Document:

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                                                                    EXHIBIT 10.8

                              EMPLOYMENT AGREEMENT

                                 BY AND BETWEEN

                                PMR CORPORATION

                                      AND

                                SUSAN D. ERSKINE

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                               TABLE OF CONTENTS

                                                                            PAGE

1.   Employment.........................................................       1
2.   Loyal And Conscientious Performance; Noncompetition................       2
3.   Compensation Of Executive..........................................       2
4.   Termination........................................................       3
5.   Certain Additional Payments........................................       6
6.   Successors.........................................................       7
7.   Nonsolicitation....................................................       8
8.   Assignment And Binding Effect......................................       8
9.   Notices............................................................       8
10.  Choice Of Law......................................................       9
11.  Integration........................................................       9
12.  Amendment..........................................................       9
13.  Waiver.............................................................       9
14.  Severability.......................................................       9
15.  Interpretation; Construction.......................................       9
16.  Representations And Warranties.....................................      10
17.  Litigation Costs...................................................      10
18.  Counterparts.......................................................      10
19.  Arbitration........................................................      10
20.  Injunctive Relief..................................................      11
21.  Trade Secrets Of Others............................................      11
22.  Advertising Waiver.................................................      11

                                       i.
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                              EMPLOYMENT AGREEMENT

     This EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into
effective as of August 25, 1999 (the "Effective Date"), by and between PMR
CORPORATION, a Delaware corporation (the "Company"), and SUSAN D. ERSKINE
("Executive"). The Company and Executive are hereinafter collectively referred
to as the "Parties," and individually referred to as a "Party."

                                    RECITALS

     A.   The Company desires the continued assurance of the association and
services of Executive in order to retain Executive's experience, skills,
abilities, background and knowledge, and is willing to engage Executive's
services on the terms and conditions set forth in this Agreement.

     B.   Executive desires to be in the employ of the Company, and is willing
to accept continued employment on the terms and conditions set forth in this
Agreement.

                                   AGREEMENT

     In consideration of the foregoing Recitals and the mutual promises and
covenants herein contained, and for other good and valuable consideration, the
Parties, intending to be legally bound, agree as follows:

1.   EMPLOYMENT.

     1.1  The Company hereby agrees to continue to employ Executive, and
Executive hereby accepts continued employment by the Company, upon the terms
and conditions set forth in this Agreement, for the period commencing the
Effective Date and ending August 30, 2000. On August 30, 2000, and on August 30
of each year thereafter, the Term shall automatically be extended by one (1)
year (the "Term") unless written notice has been provided by either Party
pursuant to Section 9 herein not less than ninety (90) days prior to the date
of such automatic renewal (a "Non-Renewal Notice"). Notwithstanding anything
herein to the contrary, either Party may terminate Executive's employment under
this Agreement at any time, with or without cause, subject to the terms and
conditions of Section 4 below.

     1.2  Executive shall have the title of Executive Vice President
Development of the Company and shall serve in such other capacity or capacities
as the Board of Directors of the Company may from time to time prescribe.
Executive shall report to the Chief Executive Officer.

     1.3  Executive shall do and perform all services, acts or things necessary
or advisable to manage and conduct the business of the Company and which are
normally associated with the position of Executive Vice President Development,
consistent with the Bylaws of the Company and as required by the Company's
Board of Directors.

     1.4  The employment relationship between the Parties shall be governed by
the policies and practices established by the Board of Directors, except that
when the terms of this Agreement
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differ from or are in conflict with the Company's policies or practices, this
Agreement shall control.

     1.5  Unless the Parties otherwise agree in writing, during the term of
this Agreement, Executive shall perform the services she is required to perform
pursuant to this Agreement at the Company's offices, located in San Diego;
provided, however, that the Company may from time to time require Executive to
travel temporarily to other locations in connection with the Company's business.

2.   LOYAL AND CONSCIENTIOUS PERFORMANCE; NONCOMPETITION.

     2.1  During Executive's employment by the Company, Executive shall devote
her full business energies, interest, abilities and productive time to the
proper and efficient performance of her duties under this Agreement.

     2.2  Except with the prior written consent of the Company's Board of
Directors, Executive will not, during the term of this Agreement, engage in
competition with the Company, either directly or indirectly, in any manner or
capacity, as adviser, principal, agent, partner, officer, director, employee,
member of any association or otherwise, in any phase of the business of
developing, marketing, providing or selling of products or services which are
in the same field of use or which otherwise compete with the products or
services or proposed products or services of the Company.

     2.3  Except as permitted herein, Executive agrees not to acquire, assume
or participate in, directly or indirectly, any position, investment or interest
known by him to be adverse or antagonistic to the Company, its business or
prospects, financial or otherwise or in any company, person or entity that is,
directly or indirectly, in competition with the business of the Company or any
of its affiliates. Ownership by Executive, as a passive investment, of less
than one percent (1%) of the outstanding shares of capital stock of any
corporation with one or more classes of its capital stock listed on a national
securities exchange or publicly traded on the Nasdaq Stock Market or in the
over-the-counter market shall not constitute a breach of this paragraph.

3.   COMPENSATION OF EXECUTIVE.

     3.1  The Company shall pay Executive a base salary of One Hundred Eighty
Thousand Dollars ($180,000.00) per year (the "Base Salary"), payable in regular
periodic payments in accordance with Company policy. Such salary shall be
prorated for any partial year of employment on the basis of a 365-day fiscal
year.

     3.2  Executive's compensation may be changed from time to time by mutual
agreement of Executive and the Company.

     3.3  Executive's performance shall be reviewed by the Board on a periodic
basis and the Board may, in its sole discretion, provide a bonus to Executive
as shall be appropriate or desirable based on Executive's performance.

                                       2.
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     3.4  All of Executive's compensation shall be subject to customary
withholding taxes and any other employment taxes as are commonly required to be
collected or withheld by the Company.

     3.5  Executive shall, in accordance with Company policy and the terms of
the applicable plan documents, be eligible to participate in benefits under
any Executive benefit plan or arrangement which may be in effect from time to
time and made available to the Company's executive or key management employees.

4.   TERMINATION.

     4.1  TERMINATION BY THE COMPANY. Executive's employment with the Company
may be terminated under the following conditions:

          4.1.1     DEATH OR DISABILITY. Executive's employment with the
Company shall terminate effective upon the date of Executive's death or
"Complete Disability" (as defined in Section 4.5.1).

          4.1.2     FOR CAUSE. The Company may terminate Executive's employment
under this Agreement for "Cause" (as defined in Section 4.5.3) by delivery of
written notice to Executive specifying the cause or causes relied upon for such
termination. Any notice of termination given pursuant to this Section 4.1.2
shall effect termination as of the date specified in such notice or, in the
event no such date is specified, on the last day of the month in which such
notice is delivered or deemed delivered as provided in Section 9 below.

          4.1.3     WITHOUT CAUSE. The Company may terminate Executive's
employment under this Agreement at any time and for any reason by delivery of
written notice of such termination to the Executive. Any notice of termination
given pursuant to this Section 4.1.3 shall effect termination as of the date
specified in such notice or, in the event no such date is specified, on the
last day of the month in which such notice is delivered or deemed delivered as
provided in Section 9 below.

          4.1.4     NON-RENEWAL NOTICE. The Company may terminate this
Agreement by providing Executive with a Non-Renewal Notice prior to the date of
automatic renewal, as provided in Section 1.1. herein.

     4.2  TERMINATION BY EXECUTIVE. Executive may terminate her employment with
the Company for "Good Reason" (as defined below in Section 4.5.2) by (i)
delivery of written notice to the Company specifying the "Good Reason" relied
upon by Executive for such termination, provided that such notice is delivered
within six (6) months following the occurrence of any event or events
constituting Good Reason, or (ii) at any time during the Term without Good
Reason.

     4.3  TERMINATION BY MUTUAL AGREEMENT OF THE PARTIES. Executive's
employment pursuant to this Agreement may be terminated at any time upon a
mutual agreement in writing between the Parties. Any such termination of
employment shall have the consequences specified in such agreement.

                                       3.

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     4.4  COMPENSATION UPON TERMINATION.

          4.4.1     DEATH OR COMPLETE DISABILITY. If Executive's employment
shall be terminated by death or Complete Disability as defined in Section
4.5.1, the Company shall pay Executive her accrued Base Salary and accrued and
unused vacation benefits earned through the date of termination at the rate in
effect at the time of termination, and the Company shall thereafter have no
further obligations to Executive under this Agreement.

          4.4.2     CAUSE OR WITHOUT GOOD REASON. If Executive's employment is
terminated (i) by the Company for Cause, or (ii) by Executive without Good
Reason, the Company shall pay Executive her accrued Base Salary and accrued and
unused vacation benefits earned through the date of termination at the rate in
effect at the time of the notice of termination, and the Company shall
thereafter have no further obligations to Executive under this Agreement.

          4.4.3     WITHOUT CAUSE, GOOD REASON OR NON-RENEWAL. If Executive's
employment is terminated (i) by the Company Without Cause, (ii) by Executive
for Good Reason, or (iii) by the Company with a Non-Renewal Notice prior to the
date of automatic renewal as provided in Section 1.1, then upon Executive's
furnishing to the Company, or its successor, an executed waiver and release of
claims (a form of which is attached hereto as Exhibit A), Executive shall be
entitled to the following:

                         (i)  A lump sum payment equal to:

                              (1)  Executive's Base Salary and accrued and
unused vacation earned through the date of termination;

                              (2)  An amount equal to one (1) year of
Executive's Base Salary in effect at the time of termination, subject to
standard deductions and withholdings, payable to Executive within ten (10) days
of such termination; and

                              (3)  An amount equal to the average of
Executive's annual bonus payment(s) over the past five (5) years, including any
years in which no bonus payment was made to Executive (the "Bonus Payment"),
subject to standard deductions and withholdings, payable to Executive within
ten (10) days of such termination.

                         (ii) If eligible, periodic payments equal to either
of the following:

                              (1)  In the event Executive has been continuously
employed with the Company for at least three (3) years but less than five (5)
years at the time of termination, she shall receive (a) continuation of her
annual Base Salary in effect at the time of termination until the earlier of
(i) a period of twelve (12) months after the termination date, or (ii) the date
in which Executive begins full-time employment with another company or business
entity and (b) a pro-rated Bonus Payment for the period in which Executive
receives her Base Salary, all of which shall be subject to standard deductions
and withholdings; and

                                       4.
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               (2) In the event Executive has been continuously employed with
the Company for greater than five (5) years at the time of termination, she
shall receive (a) continuation of her Base Salary in effect at the time of
termination until the earlier of (i) a period of twenty-four (24) months after
the termination date, or (ii) the date in which Executive begins full-time
employment with another company or business entity, and (b) a prorated Bonus
Payment for the period in which Executive receives her Base Salary, all of which
shall be subject to standard deductions and withholdings. If Executive is
eligible to receive the benefits of this subsection (ii)(2), she shall not
receive the benefits set forth in subsection (ii)(1) herein.

     4.5 DEFINITIONS. For purposes of this Agreement, the following terms shall
have the following meanings:

         4.5.1 COMPLETE DISABILITY. "Complete Disability" shall mean the
inability of Executive to perform Executive's duties under this Agreement
because Executive has become permanently disabled within the meaning of any
policy of disability income insurance covering employees of the Company then in
force. In the event the Company has no policy of disability income insurance
covering employees of the Company in force when Executive becomes disabled, the
term "Complete Disability" shall mean the inability of Executive to perform
Executive's duties under this Agreement by reason of any incapacity, physical or
mental, which the Board, based upon medical advice or an opinion provided by a
licensed physician acceptable to the Board, determines to have incapacitated
Executive from satisfactorily performing all of Executive's usual services for
the Company for a period of at least one hundred twenty (120) days during any
twelve (12) month period (whether or not consecutive). Based upon such medical
advice or opinion, the determination of the Board shall be final and binding and
the date such determination is made shall be the date of such Complete
Disability for purposes of this Agreement.

         4.5.2 GOOD REASON. "Good Reason" for Executive to terminate
Executive's employment hereunder shall mean the occurrence of any of the
following events without Executive's consent:

               (i) the regular assignment to Executive of duties or
responsibilities which are materially inconsistent with, or result in a
material diminution or adverse change of, Executive's position and status;

               (ii) a reduction by the Company in Executive's annual Base
Salary by greater than five percent (5%), except in connection with a reduction
applied on the same basis to all officers and/or senior management as a cost
savings measure for the Company; provided, however, that any reductions of
Executive's annual Base Salary of greater than 5% by a successor to the Company
(as defined in Section 6 herein) without Executive's consent shall be a basis
for Executive to terminate employment for Good Reason;

               (iii) a relocation of Executive to a location more than forty
(40) miles from the location at which Executive was performing his duties,
except for required travel

                                       5.

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by Executive on the Company's business to an extent substantially consistent
with Executive's business travel obligations at that time;

              (iv) any material breach by the Company of any material provision
of this Agreement; or

              (v) any failure by the Company to obtain the assumption of this
Agreement by any successor or assign of the Company.

        4.5.3 FOR CAUSE. The Company's termination of Executive for "Cause"
shall be limited to the occurrence of any of the following events:

              (i) any intentional action or intentional failure to act by
Executive which has performed in bad faith and to the material detriment of the
Company;

              (ii) Executive intentionally refuses or intentionally fails to
act in accordance with any lawful direction or order of the Company for a
period of thirty (30) days after written notice of such conduct is provided to
Executive;

              (iii) Executive willfully and habitually neglects her duties of
employment for a period of thirty (30) days after written notice of such
conduct is provided to Executive;

              (iv) Executive's engaging or participating in any activity which
is competitive with the Company in the reasonable judgment of the Board of
Directors;

              (v) Executive's intentional commission of any fraud against the
Company or use or appropriation for her personal use and benefit of any funds,
assets or properties of the Company not authorized by the Company to be so used
or appropriated;

              (vi) Executive's conviction of a felony or any crime involving
moral turpitude.

5. CERTAIN ADDITIONAL PAYMENTS.

   5.1   If any payments, distributions or other benefits by or from the Company
to or for the benefit of the Executive (whether paid or payable or distributed
or distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payment (the "Additional Payment")
required under this Paragraph) (collectively, the "Payment") would (i)
constitute a "parachute payment" within the meaning of Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code"), and (ii) but for this
sentence, be subject to the excise tax imposed by Section 4999 of the Code (the
"Excise Tax"), then such Payment shall be reduced to the Reduced Amount. The
"Reduced Amount" shall be either (x) the largest portion of the Payment that
would result in no portion of the Payment being subject to the Excise Tax or (y)
the largest portion, up to and including the total, of the Payment, whichever
amount, after taking into account all applicable federal, state and local
employment taxes, income taxes, and the Excise Tax (all computed at the highest
applicable marginal rate), results in the Executive's

                                       6.
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receipt, on an after-tax basis, of the greater amount of the Payment
notwithstanding that all or some portion of the Payment may be subject to the
Excise Tax. If the Reduced Amount is subject to the Excise Tax, then the
Executive shall be entitled to receive from the Company an Additional Payment
in an amount equal to the amount of the Excise Tax but not to exceed One
Hundred Eighty Thousand Dollars ($180,000.00). The foregoing additional payment
shall be reduced by applicable tax withholding.

     5.2  If a reduction in payments or benefits constituting "parachute
payments" is necessary so that the Payment equals the Reduced Amount, reduction
shall occur in the following order unless the Executive elects in writing a
different order (provided, however, that such election shall be subject to
Company approval if made on or after the effective date of the event triggering
the application of Section 280G of the Code): reduction of cash payments;
cancellation of accelerated vesting of stock awards; reduction of Executive
benefits. In the event that acceleration of vesting of stock award compensation
is to be reduced, such acceleration of vesting shall be cancelled in the
reverse order of the date of grant of the Executive's stock awards unless the
Executive elects in writing a different order for cancellation.

     5.3  The accounting firm engaged by the Company for general audit purposes
as of the day prior to the effective date of the event triggering the
application of Section 280G of the Code shall perform the foregoing
calculations. If the accounting firm so engaged by the Company is serving as
accountant or auditor for the individual, entity or group effecting the event
triggering the application of Section 280G of the Code, the Company shall
appoint a nationally recognized accounting firm to make the determinations
required hereunder. The Company shall bear all expenses with respect to the
determinations by such accounting firm required to be made hereunder.

     5.4  The accounting firm engaged to make the determinations hereunder shall
provide its calculations, together with detailed supporting documentation, to
the Company and the Executive within fifteen (15) calendar days after the date
on which the Executive's right to a Payment is triggered (if requested at that
time by the Company or the Executive) or such other time as requested by the
Company or the Executive. If the accounting firm determines that no Excise Tax
is payable with respect to a Payment, either before or after the application of
the Reduced Amount, it shall furnish the Company and the Executive with an
opinion reasonably acceptable to the Executive that no Excise Tax will be
imposed with respect to such Payment. Any good faith determinations of the
accounting firm made hereunder shall be final, binding and conclusive upon the
Company and the Executive.

6.   SUCCESSORS.

     6.1  The Company shall require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company, by agreement in form and substance
reasonably satisfactory to the Executive, to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform if no such succession had taken place.
Failure of the Company to obtain such an agreement prior to the effectiveness
of any such succession shall be a material breach of this Agreement and shall
entitle Executive to compensation and all other

                                       7.

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benefits from the Company in the same amount and on the same terms as she would
be entitled to hereunder if she terminated her employment for Good Reason.

7.   NONSOLICITATION.

     7.1  While employed by the Company and for one (1) year thereafter, the
Executive agrees that in order to protect the Company's confidential and
proprietary information from unauthorized use, that Executive will not, either
directly or through others, solicit or attempt to solicit any employee,
consultant or independent contractor of the Company to terminate her or her
relationship with the Company in order to become an employee, consultant or
independent contractor to or for any other person or business entity.

8.   ASSIGNMENT AND BINDING EFFECT.

     8.1  This Agreement shall be binding upon and inure to the benefit of
Executive and Executive's heirs, executors, personal representatives, assigns,
administrators and legal representatives. Because of the unique and personal
nature of Executive's duties under this Agreement, neither this Agreement nor
any rights or obligations under this Agreement shall be assignable by
Executive. This Agreement shall be binding upon and inure to the benefit of the
Company and its successors, assigns and legal representatives.

9.   NOTICES.

     9.1  All notices or demands of any kind required or permitted to be given
by the Company or Executive under this Agreement shall be given in writing and
shall be personally delivered (and receipted for) or mailed by certified mail,
return receipt requested, postage prepaid, addressed as follows:

          9.1.1     If to the Company:

                         PMR CORPORATION
                         501 Washington, 5th Floor
                         San Diego, CA 92103

          9.1.2     If to Executive:

                         Susan D. Erskine
                         /s/ Susan D. Erskine
                         12920 Via Del Valedor, San Diego, 92129

Any such written notice shall be deemed received when personally delivered or
three (3) days after its deposit in the United States mail as specified above.
Either Party may change its address for notices by giving notice to the other
Party in the manner specified in this section.

                                       8.
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10.  CHOICE OF LAW.

     10.1 This Agreement is made in San Diego, California. This Agreement
shall be construed and interpreted in accordance with the laws of the State of
California.

11.  INTEGRATION.

     11.1 This Agreement contains the complete, final and exclusive agreement
of the Parties relating to the terms and conditions of Executive's employment,
and supersedes all prior and contemporaneous oral and written employment
agreements or arrangements between the Parties.

12.  AMENDMENT.

     12.1 This Agreement cannot be amended or modified except by a written
agreement signed by Executive and the Company.

13.  WAIVER.

     13.1 No term, covenant or condition of this Agreement or any breach
thereof shall be deemed waived, except with the written consent of the Party
against whom the waiver is claimed, and any waiver or any such term, covenant,
condition or breach shall not be deemed to be a waiver of any preceding or
succeeding breach of the same or any other term, covenant, condition or breach.

14.  SEVERABILITY.

     14.1 The finding by a court of competent jurisdiction of the
unenforceability, invalidity or illegality of any provision of this Agreement
shall not render any other provision of this Agreement unenforceable, invalid
or illegal. Such court shall have the authority to modify or replace the
invalid or unenforceable term or provision with a valid and enforceable term or
provision which most accurately represents the parties' intention with respect
to the invalid or unenforceable term or provision.

15.  INTERPRETATION; CONSTRUCTION.

     15.1 The headings set forth in this Agreement are for convenience of
reference only and shall not be used in interpreting this Agreement. This
Agreement has been drafted by legal counsel representing the Company, but
Executive has been encouraged, and has consulted with, her own independent
counsel and tax advisors with respect to the terms of this Agreement. The
Parties acknowledge that each Party and its counsel has reviewed and revised,
or had an opportunity to review and revise, this Agreement, and the normal rule
of construction to the effect that any ambiguities are to be resolved against
the drafting party shall not be employed in the interpretation of this
Agreement.

                                       9.

<PAGE>
16.  REPRESENTATIONS AND WARRANTIES.

     16.1 Executive represents and warrants that she is not restricted or
prohibited, contractually or otherwise, from entering into and performing each
of the terms and covenants contained in this Agreement, and that her execution
and performance of this Agreement will not violate or breach any other
agreements between Executive and any other person or entity.

17.  LITIGATION COSTS.

     17.1 Should any litigation, arbitration, or administrative action be
commenced between the parties or their personal representatives concerning any
provision of this agreement or the rights and duties of any person in relation
to this agreement, the party or parties prevailing in such action shall be
entitled, in addition to such other relief as may be granted to a reasonable
sum as and for that party's attorney's fees in such litigation which shall be
determined by the court, arbitrator, or administrative agency, in such action
or in a separate action brought for that purpose.

18.  COUNTERPARTS.

     18.1 This Agreement may be executed in two counterparts, each of which
shall be deemed an original, all of which together shall contribute one and the
same instrument.

19.  ARBITRATION.

     19.1 To ensure rapid and economical resolution of any disputes which may
arise under this Agreement, Executive and the Company agree that any and all
disputes or controversies of any nature whatsoever, arising from or regarding
the interpretation, performance, enforcement or breach of this Agreement shall
be resolved by confidential, final and binding arbitration (rather than trial
by jury or court or resolution in some other forum) to the fullest extent
permitted by law. Any arbitration proceeding pursuant to this Agreement shall
be conducted by the American Arbitration Association ("AAA") in San Diego under
the then existing AAA arbitration rules. If for any reason all or part of this
arbitration provision is held to be invalid, illegal, or unenforceable in any
respect under any applicable law or rule in any jurisdiction, such invalidity,
illegality or unenforceability will not effect any other portion of this
arbitration provision or any other jurisdiction, but this provision will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable part or parts of this provision had never been
contained herein, consistent with the general intent of the parties insofar as
possible.

I have read Section 19.1 and irrevocably agree to arbitrate any dispute
identified above.
/s/ S.E. (Executive's Initials)
--------

20.  INJUNCTIVE RELIEF.

     20.1 Executive is obligated under this Agreement to render services and
comply with covenants of a special, unique, unusual and extraordinary
character, thereby giving this Agreement peculiar value, so that the loss of
such service or violation by Executive of this Agreement, including, but not
limited to, the Proprietary Information and Inventions Agreement,

                                      10.

<PAGE>
could not reasonably or adequately be compensated in damages in an action at
law. Therefore, notwithstanding Section 18 herein, in addition to any other
remedies or sanctions provided by law, whether criminal or civil, and without
limiting the right of the Company and successors or assigns to pursue all other
legal and equitable rights available to them, the Company shall have the right
during Executive's employment hereunder (or thereafter with respect to
obligations continuing after the termination of this Agreement) to compel
specific performance hereof by Executive or to obtain temporary and permanent
injunctive relief against violations hereof by Executive, including, but not
limited to violations of the Proprietary Information and Inventions Agreement,
and, in furtherance thereof, to apply to any court with jurisdiction over the
Parties to enforce the provisions hereof.

21.  TRADE SECRETS OF OTHERS.

     21.1  It is the understanding of both the Company and Executive that
Executive shall not divulge to the Company and/or its subsidiaries any
confidential information or trade secrets belonging to others, including
Executive's former employers, nor shall the Company and/or its affiliates seek
to elicit from Executive any such information. Consistent with the foregoing,
Executive shall not provide to the Company and/or its affiliates, and the
Company and/or its affiliates shall not request, any documents or copies of
documents containing such information.

22.  ADVERTISING WAIVER.

     22.1  Executive agrees to permit the Company and/or its affiliates, and
persons or other organizations authorized by the Company and/or its affiliates,
to use, publish and distribute advertising or sales promotional literature
concerning the products and/or services of the Company and/or its affiliates, or
the machinery and equipment used in the provision thereof, in which Executive's
name and/or pictures of Executive taken in the course of Executive's provision
of services to the Company and/or its affiliates, appear. Executive hereby
waives and releases any claim or right Executive may otherwise have arising out
of such use, publication or distribution.

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

Date: August 25, 1999                             PMR CORPORATION

                                             By:  /s/ Fred D. Furman
                                                  ------------------------------
                                             Its: Pres.
                                                  ------------------------------

Dated: August 25, 1999                            /s/ SUSAN D. ERSKINE
                                                  ------------------------------
                                                  SUSAN D. ERSKINE

                                       11.
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                                   EXHIBIT A

                          RELEASE AND WAIVER OF CLAIMS

     In consideration of the payments and other benefits set forth in Section
4.4 of the Employment Agreement dated August 25, 1999 to which this form is
attached, I, SUSAN D. ERSKINE, hereby furnish PMR CORPORATION (the "Company"),
with the following release and waiver ("Release and Waiver").

     I hereby release, and forever discharge the Company, its officers,
directors, agents, employees, stockholders, successors, assigns affiliates and
benefit plans, of and from any and all claims, liabilities, demands, causes of
action, costs, expenses, attorneys' fees, damages, indemnities and obligations
of every kind and nature, in law, equity, or otherwise, known and unknown,
suspected and unsuspected, disclosed and undisclosed, arising at any time prior
to and including my employment Term with respect to any claims relating to my
employment and the termination of my employment, including but not limited to,
claims pursuant to any federal, state or local law relating to employment,
including, but not limited to, discrimination claims, claims under the
California Fair Employment and Housing Act, and the Federal Age Discrimination
in Employment Act of 1967, as amended ("ADEA"), or claims for wrongful
termination, breach of the covenant of good faith, contract claims, tort claims,
and wage or benefit claims, including but not limited to, claims for salary,
bonuses, commissions, fringe benefits, severance pay or any form of
compensation; provided that, this release is not intended to release or waive
any claims that I may have as a shareholder, stock option holder or warrant
holder of the Company's stock.

     In releasing claims unknown to me at present, I am waiving all rights and
benefits under Section 1542 of the California Civil Code, and any law or legal
principle of similar effect in any jurisdiction: "A general release does not
extend to claims which the creditor does not know or suspect to exist in her
favor at the time of executing the release, which if known by him must have
materially affected her settlement with the debtor."

     I acknowledge that, among other rights, I am waiving and releasing any
rights I may have under ADEA, that this release and waiver is knowing and
voluntary, and that the consideration given for this release and waiver is in
addition to anything of value to which I was already entitled as an Executive of
the Company. I further acknowledge that I have been advised, as required by the
Older Workers Benefit Protection Act, that: (a) the release and waiver granted
herein does not relate to claims which may arise after this release and waiver
is executed; (b) I have the right to consult with an attorney prior to executing
this release and waiver (although I may choose voluntarily not to do so); and if
I am over 40 years old upon execution of this (c) I have twenty-one (21) days
from the date of termination of my employment with the Company in which to
consider this release and waiver (although I may choose voluntarily to execute
this release and waiver earlier); (d) I have seven (7) days following the
execution of this release and waiver to revoke my consent to this release and
waiver; and (e) this release and waiver shall not be effective until the seven
(7) day revocation period has expired.

Date: ____________________                  ____________________________________
                                            SUSAN D. ERSKINE<PAGE>
                                                                    EXHIBIT 10.9

                        AMENDMENT TO EMPLOYMENT AGREEMENT

         THIS AMENDMENT ("Amendment") is entered into by and between Fred Furman
("Employee") and PMR Corporation, Inc., a Delaware corporation ("Company"),
effective as of May 1, 2002 the (the "Effective Date").

         WHEREAS, Employee and Company are parties to that certain Employment
Agreement dated to be effective as of August 25, 1999 (the "Agreement"); and

         WHEREAS, pursuant to Section 12 of the Agreement, Employee and Company
may amend the Agreement; and

         WHEREAS, Company and Employee now desire to amend the Agreement; and

         NOW, THEREFORE, for and in consideration of the premises and the mutual
benefits to the parties arising out of this Amendment, the receipt and
sufficiency of which are hereby acknowledged by the parties, Company and
Employee agree that the Agreement shall be amended as follows:

         1. Section 4.4 of the Agreement shall be amended by adding the
following new Section.4.4.4 and 4.4.5:

                  "4.4.4. Termination in Contemplation of Merger. If Executive's
employment is terminated by Executive or the Company in contemplation of, upon
or within one hundred-eighty (180) days following the merger of the Company with
and into Psychiatric Solutions, Inc., a Delaware corporation ("PSI"), the terms
of which are set forth in that certain Agreement and Plan of Merger, dated on or
about May 6, 2002, among the Company, PMR Acquisition Corporation, and PSI
(respectively, the "Merger" and the "Merger Agreement"), then upon Executive's
furnishing to the Company or its successor an executed waiver and release of
claims (a form of which is attached hereto as Exhibit A), Executive shall be
entitled to the following payments equal to:

                  (i) Any payable and unpaid Base Salary in effect for Executive
at the time of such termination pursuant to Section 3.1 and accrued and unused
vacation earned through the date of such termination of employment;

                  (ii) An amount equal to three (3) times Executive's annual
Base Salary in effect under Section 3.1 at the time of such termination; and

                  (iii) An amount equal to three (3) times the average of
Executive's annual bonus payment(s) over the past five (5) consecutive years,
including any years in which no bonus was made to Executive.

The determination of whether a termination of employment is "in contemplation of
the Merger" shall be determined by the Company in its sole and absolute
discretion. Such payments shall be payable upon the effective date of
Executive's termination of employment and shall be subject to standard
withholdings and deductions. If the Merger Agreement is terminated by any
parties to the Merger Agreement prior to the consummation of the Merger, this
Section 4.4.4 and all its provisions shall be
<PAGE>
null and void and of no effect, and if applicable, Executive may be entitled to
receive payment under another provision of Section 4.4.

                  4.4.5 Limitations on Compensation Upon Termination.
Notwithstanding any provision in this Section 4.4, under no circumstances shall
Executive be entitled to receive a payment under more than one of Sections 4.4.1
through 4.4.4 (including without limitation, for example, if Executive's
termination upon or within 180 days following the Merger constitutes a
termination by the Company without Cause or termination by Executive for Good
Reason as described in Section 4.4.3)."

         2.       As amended hereby, the Agreement is ratified and reaffirmed.

                  EXECUTED this 1st day of May, 2002, to be effective as of
the Effective Date.

                                             PMR CORPORATION

                                             By: /s/ Reggie Roman
                                                 --------------------------

                                             Title: Chief Financial Officer
                                                    -----------------------

                                             FRED FURMAN

                                                  /s/ Fred Furman
                                             ------------------------------

                                       -2-

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