Document:

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                                                                   EXHIBIT 10.8

                              CONSULTING AGREEMENT

      This CONSULTING AGREEMENT ("Agreement") is entered into as of this 5th day
of August, 2002 by and between PSYCHIATRIC SOLUTIONS, INC., a Delaware
corporation (the "Company"), and ALLEN TEPPER (the "Consultant").

      In consideration of the mutual covenants contained in this Agreement, the
parties hereby agree as follows:

                                    SECTION I
                             INDEPENDENT CONTRACTOR

      Consultant will be an independent contractor of the Company. It is the
express intent of Consultant and Company that no employee-employer relationship
between Consultant and Company arises from this Agreement.

                                   SECTION II
                          POSITION AND RESPONSIBILITIES

      During the Consulting Period (as defined below), the Consultant agrees to
serve as a consultant to the Company"s subsidiary, Collaborative Care
Corporation. The Consultant will report to the Chief Operating Officer of the
Company.

                                   SECTION III
                                TERMS AND DUTIES

      A. Consulting Period. The Consultant's duties under this Agreement shall
be for a period of One (1) year, commencing August 5, 2002, and continuing
through August 4, 2003 ("Consulting Period").

      B. Duties. During the Consulting Period, the Consultant shall serve as the
Company's representative on the board of directors of the Mental Health
Cooperative.

                                   SECTION IV
                            COMPENSATION AND BENEFITS

      A. Compensation. For all services rendered by the Consultant in any
capacity during the Consulting Period, the Company shall pay the Consultant an
annual base salary of Sixty-Seven Thousand Two Hundred Dollars ($67,200) ("Base
Salary"). Base Salary shall be payable according to the customary payroll
practices of the Company but in no event less frequently than once each month.

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                                    SECTION V
                                BUSINESS EXPENSES

      The Company will reimburse the Consultant for all reasonable travel and
other expenses incurred by the Consultant in connection with the performance of
his duties and obligations under this Agreement.

                                   SECTION VI
                                      DEATH

      In the event of the death of the Consultant during the Consulting Period,
the Company"s obligation to make payments under this Agreement shall cease as of
the date of death, except for earned but unpaid Base Salary.

                                   SECTION VII
                       EFFECT OF TERMINATION OF AGREEMENT

      A. The Company may, at any time upon thirty (30) days prior written
notice, terminate this Agreement without cause. In the event this Agreement is
terminated without cause, the Company's sole obligation to Consultant shall be
to pay Consultant the amount of Base Salary that would have been due to
Consultant during the remaining term of this Agreement.

      B. If this Agreement terminates due to a Termination for Cause, earned but
unpaid Base Salary will be paid to Consultant. No other payments will be made by
the Company.

      C. For this Agreement, "Termination for Cause" means termination of the
Agreement by the Company acting in good faith by written notice to the
Consultant specifying the event relied upon for such termination, due to the
Consultant's serious, willful misconduct with respect to his duties under this
Agreement, including but not limited to conviction for a felony, misdemeanor
involving moral turpitude or perpetration of a common law fraud, in each case
which has resulted or is likely to result in material economic damage to the
Company. Termination without cause means termination of the Agreement by the
Company other than due to death or Termination for Cause.

                                  SECTION VIII
                      OTHER DUTIES OF THE CONSULTANT DURING
                         AND AFTER THE CONSULTING PERIOD

      A. The Consultant will, with reasonable notice during or after the
Consulting Period, furnish information as may be in his possession and cooperate
with the Company as may reasonably be requested in connection with the
transition of the Company following the Company's merger with PMR Corporation.

      B. The Consultant recognizes and acknowledges that all information
pertaining to the affairs, business, clients, customers or other relationships
of the Company, as hereinafter defined, is confidential and is a unique and
valuable asset of the Company. Access to and knowledge of this

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information are essential to the performance of the Consultant"s duties under
this Agreement. The Consultant will not during the Consulting Period or after
except to the extent reasonably necessary in performance of the duties under
this Agreement, give to any person, firm, association, corporation or
governmental agency any information concerning the affairs, business, clients,
customers or other relationships of the Company, except as required by law. The
Consultant will not make use of this type of information for his own purposes or
for the benefit of any person or organization other than the Company. The
Consultant will also use his best efforts to prevent the disclosure of this
information by others. All records, memoranda, etc. relating to the business of
the Company, whether made by the Consultant or otherwise coming into his
possession, are confidential and will remain the property of the Company.

      C. During the Consulting Period and for a twelve (12) month period
following termination of the Consulting Period, the Consultant will not, without
the express written consent of the Company, directly or indirectly, engage in
any activity which is, or participate or invest in, or provide or facilitate the
provision of financing to, or assist (whether as owner, shareholder, member,
partner, director, officer, trustee, employee, agent or consultant, or in any
other capacity), any business, organization or person other than the Company (or
any subsidiary or affiliate of the Company) whose business, activities, products
or services (collectively, "Business Activities") are competitive with any of
the Business Activities conducted or offered by Collaborative Care Corporation
or its successors as such Business Activities are conducted or offered
immediately following the termination of the Consulting Period. For a twelve
(12) month period after termination of the Consulting Period for any reason, the
Consultant will not directly or indirectly hire any employee of the Company (or
any subsidiary or affiliate of the Company) or solicit or encourage any such
employee to leave the employ of the Company (or any subsidiary or affiliate of
the Company).

      D. The Consultant acknowledges that his breach or threatened or attempted
breach of any provision of Section VIII would cause irreparable harm to the
Company not compensable in monetary damages and that the Company shall be
entitled, in addition to all other applicable remedies, to a temporary and
permanent injunction and a decree for specific performance of the terms of
Section VIII without being required to prove damages or furnish any bond or
other security.

                                   SECTION IX
                           EFFECTIVE PRIOR AGREEMENTS

      This Agreement contains the entire understanding between the Company and
the Consultant with respect to the subject matter and supersedes any prior
employment or severance agreements between the Company and its affiliates, and
the Consultant. Consultant agrees that he is not entitled to any further
compensation, bonus, severance payments, options, or anything of value from the
Company or any of its affiliates as a result of any employment or severance
agreement or otherwise.

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                                    SECTION X
                                  MODIFICATION

      This Agreement may not be modified or amended except in writing signed by
the parties. No term or condition of this Agreement will be deemed to have been
waived, except in writing by the party charged with waiver. A waiver shall
operate only as to the specific term or condition waived and will not constitute
a waiver for the future or act on anything other than that which is specifically
waived.

                                   SECTION XI
                                  GOVERNING LAW

      This Agreement has been executed and delivered in the State of Tennessee
and its validity, interpretation, performance and enforcement shall be governed
by the laws of that state.

                                   SECTION XII
                                     NOTICES

      All notices, requests, consents and other communications hereunder shall
be in writing and shall be deemed to have been made when delivered or mailed
first-class postage prepaid by registered mail, return receipt requested, or
when delivered if by hand, overnight delivery service or confirmed facsimile
transmission, to the following:

            (a) If to the Company, at 113 Seaboard Lane, Suite C-100, Franklin,
Tennessee 37067, Attention: Chief Executive Officer, or at such other address as
may have been furnished to the Consultant by the Company in writing, copy to Lee
Dilworth, Harwell Howard Hyne Gabbert & Manner, P.C., 315 Deaderick Street,
Suite 1800, Nashville, Tennessee 37238; or

            (b) If to the Consultant, at 13721 Condesa Drive, Del Mar, CA 92014,
or such other address as may have been furnished to the Company by the
Consultant in writing.

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

                           COMPANY:

                           PSYCHIATRIC SOLUTIONS, INC.

                           By: /s/ Joey Jacobs
                               -------------------------------------------------
                               Joey A. Jacobs,
                               President & Chief Executive Officer

                           CONSULTANT:
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                           /s/ Allen Tepper
                           -----------------------------------------------------
                           Allen Tepper<PAGE>
                                                                  EXHIBIT 10.14

                              EMPLOYMENT AGREEMENT

         This EMPLOYMENT AGREEMENT ("Agreement") made effective as of October 1,
2002 by and between PSYCHIATRIC SOLUTIONS, INC., a Delaware corporation (the
"Company"), and JACK SALBERG (the "Executive").

         WHEREAS Executive is employed by Company pursuant to that certain
Employment Agreement effective May 1, 2000 (the "Initial Agreement"); and

         WHEREAS Executive and Company desires to terminate the Initial
Agreement and continue Employees employment on terms and conditions set forth
herein below.

         In consideration of the mutual covenants contained in this Agreement,
the parties hereby agree as follows:

                                    SECTION I
                                   EMPLOYMENT

         The Company agrees to employ the Executive and the Executive agrees to
be employed by the Company for the Period of Employment as provided in Section
III.A. below upon the terms and conditions provided in the Agreement.

                                   SECTION II
                          POSITION AND RESPONSIBILITIES

         During the Period of Employment, the Executive agrees to serve as Chief
Operating Officer of the Company and President of the Company's subsidiary, PSI
Hospital Management Services, Inc., and to be responsible for the typical
management responsibilities expected of an officer holding such positions and
such other responsibilities as may be assigned to Executive from time to time by
the President/CEO of the Company.

                                   SECTION III
                                TERMS AND DUTIES

         A.       Period of Employment.

         The period of Executive's employment under this Agreement will commence
as of October 1, 2002 and shall continue through December 31, 2003, subject to
extension or termination as provided in this Agreement ("Period of Employment").
On each anniversary of the commencement of the Period of Employment, the period
of Executive's employment shall be extended for additional one (1) year periods,
unless either party gives notice thirty (30) days in advance of the expiration
of the then current period of employment of such party's intent not to extend
the Period of Employment.

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         B.       Duties.

         During the Period of Employment, the Executive shall devote most of his
business time, attention and skill to the business and affairs of the Company
and its subsidiaries. The Company agrees to grant the Executive some time away
from his business duties for reasonable outside activities typically consistent
with this type position. In addition, Executive may support Seller in collecting
its accounts receivable outstanding as of Closing. The Executive will perform
faithfully the duties which may be assigned to him from time to time by the
Company.

                                   SECTION IV
                            COMPENSATION AND BENEFITS

         A.       Compensation.

         For all services rendered by the Executive in any capacity during the
Period of Employment, the Executive shall be compensated as follows:

                  1.       Base Salary.

                  The Company shall pay the Executive an annual base salary
("Base Salary") as follows: $275,000.00.

                  Base Salary shall be payable according to the customary
payroll practices of the Company but in no event less frequently than once each
month. The Base Salary shall be reviewed each fiscal period and shall be subject
to adjustment according to the policies and practices adopted by the Company
from time to time.

         B.       Annual Incentive Award.

         The Executive shall be eligible for annual incentive compensation
awards ("Incentive Compensation Awards") tied to objective criteria to be
established from time to time by the Compensation Committee. The initial
incentive award shall be determined as set forth in Exhibit A hereto.

         C.       Additional Benefits.

         The Executive will be eligible to participate in all compensation or
employee benefit plans or programs and receive all benefits and perquisites for
which any salaried employees are eligible under any existing or future plan or
program established by the Company for salaried employees. The Executive will
participate to the extent permissible under the terms and provisions of such
plans or programs in accordance with program provisions. These may include group
hospitalization, health, dental care, life or other insurance, tax qualified
pension, savings, thrift and profit sharing plans, termination pay programs,
sick leave plans, travel or accident insurance, disability insurance, and
contingent compensation plans including capital accumulation programs,
Restricted Stock programs, stock purchase programs and stock option plans.
Nothing in this Agreement will preclude the Company from amending or terminating
any

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of the plans or programs applicable to salaried or senior executives as long as
such amendment or termination is applicable to all salaried employees or senior
executives. The Executive will be entitled to an annual paid vacation of four
(4) weeks. The Executive's Stock Option Grant shall be as set forth in Exhibit B
hereto. Executive's Stock Option Grant will be subject to the Company's stock
option plan, as amended from time to time, a current copy of which is attached
as Exhibit C. As an additional benefit, the Company will provide Executive a
term life insurance policy in the amount of twice Executive's Base Salary.

                                    SECTION V
                                BUSINESS EXPENSES

         The Company will reimburse the Executive for all reasonable travel and
other expenses incurred by the Executive in connection with the performance of
his duties and obligations under this Agreement.

                                   SECTION VI
                                   DISABILITY

         A. In the event of disability of the Executive during the Period of
Employment, the Company will continue to pay the Executive according to the
compensation provisions of this Agreement during the period of his disability,
until such time as Executive's long-term disability insurance benefits are
available. However, in the event the Executive is disabled for a continuous
period of six (6) months after the Executive first becomes disabled, the Company
may terminate the employment of the Executive. In this case, normal compensation
will cease, except for earned but unpaid Base Salary and Incentive Compensation
Awards which would be payable on a pro-rated basis for the year in which the
disability occurred. In the event of, and upon such termination, all then
unvested stock options that otherwise would vest during the immediately
succeeding eighteen (18) month period shall vest immediately.

         B. During the period the Executive is receiving payments of either
regular compensation or disability insurance described in this Agreement and as
long as he is physically and mentally able to do so, the Executive will furnish
information and assistance to the Company and from time to time will make
himself available to the Company to undertake assignments consistent with his
prior position with the Company and his physical and mental health. If the
Company fails to make a payment or provide a benefit required as part of the
Agreement, the Executive's obligation to fulfill information and assistance will
end.

         C. The term "disability" will have the same meaning as under any
disability insurance provided pursuant to this Agreement or in the absence
thereof or otherwise in force as to Executive.

                                   SECTION VII
                                      DEATH

         In the event of the death of the Executive during the Period of
Employment, the Company's obligation to make payments under this Agreement shall
cease as of the date of

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death, except for earned but unpaid Base Salary and Incentive Compensation
Awards which will be paid on a prorated basis for that year. The Executive's
designated beneficiary will be entitled to receive the proceeds of any life or
other insurance or other death benefit programs provided in this Agreement, in
accordance with the terms of such policies and/or programs.

                                  SECTION VIII
                       EFFECT OF TERMINATION OF EMPLOYMENT

         A. The Board may at any time upon thirty (30) days prior notice
terminate Executive's employment Without Cause (as "Without Cause" is defined
below) by giving Executive notice of the effective date of termination. In the
event Executive's employment is terminated Without Cause, the Company's sole
obligation to Executive shall be to pay Executive a severance payment of 1.5
times his previous 12 months Compensation, paid out over a period of eighteen
(18) months, plus any earned but unpaid Base Salary and Incentive Compensation
Awards which will be calculated on a prorated basis for that year of termination
and shall be paid as an immediate lump sum payment. "Compensation" shall be
defined as all base salary and bonuses earned for the immediately previous
12-month period. If the Executive's employment terminates due to either a
Without Cause termination or a Constructive Discharge, or pursuant to Section
XI, all then unvested stock options that otherwise would vest during the
immediate succeeding eighteen (18) month period shall vest immediately. The
Company shall cause any options so vested to remain exercisable for twelve (12)
months from the date of termination, subject to the terms and provisions of the
Company's stock option plan as to the permissible exercise period for incentive
stock options. In addition, upon such termination, Company shall provide
Executive with the standard medical and dental COBRA benefits provided to other
executives of the Company upon departure from the Company for an eighteen (18)
month period.

         B. If the Executive's employment terminates due to a Termination for
Cause (as "Termination for Cause" is defined below), earned but unpaid Base
Salary and earned but unused vacation will be paid on a pro-rated basis for the
year in which the termination occurs. No other payments will be made or benefits
provided by the Company.

         C. If the Executive's employment terminates as a result of a
Constructive Discharge (as "Constructive Discharge" is defined below) then
Executive shall have the right to the payments and benefits set forth in Section
VIII A hereinabove.

         D. Upon termination of the Executive's employment, other than for
reasons due to death, disability, pursuant to Paragraph A of this Section,
pursuant to Paragraph C of this Section, or pursuant to Section XI, the
Company's obligation to make payments or provide benefits under this Agreement
will cease as of the date of such termination except as expressly defined in
this Agreement.

         E. For this Agreement, the following terms have the following meanings:

            1. "Termination for Cause." The Company shall have the right to
immediately terminate this Agreement by providing the Executive with written
notice of

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termination, specifying therein the reason for and the date of termination.
Termination of this Agreement by the Company shall be deemed a "Termination for
Cause" if the reason for such termination is any of the following:

                  A. the Executive (i) willfully and materially breaches any
         provision of this Agreement, which breach remains uncured for fourteen
         (14) days after written notice from the Company regarding such breach,
         which notice shall state with reasonable specificity a description of
         the breach, or (ii) misrepresents or conceals a material fact for the
         purpose of securing or maintaining employment under this Agreement; or

                  B. the Executive usurps for himself or his affiliates, a
         business opportunity belonging to and pursued by the Company during the
         course of his employment hereunder; or

                  C. the Executive engages in conduct (i) involving willful
         destruction or dishonesty against the Company; or (ii) constituting
         negligence or willful misconduct in carrying out his duties under this
         Agreement; or (iii) adversely affecting the reputation, goodwill and
         prospects of the Company; or (iv) violating the policies of the Company
         with respect to non-discrimination, sexual harassment, or similar
         policies affecting workers and the workplace; or (v) resulting in a
         conviction of or plea of no contest to any crime involving a felony,
         fraud, embezzlement or the like, habitual insobriety, habitual use of
         an illegal controlled substance, or misappropriation of the Company's
         funds; or (vii) breaching the Executive's fiduciary duty or loyalty to
         the Company.

         2. "Constructive Discharge" means termination of the Executive's
employment by the Executive due to a failure of the Company to fulfill its
obligations under this Agreement in any material respect including any reduction
of the Executive's Base Salary or other compensation other than reductions
applicable to all senior executives of the Company or failure to appoint or
reappoint the Executive to the position specified in Section II hereof, or other
material change by the Company in the functions, duties or responsibilities of
the position which would reduce the ranking or level, responsibility, importance
or scope of the position. The Executive will provide the Company a written
notice which describes the circumstances being relied on for the termination
with respect to the Agreement within thirty (30) days after the event giving
rise to the notice. The Company will have thirty (30) days to remedy the
situation prior to the termination for Constructive Discharge.

         3. "Without Cause" means termination of the Executive's employment by
the Company other than due to death, disability, Termination for Cause,
Constructive Discharge, or pursuant to Section XI.

                                   SECTION IX
                      OTHER DUTIES OF THE EXECUTIVE DURING
                       AND AFTER THE PERIOD OF EMPLOYMENT

         A. The Executive will, with reasonable notice during or after the
Period of Employment, furnish information as may be in his possession and
cooperate with the Company

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as may reasonably be requested in connection with any claims or legal actions in
which the Company is or may become a party.

         B. The Executive recognizes and acknowledges that all information
pertaining to the affairs, business, clients, customers or other relationships
of the Company, as hereinafter defined, is confidential and is a unique and
valuable asset of the Company. Access to and knowledge of this information are
essential to the performance of the Executive's duties under this Agreement. The
Executive will not during the Period of Employment or after except to the extent
reasonably necessary in performance of the duties under this Agreement, give to
any person, firm, association, corporation or governmental agency any
information concerning the affairs, business, clients, customers or other
relationships of the Company, except as required by law. The Executive will not
make use of this type of information for his own purposes or for the benefit of
any person or organization other than the Company. The Executive will also use
his best efforts to prevent the disclosure of this information by others. All
records, memoranda, etc. relating to the business of the Company, whether made
by the Executive or otherwise coming into his possession, are confidential and
will remain the property of the Company.

         C. During the Period of Employment and for an eighteen (18) month
period thereafter, the Executive will not use his status with the Company to
obtain loans, goods or services from another organization on terms that would
not be available to him in the absence of his relationship to the Company.
During the Period of Employment and for a eighteen (18) month period following
termination of the Period of Employment, other than termination due to a Without
Cause Termination, (i) the Executive will not make any statements or perform any
acts intended to advance the interest of any existing or prospective competitors
of the Company in any way that will injure the interest of the Company; (ii) the
Executive, without prior express written approval by the Board of Directors of
the Company, will not directly or indirectly own or hold any proprietary
interest in or be employed by or receive compensation from any party engaged in
the behavioral health business in the same geographic areas the Company does
business; and (iii) the Executive, without express prior written approval from
the Board of Directors, will not solicit any members of the then current clients
of the Company or discuss with any employee of the Company information or
operation of any business intended to compete with the Company. For the purposes
of the Agreement, proprietary interest means legal or equitable ownership,
whether through stock holdings or otherwise, of a debt or equity interest
(including options, warrants, rights and convertible interests) in a business
firm or entity, or ownership of more than 1% of any class of equity interest in
a publicly-held company. For a twelve (12) month period after termination of the
Period of Employment for any reason, the Executive will not directly or
indirectly hire any employee of the Company or solicit or encourage any such
employee to leave the employ of the Company.

         D. The Executive acknowledges that the covenants contained herein are
reasonable as to geographic and temporal scope. If, at the time of enforcement
of this Section IX, a court shall hold that any of the duration, scope or
geographic restrictions stated herein are unreasonable under circumstances then
existing, the parties agree (and shall stipulate, if necessary, in an
appropriate pleading) that the maximum duration, scope or geographic area
reasonable under such circumstances shall be substituted for the herein stated
duration, scope or geographic area. The Executive acknowledges that his breach
or threatened or attempted breach

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of any provision of Section IX would cause irreparable harm to the Company not
compensable in monetary damages and that the Company shall be entitled, in
addition to all other applicable remedies, to a temporary and permanent
injunction and a decree for specific performance of the terms of Section IX
without being required to prove damages.

         E. The Executive shall not be bound by the provisions of Section IX in
the event of a material default by the Company in its obligations under this
Agreement which are to be performed upon or after termination of this Agreement
and such default is not cured within fourteen (14) days of receipt of written
notice by Executive specifying the nature of such default.

         F. Any reference in this Section IX shall expressly be deemed also to
refer to and run to the benefit of the Company's subsidiaries.

                                    SECTION X
                           INDEMNIFICATION, LITIGATION

         If the Executive is made a party, or threatened to be made a party, to
any lawsuit or proceeding solely as a result or on account of his services under
this Agreement, the Company shall indemnify and defend the Executive and hold
him harmless against all expenses (including, without limitation, reasonable
legal fees and costs), liabilities and losses incurred or suffered by him in
connection with or on account of such lawsuit or proceeding, (i) to the fullest
extent permitted under the Delaware Corporation Law ("DCL"), as the same now
exists or may hereafter be amended (but, in the case of any such amendment, if
permissible by the DCL, only to the extent that such amendment permits the
Company to provide broader indemnification rights than the DCL permitted the
Company to provide prior to such amendment) and (ii) in the same manner, and
subject to the same procedures, as is applicable to any members of the Board of
Directors of the Company; except that in order to have a right to this
indemnification, the Executive shall (i) provide the Company with prompt written
notice of any such lawsuit or proceeding (whether pending or threatened); (ii)
not settle any pending or threatened lawsuit or proceeding without the prior
written consent of the Company; and (iii) execute an undertaking agreement upon
mutually satisfactory terms. In addition, the Executive agrees that the Company
shall have the right, but not the obligation, to assume and direct the
Executive's defense in any action with counsel reasonably satisfactory to
Executive.

                                   SECTION XI
                                CHANGE IN CONTROL

         In the event there is a Change in Control of the ownership of the
Company and the Executive is terminated within eighteen (18) months after the
Change in Control, as a result of such Change in Control (but not as a result of
disability, death, Constructive Discharge, Termination for Cause, or Executive
resignation), the Company shall pay to the Executive upon such termination an
amount equal to 1.5 times his previous 12 month Compensation paid out over a
period of eighteen (18) monthly installments. "Compensation" shall be defined
consistent with the definition in Section XIIIA. The medical and dental benefits
set forth in Section XIIIA shall continue for eighteen (18) months from the
effective date of the termination resulting from a Change of Control.

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<PAGE>

         For purposes of this Agreement, a "Change in Control" shall occur on
the first date on which either (i) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended
("Exchange Act")) becomes the beneficial owner, directly or indirectly, of
securities of Company or representing at least fifty percent (50%) of the
combined voting power of Company's then outstanding securities if such person is
not at the date of this Agreement a beneficial owner of the Company, or (ii)
Company is combined (by merger, share exchange, consolidation or otherwise) with
another corporation and as a result of such combination, less than fifty percent
(50%) of the outstanding securities of the surviving or resulting corporation
are owned in the aggregate by the former shareholders of Company, or (iii)
Company sells, leases or otherwise transfers all or substantially all of its
properties or assets to another person or entity. Notwithstanding anything
herein to the contrary, for purposes of this Agreement, any transaction or
combination whatsoever with PMR Corporation shall not be deemed to be a Change
in Control.

                                   SECTION XII
                                WITHHOLDING TAXES

         The Company may directly or indirectly withhold from any payments under
this Agreement all federal, state, city or other taxes or deductions that shall
be required pursuant to any law or governmental regulation.

                                  SECTION XIII
                           EFFECTIVE PRIOR AGREEMENTS

         This Agreement contains the entire understanding between the Company
and the Executive with respect to the subject matter and supersedes any prior
employment or severance agreements between the Company and its affiliates, and
the Executive.

                                   SECTION XIV
                     CONSOLIDATION, MERGER OR SALE OF ASSETS

         Nothing in this Agreement shall preclude the Company from consolidating
or merging into or with, or transferring all or substantially all of its assets
to, another corporation which assumes this Agreement and all obligations and
undertakings of the Company hereunder. Upon such a consolidation, merger or sale
of assets, the term "the Company" as used will mean the other corporation and
this Agreement shall continue in full force and effect. This Section XIV is not
intended to modify or limit the rights of the Executive hereunder, including
without limitation, the rights of Executive under Section XI.

                                   SECTION XV
                                  MODIFICATION

         This Agreement may not be modified or amended except in writing signed
by the parties. No term or condition of this Agreement will be deemed to have
been waived, except in writing

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by the party charged with waiver. A waiver shall operate only as to the specific
term or condition waived and will not constitute a waiver for the future or act
on anything other than that which is specifically waived.

                                   SECTION XVI
                           GOVERNING LAW; ARBITRATION

         This Agreement has been executed and delivered in the State of
Tennessee and its validity, interpretation, performance and enforcement shall be
governed by the laws of that state.

         Any dispute among the parties hereto shall be settled by arbitration in
Nashville, Tennessee, in accordance with the then applicable rules of the
American Arbitration Association and judgment upon the award rendered may be
entered in any court having jurisdiction thereof. The arbitrator shall award all
costs, legal expenses and fees to the successful party.

                                  SECTION XVII
                                     NOTICES

         All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been made when delivered or
mailed first-class postage prepaid by registered mail, return receipt requested,
or when delivered if by hand, overnight delivery service or confirmed facsimile
transmission, to the following:

         A. If to the Company, at 113 Seaboard Lane, Suite C-100, Franklin,
Tennessee 37067, Attention: Chairman, or at such other address as may have been
furnished to the Executive by the Company in writing, copy to Lee Dilworth,
Harwell Howard Hyne Gabbert & Manner, P.C., 315 Deaderick Street, Suite 1800,
Nashville, Tennessee 37238; or

         B. If to the Executive, at ________________________________________, or
such other address as may have been furnished to the Company by the Executive in
writing.

                                  SECTION XVIII
                                BINDING AGREEMENT

         This Agreement shall be binding on the parties' successors, heirs and
assigns. In the event any payment called for herein is not paid when due it
shall not be deemed a default so long as it is cured within thirty (30) days. If
not cured, then all remaining obligations shall be accelerated and immediately
due and payable.

                                       9
<PAGE>

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

                                       COMPANY:

                                       PSYCHIATRIC SOLUTIONS, INC.

                                       By:  /s/ Joey A. Jacobs
                                            ----------------------------------
                                            Joey A. Jacobs,
                                            President & Chief Executive Officer

                                       EXECUTIVE:

                                       /s/ Jack Salberg
                                       ----------------------------
                                       JACK SALBERG

                                       10
<PAGE>

                                    EXHIBIT A

                      INCENTIVE COMPENSATION AWARD CRITERIA

         The initial incentive award under this Agreement, as set forth herein
below on this Exhibit A, shall take effect on the date of this Agreement and
shall remain in effect through December 31, 2002. Thereafter, the Board of
Directors for the Company and the Company Compensation Committee shall determine
and approve an incentive award thereafter.

Initial Incentive Award.

Bonuses will be based on the following criteria:

         Overall profitability for the year of the company versus budget.

Maximum incentive bonus eligibility shall be 60% of salary (award will be
prorated if not a full calendar year). Eligibility for bonus will begin upon
achievement of 80% of EBIDTA, 15% of salary will be earned at 80% of EBIDTA, 30%
of salary will be earned at budgeted EBIDTA, and 60% of salary (maximum) at 140%
of EBIDTA budget and above. Bonus amounts will be prorated between achieving 80%
and 140% of budgeted EBIDTA.

BONUSES ARE DISCRETIONARY. The company shall make final determination regarding
eligibility and accounting decisions and in determining actual bonus amounts.
All bonuses must be reviewed and approved by the Chief Executive Officer of
Psychiatric Solutions, before they are final.

AN EMPLOYEE MUST BE EMPLOYED WITH PSYCHIATRIC SOLUTIONS AT THE TIME BONUSES ARE
PAID. SHOULD AN EMPLOYEE LEAVE THE COMPANY PRIOR TO THE PAYMENT OF BONUSES
HE/SHE FORFEITS HIS/HER ELIGIBILITY TO RECEIVE ANY BONUS FOR THE YEAR.

                                       11
<PAGE>

                                    EXHIBIT B

                               STOCK OPTION GRANT

 The Stock Option Grant under this Agreement shall be a grant dated August 21,
 2002 of an option to purchase 57,440 shares of Psychiatric Solutions, Inc.
 common stock with an exercise price of $5.50 per share pursuant to the PMR
 Corporation 1997 Equity Incentive Plan. No such option shall be exercisable
 after the expiration of ten (10) years from the date of its grant. The options
 shall vest 1/4 on the first anniversary of its grant; 1/4 on the second
 anniversary; 1/4 on the third anniversary; and the remaining on the fourth
 anniversary.

 The Stock Option Grant pursuant to this Agreement does not affect or alter any
 other rights of Executive in previously granted stock options by the Company to
 Executive pursuant to the Initial Agreement.

                                       12
<PAGE>

                                    EXHIBIT C

                   PMR CORPORATION 1997 EQUITY INCENTIVE PLAN

See attached document.

                                       13

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