Document:

<PAGE>
                                                                    EXHIBIT 10.6

                                 PMR CORPORATION
                              CONSULTING AGREEMENT

      THIS CONSULTING AGREEMENT (this "Agreement") is entered into as of May 10,
2002 (the "Effective Date"), by and between MARK CLEIN ("Consultant") and PMR
CORPORATION, a Delaware corporation (the "Company").

      WHEREAS, Consultant is employed by Company as Chief Executive Officer
("CEO") and wishes to resign as CEO and as an employee of Company and any of the
Company's subsidiaries;

      WHEREAS, the Company desires to retain the services of Consultant under
the terms of this Agreement;

      WHEREAS, the Consultant desires to provide services, as described below,
to the Company as a consultant to the Company and the Company desires to receive
services from the Consultant, as described below.

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

      1.    Consultant hereby resigns as an employee and as Chief Executive
Officer (and any other offices which Consultant may hold) of Company (and any
subsidiaries of Company), and Company (and Company, on behalf of such
subsidiaries) accepts Consultant's resignation effective immediately.

      2.    From the Effective Date until the earlier of (i) the date that is
one year following the Effective Date or (ii) the date on which the Company
closes the merger transaction (the "Merger") contemplated by the Agreement and
Plan of Merger by and among the Company, a wholly-owned subsidiary of the
Company and Psychiatric Solutions, Inc. (such period, the "Term"), Consultant
will continue to provide services to the Company in any area of his expertise
and knowledge as performed as CEO and as requested by the Company and
particularly to assist in closing the Merger (the "Services"). Consultant agrees
to make himself available to provide the Services at such times and locations as
reasonably required by the Company and to perform the Services in a timely and
professional manner consistent with industry standards. The Company shall
reimburse Consultant for reasonable expenses incurred by the Consultant in
connection with the Services.

      3.    Consultant shall be an independent contractor and not an employee of
the Company. Notwithstanding the previous sentence, Company shall deduct all
payroll taxes and other required deductions from payments made to Consultant,
provided however, Consultant shall no longer be considered to be an employee of
Company and shall no longer be entitled to benefits as an employee of Company
(other than Consultant's rights, if any, under COBRA and the continuation of
Consultant's health insurance benefits on the same terms and conditions as
heretofore through June 30, 2002).

                                       1.
<PAGE>
      4.    Consultant's Services to the Company shall continue during the Term
of this Agreement, and as consideration for Consultant's Services under this
Agreement, Company shall pay Consultant $120,000.00 upon execution of this
Agreement (less deductions) and an additional $120,000.00 (less deductions) upon
the closing of the Merger or May 10, 2003, whichever first occurs.

      5.    The Employment Agreement between the Company and Consultant dated
August 25, 1999 is hereby terminated and Consultant hereby waives and releases
his entitlement to any benefits thereunder including but not limited to any
severance or compensation upon termination of employment.

      6.    The various agreements, including without limitation, each of the
option agreements set forth on Exhibit A, pursuant to which the Company issued
to Consultant stock options (the "Options") to purchase an aggregate of 477,720
shares of the Company's common stock ("Option Agreements") are hereby amended so
that:

            a.    the period within which Consultant shall be entitled to
exercise the Options shall not expire as a result of the termination of
Consultant's employment but shall expire (to the extent the options have not
been exercised) ninety (90) days following the end of the Term of this
Agreement, provided however, such expiration date for the exercise of the stock
options may be further extended as a result of the closing of the Merger as
provided in the Merger Agreement;

            b.    the term of each of the Options shall be extended to the
extent necessary to provide for the exercise of the Options during the period
set forth in Section 6(a) of this Agreement;

            c.    the stock options shall be treated as nonstatutory stock
options; and

            d.    all other terms of the Option Agreements shall remain in full
force and effect except as modified herein.

      7.    This Agreement shall be governed and construed in accordance with
the laws of the State of California without regard to its choice-of-law rules.
Any attempted assignment of rights or delegation of duties by Consultant shall
be void without the prior written consent of the Company. This Agreement is the
entire, final and exclusive agreement between the Company and Consultant
concerning its subject matter, and may be amended only in a writing duly signed
by both parties.

                                      * * *

                                       2.
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      IN WITNESS WHEREOF, the parties have executed this Agreement (counterparts
permitted) as of the date first above written.

CONSULTANT                                PMR CORPORATION,
                                          a Delaware corporation

/s/ Mark P. Clein                         By: /s/ Fred D. Furman
------------------------------------         -----------------------------------
Mark P. Clein                                     Name:
                                          Title: President and General Counsel
------------------------------------            --------------------------------

------------------------------------
(Address)

                                       3.
<PAGE>
                                    EXHIBIT A

                                OPTION AGREEMENTS

Option Agreement evidencing option to purchase 150,000 shares of Common Stock
dated August 25, 1999.

Option Agreement evidencing option to purchase 100,000 shares of Common Stock
dated December 3, 1998.

Amended and Restated Stock Option Agreement evidencing option to purchase 75,000
shares of Common Stock dated February 1, 1996.

Amended and Restated Stock Option Agreement evidencing option to purchase
125,000 shares of Common Stock dated February 1, 1996.

                                       4.<PAGE>
                                                                    EXHIBIT 10.7

                              EMPLOYMENT AGREEMENT

                                 BY AND BETWEEN

                                PMR CORPORATION

                                      AND

                                  FRED FURMAN

<PAGE>
                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                    PAGE
<C>  <S>                                                             <C>
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...............................................10
21.  Trade Secrets Of Others.........................................11
22.  Advertising waiver..............................................11
</TABLE>

                                       i.

<PAGE>
                              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 FRED FURMAN
("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 President and General Counsel 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 President and General Counsel,
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

<PAGE>
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 he 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
his full business energies, interest, abilities and productive time to the
proper and efficient performance of his 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
Ninety-Three Thousand Dollars ($193,000.00) 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.
<PAGE>
     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 his 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.

<PAGE>
     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 his 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 his 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) Periodic payments equal to either:

                              (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, he shall receive (a) continuation of his
annual Base Salary in effect at the time of termination for a period of twelve
(12) months after the termination date, and (b) a Bonus Payment at the end of
the twelve (12) month period in which Executive receives his Base Salary, all
of which shall be subject to standard deductions and withholdings; and

                              (2)  In the event Executive has been continuously
employed with the Company for greater than five (5) years at the time of
termination, he shall receive (a) continuation of his Base Salary in effect at
the time of termination for a period of

                                       4.
<PAGE>

twenty-four (24) months after the termination date, and (b) a Bonus Payment at
the end of each twelve (12) month period in which Executive receives his 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), he
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 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

                                       5.

<PAGE>

               (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 was 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 his 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 his 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
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

                                       6.

<PAGE>
Ninety-Three Thousand Dollars ($193,000.00). 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 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 benefits from the Company in
the same amount and on the same terms as he would be entitled to hereunder if
he terminated his employment for Good Reason.

                                       7.

<PAGE>
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 his 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:

                              FRED FURMAN

                              3858 Modena Pl.
                              --------------------------
                              San Diego, CA 92130
                              --------------------------

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.

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.

                                       8.
<PAGE>
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, his 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.

16.  REPRESENTATIONS AND WARRANTIES.

     16.1 Executive represents and warrants that he 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 his execution
and performance of this Agreement will not violate or breach any other
agreements between Executive and any other person or entity.

                                       9.
<PAGE>
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 ____ and irrevocably agree to arbitrate any dispute
identified above.

/s/ FF (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, 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

                                       10.
<PAGE>
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/ Mark Clein
                                               ---------------------------------

                                          Its: CEO
                                               ---------------------------------

Dated: August 25, 1999                         /s/ Fred Furman
                                               ---------------------------------
                                               FRED FURMAN

                                       11.
<PAGE>
                                   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, FRED FURMAN, 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 his
favor at the time of executing the release, which if known by him must have
materially affected his 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:
     ---------------------  ---------------------------------------------------
                            FRED FURMAN

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