwise cause or suffer to exist or become effective any Lien of any kind securing trade payables or Indebtedness that does not constitute Senior Indebtedness (other than Permitted Liens) upon any of their property or assets, now owned or hereafter acquired unless:

(1) in the case of Liens securing Indebtedness that is expressly subordinated or junior in right of payment to the Securities, the Securities are secured on a senior basis to the obligations so secured until such time as such obligations are no longer secured by a Lien; and

(2) in all other cases, the Securities are secured on an equal and ratable basis with the obligations so secured until such time as such obligations are no longer secured by a Lien.

SECTION 1012. Limitation on Transactions With Affiliates. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate or any affiliated professional associations or professional corporations which employ physicians and other professionals who provide healthcare services for the Company’s occupational and health services centers (each, an “Affiliate Transaction”), unless:

(1) such Affiliate Transaction is on terms that are no less favorable to the Company or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary made on an arm’s-length basis with an unrelated Person; and

(2) the Company delivers to the Trustee:

(a) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $5 million, a resolution of the Board of Directors set forth in an Officers’ Certificate certifying that such Affiliate Transaction complies with clause (1) above and that such Affiliate

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Transaction has been approved by a majority of the disinterested members of the Board of Directors; and

(b) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $15 million, an opinion as to the fairness to the holders of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of national standing.

The following items shall not be deemed to be Affiliate Transactions and, therefore, shall not be subject to the provisions of the prior paragraph:

(1) customary directors’ fees to Persons who are not otherwise Affiliates of the Company;

(2) transactions between or among the Company and/or its Restricted Subsidiaries;

(3) the payment of Affiliate Management Fees in an amount in any calendar year not to exceed the greater of (a) $1 million and (b) 1% of Consolidated EBITDA;

(4) payments by the Company or any of its Restricted Subsidiaries to Welsh Carson, Ferrer Freeman and their respective Affiliates made for any financial advisory, financing, underwriting or placement services or in respect of other investment banking activities, including, without limitation, in connection with acquisitions or divestitures, which payments are approved in good faith by a majority of the Board of Directors of the Company or a committee thereof consisting of disinterested members;

(5) loans or advances to employees in accordance with past practice made in the ordinary course of business which are approved in good faith by a majority of the Board of Directors of the Company or a committee thereof consisting of disinterested members;

(6) any agreement as in effect on the Issue Date or any amendment thereto (so long as any such amendment is no less favorable to the Company and its Restricted Subsidiaries);

(7) any payment pursuant to any tax sharing agreement between the Company and Holdings or any other Person with which the Company is required or permitted to file a consolidated tax return or with which the Company is or could be part of a consolidated, combined or unitary group for tax purposes; provided that in no event shall the amount permitted to be paid pursuant to all such agreements exceed the tax liabilities attributable solely to the Company and its Restricted Subsidiaries (whether as a consolidated, combined or unitary group);

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(8) Restricted Payments that are permitted by Section 1009;

(9) customary fees and compensation paid to, and indemnity provided on behalf of, officers, directors, employees or consultants of the Company or any of its Restricted Subsidiaries;

(10) any transaction involving ordinary course investment banking, merchant banking, commercial banking or related activities; and

(11) issuances or sales by the Company of Equity Interests (other than Disqualified Stock) or any contribution to the capital of the Company or any Restricted Subsidiary.

Notwithstanding the foregoing, the Holders will be entitled to receive payment in full in cash of all amounts due or to become due in respect of the Securities before any payment is made with respect to Affiliate Management Fees in the event of any distribution to creditors of the Company in any Insolvency or Liquidation Proceeding with respect to the Company. No payments of Affiliate Management Fees shall be made by the Company or any of its Restricted Subsidiaries if the Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which Affiliate Management Fees are to be paid is less than 1.75 to 1; provided, however, that such payments due but not paid shall accrue and shall be paid only after such time as the Fixed Charge Coverage Ratio for a four full fiscal quarter period is no longer less than or equal to 1.75 to 1.

For the avoidance of doubt, in connection with any transaction between Holdings and the Company, a member of the Board of Directors of the Company shall not cease to be a disinterested director solely because such director also serves on the board of directors of Holdings.

SECTION 1013. Limitation on Issuances and Sales of Equity Interests in Restricted Subsidiaries. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, transfer, convey, sell, lease or otherwise dispose of any Equity Interests in any Restricted Subsidiary or to issue any of its Equity Interests (other than, if necessary, Equity Interests constituting directors’ qualifying shares) to any Person except:

(1) to the Company or a Wholly Owned Subsidiary (other than a Receivables Entity); or

(2) in compliance with Section 1015 and immediately after giving effect to such issuance or sale, such Restricted Subsidiary would continue to be a Restricted Subsidiary.

Notwithstanding the preceding paragraph, the Company may sell all the Equity Interests of a Restricted Subsidiary as long as the Company complies with Section 1015.

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SECTION 1014. Repurchase of Securities at the Option of the Holder Upon a Change of Control.

(1) Upon the occurrence of a Change of Control, each Holder shall have the right to require the Company to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of such Holder’s Securities pursuant to the offer described below (the “Change of Control Offer”) at an offer price in cash equal to 101% of the aggregate principal amount of repurchased Securities plus accrued and unpaid interest and Additional Interest thereon, if any, to the Purchase Date (the “Change of Control Payment”). Within 60 Business Days following any Change of Control, the Company shall mail a notice to each Holder stating:

(a) that the Change of Control Offer is being made pursuant to this Section 1014 and that all Securities tendered shall be accepted for payment;

(b) that the Change of Control Offer shall remain open for 20 Business Days;

(c) the Purchase Price and the Purchase Date;

(d) that any Security not tendered shall continue to accrue interest;

(e) that, unless the Company defaults in the payment of the Change of Control Payment, all Securities accepted for payment pursuant to the Change of Control Offer shall cease to accrue interest after the Purchase Date;

(f) that Holders electing to have any Securities purchased pursuant to a Change of Control Offer shall be required to surrender the Securities, with the form entitled “Option of Holder to Elect Purchase” on the reverse of the Securities completed, to the Paying Agent at the address specified in the notice prior to the close of business on the third Business Day preceding the Purchase Date;

(g) that Holders shall be entitled to withdraw their election if the Paying Agent receives, not later than the close of business on the second Business Day preceding the Purchase Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of Securities delivered for purchase and a statement that such Holder is withdrawing his election to have the Securities purchased; and

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(h) that Holders whose Securities are being purchased only in part shall be issued new Securities equal in principal amount to the unpurchased portion of the Securities surrendered, which unpurchased portion must be equal to $1,000 in principal amount or an integral multiple thereof.

The Company shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of the Securities as a result of a Change of Control.

To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Indenture relating to such Change of Control Offer, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations described in this Indenture by virtue thereof.

(2) By 12:00 p.m. (noon) Eastern Time on the Purchase Date, the Company shall, to the extent lawful:

(a) accept for payment all Securities or portions thereof properly tendered pursuant to the Change of Control Offer;

(b) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Securities or portions thereof so tendered; and

(c) deliver or cause to be delivered to the Trustee the Securities so accepted together with an Officers’ Certificate stating the aggregate principal amount of Securities or portions thereof being purchased by the Company.

The Paying Agent shall promptly mail to each Holder of Securities so tendered the Change of Control Payment for such Securities, and the Trustee shall promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new Security equal in principal amount to any unpurchased portion of the Securities surrendered, if any; provided that each such new Security shall be in a principal amount of $1,000 or an integral multiple thereof. The Company shall publicly announce the results of the Change of Control Offer on or as soon as practicable after the Purchase Date.

(3) If the Purchase Date hereunder is on or after an interest payment Regular Record Date and on or before the associated Interest Payment Date, any accrued and unpaid interest (and Additional Interest, if any) due on such Interest Payment Date shall be paid to the Person in whose name a Security is registered at the close of business on such Regular Record Date, and such interest (and Additional Interest, if applicable) shall not be payable to Holders who tender the Securities pursuant to such Change of Control Offer.

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(4) Prior to making a Change of Control Offer pursuant to paragraph (1), but in any event within 90 days following such Change of Control, the Company shall either (i) obtain any required consents, if any, under all agreements governing outstanding Senior Indebtedness to permit the making of the Change of Control Offer and the purchase of Securities pursuant to this Section 1014, or (ii) repay all or a portion of the outstanding Senior Indebtedness to the extent necessary (including, if necessary, payment in full of such Indebtedness and payment of any prepayment premiums, fees, expenses or penalties) to permit the repurchase of the Securities pursuant to this Section 1015 without such consent.

(5) The Company shall publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date.

(6) The provisions described above that require the Company to make a Change of Control Offer following a Change of Control will be applicable regardless of whether or not any other provisions of the Indenture are applicable. Except as described above with respect to a Change of Control, the Company is not required to make mandatory repurchases or redemptions of the Securities in the event of a takeover, recapitalization or similar transaction.

(7) Notwithstanding anything to the contrary in this Section 1014, the Company shall not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Section 1014 hereof and all other provisions of this Indenture applicable to a Change of Control Offer made by the Company and purchases all Securities validly tendered and not withdrawn under such Change of Control Offer.

(8) The provisions of this Section 1014 relating to the Company’s obligation to make a Change of Control Offer may be waived or modified with the consent of the Holders of a majority in principal amount of the Securities.

SECTION 1015. Repurchase of Securities at the Option of the Holder Upon an Asset Sale. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless:

(1) the Company (or the Restricted Subsidiary, as the case may be) receives consideration at the time of such Asset Sale at least equal to the fair market value of the assets or Equity Interests issued or sold or otherwise disposed of;

(2) such fair market value is determined by the Company’s Board of Directors and evidenced by a resolution of the Board of Directors set forth in an Officers’ Certificate delivered to the Trustee; and

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(3) at least 75% of the consideration therefor received by the Company or such Restricted Subsidiary is in the form of cash or Cash Equivalents. For purposes of this provision, each of the following shall be deemed to be cash:

(a) any liabilities (as shown on the Company’s or the Restricted Subsidiary’s most recent balance sheet) of the Company or any Restricted Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinated to the Securities or any Subsidiary Guarantee), that are assumed by the transferee of any such assets pursuant to a customary novation agreement that releases the Company or such Restricted Subsidiary from further liability;

(b) any securities, notes or other obligations received by the Company or any such Restricted Subsidiary from such transferee that are contemporaneously (subject to ordinary settlement periods) converted by the Company or such Restricted Subsidiary into cash or Cash Equivalents (to the extent of the cash received in that conversion); and

(c) any Permitted Business Assets (so long as such Permitted Business Assets are acquired for fair market value, as determined in good faith by the Board of Directors of the Company, in connection with the transaction giving rise to such Asset Sale; provided that the Board of Directors’ determination must be based on an opinion or appraisal issued by an independent accounting, appraisal or investment baking firm of national standing if such fair market value exceeds $25 million), which Permitted Business Assets shall be deemed to have been acquired pursuant to the second succeeding paragraph in connection with such Asset Sale.

The 75% limitation referred to above shall not apply to any Asset Sale in which the cash or Cash Equivalents portion of the consideration received therefrom, determined in accordance with the preceding sentence, is equal to or greater than what the after-tax proceeds would have been had such Asset Sale complied with the 75% limitation.

Within 365 days after the receipt of any Net Proceeds from an Asset Sale, the Company or any such Restricted Subsidiary may apply such Net Proceeds, at its option:

(1) to repay or repurchase Senior Indebtedness of the Company or any Restricted Subsidiary;

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(2) to the extent any proceeds remain after the prepayment of all outstanding Senior Indebtedness, if any, that is prepayable at the option of the Company or such Restricted Subsidiary, to repay or repurchase the Company’s 13% Senior Subordinated Notes pursuant to the terms of the “Asset Sales” covenant in the indenture governing the 13% Senior Subordinated Notes;

(3) to acquire all or substantially all the assets of, or a majority of the Voting Stock of, another Permitted Business;

(4) to make a capital expenditure in a Permitted Business;

(5) to acquire other assets (other than securities) that are used or useful in a Permitted Business; or

(6) to make an Asset Sale Offer, treating the Net Proceeds as Excess Proceeds for all purposes.

Any Net Proceeds from Asset Sales that are not applied or invested as provided in the preceding paragraph shall constitute “Excess Proceeds”. When the aggregate amount of Excess Proceeds exceeds $15 million, the Company shall be required to make an offer to all Holders of Securities (an “Asset Sale Offer”) and other pari passu Indebtedness of the Company or any Guarantor (other than the 13% Senior Subordinated Notes) to the extent required pursuant to the terms of that pari passu Indebtedness to purchase the maximum principal amount of such Securities or other pari passu Indebtedness that may be purchased out of the Excess Proceeds. The offer price in any Asset Sale Offer shall be equal to 100% of the principal amount (or, in the case of such other pari passu Indebtedness that issued with significant original issue discount, 100% of the accreted value thereof) plus accrued and unpaid interest, if any, to the Purchase Date, and shall be payable in cash (or in the case of such pari passu Indebtedness, such lesser price, if any, as may be provided for by the terms of such other pari passu Indebtedness). If any Excess Proceeds remain after consummation of an Asset Sale Offer, the Company may use such Excess Proceeds for general corporate purposes. If the aggregate principal amount of Securities tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the Trustee shall select the Securities to be purchased on a pro rata basis. Upon completion of each Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.

The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of the Securities as a result of an Asset Sale Offer.

To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Indenture relating to such Asset Sale Offer, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations described in this Indenture by virtue thereof.

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SECTION 1016. Investment Company. The Company shall not, and shall not permit any of its Subsidiaries to, be required to register as an “Investment Company” (as that term is defined in the Investment Company Act of 1940, as amended), or otherwise become subject to registration under the Investment Company Act.

SECTION 1017. Limitations on Issuances of Guarantees of Indebtedness. The Company shall not permit any Restricted Subsidiary, directly or indirectly, to incur Indebtedness or Guarantee or pledge any assets to secure the payment of any Indebtedness of the Company or any Restricted Subsidiary unless either such Restricted Subsidiary (1) is a Guarantor or (2) simultaneously executes and delivers a supplemental indenture to this Indenture and becomes a Guarantor, which Guarantee shall (a) with respect to any Guarantee of Senior Indebtedness, be subordinated in right of payment on the same terms as the Securities are subordinated to such Senior Indebtedness and (b) with respect to any Guarantee of any other Indebtedness, be senior to or pari passu with such Restricted Subsidiary’s other Indebtedness or Guarantee of or pledge to secure such other Indebtedness.

Notwithstanding the preceding paragraph, any Subsidiary Guarantee of the Securities shall provide by its terms that it shall be automatically and unconditionally released and discharged:

(1) in connection with any sale or other disposition of all or substantially all of the assets of that Guarantor (including by way of merger or consolidation) if the Company applies the Net Proceeds of that sale or other disposition in accordance with the applicable provisions of this Indenture; or

(2) in connection with the sale of all of the Capital Stock of a Guarantor if the Company applies the Net Proceeds of that sale in accordance with the applicable provisions of this Indenture; or

(3) if the Company designates such Restricted Subsidiary that is a Guarantor as an Unrestricted Subsidiary.

SECTION 1018. Additional Guarantees. If (a) the Company shall acquire or create a Domestic Restricted Subsidiary (other than a Permitted Joint Venture or a Receivables Entity) after the Issue Date, or (b) any Subsidiary of the Company becomes (1) a Domestic Restricted Subsidiary (other than a Permitted Joint Venture or a Receivables Entity) or (2) guarantees any Indebtedness of the Company or a Domestic Restricted Subsidiary, then, in each case, such newly acquired or created Restricted Subsidiary or such other Subsidiary, as the case may be, shall become a Guarantor and execute a supplemental indenture that subjects such Person to the provisions of this Indenture as a Guarantor and the Company shall deliver an Opinion of Counsel to the Trustee, in accordance with the terms of this Indenture, stating that such supplemental indenture and such Person’s obligations under its Subsidiary Guarantee and this Indenture constitute valid, legal, binding and enforceable obligations of such Person (subject to customary exceptions concerning creditors’ rights and to equitable principles as may be acceptable to the Trustee).

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SECTION 1019. Limitation on Lines of Business. The Company shall not, and shall not permit any Restricted Subsidiary to, engage in any business other than a Permitted Business.

SECTION 1020. Anti-Layering. The Company shall not, and shall not permit any Guarantor to, incur, create, issue, assume, guarantee or otherwise become liable for any Indebtedness that is both:

(1) subordinate or junior in right of payment to any Senior Indebtedness; and

(2) senior in any respect in right of payment to the Securities.

No Guarantor shall incur, create, issue, assume, guarantee or otherwise become liable for any Indebtedness that is both:

(1) subordinate or junior in right of payment to any Senior Indebtedness of such Guarantor; and

(2) senior in any respect in right of payment to the Subsidiary Guarantees.

SECTION 1021. [NOT USED]

SECTION 1022. [NOT USED]

SECTION 1023. Designation of Restricted and Unrestricted Subsidiaries. The Board of Directors of the Company may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if that designation would not cause a Default. If a Restricted Subsidiary is designated as an Unrestricted Subsidiary, all outstanding Investments owned by the Company and its Restricted Subsidiaries (except to the extent repaid in cash) in the Subsidiary so designated shall be deemed to be Restricted Payments made at the time of such designation (to the extent not designated a Permitted Investment) and shall reduce the amount available for Restricted Payments under the first paragraph of Section 1009. All such outstanding Investments shall be valued at their fair market value at the time of such designation, as determined in good faith by the Board of Directors. That designation shall only be permitted if such Restricted Payment would be permitted at that time and if such Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. The Board of Directors of the Company may redesignate any Unrestricted Subsidiary to be a Restricted Subsidiary if the redesignation would not cause a Default.

SECTION 1024. Advances to Subsidiaries. All advances to Restricted Subsidiaries made by the Company after the Issue Date shall be evidenced by intercompany notes in favor of the Company substantially in the form of Exhibit B. Each intercompany note shall be payable upon demand and shall bear interest at the same rate as the Securities.

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SECTION 1025. Payments for Consents. The Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, pay or cause to be paid any consideration to or for the benefit of any Holder for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Securities unless such consideration is offered to be paid and is paid to all Holders that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement.

SECTION 1026. Statement by Officers as to Default; Compliance Certificates. (a) The Company shall deliver to the Trustee, within 90 days after the end of each fiscal year an Officers’ Certificate, stating whether or not to the best knowledge of the signers thereof the Company is in default in the performance and observance of any of the terms, provisions and conditions of Section 801 or Sections 1004 to 1025, inclusive, and if the Company shall be in default, specifying all such Defaults and the nature and status thereof of which they may have knowledge.

(b) The Company shall deliver to the Trustee, as soon as possible and in any event within 10 days after the Company becomes aware or should reasonably become aware of the occurrence of a Default or an Event of Default, an Officers’ Certificate setting forth the details of such Default or Event of Default, and the action which the Company proposes to take with respect thereto.

(c) So long as not contrary to the then current recommendations of the American Institute of Certified Public Accountants, the Company shall deliver to the Trustee within 90 days after the end of each fiscal year a written statement by the Company’s independent public accountants stating (A) that their audit examination has included a review of the terms of this Indenture and the Securities as they relate to accounting matters, and (B) whether, in connection with their audit examination, any Default has come to their attention and, if such a Default has come to their attention, specifying the nature and period of the existence thereof.

SECTION 1027. Waiver of Covenants. The Company may omit in any particular instance to comply with any covenant or condition set forth in Section 801 and Sections 1004 to 1025, if before the time for such compliance the Holders of at least a majority in principal amount of the Outstanding Securities shall, by Act of such Holders, either waive such compliance in such instance or generally waive compliance with such covenant or condition, but no such waiver shall extend to or affect such covenant or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company and the duties of the Trustee in respect of any such covenant or condition shall remain in full force and effect; provided, however, with respect to any provision requiring a supermajority approval to waive, such provision may only be waived by such a supermajority, and with respect to a covenant or provision which cannot be modified or amended without the consent of the Holder of each outstanding Security affected, such provision may only be waived by the consent of each and every Holder of outstanding Security affected.

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ARTICLE ELEVEN

Redemption of Securities

SECTION 1101. [NOT USED]

SECTION 1102. Applicability of Article. Redemption of Securities at the election of the Company, as permitted by any provision of this Indenture, shall be made in accordance with such provision, paragraph 5 of the Securities and this Article. Except as set forth in Section 1014 or Section 1015, the Company is not required to make mandatory redemption of sinking fund payments with respect to the Securities. The Company may at any time and from time to time purchase Securities in the open market or otherwise.

SECTION 1103. Election to Redeem; Notice to Trustee. The election of the Company to redeem any Securities pursuant to paragraph 5 of the Securities shall be evidenced by a Board Resolution. In case of any redemption at the election of the Company of less than all the Securities, the Company shall, at least 60 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date and of the principal amount of Securities to be redeemed. In the case of any redemption of Securities prior to the expiration of any restriction on such redemption provided in the terms of such Securities or elsewhere in this Indenture, the Company shall furnish the Trustee with an Officers’ Certificate evidencing compliance with such restriction.

SECTION 1104. Selection by Trustee of Securities to be Redeemed. If less than all of the Securities are to be redeemed at any time, the Trustee shall select Securities for redemption, not more than 60 days prior to the Redemption Date, as follows:

(1) if the Securities are listed, in compliance with the requirements of the principal national securities exchange on which the Securities are listed; or

(2) if the Securities are not so listed, on a pro rata basis, by lot or by such method as the Trustee shall deem fair and appropriate.

The Trustee shall promptly notify the Company and each Notes Registrar in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the principal amount thereof to be redeemed.

Securities and portions of Securities selected shall be in amounts of $1,000 or whole multiples of $1,000; except that if all of the Securities of a Holder are to be redeemed, the entire outstanding amount of Securities held by such Holder, even if not a multiple of $1,000, shall be redeemed.

For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any

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Securities redeemed or to be redeemed only in part, to the portion of the principal amount of such Securities which has been or is to be redeemed.

SECTION 1105. Notice of Redemption. Notice of redemption shall be given by first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Securities to be redeemed, at his address appearing in the Note Register.

All notices of redemption shall state:

(1) the Redemption Date;

(2) the Redemption Price;

(3) if less than all the Outstanding Securities are to be redeemed, the identification (and, in the case of partial redemption, the principal amounts) of the particular Securities to be redeemed, and in the case of partial redemption, a statement to the effect that upon surrender of such Securities, a new Security in a principal amount equal to the unredeemed portion thereof shall be issued upon cancellation of the original Security;

(4) that on the Redemption Date the Redemption Price shall become due and payable upon each such Security to be redeemed;

(5) the place or places where such Securities are to be surrendered for payment of the Redemption Price; and

(6) the CUSIP number of the Securities to be redeemed.

Notice of redemption of Securities to be redeemed at the election of the Company shall be given by the Company or, at the Company’s request, by the Trustee in the name and at the expense of the Company if the Company gives notice to the Trustee at least 45 days prior to the Redemption Date (unless shorter notice shall be acceptable to the Trustee).

Notices of redemption may not be conditional.

SECTION 1106. Deposit of Redemption Price. Prior to 11:00 a.m. Eastern Time on any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 1003) an amount of money sufficient to pay the Redemption Price of, and (except if the Redemption Date shall be an Interest Payment Date) any applicable accrued interest and Additional Interest on, all the Securities which are to be redeemed on that date. The Trustee or the Paying Agent shall no later than 30 days after the expiration of the Redemption Date return to the Company any money deposited with the Trustee or the Paying Agent by the Company in excess of the amounts necessary to pay the Redemption Price of, and any applicable accrued interest and Additional Interest on, all Securities to be redeemed.

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SECTION 1107. Securities Payable on Redemption Date. Notice of redemption having been given as aforesaid, the Securities so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified, and from and after such date (unless the Company shall default in the payment of the Redemption Price and any applicable accrued interest) such Securities or portions of them called for redemption shall not bear interest. Upon surrender of any such Security for redemption in accordance with said notice, such Security shall be paid by the Company at the Redemption Price, together with any applicable accrued interest and Additional Interest to (but excluding) the Redemption Date; provided, however, that installments of interest whose Interest Payment Date is on or prior to the Redemption Date shall be payable to the Holders of such Securities, or one or more Predecessor Securities, registered as such at the close of business on the relevant Record Dates according to their terms and the provisions of Section 307.

If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal (and premium, if any) shall, until paid, bear interest from the Redemption Date at the rate provided by the Security.

SECTION 1108. Securities Redeemed in Part. Any Security which is to be redeemed only in part shall be surrendered at an office or agency of the Company designated for that purpose pursuant to Section 1002 (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Security without service charge, a new Security or Securities, of any authorized denomination as requested by such Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Security so surrendered.

ARTICLE TWELVE

Defeasance and Covenant Defeasance

SECTION 1201. Company’s Option to Effect Legal Defeasance or Covenant Defeasance. The Company may, at its option and at any time, by Board Resolution elect to have either Section 1202 or 1203 hereof be applied with respect to the Outstanding Securities upon compliance with the conditions set forth below in this Article Twelve.

SECTION 1202. Legal Defeasance and Discharge. Upon the Company’s exercise of the option provided in Section 1201 applicable to this Section, the Company shall be deemed to have been discharged from its obligations with respect to the Outstanding Securities and the Guarantors shall be deemed to have been discharged from their obligations under the Subsidiary Guarantees on the date the conditions set forth below are satisfied (hereinafter, “Legal Defeasance”). For this purpose, such Legal Defeasance means that the Company and the Guarantors shall be deemed to have paid and discharged the entire indebtedness represented by the Outstanding Securities and to

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have satisfied all its other obligations under such Securities and this Indenture insofar as such Securities are concerned (and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging the same), except as to (i) rights of Holders to receive payments in respect of the principal of, premium, if any, and interest (and Additional Interest, if any) on such Securities when such payments are due from the trust funds; (ii) the Company’s obligations with respect to such Securities concerning Sections 304, 305, 306, 1002 and 1003; (iii) the rights, powers, trust, duties, and immunities of the Trustee, and the Company’s obligations in connection therewith; and (iv) the Legal Defeasance provisions of this Article Twelve, all of which shall survive until otherwise terminated or discharged hereunder. Subject to compliance with this Article Twelve, the Company may exercise its option under this Section 1202 notwithstanding the prior exercise of its option under Section 1203.

SECTION 1203. Covenant Defeasance. Upon the Company’s exercise of the option provided in Section 1201 applicable to this Section, the Company may, at its option and at any time, elect to have the obligations of the Company and the Guarantors released with respect to its (i) obligations under Sections 1005 through 1025, inclusive, and clause (4) of Section 801 and (ii) the occurrence of an event specified in Sections 501(5), (with respect to any of Sections 1005 through 1025, inclusive), 501(6) and 501(7) shall not be deemed to be a Default or an Event of Default on and after the date the conditions set forth below are satisfied (hereinafter, “Covenant Defeasance”). For this purpose, such Covenant Defeasance means that the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such Section or clause, whether directly or indirectly by reason of any reference elsewhere herein to any such Section or clause or by reason of any reference in any such Section or clause to any other provision herein or in any other document, but the remainder of this Indenture and such Securities shall be unaffected thereby.

SECTION 1204. Conditions to Legal or Covenant Defeasance. The following shall be the conditions to application of either Section 1202 or Section 1203 to the then Outstanding Securities:

(1) the Company shall irrevocably have deposited or caused to be deposited with the Trustee as trust funds in trust for the purpose of making the following payments, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of such Securities, in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as shall be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and interest, Additional Interest, if any, on the Outstanding Securities on the Stated Maturity of the Securities or on the applicable Redemption Date, as the case may be, and the Company must specify whether the Securities are being defeased to maturity or to a particular Redemption Date;

(2) in the case of an election of Legal Defeasance under Section 1202, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that (a) the

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Company has received from, or there has been published by, the Internal Revenue Service a ruling or (b) since the Issue Date, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, subject to customary assumptions and exclusions, the Holders of the Outstanding Securities shall not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and shall be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;

(3) in the case of an election of Covenant Defeasance under Section 1203, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that, subject to customary assumptions and exclusions, the Holders of the Outstanding Securities shall not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and shall be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;

(4) no Default or Event of Default shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit);

(5) such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than this Indenture) to which the Company or any of its Restricted Subsidiaries is a party or by which the Company or any of its Restricted Subsidiaries is bound;

(6) the Company must deliver to the Trustee an Officers’ Certificate stating that the deposit was not made by the Company or with the intent of preferring the Holders over the other creditors of the Company or with the intent of defeating, hindering, delaying or defrauding creditors of the Company or others;

(7) no event which is, or after notice or lapse of time or both would become, an Event of Default with respect to such Securities or any other Securities shall have occurred and be continuing at the time of such deposit or, with regard to any such event specified in paragraphs (7) or (8) of Section 501, at any time on or prior to the 90th day after the date of such deposit (it being understood that this condition shall not be deemed satisfied until after such 90th day); and

(8) the Company shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, which opinion may be subject to customary assumptions and exclusions, each stating that all conditions precedent provided for relating to either the Legal Defeasance under Section 1202 or the

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Covenant Defeasance under Section 1203 (as the case may be) have been complied with.

SECTION 1205. Deposited Money and U.S. Government Obligations to be Held in Trust; Other Miscellaneous Provisions. Subject to the provisions of the last paragraph of Section 1003, all money and U.S. Government Obligations (including the proceeds thereof) deposited with the Trustee pursuant to Section 1204 in respect of the Securities shall be held in trust and applied by the Trustee, in accordance with the provisions of such Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Holders of such Securities, of all sums due and to become due thereon in respect of principal (and premium, if any) and interest (and Additional Interest, if any), but such money need not be segregated from other funds except to the extent required by law.

The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the U.S. Government Obligations deposited pursuant to Section 1204 or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the Outstanding Securities.

Anything in this Article Twelve to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon Company Request any money or U.S. Government Obligations held by it as provided in Section 1204 which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, are in excess of the amount thereof which would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.

SECTION 1206. Reinstatement. If the Trustee or the Paying Agent is unable to apply any money in accordance with Section 1202 or 1203 by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, or if a Default from a bankruptcy or insolvency event occurs at any time during the period ending on the 91st day after the date of a deposit by the Company hereunder, then the Company’s obligations under this Indenture and the Securities shall be revived and reinstated as though no deposit had occurred pursuant to this Article Twelve until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 1202 or 1203; provided, that if the Company makes any payment of principal of (and premium, if any) or interest (and Additional Interest, if any) on any Security following the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Securities to receive such payment from the money held by the Trustee or the Paying Agent.

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ARTICLE THIRTEEN

Subordination

SECTION 1301. Agreement to Subordinate. The Company agrees, and each Holder by accepting a Security agrees, that the Indebtedness evidenced by the Securities and all Obligations in respect of the Securities (including but not limited to Additional Interest) are subordinated in right of payment, to the extent and in the manner provided in this Article Thirteen, to the prior payment in full in cash of all Senior Indebtedness (whether outstanding on the date hereof or hereafter created, incurred, assumed or guaranteed), and that the subordination is for the benefit of the holders of Senior Indebtedness.

SECTION 1302. Liquidation; Dissolution; Bankruptcy. Upon any distribution of assets of the Company upon any Insolvency or Liquidation Proceeding:

(1) the holders of all Senior Indebtedness of the Company shall be entitled to receive payment in full in cash or Cash Equivalents before the Holders shall be entitled to receive any payment on account of the principal of, premium, if any, and interest on the Securities or any Obligation in respect to the Securities (except that Holders may receive (i) Reorganization Securities and (ii) payments made from any defeasance trust created pursuant to Section 1201 hereof); and

(2) any payment or distribution of assets of the Company of any kind or character from any source, whether in cash, property or securities (other than (i) Reorganization Securities and (ii) payments made from any defeasance trust created pursuant to Section 1201 hereof), to which the Holders or the Trustee on behalf of the Holders would be entitled (by set-off or otherwise), except for this Article, shall be paid by the Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other person making such payment or distribution, or by the Holders or by the Trustee if received by them, directly to the holders of Senior Indebtedness (pro rata to such holders on the basis of the amounts of Senior Indebtedness held by such holders) or their Representative or Representatives, as their interests may appear, for application to the payment of the Senior Indebtedness remaining unpaid until all such Senior Indebtedness has been paid in full in cash, after giving effect to any concurrent payment, distribution or provision therefor to or for the holders of Senior Indebtedness.

SECTION 1303. Default on Senior Indebtedness. (a) In the event of and during the continuation of any default in the payment of principal of, interest or premium, if any, on any Senior Indebtedness, or any Obligation owing from time to time under or in respect of Senior Indebtedness, or in the event that any event of default (other than a payment default) with respect to any Senior Indebtedness shall have occurred and be continuing and shall have resulted in such Senior Indebtedness becoming or being declared due and payable prior to the date on which it would otherwise have become due and payable, then no payment shall be made by or on behalf of the Company on account of principal of, premium, if any, and interest (and Additional Interest, if any) on the

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Securities (other than payments in the form of Reorganization Securities), unless and until such default shall have been cured or waived in writing in accordance with the instruments governing such Senior Indebtedness or such acceleration shall have been rescinded or annulled;

(b) If any event of default other than as described in clause (a) above with respect to any Designated Senior Indebtedness shall have occurred and be continuing permitting the holders of such Designated Senior Indebtedness (or their Representative or Representatives) to declare such Designated Senior Indebtedness due and payable prior to the date on which it would otherwise have become due and payable, then no payment shall be made by or on behalf of the Company on account of the principal of, premium, if any, and interest (and Additional Interest, if any) on the Securities (other than payments in the form of Reorganization Securities) during the period (a “Payment Blockage Period”) commencing on the date the Company or the Trustee receives written notice (a “Payment Notice”) of such event of default (which notice shall be binding on the Trustee and the Holders as to the occurrence of such a payment default or nonpayment event of default) from the Credit Agent (or other holders of Designated Senior Indebtedness or their Representative or Representatives) and ending on the earliest of:

(A) 179 days after such date;

(B) the date, if any, on which such Designated Senior Indebtedness to which such default relates is paid in full in cash or such default is cured or waived in writing in accordance with the instruments governing such Designated Senior Indebtedness by the holders of such Designated Senior Indebtedness; and

(C) the date on which the Trustee receives written notice from the Credit Agent (or other holders of Designated Senior Indebtedness or their Representative or Representatives), as the case may be, terminating the Payment Blockage Period, unless the maturity of any Designated Senior Indebtedness has been accelerated.

(c) During any consecutive 360-day period, the aggregate of all Payment Blockage Periods shall not exceed 179 days and there shall be a period of at least 181 consecutive days in each consecutive 360-day period when no Payment Blockage Period is in effect. No event of default which existed or was continuing with respect to the Senior Indebtedness for which notice commencing a Payment Blockage Period was given on the date such Payment Blockage Period commenced shall be or be made the basis for the commencement of any subsequent Payment Blockage Period unless such event of default is cured or waived for a period of not less than 90 consecutive days.

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SECTION 1304. Acceleration of Securities. If payment of the Securities is accelerated because of an Event of Default, the Company shall promptly notify holders of Senior Indebtedness of the acceleration.

SECTION 1305. When Distribution Must be Paid Over. In the event that, notwithstanding the other provisions of this Article Thirteen, the Trustee receives any payment or distribution in respect of the Securities or of any Obligations with respect to the Securities at a time when the Trustee has received notice in accordance with Section 1310 that such payment or distribution is prohibited by Section 1303 hereof, such payment or distribution shall be held by the Trustee in trust for the benefit of, and shall be paid forthwith over and delivered, upon written request, to, the holders of Senior Indebtedness remaining unpaid or unprovided for or their representative or representatives, or to the trustee or trustees under any indenture pursuant to which any instruments representing any of such Senior Indebtedness may have been issued, ratably according to aggregate principal amounts remaining unpaid on account of such Senior Indebtedness held or represented by each, for application to the payment of all obligations with respect to Senior Indebtedness remaining unpaid, to the extent necessary to pay or to provide for the payment of all such obligations in full in cash or Cash Equivalents in accordance with their terms, after giving effect to any concurrent payment or distribution to or for the holders of Senior Indebtedness.

In the event that, notwithstanding the other provisions of this Article Thirteen, a Holder receives any payment or distribution of any Obligations with respect to the Securities at a time when such payment or distribution is prohibited by Section 1303 hereof, such payment or distribution shall be paid forthwith over and delivered, upon written request, to, the holders of Senior Indebtedness remaining unpaid or unprovided for or their representative or representatives, or to the trustee or trustees under any indenture pursuant to which any instruments representing any of such Senior Indebtedness may have been issued, ratably according to aggregate principal amounts remaining unpaid on account of such Senior Indebtedness held or represented by such, for application to the payment of all obligations with respect to Senior Indebtedness remaining unpaid, to the extent necessary to pay or to provide for the payment of all such obligations in full in cash or Cash Equivalents in accordance with their terms, after giving effect to any concurrent payment or distribution to or for the holders of Senior Indebtedness.

With respect to the holders of Senior Indebtedness, the Trustee undertakes to perform only such obligations on the part of the Trustee as are specifically set forth in this Article Thirteen, and no implied covenants or obligations with respect to the holders of Senior Indebtedness shall be read into this Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness, and shall not be liable to any such holders if the Trustee shall pay over or distribute to or on behalf of Holders or the Company or any other Person money or assets to which any holders of Senior Indebtedness shall be entitled by virtue of this Article Thirteen, except if such payment is made as a result of the willful misconduct or gross negligence of the Trustee.

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SECTION 1306. Notice by Company. The Company shall promptly notify the Trustee and the Paying Agent of any facts known to the Company that would cause a payment of any Obligations with respect to the Securities to violate this Article Thirteen, but failure to give such notice shall not affect the subordination of the Securities to the Senior Indebtedness as provided in this Article Thirteen.

SECTION 1307. Subrogation. After all Senior Indebtedness is paid in full in cash or Cash Equivalents and until the Securities are paid in full, Holders shall be subrogated (equally and ratably with all other Indebtedness pari passu with the Securities) to the rights of holders of Senior Indebtedness to receive distributions applicable to Senior Indebtedness to the extent that distributions otherwise payable to the Holders have been applied to the payment of Senior Indebtedness. A distribution made under this Article Thirteen to holders of Senior Indebtedness that otherwise would have been made to Holders is not, as between the Company and Holders, a payment by the Company on the Securities. No holder of Senior Indebtedness shall be obligated to create, warrant, preserve or protect any such subrogation right or shall suffer any loss or diminution of its rights hereunder if for any reason such right of subrogation is not available to any Holder.

SECTION 1308. Relative Rights. This Article defines the relative rights of Holders and holders of Senior Indebtedness. Nothing in this Indenture shall:

(1) impair, as between the Company and Holders, the obligation of the Company, which is absolute and unconditional, to pay principal of (and premium, if any) and interest (and Additional Interest, if any) on the Securities in accordance with their terms;

(2) affect the relative rights of Holders and creditors of the Company other than their rights in relation to holders of Senior Indebtedness; or

(3) prevent the Trustee or any Holder from exercising its available remedies upon a Default or Event of Default, subject to the rights of holders of Senior Indebtedness to receive distributions and payments otherwise payable to Holders.

If the Company fails because of this Article to pay principal of (or premium, if any) or interest (or Additional Interest, if any) on a Security on the due date, the failure is still a Default or Event of Default.

SECTION 1309. Subordination May Not be Impaired by Company. No right of any holder of Senior Indebtedness to enforce the subordination of the Indebtedness evidenced by the Securities shall be impaired by any act or failure to act by the Company or any Holder or by the failure of the Company or any holder of Senior Indebtedness to comply with this Indenture.

Without in any way limiting the generality of the foregoing paragraph, the holders of the Senior Indebtedness may, at any time and from time to time, without the consent of or notice to the Trustee or Holders, without incurring responsibility to the

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Holders and without impairing or releasing the subordination provided in this Article Thirteen or the obligations hereunder of the Holders to the holders of Senior Indebtedness, do any one or more of the following: (a) change the manner, place or terms of payment or extend the time or payment of, or renew or alter, Senior Indebtedness or any instrument evidencing the same or any agreement under which Senior Indebtedness is outstanding; provided, however, that any such alteration shall not (i) increase the amount of Senior Indebtedness outstanding in a manner prohibited by this Indenture or (ii) otherwise violate Section 1008 hereof; (b) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Indebtedness; (c) release any Person in any manner for the collection of Senior Indebtedness; and (d) exercise or refrain from exercising any rights against the Company or any other Person; provided, however, that in no event shall any such actions limit the right of the Holders to take any action to accelerate the maturity of the Securities in accordance with the provisions set forth in Section 502 or to pursue any rights or remedies against the parties to this Indenture under this Indenture or under applicable laws if the taking of such action does not otherwise violate the terms of this Article Thirteen.

SECTION 1310. Rights of Trustee and Paying Agent. Notwithstanding the provisions of this Article Thirteen or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment or distribution by the Trustee, and the Trustee and the Paying Agent may continue to make payments on the Securities, unless the Trustee shall have received at its Corporate Trust Office at least five Business Days prior to the date of such payment written notice of facts that would cause the payment of any Obligations with respect to the Securities to violate this Article Thirteen. Only the Company or the Representative may give the notice. Nothing in this Article Thirteen shall impair the claims of, or payments to, the Trustee under or pursuant to Section 607 hereof.

The Trustee in its individual or any other capacity may hold Senior Indebtedness with the same rights it would have if it were not Trustee.

SECTION 1311. Authorization to Effect Subordination. Each Holder of a Security by the Holder’s acceptance thereof authorizes and directs the Trustee on the Holder’s behalf to take such action as may be necessary or appropriate to effectuate the subordination as provided in this Article Thirteen, and appoints the Trustee to act as the Holder’s attorney-in-fact for any and all such purposes. If the Trustee does not file a proper proof of claim or proof of Indebtedness in the form required in any proceeding referred to in Section 504 hereof at least 30 days before the expiration of the time to file such claim, the Representative is hereby authorized to file an appropriate claim for and on behalf of the Holders.

SECTION 1312. Amendments. The provisions of this Article Thirteen or any related definitions shall not be amended or modified in a manner adverse to the holders of Senior Indebtedness without the written consent of the holders of all Senior Indebtedness.

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SECTION 1313. Trustee Not Fiduciary for Holders of Senior Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness and shall not be liable to any such holders if the Trustee shall in good faith mistakenly pay over or distribute to Holders of Securities or to the Company or to any other person cash, property or securities to which any holders of Senior Indebtedness shall be entitled by virtue of this Article or otherwise. With respect to the holders of Senior Indebtedness, the Trustee undertakes to perform or to observe only such of its covenants or obligations as are specifically set forth in this Article and no implied covenants or obligations with respect to holders of Senior Indebtedness shall be read into this Indenture against the Trustee.

ARTICLE FOURTEEN

Subsidiary Guarantees

SECTION 1401. Subsidiary Guarantees. Subject to the provisions of this Article Fourteen, each of the Company’s Domestic Restricted Subsidiaries (other than Permitted Joint Ventures and Receivables Entities), jointly and severally, hereby irrevocably and unconditionally fully guarantees to each Holder of a Security authenticated and delivered by the Trustee and to the Trustee and its successors and assigns (the “Subsidiary Guarantee”), that: (a) the principal of, and premium, if any, and interest (and Additional Interest, if any) on the Securities shall be duly and punctually paid in full when due, whether at maturity, by acceleration or otherwise, and interest on overdue principal, and premium, if any, and (to the extent permitted by law) interest on any interest and Additional Interest, if any, on the Securities and all other obligations of the Company to the Holders or the Trustee hereunder or under the Securities (including fees, expenses or other) shall be promptly paid in full or performed, all in accordance with the terms hereof; and (b) in case of any extension of time of payment or renewal of any Securities or any of such other obligations, the same shall be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. Failing payment when due of any amount so guaranteed or failing performance of any other obligation of the Company to the Holders, for whatever reason, each Guarantor shall be obligated to pay, or to perform or to cause the performance of, the same immediately. An Event of Default under this Indenture or the Securities shall constitute an event of default under the Subsidiary Guarantees, and shall entitle the Trustee or the Holders to accelerate the obligations of each Guarantor hereunder in the same manner and to the same extent as the obligations of the Company. Each Guarantor hereby agrees that its obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Securities or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder with respect to any thereof, the entry of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor. Each Guarantor hereby waives and relinquishes: (a) any right to require the Trustee, the Holders or the Company (each, a “Benefitted Party”) to proceed against the Company, the Subsidiaries or any other Person or to proceed against or exhaust any security held by a Benefitted Party at

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any time or to pursue any other remedy in any secured party’s power before proceeding against the Subsidiaries; (b) any defense that may arise by reason of the incapacity, lack of authority, death or disability of any other Person or Persons or the failure of a Benefitted Party to file or enforce a claim against the estate (in administration, bankruptcy or any other proceeding) of any other Person or Persons; (c) demand, protest and notice of any kind (except as expressly required by this Indenture), including but not limited to notice of the existence, creation or incurring of any new or additional Indebtedness or obligation or of any action or non-action on the part of the Guarantors, the Company, the Subsidiaries, any Benefitted Party, any creditor of the Guarantors, the Company or the Subsidiaries or on the part of any other Person whomsoever in connection with any obligations the performance of which are hereby guaranteed; (d) any defense based upon an election of remedies by a Benefitted Party, including but not limited to an election to proceed against the Guarantors for reimbursement; (e) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in other respects more burdensome than that of the principal; (f) any defense arising because of a Benefitted Party’s election, in any proceeding instituted under the Bankruptcy Law, of the application of Section 1111(b)(2) of the Bankruptcy Code; and (g) any defense based on any borrowing or grant of a security interest under Section 364 of the Bankruptcy Code. The Guarantors hereby covenant that the Subsidiary Guarantees shall not be discharged except by payment in full of all principal, premium, if any, and interest on the Securities and all other costs provided for under this Indenture, or except as provided in Sections 1202 and 1404.

If any Holder or the Trustee is required by any court or otherwise to return to either the Company or the Guarantors, or any trustee or similar official acting in relation to either the Company or the Guarantors, any amount paid by the Company or the Guarantors to the Trustee or such Holder, the Subsidiary Guarantees, to the extent theretofore discharged, shall be reinstated in full force and effect. Each of the Guarantors agrees that it shall not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. Each Guarantor agrees that, as between it, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article Five hereof for the purposes hereof, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any acceleration of such obligations as provided in Article Five hereof, such obligations (whether or not due and payable) shall forthwith become due and payable by such Guarantor for the purpose of its Subsidiary Guarantee.

SECTION 1402. Execution and Delivery of Subsidiary Guarantees. To evidence the Subsidiary Guarantees set forth in Section 1401 hereof, each of the Guarantors agrees that a Subsidiary Guarantee substantially in the form of Exhibit A hereto shall be endorsed on each Security authenticated and delivered by the Trustee and that this Indenture shall be executed on behalf of such Guarantor by its Chairman of the Board, its President or one of its Vice Presidents.

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Each of the Guarantors agrees that the Subsidiary Guarantees set forth in this Article Fourteen shall remain in full force and effect and apply to all of the Securities notwithstanding any failure to endorse on each Security a notation of the Subsidiary Guarantees.

If an individual whose manual or facsimile signature is on a Security shall have ceased to hold such office prior to the authentication and delivery of the Security on which the Subsidiary Guarantees are endorsed, the Subsidiary Guarantees shall be valid nevertheless.

The delivery of any Security by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the Subsidiary Guarantees endorsed thereon and set forth in this Indenture and shall bind each Guarantor notwithstanding the fact that a Subsidiary Guarantee does not bear the signature of such Guarantor. Each of the Guarantors hereby jointly and severally agrees that its form of Subsidiary Guarantee set forth in Section 1401 and in the form of Subsidiary Guarantee established pursuant to Exhibit A shall remain in full force and effect notwithstanding any failure to endorse a Subsidiary Guarantee on any Security.

SECTION 1403. Guarantors May Consolidate, etc., on Certain Terms.

(a) Nothing contained in this Indenture or in the Securities shall prevent any consolidation or merger of a Guarantor with or into the Company or another Guarantor, or shall prevent the transfer of all or substantially all of the assets of a Guarantor to the Company or another Guarantor. Upon any such consolidation, merger, transfer or sale, the Subsidiary Guarantee of such Guarantor shall no longer have any force or effect.

(a) Except as provided in Section 1403(a), or a transaction referred to in Section 1404, no Guarantor shall consolidate with or merge with or into (whether or not such Guarantor is the surviving corporation) another Person other than the Company or another Guarantor, whether in a single transaction or a series of related transactions, unless (i) subject to the provisions of Section 1404 hereof, the Person formed by or surviving any such consolidation or merger (if other than such Guarantor) assumes all the obligations of such Guarantor in connection with the Subsidiary Guarantees and this Indenture pursuant to a supplemental indenture in a form reasonably satisfactory to the Trustee, pursuant to which such Person shall unconditionally guarantee on a senior subordinated basis all of such Guarantor’s obligations under such Guarantor’s Subsidiary Guarantee and this Indenture on the terms set forth in this Indenture; (ii) immediately before and immediately after giving effect to such transaction on a pro forma basis, no Default or Event of Default shall have occurred and be continuing; and (iii) such Guarantor shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel addressed to the Trustee, each stating that such consolidation or merger and such supplemental indenture, if any, comply with this Indenture and that such supplemental indenture is enforceable. In case of any such consolidation or merger and upon the assumption by the successor corporation, by supplemental indenture, executed and delivered to the Trustee and satisfactory in form to the Trustee, of the Subsidiary

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Guarantees endorsed upon the Securities and the due and punctual performance of all of the covenants and conditions of this Indenture to be performed by such Guarantor, such successor corporation shall succeed to and be substituted for such Guarantor with the same effect as if it had been named herein as a Guarantor. Such successor corporation thereupon may cause to be signed any or all of the Subsidiary Guarantees to be endorsed upon all of the Securities issuable hereunder which theretofore shall have been signed by the Company and delivered to the Trustee. All the Subsidiary Guarantees so issued shall in all respects have the same legal rank and benefit under this Indenture as the Subsidiary Guarantees theretofore and thereafter issued in accordance with the terms of this Indenture as though all of such Subsidiary Guarantees had been issued at the date of the execution hereof.

(b) The Trustee, subject to the provisions of Section 1404 hereof, shall be entitled to receive an Officers’ Certificate and an Opinion of Counsel as conclusive evidence that any such consolidation, merger, sale or conveyance, and any such assumption of obligations, comply with the provisions of this Section 1403.

SECTION 1404. Releases Following Sale of Assets. Upon the sale or disposition (whether by merger, stock purchase, asset sale or otherwise) of a Guarantor (or all or substantially all of the assets of any such Guarantor or 50% or more of the Equity Interests of any such Guarantor) to an entity which is not a Guarantor or the designation of a Subsidiary to become an Unrestricted Subsidiary, which transaction is otherwise in compliance with this Indenture, including without limitation Section 1015 hereof, such Guarantor shall be deemed released from its obligations under its Subsidiary Guarantee. Upon delivery by the Company to the Trustee of an Officer’s Certificate and Opinion of Counsel, to the effect that such sale or other disposition was made by the Company in accordance with the provisions of this Indenture, including without limitation Section 1015 hereof, the Trustee shall execute any documents reasonably required in order to evidence the release of any such Guarantor from its obligations under its Subsidiary Guarantee. Any Guarantor not released from its obligations under its Subsidiary Guarantee shall remain liable for the full amount of principal of and interest on the Securities and for the other obligations of any Guarantor under this Indenture as provided in this Article Fourteen.

SECTION 1405. Limitation of Guarantor’s Liability. Each Guarantor, and by its acceptance hereof each Holder, hereby confirms that it is the intention of all such parties that the guarantee by such Guarantor pursuant to its Subsidiary Guarantee not constitute a fraudulent transfer or conveyance for purposes of the Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or state law. To effectuate the foregoing intention, the Holders and such Guarantor hereby irrevocably agree that the obligations of such Guarantor under this Article Fourteen shall be limited to the maximum amount as shall, after giving effect to all other contingent and fixed liabilities of such Guarantor and after giving effect to any collections from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under this Article Fourteen, result in the obligations of such Guarantor under the Subsidiary Guarantee of such Guarantor not constituting a fraudulent transfer or conveyance.

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SECTION 1406. Application of Certain Terms and Provisions to the Guarantors. (a) For purposes of any provision of this Indenture which provides for the delivery by any Guarantor of an Officers’ Certificate and/or an Opinion of Counsel, the definitions of such terms in Section 101 shall apply to such Guarantor as if references therein to the Company were references to such Guarantor.

(b) Any request, demand, authorization, direction, notice, consent, waiver or other document which by any provision of this Indenture is to be made by any Guarantor, shall be sufficient if evidenced as described in Section 105 as if references therein to the Company were references to such Guarantor.

(c) Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document which by any provision of this Indenture is required or permitted to be given or served by the Trustee or by any Holder may be given or served as described in Section 105 as if references therein to the Company were references to such Guarantor.

(d) Upon any application or request by any Guarantor to the Trustee to take any action under any provision of this Indenture, such Guarantor shall furnish to the Trustee such certificates and opinions as are required in Section 102 hereof as if all references therein to the Company were references to such Guarantor.

SECTION 1407. Release of Subsidiary Guarantees. Concurrently with the defeasance of the Securities under Section 1202 hereof, the Guarantors shall be released from all of their obligations under the Subsidiary Guarantees and this Article Fourteen.

SECTION 1408. Subordination of Subsidiary Guarantees. The obligations of each Guarantor under its Subsidiary Guarantee pursuant to this Article Fourteen is subordinated in right of payment to the prior payment in full in cash of all Senior Indebtedness of such Guarantor on the same basis as the Securities are subordinated to Senior Indebtedness of the Company. For the purposes of the foregoing sentence, the Trustee and the Holders shall have the right to receive and/or retain payments by any of the Guarantors only at such times as they may receive and/or retain payments in respect of Securities pursuant to this Indenture, including Article Thirteen hereof. In the event that the Trustee receives any Guarantor payment at a time when the Trustee has received notice in accordance with Section 1310, such Guarantor payment shall be held by the Trustee in trust for the benefit of, and shall be paid forthwith over and delivered, upon written request, to, the holders of the Senior Indebtedness of such Guarantor remaining unpaid or unprovided for, for application to the payment of all obligations with respect to Senior Indebtedness of such Guarantor remaining unpaid, to the extent necessary to pay such Senior Indebtedness of such Guarantor in full in accordance with their terms, after giving effect to any concurrent payment or distribution to or for the holders of Senior Indebtedness. In the event that a Holder receives any Guarantor payment at a time when such payment is prohibited by the second preceding sentence, such Guarantor payment shall be forthwith paid over and delivered to the holders of the Senior Indebtedness of such Guarantor remaining unpaid or unprovided

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for, for application to the payment of all obligations with respect to Senior Indebtedness of such Guarantor remaining unpaid, to the extent necessary to pay such Senior Indebtedness in full in accordance with their terms, after giving effect to any concurrent payment or distribution to or for the holders of Senior Indebtedness of such Guarantor.

Each Holder of a Security by its acceptance thereof (a) agrees to and shall be bound by the provisions of this Section 1408, (b) authorizes and directs the Trustee on the Holder’s behalf to take such action as may be necessary and appropriate to effectuate the subordination so provided, and (c) appoints the Trustee as the Holder’s attorney-in-fact for any and all such purposes.

SECTION 1409. Waiver of Subrogation. Until this Indenture is discharged and all of the Securities are discharged and paid in full, each Guarantor hereby irrevocably waives and agrees not to exercise any claim or other rights which it may now or hereafter acquire against the Company that arise from the existence, payment, performance or enforcement of the Company’s obligations under the Securities or this Indenture and each Guarantor’s obligations under this Subsidiary Guarantee and this Indenture, in any such instance including, without limitation, any right of subrogation, reimbursement, exoneration, contribution, indemnification, and any right to participate in any claim or remedy of the Holders and the Trustees against the Company, whether or not such claim, remedy or right arises in equity, or under contract, statute or common law, including, without limitation, the right to take or receive from the Company, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim or other rights. If any amount shall be paid to a Guarantor in violation of the preceding sentence and any amounts owing to the Trustee or the Holders under the Securities, this Indenture, or any other document or instrument delivered under or in connection with such agreements or instruments, shall not have been paid in full, such amount shall have been deemed to have been paid to such Guarantor for the benefit of, and held in trust for the benefit of, the Holders and the Trustee and shall forthwith be paid to the Trustee for the benefit of such Holders to be credited and applied to the obligations in favor of the Holders, whether matured or unmatured, in accordance with the terms of this Indenture. Each Guarantor acknowledges that it has received consideration for providing the Subsidiary Guarantee and that it shall receive direct and indirect benefits from the financing arrangements contemplated by this Indenture and that the waiver set forth in this Section 1409 is knowingly made in contemplation of such benefits.

SECTION 1410. Immediate Payment. Each Guarantor agrees to make immediate payment to the Trustee on behalf of the Holders of all obligations under the Securities and this Indenture owing or payable to the Holders upon receipt of a demand for payment therefor by the Trustee to such Guarantor in writing.

SECTION 1411. No Set-Off. Each payment to be made by any Guarantor hereunder in respect of the Securities, the Subsidiary Guarantees or this Indenture shall be payable in U.S. Dollars and shall be made without set-off, counterclaim, reduction or diminution of any kind or nature.

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SECTION 1412. Obligations Absolute. The obligations of each Guarantor hereunder are and shall be absolute and unconditional and any monies or amounts expressed to be owing or payable by a Guarantor hereunder which may not be recoverable from such Guarantor on the basis of a guarantee shall be recoverable from such Guarantor as a primary obligor and principal debtor in respect thereof.

SECTION 1413. Obligations Continuing. Subject to Section 1404, the obligations of each Guarantor hereunder shall be continuing and shall remain in full force and effect until all the obligations of the Company under the Securities and this Indenture shall have been paid and satisfied in full.

SECTION 1414. Obligations Not Reduced. The obligations of each Guarantor hereunder shall not be satisfied, reduced or discharged by any intermediate payment or satisfaction of the whole or any part of the principal, interest, fees and other monies or amounts which may at any time be or become owing or payable under or by virtue of or otherwise in connection with the Securities or this Indenture.

SECTION 1415. Obligations Reinstated. The obligations of each Guarantor hereunder shall continue to be effective or shall be reinstated, as the case may be, if at any time any payment which would otherwise have reduced the obligations of a Guarantor hereunder (whether such payment shall have been made by or on behalf of the Company or by or on behalf of a Guarantor) is rescinded or reclaimed from the Holders upon the insolvency, bankruptcy, liquidation or reorganization of the Company or any Guarantor or otherwise, all as though such payment had not been made. If demand for, or acceleration of the time for, payment by the Company is stayed upon the insolvency, bankruptcy, liquidation or reorganization of the Company, all such indebtedness otherwise subject to demand for payment or acceleration shall nonetheless be payable by each Guarantor as provided herein.

SECTION 1416. Obligations Not Affected. The obligations of each Guarantor hereunder shall not be affected, impaired or diminished in any way by any act, omission, matter or thing whatsoever, occurring before, upon or after any demand for payment hereunder (and whether or not known or consented to by a Guarantor or the Holders) which, but for this provision, might constitute a whole or partial defense to a claim against a Guarantor hereunder or might operate to release or otherwise exonerate any Guarantor from any of its obligations hereunder or otherwise affect such obligations, whether occasioned by default of any of the Holders or otherwise, including, without limitation:

(1) any limitation of status or power, disability, incapacity or other circumstance relating to the Company or any other person, including any insolvency, bankruptcy, liquidation, reorganization, readjustment, composition, dissolution, winding-up or other proceeding involving or affecting the Company or any other person;

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(2) any irregularity, defect, unenforceability or invalidity in respect of any indebtedness or other obligation of the Company or any other person under this Indenture, the Securities or any other document or instrument;

(3) any failure of the Company, whether or not without fault on its part, to perform or comply with any of the provisions of this Indenture or the Securities, or to give notice thereof to a Guarantor;

(4) the taking or enforcing or exercising or the refusal or neglect to take or enforce or exercise any right or remedy from or against the Company or any other person or their respective assets or the release or discharge of any such right or remedy;

(5) the granting of time, renewals, extensions, compromises, concessions, waivers, releases, discharges and other indulgences to the Company or any other person;

(6) any change in the time, manner or place of payment of, or in any other term of, any of the Securities, or any other amendment, variation, supplement, replacement or waiver of, or any consent to departure from, any of the Securities or this Indenture, including, without limitation, any increase or decrease in the principal amount of or premium, if any, or interest on any of the Securities;

(7) subject to Section 1404, any change in the ownership, control, name, objects, businesses, assets, capital structure or constitution of the Company or any Guarantor;

(8) subject to Section 1404, any merger or amalgamation of Company or a Guarantor with any person or persons;

(9) the occurrence of any change in the laws, rules, regulations or ordinances of any jurisdiction by any present or future action of any governmental authority or court amending, varying, reducing or otherwise affecting, or purporting to amend, vary, reduce or otherwise affect, the Securities, this Indenture or the obligations of a Guarantor under its Subsidiary Guarantee; and

(10) any other circumstance (other than by complete, irrevocable payment) that might otherwise constitute a legal or equitable discharge or defense of the Company under this Indenture or the Securities or of a Guarantor in respect of its Subsidiary Guarantee hereunder.

SECTION 1417. Dealing With the Company and Others. The Holders, without releasing, discharging, limiting or otherwise affecting in whole or in part the obligations and liabilities of any Guarantor hereunder and without the consent of or notice to any Guarantor, may

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(1) grant time, renewals, extensions, compromises, concessions, waivers, releases, discharges and other indulgences to the Company or any other Person;

(2) take or abstain from taking security or collateral from the Company or from perfecting security or collateral of the Company;

(3) release, discharge, compromise, realize, enforce or otherwise deal with or do any act or thing in respect of (with or without consideration) any and all collateral, mortgages or other security given by the Company or any third party with respect to the obligations or matters contemplated by this Indenture or the Securities;

(4) accept compromises or arrangements from the Company;

(5) apply all monies at any time received from the Company or from any security upon such part of the Securities or this Indenture as the Holders may see fit or change any such application in whole or in part from time to time as the Holders may see fit; and

(6) otherwise deal with, or waive or modify their right to deal with, the Company and all other Persons and any security as the Holders or the Trustee may see fit.

SECTION 1418. Default and Enforcement. If any Guarantor fails to pay in accordance with Section 1401 or Section 1410 hereof, the Trustee may proceed in its name as trustee hereunder in the enforcement of the Subsidiary Guarantees of such Guarantor and each other Guarantor of the Guarantors’ obligations thereunder and hereunder by any remedy provided by law, whether by legal proceedings or otherwise, and to recover from the Guarantors the obligations of the Company under the Securities and this Indenture.

SECTION 1419. Costs and Expenses. Each Guarantor shall pay on demand by the Trustee any and all costs, disbursements, advances and expenses incurred by the Trustee or the Holders (including, without limitation, the reasonable compensation, expenses and disbursements of their respective agents and counsel) in enforcing any of their rights under any Subsidiary Guarantee.

SECTION 1420. No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of the Trustee or the other Holders, any right, remedy, power or privilege hereunder or under this Indenture or the Securities, shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder or under this Indenture or the Securities preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges in the Subsidiary Guarantees and under this Indenture, the Securities and any other document or instrument between the Guarantors and/or the Company and the Trustee are cumulative and not exclusive of any rights, remedies, powers and privilege provided by law.

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SECTION 1421. Representation and Warranty of Each Guarantor. Each Guarantor hereby represents and warrants that all acts, conditions and things required to be done and performed and to have happened precedent to the creation and issuance of its Subsidiary Guarantee, to constitute the same valid, binding and legal obligation of such Guarantor, enforceable against such Guarantor, its successors and assigns in accordance with its terms, have been done and performed and have happened in compliance with all applicable laws and that it has received consideration for providing the Subsidiary Guarantee. The obligation of each Guarantor under its Subsidiary Guarantee shall constitute a direct, general, irrevocable, unconditional and unsecured obligation of such Guarantor, subordinated as provided in Section 1408 of this Indenture, and is the joint and several obligation of each other Guarantor.

SECTION 1422. Successors and Assigns. Each Subsidiary Guarantee shall be binding upon and inure to the benefit of the Guarantors and the Trustee and the Holders and their respective successors and permitted assigns.

SECTION 1423. Contribution. Each Guarantor that makes a payment under its Guarantee shall be entitled upon payment in full of all guaranteed obligations under this Indenture to a contribution from each other Guarantor in an amount equal to such other Guarantor’s pro rata portion of such payment based on the respective net assets of all the Guarantors at the time of such payment determined in accordance with GAAP.

(The remainder of this page is blank.)

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This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed and as of the day and year first above written.

THE BANK OF NEW YORK
By:	/s/    SIROJNI DINDIAL
	Sirojni Dindial
	Assistant Vice President
CONCENTRA OPERATING CORPORATION
By:	/s/    RICHARD A. PARR II
	Richard A. Parr II
	Executive Vice President,
	General Counsel and Corporate Secretary
CONCENTRA HEALTH SERVICES, INC.
CONCENTRA PREFERRED SYSTEMS, INC.
By:	/s/    RICHARD A. PARR II
	Richard A. Parr II
	Executive Vice President,
	General Counsel and Corporate Secretary
CONCENTRA INTEGRATED SERVICES, INC.
By:	/s/    RICHARD A. PARR II
	Richard A. Parr II
	Executive Vice President and Clerk

S-1

CONCENTRA MANAGED CARE BUSINESS TRUST
CONCENTRA PREFERRED BUSINESS TRUST
FOCUS HEALTHCARE BUSINESS TRUST
By:	/s/    DANIEL J. THOMAS
	Daniel J. Thomas
	Trustee
CONCENTRA MANAGEMENT SERVICES, INC.
FIRST NOTICE SYSTEMS, INC.
FOCUS HEALTHCARE MANAGEMENT, INC.
METRACOMP INC.
NHR WASHINGTON, INC.
CONCENTRA LABORATORY, L.L.C.
By:	/s/    RICHARD A. PARR II
	Richard A. Parr II
	Vice President and Corporate Secretary
CRA MANAGED CARE OF WASHINGTON, INC.
CRA-MCO, INC.
By:	/s/    RICHARD A. PARR II
	Richard A. Parr II
	Executive Vice President and Corporate
	Secretary
HEALTHNETWORK SYSTEMS LLC
MEDICAL NETWORK SYSTEMS LLC
By:	/S/    RICHARD A. PARR II
	Richard A. Parr II
	Vice President, General Counsel and
	Corporate Secretary

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NATIONAL HEALTHCARE RESOURCES, INC.
By:	/s/    RICHARD A. PARR II
	Richard A. Parr II
	Senior Vice President and Corporate Secretary

OCCUCENTERS I, L.P.
By:	Its general partner
	CONCENTRA HEALTH SERVICES INC.
	By:	/s/    RICHARD A. PARR II
		Richard A. Parr II
		Executive Vice President, General
		Counsel and Corporate Secretary

OCI HOLDINGS, INC.
By:	/s/    GARY CHEDEKEL
	Gary Chedekel
	Corporate Secretary and Treasurer

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PROVISIONS RELATING TO INITIAL SECURITIES,

PRIVATE EXCHANGE SECURITIES

AND EXCHANGE SECURITIES

1. Definitions

1.1 Definitions

For the purposes of this Appendix the following terms shall have the meanings indicated below:

“Applicable Procedures” means, with respect to any transfer or transaction involving a Temporary Regulation S Global Security or beneficial interest therein, the rules and procedures of the Depository for such a Temporary Regulation S Global Security, to the extent applicable to such transaction and as in effect from time to time.

“Definitive Security” means a certificated Initial Security or Exchange Security or Private Exchange Security bearing, if required, the appropriate restricted securities legend set forth in Section 2.3(e).

“Depository” means The Depository Trust Company, its nominees and their respective successors.

“Distribution Compliance Period,” with respect to any Securities, means the period of 40 consecutive days beginning on and including the later of (i) the day on which such Securities are first offered to Persons other than distributors (as defined in Regulation S under the Securities Act) in reliance on Regulation S and (ii) the issue date with respect to such Securities.

“Exchange Securities” means (1) the 9½% Senior Subordinated Notes Due 2010 issued pursuant to the Indenture in connection with a Registered Exchange Offer pursuant to a Registration Rights Agreement and (2) Additional Securities, if any, issued pursuant to a registration statement filed with the Commission under the Securities Act.

“IAI” means an institutional “accredited investor,” as defined in Rule 501(a)(1), (2), (3) and (7) of Regulation D under the Securities Act.

“Initial Purchasers” means (1) with respect to the Initial Securities issued on the Issue Date, Credit Suisse First Boston LLC, Citigroup Global Markets Inc., Deutsche Bank Securities Inc., J.P. Morgan Securities Inc. and Banc One Capital Markets, Inc. and (2) with respect to each issuance of Additional Securities, the Persons purchasing such Additional Securities under the related Purchase Agreement.

“Initial Securities” means (1) $150,000,000 aggregate principal amount of 9½% Senior Subordinated Notes Due 2010 issued on the Issue Date and (2) Additional Securities, if any, issued in a transaction exempt from the registration requirements of the Securities Act.

“Private Exchange” means the offer by the Company, pursuant to a Registration Rights Agreement, to the Initial Purchasers to issue and deliver to each Initial Purchaser, in exchange for the Initial Securities held by the Initial Purchaser as part of its initial distribution, a like aggregate principal amount of Private Exchange Securities.

“Private Exchange Securities” means any 9½% Senior Notes Subordinated Due 2010 issued in connection with a Private Exchange.

“Purchase Agreement” means (1) with respect to the Initial Securities issued on the Issue Date, the Purchase Agreement dated August 5, 2003, among the Company, the Guarantors and the Initial Purchasers, and (2) with respect to each issuance of Additional Securities, the purchase agreement or underwriting agreement among the Company, the Guarantors and the Persons purchasing such Additional Securities.

“QIB” means a “qualified institutional buyer” as defined in Rule 144A.

“Registered Exchange Offer” means the offer by the Company, pursuant to a Registration Rights Agreement, to certain Holders of Initial Securities, to issue and deliver to such Holders, in exchange for the Initial Securities, a like aggregate principal amount of Exchange Securities registered under the Securities Act.

“Registration Rights Agreement” means (1) with respect to the Initial Securities issued on the Issue Date, the Registration Rights Agreement dated August 13, 2003, among the Company, the Guarantors and the Initial Purchasers, and (2) with respect to each issuance of Additional Securities issued in a transaction exempt from the registration requirements of the Securities Act, the registration rights agreement, if any, among the Company, the Guarantors and the Persons purchasing such Additional Securities under the related Purchase Agreement.

“Rule 144A Securities” means all Securities offered and sold to QIBs in reliance on Rule 144A.

“Securities” means the Initial Securities, the Exchange Securities and the Private Exchange Securities, treated as a single class.

“Securities Act” means the Securities Act of 1933.

“Securities Custodian” means the custodian with respect to a Global Security (as appointed by the Depository), or any successor Person thereto and shall initially be the Trustee.

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“Shelf Registration Statement” means the registration statement issued by the Company in connection with the offer and sale of Initial Securities or Private Exchange Securities pursuant to a Registration Rights Agreement.

“Transfer Restricted Securities” means Securities that bear or are required to bear a legend relating to restrictions on transfer relating to the Securities Act set forth in Section 2.3(e).

1.2 Other Definitions.

Term	Defined in Section:
“Agent Members”	2.1	(b)
“Global Security”	2.1	(a)
“IAI Global Security”	2.1	(a)
“Permanent Regulation S Global Security”	2.1	(a)
“Regulation S”	2.1	(a)
“Regulation S Global Security”	2.1	(a)
“Rule 144A”	2.1	(a)
“Rule 144A Global Security”	2.1	(a)
“Temporary Regulation S Global Security”	2.1	(a)

2. The Securities.

2.1 (a) Form and Dating. The Initial Securities will be offered and sold by the Company pursuant to a Purchase Agreement. The Initial Securities will be resold initially only to (i) QIBs in reliance on Rule 144A under the Securities Act (“Rule 144A”) and (ii) Persons other than U.S. Persons (as defined in Regulation S) in reliance on Regulation S under the Securities Act (“Regulation S”). Initial Securities may thereafter be transferred to, among others, QIBs, IAIs and purchasers in reliance on Regulation S, subject to the restrictions on transfer set forth herein. Initial Securities initially resold pursuant to Rule 144A shall be issued initially in the form of one or more permanent global Securities in definitive, fully registered form (collectively, the “Rule 144A Global Security”); Initial Securities initially resold to IAIs shall be issued initially in the form of one or more permanent global Securities in definitive, fully registered form (collectively, the “IAI Global Security”); and Initial Securities initially resold pursuant to Regulation S shall be issued initially in the form of one or more temporary global securities in fully registered form (collectively, the “Temporary Regulation S Global Security”), in each case without interest coupons and with the global securities legend and the applicable restricted securities legend set forth in Exhibit 1 hereto, which shall be deposited on behalf of the purchasers of the Initial Securities represented thereby with the Securities Custodian and registered in the name of the Depository or a nominee of the Depository, duly executed by the Company and authenticated by the Trustee as provided in this Indenture. Except as set forth in this Section 2.1(a), beneficial ownership interests in the Temporary Regulation S Global Security will not be exchangeable for interests in

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the Rule 144A Global Security, the IAI Global Security, a permanent global security (the “Permanent Regulation S Global Security,” and together with the Temporary Regulation S Global Security, the “Regulation S Global Security”) or any other Security prior to the expiration of the Distribution Compliance Period and then, after the expiration of the Distribution Compliance Period, may be exchanged for interests in a Rule 144A Global Security, an IAI Global Security or the Permanent Regulation S Global Security only upon certification in form reasonably satisfactory to the Trustee that (i) beneficial ownership interests in such Temporary Regulation S Global Security are owned either by non-U.S. persons or U.S. persons who purchased such interests in a transaction that did not require registration under the Securities Act and (ii) in the case of an exchange for an IAI Global Security, certification that the interest in the Temporary Regulation S Global Security is being transferred to an institutional “accredited investor” under the Securities Act that is an institutional accredited investor acquiring the securities for its own account or for the account of an institutional accredited investor.

Beneficial interests in Temporary Regulation S Global Securities or IAI Global Securities may be exchanged for interests in Rule 144A Global Securities if (1) such exchange occurs in connection with a transfer of Securities in compliance with Rule 144A and (2) the transferor of the beneficial interest in the Temporary Regulation S Global Security or the IAI Global Security, as applicable, first delivers to the Trustee a written certificate (in a form satisfactory to the Trustee) to the effect that the beneficial interest in the Temporary Regulation S Global Security or the IAI Global Security, as applicable, is being transferred to a Person (a) who the transferor reasonably believes to be a QIB, (b) purchasing for its own account or the account of a QIB in a transaction meeting the requirements of Rule 144A, and (c) in accordance with all applicable securities laws of the States of the United States and other jurisdictions.

Beneficial interests in Temporary Regulation S Global Securities and Rule 144A Global Securities may be exchanged for an interest in IAI Global Securities if (1) such exchange occurs in connection with a transfer of the securities in compliance with an exemption under the Securities Act and (2) the transferor of the Regulation S Global Security or Rule 144A Global Security, as applicable, first delivers to the trustee a written certificate (substantially in the form of Exhibit 3) to the effect that (A) the Regulation S Global Security or Rule 144A Global Security, as applicable, is being transferred (a) to an “accredited investor” within the meaning of 501(a)(1),(2),(3) and (7) under the Securities Act that is an institutional investor acquiring the securities for its own account or for the account of such an institutional accredited investor, in each case in a minimum principal amount of the securities of $250,000, for investment purposes and not with a view to or for offer or sale in connection with any distribution in violation of the Securities Act and (B) in accordance with all applicable securities laws of the States of the United States and other jurisdictions.

Beneficial interests in a Rule 144A Global Security or an IAI Global Security may be transferred to a Person who takes delivery in the form of an interest in a Regulation S Global Security, whether before or after the expiration of the Distribution Compliance Period, only if the transferor first delivers to the Trustee a written certificate

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(in the form provided in the Indenture) to the effect that such transfer is being made in accordance with Rule 903 or 904 of Regulation S or Rule 144 (if applicable).

The Rule 144A Global Security, the IAI Global Security, the Temporary Regulation S Global Security and the Permanent Regulation S Global Security are collectively referred to herein as “Global Securities”. The aggregate principal amount of the Global Securities may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depository or its nominee as hereinafter provided.

(b) Book-Entry Provisions. This Section 2.1(b) shall apply only to a Global Security deposited with or on behalf of the Depository.

The Company shall execute and the Trustee shall, in accordance with this Section 2.1(b), authenticate and deliver initially one or more Global Securities that (a) shall be registered in the name of the Depository for such Global Security or Global Securities or the nominee of such Depository and (b) shall be delivered by the Trustee to such Depository or pursuant to such Depository’s instructions or held by the Trustee as custodian for the Depository.

Members of, or participants in, the Depository (“Agent Members”) shall have no rights under this Indenture with respect to any Global Security held on their behalf by the Depository or by the Trustee as the custodian of the Depository or under such Global Security, and the Company, the Trustee and any agent of the Company or the Trustee shall be entitled to treat the Depository as the absolute owner of such Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depository or impair, as between the Depository and its Agent Members, the operation of customary practices of such Depository governing the exercise of the rights of a holder of a beneficial interest in any Global Security.

(c) Certificated Securities. Except as provided in this Section 2.1 or Section 2.3 or 2.4, owners of beneficial interests in Global Securities shall not be entitled to receive physical delivery of Definitive Securities.

2.2 Authentication

The Trustee shall authenticate and deliver: (1) on the Issue Date, an aggregate principal amount of $150,000,000 9½% Senior Subordinated Notes Due 2010, (2) any Additional Securities for an original issue in an aggregate principal amount specified in a supplemental indenture pursuant to Section 301 and Section 901(6) of the Indenture and (3) Exchange Securities or Private Exchange Securities for issue only in a Registered Exchange Offer or a Private Exchange, respectively, pursuant to a Registration Rights Agreement, for a like principal amount of Initial Securities, in the case of clauses (1) and (3) upon a Company Order. Such Company Order or supplemental indenture, as the case may be, shall specify the amount of the Securities to

5

be authenticated and the date on which the original issue of Securities is to be authenticated and, in the case of any issuance of Additional Securities, shall certify that such issuance is in compliance with Section 1008 of the Indenture.

2.3 Transfer and Exchange

(a) Transfer and Exchange of Definitive Securities. When Definitive Securities are presented to the Notes Registrar with a request:

(x) to register the transfer of such Definitive Securities; or

(y) to exchange such Definitive Securities for an equal principal amount of Definitive Securities of other authorized denominations,

the Notes Registrar shall register the transfer or make the exchange as requested if its reasonable requirements for such transaction are met; provided, however, that the Definitive Securities surrendered for transfer or exchange:

(i) shall be duly endorsed or accompanied by a written instrument of transfer in form reasonably satisfactory to the Company and the Notes Registrar, duly executed by the Holder thereof or its attorney duly authorized in writing; and

(ii) if such Definitive Securities are required to bear a restricted securities legend, are being transferred or exchanged pursuant to an effective registration statement under the Securities Act, pursuant to Section 2.3(b) or pursuant to clause (A), (B) or (C) below, and are accompanied by the following additional information and documents, as applicable:

(A) if such Definitive Securities are being delivered to the Notes Registrar by a Holder for registration in the name of such Holder, without transfer, a certification from such Holder to that effect; or

(B) if such Definitive Securities are being transferred to the Company, a certification to that effect; or

(C) if such Definitive Securities are being transferred (x) pursuant to an exemption from registration in accordance with Rule 144A, Regulation S or Rule 144 under the Securities Act; or (y) in reliance upon another exemption from the requirements of the Securities Act: (i) a certification to that effect (in the form set forth on the reverse of the Security) and (ii) if the Company so requests, an opinion of counsel or other evidence reasonably satisfactory to it as to the compliance with the restrictions set forth in the legend set forth in Section 2.3(e)(i).

(b) Restrictions on Transfer of a Definitive Security for a Beneficial Interest in a Global Security. A Definitive Security may not be exchanged for a beneficial interest in a Rule 144A Global Security, an IAI Global Security or a Permanent Regulation S Global Security except upon satisfaction of the requirements set forth

6

below. Upon receipt by the Trustee of a Definitive Security, duly endorsed or accompanied by appropriate instruments of transfer, in form satisfactory to the Trustee, together with:

(i) certification, in the form set forth on the reverse of the Security, that such Definitive Security is either (A) being transferred to a QIB in accordance with Rule 144A, (B) being transferred to an IAI or (C) being transferred after expiration of the Distribution Compliance Period by a Person who initially purchased such Security in reliance on Regulation S to a purchaser who elects to hold its interest in such Security in the form of a beneficial interest in the Permanent Regulation S Global Security; and

(ii) written instructions directing the Trustee to make, or to direct the Securities Custodian to make, an adjustment on its books and records with respect to such Rule 144A Global Security (in the case of a transfer pursuant to clause (b)(i)(A)), IAI Global Security (in the case of a transfer pursuant to clause (b)(1)(B)) or Permanent Regulation S Global Security (in the case of a transfer pursuant to clause (b)(i)(C)) to reflect an increase in the aggregate principal amount of the Securities represented by the Rule 144A Global Security, IAI Global Security or Permanent Regulation S Global Security, as applicable, such instructions to contain information regarding the Depository account to be credited with such increase,

then the Trustee shall cancel such Definitive Security and cause, or direct the Securities Custodian to cause, in accordance with the standing instructions and procedures existing between the Depository and the Securities Custodian, the aggregate principal amount of Securities represented by the Rule 144A Global Security, IAI Global Security or Permanent Regulation S Global Security, as applicable, to be increased by the aggregate principal amount of the Definitive Security to be exchanged and shall credit or cause to be credited to the account of the Person specified in such instructions a beneficial interest in the Rule 144A Global Security, IAI Global Security or Permanent Regulation S Global Security, as applicable, equal to the principal amount of the Definitive Security so canceled. If no Rule 144A Global Securities, IAI Global Securities or Permanent Regulation S Global Securities, as applicable, are then outstanding, the Company shall issue and the Trustee shall authenticate, upon written order of the Company in the form of an Officers’ Certificate of the Company, a new Rule 144A Global Security, IAI Global Security or Permanent Regulation S Global Security, as applicable, in the appropriate principal amount.

(c) Transfer and Exchange of Global Securities.

(i) The transfer and exchange of Global Securities or beneficial interests therein shall be effected through the Depository, in accordance with this Indenture (including applicable restrictions on transfer set forth herein, if any) and the procedures of the Depository therefor. A transferor of a beneficial interest in a Global Security shall deliver to the Notes Registrar a written order given in accordance with the Depository’s procedures containing information regarding

7

the participant account of the Depository to be credited with a beneficial interest in the Global Security. The Notes Registrar shall, in accordance with such instructions, instruct the Depository to credit to the account of the Person specified in such instructions a beneficial interest in the Global Security and to debit the account of the Person making the transfer the beneficial interest in the Global Security being transferred.

(ii) If the proposed transfer is a transfer of a beneficial interest in one Global Security to a beneficial interest in another Global Security, the Registrar shall reflect on its books and records the date and an increase in the principal amount of the Global Security to which such interest is being transferred in an amount equal to the principal amount of the interest to be so transferred, and the Registrar shall reflect on its books and records the date and a corresponding decrease in the principal amount of the Global Security from which such interest is being transferred.

(iii) Notwithstanding any other provisions of this Appendix (other than the provisions set forth in Section 2.4), a Global Security may not be transferred as a whole except by the Depository to a nominee of the Depository or by a nominee of the Depository to the Depository or another nominee of the Depository or by the Depository or any such nominee to a successor Depository or a nominee of such successor Depository.

(iv) In the event that a Global Security is exchanged for Definitive Securities pursuant to Section 2.4 of this Appendix, prior to the consummation of a Registered Exchange Offer or the effectiveness of a Shelf Registration Statement with respect to such Securities, such Securities may be exchanged only in accordance with such procedures as are substantially consistent with the provisions of this Section 2.3 (including the certification requirements set forth on the reverse of the Securities intended to ensure that such transfers comply with Rule 144A, Regulation S or another applicable exemption under the Securities Act, as the case may be) and such other procedures as may from time to time be adopted by the Company.

(d) Restrictions on Transfer of Temporary Regulation S Global Securities. During the Distribution Compliance Period, beneficial ownership interests in Temporary Regulation S Global Securities may only be sold, pledged or transferred in accordance with the Applicable Procedures and only (i) to the Company, (ii) in an offshore transaction in accordance with Regulation S (other than a transaction resulting in an exchange for an interest in a Permanent Regulation S Global Security), (iii) pursuant to an effective registration statement under the Securities Act, in each case in accordance with any applicable securities laws of any State of the United States.

(e) Legend.

(i) Except as permitted by the following paragraphs (ii), (iii) and (iv), each Security certificate evidencing the Global Securities (and all Securities

8

issued in exchange therefor or in substitution thereof), in the case of Securities offered otherwise than in reliance on Regulation S, shall bear a legend in substantially the following form:

THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.

THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) TO THE COMPANY, (II) IN THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (III) TO AN “ACCREDITED INVESTOR” WITHIN THE MEANING OF RULE 501(A)(1),(2),(3) OR (7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL INVESTOR ACQUIRING THE SECURITIES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, (IV) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (V) PURSUANT TO EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (VI) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (VI), IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.

9

Each certificate evidencing a Security offered in reliance on Regulation S shall, in addition to the foregoing, bear a legend in substantially the following form:

THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION ORIGINALLY EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE TRANSFERRED IN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY U.S. PERSON EXCEPT PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ALL APPLICABLE STATE SECURITIES LAWS. TERMS USED ABOVE HAVE THE MEANINGS GIVEN TO THEM IN REGULATION S UNDER THE SECURITIES ACT.

Each Definitive Security shall also bear the following additional legend:

IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.

(ii) Upon any sale or transfer of a Transfer Restricted Security (including any Transfer Restricted Security represented by a Global Security) pursuant to Rule 144 under the Securities Act, the Notes Registrar shall permit the transferee thereof to exchange such Transfer Restricted Security for a certificated Security that does not bear the legend set forth above and rescind any restriction on the transfer of such Transfer Restricted Security, if the transferor thereof certifies in writing to the Registrar that such sale or transfer was made in reliance on Rule 144 (such certification to be in the form set forth on the reverse of the Security).

(iii) After a transfer of any Initial Securities or Private Exchange Securities pursuant to and during the period of the effectiveness of a Shelf Registration Statement with respect to such Initial Securities or Private Exchange Securities, as the case may be, all requirements pertaining to legends on such Initial Security or such Private Exchange Security will cease to apply, the requirements requiring any such Initial Security or such Private Exchange Security issued to certain Holders be issued in global form will cease to apply, and a certificated Initial Security or Private Exchange Security or an Initial Security or Private Exchange Security in global form, in each case without restrictive transfer legends, will be available to the transferee of the Holder of such Initial Securities or Private Exchange Securities upon exchange of such

10

transferring Holder’s certificated Initial Security or Private Exchange Security or directions to transfer such Holder’s interest in the Global Security, as applicable.

(iv) Upon the consummation of a Registered Exchange Offer with respect to the Initial Securities, all requirements pertaining to such Initial Securities that Initial Securities issued to certain Holders be issued in global form will still apply with respect to Holders of such Initial Securities that do not exchange their Initial Securities, and Exchange Securities in certificated or global form, in each case without the restricted securities legend set forth in Exhibit 1 hereto will be available to Holders that exchange such Initial Securities in such Registered Exchange Offer.

(v) Upon the consummation of a Private Exchange with respect to the Initial Securities, all requirements pertaining to such Initial Securities that Initial Securities issued to certain Holders be issued in global form will still apply with respect to Holders of such Initial Securities that do not exchange their Initial Securities, and Private Exchange Securities in global form with the global securities legend and the applicable restricted securities legend set forth in Exhibit 1 hereto will be available to Holders that exchange such Initial Securities in such Private Exchange.

(f) Cancellation or Adjustment of Global Security. At such time as all beneficial interests in a Global Security have either been exchanged for Definitive Securities, redeemed, purchased or canceled, such Global Security shall be retained and canceled by the Trustee. At any time prior to such cancellation, if any beneficial interest in a Global Security is exchanged for certificated Securities, redeemed, purchased or canceled, the principal amount of Securities represented by such Global Security shall be reduced and an adjustment shall be made on the books and records of the Trustee (if it is then the Securities Custodian for such Global Security) with respect to such Global Security, by the Trustee or the Securities Custodian, to reflect such reduction.

(g) No Obligation of the Trustee.

(i) The Trustee shall have no responsibility or obligation to any beneficial owner of a Global Security, a member of, or a participant in the Depository or other Person with respect to the accuracy of the records of the Depository or its nominee or of any participant or member thereof, with respect to any ownership interest in the Securities or with respect to the delivery to any participant, member, beneficial owner or other Person (other than the Depository) of any notice (including any notice of redemption) or the payment of any amount, under or with respect to such Securities. All notices and communications to be given to the Holders and all payments to be made to Holders under the Securities shall be given or made only to or upon the order of the registered Holders (which shall be the Depository or its nominee in the case of a Global Security). The rights of beneficial owners in any Global Security shall be exercised only through the Depository subject to the applicable rules and procedures of the Depository. The Trustee may rely and shall be fully protected in relying upon information

11

furnished by the Depository with respect to its members, participants and any beneficial owners.

(ii) The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Security (including any transfers between or among Depository participants, members or beneficial owners in any Global Security) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.

2.4 Certificated Securities

(a) A Global Security deposited with the Depository or with the Trustee as Securities Custodian for the Depository pursuant to Section 2.1 shall be transferred to the beneficial owners thereof in the form of Definitive Securities in an aggregate principal amount equal to the principal amount of such Global Security, in exchange for such Global Security, only if such transfer complies with Section 2.3 hereof and (i) the Depository notifies the Company that it is unwilling or unable to continue as Depository for such Global Security and the Depository fails to appoint a successor depositary or if at any time such Depository ceases to be a “clearing agency” registered under the Exchange Act and, in either case, a successor Depository is not appointed by the Company within 90 days of such notice, or (ii) an Event of Default has occurred and is continuing or (iii) the Company, in its sole discretion, notifies the Trustee in writing that it elects to cause the issuance of Definitive Securities under this Indenture.

(b) Any Global Security that is transferable to the beneficial owners thereof pursuant to this Section 2.4 shall be surrendered by the Depository to the Trustee located at its principal corporate trust office in the Borough of Manhattan, The City of New York, to be so transferred, in whole or from time to time in part, without charge, and the Trustee shall authenticate and deliver, upon such transfer of each portion of such Global Security, an equal aggregate principal amount of Definitive Securities of authorized denominations. Any portion of a Global Security transferred pursuant to this Section 2.4 shall be executed, authenticated and delivered only in denominations of $1,000 principal amount and any integral multiple thereof and registered in such names as the Depository shall direct. Any Definitive Security delivered in exchange for an interest in the Transfer Restricted Security shall, except as otherwise provided by Section 2.3(e) hereof, bear the applicable restricted securities legend and definitive note legend set forth in Exhibit 1 hereto.

(c) Subject to the provisions of Section 2.4(b) hereof, the registered Holder of a Global Security shall be entitled to grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Securities.

12

(d) In the event of the occurrence of one of the events specified in Section 2.4(a) hereof, the Company shall promptly make available to the Trustee a reasonable supply of Definitive Securities in definitive, fully registered form without interest coupons.

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EXHIBIT 1 to Rule 144A/REGULATION S/IAI APPENDIX

[FORM OF FACE OF INITIAL SECURITY]

[Global Securities Legend]

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE, AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.

[For Regulation S Global Security only]

UNTIL 40 DAYS AFTER THE LATER OF COMMENCEMENT OR COMPLETION OF THE OFFERING, AN OFFER OR SALE OF SECURITIES WITHIN THE UNITED STATES BY A DEALER (AS DEFINED IN THE SECURITIES ACT) MAY VIOLATE THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT IF SUCH OFFER OR SALE IS MADE OTHERWISE THAN IN ACCORDANCE WITH RULE 144A THEREUNDER.

[Restricted Securities Legend for Securities Offered Otherwise than in Reliance on Regulation S]

THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY MAY

BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.

THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) TO THE COMPANY, (II) WITHIN THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (III) TO AN “ACCREDITED INVESTOR” WITHIN THE MEANING OF RULE 501(a)(1),(2),(3) OR (7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL INVESTOR ACQUIRING THE SECURITIES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, (IV) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (V) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (VI) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (VI) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.

[Restricted Securities Legend for Securities Offered in Reliance on Regulation S.]

THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION ORIGINALLY EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE TRANSFERRED IN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY U.S. PERSON EXCEPT PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ALL APPLICABLE STATE SECURITIES LAWS. TERMS USED ABOVE HAVE THE MEANINGS GIVEN TO THEM IN REGULATION S UNDER THE SECURITIES ACT.

[Temporary Regulation S Global Security Legend]

EXCEPT AS SET FORTH BELOW, BENEFICIAL OWNERSHIP INTERESTS IN THIS TEMPORARY REGULATION S GLOBAL SECURITY WILL NOT BE EXCHANGEABLE FOR INTERESTS IN THE PERMANENT REGULATION S GLOBAL SECURITY OR ANY OTHER SECURITY REPRESENTING AN INTEREST IN THE SECURITIES REPRESENTED HEREBY

WHICH DO NOT CONTAIN A LEGEND CONTAINING RESTRICTIONS ON TRANSFER, UNTIL THE EXPIRATION OF THE “40-DAY DISTRIBUTION COMPLIANCE PERIOD” (WITHIN THE MEANING OF RULE 903(b)(2) OF REGULATION S UNDER THE SECURITIES ACT) AND THEN ONLY UPON CERTIFICATION IN FORM REASONABLY SATISFACTORY TO THE TRUSTEE THAT SUCH BENEFICIAL INTERESTS ARE OWNED EITHER BY NON-U.S. PERSONS OR U.S. PERSONS WHO PURCHASED SUCH INTERESTS IN A TRANSACTION THAT DID NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT. DURING SUCH 40-DAY DISTRIBUTION COMPLIANCE PERIOD, BENEFICIAL OWNERSHIP INTERESTS IN THIS TEMPORARY REGULATION S GLOBAL SECURITY MAY ONLY BE SOLD, PLEDGED OR TRANSFERRED (I) TO THE COMPANY, (II) OUTSIDE THE UNITED STATES IN A TRANSACTION IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, OR (III) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (III) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. HOLDERS OF INTERESTS IN THIS TEMPORARY REGULATION S GLOBAL SECURITY WILL NOTIFY ANY PURCHASER OF THIS SECURITY OF THE RESALE RESTRICTIONS REFERRED TO ABOVE, IF THEN APPLICABLE.

AFTER THE EXPIRATION OF THE DISTRIBUTION COMPLIANCE PERIOD, BENEFICIAL INTERESTS IN THIS TEMPORARY REGULATION S GLOBAL SECURITY MAY BE EXCHANGED FOR INTERESTS IN A RULE 144A GLOBAL SECURITY ONLY IF (1) SUCH EXCHANGE OCCURS IN CONNECTION WITH A TRANSFER OF THE SECURITIES IN COMPLIANCE WITH RULE 144A AND (2) THE TRANSFEROR OF THE REGULATION S GLOBAL SECURITY FIRST DELIVERS TO THE TRUSTEE A WRITTEN CERTIFICATE (IN THE FORM ATTACHED TO THIS CERTIFICATE) TO THE EFFECT THAT THE REGULATION S GLOBAL SECURITY IS BEING TRANSFERRED (A) TO A PERSON WHO THE TRANSFEROR REASONABLY BELIEVES TO BE A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, (B) TO A PERSON WHO IS PURCHASING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, AND (C) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.

AFTER THE EXPIRATION OF THE DISTRIBUTION COMPLIANCE PERIOD, BENEFICIAL INTERESTS IN THIS TEMPORARY REGULATION S GLOBAL SECURITY MAY BE EXCHANGED FOR INTERESTS IN AN IAI GLOBAL SECURITY ONLY IF (1) SUCH EXCHANGE OCCURS IN CONNECTION WITH A TRANSFER OF THE SECURITIES IN COMPLIANCE WITH AN EXEMPTION UNDER THE SECURITIES ACT AND (2) THE TRANSFEROR OF THE REGULATION S GLOBAL SECURITY FIRST DELIVERS TO THE TRUSTEE A WRITTEN CERTIFICATE (IN THE FORM ATTACHED TO THIS CERTIFICATE) TO THE EFFECT THAT THE REGULATION S GLOBAL SECURITY IS BEING

TRANSFERRED (A) TO AN “ACCREDITED INVESTOR” WITHIN THE MEANING OF RULE 501(a)(1),(2),(3) OR (7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL INVESTOR ACQUIRING THE SECURITIES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.

BENEFICIAL INTERESTS IN A RULE 144A GLOBAL SECURITY OR AN IAI GLOBAL SECURITY MAY BE TRANSFERRED TO A PERSON WHO TAKES DELIVERY IN THE FORM OF AN INTEREST IN THE REGULATION S GLOBAL SECURITY, WHETHER BEFORE OR AFTER THE EXPIRATION OF THE 40-DAY DISTRIBUTION COMPLIANCE PERIOD, ONLY IF THE TRANSFEROR FIRST DELIVERS TO THE TRUSTEE A WRITTEN CERTIFICATE (IN THE FORM ATTACHED TO THIS CERTIFICATE) TO THE EFFECT THAT SUCH TRANSFER IS BEING MADE IN ACCORDANCE WITH RULE 903 OR 904 OF REGULATION S OR RULE 144 (IF AVAILABLE).

[Definitive Securities Legend]

IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.

No.                              $             

9 ¹/2% Senior Subordinated Notes Due 2010

Concentra Operating Corporation, a Nevada corporation, promises to pay to Cede & Co., or registered assigns, the principal sum of Dollars on August 15, 2010.

Interest Payment Dates: February 15 and August 15.

Record Dates: February 1 and August 1.

Additional provisions of this Security are set forth on the other side of this Security.

Dated: August 13, 2003

CONCENTRA OPERATING CORPORATION
	by
	Name:	Richard A. Parr II
	Title:	Executive Vice President, General Counsel and Corporate Secretary

TRUSTEE’S CERTIFICATE OF AUTHENTICATION
THE BANK OF NEW YORK, as Trustee, certifies that this is one of the Securities referred to in the Indenture.
	by
		Authorized Signatory

[FORM OF REVERSE SIDE OF INITIAL SECURITY]

9 ¹/2% Senior Subordinated Note Due 2010

1. Interest

Concentra Operating Corporation, a Nevada corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the “Company”), promises to pay interest on the principal amount of this Security at the rate per annum shown above; provided, however, that if a Registration Default (as defined in the Registration Rights Agreement) occurs, additional interest will accrue on this Security at a rate of 0.25% per annum for the first 90-day period immediately following the occurrence of a Registration Default (increasing by an additional 0.25% per annum with respect to each subsequent 90-day period up to a maximum additional interest rate of 2.00%) from and including the date on which any such Registration Default shall occur to but excluding the date on which all Registration Defaults have been cured. The Company will pay interest semiannually on February 15 and August 15 of each year, commencing February 15, 2004. Interest on the Securities will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from August 13, 2003. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Company will pay interest on overdue principal at the rate borne by this Security, and it will pay interest on overdue installments of interest at the same rate to the extent lawful.

2. Method of Payment

The Company will pay interest on the Securities (except defaulted interest) to the Persons who are registered holders of Securities at the close of business on the February 1 or August 1 next preceding the interest payment date even if Securities are canceled after the record date and on or before the interest payment date. Holders must surrender Securities to a Paying Agent to collect principal payments. The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. Payments in respect of the Securities represented by a Global Security (including principal, premium and interest) will be made by wire transfer of immediately available funds to the accounts specified by the Depository. The Company will make all payments in respect of a certificated Security (including principal, premium and interest) by mailing a check to the registered address of each Holder thereof; provided, however, that payments on a certificated Security will be made by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 30 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion).

3. Paying Agent and Notes Registrar

Initially, The Bank of New York, a New York banking corporation (the “Trustee”), will act as Paying Agent and Notes Registrar. The Company may appoint and change any Paying Agent, Notes Registrar or co-registrar without notice. The Company or any of its domestically incorporated Wholly Owned Subsidiaries may act as Paying Agent, Notes Registrar or co-registrar.

4. Indenture

The Company issued the Securities under an Indenture dated as of August 13, 2003 (the “Indenture”), among the Company, the Guarantors and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb) as in effect on the date of the Indenture (the “Act”). Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture. The Securities are subject to all such terms, and Holders are referred to the Indenture and the Act for a statement of those terms.

The Securities are general unsecured obligations of the Company. The Company shall be entitled, subject to its compliance with Section 1008 of the Indenture, to issue Additional Securities pursuant to Section 301 and Section 901(6) of the Indenture. The Initial Securities issued on the Issue Date, any Additional Securities and all Exchange Securities or Private Exchange Securities issued in exchange therefor will be treated as a single class for all purposes under the Indenture. The Indenture contains covenants that limit the ability of the Company and its subsidiaries to incur or guarantee additional indebtedness and issue certain preferred stock; pay dividends or make distributions to its stockholders; repurchase or redeem capital stock or subordinated indebtedness; make investments; create liens; issue or sell capital stock of subsidiaries; engage in transactions with affiliates; transfer or sell assets; restrict dividends or other payments of subsidiaries; consolidate, merge or transfer all or substantially all of its assets and the assets of its subsidiaries. These covenants are subject to important exceptions and qualifications.

5. Optional Redemption

Except as set forth below, the Company shall not be entitled to redeem the Securities.

On or after August 15, 2007, the Company shall be entitled at its option to redeem all or a portion of the Securities (including Additional Securities, if any) upon not less than 30 nor more than 60 days’ notice, at the Redemption Prices (expressed in percentages of principal amount on the Redemption Date) plus accrued and unpaid interest thereon to the Redemption Date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant Interest Payment Date), if redeemed during the 12-month period commencing on August 15 of the years set forth below:

Period	Redemption Price
2007	104.750	%
2008	102.375	%
2009 and thereafter	100.000	%

In addition, prior to August 15, 2006, the Company shall be entitled at its option on one or more occasions to redeem Securities (including Additional Securities, if any) in an aggregate principal amount not to exceed 35% of the aggregate principal amount of the Securities (which includes Additional Securities, if any) originally issued under the Indenture at a Redemption Price (expressed as a percentage of principal amount) of 109.500%, plus accrued and unpaid interest to the Redemption Date, with the net cash proceeds from one or more Equity Offerings; provided, however, that (1) at least 65% of such aggregate principal amount of Securities (which includes Additional Securities, if any) remains outstanding immediately after the occurrence of each such redemption (excluding Securities held by the Company or its Subsidiaries); and (2) each such redemption occurs within 90 days of the date of the closing of the related Equity Offering.

Prior to August 15, 2007 the Company may at its option redeem all, but not less than all, of the Securities (including Additional Securities, if any) at a redemption price equal to 100% of the principal amount of the Securities plus the Applicable Premium as of, and accrued and unpaid interest to, the Redemption Date (subject to the right of Holders on the relevant record date to receive interest due on the relevant Interest Payment Date). Notice of such redemption must be mailed by first-class mail to each Holder’s registered address, not less than 30 or more than 60 days prior to the Redemption Date.

6. Notice of Redemption

Notice of redemption will be mailed by first-class mail, postage prepaid, at least 30 days but not more than 60 days before the redemption date to each Holder of Securities to be redeemed at his registered address. Securities in denominations larger than $1,000 principal amount may be redeemed in part but only in whole multiples of $1,000. If money sufficient to pay the Redemption Price of and accrued interest on all Securities (or portions thereof) to be redeemed on the Redemption Date is deposited with the Paying Agent on or before the Redemption Date and certain other conditions are

satisfied, on and after such date interest shall cease to accrue on such Securities (or such portions thereof) called for redemption.

7. Put Provisions

Upon a Change of Control, any Holder of Securities will have the right to cause the Company to repurchase all or any part of the Securities of such Holder at a repurchase price equal to 101% of the principal amount of the Securities to be repurchased plus accrued interest to the date of repurchase (subject to the right of Holders of record on the relevant record date to receive interest due on the related Interest Payment Date) as provided in, and subject to the terms of, the Indenture.

8. Guaranty

The payment by the Company of the principal of, and premium and interest on, the Securities is fully and unconditionally guaranteed on a joint and several senior subordinated basis by each of the Guarantors to the extent set forth in the Indenture.

9. Subordination

The Securities are subordinated to Senior Indebtedness of the Company and the Guarantors on the terms and subject to the conditions set forth in the Indenture. To the extent provided in the Indenture, Senior Indebtedness must be paid before the Securities may be paid. Each Holder by accepting a Security agrees to the subordination provisions contained in the Indenture and authorizes the Trustee to give effect to such provisions and appoints the Trustee as attorney-in-fact for such purpose.

10. Denominations; Transfer; Exchange

The Securities are in registered form without coupons in denominations of $1,000 principal amount and whole multiples of $1,000. A Holder may transfer or exchange Securities in accordance with the Indenture. The Notes Registrar may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Notes Registrar need not register the transfer of or exchange any Securities selected for redemption (except, in the case of a Security to be redeemed in part, the portion of the Security not to be redeemed) or any Securities for a period of 15 days before a selection of Securities to be redeemed or 15 days before an interest payment date.

11. Persons Deemed Owners

The registered Holder of this Security may be treated as the owner of it for all purposes.

12. Unclaimed Money

If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Company at its request unless an abandoned property law designates another Person. After any such payment, Holders entitled to the money must look only to the Company and not to the Trustee for payment.

13. Discharge and Defeasance

Subject to certain conditions, the Company at any time shall be entitled to terminate some or all of its obligations under the Securities and the Indenture if the Company deposits with the Trustee money or U.S. Government Obligations for the payment of principal and interest on the Securities to redemption or maturity, as the case may be.

14. Amendment, Waiver

Subject to certain exceptions set forth in the Indenture, (a) the Indenture and the Securities may be amended with the written consent of the Holders of at least a majority in principal amount outstanding of the Securities and (b) any default or noncompliance with any provision may be waived with the written consent of the Holders of a majority in principal amount outstanding of the Securities. Subject to certain exceptions set forth in the Indenture, without the consent of any Holder, the Company, the Guarantors and the Trustee shall be entitled to amend the Indenture or the Securities to cure any ambiguity, defect or inconsistency, to provide for uncertificated Securities in addition to or in place of certificated Securities, to provide for the assumption of the Company’s obligations to Holders in the case of a merger or consolidation or the sale of all or substantially all of the Company’s assets, to make any change that would provide any additional rights or benefits to the Holders or that does not adversely affect in any material respect the legal rights under the Indenture of any such Holder, to comply with the requirements of the Commission in order to effect or maintain the qualification of the Indenture under the Act, to provide for the issuance of Additional Securities in accordance with the limitations set forth in the Indenture or to allow any Subsidiary to guarantee the Securities.

15. Defaults and Remedies

Under the Indenture, Events of Default include (a) default for 30 days in payment of interest on the Securities, whether or not prohibited by the subordination provisions of the Indenture; (b) default in payment of principal or premium, if any on the Securities, whether or not prohibited by the subordination provisions of the Indenture; (c) failure by the Company to comply with a covenant providing for certain limitations on mergers, consolidations or sales of assets; (d) failure by the Company, subject to certain notice, to comply with the covenants providing for repurchases at the option of holders upon a Change of Control and upon certain asset sales, limitations on Restricted Payments or limitations on incurrence of certain indebtedness; (e) failure by the

Company or any Guarantor to comply with other agreements in the Indenture or the Securities, in certain cases subject to notice and lapse of time; (f) certain accelerations (including failure to pay within any grace period after final maturity) of other Indebtedness of the Company if the amount accelerated (or so unpaid) exceeds $20.0 million; (g) certain events of bankruptcy or insolvency with respect to the Company and the Company’s Significant Subsidiaries; (h) certain judgments or decrees for the payment of money in excess of $20.0 million; and (i) certain defaults with respect to Subsidiary Guarantees. If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the Securities may declare all the Securities to be due and payable immediately. Certain events of bankruptcy or insolvency are Events of Default which will result in the Securities being due and payable immediately upon the occurrence of such Events of Default.

Holders may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may refuse to enforce the Indenture or the Securities unless it receives indemnity or security satisfactory to it. Subject to certain limitations, Holders of a majority in principal amount of the Securities may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any continuing Default (except a Default in payment of principal or interest) if it determines that withholding notice is in the interest of the Holders.

16. Trustee Dealings with the Company

Subject to certain limitations imposed by the Act, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee.

17. No Recourse Against Others

A director, officer, employee, incorporator or stockholder, as such, of the Company or the Trustee shall not have any liability for any obligations of the Company under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Security, each Holder waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities.

18. Authentication

This Security shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of authentication on the other side of this Security.

19. Abbreviations

Customary abbreviations may be used in the name of a Holder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the

entireties), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act).

20. CUSIP Numbers

Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures the Company has caused CUSIP numbers to be printed on the Securities and has directed the Trustee to use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Securities or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.

21. Holders’ Compliance with Registration Rights Agreement

Each Holder of a Security, by acceptance hereof, acknowledges and agrees to the provisions of the Registration Rights Agreement, including the obligations of the Holders with respect to a registration and the indemnification of the Company to the extent provided therein.

22. Governing Law

THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

The Company will furnish to any Holder upon written request and without charge to the Security holder a copy of the Indenture which has in it the text of this Security in larger type. Requests may be made to:

Concentra Operating Corporation

5080 Spectrum Drive

Suite 400—West Tower

Addison, TX 75001

Attention: General Counsel

ASSIGNMENT FORM

To assign this Security, fill in the form below:

I or we assign and transfer this Security to

(Print or type assignee’s name, address and zip code)

(Insert assignee’s soc. sec. or tax I.D. No.)

and irrevocably appoint                             agent to transfer this Security on the books of the Company. The agent may substitute another to act for him.

Date: Your Signature:

Sign exactly as your name appears on the other side of this Security.

In connection with any transfer of any of the Securities evidenced by this certificate occurring prior to the expiration of the period referred to in Rule 144(k) under the Securities Act after the later of the date of original issuance of such Securities and the last date, if any, on which such Securities were owned by the Company or any Affiliate of the Company, the undersigned confirms that such Securities are being transferred in accordance with its terms:

CHECK ONE BOX BELOW

1.	0	to the Company; or
2.	0	pursuant to an effective registration statement under the Securities Act of 1933; or
3.	0	inside the United States to a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act of 1933) that purchases for its own account or for the account of a qualified institutional buyer to whom notice is given that such transfer is being made in reliance on Rule 144A, in each case pursuant to and in compliance with Rule 144A under the Securities Act of 1933; or
4.	0	outside the United States in an offshore transaction within the meaning of Regulation S under the Securities Act in compliance with Rule 904 under the Securities Act of 1933; or

5.	0	pursuant to the exemption from registration provided by Rule 144 under the Securities Act of 1933; or
6.	0	to an institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933) that has furnished to the Trustee a signed letter containing certain representations and agreements.

Unless one of the boxes is checked, the Trustee will refuse to register any of the Securities evidenced by this certificate in the name of any person other than the registered holder thereof; provided, however, that if box (4), (5) or (6) is checked, the Trustee shall be entitled to require, prior to registering any such transfer of the Securities, such legal opinions, certifications and other information as the Company has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, such as the exemption provided by Rule 144 under such Act.

	Signature
Signature Guarantee:
Signature must be guaranteed	Signature

Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Notes Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Notes Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED.

The undersigned represents and warrants that it is purchasing this Security for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act of 1933, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned’s foregoing representations in order to claim the exemption from registration provided by Rule 144A.

Dated:
	Notice:	To be executed by an executive officer

[TO BE ATTACHED TO GLOBAL SECURITIES]

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY

The following increases or decreases in this Global Security have been made:

Date of Exchange Amount of decrease in Principal amount of this Global Security Amount of increase in Principal amount of this Global Security Principal amount of this Global Security following such decrease or increase) Signature of authorized officer of Trustee or Securities Custodian

OPTION OF HOLDER TO ELECT PURCHASE

If you want to elect to have this Security purchased by the Company pursuant to Section 1014 or 1015 of the Indenture, check the box:

¨

If you want to elect to have only part of this Security purchased by the Company pursuant to Section 1014 or 1015 of the Indenture, state the amount in principal amount: $                     

Dated:	Your Signature:
		(Sign exactly as your name appears on the other side of this Security.)

Signature Guarantee:
	(Signature must be guaranteed)

Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Notes Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Notes Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

EXHIBIT 2

[FORM OF FACE OF EXCHANGE SECURITY

OR PRIVATE EXCHANGE SECURITY]*/**/

*/ [If the Security is to be issued in global form add the Global Securities Legend from Exhibit 1 to the Appendix and the attachment from such Exhibit 1 captioned “[TO BE ATTACHED TO GLOBAL SECURITIES]—SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY”.]

**/ [If the Security is a Private Exchange Security issued in a Private Exchange to an Initial Purchaser holding an unsold portion of its initial allotment, add the Restricted Securities Legend from Exhibit 1 to the Appendix and replace the Assignment Form included in this Exhibit 2 with the Assignment Form included in such Exhibit 1.]

No.                  $                 

9 ¹/2% Senior Subordinated Notes Due 2010

Concentra Operating Corporation, a Nevada corporation, promises to pay to Cede & Co., or registered assigns, the principal sum of             Dollars on August 15, 2010.

Interest Payment Dates: February 15 and August 15.

Record Dates: February 1 and August 1.

Additional provisions of this Security are set forth on the other side of this Security.

Dated:

CONCENTRA OPERATING CORPORATION
	By
		Name:	Richard A. Parr II
		Title:	Executive Vice President, General Counsel and Corporate Secretary

TRUSTEE’S CERTIFICATE OF AUTHENTICATION
THE BANK OF NEW YORK,
as Trustee, certifies that this is one of the Securities referred to in the Indenture.
	By
	Authorized Signatory

[FORM OF REVERSE SIDE OF EXCHANGE SECURITY

OR PRIVATE EXCHANGE SECURITY]

9 ¹/2% Senior Subordinated Note Due 2010

1. Interest

Concentra Operating Corporation, a Nevada corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the “Company”), promises to pay interest on the principal amount of this Security at the rate per annum shown above; [provided, however, that if a Registration Default (as defined in the Registration Rights Agreement) occurs, additional interest will accrue on this Security at a rate of 0.25% per annum for the first 90-day period immediately following the occurrence of Registration Default (increasing by an additional 0.25% per annum after with respect to each subsequent 90-day period up to a maximum additional interest rate of 2.00%) from and including the date on which any such Registration Default shall occur to but excluding the date on which all Registration Defaults have been cured.]¹ The Company will pay interest semiannually on February 15 and August 15 of each year, commencing February 15, 2004. Interest on the Securities will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from August 13, 2003. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Company will pay interest on overdue principal at the rate borne by this Security, and it will pay interest on overdue installments of interest at the same rate to the extent lawful.

2. Method of Payment

The Company will pay interest on the Securities (except defaulted interest) to the Persons who are registered holders of Securities at the close of business on the February 1 or August 1 next preceding the interest payment date even if Securities are canceled after the record date and on or before the interest payment date. Holders must surrender Securities to a Paying Agent to collect principal payments. The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. Payments in respect of the Securities represented by a Global Security (including principal, premium and interest) will be made by wire transfer of immediately available funds to the accounts specified by the Depository. The Company will make all payments in respect of a certificated Security (including principal, premium and interest) by mailing a check to the registered address of each Holder thereof; provided, however, that payments on a certificated Security will be made by wire transfer to a U.S. dollar account maintained by the payee with a bank in

¹ Insert if at the date of issuance of the Exchange Security or the Private Exchange Security (as the case may be) any Registration Default has occurred with respect to the related Initial Securities during the interest period in which the date of issuance occurs.

the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 30 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion).

3. Paying Agent and Notes Registrar

Initially, The Bank of New York, a New York banking corporation (the “Trustee”), will act as Paying Agent and Notes Registrar. The Company may appoint and change any Paying Agent, Notes Registrar or co-registrar without notice. The Company or any of its domestically incorporated Wholly Owned Subsidiaries may act as Paying Agent, Notes Registrar or co-registrar.

4. Indenture

The Company issued the Securities under an Indenture dated as of August 13, 2003 (the “Indenture”), among the Company, the Guarantors and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb) as in effect on the date of the Indenture (the “Act”). Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture. The Securities are subject to all such terms, and Holders are referred to the Indenture and the Act for a statement of those terms.

The Securities are general unsecured obligations of the Company. The Company shall be entitled, subject to its compliance with Section 1008 of the Indenture, to issue Additional Securities pursuant to Section 301 and Section 901(6) of the Indenture. The Initial Securities issued on the Issue Date, any Additional Securities and all Exchange Securities or Private Exchange Securities issued in exchange therefor will be treated as a single class for all purposes under the Indenture. The Indenture contains covenants that limit the ability of the Company and its subsidiaries to incur additional indebtedness and issue certain preferred stock; pay dividends or make distributions to its stockholders; repurchase or redeem capital stock or subordinated indebtedness; make investments; create liens; issue or sell capital stock of subsidiaries; engage in transactions with affiliates; transfer or sell assets; restrict dividends or other payments of subsidiaries; consolidate, merge or transfer all or substantially all of its assets and the assets of its subsidiaries. These covenants are subject to important exceptions and qualifications.

5. Optional Redemption

Except as set forth below, the Company shall not be entitled to redeem the Securities.

On or after August 15, 2007, the Company shall be entitled at its option to redeem all or a portion of the Securities (including Additional Securities, if any) upon not less than 30 nor more than 60 days’ notice, at the redemption prices (expressed in percentages of principal amount on the Redemption Date) plus accrued and unpaid interest to the Redemption Date (subject to the right of Holders of record on the relevant record date to

receive interest due on the relevant Interest Payment Date),if redeemed during the 12-month period commencing on August 15 of the years set forth below:

Period	Redemption Price
2007	104.750	%
2008	102.375	%
2009 and thereafter	100.000	%

In addition, prior to August 15, 2006, the Company shall be entitled at its option on one or more occasions to redeem Securities (which includes Additional Securities, if any) in an aggregate principal amount not to exceed 35% of the aggregate principal amount of the Securities (which includes Additional Securities, if any) originally issued under the Indenture at a Redemption Price (expressed as a percentage of principal amount) of 109.500%, plus accrued and unpaid interest to the Redemption Date, with the net cash proceeds from one or more Equity Offerings; provided, however, that (1) at least 65% of such aggregate principal amount of Securities (which includes Additional Securities, if any) remains outstanding immediately after the occurrence of each such redemption (excluding Securities held by the Company or its Subsidiaries); and (2) each such redemption occurs within 90 days of the date of the closing of the related Equity Offering.

Prior to August 15, 2007 the Company may at its option redeem all, but not less than all, of the Securities (including Additional Securities, if any) at a redemption price equal to 100% of the principal amount of the Securities plus the Applicable Premium as of, and accrued and unpaid interest to, the Redemption Date (subject to the right of Holders on the relevant record date to receive interest due on the relevant Interest Payment Date). Notice of such redemption must be mailed by first-class mail to each Holder’s registered address, not less than 30 or more than 60 days prior to the Redemption Date.

6. Notice of Redemption

Notice of redemption will be mailed by first-class mail, postage prepaid, at least 30 days but not more than 60 days before the redemption date to each Holder of Securities to be redeemed at his registered address. Securities in denominations larger than $1,000 principal amount may be redeemed in part but only in whole multiples of $1,000. If money sufficient to pay the Redemption Price of and accrued interest on all Securities (or portions thereof) to be redeemed on the Redemption Date is deposited with the Paying Agent on or before the Redemption Date and certain other conditions are satisfied, on and after such date interest shall cease to accrue on such Securities (or such portions thereof) called for redemption.

7. Put Provisions

Upon a Change of Control, any Holder of Securities will have the right to cause the Company to repurchase all or any part of the Securities of such Holder at a repurchase price equal to 101% of the principal amount of the Securities to be repurchased plus accrued interest to the date of repurchase (subject to the right of Holders of record on the relevant record date to receive interest due on the related Interest Payment Date) as provided in, and subject to the terms of, the Indenture.

8. Guaranty

The payment by the Company of the principal of, and premium and interest on, the Securities is fully and unconditionally guaranteed on a joint and several senior subordinated basis by each of the Guarantors to the extent set forth in the Indenture.

9. Subordination

The Securities are subordinated to Senior Indebtedness of the Company and the Guarantors on the terms and subject to the conditions set forth in the Indenture. To the extent provided in the Indenture, Senior Indebtedness must be paid before the Securities may be paid. Each Holder by accepting a Security agrees to the subordination provisions contained in the Indenture and authorizes the Trustee to give effect to such provision and appoints the Trustee as attorney-in-fact for such purpose.

10. Denominations; Transfer; Exchange

The Securities are in registered form without coupons in denominations of $1,000 principal amount and whole multiples of $1,000. A Holder may transfer or exchange Securities in accordance with the Indenture. The Notes Registrar may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Notes Registrar need not register the transfer of or exchange any Securities selected for redemption (except, in the case of a Security to be redeemed in part, the portion of the Security not to be redeemed) or any Securities for a period of 15 days before a selection of Securities to be redeemed or 15 days before an interest payment date.

11. Persons Deemed Owners

The registered Holder of this Security may be treated as the owner of it for all purposes.

12. Unclaimed Money

If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Company at its request unless an abandoned property law designates another Person. After any such payment, Holders entitled to the money must look only to the Company and not to the Trustee for payment.

13. Discharge and Defeasance

Subject to certain conditions, the Company at any time shall be entitled to terminate some or all of its obligations under the Securities and the Indenture if the Company deposits with the Trustee money or U.S. Government Obligations for the payment of principal and interest on the Securities to redemption or maturity, as the case may be.

14. Amendment; Waiver

Subject to certain exceptions set forth in the Indenture, (a) the Indenture and the Securities may be amended with the written consent of the Holders of at least a majority in principal amount outstanding of the Securities and (b) any default or noncompliance with any provision may be waived with the written consent of the Holders of a majority in principal amount outstanding of the Securities. Subject to certain exceptions set forth in the Indenture, without the consent of any Holder, the Company, the Guarantors and the Trustee shall be entitled to amend the Indenture or the Securities to cure any ambiguity, defect or inconsistency, to provide for uncertificated Securities in addition to or in place of certificated Securities, to provide for the assumption of the Company’s obligations to Holders in the case of a merger or consolidation or the sale of all or substantially all of the Company’s assets, to make any change that would provide any additional rights or benefits to the Holders or that does not adversely affect in any material respect the legal rights under the Indenture of any such Holder, to comply with the requirements of the Commission in order to effect or maintain the qualification of the Indenture under the Act, to provide for the issuance of Additional Securities in accordance with the limitations set forth in the Indenture or to allow any Subsidiary to guarantee the Securities.

15. Defaults and Remedies

Under the Indenture, Events of Default include (a) default for 30 days in payment of interest on the Securities, whether or not prohibited by the subordination provisions of the Indenture; (b) default in payment of principal on the Securities, (c) failure by the Company or any Guarantor to comply with other agreements in the Indenture or the Securities, in certain cases subject to notice and lapse of time; (c) failure by the Company to comply with a covenant providing for certain limitations on mergers, consolidations or sales of assets; (d) failure by the Company, subject to certain notice, to comply with the covenants providing for repurchase at the option of holders upon a Change of Control and upon certain asset sales, limitations on Restricted Payments or limitations on incurrence of certain indebtedness; (e) certain accelerations (including failure to pay within any grace period after final maturity) of other Indebtedness of the Company if the amount accelerated (or so unpaid) exceeds $20.0 million; (f) certain events of bankruptcy or insolvency with respect to the Company and the Company’s Significant Subsidiaries; (g) certain judgments or decrees for the payment of money in excess of $20.0 million; and (h) certain defaults with respect to Subsidiary Guarantees. If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the Securities may declare all the Securities to be due and payable immediately.

Certain events of bankruptcy or insolvency are Events of Default which will result in the Securities being due and payable immediately upon the occurrence of such Events of Default.

Holders may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may refuse to enforce the Indenture or the Securities unless it receives indemnity or security satisfactory to it. Subject to certain limitations, Holders of a majority in principal amount of the Securities may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any continuing Default (except a Default in payment of principal or interest) if it determines that withholding notice is in the interest of the Holders.

16. Trustee Dealings with the Company

Subject to certain limitations imposed by the Act, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee.

17. No Recourse Against Others

A director, officer, employee, incorporator or stockholder, as such, of the Company or the Trustee shall not have any liability for any obligations of the Company under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Security, each Holder waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities.

18. Authentication

This Security shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of authentication on the other side of this Security.

19. Abbreviations

Customary abbreviations may be used in the name of a Holder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act).

20. CUSIP Numbers

Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures the Company has caused CUSIP numbers to be printed on the Securities and has directed the Trustee to use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of

such numbers either as printed on the Securities or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.

21. Holders’ Compliance with Registration Rights Agreement

Each Holder of a Security, by acceptance hereof, acknowledges and agrees to the provisions of the Registration Rights Agreement, including the obligations of the Holders with respect to a registration and the indemnification of the Company to the extent provided therein.

22. Governing Law

THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

The Company will furnish to any Holder upon written request and without charge to the Security holder a copy of the Indenture which has in it the text of this Security in larger type. Requests may be made to:

Concentra Operating Corporation

5080 Spectrum Drive

Suite 400 – West Tower

Addison, TX 75001

Attention: General Counsel

ASSIGNMENT FORM

To assign this Security, fill in the form below:

I or we assign and transfer this Security to

(Print or type assignee’s name, address and zip code)

(Insert assignee’s soc. sec. or tax I.D. No.)

and irrevocably appoint                             agent to transfer this Security on the books of the Company. The agent may substitute another to act for him.

Date: Your Signature:

Sign exactly as your name appears on the other side of this Security.

OPTION OF HOLDER TO ELECT PURCHASE

If you want to elect to have this Security purchased by the Company pursuant to Section 1014 or 1015 of the Indenture, check the box:

¨

If you want to elect to have only part of this Security purchased by the Company pursuant to Section 1014 or 1015 of the Indenture, state the amount in principal amount: $                         

Dated:	Your Signature:
		(Sign exactly as your name appears on the other side of this Security.)

Signature Guarantee:
	(Signature must be guaranteed)

Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Notes Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Notes Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

EXHIBIT 3 TO RULE 144A/REGULATION S/IAI APPENDIX

Form of Transferee Letter of Representation

Concentra Operating Corporation

5080 Spectrum Drive

Suite 400 – West Tower

Addison, Texas 75001

In care of

[            ]

Ladies and Gentlemen:

This certificate is delivered to request a transfer of $[            ] principal amount of the 9 ¹/2% Senior Subordinated Notes due 2010 (the “Securities”) of Company (the “Company”).

Upon transfer, the Securities would be registered in the name of the new beneficial owner as follows:

Name:                                                                          

Address:                                                                      

Taxpayer ID Numbers:                                              

The undersigned represents and warrants to you that:

1. We are an institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended (the “Securities Act”)), purchasing for our own account or for the account of such an institutional “accredited investor” at least $250,000 principal amount of the Securities, and we are acquiring the Securities not with a view to, or for offer or sale in connection with, any distribution in violation of the Securities Act. We have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Securities, and we invest in or purchase securities similar to the Securities in the normal course of our business. We, and any accounts for which we are acting, are each able to bear the economic risk of our or its investment.

2. We understand that the Securities have not been registered under the Securities Act and, unless so registered, may not be sold except as permitted in the following sentence. We agree on our own behalf and on behalf of any investor account for which we are purchasing Securities to offer, sell or otherwise transfer such Securities prior to the date that is two years after the later of the date of original issue and the last date on which the Company or any affiliate of the Company was the owner of such Securities (or any predecessor thereto) (the “Resale Restriction Termination Date”) only (i) to the

Company, (ii) in the United States to a person whom the seller reasonably believes is a qualified institutional buyer in a transaction meeting the requirements of Rule 144A, (iii) to an institutional “accredited investor” within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act that is an institutional accredited investor purchasing for its own account or for the account of an institutional accredited investor, in each case in a minimum principal amount of the Securities of $250,000, (iv) outside the United States in a transaction complying with the provisions of Rule 904 under the Securities Act, (v) pursuant to an exemption from registration under the Securities Act provided by Rule 144 (if available) or (vi) pursuant to an effective registration statement under the Securities Act, in each of cases (i) through (vi) subject to any requirement of law that the disposition of our property or the property of such investor account or accounts be at all times within our or their control and in compliance with any applicable state securities laws. The foregoing restrictions on resale will not apply subsequent to the Resale Restriction Termination Date. If any resale or other transfer of the Securities is proposed to be made pursuant to clause (iii) above prior to the Resale Restriction Termination Date, the transferor shall deliver a letter from the transferee substantially in the form of this letter to the Company and the Trustee, which shall provide, among other things, that the transferee is an institutional “accredited investor” within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act and that it is acquiring such Securities for investment purposes and not for distribution in violation of the Securities Act. Each purchaser acknowledges that the Company and the Trustee reserve the right prior to the offer, sale or other transfer prior to the Resale Restriction Termination Date of the Securities pursuant to clause (iii), (iv) or (v) above to require the delivery of an opinion of counsel certifications or other information satisfactory to the Company and the Trustee.

TRANSFEREE:
	by
		Name:
		Title:

[FORM OF ENDORSEMENT OF GUARANTORS

TO 9 ¹/2% SENIOR SUBORDINATED NOTES DUE 2010]

For value received, each of the Guarantors listed below (which term includes any successors or assigns under the Indenture, dated as of August 13, 2003 (the “Indenture”), among the Company, the Guarantors listed below and The Bank of New York, as Trustee, and any additional Guarantors that become such following the date hereof), jointly and severally, fully and unconditionally, irrevocably, guarantees, as principal obligor and not only as surety, to the Holder of the Security on which this Subsidiary Guarantee is endorsed, and to the Trustee on behalf of such Holders, (i) the due and punctual payment of the principal of, premium, if any, and interest (and Additional Interest, if any) on the Securities, whether at Stated Maturity, by acceleration or otherwise, the due and punctual payment of interest on the overdue principal, and premium if any, and (to the extent permitted by law) interest on any interest and Additional Interest, if any, on the Securities, and the due and punctual performance of all other obligations of the Company, all in accordance with the terms set forth in Article Fourteen of the Indenture, (ii) in case of any extension of time of payment or renewal of any Securities or any such other obligations, that the same shall be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at Stated Maturity, by acceleration or otherwise, and (iii) the payment of any and all costs and expenses (including reasonable attorneys’ fees) incurred by the Trustee or any Holder in enforcing any rights under this Subsidiary Guarantee.

The obligations of each Guarantor to the Holder and to the Trustee pursuant to this Subsidiary Guarantee and the Indenture are expressly set forth in Article Fourteen of the Indenture and reference is hereby made to such Indenture for the precise terms of this Subsidiary Guarantee and other matters in respect of this Subsidiary Guarantee.

No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest and Additional Interest, if any, on this Security at the times, place and rate, and in the coin or currency, herein prescribed.

Until the Indenture is discharged and all of the Securities are discharged and paid in full, each Guarantor hereby irrevocably waives and agrees not to exercise any claim or other rights which it may now or hereafter acquire against the Company that arise from the existence, payment, performance or enforcement of the Company’s obligations under the Securities or the Indenture and each Guarantor’s obligations under this Subsidiary Guarantee and this Indenture, in any such instance including, without limitation, any right of subrogation, reimbursement, exoneration, contribution, indemnification, and any right to participate in any claim or remedy of the Holders and the Trustees against the Company, whether or not such claim, remedy or right arises in equity, or under contract, statute or common law, including, without limitation, the right to take or receive from the Company, directly or indirectly, in cash or other property or

by set-off or in any other manner, payment or security on account of such claim or other rights.

No stockholder, officer, director, employee or incorporator, as such, past, present or future of each Guarantor shall have any liability by reason of his or its status as such stockholder, officer, director, employee or incorporator for any obligations of any Guarantor under the Securities, the Indenture or its Subsidiary Guarantee or for any claim based on, in respect of, or by reason of, such obligations or their creation.

This is a continuing guarantee and shall remain in full force and effect and shall be binding upon each Guarantor and its successors and assigns until full and final payment of all of the Company’s obligations under the Securities and Indenture and shall inure to the benefit of the successors and assigns of the Trustee and the Holders, and, in the event of any transfer or assignment of rights by any Holder or the Trustee, the rights and privileges herein conferred upon that party shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions hereof and the Indenture. This is a guarantee of payment and not of collectibility.

The obligations of each Guarantor under its Subsidiary Guarantee shall be limited to the extent necessary to insure that it does not constitute a fraudulent transfer or conveyance under applicable law.

By delivery of a supplemental indenture to the Trustee in accordance with the terms of the Indenture, each Person that becomes a Guarantor after the date of the Indenture will be deemed to have executed and delivered this Subsidiary Guarantee for the benefit of the Holder of the Note upon which this Subsidiary Guarantee is endorsed with the same effect as if such Guarantor was named below and has executed and delivered this Subsidiary Guarantee.

All terms used in this Subsidiary Guarantee which are defined in the Indenture shall have the meanings assigned to them in the Indenture.

THIS SUBSIDIARY GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

(The remainder of this page is blank)

IN WITNESS WHEREOF, each of the Guarantors has caused this Subsidiary Guarantee to be duly executed.

CONCENTRA HEALTH SERVICES, INC.
CONCENTRA PREFERRED SYSTEMS, INC.
By:
	Richard A. Parr II
	Executive Vice President, General Counsel and Corporate Secretary

CONCENTRA INTEGRATED SERVICES, INC.
By:
	Richard A. Parr II
	Executive Vice President and Clerk

CONCENTRA MANAGED CARE BUSINESS TRUST
CONCENTRA PREFERRED BUSINESS TRUST
FOCUS HEALTHCARE BUSINESS TRUST
By:
	Daniel J. Thomas
	Trustee

Sig-1

CONCENTRA MANAGEMENT SERVICES, INC.
FIRST NOTICE SYSTEMS, INC.
FOCUS HEALTHCARE MANAGEMENT, INC.
METRACOMP INC.
NHR WASHINGTON, INC.
CONCENTRA LABORATORY, L.L.C.
By:
	Richard A. Parr II
	Vice President and Corporate Secretary

CRA MANAGED CARE OF WASHINGTON, INC.
CRA-MCO, INC.
By:
	Richard A. Parr II
	Executive Vice President and
	Corporate Secretary

HEALTHNETWORK SYSTEMS LLC
MEDICAL NETWORK SYSTEMS LLC
By:
	Richard A. Parr II
	Vice President, General Counsel and
	Corporate Secretary

NATIONAL HEALTHCARE RESOURCES, INC.
By:
	Richard A. Parr II
	Senior Vice President and Corporate Secretary

Sig-2

OCCUCENTERS I, L.P.
By:	Its general partner
	CONCENTRA HEALTH SERVICES, INC.
	By:
		Richard A. Parr II
		Executive Vice President,
		General Counsel and Corporate Secretary

OCI HOLDINGS, INC.
By:
	Gary Chedekel
	Corporate Secretary and Treasurer

Sig-3

EXHIBIT B

[FORM OF INTERCOMPANY NOTE]

US$                      (Date)

                        , a corporation duly incorporated and existing under the laws of              (the “Borrower”) and a subsidiary of Concentra Operating Corporation (the “Lender”), for value received, hereby promises to pay to the order of the Lender on demand the principal sum of              dollars and to pay interest thereon from the date hereof semiannually on              and              in each year at 9 ¹/2% per annum until the principal hereof is paid or made available for payment.

This Intercompany Note has been issued in accordance with the Indenture among the Lender, the Guarantors defined therein and The Bank of New York, as Trustee, dated as of August 13, 2003.

This Intercompany Note shall be governed by and construed in accordance with the laws of the State of New York.

IN WITNESS WHEREOF, the Borrower has caused this instrument to be executed.

Dated:

[BORROWER]
	by
		Name:
		Title:

Attest:

Name:

Title:

Schedule I

SCHEDULE OF GUARANTORS

The following schedule lists each Guarantor under the Indenture as of the Issue Date:

Concentra Health Services, Inc.

Concentra Integrated Services, Inc.

Concentra Laboratory, L.L.C.

Concentra Managed Care Business Trust

Concentra Management Services, Inc.

Concentra Preferred Systems, Inc.

Concentra Preferred Business Trust

CRA Managed Care of Washington, Inc.

CRA-MCO, Inc.

First Notice Systems, Inc.

Focus Healthcare Business Trust

Focus Healthcare Management, Inc.

Healthnetwork Systems LLC

Medical Network Systems LLC

Metracomp Inc.

National Healthcare Resources, Inc.

NHR Washington, Inc.

Occucenters I, L.P.

OCI Holdings, Inc.

EX-4.13

Exhibit 4.13

EXHIBIT A

$150,000,000

CONCENTRA OPERATING CORPORATION

9 ¹/2% Senior Subordinated Notes due 2010

REGISTRATION RIGHTS AGREEMENT

August 13, 2003

CREDIT SUISSE FIRST BOSTON LLC

CITIGROUP GLOBAL MARKETS INC.

DEUTSCHE BANK SECURITIES INC.

J. P. MORGAN SECURITIES INC.

BANC ONE CAPITAL MARKETS, INC.

c/o Credit Suisse First Boston LLC

Eleven Madison Avenue

New York, New York 10010-3629

Dear Sirs:

Concentra Operating Corporation, a Nevada corporation (the “Issuer”), proposes to issue and sell to Credit Suisse First Boston LLC, Citigroup Global Markets Inc., Deutsche Bank Securities, Inc., J. P. Morgan Securities Inc. and Banc One Capital Markets, Inc. (collectively, the “Initial Purchasers”), upon the terms set forth in a purchase agreement of even date herewith (the “Purchase Agreement”), $150,000,000 aggregate principal amount of its 9 ¹/2% Senior Subordinated Notes due 2010 (the “Initial Securities”) to be unconditionally guaranteed by each of the Subsidiaries listed on Schedule B to the Purchase Agreement (the “Guarantors and, together with the Issuer, the “Company”). The Initial Securities will be issued pursuant to an Indenture, dated as of August 13 , 2003, (the “Indenture”) among the Company, the Guarantors and The Bank of New York (the “Trustee”). As an inducement to the Initial Purchasers, the Company agrees with the Initial Purchasers, for the benefit of the holders of the Initial Securities (including, without limitation, the Initial Purchasers), the Exchange Securities (as defined below) and the Private Exchange Securities (as defined below) (collectively the “Holders”), as follows:

1. Registered Exchange Offer. The Company shall, at its own cost, prepare and, not later than 90 days after (or if the 90th day is not a business day, the first business day thereafter) the date of original issue of the Initial Securities (the “Issue Date”), file with the Securities and Exchange Commission (the “Commission”) a registration statement (the “Exchange Offer Registration Statement”) on an appropriate form under the Securities Act of 1933, as amended (the “Securities Act”), with respect to a proposed offer (the “Registered Exchange Offer”) to the Holders of Transfer Restricted Securities (as defined in Section 6 hereof), who are not prohibited by any law or policy of the Commission from participating in the Registered Exchange Offer, to issue and deliver to such Holders, in exchange for the Initial Securities, a like aggregate principal amount of debt securities (the “Exchange Securities”) of the Company issued under the Indenture and identical in all material respects to the Initial Securities (except for the transfer restrictions relating to the Initial Securities and the provisions relating to the matters described in Section 6 hereof) that would be registered under the Securities Act. The Company shall use its reasonable best efforts to cause such Exchange Offer Registration Statement to become effective under the Securities Act within 180 days (or if the 180th day is not a business day, the first business day thereafter) after the Issue Date of the Initial Securities and shall keep the Exchange Offer Registration Statement effective for not less than 30 days (or longer, if required by applicable law) after the date notice of the Registered Exchange Offer is mailed to the Holders (such period being called the “Exchange Offer Registration Period”).

If the Company effects the Registered Exchange Offer, the Company will be entitled to close the Registered Exchange Offer 40 days after the commencement thereof provided that the Company has accepted all the Initial Securities theretofore validly tendered in accordance with the terms of the Registered Exchange Offer.

Following the declaration of the effectiveness of the Exchange Offer Registration Statement, the Company shall promptly commence the Registered Exchange Offer, it being the objective of such Registered Exchange Offer to enable each Holder of Transfer Restricted Securities (as defined in Section 6 hereof) electing to exchange the Initial Securities for Exchange Securities (assuming that such Holder is not an affiliate of the Company within the meaning of the Securities Act, acquires the Exchange Securities in the ordinary course of such Holder’s business and has no arrangements with any person to participate in the distribution of the Exchange Securities and is not prohibited by any law or policy of the Commission from participating in the Registered Exchange Offer) to trade such Exchange Securities from and after their receipt without any limitations or restrictions under the Securities Act and without material restrictions under the securities laws of the several states of the United States.

The Company acknowledges that, pursuant to current interpretations by the Commission’s staff of Section 5 of the Securities Act, in the absence of an applicable exemption therefrom, (i) each Holder which is a broker-dealer electing to exchange Securities, acquired for its own account as a result of market making activities or other trading activities, for Exchange Securities (an “Exchanging Dealer”), is required to deliver a prospectus containing the information set forth in (a) Annex A hereto on the cover, (b) Annex B hereto in the “Exchange Offer Procedures” section and the “Purpose of the Exchange Offer” section, and (c) Annex C hereto in the “Plan of Distribution” section of such prospectus in connection with a sale of any such Exchange Securities received by such Exchanging Dealer pursuant to the Registered Exchange Offer and (ii) an Initial Purchaser that elects to sell Exchange Securities acquired in exchange for Initial Securities constituting any portion of an unsold allotment is required to deliver a prospectus containing the information required by Items 507 or 508 of Regulation S-K under the Securities Act, as applicable, in connection with such sale.

The Company shall use its reasonable best efforts to keep the Exchange Offer Registration Statement effective and to amend and supplement the prospectus contained therein, in order to permit such prospectus to be lawfully delivered by all persons subject to the prospectus delivery requirements of the Securities Act for such period of time as such persons must comply with such requirements in order to resell the Exchange Securities; provided, however, that (i) in the case where such prospectus and any amendment or supplement thereto must be delivered by an Exchanging Dealer or an Initial Purchaser, such period shall be the lesser of 180 days and the date on which all Exchanging Dealers and the Initial Purchasers have sold all Exchange Securities held by them (unless such period is extended pursuant to Section 3(j) below) and (ii) the Company shall make such prospectus and any amendment or supplement thereto, available to any broker-dealer for use in connection with any resale of any Exchange Securities for a period of not less than 90 days after the consummation of the Registered Exchange Offer.

If, upon consummation of the Registered Exchange Offer, any Initial Purchaser holds Initial Securities acquired by it as part of its initial distribution, the Company, simultaneously with the delivery of the Exchange Securities pursuant to the Registered Exchange Offer, shall issue and deliver to such Initial Purchaser upon the written request of such Initial Purchaser, in exchange (the “Private Exchange”) for the Initial Securities held by such Initial Purchaser, a like principal amount of debt securities of the Company issued under the Indenture and identical in all material respects (including the existence of restrictions on transfer under the Securities Act and the securities laws of the several states of the United States, but excluding provisions relating to the matters described in Section 6 hereof) to the Initial Securities (the “Private Exchange Securities”). The Initial Securities, the Exchange Securities and the Private Exchange Securities are herein collectively called the “Securities”.

In connection with the Registered Exchange Offer, the Company shall:

2

(a) mail to each Holder a copy of the prospectus forming part of the Exchange Offer Registration Statement, together with an appropriate letter of transmittal and related documents;

(b) keep the Registered Exchange Offer open for not less than 30 days (or longer, if required by applicable law) after the date notice thereof is mailed to the Holders;

(c) utilize the services of a depositary for the Registered Exchange Offer with an address in the Borough of Manhattan, The City of New York, which may be the Trustee or an affiliate of the Trustee;

(d) permit Holders to withdraw tendered Securities at any time prior to the close of business, New York time, on the last business day on which the Registered Exchange Offer shall remain open; and

(e) otherwise comply with all applicable laws.

As soon as practicable after the close of the Registered Exchange Offer or the Private Exchange, as the case may be, the Company shall:

(x) accept for exchange all the Securities validly tendered and not withdrawn pursuant to the Registered Exchange Offer and the Private Exchange;

(y) deliver to the Trustee for cancellation all the Initial Securities so accepted for exchange; and

(z) cause the Trustee to authenticate and deliver promptly to each Holder of the Initial Securities, Exchange Securities or Private Exchange Securities, as the case may be, equal in principal amount to the Initial Securities of such Holder so accepted for exchange.

The Indenture will provide that the Exchange Securities will not be subject to the transfer restrictions set forth in the Indenture and that all the Securities will vote and consent together on all matters as one class and that none of the Securities will have the right to vote or consent as a class separate from one another on any matter.

Interest on each Exchange Security and Private Exchange Security issued pursuant to the Registered Exchange Offer and in the Private Exchange will accrue from the last interest payment date on which interest was paid on the Initial Securities surrendered in exchange therefor or, if no interest has been paid on the Initial Securities, from the date of original issue of the Initial Securities.

Each Holder participating in the Registered Exchange Offer shall be required to represent to the Company that at the time of the consummation of the Registered Exchange Offer (i) any Exchange Securities received by such Holder will be acquired in the ordinary course of business, (ii) such Holder will have no arrangements or understanding with any person to participate in the distribution of the Securities or the Exchange Securities within the meaning of the Securities Act, (iii) such Holder is not an “affiliate,” as defined in Rule 405 of the Securities Act, of the Company or if it is an affiliate, such Holder will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable, (iv) if such Holder is not a broker-dealer, that it is not engaged in, and does not intend to engage in, the distribution of the Exchange Securities and (v) if such Holder is a broker-dealer, that it will receive Exchange Securities for its own account in exchange for Initial Securities that were acquired as a result of market-making activities or other trading activities and that it will be required to acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities.

Notwithstanding any other provisions hereof, the Company will ensure that (i) any Exchange Offer Registration Statement and any amendment thereto and any prospectus forming part thereof and any supplement thereto comply in all material respects with the Securities Act and the rules and regulations

3

thereunder, (ii) any Exchange Offer Registration Statement and any amendment thereto do not, when they become effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (iii) any prospectus forming part of any Exchange Offer Registration Statement, and any supplement to such prospectus, do not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

2. Shelf Registration. If, (i) because of any change in law or in applicable interpretations thereof by the staff of the Commission, the Company is not permitted to effect a Registered Exchange Offer, as contemplated by Section 1 hereof, (ii) the Registered Exchange Offer is not consummated within 220 days of the Issue Date, (iii) any Initial Purchaser shall notify the Company following consummation of the Registered Exchange Offer that the Initial Securities (or the Private Exchange Securities) held by it are not eligible to be exchanged for Exchange Securities in the Registered Exchange Offer; or (iv) any Holder (other than an Exchanging Dealer) notifies the Company in writing that it is prohibited by law or SEC policy from participating in the Registered Exchange Offer or may not resell the Exchange Notes acquired by it in the Registered Exchange Offer to the public without delivering a prospectus, and the prospectus contained in the Exchange Offer Registration Statement is not appropriate or available for such resales by it, the Company shall take the following actions:

(a) The Company shall, at its cost, as promptly as practicable (but in no event more than 60 days after so required or requested pursuant to this Section 2) file with the Commission a registration statement (the “Shelf Registration Statement” and, together with the Exchange Offer Registration Statement, a “Registration Statement”) on an appropriate form under the Securities Act relating to the offer and sale of the Transfer Restricted Securities (as defined in Section 6 hereof) by the Holders thereof from time to time in accordance with the methods of distribution set forth in the Shelf Registration Statement and Rule 415 under the Securities Act (hereinafter, the “Shelf Registration”); provided, however, that no Holder (other than an Initial Purchaser) shall be entitled to have the Securities held by it covered by such Shelf Registration Statement unless such Holder agrees in writing to be bound by all the provisions of this Agreement applicable to such Holder.

(b) The Company shall (x) in the case of clause (i) above, use its reasonable best efforts to cause the Shelf Registration Statement to be declared effective under the Securities Act on or prior to the 180th day after the Issue Date and (y) in the case of clause (ii), (iii) or (iv) above, use its reasonable best efforts to cause the Shelf Registration Statement to be declared effective under the Securities Act on or prior to the 60th day after the date on which the Shelf Registration Statement is required to be filed.

(c) The Company shall use its reasonable best efforts to keep the Shelf Registration Statement continuously effective in order to permit the prospectus included therein to be lawfully delivered by the Holders of the relevant Securities, for a period of two years (or for such longer period if extended pursuant to Section 3(j) below) from the date of its effectiveness or such shorter period that will terminate when all the Securities covered by the Shelf Registration Statement (i) have been sold pursuant thereto or (ii) are no longer restricted securities (as defined in Rule 144 under the Securities Act, or any successor rule thereof). The Company shall be deemed not to have used its reasonable best efforts to keep the Shelf Registration Statement effective during the requisite period if it voluntarily takes any action that would result in Holders of Securities covered thereby not being able to offer and sell such Securities during that period, unless such action is required by applicable law.

(d) Notwithstanding any other provisions of this Agreement to the contrary, the Company shall cause the Shelf Registration Statement and the related prospectus and any amendment or supplement thereto, as of the effective date of the Shelf Registration Statement, amendment or supplement, (i) to comply in all material respects with the applicable requirements of the Securities

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Act and the rules and regulations thereunder and (ii) not to contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

3. Registration Procedures. In connection with any Shelf Registration contemplated by Section 2 hereof and, to the extent applicable, any Registered Exchange Offer contemplated by Section 1 hereof, the following provisions shall apply:

(a) The Company shall (i) furnish to each Initial Purchaser, prior to the filing thereof with the Commission, a copy of the Registration Statement and each amendment thereof and each supplement, if any, to the prospectus included therein and, in the event that an Initial Purchaser (with respect to any portion of an unsold allotment from the original offering) is participating in the Registered Exchange Offer or the Shelf Registration Statement, the Company shall use its reasonable best efforts to reflect in each such document, when so filed with the Commission, such comments as such Initial Purchaser reasonably may propose; (ii) include the information set forth in Annex A hereto on the cover, in Annex B hereto in the “Exchange Offer Procedures” section and the “Purpose of the Exchange Offer” section and in Annex C hereto in the “Plan of Distribution” section of the prospectus forming a part of the Exchange Offer Registration Statement and include the information set forth in Annex D hereto in the Letter of Transmittal delivered pursuant to the Registered Exchange Offer; (iii) if requested by an Initial Purchaser within a reasonable time after receipt of any such document, include the information required by Items 507 or 508 of Regulation S-K under the Securities Act, as applicable, in the prospectus forming a part of the Exchange Offer Registration Statement; (iv) include within the prospectus contained in the Exchange Offer Registration Statement a section entitled “Plan of Distribution,” reasonably acceptable to the Initial Purchasers, which shall contain a summary statement of the positions taken or policies made by the staff of the Commission with respect to the potential “underwriter” status of any broker-dealer that is the beneficial owner (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of Exchange Securities received by such broker-dealer in the Registered Exchange Offer (a “Participating Broker-Dealer”), whether such positions or policies have been publicly disseminated by the staff of the Commission or such positions or policies, in the reasonable judgment of the Initial Purchasers based upon advice of counsel (which may be in-house counsel), represent the prevailing views of the staff of the Commission; and (v) in the case of a Shelf Registration Statement, include the names of the Holders, who propose to sell Securities pursuant to the Shelf Registration Statement, as selling securityholders; provided, however, that each such Holder shall have furnished to the Company on a timely basis such information regarding the Holder as the Company may require pursuant to Section 3(n) hereof.

(b) The Company shall give written notice to the Initial Purchasers, the Holders of the Securities proposed to be sold under the Shelf Registration Statement and any Participating Broker-Dealer from whom the Company has received prior written notice that it will be a Participating Broker-Dealer in the Registered Exchange Offer (which notice pursuant to clauses (ii)-(v) hereof shall be accompanied by an instruction to suspend the use of the prospectus until the requisite changes have been made):

(i) when the Registration Statement or any amendment thereto has been filed with the Commission and when the Registration Statement or any post-effective amendment thereto has become effective;

(ii) of any request by the Commission for amendments or supplements to the Registration Statement or the prospectus included therein or for additional information;

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(iii) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose;

(iv) of the receipt by the Company or its legal counsel of any notification with respect to the suspension of the qualification of the Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and

(v) of the happening of any event that requires the Company to make changes in the Registration Statement or the prospectus in order that the Registration Statement or the prospectus do not contain an untrue statement of a material fact nor omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of the prospectus, in light of the circumstances under which they were made) not misleading.

(c) The Company shall make every reasonable effort to obtain the withdrawal at the earliest possible time, of any order suspending the effectiveness of the Registration Statement.

(d) The Company shall furnish to each Holder of Securities included within the coverage of the Shelf Registration, without charge, at least one copy of the Shelf Registration Statement and any post-effective amendment thereto, including financial statements and schedules, and, if the Holder so requests in writing, all exhibits thereto (including those, if any, incorporated by reference).

(e) The Company shall deliver to each Exchanging Dealer and each Initial Purchaser, and to any other Holder who so requests, without charge, at least one copy of the Exchange Offer Registration Statement and any post-effective amendment thereto, including financial statements and schedules, and, if any Initial Purchaser or any such Holder requests, all exhibits thereto (including those incorporated by reference).

(f) The Company shall, during the Shelf Registration Period, deliver to each Holder of Securities included within the coverage of the Shelf Registration, without charge, as many copies of the prospectus (including each preliminary prospectus) included in the Shelf Registration Statement and any amendment or supplement thereto as such person may reasonably request. The Company consents, subject to the provisions of this Agreement, to the use of the prospectus or any amendment or supplement thereto by each of the selling Holders of the Securities in connection with the offering and sale of the Securities covered by the prospectus, or any amendment or supplement thereto, included in the Shelf Registration Statement.

(g) The Company shall deliver to each Initial Purchaser, any Exchanging Dealer, any Participating Broker-Dealer and such other persons required to deliver a prospectus following the Registered Exchange Offer, without charge, as many copies of the final prospectus included in the Exchange Offer Registration Statement and any amendment or supplement thereto as such persons may reasonably request. The Company consents, subject to the provisions of this Agreement, to the use of the prospectus or any amendment or supplement thereto by any Initial Purchaser, if necessary, any Participating Broker-Dealer and such other persons required to deliver a prospectus following the Registered Exchange Offer in connection with the offering and sale of the Exchange Securities covered by the prospectus, or any amendment or supplement thereto, included in such Exchange Offer Registration Statement.

(h) Prior to any public offering of the Securities, pursuant to any Registration Statement, the Company shall register or qualify or cooperate with the Holders of the Securities included therein and their respective counsel in connection with the registration or qualification of the Securities for offer and sale under the securities or “blue sky” laws of such states of the United States as any Holder of the Securities reasonably requests in writing and do any and all other acts

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or things necessary or advisable to enable the offer and sale in such jurisdictions of the Securities covered by such Registration Statement; provided, however, that the Company shall not be required to (i) qualify generally to do business in any jurisdiction where it is not then so qualified or (ii) take any action which would subject it to general service of process or to taxation in any jurisdiction where it is not then so subject.

(i) The Company shall cooperate with the Holders of the Securities to facilitate the timely preparation and delivery of certificates representing the Securities to be sold pursuant to any Registration Statement free of any restrictive legends and in such denominations and registered in such names as the Holders may request a reasonable period of time prior to sales of the Securities pursuant to such Registration Statement.

(j) Upon the occurrence of any event contemplated by paragraphs (ii) through (v) of Section 3(b) above during the period for which the Company is required to maintain an effective Registration Statement, the Company shall promptly prepare and file a post-effective amendment to the Registration Statement or a supplement to the related prospectus and any other required document so that, as thereafter delivered to Holders of the Securities or purchasers of Securities, the prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. If the Company notifies the Initial Purchasers, the Holders of the Securities and any known Participating Broker-Dealer in accordance with paragraphs (ii) through (v) of Section 3(b) above to suspend the use of the prospectus until the requisite changes to the prospectus have been made, then the Initial Purchasers, the Holders of the Securities and any such Participating Broker-Dealers shall suspend use of such prospectus, and the period of effectiveness of the Shelf Registration Statement provided for in Section 2(b) above and the Exchange Offer Registration Statement provided for in Section 1 above shall each be extended by the number of days from and including the date of the giving of such notice to and including the date when the Initial Purchasers, the Holders of the Securities and any known Participating Broker-Dealer shall have received such amended or supplemented prospectus pursuant to this Section 3(j) or the Company shall have notified such Holders that disposition of such Transfer Restricted Securities may resume under the existing prospectus.

(k) Not later than the effective date of the applicable Registration Statement, the Company will provide a CUSIP number for the Initial Securities, the Exchange Securities or the Private Exchange Securities, as the case may be, and provide the applicable trustee with certificates for the Initial Securities, the Exchange Securities or the Private Exchange Securities, as the case may be, in a form eligible for deposit with The Depository Trust Company.

(l) The Company will comply with all rules and regulations of the Commission to the extent and so long as they are applicable to the Registered Exchange Offer or the Shelf Registration and will make generally available to its security holders (or otherwise provide in accordance with Section 11(a) of the Securities Act) an earnings statement satisfying the provisions of Section 11(a) of the Securities Act, no later than 45 days after the end of a 12-month period (or 90 days, if such period is a fiscal year) beginning with the first month of the Company’s first fiscal quarter commencing after the effective date of the Registration Statement, which statement shall cover such 12-month period.

(m) The Company shall cause the Indenture to be qualified under the Trust Indenture Act of 1939, as amended, in a timely manner and containing such changes, if any, as shall be necessary for such qualification. In the event that such qualification would require the appointment of a new trustee under the Indenture, the Company shall appoint a new trustee thereunder pursuant to the applicable provisions of the Indenture.

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(n) The Company may require each Holder of Securities to be sold pursuant to the Shelf Registration Statement to furnish to the Company such information regarding the Holder and the distribution of the Securities as the Company may from time to time reasonably require for inclusion in the Shelf Registration Statement, and the Company may exclude from such registration the Securities of any Holder that unreasonably fails to furnish such information within a reasonable time after receiving such request.

(o) The Company shall enter into such customary agreements (including, if requested, an underwriting agreement in customary form) and take all such other action, if any, as Holders of not less than a majority of the aggregate principal amount of the Securities to be included in the Registration Statement shall reasonably request in order to facilitate the disposition of the Securities pursuant to any Shelf Registration Statement.

(p) In the case of any Shelf Registration, the Company shall (i) make reasonably available for inspection by the Holders of the Securities, any underwriter participating in any disposition pursuant to the Shelf Registration Statement and any attorney, accountant or other agent retained by the Holders of the Securities or any such underwriter all relevant financial and other records, pertinent corporate documents and properties of the Company and (ii) cause the Company’s officers, directors, employees, accountants and auditors to supply all relevant information reasonably requested by the Holders of the Securities or any such underwriter, attorney, accountant or agent in connection with the Shelf Registration Statement, in each case, as shall be reasonably necessary to enable such persons, to conduct a reasonable investigation within the meaning of Section 11 of the Securities Act; provided, however, that the foregoing inspection and information gathering shall be coordinated on behalf of the Initial Purchasers by you and on behalf of the other parties, by one counsel designated by and on behalf of such other parties as described in Section 4 hereof and shall be subject to any confidentiality procedures reasonably instituted by the Company and reasonably approved by you.

(q) In the case of any Shelf Registration, the Company, if requested by the Holders of at least a majority of the aggregate principal amount of the Securities covered thereby, shall cause (i) its counsel to deliver an opinion and updates thereof relating to the Securities in customary form addressed to such Holders and the managing underwriters, if any, thereof and dated, in the case of the initial opinion, the effective date of such Shelf Registration Statement (it being agreed that the matters to be covered by such opinion shall include, without limitation but subject to customary and reasonable qualifications and exceptions, the due incorporation and good standing of the Company and its subsidiaries; the qualification of the Company and its subsidiaries to transact business as foreign corporations; the due authorization, execution and delivery of the relevant agreement of the type referred to in Section 3(o) hereof; the due authorization, execution, authentication and issuance, and the validity and enforceability, of the applicable Securities; the absence of material legal or governmental proceedings involving the Company and its subsidiaries; the absence of governmental approvals required to be obtained in connection with the Shelf Registration Statement, the offering and sale of the applicable Securities, or any agreement of the type referred to in Section 3(o) hereof; the compliance as to form of such Shelf Registration Statement and any documents incorporated by reference therein and of the Indenture with the requirements of the Securities Act and the Trust Indenture Act, respectively; and, as of the date of the opinion and as of the effective date of the Shelf Registration Statement or most recent post-effective amendment thereto, as the case may be, the absence from such Shelf Registration Statement and the prospectus included therein, as then amended or supplemented, and from any documents incorporated by reference therein of an untrue statement of a material fact or the omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading (in the case of any such documents, in the light of the circumstances existing at the time that such documents were filed with the Commission under the Exchange Act); (ii) its officers to execute and deliver all customary documents and certificates and updates thereof requested by any underwriters of the applicable Securities and (iii) its independent public accountants to provide to the selling Holders of the applicable Securities and any

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underwriter therefor a comfort letter in customary form and covering matters of the type customarily covered in comfort letters in connection with primary underwritten offerings, subject to receipt of appropriate documentation as contemplated, and only if permitted, by Statement of Auditing Standards No. 72.

(r) In the case of the Registered Exchange Offer, if requested by any Initial Purchaser or any known Participating Broker-Dealer, the Company shall cause (i) its counsel to deliver to such Initial Purchaser or such Participating Broker-Dealer a signed opinion in the form set forth in Section 6(c) and (d) of the Purchase Agreement with such changes as are customary in connection with the preparation of a Registration Statement and (ii) its independent public accountants to deliver to such Initial Purchaser or such Participating Broker-Dealer a comfort letter, in customary form, meeting the requirements as to the substance thereof as set forth in Section 6(a) of the Purchase Agreement, with appropriate date changes.

(s) If a Registered Exchange Offer or a Private Exchange is to be consummated, upon delivery of the Initial Securities by Holders to the Company (or to such other Person as directed by the Company) in exchange for the Exchange Securities or the Private Exchange Securities, as the case may be, the Company shall mark, or cause to be marked, on the Initial Securities so exchanged that such Initial Securities are being canceled in exchange for the Exchange Securities or the Private Exchange Securities, as the case may be; in no event shall the Initial Securities be marked as paid or otherwise satisfied.

(t) The Company will use its reasonable best efforts to (a) if the Initial Securities have been rated prior to the initial sale of such Initial Securities, confirm such ratings will apply to the Securities covered by a Registration Statement, or (b) if the Initial Securities were not previously rated, cause the Securities covered by a Registration Statement to be rated with the appropriate rating agencies, if so requested by Holders of a majority in aggregate principal amount of Securities covered by such Registration Statement, or by the managing underwriters, if any.

(u) In the event that any broker-dealer registered under the Exchange Act shall underwrite any Securities or participate as a member of an underwriting syndicate or selling group or “assist in the distribution” (within the meaning of the Conduct Rules (the “Rules”) of the National Association of Securities Dealers, Inc. (“NASD”)) thereof, whether as a Holder of such Securities or as an underwriter, a placement or sales agent or a broker or dealer in respect thereof, or otherwise, the Company will assist such broker-dealer in complying with the requirements of such Rules, including, without limitation, by (i) if such Rules, including Rule 2720, shall so require, engaging a “qualified independent underwriter” (as defined in Rule 2720) to participate in the preparation of the Registration Statement relating to such Securities, to exercise usual standards of due diligence in respect thereto and, if any portion of the offering contemplated by such Registration Statement is an underwritten offering or is made through a placement or sales agent, to recommend the yield of such Securities, (ii) indemnifying any such qualified independent underwriter to the extent of the indemnification of underwriters provided in Section 5 hereof and (iii) providing such information to such broker-dealer as may be required in order for such broker-dealer to comply with the requirements of the Rules.

(v) The Company shall use its reasonable best efforts to take all other steps necessary to effect the registration of the Securities covered by a Registration Statement contemplated hereby.

4. Registration Expenses. The Company shall bear all fees and expenses incurred in connection with the performance of its obligations under Sections 1 through 3 hereof (including the reasonable fees and expenses, if any, of Cravath, Swaine & Moore LLP, counsel for the Initial Purchasers, incurred in connection with the Registered Exchange Offer), whether or not the Exchange Offer Registration Statement or a Shelf Registration Statement is filed or becomes effective, and, in the event of a Shelf Registration, shall bear or reimburse the Holders of the Securities covered thereby for the reasonable fees and disbursements of one firm of counsel designated by the Holders of a majority in principal amount of the

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Initial Securities covered thereby to act as counsel for the Holders of the Initial Securities in connection therewith.

5. Indemnification. (a) The Company agrees to indemnify and hold harmless each Holder of the Securities, any Participating Broker-Dealer and each person, if any, who controls such Holder or such Participating Broker-Dealer within the meaning of the Securities Act or the Exchange Act (each Holder, any Participating Broker-Dealer and such controlling persons are referred to collectively as the “Indemnified Parties”) from and against any losses, claims, damages or liabilities, joint or several, or any actions in respect thereof (including, but not limited to, any losses, claims, damages, liabilities or actions relating to purchases and sales of the Securities) to which each Indemnified Party may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement or prospectus or in any amendment or supplement thereto or in any preliminary prospectus relating to a Shelf Registration, or arise out of, or are based upon, the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and shall reimburse, as incurred, the Indemnified Parties for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action in respect thereof; provided, however, that (i) the Company shall not be liable in any such case to the extent that such loss, claim, damage or liability arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made in a Registration Statement or prospectus or in any amendment or supplement thereto or in any preliminary prospectus relating to a Shelf Registration in reliance upon and in conformity with written information pertaining to such Holder and furnished to the Company by or on behalf of such Holder specifically for inclusion therein and (ii) with respect to any untrue statement or omission or alleged untrue statement or omission made in any preliminary prospectus relating to a Shelf Registration Statement, the indemnity agreement contained in this subsection (a) shall not inure to the benefit of any Holder or Participating Broker-Dealer from whom the person asserting any such losses, claims, damages or liabilities purchased the Securities concerned, to the extent that a prospectus relating to such Securities was required to be delivered by such Holder or Participating Broker-Dealer under the Securities Act in connection with such purchase and any such loss, claim, damage or liability of such Holder or Participating Broker-Dealer results from the fact that there was not sent or given to such person, at or prior to the written confirmation of the sale of such Securities to such person, a copy of the final prospectus if the Company had previously furnished copies thereof to such Holder or Participating Broker-Dealer; provided further, however, that this indemnity agreement will be in addition to any liability which the Company may otherwise have to such Indemnified Party. The Company shall also indemnify underwriters, their officers and directors and each person who controls such underwriters within the meaning of the Securities Act or the Exchange Act to the same extent as provided above with respect to the indemnification of the Holders of the Securities if requested by such Holders.

(b) Each Holder of the Securities, severally and not jointly, will indemnify and hold harmless the Company, each of its directors and each of its officers and each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act from and against any losses, claims, damages or liabilities or any actions in respect thereof, to which the Company or any such controlling person may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement or prospectus or in any amendment or supplement thereto or in any preliminary prospectus relating to a Shelf Registration Statement, or arise out of or are based upon the omission or alleged omission to state therein a material fact necessary to make the statements therein not misleading, but in each case only to the extent that the untrue statement or omission or alleged untrue statement or omission was made in reliance upon and in conformity with written information pertaining to such Holder and furnished to the Company by or on behalf of such Holder specifically for inclusion therein; and, subject to the limitation set forth immediately preceding this clause, shall reimburse, as incurred, the Company for any legal or other expenses reasonably incurred by the Company or any such controlling person in connection with investigating or defending any loss, claim, damage, liability or action in respect thereof. This

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indemnity agreement will be in addition to any liability which such Holder may otherwise have to the Company or any of its controlling persons.

(c) Promptly after receipt by an indemnified party under this Section 5 of notice of the commencement of any action or proceeding (including a governmental investigation), such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 5, notify the indemnifying party of the commencement thereof; but the failure to notify the indemnifying party shall not relieve the indemnifying party from any liability that it may have under subsection (a) or (b) above except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and provided further that the failure to notify the indemnifying party shall not relieve it from any liability that it may have to an indemnified party otherwise than under subsection (a) or (b) above. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof the indemnifying party will not be liable to such indemnified party under this Section 5 for any legal or other expenses, other than reasonable costs of investigation, subsequently incurred by such indemnified party in connection with the defense thereof. In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the contrary; (ii) the indemnifying party has failed within a reasonable time to retain counsel reasonably satisfactory to the indemnified party; (iii) the indemnified party shall have reasonably concluded, based on the advice of legal counsel, that there may be legal defenses available to it that are different from or in addition to those available to the indemnifying party; or (iv) the named parties in any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood and agreed that the indemnifying party shall not, in connection with any proceeding or related proceeding in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all indemnified parties, and that all such fees and expenses shall be reimbursed as they are incurred. Any such separate firm for any Purchaser, its affiliates, directors and officers and any control persons of such Purchaser shall be designated in writing by CSFB and any such separate firm for the Company, the Guarantors, their directors and officers and any control persons of the Company and the Guarantors shall be designated in writing by the Company. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened action in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party unless such settlement (i) includes an unconditional release of such indemnified party from all liability on any claims that are the subject matter of such action, and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party.

(d) If the indemnification provided for in this Section 5 is unavailable or insufficient to hold harmless an indemnified party under subsections (a) or (b) above, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to in subsection (a) or (b) above (i) in such proportion as is appropriate to reflect the relative benefits received by the indemnifying party or parties on the one hand and the indemnified party on the other from the exchange of the Initial Securities, pursuant to the Registered Exchange Offer, or (ii) if the allocation provided by the foregoing clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the indemnifying party or parties on the one hand and the indemnified

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party on the other in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities (or actions in respect thereof) as well as any other relevant equitable considerations. The relative fault of the parties shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand or such Holder or such other indemnified party, as the case may be, on the other, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any action or claim which is the subject of this subsection (d). Notwithstanding any other provision of this Section 5(d), the Holders of the Securities shall not be required to contribute any amount in excess of the amount by which the net proceeds received by such Holders from the sale of the Securities pursuant to a Registration Statement exceeds the amount of damages which such Holders have otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this paragraph (d), each person, if any, who controls such indemnified party within the meaning of the Securities Act or the Exchange Act shall have the same rights to contribution as such indemnified party and each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act shall have the same rights to contribution as the Company.

(e) The agreements contained in this Section 5 shall survive the sale of the Securities pursuant to a Registration Statement and shall remain in full force and effect, regardless of any termination or cancellation of this Agreement or any investigation made by or on behalf of any indemnified party.

6. Additional Interest Under Certain Circumstances. (a) Additional interest (the “Additional Interest”) with respect to the Initial Securities shall be assessed as follows if any of the following events occur (each such event in clauses (i) through (vi) below a “Registration Default”:

(i) If the Company fails to file an Exchange Offer Registration Statement with the Commission on or prior to the 90th day after the Issue Date,

(ii) If the Exchange Offer Registration Statement is not declared effective by the Commission on or prior to the 180th day after the Issue Date or, if filing a Shelf Registration Statement in the circumstances referenced in clause 2(i) above, a Shelf Registration Statement is not declared effective by the Commission on or prior to the 180th day after the Issue Date,

(iii) if the Exchange Offer is not consummated on or before the 40th day after the Exchange Offer Registration Statement is declared effective,

(iv) if filing a Shelf Registration Statement in the circumstances referenced in clause 2(ii), (iii) or (iv) above, the Company fails to file the Shelf Registration Statement with the Commission on or prior to the 60th day (the “Shelf Filing Date”) after the date on which the obligation to file a Shelf Registration Statement arises,

(v) if filing a Shelf Registration Statement in the circumstances referenced in clause 2(ii), (iii) or (iv) above, the Shelf Registration Statement is not declared effective on or prior to the 60th day after the Shelf Filing Date, or

(vi) after the Exchange Offer Registration Statement or the Shelf Registration Statement, as the case may be, is declared effective, (A) such Registration Statement

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thereafter ceases to be effective; or (B) such Registration Statement or the related prospectus ceases to be usable (except as permitted in paragraph (b)) in connection with resales of Transfer Restricted Securities during the periods specified herein because either (1) any event occurs as a result of which the related prospectus forming part of such Registration Statement would include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein in the light of the circumstances under which they were made not misleading, or (2) it shall be necessary to amend such Registration Statement or supplement the related prospectus, to comply with the Securities Act or the Exchange Act or the respective rules thereunder.

Additional Interest shall accrue on the Initial Securities over and above the interest set forth in the title of the Securities from and including the date on which any such Registration Default shall occur to but excluding the date on which all such Registration Defaults have been cured, at a rate of 0.25% per annum for the first 90-day period immediately following the occurrence of a Registration Default, and such rate will increase by an additional 0.25% per annum with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum additional interest rate of 2.0% per annum. Such Additional Interest will be in addition to any other interest payable from time to time with respect to the Initial Securities and the Exchange Notes.

(b) A Registration Default referred to in Section 6(a)(vi)(B) hereof shall be deemed not to have occurred and be continuing in relation to a Shelf Registration Statement or the related prospectus if (i) such Registration Default has occurred solely as a result of (x) the filing of a post-effective amendment to such Shelf Registration Statement to incorporate annual audited financial information with respect to the Company where such post-effective amendment is not yet effective and needs to be declared effective to permit Holders to use the related prospectus or (y) other material events, with respect to the Company that would need to be described in such Shelf Registration Statement or the related prospectus and (ii) in the case of clause (y), the Company is proceeding promptly and in good faith to amend or supplement such Shelf Registration Statement and related prospectus to describe such events; provided, however, that in any case if such Registration Default occurs for a continuous period in excess of 30 days, Additional Interest shall be payable in accordance with the above paragraph from the day such Registration Default occurs until such Registration Default is cured.

(c) Any amounts of Additional Interest due pursuant to Section 6(a) above will be payable in cash on the regular interest payment dates with respect to the Initial Securities. The amount of Additional Interest will be determined by multiplying the applicable Additional Interest rate by the principal amount of the Initial Securities, multiplied by a fraction, the numerator of which is the number of days such Additional Interest rate was applicable during such period (determined on the basis of a 360-day year comprised of twelve 30-day months), and the denominator of which is 360.

(d) “Transfer Restricted Securities” means each Security until (i) the date on which such Transfer Restricted Security has been exchanged by a person other than a broker-dealer for a freely transferable Exchange Security in the Registered Exchange Offer, (ii) following the exchange by a broker-dealer in the Registered Exchange Offer of an Initial Security for an Exchange Note, the date on which such Exchange Note is sold to a purchaser who receives from such broker-dealer on or prior to the date of such sale a copy of the prospectus contained in the Exchange Offer Registration Statement, (iii) the date on which such Initial Security has been effectively registered under the Securities Act and disposed of in accordance with the Shelf Registration Statement or (iv) the date on which such Initial Securities is distributed to the public pursuant to Rule 144 under the Securities Act or is saleable pursuant to Rule 144(k) under the Securities Act.

7. Rules 144 and 144A. The Company shall use its reasonable best efforts to file the reports required to be filed by it under the Securities Act and the Exchange Act in a timely manner and, if at any time the Company is not required to file such reports, it will, upon the request of any Holder of Initial

13

Securities, make publicly available other information so long as necessary to permit sales of their securities pursuant to Rules 144 and 144A. The Company covenants that it will take such further action as any Holder of Initial Securities may reasonably request, all to the extent required from time to time to enable such Holder to sell Initial Securities without registration under the Securities Act within the limitation of the exemptions provided by Rules 144 and 144A (including the requirements of Rule 144A(d)(4)). The Company will provide a copy of this Agreement to prospective purchasers of Initial Securities identified to the Company by the Initial Purchasers upon request. Upon the request of any Holder of Initial Securities, the Company shall deliver to such Holder a written statement as to whether it has complied with such requirements. Notwithstanding the foregoing, nothing in this Section 7 shall be deemed to require the Company to register any of its securities pursuant to the Exchange Act.

8. Underwritten Registrations. If any of the Transfer Restricted Securities covered by any Shelf Registration are to be sold in an underwritten offering, the investment banker or investment bankers and manager or managers that will administer the offering (“Managing Underwriters”) will be selected by the Holders of a majority in aggregate principal amount of such Transfer Restricted Securities to be included in such offering.

No person may participate in any underwritten registration hereunder unless such person (i) agrees to sell such person’s Transfer Restricted Securities on the basis reasonably provided in any underwriting arrangements approved by the persons entitled hereunder to approve such arrangements and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements. Except as provided in Section 4, the Holders participating in any underwritten offering shall be responsible for any expenses customarily borne by selling securityholders, including underwriting discounts and commissions and fees and expenses of counsel to selling securityholders.

9. Miscellaneous.

(a) Amendments and Waivers. The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, except by the Company and the written consent of the Holders of a majority in principal amount of the Securities affected by such amendment, modification, supplement, waiver or consents.

(b) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand delivery, first-class mail, facsimile transmission, or air courier which guarantees overnight delivery:

(i) if to a Holder of the Securities, at the most current address given by such Holder to the Company.

(ii) if to the Initial Purchasers;

Credit Suisse First Boston LLC

Eleven Madison Avenue

New York, NY 10010-3629

Fax No.: (212) 325-8278

Attention: Transactions Advisory Group

Citigroup Global Markets, Inc.

338 Greenwich Street

32nd Floor

New York, NY 10013

Attention: Legal—Addison Crawford

14

with a copy to:

Cravath, Swaine & Moore LLP

825 Eighth Avenue

New York, NY 10019

Attention: Stephen L. Burns, Esq.

(iii) if to the Company, at its address as follows:

Concentra Operating Corporation

5080 Spectrum Drive

Suite 400-West Tower

Addison, TX 75001

Attention: Richard Parr, Esq.

with a copy to:

Vinson & Elkins L.L.P.

2001 Ross Avenue

3700 Transmell Crow Center

Dallas, TX 75201-2975

Attention: Jeffrey A. Chapman, Esq.

All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; three business days after being deposited in the mail, postage prepaid, if mailed; when receipt is acknowledged by recipient’s facsimile machine operator, if sent by facsimile transmission; and on the day delivered, if sent by overnight air courier guaranteeing next day delivery.

(c) No Inconsistent Agreements. The Company has not, as of the date hereof, entered into, nor shall it, on or after the date hereof, enter into, any agreement with respect to its securities that is inconsistent with the rights granted to the Holders herein or otherwise conflicts with the provisions hereof.

(d) Successors and Assigns. This Agreement shall be binding upon the Company and its successors and assigns.

(e) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

(f) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

(g) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

(h) Severability. If any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby.

(i) Securities Held by the Company. Whenever the consent or approval of Holders of a specified percentage of principal amount of Securities is required hereunder, Securities held by the Company or its affiliates (other than subsequent Holders of Securities if such subsequent Holders

15

are deemed to be affiliates solely by reason of their holdings of such Securities) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage.

16

If the foregoing is in accordance with your understanding of our agreement, please sign and return to the Issuer a counterpart hereof, whereupon this instrument, along with all counterparts, will become a binding agreement among the several Initial Purchasers and the Company in accordance with its terms.

Very truly yours, CONCENTRA OPERATING CORPORATION
	by
		/s/    RICHARD A. PARR II
		Name:	Richard A. Parr II
		Title:	Executive Vice President, General Counsel and Corporate Secretary
CONCENTRA HEALTH SERVICES, INC.,
	by
		/s/    RICHARD A. PARR II
		Name:	Richard A. Parr II
		Title:	Executive Vice President, General Counsel and Corporate Secretary
CONCENTRA INTEGRATED SERVICES, INC.,
	by
		/s/    RICHARD A. PARR II
		Name:	Richard A. Parr II
		Title:	Executive Vice President and Clerk
CONCENTRA LABORATORY, L.L.C.,
	by
		/s/    RICHARD A. PARR II
		Name:	Richard A. Parr II
		Title:	Vice President and Corporate Secretary
CONCENTRA MANAGED CARE BUSINESS TRUST,
	by
		/s/    DANIEL J. THOMAS
		Name:	Daniel J. Thomas
		Title:	Trustee
CONCENTRA MANAGEMENT SERVICES, INC.,
	by
		/s/    RICHARD A. PARR II
		Name:	Richard A. Parr II
		Title:	Vice President and Corporate Secretary

17

CONCENTRA PREFERRED SYSTEMS, INC.,
	by
		/s/    RICHARD A. PARR II
		Name:	Richard A. Parr
		Title:	Executive Vice President, General Counsel and Corporate Secretary
CONCENTRA PREFERRED BUSINESS TRUST,
	by
		/s/    DANIEL J. THOMAS
		Name:	Daniel J. Thomas
		Title:	Trustee
CRA MANAGED CARE OF WASHINGTON, INC.,
	by
		/s/    RICHARD A. PARR II
		Name:	Richard A. Parr II
		Title:	Executive Vice President and Corporate Secretary
CRA-MCO, INC.,
	by
		/s/    RICHARD A. PARR II
		Name:	Richard A. Parr II
		Title:	Executive Vice President and Corporate Secretary
FIRST NOTICE SYSTEMS, INC.,
	by
		/s/    RICHARD A. PARR II
		Name:	Richard A. Parr II
		Title:	Vice President and Corporate Secretary
FOCUS HEALTHCARE BUSINESS TRUST,
	by
		/s/    DANIEL J. THOMAS
		Name:	Daniel J. Thomas
		Title:	Trustee
FOCUS HEALTHCARE MANAGEMENT, INC.,
	by
		/s/    RICHARD A. PARR II
		Name:	Richard A. Parr II
		Title:	Vice President and Corporate Secretary

18

HEALTHNETWORK SYSTEMS LLC,
	by
		/s/    RICHARD A. PARR II
		Name:	Richard A. Parr II
		Title:	Vice President, General Counsel and Corporate Secretary
MEDICAL NETWORK SYSTEMS LLC,
	by
		/s/    RICHARD A. PARR II
		Name:	Richard A. Parr II
		Title:	Vice President, General Counsel and Corporate Secretary
METRACOMP INC.,
	by
		/s/    RICHARD A. PARR II
		Name:	Richard A. Parr II
		Title:	Vice President and Corporate Secretary
NATIONAL HEALTHCARE RESOURCES, INC.,
	by
		/s/    RICHARD A. PARR II
		Name:	Richard A. Parr II
		Title:	Senior Vice President and Corporate Secretary
NHR WASHINGTON, INC.,
	by
		/s/    RICHARD A. PARR II
		Name:	Richard A. Parr II
		Title:	Vice President and Corporate Secretary
OCCUCENTERS I, L.P.
By its general partner
CONCENTRA HEALTH SERVICES INC.,
	by
		/s/    RICHARD A. PARR II
		Name:	Richard A. Parr II
		Title:	Executive Vice President, General Counsel and Corporate Secretary

19

OCI HOLDINGS, INC.,
	by
		/s/    GARY CHEDEKEL
		Name:	Gary Chedekel
		Title:	Corporate Secretary and Treasurer

The foregoing Registration

Rights Agreement is hereby confirmed

and accepted as of the date first

above written.

CREDIT SUISSE FIRST BOSTON LLC

Acting on behalf of itself and as

the Representative of the Initial Purchasers

CREDIT SUISSE FIRST BOSTON LLC

by
	/S/    MICHAEL J. WIGGINS
	Name:    Michael J. Wiggins
	Title:      Director

CITIGROUP GLOBAL MARKETS INC.

Acting on behalf of itself and as

the Representative of the Initial Purchasers

CITIGROUP GLOBAL MARKETS INC.

by
	/s/    TIMOTHY D. DILWORTH
	Name:    Timothy D. Dilworth
	Title:      Vice President

20

ANNEX A

Each broker-dealer that receives Exchange Securities for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Securities received in exchange for Initial Securities where such Initial Securities were acquired by such broker-dealer as a result of market-making activities or other trading activities. The Company has agreed that, for a period of 180 days after the Expiration Date (as defined herein), it will make this Prospectus available to any broker-dealer for use in connection with any such resale. See “Plan of Distribution.”

ANNEX B

Each broker-dealer that receives Exchange Securities for its own account in exchange for Securities, where such Initial Securities were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. See “Plan of Distribution.”

ANNEX C

PLAN OF DISTRIBUTION

Each broker-dealer that receives Exchange Securities for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Securities received in exchange for Initial Securities where such Initial Securities were acquired as a result of market-making activities or other trading activities. The Company has agreed that, for a period of 180 days after the Expiration Date, it will make this prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. In addition, until             , 200 , all dealers effecting transactions in the Exchange Securities may be required to deliver a prospectus.⁽¹⁾

The Company will not receive any proceeds from any sale of Exchange Securities by broker-dealers. Exchange Securities received by broker-dealers for their own account pursuant to the Exchange Offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the Exchange Securities or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer or the purchasers of any such Exchange Securities. Any broker-dealer that resells Exchange Securities that were received by it for its own account pursuant to the Exchange Offer and any broker or dealer that participates in a distribution of such Exchange Securities may be deemed to be an “underwriter” within the meaning of the Securities Act and any profit on any such resale of Exchange Securities and any commission or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The Letter of Transmittal states that, by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.

For a period of 180 days after the Expiration Date the Company will promptly send additional copies of this Prospectus and any amendment or supplement to this Prospectus to any broker-dealer that requests such documents in the Letter of Transmittal. The Company has agreed to pay all expenses incident to the Exchange Offer (including the expenses of one counsel for the Holders of the Securities) other than commissions or concessions of any brokers or dealers and will indemnify the Holders of the Securities (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act.

⁽¹⁾ In addition, the legend required by Item 502(e) of Regulation S-K will appear on the back cover page of the Exchange Offer prospectus.

ANNEX D

CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.

Name:

Address:

If the undersigned is not a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a distribution of Exchange Securities. If the undersigned is a broker-dealer that will receive Exchange Securities for its own account in exchange for Initial Securities that were acquired as a result of market-making activities or other trading activities, it acknowledges that it will deliver a prospectus in connection with any resale of such Exchange Securities; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.

EX-5.1

Exhibit 5.1

[LETTERHEAD OF VINSON & ELKINS L.L.P.]

August 28, 2003

Concentra Operating Corporation

5080 Spectrum Drive

Suite 400 West

Addison, Texas 75001

RE: Registration Statement on Form S-4

Ladies and Gentlemen:

We have acted as counsel to Concentra Operating Corporation, a Nevada corporation (the “Company”), with respect to certain legal matters in connection with the filing of a Registration Statement on Form S-4 (the “Registration Statement”) with the Securities and Exchange Commission (the “Commission”) pursuant to which the Company and the Subsidiary Guarantors (as defined below) are registering under the Securities Act of 1933 (the “Securities Act”) (i) $150,000,000 in aggregate principal amount of the Company’s 9½% Senior Subordinated Notes due 2010 (the “New Notes”) to be exchanged for the Company’s outstanding notes bearing substantially identical terms and in like principal amount (the “Old Notes”) in a registered exchange offer (the “Exchange Offer”) and (ii) the guarantees (the “Guarantees”) of certain subsidiaries of the Company listed in the Registration Statement as guarantors (the “Subsidiary Guarantors”) of the New Notes. The Old Notes were issued, and the New Notes will be issued, under an Indenture dated as of August 13, 2003, among the Company, the Subsidiary Guarantors and The Bank of New York, as Trustee (the “Indenture”). The Exchange Offer will be conducted on such terms and conditions as are set forth in the prospectus contained in the Registration Statement.

We have examined originals or copies, certified or otherwise identified to our satisfaction, of (i) the Registration Statement, (ii) the Indenture, (iii) the Guarantees and (iv) such other corporate records, certificates, statutes and other instruments and documents as we have considered necessary or appropriate for purposes of the opinions hereafter expressed.

In connection with this opinion, we have assumed that (i) all information contained in all documents reviewed by us is true and correct, (ii) all signatures on all documents reviewed by us are genuine, (iii) all documents submitted to us as originals are true and complete, (iv) all documents submitted to us as copies are true and complete copies of the originals thereof, (v) each natural person signing any document reviewed by us had the legal capacity to do so, (vi) each person signing in a representative capacity any document reviewed by us had authority to sign in such capacity, and (vii) the Indenture is a binding agreement of the Trustee.

We have further assumed that the Registration Statement, and any amendments thereto (including post-effective amendments), will have become effective and the New Notes and the Guarantees will be issued and sold in compliance with applicable federal and state securities laws and in the manner described in the Registration Statement.

Based on the foregoing and subject to the assumptions, qualifications, limitations and exceptions set forth herein, we are of the opinion that when the New Notes and the Guarantees have been duly executed, authenticated, issued and delivered in accordance with the provisions of the Indenture, (i) the New Notes will be legally issued and will constitute valid and binding obligations of the Company enforceable against the Company in accordance with their terms, and (ii) the Guarantees will be valid and binding obligations of the Subsidiary Guarantors, enforceable against each Subsidiary Guarantor in accordance with their terms.

The foregoing opinions are subject in each case to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other laws relating to or affecting creditors’ rights generally and to general equity principles (regardless of whether such enforcement is considered in a proceeding in equity or at law). We express

no opinions concerning (a) the validity or enforceability of any provisions contained in the Indenture, the New Notes or the Guarantees that purport to waive or not give effect to rights to notices, defenses, subrogation or other rights or benefits that cannot be effectively waived or rendered ineffective under applicable law or (b) the enforceability of indemnification or contribution provisions to the extent they purport to relate to liabilities resulting from or based upon negligence or any violation of federal or state securities or blue sky laws.

We are members of the bars of the State of Texas and the State of New York. The opinions set forth above are limited in all respects to matters of the laws of the State of Texas, the General Corporation Law and the Limited Liability Act of the State of Delaware, the contract law of the State of New York and the federal laws of the United States of America to the extent specifically referred to herein. You should be aware that we are not admitted to the practice of law in the State of Delaware, which is the state of incorporation or formation of some of the Subsidiary Guarantors. We do not express any opinions as to the laws of any other jurisdiction.

In rendering the foregoing opinions and with your permission we have relied, without independent investigation, upon (1) the opinion of Schreck Brignone attached as Annex A hereto, (2) the opinion of McDermott, Will & Emery attached as Annex B hereto, and (3) the opinion of Richard A. Parr II, General Counsel of the Company, attached as Annex C hereto, and our foregoing opinions are subject to the same qualifications and exceptions stated in such opinions.

We express no opinion as to any matter other than as expressly set forth above, and no opinion is to or may be inferred or implied herefrom. This opinion is given as of the date hereof, and we undertake no, and hereby disclaim any, obligation to advise you regarding any changes subsequent to the date hereof in, or to otherwise communicate with you with respect to, the matters addressed herein. The opinion expressed herein is for the sole use and benefit of, and may only be relied upon, the Company and is not to be used, circulated, quoted or otherwise referred to in connection with any transaction other than the Exchange Offer or by or to any other person without our prior written consent.

We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the use of our firm name in the prospectus forming a part of the Registration Statement under the caption “Legal Matters.” By giving such consent, we do not admit that we are within the category of person whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission issued thereunder.

Very truly yours,

/s/  Vinson & Elkins L.L.P.

2

ANNEX A

[LETTERHEAD OF SCHRECK BRIGNONE]

August 28, 2003

Concentra Operating Corporation

5080 Spectrum Drive

Suite 400 West

Addison, Texas 75001

Ladies and Gentlemen:

We have acted as special Nevada counsel to Concentra Operating Corporation, a Nevada corporation (the “Company”), and to each of the Nevada subsidiaries of the Company listed on Schedule 1 hereto (the “Nevada Subsidiary Guarantors” and, together with the Company, the “Nevada Entities”), in connection with the filing by the Company of a Registration Statement on Form S-4 (the “Registration Statement”) with the Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “Securities Act”), covering the registration of (i) up to $150,000,000 aggregate principal amount of a new series of notes (the “New Notes”) bearing substantially identical terms to and in exchange of the Company’s $150,000,000 aggregate principal amount 9½% Senior Subordinated Notes due 2010 (the “Old Notes”) and (ii) the guarantees of certain subsidiaries of the Company listed in the Registration Statement as guarantors (the “Subsidiary Guarantors”) of the New Notes. The Old Notes were issued, and the New Notes will be issued, pursuant to an indenture, dated as of August 13, 2003, among the Company, the Subsidiary Guarantors and The Bank of New York, as Trustee (the “Indenture”), which will be filed as an exhibit to the Registration Statement.

In rendering the opinions hereinafter expressed, we have examined and relied on originals or copies, certified or otherwise identified to our satisfaction, of (i) the Registration Statement; (ii) the Indenture; (iii) the form of the New Notes; (iv) the Registration Rights Agreement; (v) the Articles of Incorporation and Bylaws, each as amended to date of the Nevada Entities; and (vi) such other documents, corporate records, certificates and other instruments as we have deemed necessary as a basis for this opinion. We have been furnished with, and with your consent have relied upon, certificates of officers of the Nevada Entities with respect to certain factual matters. In addition, we have obtained and relied upon such certificates and assurances from public officials as we have deemed necessary or appropriate for purposes of this opinion.

Without limiting the generality of the foregoing, we have examined such matters of fact and questions of law as we have considered appropriate for purposes of rendering the opinions expressed herein. In our examination, we have assumed (i) the genuineness of all signatures, the authenticity of all documents submitted to us as originals, and the conformity to authentic original documents of all documents submitted to us as certified, conformed, photostatic or facsimile copies; (ii) that each natural person executing any instrument, document, or agreement

Concentra Operating Corporation

August 28, 2003

Page 2

has sufficient legal capacity to do so; (iii) that there are no oral or written modifications of or amendments to the documents we have examined, and there has been no waiver of any of the provisions thereof, by actions or conduct of the parties or otherwise; and (iv) that all corporate records made available to us by the Company and all public records we have reviewed are accurate and complete.

We are qualified to practice law in the State of Nevada. The opinions set forth herein are expressly limited to the laws of the State of Nevada and we do not purport to be experts on, or to express any opinion herein concerning, or to assume any responsibility as to the applicability to or the effect on any of the matters covered herein of, the laws of any other jurisdiction. We express no opinion concerning, and we assume no responsibility as to laws or judicial decisions related to, or any orders, consents or other authorizations or approvals as may be required by, any federal law, including any federal securities law, or any state securities or “Blue Sky” laws.

On the basis of the foregoing, and in reliance thereon, and having regard to legal considerations and other information that we deem relevant, we are of the opinion that:

1. Each of the Nevada Entities has been duly incorporated and is validly existing as a corporation in good standing under the laws of Nevada.

2. Each of the Nevada Entities had the corporate power and authority to enter into the Indenture when it was executed by such Nevada Entity, and has the corporate power and authority to perform its obligations thereunder, including, without limitation, the guarantee of the New Notes by the Nevada Subsidiary Guarantors.

3. Each of the Nevada Entities’ execution and delivery of the Indenture was duly authorized by such Nevada Entity.

4. The New Notes have been duly authorized by the Company.

We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the use of our firm name, if desired, in the prospectus forming part of the Registration Statement under the caption “Legal Matters”. In giving this consent, we do not admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission promulgated thereunder. This opinion may not be relied upon or used by you for any other purpose, or otherwise circulated or furnished to, quoted to, or relied upon by any other person, firm or entity for any purpose, without our prior written consent in each instance, except that, subject to all qualifications, assumptions, exceptions and limitations set forth herein, (i) Vinson & Elkins L.L.P. and (ii) Richard A. Parr II, Executive Vice President, General Counsel and Corporate Secretary of the Company, each may rely on this opinion for the sole purpose of issuing their respective opinions, of even date herewith, to the Company, which opinions will also be filed as exhibits to the Registration Statement.

Very truly yours,

/s/  SCHRECK BRIGNONE

SCHEDULE 1

NEVADA SUBSIDIARY GUARANTORS

Concentra Health Services, Inc.

Concentra Management Services, Inc.

CRA-MCO, Inc.

OCI Holdings, Inc.

ANNEX B

[LETTERHEAD OF MCDERMOTT, WILL & EMERY]

August 28, 2003

Concentra Operating Corporation

5080 Spectrum Drive

Suite 400 West

Addison, Texas 75001

RE: Concentra Integrated Services, Inc.,

Concentra Managed Care Business Trust,

Concentra Preferred Business Trust and

Focus Healthcare Business Trust                

Ladies and Gentlemen:

We have acted as special Massachusetts counsel to Concentra Integrated Services, Inc., a Massachusetts corporation (“Concentra Integrated”), Concentra Managed Care Business Trust, a Massachusetts business trust (“Concentra Managed”), Concentra Preferred Business Trust, a Massachusetts business trust (“Concentra Preferred”), and Focus Healthcare Business Trust, a Massachusetts business trust (“Focus Healthcare” and, together with Concentra Integrated, Concentra Managed and Concentra Preferred, each a “Guarantor” and collectively, the “Guarantors”) in connection with certain legal matters in connection with the Registration Statement on Form S-4 (the “Registration Statement”) filed with the Securities and Exchange Commission (the “Commission”) in connection with the registration by Concentra Operating Corporation, a Nevada corporation (“Concentra”) under the Securities Act of 1933, as amended (the “Securities Act”) of (i) the offer and exchange by Concentra (the “Exchange Offer”) of $150,000,000 in aggregate principal amount of Concentra’s 9½% Senior Subordinated Notes due 2010 (the “Old Notes”), for a new series of notes bearing substantially identical terms and in like principal amount (the “New Notes”) and (ii) the guarantees (the “Guarantees”) of the Guarantor of the New Notes. The Old Notes and the New Notes are collectively referred to herein as the “Notes.” The Old Notes were issued, and the New Notes will be issued, under an Indenture dated as of August 13, 2003 among Concentra, the Guarantors, the other subsidiaries of Concentra named therein and The Bank of New York, as Trustee (the “Indenture”). The Exchange Offer will be conducted on such terms and conditions as are set forth in the prospectus contained in the Registration Statement to which this opinion is filed as an exhibit.

Concentra Operating Corporation

August 28, 2003

Page 2

        In our examination of the documents referred to below, we have assumed the genuineness of all signatures, the legal capacity of natural persons, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified or photostatic copies, and the authenticity of the originals of such copies. As to any facts material to this opinion which we did not independently verify, we have, without independent investigation, relied upon certificates, statements and representations of the Guarantors and their officers and other representatives, and of public officials.

I. SCOPE OF REVIEW

        In rendering the opinions set forth herein, we have examined and relied on originals or copies of the following:

(a) the Purchase Agreement dated August 5, 2003 (the “Purchase Agreement”) among Concentra, Credit Suisse First Boston LLC and Citigroup Global Markets Inc., as Representatives of the Initial Purchasers listed in Schedule A thereto (the “Representatives”), the Guarantors and certain other subsidiaries of Concentra;

(b) the Indenture (the “Indenture”) dated August 13, 2003 executed by Concentra, each of the Guarantors and the other subsidiaries of Concentra named therein in favor of the Bank of New York as Trustee;

(c) the Registration Rights Agreement (the “Registration Rights Agreement”) dated August 13, 2003 among Concentra, the Guarantors, certain other subsidiaries of Concentra and the Representatives;

(d) the Guarantees executed by each of the Guarantors and the other subsidiaries of Concentra named therein in favor of the Bank of New York as Trustee;

(e) the form of Old Notes and New Notes each attached as exhibits to the Indenture;

(f) the Registration Statement;

(g) a certificate of the Clerk or Trustee of each Guarantor dated August 13, 2003 certifying as to (A) the articles of incorporation, declaration of trust and/or by-laws of such Guarantor (the “Organizational Documents”), and (B) resolutions adopted on July 23, 2003, by the Board of Directors or Trustees of each Guarantor;

Concentra Operating Corporation

August 28, 2003

Page 3

(h) a certificate of the Secretary of State of the Commonwealth of Massachusetts, dated August 4, 2003 attesting to the continued legal existence and good standing of each Guarantor; and

(i) such other documents and records, and other certificates, opinions and instruments and have conducted such investigation as we have deemed necessary as a basis for the opinions expressed below.

The documents referred to in clauses (a) through (d) above are herein collectively called the “Subject Documents”.

        For purposes hereof, “Applicable Laws” means those laws, rules and regulations of the Commonwealth of Massachusetts which, in our experience, are normally applicable to transactions of the type contemplated by the Subject Documents (but specifically excluding any securities, health-care or anti-fraud statute, rule or regulation).

        Terms not otherwise defined herein are used herein as defined in the Purchase Agreement.

        We are admitted to the Bar in the Commonwealth of Massachusetts. We express no opinion as to the laws of any jurisdiction other than the laws of the Commonwealth of Massachusetts. In this respect we call to your attention that Subject Documents are governed by the laws of the State of New York and we express no opinion as to the effect of any such other laws on the opinions expressed herein.

        Our opinions are also subject to the following assumptions and qualifications:

II. ASSUMPTIONS

        A. We have assumed, with your permission, that:

(1) Each of the Subject Documents have been duly authorized, executed and delivered by the parties thereto (other than the Guarantors); and

(2) Each of the Subject Documents constitutes the legal, valid and binding obligation of each party thereto (including the Guarantors), enforceable against such parties (including the Guarantors) in accordance with its terms.

Concentra Operating Corporation

August 28, 2003

Page 4

We understand that you are separately receiving opinions, subject to certain assumptions and limitations, with respect to the foregoing from Vinson & Elkins, L.L.P. and Richard A. Parr II, General Counsel, Executive Vice President and Corporate Secretary of Concentra.

        B. We have further assumed that the Registration Statement, and any amendments thereto (including post-effective amendments), will have become effective and the New Notes will be issued and sold in compliance with applicable federal and state securities laws and in the manner described in the Registration Statement.

III. QUALIFICATIONS

        A. We express no opinion as to the effect on the opinions herein stated of (i) the compliance or non-compliance of any party to the Subject Documents with any federal, state, or other laws or regulations applicable to it or (ii) the legal or regulatory status or the nature of the business of such other parties;

        B. We express no opinion as to the applicability or effect of Sections 364, 547, 548 or 552 of the United States Bankruptcy Code (the “Bankruptcy Code”) or any comparable provision of state law on the Subject Documents or any transaction contemplated thereby.

IV. OPINIONS

Based upon the foregoing and subject to the assumptions, limitations, qualifications, exceptions and other limitations set forth herein, we are of the opinion that:

1. Each of the Guarantors is validly existing and in good standing under the laws of the Commonwealth of Massachusetts.

2. Each of the Guarantors has the corporate or trust power, as applicable, to execute, deliver and perform all of its obligations under the Indenture and the Guarantees to which it is a party. The execution and delivery of the Indenture and each of the Guarantees to which it is a party and the consummation by each of the Guarantors of the transactions contemplated thereby have been duly authorized by requisite corporate or trust action, as applicable, on the part of each of the Guarantors.

* * *

This opinion is limited to the matters expressly set forth herein and no opinion is implied or may be inferred beyond the matters expressly so stated. This opinion is given as of the date hereof and we do not undertake any liability or responsibility to inform you of any change in

Concentra Operating Corporation

August 28, 2003

Page 5

circumstances occurring, or additional information becoming available to us, after the date hereof which might alter the opinions contained herein.

This opinion is, furnished to you solely for your benefit in connection with the transactions described above and is not to be used, circulated, quoted, relied upon or otherwise referred to for any other purpose without our prior written consent, and this opinion may not be relied upon by you for any other purpose or by any other person in any manner or for any purpose, other than by Richard A. Parr II, General Counsel, Executive Vice President and Corporate Secretary of Concentra, Vinson & Elkins, L.L.P. and Bank of New York as Trustee.

We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the use of our firm name in the prospectus forming a part of the Registration Statement under the caption “Legal Matters.” By giving such consent, we do not admit that we are within the category of person whose consent is required under Section 7 of the Securities Act or the rules and regulation of the Commission issued thereunder.

Very truly yours,

/s/ McDermott, Will & Emery

ANNEX C

[LETTERHEAD OF CONCENTRA INC.]

August 28, 2003

Concentra Operating Corporation

5080 Spectrum Drive

Suite 400 West

Addison, Texas 75001

Ladies and Gentlemen:

I am the Executive Vice President, Corporate Secretary and General Counsel of Concentra Operating Corporation, a Nevada corporation (the “Company”). The Company is the direct or indirect parent of each of the Guarantors (as defined below). This opinion is being delivered in connection with the filing of a Registration Statement on Form S-4 (the “Registration Statement”) with the Securities and Exchange Commission (the “Commission”) pursuant to which the Company and the Guarantors are registering under the Securities Act of 1933, as amended (the “Securities Act”), (i) $150,000,000 in aggregate principal amount of the Company’s 9½% Senior Subordinated Notes due 2010 (the “New Notes”) to be exchanged for the Company’s outstanding notes bearing substantially identical terms and in like principal amount (the “Old Notes”) in a registered exchange offer (the “Exchange Offer”) and (ii) the guarantees (the “Guarantees”) of certain subsidiaries of the Company listed in the Registration Statement as guarantors (the “Guarantors”) of the New Notes. The Old Notes were issued, and the New Notes will be issued, under an Indenture dated as of August 13, 2003 among the Company, the Subsidiary Guarantors and The Bank of New York, as Trustee (the “Indenture”). The Exchange Offer will be conducted on such terms and conditions as are set forth in the prospectus contained in the Registration Statement.

In reaching the opinions set forth herein, I have examined the Indenture, the Registration Statement and such other corporate records, certificates, statutes and other instruments and documents as I have considered necessary or appropriate for purposes of the opinions hereafter expressed.

In rendering such opinions, I have assumed, in each case without independent verification, that (i) each document has been duly executed and delivered by all parties to such document (other than by the Company and Guarantors) and that each such document is valid, binding and enforceable against the parties thereto other than the Company or any of the Guarantors, (ii) all information contained in all documents I reviewed is true and correct, (iii) all signatures (other than signatures of representatives of the Company or the Guarantors) on all

Concentra Operating Corporation

August 28, 2003

Page 2

documents I reviewed are genuine, (iv) all documents submitted to me as originals are true and complete, (v) all documents submitted to me as copies are true and complete copies of the originals thereof, and (vi) each natural person signing any document I reviewed (other than representatives of the Company or any of the Guarantors) had the legal capacity to do so.

I have assumed the due and valid authorization, execution and delivery of the Indenture by the Trustee and that the Indenture constitutes a valid and binding agreement of the Trustee, enforceable against the Trustee in accordance with its terms. As to questions of fact material to this opinion not independently established by me, I have relied, to the extent I have deemed reasonably appropriate, upon certificates of public officials.

Based upon the foregoing, and subject to the limitations, qualifications, exceptions and assumptions contained herein, I express the following opinions:

1. The Indenture has been duly authorized, executed and delivered by the Company and each Guarantor.

2. The New Notes have been duly authorized by the Company and each of the Guarantors.

3. The Guarantee to be endorsed on the New Notes by each Guarantor has been duly authorized by the Company and each such Guarantor.

4. The Company is an existing corporation in good standing under the laws of the State of Nevada, with corporate power and authority to execute, deliver and perform its obligations under the Indenture and the New Notes.

5. Each subsidiary of the Company is an existing corporation, limited liability company or other entity in good standing under the laws of the jurisdiction of its incorporation or organization, with power and authority (corporate, limited liability company and other, as applicable) to execute, deliver and perform its obligations under the Indenture and the Guarantees.

The opinions set forth above are limited in all respects to matters of the laws of the State of Texas, the Delaware General Corporation Law, the Delaware Limited Liability Company Act, the Tennessee Business Corporation Act and the federal laws of the United States of America. You should be aware that I am admitted to the practice of law only in the states of Texas, Oklahoma and Tennessee.

With your permission and without independent investigation, in expressing the foregoing opinions, I have relied (1) with respect to the Company, Concentra Management Services, Inc., a Nevada corporation, Concentra Health Services, Inc., a Nevada corporation, OCI Holdings, Inc.,

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August 28, 2003

Page 3

a Nevada corporation, and CRA-MCO, Inc., a Nevada corporation, upon the opinion of even date herewith of Schreck Brignone, and (2) with respect to Concentra Integrated Services, Inc., a Massachusetts corporation, Focus Healthcare Business Trust, a Massachusetts business trust, Concentra Preferred Business Trust, a Massachusetts business trust and Concentra Managed Care Business Trust, a Massachusetts business trust, on the opinion of even date herewith of McDermott, Will & Emery.

In expressing the foregoing opinions relating to the subsidiaries of the Company that are organized under the laws of a state other than the States of Nevada, Delaware, Massachusetts, Tennessee or Texas I have assumed, that the relevant provisions of the business corporation laws of the states of incorporation and organization of each of such subsidiaries are identical in all respects to the Business Corporation Act of the State of Texas, in each case, without having made any independent investigation of such provisions.

I express no opinion as to any matter other than as expressly set forth above, and no such other opinion is to, or may be, inferred or implied herefrom. This opinion is given as of the date hereof, and I undertake no, and hereby disclaim any, obligation to advise you of any change in any matter set forth herein.

Vinson & Elkins L.L.P. is authorized to rely upon this opinion. Except as stated in the previous sentence, this opinion may not be relied upon by you for any other purpose and may not be used or relied upon for any purpose by any other person without my prior written consent. Except for the use permitted herein, this opinion is not to be quoted or reproduced in whole or in part or otherwise referred to in any manner nor is it to be filed with any governmental agency or delivered to any other person without my prior written consent.

I hereby consent to the filing of this opinion as an exhibit to the Registration Statement and, if desired, to the use of my name in the prospectus forming part of the Registration Statement under the caption “Legal Matters.” By giving such consent, I do not admit that I am within the category of person whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission issued thereunder.

Very truly yours,

/s/ Richard A. Parr II

EX-10.2

Exhibit 10.2

$435,000,000

CREDIT AGREEMENT

Among

CONCENTRA INC.,

as Holdings,

CONCENTRA OPERATING CORPORATION,

as Borrower,

The Several Lenders

from Time to Time Parties Hereto,

JPMORGAN CHASE BANK,

as Administrative Agent,

DEUTSCHE BANC ALEX BROWN

as Documentation Agent,

and

CITICORP NORTH AMERICA, INC.

and

CREDIT SUISSE FIRST BOSTON

as Co-Syndication Agents

Dated as of August 13, 2003

J.P. MORGAN SECURITIES INC.,

as Lead Arranger and Sole Book Manager

and

CREDIT SUISSE FIRST BOSTON

and

CITIGROUP GLOBAL MARKETS INC.,

as Co-Arrangers

TABLE OF CONTENTS

		Page
SECTION 1.	DEFINITIONS	1
1.1	Defined Terms	1
1.2	Other Definitional Provisions	24
SECTION 2.	AMOUNT AND TERMS OF COMMITMENTS	24
2.1	Term Commitments	24
2.2	Procedure for Term Loan Borrowing	25
2.3	Repayment of Term Loans	25
2.4	Revolving Commitments	26
2.5	Procedure for Revolving Loan Borrowing	26
2.6	Commitment Fees, etc.	26
2.7	Termination or Reduction of Revolving Commitments	27
2.8	Optional Prepayments	27
2.9	Mandatory Prepayments and Commitment Reductions	27
2.10	Conversion and Continuation Options	29
2.11	Limitations on Eurodollar Tranches	29
2.12	Interest Rates and Payment Dates	29
2.13	Computation of Interest and Fees	30
2.14	Inability to Determine Interest Rate	30
2.15	Pro Rata Treatment and Payments	31
2.16	Requirements of Law	32
2.17	Taxes	33
2.18	Indemnity	35
2.19	Change of Lending Office	36
2.20	Replacement of Lenders	36
SECTION 3.	LETTERS OF CREDIT	36
3.1	L/C Commitment	36
3.2	Procedure for Issuance of Letter of Credit	37
3.3	Fees and Other Charges	37
3.4	L/C Participations	37
3.5	Reimbursement Obligation of the Borrower	38
3.6	Obligations Absolute	39
3.7	Letter of Credit Payments	39
3.8	Applications	39
SECTION 4.	REPRESENTATIONS AND WARRANTIES	39
4.1	Financial Condition	39
4.2	No Change	40
4.3	Existence; Compliance with Law	40

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4.4	Power; Authorization; Enforceable Obligations	41
4.5	No Legal Bar	41
4.6	Litigation	41
4.7	No Default	41
4.8	Ownership of Property; Liens	41
4.9	Intellectual Property	42
4.10	Taxes	42
4.11	Federal Regulations	42
4.12	Labor Matters	42
4.13	ERISA	43
4.14	Investment Company Act; Other Regulations	43
4.15	Subsidiaries	43
4.16	Use of Proceeds	43
4.17	Environmental Matters	43
4.18	Accuracy of Information, etc.	44
4.19	Security Documents	45
4.20	Solvency	45
4.21	Senior Indebtedness	45
4.22	Insurance	45
4.23	Certain Documents	46
SECTION 5.	CONDITIONS PRECEDENT	46
5.1	Conditions to Initial Extension of Credit	46
5.2	Conditions to Each Extension of Credit	49
SECTION 6.	AFFIRMATIVE COVENANTS	50
6.1	Financial Statements	50
6.2	Certificates; Other Information	52
6.3	Payment of Obligations	53
6.4	Maintenance of Existence; Compliance	53
6.5	Maintenance of Property; Insurance	53
6.6	Inspection of Property; Books and Records; Discussions	53
6.7	Notices	54
6.8	Environmental Laws	54
6.9	Additional Collateral, etc.	55
SECTION 7.	NEGATIVE COVENANTS	56
7.1	Financial Condition Covenants.	57
7.2	Indebtedness	58
7.3	Liens	60
7.4	Fundamental Changes	61
7.5	Disposition of Property	62
7.6	Restricted Payments	62
7.7	Capital Expenditures	63

ii

7.8	Investments	63
7.8A	Acquisitions	64
7.9	Optional Payments and Modifications of Certain Debt Instruments	65
7.10	Transactions with Affiliates	65
7.11	Sales and Leasebacks	66
7.12	Changes in Fiscal Periods	66
7.13	Negative Pledge Clauses	66
7.14	Clauses Restricting Subsidiary Distributions	66
7.15	Lines of Business	66
7.16	Limitation of Activities of Holdings	67
7.17	Limitation of Permitted Joint Ventures	67
SECTION 8.	EVENTS OF DEFAULT	67
SECTION 9.	THE AGENTS	71
9.1	Appointment	71
9.2	Delegation of Duties	71
9.3	Exculpatory Provisions	72
9.4	Reliance by Administrative Agent	72
9.5	Notice of Default	72
9.6	Non–Reliance on Agents and Other Lenders	73
9.7	Indemnification	73
9.8	Agent in Its Individual Capacity	74
9.9	Successor Administrative Agent	74
9.10	Other Representatives	74
SECTION 10.	MISCELLANEOUS	74
10.1	Amendments and Waivers	74
10.2	Notices	75
10.3	No Waiver; Cumulative Remedies	76
10.4	Survival of Representations and Warranties	77
10.5	Payment of Expenses and Taxes	77
10.6	Successors and Assigns; Participations and Assignments	79
10.7	Adjustments; Set–off	81
10.8	Counterparts	82
10.9	Severability	82
10.10	Integration	82
10.11	GOVERNING LAW	82
10.12	Submission To Jurisdiction; Waivers	82
10.13	Acknowledgments	83
10.14	Releases of Guarantees and Liens	83
10.15	Confidentiality	84
10.16	WAIVERS OF JURY TRIAL	85

iii

ANNEX:
A	Pricing Grid
SCHEDULES:
1.1	Commitments
4.4	Consents, Authorizations, Filings and Notices
4.15	Subsidiaries
4.19	UCC Filing Jurisdictions
4.19(b)	Real Property
7.2(d)	Existing Indebtedness
7.3(f)	Existing Liens
EXHIBITS:
A	Form of Guarantee and Collateral Agreement
B	Form of Compliance Certificate
C	Form of Closing Certificate
D	Form of Assignment and Assumption
E-1	Form of Legal Opinion of Vinson & Elkins L.L.P., counsel to Holdings, the Borrower and its Subsidiaries
E-2	Form of Legal Opinion of Richard A. Parr, general counsel to Holdings, the Borrower and its Subsidiaries
E-3	Form of Legal Opinion of Schreck Brignone, Nevada counsel to the Borrower and certain Subsidiaries
E-4	Form of Legal Opinion of McDermott, Will & Emery, Massachusetts counsel to certain Subsidiaries
F	Form of Exemption Certificate

iv

CREDIT AGREEMENT, dated as of August 13, 2003, among CONCENTRA 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 this Agreement (the “Lenders”), JPMORGAN CHASE BANK, as administrative agent, Deutsche Banc Alex Brown, as documentation agent, and Citicorp North America, Inc. and Credit Suisse First Boston, as co-syndication agents.

RECITALS

WHEREAS, in order to (a) refinance certain indebtedness of the Borrower (b) finance a portion of the Transactions (as hereinafter defined), and (c) to provide for certain ongoing working capital needs of the Borrower and its Subsidiaries, the Borrower desires to obtain financing through (i) the issuance of senior subordinated notes for an aggregate principal amount of not more than $150,000,000 and (ii) the incurrence of senior secured Indebtedness of an aggregate principal amount of not more than $435,000,000 by entering into this Agreement with the Lenders hereto.

NOW, THEREFORE, in consideration of the mutual provisions, covenants and agreements herein contained, the parties hereto hereby agree as follows:

SECTION 1. DEFINITIONS

1.1 Defined Terms. As used in this Agreement, the terms listed in this Section 1.1 shall have the respective meanings set forth in this Section 1.1.

“1999 Senior Subordinated Note Indenture”: the indenture entered into by the Borrower, the Subsidiary Guarantors and United States Trust Company, as trustee thereunder, in connection with the issuance of the 1999 Senior Subordinated Notes, together with all instruments and other agreements entered into by the Borrower and the Subsidiary Guarantors in connection therewith, as the same may be amended, supplemented or otherwise modified from time to time in accordance with Section 7.9.

“1999 Senior Subordinated Notes”: the 13% Senior Subordinated Notes due 2009 issued by the Borrower.

“2002 Holdings Bridge Notes”: the $55,000,000 unsecured senior bridge notes due 2004 issued by Holdings.

“2003 Issuance”: as defined in Section 5.1(b)(i).

“2003 Senior Subordinated Note Indenture”: the indenture entered into by the Borrower, the Subsidiary Guarantors and The Bank of New York, as trustee thereunder, in connection with the issuance of the 2003 Senior Subordinated Notes, together with all instruments and other agreements entered into by the Borrower and the Subsidiary Guarantors in connection therewith, as the same may be amended, supplemented or otherwise modified from time to time in accordance with Section 7.9.

“2003 Senior Subordinated Notes”: the $150,000,000 9.5% Senior Subordinated Notes due 2010 issued by the Borrower on the Closing Date pursuant to the 2003 Senior Subordinated Note Indenture.

“ABR”: for any day, a rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on such day plus ½ of 1%. For purposes hereof: “Prime Rate” shall mean the rate of interest per annum publicly announced from time to time by the Reference Lender as its prime rate in effect at its principal office in New York City (the Prime Rate not being intended to be the lowest rate of interest charged by the Reference Lender in connection with extensions of credit to debtors). Any change in the ABR due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective as of the opening of business on the effective day of such change in the Prime Rate or the Federal Funds Effective Rate, respectively.

“ABR Loans”: Loans the rate of interest applicable to which is based upon the ABR.

“Acquisition Capital Expenditures”: for any period, with respect to any Person, the aggregate of all expenditures by such Person and its Subsidiaries for the acquisition of fixed or capital assets in Permitted Acquisitions that should be capitalized under GAAP on a consolidated balance sheet of such Person and its Subsidiaries.

“Adjustment Date”: as defined in the Pricing Grid.

“Administrative Agent”: JPMorgan Chase Bank, together with its affiliates as the administrative agent for the Lenders under this Agreement and the other Loan Documents, together with any of its permitted successors hereunder.

“Affiliate”: as to any Person, any other Person that, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person, other than any Professional Association. For purposes of this definition, “control” of a Person means the power, directly or indirectly, either to (a) vote 10% or more of the securities having ordinary voting power for the election of directors (or persons performing similar functions) of such Person or (b) direct or cause the direction of the management and policies of such Person, whether by contract or otherwise.

“Agents”: the collective reference to the Co-Syndication Agents, the Documentation Agent and the Administrative Agent.

“Aggregate Exposure”: with respect to any Lender at any time, an amount equal to (a) until the Closing Date, the aggregate amount of such Lender’s Commitments at such time and (b) thereafter, the sum of (i) the aggregate then unpaid principal amount of such Lender’s Term Loans and (ii) the amount of such Lender’s Revolving Commitment then in effect or, if the Revolving Commitments have been terminated, the amount of such Lender’s Revolving Extensions of Credit then outstanding.

2

“Aggregate Exposure Percentage”: with respect to any Lender at any time, the ratio (expressed as a percentage) of such Lender’s Aggregate Exposure at such time to the Aggregate Exposure of all Lenders at such time.

“Agreement”: this Credit Agreement, as amended, supplemented, restated or otherwise modified from time to time.

“Applicable Margin”: (a) for each Term Loan, the rate per annum which is 2.75% for ABR Loans and 3.75% for Eurodollar Loans; and (b) for Revolving Loans, the rate per annum which is 2.25% for ABR Loans and 3.25% for Eurodollar Loans; provided, that on and after the first Adjustment Date occurring after receipt by the Administrative Agent of the first available Compliance Certificate after the Closing Date, the Applicable Margin with respect to Revolving Loans will be determined pursuant to the Pricing Grid.

“Application”: an application, in such form as the Issuing Lender may specify from time to time, requesting the Issuing Lender to open a Letter of Credit.

“Approved Fund”: as defined in Section 10.6(b)(ii).

“Asset Sale”: any Disposition of property or series of related Dispositions of property (excluding any such Disposition permitted by clause (a), (b), (c) or (d) of Section 7.5).

“Assignee”: as defined in Section 10.6(b)(i).

“Assignment and Assumption”: an Assignment and Assumption, substantially in the form of Exhibit D.

“Available Revolving Commitment”: as to any Revolving Lender at any time, an amount equal to the excess, if any, of (a) such Lender’s Revolving Commitment then in effect over (b) such Lender’s Revolving Extensions of Credit then outstanding.

“Bank Debt Repayment”: as defined in Section 5.1(b)(iii)(A).

“Benefitted Lender”: as defined in Section 10.7(a).

“Board”: the Board of Governors of the Federal Reserve System of the United States (or any successor).

“Borrower”: as defined in the preamble hereto.

“Borrowing Date”: any Business Day specified by the Borrower as a date on which the Borrower requests the relevant Lenders to make Loans hereunder.

“Business”: as defined in Section 4.17(b).

“Business Day”: a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close, provided, that with respect to notices and determinations in connection with, and payments of principal and

3

interest on, Eurodollar Loans, such day is also a day for trading by and between banks in Dollar deposits in the interbank eurodollar market.

“Capital Expenditures”: for any period, with respect to any Person, the sum of all Maintenance Capital Expenditures and Acquisition Capital Expenditures by such Person and its Subsidiaries.

“Capital Lease Obligations”: as to any Person, the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP and, for the purposes of this Agreement, the amount of such obligations at any time shall be the capitalized amount thereof at such time determined in accordance with GAAP.

“Capital Stock”: any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants, rights or options to purchase any of the foregoing.

“Cash Equivalents”: (a) marketable direct obligations issued by, or unconditionally guaranteed by, the United States government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within one year from the date of acquisition; (b) certificates of deposit, time deposits, eurodollar time deposits or overnight bank deposits having maturities of one year or less from the date of acquisition issued by any Lender or by any commercial bank organized under the laws of the United States or any state thereof having combined capital and surplus of not less than $500,000,000; (c) commercial paper of an issuer rated at least A-1 by Standard & Poor’s Ratings Services (“S&P”) or P-1 by Moody’s Investors Service, Inc. (“Moody’s”), or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of commercial paper issuers generally, and maturing within one year from the date of acquisition; (d) repurchase obligations of any Lender or of any commercial bank satisfying the requirements of clause (b) of this definition, having a term of not more than 90 days, with respect to securities issued or fully guaranteed or insured by the United States government; (e) securities with maturities of one year or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least A-1 by S&P or P-1 by Moody’s; (f) securities with maturities of one year or less from the date of acquisition backed by standby letters of credit issued by any Lender or any commercial bank satisfying the requirements of clause (b) of this definition; or (g) shares of money market mutual or similar funds which invest exclusively in assets satisfying the requirements of clauses (a) through (f) of this definition.

“Closing Date”: the date on which the conditions precedent set forth in Section 5.1 shall have been satisfied, which date is August 13, 2003.

4

“Co-Arrangers”: Citigroup Global Markets Inc. and Credit Suisse First Boston, together with their respective affiliates, as co-arrangers for the Facilities, together with any of their respective successors.

“Co-Syndication Agents”: Citicorp North America, Inc. and Credit Suisse First Boston, together with their respective affiliates as the co-syndication agents under this Agreement and the other Loan Documents, together with any of their respective successors.

“Code”: the Internal Revenue Code of 1986, as amended from time to time.

“Collateral”: all of the property of the Loan Parties, now owned or hereafter acquired, upon which a Lien is purported to be created by any Security Document.

“Commitment”: as to any Lender, the sum of the Term Commitment and the Revolving Commitment of such Lender.

“Commitment Fee Rate”:  ¹/2 of 1% per annum.

“Commonly Controlled Entity”: an entity, whether or not incorporated, that is under common control with the Borrower within the meaning of Section 4001 of ERISA or is part of a group that includes the Borrower and that is treated as a single employer under Section 414 of the Code.

“Compliance Certificate”: a certificate duly executed by a Responsible Officer substantially in the form of Exhibit B.

“Confidential Information Memorandum”: the Confidential Information Memorandum dated July 2003 and furnished to the Lenders.

“Consolidated Current Assets”: at any date, all amounts (other than cash and Cash Equivalents) that would, in conformity with GAAP, be set forth opposite the caption “total current assets” (or any like caption) on a consolidated balance sheet of the Borrower and its Subsidiaries at such date.

“Consolidated Current Liabilities”: at any date, all amounts that would, in conformity with GAAP, be set forth opposite the caption “total current liabilities” (or any like caption) on a consolidated balance sheet of the Borrower and its Subsidiaries at such date, but excluding (a) the current portion of any Funded Debt of the Borrower and its Subsidiaries and (b) without duplication of clause (a) above, all Indebtedness consisting of Revolving Loans to the extent otherwise included therein.

“Consolidated EBITDA”: for any period, Consolidated Net Income for such period plus, without duplication and to the extent reflected as a charge in the statement of such Consolidated Net Income for such period, the sum of (a) income tax expense, (b) interest expense, amortization or writeoff of debt discount and debt issuance costs and commissions, discounts and other fees and charges associated with Indebtedness (including the Loans), (c) depreciation and amortization expense, (d) amortization of intangibles (including, but not limited to, goodwill) and organization costs, (e) any extraordinary, unusual or non-recurring non-

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cash expenses or losses (including, whether or not otherwise includable as a separate item in the statement of such Consolidated Net Income for such period, non-cash losses on sales of assets outside of the ordinary course of business), (f) cash dividends or similar distributions paid to owners (other than the Borrower and its Subsidiaries) of Permitted Joint Ventures in an aggregate amount not to exceed $5,000,000 in each fiscal year, (g) any other non-cash charges, (h) losses on the extinguishment of debt, (i) fees and expenses incurred in connection with the issuance of Indebtedness, (j) non-cash expenses associated with the issuance of employee stock or stock options, (k) non-cash charges incurred in connection with the consummation of acquisitions of entities under common control and (l) charges classified as cumulative changes in accounting principles and minus, to the extent included in the statement of such Consolidated Net Income for such period, the sum of (a) interest income, (b) any extraordinary, unusual or non-recurring income or gains (including, whether or not otherwise includable as a separate item in the statement of such Consolidated Net Income for such period, gains on the sales of assets outside of the ordinary course of business), (c) cash payments for such period that relate to prior period non-cash charges previously added back pursuant to clause (e), (g) or (k), above and (d) any other non-cash income, all as determined on a consolidated basis. For the purposes of calculating Consolidated EBITDA for any period of four consecutive fiscal quarters (each, a “Reference Period”) pursuant to any determination of the Consolidated Leverage Ratio, (i) if at any time during such Reference Period the Borrower or any Subsidiary shall have made any Material Disposition, the Consolidated EBITDA for such Reference Period shall be reduced by an amount equal to the Consolidated EBITDA (if positive) attributable to the property that is the subject of such Material Disposition for such Reference Period or increased by an amount equal to the Consolidated EBITDA (if negative) attributable thereto for such Reference Period and (ii) if during such Reference Period the Borrower or any Subsidiary shall have made a Material Acquisition, Consolidated EBITDA for such Reference Period shall be calculated after giving pro forma effect thereto as if such Material Acquisition occurred on the first day of such Reference Period. As used in this definition, “Material Acquisition” means any acquisition of property or series of related acquisitions of property that (a) constitutes assets comprising all or substantially all of an operating unit of a business or constitutes all or substantially all of the common stock of a Person and (b) involves the payment of consideration by the Borrower and its Subsidiaries in excess of $5,000,000; and “Material Disposition” means any Disposition of property or series of related Dispositions of property that (x) constitutes assets comprising all or substantially all of an operating unit of a business or constitutes all or substantially all of the common stock of a Person and (y) yields gross proceeds to the Borrower or any of its Subsidiaries in excess of $5,000,000.

“Consolidated Fixed Charge Coverage Ratio”: for any period, the ratio of (a) the sum of Consolidated EBITDA for such period and Consolidated Lease Expense for such period to (b) Consolidated Fixed Charges for such period.

“Consolidated Fixed Charges”: for any period, the sum (without duplication) of (a) Consolidated Interest Expense for such period, (b) Consolidated Lease Expense for such period, (c) scheduled payments made during such period on account of principal of Indebtedness of the Borrower or any of its Subsidiaries (including scheduled principal payments in respect of the Term Loans and payments of Revolving Loans accompanying scheduled reductions of the Revolving Commitments), (d) Maintenance Capital Expenditures for such period not financed by

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Indebtedness permitted pursuant to Section 7.2(e) or (i) and (e) the aggregate amount of income taxes for which provision is made by the Borrower and its Subsidiaries for such period.

“Consolidated Interest Coverage Ratio”: for any period, the ratio of (a) Consolidated EBITDA for such period to (b) Consolidated Interest Expense for such period.

“Consolidated Interest Expense”: for any period, total cash interest expense (including that attributable to Capital Lease Obligations), net of cash interest income, of the Borrower and its Subsidiaries for such period with respect to all outstanding Indebtedness of the Borrower and its Subsidiaries (including all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing and net costs under Hedge Agreements in respect of interest rates to the extent such net costs are allocable to such period in accordance with GAAP but excluding net payments received under Hedge Agreements).

“Consolidated Lease Expense”: for any period, the aggregate amount of fixed and contingent rentals payable by the Borrower and its Subsidiaries for such period with respect to leases of real and personal property, determined on a consolidated basis in accordance with GAAP.

“Consolidated Leverage Ratio”: as at the last day of any period, the ratio of (a) Consolidated Total Debt on such day to (b) Consolidated EBITDA for such period.

“Consolidated Net Income”: for any period, the consolidated net income (or loss) of the Borrower and its Subsidiaries, determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded (a) the income (or deficit) of any Person accrued prior to the date it becomes a Subsidiary of the Borrower or is merged into or consolidated with the Borrower or any of its Subsidiaries, (b) the income (or deficit) of any Person (other than a Subsidiary of the Borrower) in which the Borrower or any of its Subsidiaries has an ownership interest, except to the extent that any such income is actually received by the Borrower or such Subsidiary in the form of dividends or similar distributions and (c) the undistributed earnings of any Subsidiary of the Borrower to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary is not at the time permitted by the terms of any Contractual Obligation (other than under any Loan Document) or Requirement of Law applicable to such Subsidiary.

“Consolidated Total Debt”: at any date, the aggregate principal amount of all Indebtedness of the Borrower and its Subsidiaries at such date, determined on a consolidated basis in accordance with GAAP.

“Consolidated Working Capital”: at any date, the excess of Consolidated Current Assets on such date over Consolidated Current Liabilities on such date.

“Continuing Directors”: the directors of Holdings on the Closing Date and each other director, if, in each case, such other director’s nomination for election to the board of directors of Holdings is recommended by at least a majority of the then Continuing Directors (provided, that the act or vote of a majority of the directors is sufficient to constitute such act or vote as that of the board of directors of Holdings, otherwise, such nomination for election of

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directors of Holdings shall be by at least the requisite number of the then Continuing Directors as is required therefor) or such other director receives the vote of the Permitted Investors in his or her election by the shareholders of Holdings.

“Contractual Obligation”: as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.

“Control Investment Affiliate”: as to any Person, any other Person that (a) directly or indirectly, is in control of, is controlled by, or is under common control with, such Person and (b) is organized by such Person primarily for the purpose of making equity or debt investments in one or more companies. For purposes of this definition, “control” of a Person means the power, directly or indirectly, to direct or cause the direction of the management and policies of such Person whether by contract or otherwise.

“Default”: any of the events specified in Section 8, whether or not any requirement for the giving of notice, the lapse of time, or both, has been satisfied.

“Designated Lender”: as defined in Section 5.1(a).

“Disposition”: with respect to any property, any sale, lease, sale and leaseback, assignment, conveyance, transfer or other disposition thereof. The terms “Dispose” and “Disposed of” shall have correlative meanings.

“Documentation Agent”: Deutsche Banc Alex Brown, together with its affiliates, as documentation agent under this Agreement and the other Loan Documents, together with any of its successors.

“Dollars” and “$”: dollars in lawful currency of the United States.

“Domestic Subsidiary”: any Subsidiary of the Borrower organized under the laws of any jurisdiction within the United States.

“ECF Percentage”: 50%.

“Environmental Laws”: any and all foreign, Federal, state, local or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees, requirements of any Governmental Authority or other Requirements of Law (including common law) regulating, relating to or imposing liability or standards of conduct concerning protection of the environment or of human health as affected by the environment as now or may at any time hereafter be in effect.

“ERISA”: the Employee Retirement Income Security Act of 1974, as amended from time to time.

“Eurocurrency Reserve Requirements”: for any day as applied to a Eurodollar Loan, the aggregate (without duplication) of the maximum rates (expressed as a decimal fraction) of reserve requirements in effect on such day (including basic, supplemental, marginal

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and emergency reserves under any regulations of the Board or other Governmental Authority having jurisdiction with respect thereto) dealing with reserve requirements prescribed for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board) maintained by a member bank of the Federal Reserve System.

“Eurodollar Base Rate”: with respect to each day during each Interest Period pertaining to a Eurodollar Loan, the rate per annum determined on the basis of the rate for deposits in Dollars for a period equal to such Interest Period commencing on the first day of such Interest Period appearing on Page 3750 of the Telerate screen as of 11:00 A.M., London time, two Business Days prior to the beginning of such Interest Period. In the event that such rate does not appear on Page 3750 of the Telerate screen (or otherwise on such screen), the “Eurodollar Base Rate” shall be determined by reference to such other comparable publicly available service for displaying eurodollar rates as may be selected by the Administrative Agent or, in the absence of such availability, by reference to the rate at which the Administrative Agent is offered Dollar deposits at or about 11:00 A.M., New York City time, two Business Days prior to the beginning of such Interest Period in the interbank eurodollar market where its eurodollar and foreign currency and exchange operations are then being conducted for delivery on the first day of such Interest Period for the number of days comprised therein.

“Eurodollar Loans”: Loans the rate of interest applicable to which is based upon the Eurodollar Rate.

“Eurodollar Rate”: with respect to each day during each Interest Period pertaining to a Eurodollar Loan, a rate per annum determined for such day in accordance with the following formula (rounded upward to the nearest 1/100th of 1%):

Eurodollar Base Rate

1.00—Eurocurrency Reserve Requirements

“Eurodollar Tranche”: the collective reference to Eurodollar Loans the then current Interest Periods with respect to all of which begin on the same date and end on the same later date (whether or not such Loans shall originally have been made on the same day).

“Event of Default”: any of the events specified in Section 8, provided that any requirement for the giving of notice, the lapse of time, or both, has been satisfied.

“Excess Cash Flow”: for any fiscal period of the Borrower, the excess, if any, of (a) the sum, without duplication, of (i) Consolidated Net Income for such fiscal period, (ii) an amount equal to the amount of all non-cash charges (including depreciation and amortization) deducted in arriving at such Consolidated Net Income, (iii) decreases in Consolidated Working Capital for such fiscal period, and (iv) an amount equal to the aggregate net non-cash loss on the Disposition of property by the Borrower and its Subsidiaries during such fiscal period (other than sales of inventory in the ordinary course of business), to the extent deducted in arriving at such Consolidated Net Income over (b) the sum, without duplication, of (i) an amount equal to the amount of all non-cash credits included in arriving at such Consolidated Net Income, (ii) the aggregate amount actually paid by the Borrower and its Subsidiaries in cash during such fiscal period on account of Maintenance Capital Expenditures, Acquisition Capital Expenditures and,

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without duplication, Permitted Acquisitions and Permitted Minority Acquisitions (excluding the principal amount of Indebtedness incurred to finance any such expenditures or any such expenditures financed with the proceeds of any Reinvestment Deferred Amount, any Asset Sale retained by the Borrower or any of its Subsidiaries pursuant to Section 2.9(b) or any issuance of Capital Stock by the Borrower or its Subsidiaries), (iii) the aggregate amount of all prepayments of Revolving Loans during such fiscal period to the extent accompanying permanent optional reductions of the Revolving Commitments and all optional prepayments of the Term Loans during such fiscal period, (iv) the aggregate amount of all regularly scheduled principal payments of Funded Debt (including the Term Loans) of the Borrower and its Subsidiaries made during such fiscal period (other than in respect of any revolving credit facility to the extent there is not an equivalent permanent reduction in commitments thereunder), (v) increases in Consolidated Working Capital for such fiscal period, (vi) an amount equal to the aggregate net non-cash gain on the Disposition of property by the Borrower and its Subsidiaries during such fiscal period (other than sales of inventory in the ordinary course of business), to the extent included in arriving at such Consolidated Net Income, and (vii) without duplication, an amount equal to the amount of all Restricted Payments actually paid by the Borrower or its Subsidiaries pursuant to Sections 7.6(a), (b) and (c) during such fiscal period, including, without limitation, management fees paid by the Borrower or its Subsidiaries as set forth in Section 7.6(b).

“Excess Cash Flow Application Date”: as defined in Section 2.9(c).

“Exchange Act”: as defined in Section 8(k).

“Excluded Foreign Subsidiary”: any Foreign Subsidiary in respect of which either (a) the pledge of all of the Capital Stock of such Subsidiary as Collateral or (b) the guaranteeing by such Subsidiary of the Obligations, is restricted by regulatory authority or by Requirement of Law or would, in the good faith judgment of the Borrower, result in adverse tax consequences to the Borrower.

“Facility”: each of (a) the Term Commitments and the Term Loans made thereunder (the “Term Facility”) and (b) the Revolving Commitments and the extensions of credit made thereunder (the “Revolving Facility”).

“Federal Funds Effective Rate”: for any day, the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for the day of such transactions received by the Reference Lender from three federal funds brokers of recognized standing selected by it.

“Foreign Subsidiary”: any Subsidiary of the Borrower that is not a Domestic Subsidiary.

“Funded Debt”: as to any Person, all Indebtedness of such Person that matures more than one year from the date of its creation or matures within one year from such date but is renewable or extendible, at the option of such Person, to a date more than one year from such date or arises under a revolving credit or similar agreement that obligates the lender or lenders to

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extend credit during a period of more than one year from such date, including all current maturities and current sinking fund payments in respect of such Indebtedness whether or not required to be paid within one year from the date of its creation and, in the case of the Borrower, Indebtedness in respect of the Loans.

“Funding Office”: the office of the Administrative Agent specified in Section 10.2 or such other office as may be specified from time to time by the Administrative Agent as its funding office by written notice to the Borrower and the Lenders.

“GAAP”: generally accepted accounting principles in the United States as in effect from time to time, except that for purposes of Section 7.1, GAAP shall be determined on the basis of such principles in effect on the date hereof and consistent with those used in the preparation of the most recent audited financial statements delivered pursuant to Section 4.1(b). In the event that any “Accounting Change” (as defined below) shall occur and such change results in a change in the method of calculation of financial covenants, standards or terms in this Agreement, then the Borrower and the Administrative Agent agree to enter into negotiations in order to amend such provisions of this Agreement so as to equitably reflect such Accounting Changes with the desired result that the criteria for evaluating the Borrower’s financial condition shall be the same after such Accounting Changes as if such Accounting Changes had not been made. Until such time as such an amendment shall have been executed and delivered by the Borrower, the Administrative Agent and the Required Lenders, all financial covenants, standards and terms in this Agreement shall continue to be calculated or construed as if such Accounting Changes had not occurred. “Accounting Changes” refers to changes in accounting principles required by the promulgation of any rule, regulation, pronouncement or opinion by the Financial Accounting Standards Board of the American Institute of Certified Public Accountants or, if applicable, the SEC.

“Governmental Authority”: any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions of or pertaining to government, any securities exchange and any self-regulatory organization (including the National Association of Insurance Commissioners).

“Guarantee and Collateral Agreement”: the Guarantee and Collateral Agreement to be executed and delivered by Holdings, the Borrower and each Subsidiary Guarantor, substantially in the form of Exhibit A, as the same may be amended, supplemented or otherwise modified from time to time.

“Guarantee Obligation”: as to any Person (the “guaranteeing person”), any obligation of (a) the guaranteeing person or (b) another Person (including any bank under any letter of credit) to induce the creation of which the guaranteeing person has issued a reimbursement, counterindemnity or similar obligation, in either case guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends or other obligations (the “primary obligations”) of any other third Person (the “primary obligor”) in any manner, whether directly or indirectly, including any obligation of the guaranteeing person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (1) for the purchase or payment of any such primary obligation or (2)

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to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the owner of any such primary obligation against loss in respect thereof; provided, however, that the term Guarantee Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Guarantee Obligation of any guaranteeing person shall be deemed to be the lower of (a) an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee Obligation is made and (b) the maximum amount for which such guaranteeing person may be liable pursuant to the terms of the instrument embodying such Guarantee Obligation, unless such primary obligation and the maximum amount for which such guaranteeing person may be liable are not stated or determinable (or is limited to certain property or the value thereof), in which case the amount of such Guarantee Obligation shall be such guaranteeing person’s maximum reasonably anticipated liability in respect thereof as determined by the board of directors of the Borrower in good faith or, with respect to any property, the fair market value of such property or, if such fair market value is not readily determinable, the maximum value of such property as determined by the board of directors of the Borrower in good faith.

“Guarantors”: the collective reference to Holdings and the Subsidiary Guarantors.

“Hedge Agreements”: all interest rate swaps, caps or collar agreements or similar arrangements providing for protection against fluctuations in interest rates or currency exchange rates or the exchange of nominal interest obligations, either generally or under specific contingencies.

“Hedge Retirement”: as defined in Section 5.1(b)(iii)(C).

“Holdings”: as defined in the preamble hereto.

“Holdings Refinancing Indebtedness”: any Indebtedness incurred by Holdings to refinance in whole or in part the 2002 Holdings Bridge Notes (including accrued interest thereon), provided that such Indebtedness (i) is subordinate to the rights of the Lenders under this Agreement, (ii) does not exceed the aggregate amount of such indebtedness in existence on the Closing Date (including accrued interest thereon, together with transaction fees and expenses), (iii) is stated to mature or amortize not earlier than the date that is the earlier of six months after (x) the sixth anniversary of the Closing Date and (y) the first date on which the Loans have been paid or prepaid in full and no Commitments or Letters of Credit are outstanding, (iv) is not the object of any Guarantee Obligation by, and otherwise has no recourse to, the Borrower or any of its Subsidiaries and is not secured by any assets of the Borrower or any of its Subsidiaries, (v) has cross-default or cross-acceleration provisions relating to Indebtedness of the Borrower or any of its Subsidiaries that are no less favorable to Holdings than those provided for in the Senior Discount Debenture Indenture or that are otherwise reasonably satisfactory to the Administrative Agent and (vi) otherwise has terms and conditions reasonably satisfactory to the Administrative Agent.

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“Indebtedness”: of any Person at any date, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person for the deferred purchase price of property or services (other than current trade payables incurred in the ordinary course of such Person’s business), (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all Capital Lease Obligations of such Person, (f) all obligations of such Person, contingent or otherwise, as an account party under acceptance, letter of credit or similar facilities, (g) the liquidation value of all mandatorily redeemable preferred Capital Stock of such Person, (h) all Guarantee Obligations of such Person in respect of obligations of the kind referred to in clauses (a) through (g) above; (i) all obligations of the kind referred to in clauses (a) through (h) above secured by (or for which the holder of such obligation has an existing right, contingent or otherwise, to be secured by) any Lien on property (including accounts and contract rights) owned by such Person, whether or not such Person has assumed or become liable for the payment of such obligation; and (j) for the purposes of Section 8(e) only, all obligations of such Person in respect of Hedge Agreements. With respect to any obligations for which recourse is limited to certain property or the value thereof, the amount of such Person’s Indebtedness shall be the fair market value of such property or, if such fair market value is not readily determinable, the maximum value of such property as determined by the board of directors of the Borrower in good faith. In calculating Indebtedness of the Borrower and its Subsidiaries on a consolidated basis for any purpose herein, any Guarantee Obligation of the Borrower or any Subsidiary in respect of any other Indebtedness of the Borrower or any Subsidiary shall be disregarded.

“Insolvency”: with respect to any Multiemployer Plan, the condition that such Plan is insolvent within the meaning of Section 4245 of ERISA.

“Insolvent”: pertaining to a condition of Insolvency.

“Intellectual Property”: the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including copyrights, copyright licenses, patents, patent licenses, trademarks, trademark licenses, technology, know-how and processes, and all rights to sue at law or in equity for any infringement or other impairment thereof, including the right to receive all proceeds and damages therefrom.

“Intercompany Loan”: as defined in Section 5.1(b)(iii)(B) and evidenced by that certain promissory note from Holdings to the Borrower, dated as of the Closing Date, in an aggregate amount of $141,152,090, due and payable in one final installment of all unpaid principal and accrued unpaid interest on August 13, 2013. The note shall be subordinate in right of payment to the Senior Discount Debentures.

“Interest Payment Date”: (a) as to any ABR Loan, quarterly in arrears on the last day of each quarter following the Closing Date while such Loan is outstanding and the final maturity date of such Loan, (b) as to any Eurodollar Loan having an Interest Period of three months or less, the last day of such Interest Period, (c) as to any Eurodollar Loan having an

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Interest Period longer than three months, each day that is three months, or a whole multiple thereof, after the first day of such Interest Period and the last day of such Interest Period and (d) as to any Loan (other than any Revolving Loan that is an ABR Loan), the date of any repayment or prepayment made in respect thereof.

“Interest Period”: as to any Eurodollar Loan, (a) initially, the period commencing on the borrowing or conversion date, as the case may be, with respect to such Eurodollar Loan and ending one, two, three or six months thereafter, as selected by the Borrower in its notice of borrowing or notice of conversion, as the case may be, given with respect thereto; and (b) thereafter, each period commencing on the last day of the next preceding Interest Period applicable to such Eurodollar Loan and ending one, two, three or six months thereafter, as selected by the Borrower by irrevocable notice to the Administrative Agent not less than three Business Days prior to the last day of the then current Interest Period with respect thereto; provided that, all of the foregoing provisions relating to Interest Periods are subject to the following:

(i) if any Interest Period would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such Interest Period into another calendar month in which event such Interest Period shall end on the immediately preceding Business Day;

(ii) the Borrower may not select an Interest Period under a particular Facility that would extend beyond the Scheduled Revolving Termination Date or beyond the date final payment is due on the Term Loans, as the case may be;

(iii) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of a calendar month; and

(iv) the Borrower shall select Interest Periods so as not to require a payment or prepayment of any Eurodollar Loan during an Interest Period for such Loan.

“Investments”: as defined in Section 7.8.

“IPO”: the issuance by Holdings of shares of its common stock to the public pursuant to a bona fide underwritten public offering, resulting in at least 15% of Holdings’ outstanding shares of common stock having been issued to the public by Holdings.

“Issuing Lender”: JPMorgan Chase Bank, in its capacity as issuer of any Letter of Credit.

“L/C Commitment”: $35,000,000.

“L/C Fee Payment Date”: the last day of each quarter following the Closing Date and the last day of the Revolving Commitment Period.

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“L/C Obligations”: at any time, an amount equal to the sum of (a) the aggregate then undrawn and unexpired amount of the then outstanding Letters of Credit and (b) the aggregate amount of drawings under Letters of Credit that have not then been reimbursed pursuant to Section 3.5.

“L/C Participants”: the collective reference to all the Revolving Lenders other than the Issuing Lender.

“Lead Arranger”: J.P. Morgan Securities Inc., together with its affiliates, as lead arranger and joint book manager for the Facilities, together with any of their respective successors.

“Lenders”: as defined in the preamble hereto.

“Letters of Credit”: as defined in Section 3.1(a).

“Lien”: any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge or other security interest or any preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement and any capital lease having substantially the same economic effect as any of the foregoing).

“Loan”: any loan made by any Lender pursuant to this Agreement.

“Loan Documents”: this Agreement, the Security Documents and the Notes, if any.

“Loan Parties”: Holdings, the Borrower and each Subsidiary of the Borrower that is a party to a Loan Document.

“Maintenance Capital Expenditures”: for any period, with respect to any Person, the aggregate of all expenditures by such Person and its Subsidiaries for the acquisition or leasing (pursuant to a capital lease) of fixed or capital assets (other than fixed or capital assets acquired in Permitted Acquisitions) or additions to, and development of, equipment, computer system, hardware and software (including replacements, capitalized repairs and improvements during such period) that should be capitalized as fixed or capital assets under GAAP on a consolidated balance sheet of such Person and its Subsidiaries.

“Majority Facility Lenders”: with respect to any Facility, the holders of more than 50% of the aggregate unpaid principal amount of the Term Loans or the Total Revolving Extensions of Credit, as the case may be, outstanding under such Facility (or, in the case of the Revolving Facility, prior to any termination of the Revolving Commitments, the holders of more than 50% of the Total Revolving Commitments).

“Material Adverse Effect”: a material adverse effect on (a) the Transactions, (b) the business, property, operations, condition (financial or otherwise) or prospects of the Borrower and its Subsidiaries taken as a whole or (c) the validity or enforceability of this Agreement or any of the other Loan Documents.

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“Materials of Environmental Concern”: any gasoline or petroleum (including crude oil or any fraction thereof) or petroleum products or any hazardous or toxic substances, materials or wastes, defined or regulated as such in or under any Environmental Law, including asbestos, polychlorinated biphenyls and urea-formaldehyde insulation, and any other substance the presence of or exposure to which could reasonably be expected to result in liability under any applicable Environmental Law.

“Moody’s”: Moody’s Investors Services Inc.

“Mortgages”: each of the mortgages and deeds of trust which shall be made by any Loan Party in favor of, or for the benefit of, the Administrative Agent for the benefit of the Lenders, upon acquisition of any real property by Holdings, the Borrower or any of its Domestic Subsidiaries after the Closing Date pursuant to Section 6.9(b).

“Multiemployer Plan”: a Plan that is a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

“Net Cash Proceeds”: (a) in connection with any Asset Sale or any Recovery Event, the proceeds thereof in the form of cash and Cash Equivalents (including any such proceeds received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment receivable or otherwise, but only as and when received) of such Asset Sale or Recovery Event, net of attorneys’ fees, accountants’ fees, investment banking fees, other consultants’ fees in connection therewith not already set forth herein and other customary fees and expenses actually incurred in connection therewith and net of taxes paid or reasonably estimated to be payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements), amounts required to be applied to the repayment of Indebtedness secured by a Lien expressly permitted hereunder on any asset that is the subject of such Asset Sale or Recovery Event (other than any Lien pursuant to a Security Document) including amounts paid as penalties or premiums on the repayment of such Indebtedness, amounts of any reserves reasonably estimated to be paid out within eighteen months from the date of the occurrence of such Asset Sale or Recovery Event that are directly attributable to such event and (b) in connection with any issuance or sale of equity securities or debt securities or instruments or the incurrence of loans, the cash proceeds received from such issuance or incurrence, net of attorneys’ fees, investment banking fees, accountants’ fees, other consultants’ fees in connection therewith not already set forth herein, underwriting discounts and commissions, and other customary fees and expenses actually incurred in connection therewith.

“Non-Excluded Taxes”: as defined in Section 2.17(a).

“Non-Executing Persons”: as defined in Section 5.1(a).

“Non-U.S. Lender”: as defined in Section 2.17(d).

“Notes”: the collective reference to any promissory note evidencing Loans.

“Obligations”: the unpaid principal of and interest on (including interest accruing after the maturity of the Loans and Reimbursement Obligations and interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or

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like proceeding, relating to the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) the Loans and all other obligations and liabilities of the Borrower to the Administrative Agent or to any Lender (or, in the case of Hedge Agreements, any affiliate of any Lender), whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, this Agreement, any other Loan Document, the Letters of Credit, any Hedge Agreement entered into with any Lender or any affiliate of any Lender or any other document made, delivered or given in connection herewith or therewith, whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses (including all reasonable fees, charges and disbursements of counsel to the Administrative Agent or to any Lender that are required to be paid by the Borrower pursuant hereto) or otherwise.

“Other Representatives”: the collective reference to the Co-Syndication Agents, the Documentation Agent, the Lead Arranger and the Co-Arrangers.

“Other Taxes”: any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document.

“Participant”: as defined in Section 10.6(c)(i).

“PBGC”: the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA (or any successor).

“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 6.9 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, 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 4.00

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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.

“Permitted Holdings Interest Payment Amount”: as at any date in any fiscal year of the Borrower beginning with the 2005 fiscal year, an amount equal to the remainder of (a) the lesser of:

(i) the amount set forth opposite the Consolidated Leverage Ratio as at the end of most recent fiscal quarter of the Borrower for which financial statements are available:

Consolidated Leverage Ratio	Amount
>3.50 to 1.00	$	10,000,000
£3.50 to 1.00 but >3.00 to 1.00	$	12,500,000
£3.00 to 1.00	$	15,000,000

with the determination of such amount being subject to the second and third sentences of the Pricing Grid; or

(ii) the ECF Percentage of the Excess Cash Flow of the Borrower for such most recent fiscal quarter of the Borrower;

minus (b) the sum of the dividend payments and other distributions to Holdings previously made under Section 7.6(d) during the then current fiscal year of the Borrower; provided that the first determination of the Permitted Holdings Interest Payment Amount in any fiscal year shall be based on figures from the Borrower’s most recently completed fiscal year.

“Permitted Investors”: the collective reference to the Sponsor and its Control Investment Affiliates.

“Permitted Joint Venture”: with respect to the Borrower and any one or more of its Subsidiaries (a) any corporation, association, limited liability company or other business entity (other than a partnership) (i) of which 50% or more of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time of determination owned or controlled, directly or indirectly, by the Borrower or any one or more of its Subsidiary Guarantors or a combination thereof and (ii) which is either managed or controlled by the Borrower or any one or more of its Subsidiary Guarantors and (b) any partnership of which (i) 50% or more of the general or limited partnership interests are owned or controlled, directly or indirectly, by the Borrower or any one or more of its Subsidiary Guarantors or a combination thereof and (ii) which is either managed or controlled by the Borrower or any one or more of its Subsidiary Guarantors, and which in the case of each of clauses (a) and (b), (i) is engaged in a business in which

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the Borrower and its Subsidiaries are permitted to be engaged pursuant to Section 7.15 of this Agreement or that are reasonably related thereto, (ii) only incurs Indebtedness from the Borrower, (iii) cannot enter into any Guarantee Obligation, and (iv) distributes all cash at least annually (other than cash required to be reserved on its balance sheet in accordance with GAAP consistent with past practice).

“Permitted Minority Acquisition”: any acquisition or investment by the Borrower or a Subsidiary of or in less than 50% of 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) such Person or division or line of business of such Person is engaged in a business in which the Borrower and its Subsidiaries are permitted to be engaged pursuant to Section 7.15 of this Agreement or that are reasonably related thereto, and (c) 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.

“Person”: an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature.

“Plan”: at a particular time, any employee benefit plan that is covered by ERISA and in respect of which the Borrower or a Commonly Controlled Entity is (or, if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

“Pricing Grid”: the pricing grid attached hereto as Annex A.

“Professional Association”: any professional association or professional corporation which employs physicians or other professionals to provide health care services for the Borrower’s and its Subsidiaries’ and other Affiliates’ occupational and health services centers.

“Pro Forma Balance Sheets”: as defined in Section 4.1(a).

“Projections”: as defined in Section 6.2(c).

“Properties”: as defined in Section 4.17(a).

“Recovery Event”: any settlement of or payment in respect of any property or casualty insurance claim or any condemnation proceeding relating to any asset of Holdings, the Borrower or any of its Subsidiaries.

“Redemption”: as defined in Section 5.1(b)(iii)(B).

“Reference Lender”: JPMorgan Chase Bank.

“Refinancing”: as defined in Section 5.1(b)(iii)(D).

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“Register”: as defined in Section 10.6(b)(iv).

“Regulation U”: Regulation U of the Board as in effect from time to time.

“Reimbursement Obligation”: the obligation of the Borrower to reimburse the Issuing Lender pursuant to Section 3.5 for amounts drawn under Letters of Credit.

“Reinvestment Deferred Amount”: with respect to any Reinvestment Event, the aggregate Net Cash Proceeds received by Holdings, the Borrower or any of their respective Subsidiaries in connection therewith that are not applied to prepay the Term Loans or reduce the Revolving Commitments pursuant to Section 2.9(b) as a result of the delivery of a Reinvestment Notice.

“Reinvestment Event”: any Recovery Event in respect of which the Borrower has delivered a Reinvestment Notice.

“Reinvestment Notice”: a written notice executed by a Responsible Officer stating that no Default or Event of Default has occurred and is continuing and that the Borrower (directly or indirectly through a Subsidiary) intends and expects to use all or a specified portion of the Net Cash Proceeds of a Recovery Event to acquire, repair or replace assets useful in its business.

“Reinvestment Prepayment Amount”: with respect to any Reinvestment Event, the Reinvestment Deferred Amount relating thereto less any amount expended prior to the relevant Reinvestment Prepayment Date to acquire, repair or replace assets useful in the Borrower’s business.

“Reinvestment Prepayment Date”: with respect to any Reinvestment Event, the earlier of (a) the date occurring six months after such Reinvestment Event and (b) the date on which the Borrower shall have determined not to, or shall have otherwise ceased to, acquire, repair or replace assets useful in the Borrower’s business with all or any portion of the relevant Reinvestment Deferred Amount.

“Reorganization”: with respect to any Multiemployer Plan, the condition that such plan is in reorganization within the meaning of Section 4241 of ERISA.

“Reportable Event”: any of the events set forth in Section 4043(b) of ERISA, other than those events as to which the thirty day notice period is waived under subsections .27, .28, .29, .30, .31, .32, .34 or .35 of PBGC Reg. § 4043.

“Required Lenders”: at any time, the holders of more than 50% of (a) until the Closing Date, the Commitments then in effect and (b) thereafter, the sum of (i) the aggregate unpaid principal amount of the Term Loans then outstanding and (ii) the Total Revolving Commitments then in effect or, if the Revolving Commitments have been terminated, the Total Revolving Extensions of Credit then outstanding.

“Requirement of Law”: as to any Person, the Certificate of Incorporation and By-Laws or other organizational or governing documents of such Person, and any law, treaty,

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rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

“Responsible Officer”: the chief executive officer, president, chief financial officer or executive vice president of the Borrower or Holdings, as applicable, but in any event, with respect to financial matters, the chief financial officer of the Borrower or Holdings, as applicable.

“Restricted Payments”: as defined in Section 7.6.

“Revolving Commitment”: as to any Lender, the obligation of such Lender, if any, to make Revolving Loans and Letters of Credit in an aggregate principal and/or face amount not to exceed the amount set forth under the heading “Revolving Commitment” opposite such Lender’s name on Schedule 1.1 or in the Assignment and Assumption pursuant to which such Lender became a party hereto, as the same may be changed from time to time pursuant to the terms hereof. The original amount of the Total Revolving Commitments is $100,000,000.

“Revolving Commitment Period”: the period from and including the Closing Date to the Scheduled Revolving Termination Date.

“Revolving Extensions of Credit”: as to any Revolving Lender at any time, an amount equal to the sum of (a) the aggregate principal amount of all Revolving Loans held by such Lender then outstanding and (b) such Lender’s Revolving Percentage of the L/C Obligations then outstanding.

“Revolving Lender”: each Lender that has a Revolving Commitment or that holds Revolving Loans.

“Revolving Loans”: as defined in Section 2.4(a).

“Revolving Percentage”: as to any Revolving Lender at any time, the percentage which such Lender’s Revolving Commitment then constitutes of the Total Revolving Commitments (or, at any time after the Revolving Commitments shall have expired or terminated, the percentage which the aggregate principal amount of such Lender’s Revolving Loans then outstanding constitutes of the aggregate principal amount of the Revolving Loans then outstanding).

“S&P”: Standard & Poor’s Ratings Services (a division of McGraw-Hill Companies, Inc.).

“Scheduled Revolving Termination Date”: August 13, 2008.

“SEC”: the Securities and Exchange Commission, any successor thereto and any analogous Governmental Authority.

“Security Documents”: the collective reference to the Guarantee and Collateral Agreement, Mortgages, if applicable, and all other security documents hereafter delivered to the

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Administrative Agent granting a Lien on any property of any Person to secure the obligations and liabilities of any Loan Party under any Loan Document.

“Senior Discount Debentures”: the 14% Senior Discount Debentures due 2011 issued by Holdings, together with warrants to purchase Capital Stock of Holdings.

“Senior Discount Debenture Indenture”: the collective reference to (a) the indenture entered into by Holdings in connection with the issuance of the Senior Discount Debentures, (b) the supplemental indenture entered into by Holdings, The Bank of New York, as trustee and the holders of the Senior Discount Debentures dated as of July 28, 2003, and (c) all instruments and other agreements entered into by Holdings in connection therewith, as the same may be amended, supplemented or otherwise modified from time to time in accordance with Section 7.9.

“Senior Discount Debenture Purchase Agreement”: the agreement entered into by Holdings in connection with the issuance of the Senior Discount Debentures, together with all instruments and other agreements entered into by Holdings in connection therewith, as the same may be amended, supplemented or otherwise modified from time to time in accordance with Section 7.9.

“Senior Discount Debenture Refinancing”: as defined in Section 7.2(g).

“Senior Subordinated Note Indentures”: the collective reference to the 1999 Senior Subordinated Note Indenture and the 2003 Senior Subordinated Note Indenture.

“Senior Subordinated Notes”: the collective reference to the 1999 Senior Subordinated Notes and the 2003 Senior Subordinated Notes.

“Single Employer Plan”: any Plan that is covered by Title IV of ERISA, but that is not a Multiemployer Plan.

“Solvent”: when used with respect to any Person, means that, as of any date of determination, (a) the amount of the “present fair saleable value” of the assets of such Person will, as of such date, exceed the amount of all “liabilities of such Person, contingent or otherwise”, as of such date, as such quoted terms are determined in accordance with applicable federal and state laws governing determinations of the insolvency of debtors, (b) the present fair saleable value of the assets of such Person will, as of such date, be greater than the amount that will be required to pay the liability of such Person on its debts as such debts become absolute and matured, (c) such Person will not have, as of such date, an unreasonably small amount of capital with which to conduct its business, and (d) such Person will be able to pay its debts as they mature. For purposes of this definition, (i) “debt” means liability on a “claim”, and (ii) “claim” means any (x) right to payment, whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y) right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured or unsecured.

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“Specified Change of Control”: a “Change of Control” as defined in either Senior Subordinated Note Indenture, the Senior Discount Debenture Purchase Agreement, the Senior Discount Debenture Indenture, the documentation for any Senior Discount Debenture Refinancing, the 2002 Holdings Bridge Notes and the documentation for any Holdings Refinancing Indebtedness.

“Sponsor”: Welsh, Carson, Anderson & Stowe VIII, L.P., together with its Affiliates.

“Subsidiary”: as to any Person, a corporation, partnership, limited liability company, trust or other entity (other than, except for purposes of Sections 6.1 and 7.1, a Permitted Joint Venture) of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors, other managers or trustees of such corporation, partnership, limited liability company, trust or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower.

“Subsidiary Guarantor”: each Subsidiary of the Borrower other than any Excluded Foreign Subsidiary.

“Term Commitment”: as to any Lender, the obligation of such Lender, if any, to make a Term Loan to the Borrower hereunder in a principal amount not to exceed the amount set forth under the heading “Term Commitment” opposite such Lender’s name on Schedule 1.1. The original aggregate amount of the Term Commitments is $335,000,000.

“Term Lender”: each Lender that has a Term Commitment or that holds a Term Loan.

“Term Loan”: as defined in Section 2.1.

“Term Percentage”: as to any Term Lender at any time, the percentage which such Lender’s Term Commitment then constitutes of the aggregate Term Commitments (or, at any time after the Closing Date, the percentage which the aggregate principal amount of such Lender’s Term Loans then outstanding constitutes of the aggregate principal amount of the Term Loans then outstanding).

“Total Revolving Commitments”: at any time, the aggregate amount of the Revolving Commitments then in effect.

“Total Revolving Extensions of Credit”: at any time, the aggregate amount of the Revolving Extensions of Credit of the Revolving Lenders outstanding at such time.

“Transactions”: as defined in Section 5.1(b)(iii).

“Transferee”: any Assignee or Participant.

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“Type”: as to any Loan, its nature as an ABR Loan or a Eurodollar Loan.

“United States”: the United States of America.

“Wholly Owned Subsidiary”: as to any Person, any other Person all of the Capital Stock of which (other than directors’ qualifying shares required by law) is owned by such Person directly and/or through other Wholly Owned Subsidiaries.

“Wholly Owned Subsidiary Guarantor”: any Subsidiary Guarantor that is a Wholly Owned Subsidiary of the Borrower.

1.2 Other Definitional Provisions. (a) Unless otherwise specified therein, all terms defined in this Agreement shall have the defined meanings when used in the other Loan Documents or any certificate or other document made or delivered pursuant hereto or thereto.

(b) As used herein and in the other Loan Documents, and any certificate or other document made or delivered pursuant hereto or thereto, (i) accounting terms relating to Holdings, the Borrower and its Subsidiaries not defined in Section 1.1 and accounting terms partly defined in Section 1.1, to the extent not defined, shall have the respective meanings given to them under GAAP, (ii) the words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”, (iii) the word “incur” shall be construed to mean incur, create, issue, assume, become liable in respect of or suffer to exist (and the words “incurred” and “incurrence” shall have correlative meanings), (iv) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, Capital Stock, securities, revenues, accounts, leasehold interests and contract rights, and (v) Holdings, the Borrower, any of their respective Subsidiaries or any Loan Party shall be deemed to have “knowledge” or “know” of a particular matter, or such matter shall be deemed “known” to any of them if any of their respective directors, chief executive officer, president, chief financial officer, treasurer, controller, general counsel, corporate secretary or other senior officers shall have actual knowledge or actually know of such matter or such matter is actually known to any of them.

(c) The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section, Schedule and Exhibit references are to this Agreement unless otherwise specified.

(d) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.

SECTION 2. AMOUNT AND TERMS OF COMMITMENTS

2.1 Term Commitments. Subject to the terms and conditions hereof, each Term Lender severally agrees to make a term loan (a “Term Loan”) to the Borrower on the Closing Date in a single draw in the amount of the Term Commitment of such Lender. The Term Loans may from time to time be Eurodollar Loans or ABR Loans, as determined by the Borrower and notified to the Administrative Agent in accordance with Sections 2.2 and 2.10.

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2.2 Procedure for Term Loan Borrowing. The Borrower shall give the Administrative Agent irrevocable notice (which notice must be received by the Administrative Agent prior to 12:00 Noon, New York City time, three Business Days prior to the Closing Date, in the case of Eurodollar Loans, or prior to 10:00 A.M., New York City time, on the Closing Date, in the case of ABR Loans) specifying (i) the amount and Type of Term Loans to be borrowed and (ii) in the case of Eurodollar Loans, the respective amounts of each such Type of Loan and the respective lengths of the initial Interest Period therefor. Upon receipt of such notice the Administrative Agent shall promptly notify each Term Lender thereof. Not later than 12:00 Noon, New York City time, on the Closing Date each Term Lender shall make available to the Administrative Agent at the Funding Office an amount in immediately available funds equal to the Term Loan or Term Loans to be made by such Lender. The Administrative Agent shall credit the account of the Borrower on the books of such office of the Administrative Agent with the aggregate of the amounts made available to the Administrative Agent by the Term Lenders in immediately available funds.

2.3 Repayment of Term Loans. The Term Loan of each Lender shall mature in twenty-four (24) consecutive quarterly installments, commencing on September 30, 2003, each of which shall be in an amount equal to such Lender’s Term Percentage multiplied by the amount set forth below opposite such installment:

Installment	Principal Amount
September 30, 2003	$        837,500
December 31, 2003	837,500
March 31, 2004	837,500
June 30, 2004	837,500
September 30, 2004	837,500
December 31, 2004	837,500
March 31, 2005	837,500
June 30, 2005	837,500
September 30, 2005	837,500
December 31, 2005	837,500
March 31, 2006	837,500
June 30, 2006	837,500
September 30, 2006	837,500
December 31, 2006	837,500
March 31, 2007	837,500
June 30, 2007	837,500
September 30, 2007	837,500
December 31, 2007	837,500
March 31, 2008	837,500
June 30, 2008	837,500
September 30, 2008	47,737,500
December 31, 2008	47,737,500
March 31, 2009	95,475,000
June 30, 2009	all amounts outstanding in respect of the Term Loans.

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2.4 Revolving Commitments. (a) Subject to the terms and conditions hereof, each Revolving Lender severally agrees to make revolving credit loans (“Revolving Loans”) to the Borrower from time to time during the Revolving Commitment Period in an aggregate principal amount at any one time outstanding which, when added to such Lender’s Revolving Percentage of the L/C Obligations then outstanding, does not exceed the amount of such Lender’s Revolving Commitment. During the Revolving Commitment Period the Borrower may use the Revolving Commitments by borrowing, prepaying the Revolving Loans in whole or in part, and reborrowing, all in accordance with the terms and conditions hereof. The Revolving Loans may from time to time be Eurodollar Loans or ABR Loans, as determined by the Borrower and notified to the Administrative Agent in accordance with Sections 2.5 and 2.10.

(b) The Borrower shall repay all outstanding Revolving Loans on the Scheduled Revolving Termination Date.

2.5 Procedure for Revolving Loan Borrowing. The Borrower may borrow under the Revolving Commitments during the Revolving Commitment Period on any Business Day, provided that the Borrower shall give the Administrative Agent irrevocable notice (which notice must be received by the Administrative Agent prior to 1:00 P.M., New York City time, three Business Days prior to the requested Borrowing Date, in the case of Eurodollar Loans, or prior to 10:00 A.M., New York City time, on the requested Borrowing Date, in the case of ABR Loans), specifying (i) the amount and Type of Revolving Loans to be borrowed, (ii) the requested Borrowing Date and (iii) in the case of Eurodollar Loans, the respective amounts of each such Type of Loan and the respective lengths of the initial Interest Period therefor. Each borrowing under the Revolving Commitments shall be in an amount equal to (x) in the case of ABR Loans, $1,000,000 or a multiple of $500,000 in excess thereof (or, if the then aggregate Available Revolving Commitments are less than $1,000,000, such lesser amount) and (y) in the case of Eurodollar Loans, $2,500,000 or a whole multiple of $500,000 in excess thereof. Upon receipt of any such notice from the Borrower, the Administrative Agent shall promptly notify each Revolving Lender thereof. Each Revolving Lender will make the amount of its pro rata share of each borrowing available to the Administrative Agent for the account of the Borrower at the Funding Office prior to 12:00 Noon, New York City time, on the Borrowing Date requested by the Borrower in funds immediately available to the Administrative Agent. Such borrowing will then be made available to the Borrower by the Administrative Agent crediting the account of the Borrower on the books of such office with the aggregate of the amounts made available to the Administrative Agent by the Revolving Lenders and in like funds as received by the Administrative Agent.

2.6 Commitment Fees, etc. (a) The Borrower agrees to pay to the Administrative Agent for the account of each Revolving Lender a commitment fee for the period from and including the Closing Date to the last day of the Revolving Commitment Period, computed at the Commitment Fee Rate on the average daily amount of the Available Revolving Commitment of such Lender during the period for which payment is made, payable quarterly in arrears on the last day of each March, June, September and December and on the Scheduled Revolving Termination Date, commencing on the first of such dates to occur after the date hereof.

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(b) The Borrower agrees to pay to the Administrative Agent and the Other Representatives the fees, if any, in the amounts and on the dates previously agreed to in writing by the Borrower and the Administrative Agent and the Other Representatives, as the case may be.

2.7 Termination or Reduction of Revolving Commitments. The Borrower shall have the right, upon not less than three Business Days’ notice to the Administrative Agent, to terminate the Revolving Commitments or, from time to time, to reduce the amount of the Revolving Commitments; provided that no such termination or reduction of Revolving Commitments shall be permitted if, after giving effect thereto and to any prepayments of the Revolving Loans made on the effective date thereof, the Total Revolving Extensions of Credit would exceed the Total Revolving Commitments. Any such reduction shall be in an amount equal to $1,000,000, or a whole multiple thereof, and shall reduce permanently the Revolving Commitments then in effect.

2.8 Optional Prepayments. (a) The Borrower may at any time and from time to time prepay the Loans, in whole or in part, without premium or penalty (except, with respect to optional prepayments of the Term Loans, as expressly set forth in Section 2.8(b)), upon irrevocable notice delivered to the Administrative Agent at least three Business Days prior thereto in the case of Eurodollar Loans and at least one Business Day prior thereto in the case of ABR Loans, which notice shall specify the date and amount of prepayment and whether the prepayment is of Eurodollar Loans or ABR Loans; provided, that if a Eurodollar Loan is prepaid on any day other than the last day of the Interest Period applicable thereto, the Borrower shall also pay any amounts owing pursuant to Section 2.18. Upon receipt of any such notice the Administrative Agent shall promptly notify each relevant Lender thereof. If any such notice is given, the amount specified in such notice shall be due and payable on the date specified therein, together with (except in the case of Revolving Loans that are ABR Loans) accrued interest to such date on the amount prepaid. Partial prepayments of Term Loans and Revolving Loans shall be in an aggregate principal amount of $2,500,000 or a whole multiple thereof and shall be applied as set forth in Sections 2.15(b) or (c), as the case may be.

(b) Each optional prepayment of the Term Loans of any Term Lender during the period from the Closing Date to but excluding the first anniversary of the Closing Date shall be accompanied by payment of a 1% prepayment premium on the principal amount of such Term Lender’s Term Loan prepaid (unless such prepayment premium is waived by such Term Lender).

2.9 Mandatory Prepayments and Commitment Reductions. (a) If any Capital Stock shall be issued by Holdings, the Borrower or any of its Subsidiaries (other than (i) Capital Stock issued to directors and employees of Holdings, the Borrower or any of its Subsidiaries under employee benefit plans, (ii) Capital Stock issued to sellers as consideration in acquisitions of equity or ownership interests in, or assets of, other Persons, (iii) Capital Stock issued to existing stockholders of Holdings or other investors in private placements of the Capital Stock organized by the Sponsor, or (iv) Capital Stock issued by Holdings the proceeds of which are used to repay in whole or in part the 2002 Holdings Bridge Notes, any Holdings Refinancing Indebtedness, the Senior Discount Debentures or any Senior Discount Debenture Refinancing) an amount equal to 50% of the Net Cash Proceeds from the issuance of such Capital Stock shall be applied on the date of such issuance toward the prepayment of the Term Loans and the

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reduction of the Revolving Commitments as set forth in Section 2.9(d). If any Indebtedness shall be incurred by Holdings, the Borrower or any of its Subsidiaries after the Closing Date (other than the 2003 Senior Subordinated Notes, the Senior Discount Debenture Refinancing, the Holdings Refinancing Indebtedness and other Indebtedness permitted in accordance with Section 7.2 as in effect on the date hereof) an amount equal to 100% of the Net Cash Proceeds from the incurrence of such Indebtedness shall be applied on the date of such issuance or incurrence toward the prepayment of the Term Loans and the reduction of the Revolving Commitments as set forth in Section 2.9(d).

(b) If on any date Holdings, the Borrower or any of its Subsidiaries shall receive Net Cash Proceeds from any Asset Sale or Recovery Event then, unless a Reinvestment Notice in respect of any Recovery Event shall be delivered in respect thereof, such Net Cash Proceeds shall be applied on such date toward the prepayment of the Term Loans and the reduction of the Revolving Commitments as set forth in Section 2.9(d); provided, that, notwithstanding the foregoing, (i) an aggregate amount not to exceed $5,000,000 of Net Cash Proceeds from Asset Sales in any fiscal year of the Borrower may be retained by Holdings, the Borrower or any of its Subsidiaries, as the case may be, and (ii) on each Reinvestment Prepayment Date, an amount equal to the Reinvestment Prepayment Amount with respect to the relevant Reinvestment Event shall be applied toward the prepayment of the Term Loans and the reduction of the Revolving Commitments as set forth in Section 2.9(d).

(c) If, for any fiscal year of the Borrower commencing with the fiscal year ending December 31, 2004, there shall be Excess Cash Flow, the Borrower shall, on the relevant Excess Cash Flow Application Date, apply the ECF Percentage of such Excess Cash Flow toward the prepayment of the Term Loans and the reduction of the Revolving Commitments as set forth in Section 2.9(d). Each such prepayment and commitment reduction shall be made on a date (an “Excess Cash Flow Application Date”) no later than five days after the earlier of (i) the date on which the financial statements of the Borrower referred to in Section 6.1(a), for the fiscal year with respect to which such prepayment is made, are required to be delivered to the Lenders and (ii) the date such financial statements are actually delivered.

(d) Amounts to be applied in connection with prepayments and Commitment reductions made pursuant to this Section 2.9 shall be applied, first, to the prepayment of the Term Loans and, second, to reduce permanently the Revolving Commitments. Any such reduction of the Revolving Commitments shall be accompanied by prepayment of the Revolving Loans to the extent, if any, that the Total Revolving Extensions of Credit exceed the amount of the Total Revolving Commitments as so reduced, provided that if the aggregate principal amount of Revolving Loans then outstanding is less than the amount of such excess (because L/C Obligations constitute a portion thereof), the Borrower shall, to the extent of the balance of such excess, replace outstanding Letters of Credit and/or deposit an amount in cash in a cash collateral account established with the Administrative Agent for the benefit of the Lenders on terms and conditions satisfactory to the Administrative Agent.

The application of any prepayment pursuant to this Section 2.9 shall be made, first, to ABR Loans and, second, to Eurodollar Loans and shall be applied as set forth in Sections 2.15(b) or (c), as the case may be. Each prepayment of the Loans under this Section 2.9 (except

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in the case of Revolving Loans that are ABR Loans) shall be accompanied by accrued interest to the date of such prepayment on the amount prepaid.

2.10 Conversion and Continuation Options. (a) The Borrower may elect from time to time to convert Eurodollar Loans to ABR Loans by giving the Administrative Agent at least two Business Days’ prior irrevocable notice of such election, provided that any such conversion of Eurodollar Loans may only be made on the last day of an Interest Period with respect thereto. The Borrower may elect from time to time to convert ABR Loans to Eurodollar Loans by giving the Administrative Agent at least three Business Days’ prior irrevocable notice of such election (which notice shall specify the length of the initial Interest Period therefor), provided that no ABR Loan under a particular Facility may be converted into a Eurodollar Loan when any Event of Default has occurred and is continuing and, so long as any Event of Default has occurred and is continuing, the Administrative Agent or the Majority Facility Lenders in respect of such Facility have determined in its or their sole discretion not to permit such conversions. Upon receipt of any such notice the Administrative Agent shall promptly notify each relevant Lender thereof.

(b) Any Eurodollar Loan may be continued as such upon the expiration of the then current Interest Period with respect thereto by the Borrower giving irrevocable notice to the Administrative Agent, in accordance with the applicable provisions of the term “Interest Period” set forth in Section 1.1, of the length of the next Interest Period to be applicable to such Loans, provided that no Eurodollar Loan under a particular Facility may be continued as such when any Event of Default has occurred and is continuing and, so long as any Event of Default has occurred and is continuing, the Administrative Agent has or the Majority Facility Lenders in respect of such Facility have determined in its or their sole discretion not to permit such continuations, and provided, further, that if the Borrower shall fail to give any required notice as described above in this paragraph or if such continuation is not permitted pursuant to the preceding proviso such Loans shall be automatically converted to ABR Loans on the last day of such then expiring Interest Period. Upon receipt of any such notice the Administrative Agent shall promptly notify each relevant Lender thereof.

2.11 Limitations on Eurodollar Tranches. Notwithstanding anything to the contrary in this Agreement, all borrowings, conversions and continuations of Eurodollar Loans hereunder and all selections of Interest Periods hereunder shall be in such amounts and be made pursuant to such elections so that, (a) after giving effect thereto, the aggregate principal amount of the Eurodollar Loans comprising each Eurodollar Tranche shall be equal to $2,500,000 or a whole multiple of $500,000 in excess thereof and (b) no more than eight Eurodollar Tranches shall be outstanding at any one time.

2.12 Interest Rates and Payment Dates. (a) Each Eurodollar Loan shall bear interest for each day during each Interest Period with respect thereto at a rate per annum equal to the Eurodollar Rate determined for such day plus the Applicable Margin.

(b) Each ABR Loan shall bear interest at a rate per annum equal to the ABR plus the Applicable Margin.

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(c) (i) If all or a portion of the principal amount of any Loan or Reimbursement Obligation shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), all outstanding Loans and Reimbursement Obligations (whether or not overdue) shall bear interest at a rate per annum equal to (x) in the case of the Loans, the rate that would otherwise be applicable thereto pursuant to the foregoing provisions of this Section plus 2% or (y) in the case of Reimbursement Obligations, the rate applicable to ABR Loans under the Revolving Facility plus 2%, and (ii) if all or a portion of any interest payable on any Loan or Reimbursement Obligation or any commitment fee or other amount payable hereunder shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), such overdue amount shall bear interest at a rate per annum equal to the rate then applicable to ABR Loans under the relevant Facility plus 2% (or, in the case of any such other amounts that do not relate to a particular Facility, the rate then applicable to ABR Loans under the Revolving Facility plus 2%), in each case, with respect to clauses (i) and (ii) above, from the date of such non-payment until such amount is paid in full (as well after as before judgment).

(d) Interest shall be payable in arrears on each Interest Payment Date, provided that interest accruing pursuant to paragraph (c) of this Section shall be payable from time to time on demand.

2.13 Computation of Interest and Fees. (a) Interest and fees payable pursuant hereto shall be calculated on the basis of a 360-day year for the actual days elapsed, except that, with respect to ABR Loans the rate of interest on which is calculated on the basis of the Prime Rate, the interest thereon shall be calculated on the basis of a 365- (or 366-, as the case may be) day year for the actual days elapsed. The Administrative Agent shall as soon as practicable notify the Borrower and the relevant Lenders of each determination of a Eurodollar Rate. Any change in the interest rate on a Loan resulting from a change in the ABR or the Eurocurrency Reserve Requirements shall become effective as of the opening of business on the day on which such change becomes effective. The Administrative Agent shall as soon as practicable notify the Borrower and the relevant Lenders of the effective date and the amount of each such change in interest rate.

(b) Each determination of an interest rate by the Administrative Agent pursuant to any provision of this Agreement shall be conclusive and binding on the Borrower and the Lenders in the absence of manifest error. The Administrative Agent shall, at the request of the Borrower, deliver to the Borrower a statement showing the quotations used by the Administrative Agent in determining any interest rate pursuant to Section 2.12(a).

2.14 Inability to Determine Interest Rate. If prior to the first day of any Interest Period:

(a) the Administrative Agent shall have determined in good faith (which determination shall be conclusive and binding upon the Borrower) that, by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining the Eurodollar Rate for such Interest Period, or

(b) the Administrative Agent shall have received notice from the Majority Facility Lenders in respect of the relevant Facility that the Eurodollar Rate determined or

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to be determined for such Interest Period will not adequately and fairly reflect the cost to such Lenders (as conclusively certified by such Lenders) of making or maintaining their affected Loans during such Interest Period,

the Administrative Agent shall give telecopy or telephonic notice thereof to the Borrower and the relevant Lenders as soon as practicable thereafter. If such notice is given (x) any Eurodollar Loans under the relevant Facility requested to be made on the first day of such Interest Period shall be made as ABR Loans, (y) any Loans under the relevant Facility that were to have been converted on the first day of such Interest Period to Eurodollar Loans shall be continued as ABR Loans and (z) any outstanding Eurodollar Loans under the relevant Facility shall be converted, on the last day of the then-current Interest Period, to ABR Loans. Until such notice has been withdrawn by the Administrative Agent, no further Eurodollar Loans under the relevant Facility shall be made or continued as such, nor shall the Borrower have the right to convert Loans under the relevant Facility to Eurodollar Loans.

2.15 Pro Rata Treatment and Payments. (a) Each borrowing by the Borrower from the Lenders hereunder, each payment by the Borrower on account of any commitment fee and any reduction of the Commitments of the Lenders shall be made pro rata according to the respective Term Percentages or Revolving Percentages, as the case may be, of the relevant Lenders.

(b) Each payment (including each prepayment) by the Borrower on account of principal of and interest on the Term Loans shall be made pro rata according to the respective outstanding principal amounts of the Term Loans then held by the Term Lenders. Prepayments of the Term Loans shall be applied pro rata to the installments thereof according to the respective outstanding principal amounts thereof, except that optional prepayments shall be applied in the direct order of maturity thereof. Amounts repaid or prepaid on account of the Term Loans may not be reborrowed.

(c) Each payment (including each prepayment) by the Borrower on account of principal of and interest on the Revolving Loans shall be made pro rata according to the respective outstanding principal amounts of the Revolving Loans then held by the Revolving Lenders.

(d) All payments (including prepayments) to be made by the Borrower hereunder, whether on account of principal, interest, fees or otherwise, shall be made without setoff or counterclaim and shall be made prior to 12:00 Noon, New York City time, on the due date thereof to the Administrative Agent, for the account of the Lenders, at the Funding Office, in Dollars and in immediately available funds. The Administrative Agent shall distribute such payments to the Lenders promptly upon receipt in like funds as received. If any payment hereunder (other than payments on the Eurodollar Loans) becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day. If any payment on a Eurodollar Loan becomes due and payable on a day other than a Business Day, the maturity thereof shall be extended to the next succeeding Business Day unless the result of such extension would be to extend such payment into another calendar month, in which event such payment shall be made on the immediately preceding Business Day. In the case of any

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extension of any payment of principal pursuant to the preceding two sentences, interest thereon shall be payable at the then applicable rate during such extension.

(e) Unless the Administrative Agent shall have been notified in writing by any Lender prior to a borrowing that such Lender will not make the amount that would constitute its share of such borrowing available to the Administrative Agent, the Administrative Agent may assume that such Lender is making such amount available to the Administrative Agent, and the Administrative Agent may, in reliance upon such assumption and at its sole discretion, make available to the Borrower a corresponding amount. If such amount is not made available to the Administrative Agent by the required time on the Borrowing Date therefor, such Lender shall pay to the Administrative Agent, on demand, such amount with interest thereon at a rate equal to the daily average Federal Funds Effective Rate for the period until such Lender makes such amount immediately available to the Administrative Agent. A certificate of the Administrative Agent submitted to any Lender with respect to any amounts owing under this paragraph shall be conclusive in the absence of manifest error. If such Lender’s share of such borrowing is not made available to the Administrative Agent by such Lender within three Business Days of such Borrowing Date, the Administrative Agent shall also be entitled to recover such amount with interest thereon at the rate per annum applicable to ABR Loans under the relevant Facility, on demand, from the Borrower.

(f) Unless the Administrative Agent shall have been notified in writing by the Borrower prior to the date of any payment being made hereunder that the Borrower will not make such payment to the Administrative Agent, the Administrative Agent may assume that the Borrower is making such payment, and the Administrative Agent may, but shall not be required to, in reliance upon such assumption and at its sole discretion, make available to the Lenders their respective pro rata shares of a corresponding amount. If such payment is not made to the Administrative Agent by the Borrower within three Business Days of such required date, the Administrative Agent shall be entitled to recover, on demand, from each Lender to which any amount which was made available pursuant to the preceding sentence, such amount with interest thereon at the rate per annum equal to the daily average Federal Funds Effective Rate. Nothing herein shall be deemed to limit the rights of the Administrative Agent or any Lender against the Borrower.

2.16 Requirements of Law. (a) If the adoption of or any change in any Requirement of Law or in the interpretation or application thereof or compliance by any Lender with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority made subsequent to the date hereof:

(i) shall subject any Lender to any tax of any kind whatsoever with respect to this Agreement, any Letter of Credit, any Application or any Eurodollar Loan made by it, or change the basis of taxation of payments to such Lender in respect thereof (except for Non-Excluded Taxes covered by Section 2.17 and changes in the rate of tax on the overall net income of such Lender);

(ii) shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit by, or any other

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acquisition of funds by, any office of such Lender that is not otherwise included in the determination of the Eurodollar Rate hereunder; or

(iii) shall impose on such Lender any other condition;

and the result of any of the foregoing is to increase the cost to such Lender, by an amount that such Lender deems in good faith to be material, of making, converting into, continuing or maintaining Eurodollar Loans or issuing or participating in Letters of Credit, or to reduce any amount receivable hereunder in respect thereof, then, in any such case, the Borrower shall promptly pay such Lender, upon its demand, any additional amounts necessary to compensate such Lender for such increased cost or reduced amount receivable. If any Lender becomes entitled to claim any additional amounts pursuant to this paragraph, it shall promptly notify the Borrower (with a copy to the Administrative Agent) of the event by reason of which it has become so entitled.

(b) If any Lender shall have determined that the adoption of or any change in any Requirement of Law regarding capital adequacy or in the interpretation or application thereof or compliance by such Lender or any corporation controlling such Lender with any request or directive regarding capital adequacy (whether or not having the force of law) from any Governmental Authority made subsequent to the date hereof shall have the effect of reducing the rate of return on such Lender’s or such corporation’s capital as a consequence of its obligations hereunder or under or in respect of any Letter of Credit to a level below that which such Lender or such corporation reasonably believes it could have achieved but for such adoption, change or compliance (taking into consideration such Lender’s or such corporation’s policies with respect to capital adequacy) by an amount deemed by such Lender to be material, then from time to time, after submission by such Lender to the Borrower (with a copy to the Administrative Agent) of a written request therefor, the Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender for such reduction; provided that the Borrower shall not be required to compensate a Lender pursuant to this paragraph for any amounts incurred more than six months prior to the date that such Lender notifies the Borrower of such Lender’s intention to claim compensation therefor; and provided further that, if the circumstances giving rise to such claim have a retroactive effect, then such six-month period shall be extended to include the period of such retroactive effect.

(c) A certificate as to any additional amounts payable pursuant to this Section submitted by any Lender to the Borrower (with a copy to the Administrative Agent) shall be conclusive in the absence of manifest error. The obligations of the Borrower pursuant to this Section shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.

2.17 Taxes. (a) All payments made by the Borrower under this Agreement shall be made free and clear of, and without deduction or withholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority, excluding net income taxes and franchise taxes (imposed in lieu of net income taxes) imposed on the Administrative Agent or any Lender as a result of a present or former connection between the Administrative Agent or such Lender and the jurisdiction of the

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Governmental Authority imposing such tax or any political subdivision or taxing authority thereof or therein (other than any such connection arising solely from the Administrative Agent or such Lender having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement or any other Loan Document). If any such non-excluded taxes, levies, imposts, duties, charges, fees, deductions or withholdings (“Non-Excluded Taxes”) or Other Taxes are required to be withheld from any amounts payable to the Administrative Agent or any Lender hereunder, the amounts so payable to the Administrative Agent or such Lender shall be increased to the extent necessary to yield to the Administrative Agent or such Lender (after payment of all Non-Excluded Taxes and Other Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Agreement, provided, however, that the Borrower shall not be required to increase any such amounts payable to any Lender with respect to any Non-Excluded Taxes (i) that are attributable to such Lender’s failure to comply with the requirements of paragraph (d) or (e) of this Section or (ii) that are United States withholding taxes imposed on amounts payable to such Lender at the time the Lender becomes a party to this Agreement, except to the extent that such Lender’s assignor (if any) was entitled, at the time of assignment, to receive additional amounts from the Borrower with respect to such Non-Excluded Taxes pursuant to this paragraph.

(b) In addition, the Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

(c) Whenever any Non-Excluded Taxes or Other Taxes are payable by the Borrower, as promptly as possible thereafter the Borrower shall send to the Administrative Agent for its own account or for the account of the relevant Lender, as the case may be, a certified copy of an original official receipt received by the Borrower showing payment thereof. If the Borrower fails to pay any Non-Excluded Taxes or Other Taxes when due to the appropriate taxing authority or fails to remit to the Administrative Agent the required receipts or other required documentary evidence, the Borrower shall indemnify the Administrative Agent and the Lenders for any incremental taxes, interest or penalties that may become payable by the Administrative Agent or any Lender as a result of any such failure.

(d) Each Lender (or Transferee) that is not a citizen or resident of the United States of America, a corporation, partnership or other entity created or organized in or under the laws of the United States of America (or any jurisdiction thereof), or any estate or trust that is subject to federal income taxation regardless of the source of its income (a “Non-U.S. Lender”) shall deliver to the Borrower and the Administrative Agent (or, in the case of a Participant, to the Lender from which the related participation shall have been purchased) two copies of either U.S. Internal Revenue Service Form W-8BEN or Form W-8ECI, or, in the case of a Non-U.S. Lender claiming exemption from U.S. federal withholding tax under Section 871(h) or 881(c) of the Code with respect to payments of “portfolio interest”, a statement substantially in the form of Exhibit F and a Form W-8BEN, or any subsequent versions thereof or successors thereto, properly completed and duly executed by such Non-U.S. Lender claiming complete exemption from, or a reduced rate of, U.S. federal withholding tax on all payments by the Borrower under this Agreement and the other Loan Documents. Such forms shall be delivered by each Non-U.S. Lender on or before the date it becomes a party to this Agreement (or, in the case of any Participant, on or before the date such Participant purchases the related participation. In addition, each Non-U.S. Lender shall deliver such forms promptly upon the obsolescence or

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invalidity of any form previously delivered by such Non-U.S. Lender. Each Non-U.S. Lender shall promptly notify the Borrower at any time it determines that it is no longer in a position to provide any previously delivered certificate to the Borrower (or any other form of certification adopted by the U.S. taxing authorities for such purpose). Notwithstanding any other provision of this paragraph, a Non-U.S. Lender shall not be required to deliver any form pursuant to this paragraph that such Non-U.S. Lender is not legally able to deliver.

(e) A Lender that is entitled to an exemption from or reduction of non-U.S. withholding tax under the law of the jurisdiction in which the Borrower is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable law or reasonably requested by the Borrower, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate, provided that such Lender is legally entitled to complete, execute and deliver such documentation and in such Lender’s good faith judgment such completion, execution or submission would not materially prejudice the legal position of such Lender.

(f) If the Administrative Agent or any Lender receives a refund in respect of Non-Excluded Taxes or Other Taxes paid by the Borrower, which in the sole judgment of such Lender is allocable to such payment, it shall promptly pay such refund, together with any other amounts paid by the Borrower in connection with such refunded Taxes or Other Taxes, to the Borrower, net of all out-of-pocket expenses of such Lender incurred in obtaining such refund, provided, however, that such Borrower agrees to promptly return such refund to the Administrative Agent or the applicable Lender, as the case may be, if it receives notice from the Administrative Agent or applicable Lender that such Administrative Agent or Lender is required to repay such refund.

(g) The agreements in this Section shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.

2.18 Indemnity. The Borrower agrees to indemnify each Lender and to hold each Lender harmless from any loss or expense that such Lender may sustain or incur as a consequence of (a) default by the Borrower in making a borrowing of, conversion into or continuation of Eurodollar Loans after the Borrower has given a notice requesting the same in accordance with the provisions of this Agreement, (b) default by the Borrower in making any prepayment of or conversion from Eurodollar Loans after the Borrower has given a notice thereof in accordance with the provisions of this Agreement or (c) the making of a prepayment of Eurodollar Loans on a day that is not the last day of an Interest Period with respect thereto. Such indemnification may include an amount equal to the excess, if any, of (i) the amount of interest that would have accrued on the amount so prepaid, or not so borrowed, converted or continued, for the period from the date of such prepayment or of such failure to borrow, convert or continue to the last day of such Interest Period (or, in the case of a failure to borrow, convert or continue, the Interest Period that would have commenced on the date of such failure) in each case at the applicable rate of interest for such Loans provided for herein (excluding, however, the Applicable Margin included therein, if any) over (ii) the amount of interest (as reasonably determined by such Lender) that would have accrued to such Lender on such amount by placing

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such amount on deposit for a comparable period with leading banks in the interbank eurodollar market. A certificate as to any amounts payable pursuant to this Section submitted to the Borrower by any Lender shall be conclusive in the absence of manifest error. This covenant shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.

2.19 Change of Lending Office. Each Lender agrees that, upon the occurrence of any event giving rise to the operation of Section 2.16 or 2.17(a) with respect to such Lender, it will, if requested by the Borrower, use reasonable efforts (subject to overall policy considerations of such Lender) to designate another lending office for any Loans affected by such event with the object of avoiding the consequences of such event; provided, that such designation is made on terms that, in the sole good faith judgment of such Lender, cause such Lender and its lending office(s) to suffer no economic, legal or regulatory disadvantage, and provided, further, that nothing in this Section shall affect or postpone any of the obligations of any Borrower or the rights of any Lender pursuant to Section 2.16 or 2.17(a).

2.20 Replacement of Lenders. The Borrower shall be permitted to replace any Lender that (a) requests reimbursement for amounts owing pursuant to Section 2.16 or 2.17(a) or (b) defaults in its obligation to make Loans hereunder, with a replacement financial institution; provided that (i) such replacement does not conflict with any Requirement of Law, (ii) no Event of Default shall have occurred and be continuing at the time of such replacement, (iii) prior to any such replacement, such Lender shall have taken no action under Section 2.19 so as to eliminate the continued need for payment of amounts owing pursuant to Section 2.16 or 2.17(a), (iv) the replacement financial institution shall purchase, at par, all Loans and other amounts owing to such replaced Lender on or prior to the date of replacement, (v) the Borrower shall be liable to such replaced Lender under Section 2.18 if any Eurodollar Loan owing to such replaced Lender shall be purchased other than on the last day of the Interest Period relating thereto, (vi) the replacement financial institution, if not already a Lender, shall be reasonably satisfactory to the Administrative Agent, which determination shall not be unreasonably delayed, (vii) the replaced Lender shall be obligated to make such replacement in accordance with the provisions of Section 10.6 (provided that the Borrower shall be obligated to pay the registration and processing fee referred to therein), (viii) until such time as such replacement shall be consummated, the Borrower shall pay all additional amounts (if any) required pursuant to Section 2.16 or 2.17(a), as the case may be, and (ix) any such replacement shall not be deemed to be a waiver of any rights that the Borrower, the Administrative Agent or any other Lender shall have against the replaced Lender.

SECTION 3. LETTERS OF CREDIT

3.1 L/C Commitment. (a) Subject to the terms and conditions hereof, the Issuing Lender, in reliance on the agreements of the other Revolving Lenders set forth in Section 3.4(a), agrees to issue letters of credit (“Letters of Credit”) for the account of the Borrower on any Business Day during the Revolving Commitment Period in such form as may be approved from time to time by the Issuing Lender; provided that the Issuing Lender shall have no obligation to issue any Letter of Credit if, after giving effect to such issuance, (i) the L/C Obligations would exceed the L/C Commitment or (ii) the aggregate amount of the Available Revolving Commitments would be less than zero. Each Letter of Credit shall (i) be denominated in Dollars

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and (ii) have a term until expiry (or, if such Letter of Credit contemplates time drafts, a term through the maximum time draft period) ending no later than the earlier of (x) the first anniversary of its date of issuance (except with the consent of the Majority Facility Lenders in respect of the Revolving Facility) and (y) the date that is five Business Days prior to the Scheduled Revolving Termination Date, provided that any Letter of Credit may provide for the renewal thereof, with or without notice from the Issuing Lender, for successive periods of up to one year each (which shall in no event extend beyond the date referred to in clause (y) above).

(b) The Issuing Lender shall not at any time be obligated to issue any Letter of Credit hereunder if such issuance would conflict with, or cause the Issuing Lender or any L/C Participant to exceed any limits imposed by, any applicable Requirement of Law.

3.2 Procedure for Issuance of Letter of Credit. The Borrower may from time to time request that the Issuing Lender issue a Letter of Credit by delivering to the Issuing Lender at its address for notices specified herein an Application therefor, completed to the reasonable satisfaction of the Issuing Lender, and such other certificates, documents and other papers and information as the Issuing Lender may reasonably request. Upon receipt of any Application, the Issuing Lender will promptly process such Application and the certificates, documents and other papers and information delivered to it in connection therewith in accordance with its customary procedures and shall promptly issue the Letter of Credit requested thereby (but in no event shall the Issuing Lender be required to issue any Letter of Credit earlier than three Business Days after its receipt of the Application therefor and all such other certificates, documents and other papers and information relating thereto) by issuing the original of such Letter of Credit to the beneficiary thereof or as otherwise may be agreed to by the Issuing Lender and the Borrower. The Issuing Lender shall furnish a copy of such Letter of Credit to the Borrower promptly following the issuance thereof. The Issuing Lender shall promptly furnish to the Administrative Agent, which shall in turn promptly furnish to the Lenders, notice of the issuance of each Letter of Credit (including the amount thereof).

3.3 Fees and Other Charges. (a) The Borrower will pay a fee on all outstanding Letters of Credit at a per annum rate equal to the Applicable Margin then in effect with respect to Eurodollar Loans under the Revolving Facility, shared ratably among the Revolving Lenders and payable quarterly in arrears on each L/C Fee Payment Date after the issuance date. In addition, the Borrower shall pay to the Issuing Lender for its own account a fronting fee of 1/8 of 1% per annum on the average daily undrawn and unexpired amount of each Letter of Credit, payable quarterly in arrears on each L/C Fee Payment Date after the Issuance Date.

(b) In addition to the foregoing fees, the Borrower shall pay or reimburse the Issuing Lender for such normal and customary costs and expenses as are incurred or charged by the Issuing Lender in issuing, negotiating, effecting payment under, amending or otherwise administering any Letter of Credit.

3.4 L/C Participations. (a) The Issuing Lender irrevocably agrees to grant and hereby grants to each L/C Participant, and, to induce the Issuing Lender to issue Letters of Credit hereunder, each L/C Participant irrevocably agrees to accept and purchase and hereby accepts and purchases from the Issuing Lender, on the terms and conditions hereinafter stated, for such L/C Participant’s own account and risk an undivided interest equal to such L/C Participant’s

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Revolving Percentage in the Issuing Lender’s obligations and rights under each Letter of Credit issued hereunder and the amount of each draft paid by the Issuing Lender thereunder. Each L/C Participant unconditionally and irrevocably agrees with the Issuing Lender that, if a draft is paid under any Letter of Credit for which the Issuing Lender is not reimbursed in full by the Borrower in accordance with the terms of this Agreement (or, if reimbursed, is required to be returned to the Borrower), such L/C Participant shall pay to the Issuing Lender upon demand at the Issuing Lender’s address for notices specified herein an amount equal to such L/C Participant’s Revolving Percentage of the amount of such draft, or any part thereof, that is not so reimbursed (or, if reimbursed, is required to be returned to the Borrower).

(b) If any amount required to be paid by any L/C Participant to the Issuing Lender pursuant to Section 3.4(a) in respect of any unreimbursed portion of any payment made by the Issuing Lender under any Letter of Credit is paid to the Issuing Lender within three Business Days after the date such payment is due, such L/C Participant shall pay to the Issuing Lender on demand an amount equal to the product of (i) such amount, times (ii) the daily average Federal Funds Effective Rate during the period from and including the date such payment is required to the date on which such payment is immediately available to the Issuing Lender, times (iii) a fraction the numerator of which is the number of days that elapse during such period and the denominator of which is 360. If any such amount required to be paid by any L/C Participant pursuant to Section 3.4(a) is not made available to the Issuing Lender by such L/C Participant within three Business Days after the date such payment is due, the Issuing Lender shall be entitled to recover from such L/C Participant, on demand, such amount with interest thereon calculated from such due date at the rate per annum applicable to ABR Loans under the Revolving Facility. A certificate of the Issuing Lender submitted to any L/C Participant with respect to any amounts owing under this Section shall be conclusive in the absence of manifest error.

(c) Whenever, at any time after the Issuing Lender has made payment under any Letter of Credit and has received from any L/C Participant its pro rata share of such payment in accordance with Section 3.4(a), the Issuing Lender receives any payment related to such Letter of Credit (whether directly from the Borrower or otherwise, including proceeds of collateral applied thereto by the Issuing Lender), or any payment of interest on account thereof, the Issuing Lender will distribute to such L/C Participant its pro rata share thereof; provided, however, that in the event that any such payment received by the Issuing Lender shall be required to be returned by the Issuing Lender, such L/C Participant shall return to the Issuing Lender the portion thereof previously distributed by the Issuing Lender to it.

3.5 Reimbursement Obligation of the Borrower. The Borrower agrees to reimburse the Issuing Lender on the Business Day immediately following the date on which the Issuing Lender notifies the Borrower of the date and amount of a draft presented under any Letter of Credit and paid by the Issuing Lender for the amount of (a) such draft so paid and (b) any taxes, fees, charges or other costs or expenses incurred by the Issuing Lender in connection with such payment. Each such payment shall be made to the Issuing Lender at its address for notices specified herein in lawful money of the United States and in immediately available funds. Interest shall be payable on any and all amounts remaining unpaid by the Borrower under this Section from the date such amounts become payable (whether at stated maturity, by acceleration

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or otherwise) until payment in full at the rate set forth in (i) until the second Business Day following the date of the applicable drawing, Section 2.12(b) and (ii) thereafter, Section 2.12(c).

3.6 Obligations Absolute. The Borrower’s obligations under this Section 3 shall be absolute and unconditional under any and all circumstances and irrespective of any setoff, counterclaim or defense to payment that the Borrower may have or have had against the Issuing Lender, any beneficiary of a Letter of Credit or any other Person. The Borrower also agrees with the Issuing Lender that the Issuing Lender shall not be responsible for, and the Borrower’s Reimbursement Obligations under Section 3.5 shall not be affected by, among other things, the validity or genuineness of documents or of any endorsements thereon, even though such documents shall in fact prove to be invalid, fraudulent or forged, or any dispute between or among the Borrower and any beneficiary of any Letter of Credit or any other party to which such Letter of Credit may be transferred or any claims whatsoever of the Borrower against any beneficiary of such Letter of Credit or any such transferee. The Issuing Lender shall not be liable for any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any Letter of Credit, except for errors or omissions resulting from the gross negligence or willful misconduct of the Issuing Lender. The Borrower agrees that any action taken or omitted by the Issuing Lender under or in connection with any Letter of Credit or the related drafts or documents, if done in the absence of gross negligence or willful misconduct and in accordance with the standards of care specified in the Uniform Commercial Code of the State of New York, shall be binding on the Borrower and shall not result in any liability of the Issuing Lender to the Borrower.

3.7 Letter of Credit Payments. If any draft shall be presented for payment under any Letter of Credit, the Issuing Lender shall promptly notify the Borrower of the date and amount thereof. The responsibility of the Issuing Lender to the Borrower in connection with any draft presented for payment under any Letter of Credit shall, in addition to any payment obligation expressly provided for in such Letter of Credit, be limited to determining that the documents (including each draft) delivered under such Letter of Credit in connection with such presentment are substantially in conformity with such Letter of Credit.

3.8 Applications. To the extent that any provision of any Application related to any Letter of Credit is inconsistent with the provisions of this Section 3, the provisions of this Section 3 shall apply.

SECTION 4. REPRESENTATIONS AND WARRANTIES

To induce the Administrative Agent and the Lenders to enter into this Agreement and to make the Loans and issue or participate in the Letters of Credit, Holdings and the Borrower hereby jointly and severally represent and warrant to the Administrative Agent and each Lender that:

4.1 Financial Condition. (a) The unaudited pro forma consolidated balance sheets of Holdings and its consolidated Subsidiaries and the Borrower and its consolidated Subsidiaries, respectively, as at the Closing Date (including the notes thereto) (the “Pro Forma Balance Sheets”), copies of which have heretofore been furnished to each Lender, have been prepared giving effect (as if such events had occurred on such date) to (i) the consummation of

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the Transactions, (ii) the Loans to be made hereunder and the 2003 Senior Subordinated Notes to be issued on the Closing Date and the use of proceeds thereof and (iii) the payment of fees and expenses in connection with the foregoing. The Pro Forma Balance Sheets have been prepared based on the best information available to Holdings or the Borrower as of the date of delivery thereof, and present fairly on a pro forma basis the estimated financial position of Holdings and its consolidated Subsidiaries and the Borrower and its consolidated Subsidiaries, respectively, as at the Closing Date, assuming that the events specified in the preceding sentence had actually occurred at such date.

(b) The audited consolidated balance sheets of Holdings as at December 31, 2000, December 31, 2001 and December 31, 2002, and the related consolidated statements of income and of cash flows for the fiscal years ended on such dates, reported on by and accompanied by an unqualified report from PricewaterhouseCoopers LLP, present fairly the consolidated financial condition of Holdings as at such dates, and the consolidated results of its operations and its consolidated cash flows for the fiscal years then ended. The unaudited consolidating statements of income for the fiscal years ending December 31, 2000, December 31, 2001 and December 31, 2002, as the case may be, present fairly the financial condition of each business unit of Holdings. The unaudited consolidated balance sheets of Holdings as at March 31, 2003 and June 30, 2003, and the related unaudited consolidated statements of income and of cash flows for each three-month quarterly period ended on such dates, present fairly the consolidated financial condition of Holdings as at such dates, and the consolidated results of its operations and its consolidated cash flows for each three-month quarterly period then ended (subject to normal year-end audit adjustments). All such financial statements, including the related schedules and notes thereto, have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as approved by the aforementioned firm of accountants and disclosed therein) and comply as to form in all material respects with the published rules and regulations of the SEC with respect thereto. Holdings and its Subsidiaries do not have any material Guarantee Obligations, contingent liabilities and liabilities for taxes, or any long-term leases or unusual forward or long-term commitments, including any interest rate or foreign currency swap or exchange transaction or other obligation in respect of derivatives, that are not reflected in the most recent financial statements referred to in this paragraph. During the period from June 30, 2003 to and including the date hereof there has been no Disposition by Holdings of any material part of its business or property.

4.2 No Change. Since December 31, 2002 there has been no development or event that has had or is reasonably expected to have a Material Adverse Effect.

4.3 Existence; Compliance with Law. Each of Holdings, the Borrower and its Subsidiaries (a) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization or formation, (b) has the corporate or other organizational power and authority, and the legal right, to own and operate its property, to lease the property it operates as lessee and to conduct the business in which it is currently engaged, (c) is duly qualified as a foreign corporation, partnership, limited liability company or other organization (as applicable) and in good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification, except to the extent that the failure to qualify as a foreign corporation, partnership, limited liability company or other organization (as applicable) or be in good standing could not reasonably be expected to

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have a Material Adverse Effect and (d) is in compliance with all Requirements of Law except to the extent that the failure to comply therewith could not, in the aggregate, reasonably be expected to have a Material Adverse Effect.

4.4 Power; Authorization; Enforceable Obligations. Each Loan Party has the corporate or other organizational power and authority, and the legal right, to make, deliver and perform the Loan Documents to which it is a party and, in the case of the Borrower, to borrow hereunder. Each Loan Party has taken all necessary corporate or other organizational action to authorize the execution, delivery and performance of the Loan Documents to which it is a party and, in the case of the Borrower, to authorize the borrowings on the terms and conditions of this Agreement. 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 borrowings hereunder or with the execution, delivery, performance, validity or enforceability of this Agreement or any of the Loan Documents, except (i) consents, authorizations, filings and notices described in Schedule 4.4, which consents, authorizations, filings and notices have been obtained or made and are in full force and effect and (ii) the filings referred to in Section 4.19. Each Loan Document has been duly executed and delivered on behalf of each Loan Party party thereto. This Agreement constitutes, and each other Loan Document upon execution will constitute, a legal, valid and binding obligation of each Loan Party party thereto, enforceable against each such Loan Party 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).

4.5 No Legal Bar. The execution, delivery and performance of this Agreement and the other Loan Documents, the issuance of Letters of Credit, the borrowings hereunder and the use of the proceeds thereof 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 their respective properties or revenues pursuant to any Requirement of Law or any such Contractual Obligation (other than the Liens created by the Security Documents).

4.6 Litigation. No litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of Holdings or the Borrower, threatened by or against Holdings, the Borrower or any of its Subsidiaries or against any of their respective properties or revenues (a) with respect to any of the Loan Documents or any of the transactions contemplated hereby or thereby, or (b) that is reasonably expected to have a Material Adverse Effect.

4.7 No Default. Neither Holdings, the Borrower nor its respective Subsidiaries is in default under or with respect to any of its Contractual Obligations in any respect that is reasonably expected to have a Material Adverse Effect. No Default or Event of Default has occurred and is continuing.

4.8 Ownership of Property; Liens. (a) Each of Holdings, the Borrower and each of its Subsidiaries has title in fee simple to, or a valid leasehold interest in, all its real property,

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and good title to, or a valid leasehold interest in, all its other material property, and none of such property is subject to any Lien except as permitted by Section 7.3.

(b) Neither Holdings, the Borrower nor any of their Subsidiaries has title in fee simple to any real property having a value (together with improvements thereon) of greater than $2,500,000 (in the reasonable judgment of Holdings or the Borrower) on or before the Closing Date

4.9 Intellectual Property. Each of Holdings, the Borrower and each of its Subsidiaries owns, or is licensed to use, all Intellectual Property material in the conduct of its business as currently conducted. No material claim has been asserted and is pending by any Person challenging or questioning the use of any Intellectual Property or the validity or effectiveness of any Intellectual Property, nor does Holdings or the Borrower know of any valid basis for any such claim. The use of Intellectual Property by Holdings, the Borrower and its Subsidiaries does not, to Borrower’s knowledge, infringe on the rights of any Person in any material respect.

4.10 Taxes. Each of Holdings, the Borrower and each of its Subsidiaries has filed or caused to be filed all Federal, state and other material tax returns that are required to be filed and has paid all taxes shown to be due and payable on said returns or on any assessments made against it or any of its property and all other taxes, fees or other charges imposed on it or any of its property by any Governmental Authority (other than any the amount or validity of which are currently being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided on the books of Holdings, the Borrower or its Subsidiaries, as the case may be); no tax Lien has been filed, and, to the knowledge of Holdings or the Borrower, no claim is being asserted, with respect to any such tax, fee or other charge. Such tax returns accurately reflect in all material respects all liability for taxes of Holdings, the Borrower and its Subsidiaries for the periods covered thereby.

4.11 Federal Regulations. No part of the proceeds of any Loans will be used for “buying” or “carrying” any “margin stock” within the respective meanings of each of the quoted terms under Regulation U in any manner that violates the provisions of the Regulations of the Board. If requested by any Lender or the Administrative Agent, the Borrower will furnish to the Administrative Agent and each Lender a statement to the foregoing effect in conformity with the requirements of FR Form G-3 or FR Form U-1, as applicable, referred to in Regulation U.

4.12 Labor Matters. Except as, in the aggregate, could not reasonably be expected to have a Material Adverse Effect: (a) there are no strikes or other labor disputes against Holdings, the Borrower or any of its Subsidiaries pending or, to the knowledge of Holdings or the Borrower, threatened; (b) hours worked by and payment made to employees of Holdings, the Borrower or any of its Subsidiaries have not been in violation of the Fair Labor Standards Act or any other applicable Requirement of Law dealing with such matters; and (c) all payments due from Holdings, the Borrower or any of its Subsidiaries on account of employee health and welfare insurance have been paid or accrued as a liability on the books of Holdings, the Borrower or the relevant Subsidiary.

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4.13 ERISA. Neither a Reportable Event nor an “accumulated funding deficiency” (within the meaning of Section 412 of the Code or Section 302 of ERISA) has occurred during the five-year period prior to the date on which this representation is made or deemed made with respect to any Plan, and each Plan has complied in all material respects with the applicable provisions of ERISA and the Code. No termination of a Single Employer Plan has occurred, and no Lien in favor of the PBGC or a Plan has arisen, during such five-year period. The present value of all accrued benefits under each Single Employer Plan (based on those assumptions used to fund such Plans) did not, as of the last annual valuation date prior to the date on which this representation is made or deemed made, exceed the value of the assets of such Plan allocable to such accrued benefits by a material amount. Neither the Borrower nor any Commonly Controlled Entity has had a complete or partial withdrawal from any Multiemployer Plan that has resulted or could reasonably be expected to result in a material liability under ERISA, and neither the Borrower nor any Commonly Controlled Entity would become subject to any material liability under ERISA if the Borrower or any such Commonly Controlled Entity were to withdraw completely from all Multiemployer Plans as of the valuation date most closely preceding the date on which this representation is made or deemed made. No such Multiemployer Plan is in Reorganization or Insolvent.

4.14 Investment Company Act; Other Regulations. No Loan Party is an “investment company”, or a company “controlled” by an “investment company”, within the meaning of the Investment Company Act of 1940, as amended. No Loan Party is subject to regulation under any Requirement of Law (other than Regulation X of the Board) that limits its ability to incur Indebtedness.

4.15 Subsidiaries. Except as disclosed to the Administrative Agent by the Borrower in writing from time to time after the Closing Date, (a) Schedule 4.15 sets forth the name and jurisdiction of incorporation or formation of each Subsidiary and, as to each such Subsidiary, the percentage of each class of Capital Stock owned by any Loan Party and (b) except as set forth on Schedule 4.15 there are no outstanding subscriptions, options, warrants, calls, rights or other agreements or commitments (other than stock options granted to employees or directors and directors’ qualifying shares) of any nature relating to any Capital Stock of the Borrower or any Subsidiary, except as created by the Loan Documents.

4.16 Use of Proceeds. The proceeds of the Term Loans shall be used to finance a portion of the Transactions and to pay related fees and expenses. The proceeds of the Revolving Loans, and the Letters of Credit, shall be used to finance a portion of the Transactions and for general corporate purposes, including to finance the working capital needs of the Borrower and its Subsidiaries and, subject to Section 7.8, their acquisitions of Capital Stock or ownership interests of, and investments in, other Persons.

4.17 Environmental Matters. Except as, in the aggregate, could not reasonably be expected to have a Material Adverse Effect:

(a) the facilities and properties owned, leased or operated by Holdings, the Borrower or any of its Subsidiaries (the “Properties”) do not contain, and have not previously contained, any Materials of Environmental Concern in amounts or

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concentrations or under circumstances that constitute or constituted a violation of, or could reasonably be expected to give rise to liability under, any Environmental Law;

(b) neither Holdings, the Borrower nor any of its Subsidiaries has received or is aware of any notice of violation, alleged violation, non-compliance, liability or potential liability regarding environmental matters or compliance with Environmental Laws with regard to any of the Properties or the business operated by Holdings, the Borrower or any of its Subsidiaries (the “Business”), nor does Holdings or the Borrower have knowledge or reason to believe that any such notice will be received or is being threatened;

(c) Materials of Environmental Concern have not been transported or disposed of from the Properties in violation of, or in a manner or to a location that could reasonably be expected to give rise to liability under, any Environmental Law, nor have any Materials of Environmental Concern been generated, treated, stored or disposed of at, on or under any of the Properties in violation of, or in a manner that could give rise to liability under, any applicable Environmental Law;

(d) no judicial proceeding or governmental or administrative action is pending or, to the knowledge of Holdings or the Borrower, threatened, under any Environmental Law to which Holdings, the Borrower or any Subsidiary is or will be named as a party, nor are there any consent decrees or other decrees, consent orders, administrative orders or other orders, or other administrative or judicial requirements outstanding under any Environmental Law with respect to the Properties or the Business;

(e) there has been no release or threat of release of Materials of Environmental Concern at or from the Properties, or arising from or related to the operations of Holdings, the Borrower or any Subsidiary in connection with the Properties or otherwise in connection with the Business, in violation of or in amounts or in a manner that could give rise to liability under Environmental Laws;

(f) the Properties and all operations at the Properties are in compliance, and have in the last five years been in compliance, with all applicable Environmental Laws, and there is no contamination at, under or about the Properties or violation of any Environmental Law with respect to the Properties or the Business; and

(g) neither Holdings, the Borrower nor any of its Subsidiaries has retained or assumed any liability of any other Person under Environmental Laws.

4.18 Accuracy of Information, etc. No statement or information contained in this Agreement, any other Loan Document or any other document, certificate or written statement furnished by or on behalf of any Loan Party to the Administrative Agent or the Lenders, or any of them, for use in connection with the transactions contemplated by this Agreement or the other Loan Documents, contained as of the date such statement, information, document or certificate was so furnished (or, in the case of the Confidential Information Memorandum, as of the date of this Agreement), any untrue statement of a material fact or omitted to state a material fact necessary to make the statements contained herein or therein not misleading, provided, that with respect to any statement or information furnished on behalf of any Loan Party by any other

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Person that is not a Loan Party, the representation and warranty set forth in this Section 4.18 is limited to such Loan Party’s best knowledge. The projections and pro forma financial information contained in the materials referenced above are based upon good faith estimates and assumptions believed by management of Holdings and the Borrower to be reasonable at the time made, it being recognized by the Lenders that such financial information as it relates to future events is not to be viewed as fact and that actual results during the period or periods covered by such financial information may differ from the projected results set forth therein by a material amount. There is no fact known to any Loan Party that is reasonably expected to have a Material Adverse Effect that has not been expressly disclosed herein, in the other Loan Documents or in any other documents, certificates and statements furnished to the Administrative Agent and the Lenders for use in connection with the transactions contemplated hereby and by the other Loan Documents.

4.19 Security Documents. (a) The Guarantee and Collateral Agreement is effective to create in favor of the Administrative Agent, for the benefit of the Lenders, a legal, valid and enforceable security interest in the Collateral described therein, all rights, title or interest thereto and proceeds thereof. In the case of the Pledged Stock described in the Guarantee and Collateral Agreement, when stock certificates representing such Pledged Stock are delivered to the Administrative Agent, and in the case of the other Collateral described in the Guarantee and Collateral Agreement, when financing statements and other filings specified on Schedule 4.19 in appropriate form are filed in the offices specified on Schedule 4.19, the Guarantee and Collateral Agreement shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in such Collateral and the proceeds thereof, as security for the Obligations (as defined in the Guarantee and Collateral Agreement), in each case prior and superior in right to any other Person (except, in the case of Collateral other than Pledged Stock, Liens permitted by Section 7.3).

(b) Schedule 4.19(b) lists each of the real properties in the United States owned in fee simple by the Borrower or any of its Subsidiaries on the Closing Date. No Liens or Mortgages shall be created under this Agreement on, and no Lenders shall have any security interests in, the real property owned on the Closing Date by the Borrower or any of its Subsidiaries.

4.20 Solvency. Each Loan Party is, and after giving effect to the incurrence of all Indebtedness and obligations being incurred in connection herewith will be and will continue to be, Solvent.

4.21 Senior Indebtedness. The Obligations constitute “Senior Indebtedness” of the Borrower under and as defined in the Senior Subordinated Note Indentures. The obligations of each Subsidiary Guarantor under the Guarantee and Collateral Agreement constitute “Guarantor Senior Indebtedness” of such Subsidiary Guarantor under and as defined in the Senior Subordinated Note Indentures.

4.22 Insurance. The insurance maintained by or reserved against on the books of Holdings, the Borrower and its Subsidiaries is sufficient to protect Holdings, the Borrower and its Subsidiaries against such risks as are usually insured against in the same general area by companies engaged in the same or similar business. None of the Loan Parties or any of their

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Subsidiaries is in default under any provisions of any such policy of insurance the result of which could reasonably be expected to cause a cancellation of such policy of insurance or to limit or delay the entitlement to any payment thereunder or has received notice of cancellation of any such insurance (other than in connection with the replacement of any such policy). None of the Loan Parties or any of their Subsidiaries has made any material claims under any policy of insurance with respect to which the insurance carrier has denied liability.

4.23 Certain Documents. The Borrower has delivered to the Administrative Agent a complete and correct copy of the 1999 Senior Subordinated Note Indenture, the 2003 Senior Subordinated Note Indenture, the Senior Discount Debenture Purchase Agreement, the Senior Discount Debenture Indenture, and all other documents reasonably requested by the Administrative Agent, including any amendments, supplements or modifications with respect to any of the foregoing.

SECTION 5. CONDITIONS PRECEDENT

5.1 Conditions to Initial Extension of Credit. The agreement of each Lender to make the initial extension of credit requested to be made by it is subject to the satisfaction, prior to or concurrently with the making of such extension of credit on the Closing Date, of the following conditions precedent:

(a) Credit Agreement; Guarantee and Collateral Agreement. The Administrative Agent shall have received (i) this Agreement, executed and delivered by the Administrative Agent, Holdings, the Borrower and each Person listed on Schedule 1.1, (ii) each Note requested by a Lender, the Guarantee and Collateral Agreement, executed and delivered by Holdings, the Borrower and each Subsidiary Guarantor, and (iii) an Acknowledgment and Consent in the form attached to the Guarantee and Collateral Agreement, executed and delivered by each Issuer (as defined therein), if any, that is not a Loan Party.

In the event that this Agreement has not been duly executed and delivered by each Person listed on Schedule 1.1 on the date scheduled to be the Closing Date, the condition referred to in clause (i) above shall nevertheless be deemed satisfied if on such date the Borrower and the Administrative Agent shall have designated one or more Persons (the “Designated Lenders”) to assume, in the aggregate, all of the Commitments that would have been held by the Persons listed on Schedule 1.1 (the “Non-Executing Persons”) which have not so executed and delivered this Agreement (subject to each such Designated Lender’s consent and its execution and delivery of this Agreement). Schedule 1.1 shall automatically be deemed to be amended to reflect the respective Commitments of the Designated Lenders and the omission of the Non-Executing Persons as Lenders hereunder.

(b) Transactions. The following transactions shall have been consummated, in each case on terms and conditions reasonably satisfactory to the Lenders:

(i) the Borrower shall have received at least $150,000,000 in gross cash proceeds from the issuance of the 2003 Senior Subordinated Notes (the “2003

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Issuance”) and shall have used all such proceeds to consummate a portion of the Transactions;

(ii) the Administrative Agent shall have received satisfactory evidence that the fees and expenses to be incurred in connection with the Transactions shall not exceed $16,000,000 in the aggregate; and

(iii) The Administrative Agent shall have received satisfactory evidence that (A) the $475,000,000 Amended and Restated Credit Agreement, dated as of March 21, 2000, among Holdings, the lenders therein, JPMorgan Chase Bank, as administrative agent thereunder, and Credit Suisse First Boston and Fleet National Bank, as co-documentation agents thereunder shall have been repaid in full (the “Bank Debt Repayment”), (B) approximately $138,726,372 shall be paid in partial redemption of the Senior Discount Debentures (the “Redemption”) on the Business Day following the Closing Date with the proceeds of an intercompany loan from the Borrower to Holdings (the “Intercompany Loan”), (C) all outstanding Hedge Agreements of the Borrower shall have been retired and terminated (the “Hedge Retirement”), and (D) other Indebtedness of Holdings and its Subsidiaries (other than amounts outstanding as permitted hereunder) shall have been repaid, redeemed, repurchased or terminated and all amounts payable in connection therewith shall have been indefeasibly paid in full (the “Refinancing”, together with the 2003 Issuance, the Bank Debt Repayment, the Redemption, the Intercompany Loan and the Hedge Retirement, collectively, the “Transactions”), and satisfactory arrangements shall have been made for the termination of all Liens granted in connection therewith.

Immediately after the Closing Date, neither Holdings nor the Borrower nor any of their respective Subsidiaries shall have any Indebtedness other than (A) the 2003 Senior Subordinated Notes, (B) the 1999 Senior Subordinated Notes, (C) the Senior Discount Debentures, (D) the 2002 Holdings Bridge Notes, (E) the Intercompany Loan, (F) the Loans, (G) any Letters of Credit outstanding, and (H) other Indebtedness to the extent permitted by Section 7.2.

(c) Pro Forma Balance Sheets; Financial Statements. The Lenders shall have received satisfactory (i) Pro Forma Balance Sheets, (ii) audited consolidated balance sheets of Holdings as at December 31, 2000, December 31, 2001 and December 31, 2002, and the related consolidated statements of income and of cash flows for the fiscal years ended on such dates, reported on by and accompanied by an unqualified report from PricewaterhouseCoopers LLP, (iii) unaudited consolidating statements of income of Holdings (calculated on a business unit basis) for the fiscal years ended on December 31, 2000, December 31, 2001 and December 31, 2002, (iv) unaudited consolidated balance sheets of Holdings as at March 31, 2003 and June 30, 2003, and the related unaudited consolidated statements of income and of cash flows for each three-month quarterly period ended on such dates, and (v) unaudited consolidating statements of income of Holdings (calculated on a business unit basis) for each three-month quarterly period ended on March 31, 2003 and June 30, 2003.

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(d) Approvals. All governmental and third party approvals necessary or in the reasonable judgment of the Administrative Agent, advisable in connection with the Transactions, the continuing operations of Holdings, the Borrower and its Subsidiaries and the financings and transactions contemplated hereby shall have been obtained and be in full force and effect, and all applicable waiting periods shall have expired without any action being taken or threatened by any competent authority that would restrain, prevent or otherwise impose materially adverse conditions on the Transactions or the financings and transactions contemplated hereby.

(e) Lien Searches. The Administrative Agent shall have received the results of a recent lien search in each of the jurisdictions listed for each of the Loan Parties on Schedule 4.19, and such search shall reveal no liens on any of the assets of Holdings, the Borrower or its Subsidiaries except for liens permitted by Section 7.3 or discharged on or prior to the Closing Date pursuant to documentation satisfactory to the Administrative Agent.

(f) Fees. The Lenders, the Administrative Agent and the Other Representatives shall have received all fees required to be paid, and all expenses required to be reimbursed and for which invoices have been presented (including the reasonable fees and expenses of legal counsel), on or before the Closing Date. All such amounts will be paid with proceeds of Loans made on the Closing Date and will be reflected in the funding instructions given by the Borrower to the Administrative Agent on or before the Closing Date.

(g) Closing Certificate. The Administrative Agent shall have received, with a counterpart for each Lender, a certificate of each Loan Party, dated the Closing Date, substantially in the form of Exhibit C, with appropriate insertions and attachments.

(h) Legal Opinions. The Administrative Agent shall have received the following executed legal opinions:

(i) the legal opinion of Vinson & Elkins L.L.P., counsel to Holdings, the Borrower and its Subsidiaries, substantially in the form of Exhibit E-1;

(ii) the legal opinion of Richard A. Parr, general counsel of Holdings, the Borrower and its Subsidiaries, substantially in the form of Exhibit E-2;

(iii) the legal opinion of Schreck Brignone, Nevada counsel to the Borrower and certain Subsidiaries, substantially in the form of Exhibit E-3; and

(iv) the legal opinion of McDermott, Will & Emery, Massachusetts counsel to certain Subsidiaries, substantially in the form of Exhibit E-4.

Each such legal opinion, reports and other documents shall cover such other matters incident to the transactions contemplated by this Agreement as the Administrative Agent may reasonably require.

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(i) Projections. The Lenders shall have received projections of Holdings and the Borrower through the 2009 fiscal year, in form and substance satisfactory to the Lenders.

(j) Credit Ratings. The Borrower shall have obtained minimum ratings for either senior secured debt or the Loans of no lower than “B+” from S&P and “B1” from Moody’s.

(k) Pledged Stock; Stock Powers; Pledged Notes. The Administrative Agent shall have received (i) the certificates (as applicable) representing the shares of Capital Stock pledged pursuant to the Guarantee and Collateral Agreement, together with (as applicable) an undated stock power for each such certificate executed in blank by a duly authorized officer of the pledgor thereof and (ii) each promissory note (if any) pledged to the Administrative Agent pursuant to the Guarantee and Collateral Agreement endorsed (without recourse) in blank (or accompanied by an executed transfer form in blank) by the pledgor thereof.

(l) Filings, Registrations and Recordings. Each document (including any Uniform Commercial Code financing statement) required by the Security Documents or reasonably requested by the Administrative Agent to be filed, registered or recorded in order to create in favor of the Administrative Agent, for the benefit of the Lenders, a perfected Lien on the Collateral described therein, prior and superior in right to any other Person (other than with respect to Liens expressly permitted by Section 7.3), shall be in proper form for filing, registration or recordation.

(m) Insurance. The Administrative Agent shall have received insurance certificates satisfying the requirements of Section 5.2(b) of the Guarantee and Collateral Agreement, which insurance (applicable on and after the Closing Date) shall be reasonably satisfactory to the Administrative Agent.

5.2 Conditions to Each Extension of Credit. The agreement of each Lender to make any extension of credit requested to be made by it on any date (including its initial extension of credit) is subject to the satisfaction of the following conditions precedent:

(a) Representations and Warranties. Each of the representations and warranties made by any Loan Party in or pursuant to the Loan Documents shall be true and correct on and as of such date as if made on and as of such date, except to the extent that such representation and warranty is expressly limited by its terms to an earlier date.

(b) No Default. No Default or Event of Default shall have occurred and be continuing on such date or after giving effect to the extensions of credit requested to be made on such date.

Each borrowing by and issuance of a Letter of Credit on behalf of the Borrower hereunder shall constitute a representation and warranty by the Borrower as of the date of such extension of credit that the conditions contained in this Section 5.2 have been satisfied.

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SECTION 6. AFFIRMATIVE COVENANTS

Holdings and the Borrower hereby jointly and severally agree that, so long as the Commitments remain in effect, any Letter of Credit remains outstanding (unless cash in an amount equal to the aggregate amount of the L/C Obligations outstanding has been deposited in a cash collateral account established by the Administrative Agent) or any Loan or other amount is owing to any Lender or the Administrative Agent hereunder, each of Holdings and the Borrower shall and shall cause each of its Subsidiaries to:

6.1 Financial Statements. Furnish to the Administrative Agent and each Lender:

(a) as soon as available, but in any event within 95 days after the end of each fiscal year (or not later than two (2) Business Days after such earlier filing date as may be required by the SEC):

(i) of the Borrower, copies of (A) the audited consolidated balance sheets of the Borrower and its consolidated Subsidiaries as at the end of such year and the related audited consolidated statements of income and of cash flows for such year, setting forth in comparative form the figures for the previous year, reported on without a “going concern” or like qualification or exception, or qualification arising out of the scope of the audit, by independent certified public accountants of nationally recognized standing, and (B) the unaudited consolidating statements of income of the Borrower for such year (calculated on a business unit basis), setting forth 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, copies of unaudited consolidated balance sheets of Holdings and its consolidated Subsidiaries as at the end of such year and the related unaudited consolidated statements of income and of cash flows for such year, setting forth 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);

(b) as soon as available, but in any event not later than 50 days after the end of each of the first three quarterly periods of each fiscal year (or not later than two (2) Business Days after such earlier filing date as may be required by the SEC):

(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 quarter and the related unaudited consolidated statements of income for such quarter and the portion of the fiscal year through the end of such quarter and of cash flows for such portion of such fiscal year, and (B) the unaudited consolidating statements of income of the Borrower for such quarter and the portion of the fiscal year through the end of such quarter (calculated on a business unit basis), setting forth in each case in comparative form the figures for the previous year, certified by a

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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 quarter and the related unaudited consolidated statements of income for such quarter and the portion of the fiscal year through the end of such quarter and of cash flows for such portion of such fiscal year, setting forth 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

(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):

(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 for such month and the portion of the fiscal year through the end of such month and of cash flows for such portion of such fiscal year, setting forth 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).

provided; that the reporting required by this paragraph (c) shall not apply at any time that the Consolidated Leverage Ratio is at or less than 4.00 to 1.00.

All such financial statements shall be complete and correct in all material respects and shall be prepared in reasonable detail and in accordance with GAAP applied consistently throughout the periods reflected therein and with prior periods (except as approved by such accountants or officer, as the case may be, and disclosed therein and, with respect to unaudited financial statements as set forth in this Section 6.1, subject, where appropriate, to normal year-end audit adjustments and the absence of notes thereto).

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In lieu of furnishing the Lenders the items referred to in this Section 6.1, the Borrower may make available such items on the Borrower’s IntraLinks website or at such other website as notified to the Administrative Agent and the Lenders.

6.2 Certificates; Other Information. Furnish to the Administrative Agent and each Lender (or, in the case of clause (g), to the relevant Lender):

(a) concurrently with the delivery of the financial statements referred to in Section 6.1(a), a certificate of the independent certified public accountants reporting on such financial statements stating that in making the examination necessary therefor no knowledge was obtained of any Default or Event of Default, except as specified in such certificate;

(b) concurrently with the delivery of any financial statements pursuant to Section 6.1, (i) a certificate of a Responsible Officer stating that, to the best of such Responsible Officer’s knowledge, each Loan Party during such period has observed or performed all of its covenants and other agreements, and satisfied every condition, contained in this Agreement and the other Loan Documents to which it is a party to be observed, performed or satisfied by it, and that such Responsible Officer has obtained no knowledge of any Default or Event of Default except as specified in such certificate and (ii) in the case of quarterly or annual financial statements, (x) a Compliance Certificate containing all information and calculations necessary for determining compliance by Holdings, the Borrower and its Subsidiaries with the provisions of this Agreement referred to therein as of the last day of the fiscal quarter or fiscal year of the Borrower, as the case may be, and (y) to the extent not previously disclosed to the Administrative Agent, a listing of any Intellectual Property acquired by any Loan Party since the date of the most recent list delivered pursuant to this clause (y) (or, in the case of the first such list so delivered, since the Closing Date);

(c) as soon as available, and in any event within 60 days after the beginning of each fiscal year of the Borrower, a detailed consolidated budget for such fiscal year (including a projected consolidated balance sheet of the Borrower and its Subsidiaries as of the end of such fiscal year, the related consolidated statements of projected cash flow and projected income and a description of the underlying assumptions applicable thereto), and, as soon as available, significant revisions, if any, of such budget and projections, which revisions, in the reasonable judgment of the Borrower, are necessary to make the information contained in such budget and projections not materially misleading or inaccurate, with respect to such fiscal year (collectively, the “Projections”), which Projections shall in each case be accompanied by a certificate of a Responsible Officer stating that such Projections are based on reasonable estimates, information and assumptions and that such Responsible Officer has no reason to believe that such Projections are incorrect or misleading in any material respect;

(d) within 50 days after the end of each fiscal quarter of the Borrower, a narrative discussion and analysis of the financial condition and results of operations of the Borrower and its Subsidiaries for such fiscal quarter and for the period from the beginning of the then current fiscal year to the end of such fiscal quarter, as compared to

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the portion of the Projections covering such periods and to the comparable periods of the previous year, to the extent filings with the SEC by or on behalf of the Borrower in which such narrative discussion and analysis are presented shall no longer be required or made;

(e) no later than five Business Days prior to the effectiveness thereof, copies of substantially final drafts of any proposed amendment, supplement, waiver or other modification with respect to the Senior Subordinated Note Indentures, the Senior Discount Debenture Purchase Agreement, the Senior Discount Debenture Indenture or the documentation for any Senior Discount Debenture Refinancing;

(f) within 10 days after the same are sent, copies of all financial statements and reports that Holdings or the Borrower sends to the holders of any class of its debt securities or public equity securities and, within 10 days after the same are filed, copies of all financial statements and reports that Holdings or the Borrower may make to, or file with, the SEC; and

(g) promptly, such additional financial and other information as any Lender may from time to time reasonably request.

6.3 Payment of Obligations. Pay, discharge or otherwise satisfy at or before maturity or before they become delinquent, as the case may be, all its obligations of whatever nature, except where the amount or validity thereof is currently being contested in good faith by appropriate proceedings and reserves in conformity with GAAP with respect thereto have been provided on the books of Holdings, the Borrower or its Subsidiaries, as the case may be, and except where the failure to pay, discharge or satisfy the obligations could not reasonably be expected to have a Material Adverse Effect.

6.4 Maintenance of Existence; Compliance. (a) (i) Preserve, renew and keep in full force and effect its corporate or other organizational existence and business and (ii) take all reasonable action to maintain all rights, privileges and franchises necessary or desirable in the normal conduct of its business, except, in each case, as otherwise permitted by Section 7.4 and except, in the case of clause (ii) above, to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect; and (b) comply with all Contractual Obligations and Requirements of Law except to the extent that failure to comply therewith could not, in the aggregate, reasonably be expected to have a Material Adverse Effect.

6.5 Maintenance of Property; Insurance. (a) Keep all property material and necessary in its business in good working order and condition, ordinary wear and tear excepted and (b) maintain with financially sound and reputable insurance companies insurance on all its property in at least such amounts and against at least such risks (but including in any event public liability, product liability and business interruption) as are usually insured against in the same general area by companies engaged in the same or a similar business.

6.6 Inspection of Property; Books and Records; Discussions. (a) Keep proper books of records and account in which entries in conformity with GAAP and all Requirements of Law shall be made of all dealings and transactions in relation to its business and activities and (b) permit representatives of any Lender to visit and inspect any of its properties and examine

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and make abstracts from any of its books and records at any reasonable time and as often as may reasonably be desired and to discuss the business, operations, properties and financial and other condition of Holdings, the Borrower and its Subsidiaries with officers and employees of Holdings, the Borrower and its Subsidiaries and with its independent certified public accountants. In the event multiple Lenders separately request such a visit, inspection or discussion in substantially the same time period, such Lenders shall comply with reasonable requests by the Borrower to coordinate the same.

6.7 Notices. Promptly after Holdings, the Borrower or any Subsidiary, has obtained knowledge thereof, give notice to the Administrative Agent and each Lender of:

(a) the occurrence of any Default or Event of Default;

(b) any (i) default or event of default under any Contractual Obligation of Holdings, the Borrower or any of its Subsidiaries or (ii) litigation, investigation or proceeding that may exist at any time between Holdings, the Borrower or any of its Subsidiaries and any Governmental Authority, that in either case, if not cured or if adversely determined, as the case may be, could reasonably be expected to have a Material Adverse Effect;

(c) any litigation or proceeding affecting Holdings, the Borrower or any of its Subsidiaries in which the amount involved is $2,000,000 or more and not covered by insurance or in which injunctive or similar relief (the result of which could reasonably be expected to have a Material Adverse Effect) is sought;

(d) any of the following events that could reasonably be expected to create or be a material liability, as soon as possible and in any event within 30 days after the Borrower knows or has reason to know thereof: (i) the occurrence of any Reportable Event with respect to any Plan, a failure to make any required contribution to a Plan, the creation of any Lien in favor of the PBGC or a Plan or any withdrawal from, or the termination, Reorganization or Insolvency of, any Multiemployer Plan or (ii) the institution of proceedings or the taking of any other action by the PBGC or the Borrower or any Commonly Controlled Entity or any Multiemployer Plan with respect to the withdrawal from, or the termination, Reorganization or Insolvency of, any Plan; and

(e) any other development or event that has had or could reasonably be expected to have a Material Adverse Effect.

Each notice pursuant to this Section 6.7 shall be accompanied by a statement of a Responsible Officer setting forth details of the occurrence referred to therein and stating what action Holdings, the Borrower or the relevant Subsidiary proposes to take with respect thereto.

6.8 Environmental Laws. (a) Comply in all material respects with, and use all reasonable efforts to ensure compliance in all material respects by all tenants and subtenants, if any, with, all applicable Environmental Laws, and obtain and comply in all material respects with and maintain, and use all reasonable efforts to ensure that all tenants and subtenants obtain and comply in all material respects with and maintain, any and all licenses, approvals, notifications, registrations or permits required by applicable Environmental Laws.

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(b) Conduct and complete all investigations, studies, sampling and testing, and all remedial, removal and other actions required under Environmental Laws and promptly comply in all material respects with all lawful orders and directives of all Governmental Authorities regarding Environmental Laws.

6.9 Additional Collateral, etc. (a) With respect to any property acquired after the Closing Date by Holdings, the Borrower or any of its Subsidiaries (other than (x) any property described in paragraph (b), (c) or (d) below, (y) any property subject to a Lien expressly permitted by Section 7.3(g) and (z) property acquired by any Excluded Foreign Subsidiary) as to which the Administrative Agent, for the benefit of the Lenders, does not have a perfected Lien, promptly (i) execute and deliver to the Administrative Agent such amendments to the Guarantee and Collateral Agreement or such other documents as the Administrative Agent deems necessary or advisable to grant to the Administrative Agent, for the benefit of the Lenders, a security interest in such property and (ii) take all actions necessary or advisable to grant to the Administrative Agent, for the benefit of the Lenders, a perfected first priority security interest in such property, including the filing of Uniform Commercial Code financing statements in such jurisdictions as may be required by the Guarantee and Collateral Agreement or by law or as may be requested by the Administrative Agent. Notwithstanding the foregoing, neither Holdings nor the Borrower shall be required, and the Borrower shall not be required to cause each of its Subsidiaries, to take any actions or accept any contract terms which could reasonably be expected to have a Material Adverse Effect or cause undue hardship or excessive costs to Holdings, the Borrower or such Subsidiary, as the case may be, in order to obtain the necessary consents to an assignment of its rights, title and interest in the Collateral.

(b) With respect to any fee interest in any real property having a value (together with improvements thereof) of at least $2,500,000 acquired after the Closing Date by Holdings, the Borrower or any of its Subsidiaries (other than (x) any such real property subject to a Lien expressly permitted by Section 7.3(g) and (y) real property acquired by any Excluded Foreign Subsidiary), promptly (i) execute and deliver a first priority Mortgage, in favor of the Administrative Agent, for the benefit of the Lenders, covering such real property, (ii) if requested by the Administrative Agent, provide the Lenders with (x) title and extended coverage insurance covering such real property in an amount at least equal to the purchase price of such real property (or such other amount as shall be reasonably specified by the Administrative Agent) as well as a current ALTA survey thereof, together with a surveyor’s certificate and (y) any consents or estoppels (which may be obtained without undue hardship or excessive costs) reasonably deemed necessary or advisable by the Administrative Agent in connection with such Mortgage, each of the foregoing in form and substance reasonably satisfactory to the Administrative Agent and (iii) if requested by the Administrative Agent, deliver to the Administrative Agent legal opinions relating to the matters described above, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent.

(c) With respect to any new Subsidiary (other than an Excluded Foreign Subsidiary) created or acquired after the Closing Date by Holdings (which, for the purposes of this paragraph (c), shall include any existing Subsidiary that ceases to be an Excluded Foreign Subsidiary), the Borrower or any of its Subsidiaries, promptly (i) execute and deliver to the Administrative Agent such amendments to the Guarantee and Collateral Agreement as the

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Administrative Agent deems necessary or advisable to grant to the Administrative Agent, for the benefit of the Lenders, a perfected first priority security interest in the Capital Stock of such new Subsidiary that is owned by Holdings, the Borrower or any of its Subsidiaries, (ii) deliver to the Administrative Agent the certificates, as applicable, representing such Capital Stock, together with, as applicable, undated stock powers, in blank, executed and delivered by a duly authorized officer of Holdings, the Borrower or such Subsidiary, as the case may be, (iii) cause such new Subsidiary (A) to become a party to the Guarantee and Collateral Agreement, (B) to take such actions necessary or advisable to grant to the Administrative Agent for the benefit of the Lenders a perfected first priority security interest in the Collateral described in the Guarantee and Collateral Agreement with respect to such new Subsidiary, including the filing of Uniform Commercial Code financing statements in such jurisdictions as may be required by the Guarantee and Collateral Agreement or by law or as may be requested by the Administrative Agent and (C) to deliver to the Administrative Agent a certificate of such Subsidiary, substantially in the form of Exhibit C, with appropriate insertions and attachments, and (iv) if requested by the Administrative Agent, deliver to the Administrative Agent legal opinions relating to the matters described above, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent.

(d) With respect to any new Excluded Foreign Subsidiary created or acquired after the Closing Date by Holdings, the Borrower or any of its Subsidiaries, promptly, to the extent not restricted by Requirement of Law, (i) execute and deliver to the Administrative Agent such amendments to the Guarantee and Collateral Agreement as the Administrative Agent deems necessary or advisable to grant to the Administrative Agent, for the benefit of the Lenders, a perfected first priority security interest in the Capital Stock of such new Subsidiary that is owned by Holdings, the Borrower or any of its Subsidiaries (provided that in no event shall more than 65% of the total outstanding Capital Stock of any such new Subsidiary be required to be so pledged), (ii) deliver to the Administrative Agent the certificates, as applicable, representing such Capital Stock, together with, as applicable, undated stock powers, in blank, executed and delivered by a duly authorized officer of Holdings, the Borrower or such Subsidiary, as the case may be, and take such other action as may be necessary or, in the reasonable opinion of the Administrative Agent, desirable to perfect the Administrative Agent’s security interest therein, and (iii) if requested by the Administrative Agent, deliver to the Administrative Agent legal opinions relating to the matters described above, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent.

(e) With respect to any new Permitted Joint Venture created or acquired by the Borrower or any of one or more of its Subsidiaries after the Closing Date, use reasonable efforts in good faith to cause the joint venture or similar agreement with respect thereto to permit the ownership interests of the Borrower and such Subsidiaries therein to be included as Collateral under the Security Documents.

SECTION 7. NEGATIVE COVENANTS

Holdings and the Borrower hereby jointly and severally agree that, so long as the Commitments remain in effect, any Letter of Credit remains outstanding (unless cash in an amount equal to the aggregate amount of the L/C Obligations outstanding has been deposited in a cash collateral account established by the Administrative Agent) or any Loan or other amount

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is owing to any Lender or the Administrative Agent hereunder, each of Holdings and the Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly (and with respect to Permitted Joint Ventures, the Borrower shall not permit any Permitted Joint Venture to, directly or indirectly, do or take the actions set forth in Section 7.17):

7.1 Financial Condition Covenants.

(a) Consolidated Leverage Ratio. Permit the Consolidated Leverage Ratio as at the last day of any period of four consecutive fiscal quarters of the Borrower ending with any fiscal quarter set forth below to exceed the ratio set forth below opposite such fiscal quarter:

Fiscal Quarter	Consolidated Leverage Ratio
September 30, 2003	5.00 to 1.00
December 31, 2003	5.00 to 1.00
March 31, 2004	5.00 to 1.00
June 30, 2004	5.00 to 1.00
September 30, 2004	5.00 to 1.00
December 31, 2004	4.75 to 1.00
March 31, 2005	4.75 to 1.00
June 30, 2005	4.75 to 1.00
September 30, 2005	4.75 to 1.00
December 31, 2005	4.25 to 1.00
March 31, 2006	4.25 to 1.00
June 30, 2006	4.25 to 1.00
September 30, 2006	4.25 to 1.00
December 31, 2006	3.75 to 1.00
March 31, 2007	3.75 to 1.00
June 30, 2007	3.75 to 1.00
September 30, 2007	3.75 to 1.00
December 31, 2007	3.50 to 1.00
March 31, 2008	3.50 to 1.00
June 30, 2008	3.50 to 1.00
September 30, 2008	3.50 to 1.00
December 31, 2008 and thereafter	3.00 to 1.00

(b) Consolidated Interest Coverage Ratio. Permit the Consolidated Interest Coverage Ratio for any period of four consecutive fiscal quarters of the Borrower ending with any fiscal quarter set forth below to be less than the ratio set forth below opposite such fiscal quarter:

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Fiscal Quarter	Consolidated Interest Coverage Ratio
September 30, 2003	2.25 to 1.00
December 31, 2003	2.25 to 1.00
March 31, 2004	2.25 to 1.00
June 30, 2004	2.35 to 1.00
September 30, 2004	2.35 to 1.00
December 31, 2004	2.45 to 1.00
March 31, 2005	2.45 to 1.00
June 30, 2005	2.45 to 1.00
September 30, 2005	2.45 to 1.00
December 31, 2005	2.50 to 1.00
March 31, 2006	2.50 to 1.00
June 30, 2006	2.50 to 1.00
September 30, 2006	2.50 to 1.00
December 31, 2006	2.65 to 1.00
March 31, 2007	2.65 to 1.00
June 30, 2007	2.65 to 1.00
September 30, 2007	2.65 to 1.00
December 31, 2007	2.90 to 1.00
March 31, 2008	2.90 to 1.00
June 30, 2008	2.90 to 1.00
September 30, 2008	2.90 to 1.00
December 31, 2008 and thereafter	3.00 to 1.00

(c) Consolidated Fixed Charge Coverage Ratio. Permit the Consolidated Fixed Charge Coverage Ratio for any period of four consecutive fiscal quarters of the Borrower ending with any fiscal quarter set forth below to be less than the ratio set forth below opposite such fiscal quarter:

Fiscal Quarter	Consolidated Fixed Charge Coverage Ratio
September 30, 2003 and thereafter	1.00 to 1.00

provided; that for purposes of calculating the Consolidated Fixed Charge Coverage Ratio beginning with the fiscal quarter ended September 30, 2008, the numerator (Consolidated EBITDA plus Consolidated Lease Expense) will include the Borrower’s cash on hand as of the beginning of such period.

7.2 Indebtedness. Create, issue, incur, assume, become liable in respect of or suffer to exist any Indebtedness, except:

(a) Indebtedness of any Loan Party pursuant to any Loan Document or Letter of Credit;

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(b) Indebtedness of the Borrower to any Subsidiary and of any Wholly Owned Subsidiary Guarantor to the Borrower or any other Subsidiary, provided, however that:

(i) if the Borrower or any Wholly Owned Subsidiary Guarantor is the obligor under such Indebtedness, such Indebtedness must be expressly subordinated to the prior payment in full of all Obligations hereunder; and

(ii) (A) any subsequent issuance or transfer of Capital Stock or ownership interests that results in any such Indebtedness being held by a Person other than the Borrower or a Wholly Owned Subsidiary Guarantor and (B) any sale or other transfer of any such Indebtedness to a Person that is not either the Borrower or a Wholly Owned Subsidiary Guarantor shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Borrower or such Wholly Owned Subsidiary Guarantor, as the case may be, that is not permitted by this Section 7.2(b);

(c) Guarantee Obligations incurred in the ordinary course of business by the Borrower or any of its Subsidiaries of obligations of any Wholly Owned Subsidiary Guarantor;

(d) Indebtedness outstanding on the date hereof and listed on Schedule 7.2(d) and any refinancings, refundings, renewals or extensions thereof (without increasing, or shortening the maturity of, the principal amount thereof and which shall not be adverse to the Borrower or shall have a negative impact on the Lenders);

(e) Indebtedness (including, without limitation, Capital Lease Obligations) of the Borrower and its Subsidiaries secured by Liens permitted by Section 7.3(g) in an aggregate principal amount not to exceed $15,000,000 at any one time outstanding;

(f) (i) Indebtedness of the Borrower in respect of the 2003 Senior Subordinated Notes in an aggregate principal amount not to exceed $150,000,000 and (ii) Guarantee Obligations of any Subsidiary Guarantor in respect of such Indebtedness, provided that such Guarantee Obligations are subordinated to the same extent as the obligations of the Borrower in respect of the 2003 Senior Subordinated Notes;

(g) Indebtedness of Holdings in respect of the Senior Discount Debentures, provided, that Holdings may refinance the Senior Discount Debentures with, and/or exchange the Senior Discount Debentures for, other Indebtedness of Holdings the terms of which shall be reasonably acceptable to the Administrative Agent and no less favorable to the Lenders than the terms contained in the Senior Discount Debenture Indenture or Senior Discount Debenture Purchase Agreement including, without limitation, that (A) such Indebtedness shall be subordinate to the Indebtedness incurred hereunder, (B) the maturity or amortization of such Indebtedness shall occur no earlier than the date that is the earlier of six months after (x) the sixth anniversary of the Closing Date and (y) the first date on which the Loans have been paid or prepaid in full and no Commitments or Letters of Credit are outstanding, (C) the amount of such indebtedness shall not exceed the aggregate amount of such indebtedness in existence on the Closing

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Date (including accrued interest thereon, together with transaction fees and expenses), and (D) such Indebtedness otherwise has terms and conditions reasonably satisfactory to the Administrative Agent (such other Indebtedness, the “Senior Discount Debenture Refinancing”);

(h) Indebtedness incurred or assumed in connection with, or resulting from, Permitted Acquisitions, provided, that the aggregate principal amount of Indebtedness permitted by this Section 7.2(h) shall be subject to the limitations set forth in Section 7.8(g);

(i) Indebtedness of Holdings in respect of any Holdings Refinancing Indebtedness (plus increases to the principal amount of such Indebtedness resulting from any pay in kind feature of such Indebtedness);

(j) Indebtedness of Holdings in respect of the Intercompany Loan; and

(k) additional Indebtedness of the Borrower or any of its Subsidiaries in an aggregate principal amount (for the Borrower and all Subsidiaries) not to exceed $10,000,000 at any one time outstanding.

7.3 Liens. Create, incur, assume or suffer to exist any Lien upon any of its property, whether now owned or hereafter acquired, except for:

(a) Liens for taxes not yet due or that are being contested in good faith by appropriate proceedings, provided that adequate reserves with respect thereto are maintained on the books of the Borrower or its Subsidiaries, as the case may be, in conformity with GAAP;

(b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s, landlord’s or other like Liens arising in the ordinary course of business that are not overdue for a period of more than 30 days or that are being contested in good faith by appropriate proceedings;

(c) pledges or deposits in connection with workers’ compensation, unemployment insurance and other social security legislation;

(d) deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;

(e) easements, rights-of-way, restrictions and other similar encumbrances incurred in the ordinary course of business that, in the aggregate, are not substantial in amount and that do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the Borrower or any of its Subsidiaries;

(f) Liens in existence on the date hereof listed on Schedule 7.3(f), securing Indebtedness permitted by Section 7.2(d), provided that no such Lien is spread to cover

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any additional property after the Closing Date and that the amount of Indebtedness secured thereby is not increased;

(g) Liens securing Indebtedness of the Borrower or any of its Subsidiaries incurred pursuant to Section 7.2(e) to finance the acquisition of fixed or capital assets, provided that (i) such Liens shall be created substantially simultaneously with the acquisition of such fixed or capital assets, (ii) such Liens do not at any time encumber any property other than the property financed by such Indebtedness and (iii) the amount of Indebtedness secured thereby is not increased;

(h) Liens created pursuant to the Security Documents;

(i) any interest or title of a lessor under any lease entered into by the Borrower or any of its Subsidiaries in the ordinary course of its business and covering only the assets so leased; and

(j) Liens not otherwise permitted by this Section so long as neither (i) the aggregate outstanding principal amount of the obligations secured thereby nor (ii) the aggregate fair market value (determined as of the date such Lien is incurred) of the assets subject thereto exceeds (as to the Borrower and its Subsidiaries) $5,000,000 at any one time.

Notwithstanding any of the foregoing provisions, no real property of the Borrower or its Subsidiaries owned on the Closing Date shall be subject to any Liens permitted under Section 7.3 (f), (g) or (j).

7.4 Fundamental Changes. Enter into any merger, consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or Dispose of, all or substantially all of its property or business, except that:

(a) any Subsidiary of the Borrower may be merged or consolidated with or into the Borrower (provided that the Borrower shall be the continuing or surviving corporation) or with or into any Wholly Owned Subsidiary Guarantor (provided that the Wholly Owned Subsidiary Guarantor shall be the continuing or surviving entity) or with or into any other Subsidiary which wholly owns or is wholly owned by such Subsidiary; and

(b) any Subsidiary of the Borrower may Dispose of any or all of its assets (upon voluntary liquidation or otherwise) to the Borrower or any Wholly Owned Subsidiary Guarantor or any other Subsidiary which wholly owns or is wholly owned by such Subsidiary;

provided, in each case that prior to or after giving effect to such changes contemplated in clause (a) and (b) above, no Default or Event of Default shall have occurred and be continuing.

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7.5 Disposition of Property. Dispose of any of its property, whether now owned or hereafter acquired, or, in the case of any Subsidiary, issue or sell any shares of such Subsidiary’s Capital Stock to any Person, except:

(a) the Disposition of obsolete or worn out property in the ordinary course of business;

(b) the sale of inventory in the ordinary course of business;

(c) Dispositions permitted by Section 7.4(b);

(d) the sale or issuance of any Subsidiary’s Capital Stock to the Borrower or any other Subsidiary; and

(e) the Disposition of other property having a fair market value not to exceed $10,000,000 in the aggregate for any fiscal year of the Borrower.

7.6 Restricted Payments. Declare or pay any dividend (other than dividends payable solely in common stock of the Person making such dividend) on, or make any payment on account of, or set apart assets for a sinking or other analogous fund for, the purchase, redemption, defeasance, retirement or other acquisition of, any Capital Stock of Holdings, the Borrower or any Subsidiary, whether now or hereafter outstanding, or make any other distribution in respect thereof, either directly or indirectly, whether in cash or property or in obligations of Holdings, the Borrower or any Subsidiary (collectively, “Restricted Payments”), except that:

(a) any Subsidiary may make Restricted Payments to the Borrower or any other Subsidiary;

(b) so long as no Default or Event of Default shall have occurred and be continuing, the Borrower may pay dividends to Holdings to permit Holdings to (i) purchase Holdings’ common stock or common stock options from present or former officers or employees of Holdings, the Borrower or any Subsidiary upon the death, disability or termination of employment of such officer or employee, provided, that the aggregate amount of payments under this clause after the date hereof (net of any proceeds received by Holdings and contributed to the Borrower after the date hereof in connection with resales of any common stock or common stock options so purchased) shall not exceed $5,000,000, and (ii) pay management fees expressly permitted by the last sentence of Section 7.10;

(c) the Borrower may pay dividends to Holdings to permit Holdings to (i) pay corporate overhead expenses incurred in the ordinary course of business not to exceed $1,000,000 in any fiscal year, and (ii) pay any taxes that are due and payable by Holdings and the Borrower as part of a consolidated group; and

(d) beginning with fiscal year 2005, the Borrower may pay dividends or make other distributions to Holdings on any date to permit Holdings to promptly pay interest and/or “original issue discount” (within the meaning of Section 1273(a) of the Code)

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accrued and accruing on the Senior Discount Debentures, the Senior Discount Debenture Refinancing and the Holdings Refinancing Indebtedness, in an amount which is not greater than the Permitted Holdings Interest Payment Amount as at such date; provided, that any time any such dividends or distributions are to made, (x) no Default or Event of Default shall have occurred and be continuing or would result therefrom, (y) 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 to such payment, 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 payment and any borrowing in connection with such payment had occurred on the last day of each relevant period for testing such compliance, and (z) the Consolidated Leverage Ratio is less than or equal to 4.00 to 1.00 for the four consecutive fiscal quarters then ended for which financial statements are available.

7.7 Capital Expenditures. Make any Capital 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:

Fiscal Year	Maintenance Capital Expenditures
2003	$	52,500,000
2004		57,500,000
2005		60,000,000
2006		65,000,000
2007		70,000,000
2008 and thereafter		77,500,000

; provided, that up to 50% of each such 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.

7.8 Investments. Make any advance, loan, extension of credit (by way of guaranty or otherwise) or capital contribution to, or purchase any Capital Stock, bonds, notes, debentures or other debt securities of, or any assets constituting a business unit of, or make any other investment in, any Person (all of the foregoing, “Investments”), except:

(a) extensions of trade credit in the ordinary course of business;

(b) investments in Cash Equivalents;

(c) Guarantee Obligations permitted by Section 7.2;

(d) loans and advances to employees of Holdings, the Borrower or any Subsidiary of the Borrower in the ordinary course of business (including for travel,

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entertainment and relocation expenses) in an aggregate amount for Holdings, the Borrower or any Subsidiary of the Borrower not to exceed $2,500,000 at any one time outstanding;

(e) the Transactions;

(f) Investments by Holdings, the Borrower or any of its Subsidiaries in the Borrower or any Person that, prior to such investment, is a Wholly Owned Subsidiary Guarantor;

(g) Permitted Acquisitions and investments in Permitted Joint Ventures as permitted by Section 7.8A;

(h) Permitted Minority Acquisitions; provided, that such Permitted Minority Acquisitions do not exceed an aggregate principal amount of $10,000,000;

(i) advances, loans or extensions of credit to, or the taking of notes from, members of management of the Borrower in connection with the issuance and sale of the Capital Stock of the Borrower to such members in an amount not to exceed $4,000,000 at any one time outstanding; and

(j) loans and advances on behalf of customers or clients of the Borrower or any Subsidiary of the Borrower in the ordinary course of business in an aggregate amount for Holdings, the Borrower or any Subsidiary of the Borrower not to exceed $5,000,000 at any one time outstanding.

7.8A Acquisitions. Except as permitted by Section 7.16 with respect to Holdings and except with respect to Permitted Minority Acquisitions permitted by Section 7.8(h), 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 $12,000,000 for the period from the Closing Date to December 31, 2003, $32,500,000 in the fiscal year ended 2004, $35,000,000 in the fiscal year ended 2005, $37,500,000 in the fiscal year ended 2006, $40,000,000 in the fiscal year ended 2007, $42,500,000 in the fiscal year ended 2008 and $22,500,000 for the period from January 1, 2009 through June 30, 2009 (which amounts 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, however, that immediately after giving effect to any such Acquisition Capital

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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 4.00 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.

7.9 Optional Payments and Modifications of Certain Debt Instruments. (a) Make or offer to make any optional or voluntary payment, prepayment, repurchase or redemption of or otherwise optionally or voluntarily defease or segregate funds with respect to the Senior Subordinated Notes or the Senior Discount Debentures (other than (i) the Redemption and (ii) such a payment, prepayment, repurchase or redemption of the Senior Discount Debentures with the proceeds of any Senior Discount Debenture Refinancing, (b) amend, modify, waive or otherwise change, or consent or agree to any amendment, modification, waiver or other change to, any of the terms of the Senior Subordinated Notes, the Senior Discount Debentures or any Senior Discount Debenture Refinancing (other than any such amendment, modification, waiver or other change that (i) would extend the maturity or reduce the amount of any payment of principal thereof or reduce the rate or extend any date for payment of interest thereon and (ii) does not involve the payment of a material consent fee, or (c) designate any Indebtedness (other than obligations of the Loan Parties pursuant to the Loan Documents) as “Designated Senior Indebtedness” for the purposes of the Senior Subordinated Note Indentures.

7.10 Transactions with Affiliates. Enter into any transaction, including any purchase, sale, lease or exchange of property, the rendering of any service or the payment of any management, advisory or similar fees, with any Affiliate (other than Holdings, the Borrower or any Subsidiary), Permitted Joint Venture or Professional Association unless such transaction is (a) otherwise permitted under this Agreement, (b) in the ordinary course of business of Holdings, the Borrower or such Subsidiary, as the case may be, and (c) upon fair and reasonable terms no less favorable to Holdings, the Borrower or such Subsidiary, as the case may be, than it would obtain in a comparable arm’s length transaction with a Person that is not an Affiliate. Notwithstanding the foregoing, (i) Holdings, the Borrower and its Subsidiaries may pay to the Sponsor and its Control Investment Affiliates fees and expenses pursuant to a management agreement approved by the board of directors of Holdings or the Borrower, as the case may be, in an aggregate amount not to exceed $1,000,000 in any fiscal year of the Borrower, provided,

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that (x) such management agreement may not be amended in any manner the result of which shall be to increase the aggregate amount of fees and expenses payable thereunder to the Sponsor and its Control Investment Affiliates and (y) at any time such fees and expenses are to be paid, no Default or Event of Default shall have occurred and be continuing and (ii) Holdings may (A) issue and sell to any Affiliate all or any part of the 2002 Holdings Bridge Notes and any Holdings Refinancing Indebtedness and may pay and perform all of its obligations thereunder, including the payment of all fees and expenses in connection therewith (including any guarantee fee payable to the Sponsor in respect of its guarantee of the 2002 Holdings Bridge Notes) and (B) redeem Senior Discount Debentures held by any Affiliate pursuant to the Redemption.

7.11 Sales and Leasebacks. Enter into any arrangement with any Person providing for the leasing by Holdings, the Borrower or any Subsidiary of real or personal property that has been or is to be sold or transferred by Holdings, the Borrower or such Subsidiary to such Person or to any other Person to whom funds have been or are to be advanced by such Person on the security of such property or rental obligations of Holdings, the Borrower or such Subsidiary.

7.12 Changes in Fiscal Periods. Permit the fiscal year of the Borrower to end on a day other than December 31 or change the Borrower’s method of determining fiscal quarters.

7.13 Negative Pledge Clauses. Enter into or suffer to exist or become effective any agreement that prohibits or limits the ability of Holdings, the Borrower or any of its Subsidiaries to create, incur, assume or suffer to exist any Lien upon any of its property or revenues, whether now owned or hereafter acquired, to secure its obligations under the Loan Documents to which it is a party other than (a) this Agreement and the other Loan Documents and (b) any agreements governing any purchase money Liens or Capital Lease Obligations otherwise permitted hereby (in which case, any prohibition or limitation shall only be effective against the assets financed thereby).

7.14 Clauses Restricting Subsidiary Distributions. Enter into or suffer to exist or become effective any consensual encumbrance or restriction on the ability of any Subsidiary of the Borrower to (a) make Restricted Payments in respect of any Capital Stock of such Subsidiary held by, or pay any Indebtedness owed to, the Borrower or any other Subsidiary of the Borrower, (b) make loans or advances to, or other Investments in, the Borrower or any other Subsidiary of the Borrower or (c) transfer any of its assets to the Borrower or any other Subsidiary of the Borrower, except for such encumbrances or restrictions existing under or by reason of (i) any restrictions existing under the Loan Documents, (ii) any restrictions with respect to a Subsidiary imposed pursuant to an agreement that has been entered into in connection with the Disposition of all or substantially all of the Capital Stock or assets of such Subsidiary and (iii) any restrictions imposed by any agreement related to secured Indebtedness permitted by this Agreement if such restrictions apply only to the property or assets securing such Indebtedness.

7.15 Lines of Business. Enter into any business, either directly or through any Subsidiary, except for those businesses in which the Borrower and its Subsidiaries are engaged on the date of this Agreement or that are reasonably related or ancillary thereto.

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7.16 Limitation of Activities of Holdings. In the case of Holdings, notwithstanding anything to the contrary in this Agreement or any other Loan Document, (a) conduct, transact or otherwise engage in, or commit to conduct, transact or otherwise engage in, any business or operations other than those incidental to its ownership of the Capital Stock of the Borrower (except that Holdings may create or acquire any Subsidiary (in compliance with Section 7.15), and any such Subsidiary may acquire any assets or Capital Stock of any other Person (in compliance with Section 7.15), so long as such Subsidiary and any Indebtedness incurred or assumed in connection with the creation or acquisition thereof or the acquisition by it of any such assets or Capital Stock, is contributed to or acquired or assumed by the Borrower or any of its Subsidiaries within the same Business Day in a Permitted Acquisition), (b) incur, create, assume or suffer to exist any Indebtedness or other liabilities or financial obligations, except (i) nonconsensual obligations imposed by operation of law, (ii) pursuant to the Loan Documents to which it is a party, the Senior Discount Debenture Purchase Agreement, the Senior Discount Debenture Indenture or the documentation for any Senior Discount Debenture Refinancing, the 2002 Holdings Bridge Notes or the documentation for any Holdings Refinancing Indebtedness or the Intercompany Loan and (iii) obligations with respect to its Capital Stock, or (c) own, lease, manage or otherwise operate any properties or assets (including cash (other than cash received in connection with dividends made by the Borrower in accordance with Section 7.6 pending application in the manner contemplated by said Section) and cash equivalents) other than the ownership of shares of Capital Stock of the Borrower.

7.17 Limitation of Permitted Joint Ventures. Permit any Permitted Joint Venture, to (a) create, issue, incur, assume, become liable in respect of or suffer to exist any Indebtedness, except Indebtedness to the Borrower permitted to be advanced by the Borrower pursuant to Section 7.8A, (b) enter into any Guarantee Obligation, (c) enter into any business, either directly or through any of their affiliates, except for those businesses in which the Borrower and its Subsidiaries are permitted to engage pursuant to Section 7.15 or that are reasonably related thereto, or (d) retain any cash remaining at the end of any fiscal year (other than cash required to be reserved on its balance sheets in accordance with GAAP consistent with past practice).

SECTION 8. EVENTS OF DEFAULT

If any of the following events shall occur and be continuing:

(a) the Borrower shall fail to pay any principal of any Loan or Reimbursement Obligation when due in accordance with the terms hereof; or the Borrower shall fail to pay any interest on any Loan or Reimbursement Obligation, or any other amount payable hereunder or under any other Loan Document, within three days after any such interest or other amount becomes due in accordance with the terms hereof; or

(b) any representation or warranty made or, pursuant to the last sentence of Section 5.2, deemed made by any Loan Party herein or in any other Loan Document or that is contained in any certificate, document or financial or other written statement furnished by it at any time under or in connection with this Agreement or any such other Loan Document shall prove to have been inaccurate in any material respect on or as of the date made or deemed made; or

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(c) (i) any Loan Party shall default in the observance or performance of any agreement contained in clause (i) or (ii) of Section 6.4(a) (with respect to Holdings and the Borrower only), Section 6.7(a) or Section 7 of this Agreement or Sections 5.5(ii), Section 5.5(iii) and 5.7(b) of the Guarantee and Collateral Agreement or (ii) an “Event of Default” under and as defined in any Mortgage, if applicable, shall have occurred and be continuing; or

(d) any Loan Party shall default in the observance or performance of any other agreement contained in this Agreement or any other Loan Document (other than as provided in paragraphs (a) through (c) of this Section), and such default shall continue unremedied for a period of 30 days; or

(e) Holdings, the Borrower or any of its Subsidiaries shall (i) default in making any payment of any principal of any Indebtedness (including any Guarantee Obligation, but excluding the Loans) on the scheduled or original due date with respect thereto; or (ii) default in making any payment of any interest on any such Indebtedness beyond the period of grace, if any, provided in the instrument or agreement under which such Indebtedness was created; or (iii) default in the observance or performance of any other agreement or condition relating to any such Indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or beneficiary of such Indebtedness (or a trustee or agent on behalf of such holder or beneficiary) to cause, with the giving of notice if required, such Indebtedness to become due prior to its stated maturity or (in the case of any such Indebtedness constituting a Guarantee Obligation) to become payable; provided, that a default, event or condition described in clause (i), (ii) or (iii) of this paragraph (e) shall not at any time constitute an Event of Default unless, at such time, one or more defaults, events or conditions of the type described in clauses (i), (ii) and (iii) of this paragraph (e) shall have occurred and be continuing with respect to Indebtedness the outstanding principal amount of which exceeds in the aggregate $10,000,000; or

(f) (i) Holdings, the Borrower or any of its Subsidiaries shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or Holdings, the Borrower or any of its Subsidiaries shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against Holdings, the Borrower or any of its Subsidiaries any case, proceeding or other action of a nature referred to in clause (i) above that (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed, undischarged or unbonded for a period of 60 days; or (iii) there shall be commenced against Holdings, the Borrower or any of its Subsidiaries any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its

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assets that results in the entry of an order for any such relief that shall not have been vacated, discharged, or stayed or bonded pending appeal within 45 days from the entry thereof; or (iv) Holdings, the Borrower or any of its Subsidiaries shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v) Holdings, the Borrower or any of its Subsidiaries shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due; or

(g) (i) any Person shall engage in any “prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan, (ii) any “accumulated funding deficiency” (as defined in Section 302 of ERISA), whether or not waived, shall exist with respect to any Plan or any Lien in favor of the PBGC or a Plan shall arise on the assets of the Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall occur with respect to, or proceedings shall commence to have a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any Single Employer Plan, which Reportable Event or commencement of proceedings or appointment of a trustee is, in the reasonable opinion of the Required Lenders, likely to result in the termination of such Plan for purposes of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for purposes of Title IV of ERISA, (v) the Borrower or any Commonly Controlled Entity shall, or in the reasonable opinion of the Required Lenders is likely to, incur any liability in connection with a withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan or (vi) any other event or condition shall occur or exist with respect to a Plan; and in each case in clauses (i) through (vi) above, such event or condition, together with all other such events or conditions, if any, could reasonably be expected to have a Material Adverse Effect; or

(h) one or more judgments or decrees shall be entered against Holdings, the Borrower or any of its Subsidiaries involving in the aggregate a liability (not paid or fully covered by insurance as to which the relevant insurance company has acknowledged coverage) of $5,000,000 or more, and all such judgments or decrees shall not have been vacated, discharged, stayed or bonded pending appeal within 45 days from the entry thereof; or

(i) any of the Security Documents shall cease, for any reason, to be in full force and effect, or any Loan Party or any Affiliate of any Loan Party shall so assert, or any Lien created by any of the Security Documents shall cease to be enforceable and of the same effect and priority purported to be created thereby; or

(j) the guarantee contained in Section 2 of the Guarantee and Collateral Agreement shall cease, for any reason, to be in full force and effect or any Loan Party or any Affiliate of any Loan Party shall so assert; or

(k) (i) prior to an IPO, (A) the Permitted Investors shall cease collectively to own, of record and beneficially, shares of the common stock of Holdings equal to at least 51% of all of the issued and outstanding shares of the common stock of Holdings on a fully diluted basis and (B) the Permitted Investors shall cease to have the power to vote or direct the voting of securities having a majority of the aggregate ordinary voting power

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for the election of directors of Holdings (determined on a fully diluted basis); (ii) after an IPO, (X) the Permitted Investors shall cease collectively to own, of record and beneficially, shares of the common stock of Holdings equal to at least 35% of all of the issued and outstanding shares of the common stock of Holdings on a fully diluted basis, (Y) the Permitted Investors shall cease to have the power to vote or direct the voting of securities having at least 35% of the aggregate ordinary voting power for the election of directors of Holdings (determined on a fully diluted basis) and (Z) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), excluding the Permitted Investors, shall become, or obtain rights (whether by means or warrants, options or otherwise) to become, the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of more than 15% of the outstanding common stock of Holdings; (iii) the board of directors of Holdings shall cease to consist of a majority of Continuing Directors; (iv) Holdings shall cease to own and control, of record and beneficially, directly, 100% of each class of outstanding Capital Stock of the Borrower free and clear of all Liens (except Liens created by the Guarantee and Collateral Agreement); or (v) a Specified Change of Control shall occur; or

(l) Holdings shall (i) conduct, transact or otherwise engage in, or commit to conduct, transact or otherwise engage in, any business or operations other than those incidental to its ownership of the Capital Stock of the Borrower, (ii) incur, create, assume or suffer to exist any Indebtedness or other liabilities or financial obligations, except (w) the Senior Discount Debentures or any Senior Discount Debenture Refinancing, the 2002 Holdings Bridge Notes or any Holdings Refinancing Indebtedness, or the Intercompany Loan (x) nonconsensual obligations imposed by operation of law, (y) pursuant to the Loan Documents to which it is a party and (z) obligations with respect to its Capital Stock, or (iii) own, lease, manage or otherwise operate any properties or assets (including cash (other than cash received in connection with dividends made by the Borrower in accordance with Section 7.6 pending application in the manner contemplated by said Section) and cash equivalents) other than the ownership of shares of Capital Stock of the Borrower; or

(m) the Senior Subordinated Notes or the guarantees thereof shall cease, for any reason, to be validly subordinated to the Obligations or the obligations of the Subsidiary Guarantors under the Guarantee and Collateral Agreement, as the case may be, as provided in the Senior Subordinated Note Indentures, or any Loan Party, any Affiliate of any Loan Party, the trustees (as applicable) in respect of the Senior Subordinated Notes or the holders of at least 25% in aggregate principal amount of either the 1999 Senior Subordinated Notes or the 2003 Senior Subordinated Notes (as applicable) shall so assert;

then, and in any such event, (A) if such event is an Event of Default specified in clause (i) or (ii) of paragraph (f) above with respect to the Borrower, automatically the Commitments shall immediately terminate and the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement and the other Loan Documents (including all amounts of L/C Obligations, whether or not the beneficiaries of the then outstanding Letters of Credit shall have presented the documents required thereunder) shall immediately become due and payable, and (B) if such event is any other Event of Default, either or both of the following actions may

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be taken: (i) with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to the Borrower declare the Revolving Commitments to be terminated forthwith, whereupon the Revolving Commitments shall immediately terminate; and (ii) with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to the Borrower, declare the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement and the other Loan Documents (including all amounts of L/C Obligations, whether or not the beneficiaries of the then outstanding Letters of Credit shall have presented the documents required thereunder) to be due and payable forthwith, whereupon the same shall immediately become due and payable. With respect to all Letters of Credit with respect to which presentment for honor shall not have occurred at the time of an acceleration pursuant to this paragraph, the Borrower shall at such time deposit in a cash collateral account opened by the Administrative Agent an amount equal to the aggregate then undrawn and unexpired amount of such Letters of Credit. Amounts held in such cash collateral account shall be applied by the Administrative Agent to the payment of drafts drawn under such Letters of Credit, and the unused portion thereof after all such Letters of Credit shall have expired or been fully drawn upon, if any, shall be applied to repay other obligations of the Borrower hereunder and under the other Loan Documents provided, however, that in the event any and all Events of Default shall have been waived or cured prior to the application of all amounts held in such cash collateral account to the payment of drafts drawn under such Letters of Credit or the repayment of other obligations of the Borrower hereunder and under the other Loan Documents, such remaining amounts in such cash collateral account shall be paid back to the Borrower. After all such Letters of Credit shall have expired or been fully drawn upon, all Reimbursement Obligations shall have been satisfied and all other obligations of the Borrower hereunder and under the other Loan Documents shall have been paid in full, the balance, if any, in such cash collateral account shall be returned to the Borrower (or such other Person as may be lawfully entitled thereto). Except as expressly provided above in this Section, presentment, demand, protest and all other notices of any kind are hereby expressly waived by the Borrower.

SECTION 9. THE AGENTS

9.1 Appointment. Each Lender hereby irrevocably designates and appoints the Administrative Agent as the agent of such Lender under this Agreement and the other Loan Documents, and each such Lender irrevocably authorizes the Administrative Agent, in such capacity, to take such action on its behalf under the provisions of this Agreement and the other Loan Documents and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of this Agreement and the other Loan Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein or in the other Loan Documents, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Administrative Agent.

9.2 Delegation of Duties. The Administrative Agent may execute any of its duties under this Agreement and the other Loan Documents by or through agents or

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attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Administrative Agent shall not be responsible for the negligence or misconduct of any agents or attorneys in-fact selected by it with reasonable care.

9.3 Exculpatory Provisions. Neither any Agent nor the Lead Arranger nor any Co-Arranger nor any of their respective officers, directors, employees, agents, attorneys-in-fact or affiliates shall be (i) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with this Agreement or any other Loan Document (except to the extent that any of the foregoing are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from its or such Person’s own gross negligence or willful misconduct) or (ii) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by any Loan Party or any officer thereof contained in this Agreement or any other Loan Document or in any certificate, report, statement or other document referred to or provided for in, or received by any of the Agents, the Lead Arranger or the Co-Arrangers under or in connection with, this Agreement or any other Loan Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document or for any failure of any Loan Party a party thereto to perform its obligations hereunder or thereunder. The Agents shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of any Loan Party.

9.4 Reliance by Administrative Agent. The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any instrument, writing, resolution, notice, consent, certificate, affidavit, letter, telecopy, telex or teletype message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including counsel to Holdings or the Borrower), independent accountants and other experts selected by the Administrative Agent. The Administrative Agent may deem and treat the payee of any Note as the owner thereof for all purposes unless a written notice of assignment, negotiation or transfer thereof shall have been filed with the Administrative Agent. The Administrative Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or concurrence of the Required Lenders (or, if so specified by this Agreement, all Lenders) as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Loan Documents in accordance with a request of the Required Lenders (or, if so specified by this Agreement, all Lenders), and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the Loans.

9.5 Notice of Default. The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless the Administrative Agent has received notice from a Lender, Holdings or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a “notice of default”. In the event that the Administrative Agent receives such a notice, the

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Administrative Agent shall give notice thereof to the Lenders. The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders (or, if so specified by this Agreement, all Lenders); provided that unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders.

9.6 Non-Reliance on Agents and Other Lenders. Each Lender expressly acknowledges that neither the Agents nor any of their respective officers, directors, employees, agents, attorneys-in-fact or affiliates have made any representations or warranties to it and that no act by any Agent hereinafter taken, including any review of the affairs of a Loan Party or any affiliate of a Loan Party, shall be deemed to constitute any representation or warranty by any Agent to any Lender. Each Lender represents to the Agents that it has, independently and without reliance upon any Agent, the Lead Arranger, any Co-Arranger or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, financial and other condition and creditworthiness of the Loan Parties and their affiliates and made its own decision to make its Loans hereunder and enter into this Agreement. Each Lender also represents that it will, independently and without reliance upon any Agent, the Lead Arranger, any Co-Arranger or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of the Loan Parties and their affiliates. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent hereunder, the Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, property, condition (financial or otherwise), prospects or creditworthiness of any Loan Party or any affiliate of a Loan Party that may come into the possession of the Administrative Agent or any of its officers, directors, employees, agents, attorneys-in-fact or affiliates.

9.7 Indemnification. The Lenders agree to indemnify each of the Other Representatives and the Administrative Agent in its capacity as such (to the extent not reimbursed by Holdings or the Borrower and without limiting the obligation of Holdings or the Borrower to do so), ratably according to their respective Aggregate Exposure Percentages in effect on the date on which indemnification is sought under this Section (or, if indemnification is sought after the date upon which the Commitments shall have terminated and the Loans shall have been paid in full, ratably in accordance with such Aggregate Exposure Percentages immediately prior to such date), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever that may at any time (whether before or after the payment of the Loans) be imposed on, incurred by or asserted against such Other Representative or the Administrative Agent in any way relating to or arising out of, the Commitments, this Agreement, any of the other Loan Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by such Other Representative or the Administrative Agent under or in connection with any of the foregoing; provided that no

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Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements that are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from such Other Representative’s or the Administrative Agent’s gross negligence or willful misconduct. The agreements in this Section shall survive the payment of the Loans and all other amounts payable hereunder.

9.8 Agent in Its Individual Capacity. Each of the Other Representatives, the Administrative Agent and their respective affiliates may make loans to, accept deposits from and generally engage in any kind of business with any Loan Party as though such Other Representative or the Administrative Agent was not an Other Representative or the Administrative Agent, respectively. With respect to the Loans made or renewed by any of them and with respect to any Letter of Credit issued or participated in by any of them, each of the Other Representatives or the Administrative Agent shall have the same rights and powers under this Agreement and the other Loan Documents as any Lender and may exercise the same as though it were not an Other Representative or the Administrative Agent, and the terms “Lender” and “Lenders” shall include each of the Other Representative or the Administrative Agent in its individual capacity.

9.9 Successor Administrative Agent. The Administrative Agent may resign as Administrative Agent upon 30 days’ notice to the Lenders and the Borrower. If the Administrative Agent shall resign as Administrative Agent under this Agreement and the other Loan Documents, then the Required Lenders shall appoint from among the Lenders a successor agent for the Lenders, which successor agent shall (unless an Event of Default under Section 8(a) or Section 8(f) with respect to the Borrower shall have occurred and be continuing) be subject to approval by the Borrower (which approval shall not be unreasonably withheld or delayed), whereupon such successor agent shall succeed to the rights, powers and duties of the Administrative Agent, and the term “Administrative Agent” shall mean such successor agent effective upon such appointment and approval, and the former Administrative Agent’s rights, powers and duties as Administrative Agent shall be terminated, without any other or further act or deed on the part of such former Administrative Agent or any of the parties to this Agreement or any holders of the Loans. If no successor agent has accepted appointment as Administrative Agent by the date that is 30 days following a retiring Administrative Agent’s notice of resignation, the retiring Administrative Agent’s resignation shall nevertheless thereupon become effective and the Lenders shall assume and perform all of the duties of the Administrative Agent hereunder until such time, if any, as the Required Lenders appoint a successor agent as provided for above. After any retiring Administrative Agent’s resignation as Administrative Agent, the provisions of this Section 9 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement and the other Loan Documents.

9.10 Other Representatives. None of the Other Representatives shall have any duties or responsibilities hereunder in each of their respective capacities as such.

SECTION 10. MISCELLANEOUS

10.1 Amendments and Waivers. Neither this Agreement, any other Loan Document, nor any terms hereof or thereof may be amended, supplemented or modified except

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in accordance with the provisions of this Section 10.1. The Required Lenders and each Loan Party party to the relevant Loan Document may, or, with the written consent of the Required Lenders, the Administrative Agent and each Loan Party party to the relevant Loan Document may, from time to time, (a) enter into written amendments, supplements or modifications hereto and to the other Loan Documents for the purpose of adding any provisions to this Agreement or the other Loan Documents or changing in any manner the rights of the Lenders or of the Loan Parties hereunder or thereunder or (b) waive, on such terms and conditions as the Required Lenders or the Administrative Agent, as the case may be, may specify in such instrument, any of the requirements of this Agreement or the other Loan Documents or any Default or Event of Default and its consequences; provided, however, that no such waiver and no such amendment, supplement or modification shall (i) forgive or reduce the principal amount or extend the final scheduled date of maturity of any Loan or Reimbursement Obligation, extend the scheduled date of any amortization payment in respect of any Term Loan, reduce the stated rate of any interest or fee payable hereunder or extend the scheduled date of any payment thereof, or increase the amount or extend the expiration date of any Lender’s Revolving Commitment, in each case without the consent of each Lender directly affected thereby; (ii) eliminate or reduce any voting rights under this Section 10.1, reduce any percentage specified in the definition of Required Lenders, consent to the assignment or transfer by the Borrower of any of its rights and obligations under this Agreement and the other Loan Documents, release all or substantially all of the Collateral or release any Subsidiary Guarantor (the release of which could reasonably be expected to have a Material Adverse Effect) from its obligations under the Guarantee and Collateral Agreement, in each case without the consent of all Lenders; (iii) amend, modify or waive any condition precedent to any extension of credit under the Revolving Facility set forth in Section 5.2 (including in connection with any waiver of an existing Default or Event of Default) without the written consent of the Majority Facility Lenders in respect of the Revolving Facility; (iv) amend, modify or waive any provision of Section 2.15 without the consent of each Lender; (v) reduce the amount of Net Cash Proceeds or Excess Cash Flow required to be applied to prepay Loans (or change the application of such prepayments among the Loans) under this Agreement without the consent of the Majority Facility Lenders under each Facility; (vi) reduce the percentage specified in the definition of Majority Facility Lenders with respect to any Facility without the consent of all Lenders under such Facility; (vii) amend, modify or waive any provision of Section 9 without the consent of the Administrative Agent; or (viii) amend, modify or waive any provision of Section 3 without the consent of the Issuing Lender. Any such waiver and any such amendment, supplement or modification shall apply equally to each of the Lenders and shall be binding upon the Loan Parties, the Lenders, the Administrative Agent and all future holders of the Loans. In the case of any waiver, the Loan Parties, the Lenders and the Administrative Agent shall be restored to their former position and rights hereunder and under the other Loan Documents, and any Default or Event of Default waived shall be deemed to be cured and not continuing; but no such waiver shall extend to any subsequent or other Default or Event of Default, or impair any right consequent thereon.

10.2 Notices. All notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by electronic transmission), and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered, or three Business Days after being deposited in the mail, postage prepaid, or, in the case of electronic transmission notice, when received, addressed as follows in the case of Holdings, the Borrower and the Administrative Agent, and as set forth in an administrative

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questionnaire delivered to the Administrative Agent in the case of the Lenders, or to such other address as may be hereafter notified by the respective parties hereto:

Holdings and the Borrower:	Concentra Inc. 5080 Spectrum Drive Suite 400, West Tower Addison, Texas 75001 Attention: Chief Financial Officer Telecopy: 972-387-8092 Telephone: 972-364-8217 E-Mail Address: Tom.Kiraly@Concentra.com
with a copy to:	Concentra Inc. 5080 Spectrum Drive Suite 400, West Tower Addison, Texas 75001 Attention: General Counsel Telecopy: 972-387-1938 Telephone: 972-364-8043 E-Mail Address: Richard.Parr@Concentra.com
The Administrative Agent:	JPMorgan Chase Bank 1111 Fannin, 10th Floor Houston, TX 77002 Attention: Jennifer Anyigbo Telecopy: 713-750-2782 Telephone: 713-750-2110 E-Mail Address: jennifer.anyigbo@jpmorgan.com
with a copy to:	JPMorgan Chase Bank 270 Park Avenue, 15th Floor New York, New York 10017 Attention: Lyette Proctor Telecopy: 212-270-5135 Telephone: 212-270-1479 E-Mail Address: lyette.proctor@jpmorgan.com

provided that any notice, request or demand to or upon the Administrative Agent or the Lenders shall not be effective until received.

10.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of the Administrative Agent or any Lender, any right, remedy, power or

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privilege hereunder or under the other Loan Documents shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

10.4 Survival of Representations and Warranties. All representations and warranties made hereunder, in the other Loan Documents and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the making of the Loans and other extensions of credit hereunder.

10.5 Payment of Expenses and Taxes; Lender Indemnification. The Borrower agrees (a) to pay or reimburse (i) each of the Lead Arranger and the Administrative Agent for all their respective out-of-pocket costs and expenses incurred in connection with the syndication of the Facilities and (ii) the Administrative Agent for all out-of-pocket costs and expenses incurred in connection with the preparation and execution of, and any amendment, supplement or modification to, this Agreement and the other Loan Documents and any other documents prepared in connection herewith or therewith, the syndication of the Facilities and the consummation and administration of the transactions contemplated hereby and thereby, including the reasonable fees and disbursements of counsel to the Administrative Agent and filing and recording fees and expenses, with statements with respect to the foregoing to be submitted to the Borrower prior to the Closing Date (in the case of amounts to be paid on the Closing Date) and from time to time thereafter on a quarterly basis or such other periodic basis as the Administrative Agent shall deem appropriate, (b) to pay or reimburse each Lender and the Administrative Agent for all its out-of-pocket costs and expenses incurred in connection with the enforcement or preservation of any rights under this Agreement, the other Loan Documents and any such other documents, including the reasonable fees and disbursements of counsel to each Lender and of counsel to the Administrative Agent, (c) to pay, indemnify, and hold each Lender and the Administrative Agent harmless from, any and all recording and filing fees and any and all liabilities with respect to, or resulting from any delay in paying, stamp, excise and other taxes, if any, that may be payable or determined to be payable in connection with the execution and delivery of, or consummation or administration of any of the transactions contemplated by, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, this Agreement, the other Loan Documents and any such other documents, and (d) TO PAY, INDEMNIFY, AND HOLD EACH LENDER, THE OTHER REPRESENTATIVES, THE ADMINISTRATIVE AGENT AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AFFILIATES, TRUSTEES AND ADVISORS, AGENTS AND CONTROLLING PERSONS (EACH, AN “INDEMNITEE”) HARMLESS FROM AND AGAINST ANY AND ALL OTHER LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS OF ANY KIND OR NATURE WHATSOEVER WITH RESPECT TO THE SYNDICATION AND FINANCING OF THE FACILITIES, AND THE EXECUTION, DELIVERY, ENFORCEMENT, PERFORMANCE AND ADMINISTRATION OF THIS AGREEMENT, THE OTHER LOAN DOCUMENTS AND ANY SUCH OTHER DOCUMENTS, INCLUDING ANY OF THE FOREGOING RELATING TO THE USE OF PROCEEDS OF THE LOANS OR THE VIOLATION OF, NONCOMPLIANCE WITH OR LIABILITY UNDER, ANY ENVIRONMENTAL LAW APPLICABLE TO

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THE OPERATIONS OF HOLDINGS, THE BORROWER ANY OF ITS SUBSIDIARIES OR ANY OF THE PROPERTIES AND THE REASONABLE FEES AND EXPENSES OF LEGAL COUNSEL IN CONNECTION WITH CLAIMS, ACTIONS OR PROCEEDINGS UNDER OR IN CONNECTION WITH ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY (ALL THE FOREGOING IN THIS CLAUSE (D), COLLECTIVELY, THE “INDEMNIFIED LIABILITIES”), PROVIDED, THAT THE BORROWER SHALL HAVE NO OBLIGATION HEREUNDER TO ANY INDEMNITEE WITH RESPECT TO INDEMNIFIED LIABILITIES TO THE EXTENT SUCH INDEMNIFIED LIABILITIES ARE FOUND BY A FINAL AND NONAPPEALABLE DECISION OF A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE. WITHOUT LIMITING THE FOREGOING, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE BORROWER AGREES NOT TO ASSERT AND TO CAUSE ITS SUBSIDIARIES NOT TO ASSERT, AND HEREBY WAIVES AND AGREES TO CAUSE ITS SUBSIDIARIES TO SO WAIVE, ALL RIGHTS FOR CONTRIBUTION OR ANY OTHER RIGHTS OF RECOVERY WITH RESPECT TO ALL CLAIMS, DEMANDS, PENALTIES, FINES, LIABILITIES, SETTLEMENTS, DAMAGES, COSTS AND EXPENSES OF WHATEVER KIND OR NATURE, UNDER OR RELATED TO ENVIRONMENTAL LAWS, THAT ANY OF THEM MIGHT HAVE BY STATUTE OR OTHERWISE AGAINST ANY INDEMNITEE. ALL AMOUNTS DUE UNDER THIS SECTION 10.5 SHALL BE PAYABLE NOT LATER THAN 10 DAYS AFTER WRITTEN DEMAND THEREFOR. STATEMENTS PAYABLE BY THE BORROWER PURSUANT TO THIS SECTION 10.5 SHALL BE SUBMITTED TO CHIEF FINANCIAL OFFICER (TELEPHONE NO. 972-364-8217) (TELECOPY NO. 972-387-8092), AT THE ADDRESS OF THE BORROWER SET FORTH IN SECTION 10.2, OR TO SUCH OTHER PERSON OR ADDRESS AS MAY BE HEREAFTER DESIGNATED BY THE BORROWER IN A WRITTEN NOTICE TO THE ADMINISTRATIVE AGENT. THE AGREEMENTS IN THIS SECTION 10.5 SHALL SURVIVE REPAYMENT OF THE LOANS AND ALL OTHER AMOUNTS PAYABLE HEREUNDER. BORROWER ACKNOWLEDGES THAT THIS AGREEMENT CONTAINS PROVISIONS RELEASING EACH INDEMNITEE FROM LIABILITY AND/OR INDEMNIFYING AND HOLDING HARMLESS EACH INDEMNITEE FOR, AMONG OTHER THINGS, INDEMNITEE’S OWN NEGLIGENCE. BORROWER AGREES THAT THE RELEASE AND/OR INDEMNITY PROVISIONS CONTAINED IN THIS AGREEMENT ARE CAPTIONED TO CLEARLY IDENTIFY THE RELEASE AND/OR INDEMNITY PROVISIONS AND, THEREFORE, ARE SO CONSPICUOUS THAT BORROWER HAS FAIR NOTICE OF THE EXISTENCE AND CONTENTS OF SUCH PROVISIONS. BORROWER HEREBY WAIVES ANY DEFENSES IT MIGHT ASSERT AGAINST EACH INDEMNITEE BASED ON THE HOLDINGS OF THE TEXAS SUPREME COURT IN ETHYL CORP. v. DANIEL CONST. CO., 725 S.W.2d 705 (TEX. 1987), AND DRESSER INDUSTRIES, INC. v. PAGE PETROLEUM, INC., 853 S.W.2d 505 (TEX. 1993), AND OF THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT IN QUORUM HEALTH RESOURCES, L.L.C. v. MAVERICK COUNTY HOSPITAL DISTRICT, 308 F.3d 451 (5TH CIR. 2002) AND ANY RELATED CASE LAW HOLDINGS.

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10.6 Successors and Assigns; Participations and Assignments. (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby (including any affiliate of the Issuing Lender that issues any Letter of Credit), except that (i) the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section.

(b)(i) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign to one or more assignees (each, an “Assignee”) all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitments and the Loans at the time owing to it) with the consent (such consent not to be unreasonably withheld) of:

(A) the Borrower, provided that no consent of the Borrower shall be required for an assignment to a Lender, an affiliate of a Lender, an Approved Fund or, if an Event of Default has occurred and is continuing, any other Person; and

(B) the Administrative Agent, provided that no consent of the Administrative Agent shall be required for an assignment of (x) any Revolving Commitment to an assignee that is a Lender with a Revolving Commitment immediately prior to giving effect to such assignment or (y) all or any portion of a Term Loan to a Lender, an Affiliate of a Lender or an Approved Fund.

(ii) Assignments shall be subject to the following additional conditions:

(A) except in the case of an assignment to a Lender, an affiliate of a Lender or an Approved Fund or an assignment of the entire remaining amount of the assigning Lender’s Commitments or Loans under any Facility, the amount of the Commitments or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent) shall not be less than (i) $5,000,000 in the case of assignments under the Revolving Facility and (ii) $1,000,000 in the case of assignments under the Term Facility (in each case other than in the case of an assignment of all of a Lender’s interests under this Agreement), unless each of the Borrower and the Administrative Agent otherwise consent, provided that (1) no such consent of the Borrower shall be required if an Event of Default has occurred and is continuing and (2) such amounts shall be aggregated in respect of each Lender and its affiliates or Approved Funds, if any;

(B) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500; and

(C) the Assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an administrative questionnaire.

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For the purposes of this Section 10.6, the term “Approved Fund” has the following meaning:

“Approved Fund” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business and that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

(iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) below, from and after the effective date specified in each Assignment and Assumption the Assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.16, 2.17, 2.18 and 10.5). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 10.6 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (c) of this Section.

(iv) The Administrative Agent, acting for this purpose as an agent of the Borrower, shall maintain at one of its offices a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amount of the Loans and L/C Obligations owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive in the absence of manifest error, and the Borrower, the Administrative Agent, the Issuing Lender and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower, the Issuing Lender and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

(v) Upon its receipt of a duly completed Assignment and Assumption executed by an assigning Lender and an Assignee, the Assignee’s completed administrative questionnaire (unless the Assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b)(ii)(B) of this Section and any written consent to such assignment required by paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.

(c)(i) Any Lender may, without the consent of the Borrower or the Administrative Agent, sell participations to one or more banks or other entities (a “Participant”) in all or a portion of such Lender’s rights and obligations under this Agreement (including all or

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a portion of its Commitments and the Loans owing to it); provided that (A) such Lender’s obligations under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (C) the Borrower, the Administrative Agent, the Issuing Lender and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver that (1) requires the consent of each Lender directly affected thereby pursuant to the proviso to the second sentence of Section 10.1 and (2) directly affects such Participant. Subject to paragraph (c)(ii) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.16, 2.17 and 2.18 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 10.7(b) as though it were a Lender, provided such Participant shall be subject to Section 10.7(a) as though it were a Lender.

(ii) A Participant shall not be entitled to receive any greater payment under Section 2.16 or 2.17 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent. Any Participant that is a Non-U.S. Lender shall not be entitled to the benefits of Section 2.17 unless such Participant complies with Section 2.17(d).

(d) Any Lender may, without the consent of the Borrower or the Administrative Agent, at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or Assignee for such Lender as a party hereto.

(e) The Borrower, upon receipt of written notice from the relevant Lender, agrees to issue Notes to any Lender requiring Notes to facilitate transactions of the type described in paragraph (d) above.

10.7 Adjustments; Set-off. (a) Except to the extent that this Agreement expressly provides for payments to be allocated to a particular Lender or to the Lenders under a particular Facility, if any Lender or affiliate of any Lender (a “Benefitted Lender”) shall, at any time after an Event of Default pursuant to Section 8, receive any payment of all or part of the Obligations owing to it, or receive any collateral in respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or proceedings of the nature referred to in Section 8(f), or otherwise), in a greater proportion than any such payment to or collateral received by any other Lender, if any, in respect of the Obligations owing to such other Lender, such Benefitted Lender shall purchase for cash from the other Lenders a participating interest in such portion of the Obligations owing to each such other Lender, or shall provide such other

81

Lenders with the benefits of any such collateral, as shall be necessary to cause such Benefitted Lender to share the excess payment or benefits of such collateral ratably with each of the Lenders; provided, however, that if all or any portion of such excess payment or benefits is thereafter recovered from such Benefitted Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest.

(b) In addition to any rights and remedies of the Lenders provided by law, each Lender or affiliate of such Lender shall have the right, without prior notice to Holdings or the Borrower, any such notice being expressly waived by Holdings and the Borrower to the extent permitted by applicable law, upon an Event of Default, to set off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by such Lender, an affiliate of such Lender or any branch or agency thereof to or for the credit or the account of Holdings or the Borrower, as the case may be. Each Lender agrees promptly to notify the Borrower and the Administrative Agent after any such setoff and application made by such Lender, provided that the failure to give such notice shall not affect the validity of such setoff and application.

10.8 Counterparts. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. Delivery of an executed signature page of this Agreement by facsimile transmission shall be effective as delivery of a manually executed counterpart hereof. A set of the copies of this Agreement signed by all the parties shall be lodged with the Borrower and the Administrative Agent.

10.9 Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

10.10 Integration. This Agreement and the other Loan Documents represent the agreement of Holdings, the Borrower, the Administrative Agent and the Lenders with respect to the subject matter hereof, and there are no promises, undertakings, representations or warranties by the Administrative Agent or any Lender relative to subject matter hereof not expressly set forth or referred to herein or in the other Loan Documents.

10.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

10.12 Submission To Jurisdiction; Waivers. Each of Holdings and the Borrower hereby irrevocably and unconditionally:

82

(a) submits for itself and its property in any legal action or proceeding relating to this Agreement and the other Loan Documents to which it is a party, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of the courts of the State of New York, the courts of the United States for the Southern District of New York, and appellate courts from any thereof;

(b) consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same;

(c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to Holdings or the Borrower, as the case may be at its address set forth in Section 10.2 or at such other address of which the Administrative Agent shall have been notified pursuant thereto;

(d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and

(e) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this Section any special, exemplary, punitive or consequential damages.

10.13 Acknowledgments. Each of Holdings and the Borrower hereby acknowledges that:

(a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Loan Documents;

(b) neither the Administrative Agent nor any Lender has any fiduciary relationship with or duty to Holdings or the Borrower arising out of or in connection with this Agreement or any of the other Loan Documents, and the relationship between Administrative Agent and Lenders, on one hand, and Holdings and the Borrower, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and

(c) no joint venture is created hereby or by the other Loan Documents or otherwise exists by virtue of the transactions contemplated hereby among the Lenders or among Holdings, the Borrower and the Lenders.

10.14 Releases of Guarantees and Liens. (a) Notwithstanding anything to the contrary contained herein or in any other Loan Document, the Administrative Agent is hereby irrevocably authorized by each Lender (without requirement of notice to or consent of any Lender except as expressly required by Section 10.1) to take any action requested by the Borrower having the effect of releasing any Collateral or guarantee obligations (i) to the extent necessary to permit consummation of any transaction not prohibited by any Loan Document or

83

that has been consented to in accordance with Section 10.1 or (ii) under the circumstances described in paragraph (b) below.

(b) At such time as the Loans, the Reimbursement Obligations and the other obligations under the Loan Documents (other than obligations under or in respect of Hedge Agreements) shall have been paid in full, the Commitments have been terminated and no Letters of Credit shall be outstanding, the Collateral shall be released from the Liens created by the Security Documents, and the Security Documents and all obligations (other than those expressly stated to survive such termination) of the Administrative Agent and each Loan Party under the Security Documents shall terminate, all without delivery of any instrument or performance of any act by any Person and at such time, the Administrative Agent agrees to promptly take such action and execute and deliver such instruments and documents as shall be necessary to release the Liens and security interests created by the Security Documents, including, without limitation, any Uniform Commercial Code release or termination statements.

10.15 Confidentiality. Each of the Administrative Agent and each Lender agrees to keep confidential all non-public information provided to it by any Loan Party pursuant to this Agreement that is designated by such Loan Party as confidential; provided that nothing herein shall prevent the Administrative Agent or any Lender from disclosing any such information (a) to the Administrative Agent, any other Lender or any affiliate of any Lender, (b) to any Transferee or prospective Transferee that agrees to comply with the provisions of this Section, (c) to its employees, directors, agents, attorneys, accountants and other professional advisors or those of any of its affiliates, (d) to any direct or indirect contractual counterparty in swap agreements or such contractual counterparty’s professional advisor (so long as such contractual counterparty or professional advisor to such contractual counterparty agrees to be bound by the provisions of this Section 10.15, (e) upon the request or demand of any Governmental Authority, (f) in response to any order of any court or other Governmental Authority or as may otherwise be required pursuant to any Requirement of Law, (g) if requested or required to do so in connection with any litigation or similar proceeding, (h) that has been publicly disclosed without violation of this Section 10.15, (i) to the National Association of Insurance Commissioners or any similar organization or any nationally recognized rating agency that requires access to information about a Lender’s investment portfolio in connection with ratings issued with respect to such Lender, or (j) in connection with the exercise of any remedy hereunder or under any other Loan Document. Each of the Administrative Agent and each Lender agrees that in the event it is requested, required or demanded to disclose such non-public information pursuant to clause (e), (f) or (g) above, it shall, to the extent permitted by law, promptly notify the applicable Loan Party thereof, to enable such Loan Party to obtain a protective order with respect to such information. Notwithstanding anything herein to the contrary, any party subject to confidentiality obligations hereunder or under any other related document (and any employee, representative or other agent of such party) may disclose to any and all persons, without limitation of any kind, such party’s U.S. federal tax treatment and the U.S. federal tax structure of the transactions contemplated by this Agreement relating to such party and all materials of any kind (including opinions or other tax analyses) that are provided to it relating to such tax treatment and tax structure. However, no such party shall disclose any information relating to such tax treatment or tax structure to the extent nondisclosure is reasonably necessary in order to comply with applicable securities laws.

84

10.16 WAIVERS OF JURY TRIAL. HOLDINGS, THE BORROWER, THE ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

[signature pages to follow]

85

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

CONCENTRA INC.
By:	/s/ RICHARD A. PARR II
	Richard A. Parr II
	Executive Vice President, General Counsel and Corporate Secretary
CONCENTRA OPERATING CORPORATION
By:	/s/ RICHARD A. PARR II
	Richard A. Parr II
	Executive Vice President, General Counsel and Corporate Secretary

JPMORGAN CHASE BANK, as Administrative Agent, Issuing Lender and a Lender
By:	/s/ GARY L. SPEVACK
	Name:	Gary L. Spevack
	Title:	Vice President

BANK ONE, N.A.
By:	/s/ SHARON ELLIS
	Name:	Sharon Ellis
	Title:	Vice President
Send Notices to:
CITICORP NORTH AMERICA, INC.
By:	/s/ EIVIND HEGELSTAD
	Name:	Eivind Hegelstad
	Title:	Vice President
Send Notices to:
CREDIT SUISSE FIRST BOSTON
By:	/s/ KARL M. STUDER
	Name:	Karl M. Studer
	Title:	Director
By:	/s/ CHRISTOPHER LALLY
	Name:	Christopher Lally
	Title:	Vice President
Send Notices to:
		Loan Operations
		One Madison Avenue
		New York, NY 10010
		Fax: (212) 538-6851
DEUTSCHE BANK TRUST COMPANY AMERICAS
By:	/s/ SUSAN LEFEVRE
	Name:	Susan LeFevre
	Title:	Director
Send Notices to:

STANWICH LOAN FUNDING LLC
By:	/s/ KELLY W. WARNEMENT
	Name:	Kelly W. Warnement
	Title:	Vice President
Send Notices to:
KZH CYPRESSTREE-1 LLC
By:	/s/ DORIAN HERRERA
	Name:	Dorian Herrera
	Title:	Authorized Agent
Send Notices to:
KZH ING-2 LLC
By:	/s/ DORIAN HERRERA
	Name:	Dorian Herrera
	Title:	Authorized Agent
Send Notices to:
KZH SOLEIL-2 LLC
By:	/s/ DORIAN HERRERA
	Name:	Dorian Herrera
	Title:	Authorized Agent
Send Notices to:

KZH STERLING LLC
By:	/s/ DORIAN HERRERA
	Name:	Dorian Herrera
	Title:	Authorized Agent
Send Notices to:

Annex A

PRICING GRID FOR REVOLVING CREDIT LOANS

Consolidated Leverage Ratio	Applicable Margin for Eurodollar Loans		Applicable Margin for ABR Loans
³ 4.00 to 1.0	3.25	%	2.25	%
< 4.00 to 1.0 and ³ 3.5 to 1.0	3.00	%	2.00	%
< 3.5 to 1.0 and ³ 3.0 to 1.0	2.75	%	1.75	%
< 3.0 to 1.0 and ³ 2.5 to 1.0	2.50	%	1.50	%
< 2.5 to 1.0	2.25	%	1.25	%

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 4.00 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 4.00 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.

EX-12.1

Exhibit 12.1

CONCENTRA OPERATING CORPORATION

COMPUTATION OF RATIOS

Ratio of Earnings to Fixed Charges

(Unaudited)

	Years Ended December 31,															Six Months Ended June 30,
	1998			1999			2000			2001			2002			2002			2003
	(dollars in thousands)
Earnings:
Income (loss) before income taxes	$	41,794		$	(17,512	)	$	(2,360	)	$	(14,650	)	$	1,026		$	8,620		$	25,629
Less: Equity in earnings of unconsolidated subsidiaries net of related distributions		(218	)		(474	)		(1,210	)		(3,015	)		(850	)		(1,055	)		1,412
Fixed charges		25,282			44,126			77,438			77,042			75,560			39,111			35,003
Total earnings(1)	$	66,858		$	26,140		$	73,868		$	59,377		$	75,736		$	46,676		$	62,044
Fixed Charges:
Interest expense	$	18,021		$	35,779		$	68,932		$	67,250		$	63,981		$	33,256		$	29,284
Interest portion of rent expense		7,261			8,347			8,506			9,792			11,579			5,855			5,719
Total fixed charges	$	25,282		$	44,126		$	77,438		$	77,042		$	75,560		$	39,111		$	35,003
Ratio of earnings to fixed charges		2.6	x		0.6	x		1.0	x		0.8	x		1.0	x		1.2	x		1.8	x

(1) For purposes of determining the ratio of earnings to fixed charges, earnings include income from continuing operations before income taxes adjusted for fixed charges and equity in earnings of unconsolidated subsidiaries and related distributions. Fixed charges consist of interest on debt, including amortization of debt issuance costs, and one-fourth of rent expenses, which we estimate as the interest component of such rentals.

EX-21.1

Exhibit 21.1

SUBSIDIARIES

NAME	STATE OF ORGANIZATION
Concentra Akron, L.L.C.	Delaware
Concentra Arkansas, L.L.C. (doing business as Concentra Medical Centers)	Delaware
Concentra Birmingham, L.L.C. (doing business as Concentra Medical Centers)	Delaware
Concentra Health Services, Inc. (doing business as Concentra Medical Centers)	Nevada
Concentra Integrated Services, Inc.	Massachusetts
Concentra Laboratory, L.L.C. (doing business as Advanced Toxicology Network)	Delaware
Concentra Managed Care Business Trust	Massachusetts
Concentra Management Services, Inc. (doing business as Concentra Medical Centers)	Nevada
Concentra New Orleans, L.L.C. (doing business as Concentra Medical Centers)	Delaware
Concentra Occupational Healthcare Harrisburg, L.P. (doing business as Concentra Medical Centers)	Pennsylvania
Concentra Preferred Business Trust	Massachusetts
Concentra Preferred Systems, Inc.	Delaware
Concentra South Carolina, L.L.C. (doing business as Concentra Medical Centers)	Delaware
Concentra St. Louis, L.L.C. (doing business as Concentra Medical Centers)	Delaware
Concentra-UPMC, L.L.C (doing business as Concentra Medical Centers)	Delaware
Concentra Vanderbilt, L.L.C. (doing business as Concentra Medical Centers)	Delaware
Concentra Winston-Salem, L.L.C. (doing business as Concentra Medical Centers)	Delaware
CRA Managed Care of Washington, Inc.	Washington
CRA-MCO, Inc.	Nevada
First Notice Systems, Inc.	Delaware
Focus Healthcare Business Trust	Massachusetts
Focus Healthcare Management, Inc.	Tennessee
HealthNetwork Systems LLC	Delaware
Managed Prescription Program Joint Venture	Arizona
Medical Network Systems LLC	Delaware
MetraComp, Inc	Connecticut
National Healthcare Resources, Inc.	Delaware
NHR Washington, Inc	Delaware
OccuCenters I, L.P. (doing business as Concentra Medical Centers; Concentra)	Texas
Occupational Health Ventures, L.L.C (doing business as Concentra Medical Centers)	Pennsylvania
OCI Holdings, Inc.	Nevada
OHC of Oklahoma, L.L.C. (doing business as Concentra Medical Centers)	Oklahoma
Tucson Occupational Medicine Partnership (doing business as Concentra Medical Centers)	Arizona

EX-23.5

Exhibit 23.5

CONSENT OF INDEPENDENT ACCOUNTANT

We hereby consent to the use in this Registration Statement on Form S-4 of Concentra Operating Corporation of our report dated February 11, 2003, except for Note 14, as to which the date is July 13, 2003, relating to the financial statements and financial statement schedules of Concentra Operating Corporation, which appears in such Registration Statement.

/s/    PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP

Dallas, TX

August 28, 2003

EX-25.1

Exhibit 25.1

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM T-1

STATEMENT OF ELIGIBILITY

UNDER THE TRUST INDENTURE ACT OF 1939 OF A

CORPORATION DESIGNATED TO ACT AS TRUSTEE

CHECK IF AN APPLICATION TO DETERMINE

ELIGIBILITY OF A TRUSTEE PURSUANT TO

SECTION 305(b)(2)  ¨

THE BANK OF NEW YORK

(Exact name of trustee as specified in its charter)

New York	13-5160382
(State of incorporation if not a U.S. national bank)	(I.R.S. employer identification no.)
One Wall Street, New York, N.Y.	10286
(Address of principal executive offices)	(Zip code)

CONCENTRA OPERATING CORPORATION

(Exact name of obligor as specified in its charter)

Nevada	75-2822620
(State or other jurisdiction of incorporation or organization)	(I.R.S. employer identification no.)

Concentra Preferred Systems, Inc.

(Exact name of obligor as specified in its charter)

Delaware
(State or other jurisdiction of incorporation or organization)	(I.R.S. employer identification no.)

National Healthcare Resources, Inc.

(Exact name of obligor as specified in its charter)

Delaware
(State or other jurisdiction of incorporation or organization)	(I.R.S. employer identification no.)

MetraComp, Inc.

(Exact name of obligor as specified in its charter)

Delaware
(State or other jurisdiction of incorporation or organization)	(I.R.S. employer identification no.)

Concentra Integrated Services Inc.

(Exact name of obligor as specified in its charter)

Massachusetts
(State or other jurisdiction of incorporation or organization)	(I.R.S. employer identification no.)

First Notice Systems, Inc.

(Exact name of obligor as specified in its charter)

Delaware
(State or other jurisdiction of incorporation or organization)	(I.R.S. employer identification no.)

Focus Healthcare Management, Inc.

(Exact name of obligor as specified in its charter)

Tennessee
(State or other jurisdiction of incorporation or organization)	(I.R.S. employer identification no.)

2

CRA-MCO, Inc.

(Exact name of obligor as specified in its charter)

Nevada
(State or other jurisdiction of incorporation or organization)	(I.R.S. employer identification no.)

CRA Managed Care of Washington, Inc.

(Exact name of obligor as specified in its charter)

Washington
(State or other jurisdiction of incorporation or organization)	(I.R.S. employer identification no.)

Concentra Health Services, Inc.

(Exact name of obligor as specified in its charter)

Nevada
(State or other jurisdiction of incorporation or organization)	(I.R.S. employer identification no.)

OCI Holdings, Inc.

(Exact name of obligor as specified in its charter)

Nevada
(State or other jurisdiction of incorporation or organization)	(I.R.S. employer identification no.)

Concentra Management Services, Inc.

(Exact name of obligor as specified in its charter)

Nevada
(State or other jurisdiction of incorporation or organization)	(I.R.S. employer identification no.)

3

NHR Washington, Inc.

(Exact name of obligor as specified in its charter)

Delaware
(State or other jurisdiction of incorporation or organization)	(I.R.S. employer identification no.)

Concentra Laboratory, LLC

(Exact name of obligor as specified in its charter)

Delaware
(State or other jurisdiction of incorporation or organization)	(I.R.S. employer identification no.)

Health Network Systems LLC

(Exact name of obligor as specified in its charter)

Delaware
(State or other jurisdiction of incorporation or organization)	(I.R.S. employer identification no.)

Medical Network Systems LLC

(Exact name of obligor as specified in its charter)

Delaware
(State or other jurisdiction of incorporation or organization)	(I.R.S. employer identification no.)

Occucenters I, L.P.

(Exact name of obligor as specified in its charter)

Texas
(State or other jurisdiction of incorporation or organization)	(I.R.S. employer identification no.)

4

Concentra Preferred Business Trust

(Exact name of obligor as specified in its charter)

Massachusetts
(State or other jurisdiction of incorporation or organization)	(I.R.S. employer identification no.)

Concentra Managed Care Business Trust

(Exact name of obligor as specified in its charter)

Massachusetts
(State or other jurisdiction of incorporation or organization)	(I.R.S. employer identification no.)

Focus Healthcare Business Trust

(Exact name of obligor as specified in its charter)

Massachusetts
(State or other jurisdiction of incorporation or organization)	(I.R.S. employer identification no.)
5080 Spectrum Drive Suite 400 West Addison, Texas	75001
(Address of principal executive offices)	(Zip code)

9 ¹/2% Senior Subordinated Notes due 2010

(Title of the indenture securities)

5

1. General information. Furnish the following information as to the Trustee:

(a) Name and address of each examining or supervising authority to which it is subject.

Name	Address
Superintendent of Banks of the State of New York	2 Rector Street, New York, N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York	33 Liberty Plaza, New York, N.Y. 10045
Federal Deposit Insurance Corporation	Washington, D.C. 20429
New York Clearing House Association	New York, New York 10005

(b) Whether it is authorized to exercise corporate trust powers.

Yes.

2. Affiliations with Obligor.

If the obligor is an affiliate of the trustee, describe each such affiliation.

None.

16. List of Exhibits.

Exhibits identified in parentheses below, on file with the Commission, are incorporated herein by reference as an exhibit hereto, pursuant to Rule 7a-29 under the Trust Indenture Act of 1939 (the “Act”) and 17 C.F.R. 229.10(d).

1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.)

4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.)

6. The consent of the Trustee required by Section 321(b) of the Act. (Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.)

6

7. A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority.

7

SIGNATURE

Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on the 27th of August, 2003.

THE BANK OF NEW YORK
By:	/S/       VAN K. BROWN
	Name:   VAN K. BROWN
	Title:     VICE PRESIDENT

8

Exhibit 7

Consolidated Report of Condition of

THE BANK OF NEW YORK

of One Wall Street, New York, N.Y. 10286

And Foreign and Domestic Subsidiaries,

a member of the Federal Reserve System, at the close of business June 30, 2003, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.

	Dollar Amounts In Thousands
ASSETS
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin	$	4,257,371
Interest-bearing balances		6,048,782
Securities:
Held-to-maturity securities		373,479
Available-for-sale securities		18,918,169
Federal funds sold in domestic offices		6,689,000
Securities purchased under agreements to resell		5,293,789
Loans and lease financing receivables:
Loans and leases held for sale		616,186
Loans and leases, net of unearned income		38,342,282
LESS: Allowance for loan and lease losses		819,982
Loans and leases, net of unearned income and allowance		37,522,300
Trading Assets		5,741,193
Premises and fixed assets (including capitalized leases)		958,273
Other real estate owned		441
Investments in unconsolidated subsidiaries and associated companies		257,626
Customers’ liability to this bank on acceptances outstanding		159,995
Intangible assets
Goodwill		2,554,921
Other intangible assets		805,938
Other assets		6,285,971

9

Total assets	$	96,483,434
LIABILITIES
Deposits:
In domestic offices	$	37,264,787
Noninterest-bearing		15,357,289
Interest-bearing		21,907,498
In foreign offices, Edge and Agreement subsidiaries, and IBFs		28,018,241
Noninterest-bearing		1,026,601
Interest-bearing		26,991,640
Federal funds purchased in domestic offices		739,736
Securities sold under agreements to repurchase		465,594
Trading liabilities		2,456,565
Other borrowed money:
(includes mortgage indebtedness and obligations under capitalized leases)		8,994,708
Bank’s liability on acceptances executed and outstanding		163,277
Subordinated notes and debentures		2,400,000
Other liabilities		7,446,726
Total liabilities	$	87,949,634
Minority interest in consolidated subsidiaries		519,472
EQUITY CAPITAL
Perpetual preferred stock and related surplus		0
Common stock		1,135,284
Surplus		2,056,273
Retained earnings		4,694,161
Accumulated other comprehensive income		128,610
Other equity capital components		0
Total equity capital		8,014,328
Total liabilities minority interest and equity capital	$	96,483,434

10

I, Thomas J. Mastro, Senior Vice President and Comptroller of the above-named bank do hereby declare that this Report of Condition is true and correct to the best of my knowledge and belief.

Thomas J. Mastro,            

Senior Vice President and Comptroller            

We, the undersigned directors, attest to the correctness of this statement of resources and liabilities. We declare that it has been examined by us, and to the best of our knowledge and belief has been prepared in conformance with the instructions and is true and correct.

Thomas A. Renyi Gerald L. Hassell Alan R. Griffith Directors

11