SUBLEASE BETWEEN CMS DEVELOPMENT AND MANAGEMENT COMPANY, INC. as Sublandlord AND PMR CORPORATION as Subtenant

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EXHIBIT 10.13

SUBLEASE

BETWEEN

CMS DEVELOPMENT AND MANAGEMENT COMPANY, INC.
as Sublandlord

AND

PMR CORPORATION
as Subtenant

TABLE OF CONTENTS
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ARTICLE 1 DESCRIPTION OF LEASED SPACE, PRIME LEASE................................ 1
1.1 Demise of Leased Space.................................................. 1
1.2 Prime Lease............................................................. 1
1.3. Protection of Prime Lease............................................... 2
1.4 Sublandlord's Prime Lease Obligations................................... 2

ARTICLE 2 TERM.................................................................... 2
2.1 Commencement and Expiration............................................. 2

ARTICLE 3 RENT.................................................................... 2
3.1 Monthly Base Rent....................................................... 2
3.2 Annual Increase in Rent................................................. 3
3.3 Late Charge............................................................. 3

ARTICLE 4 - USE; LIMITATIONS........................................................ 3
4.1 Uses.................................................................... 3
4.2 Regulations and CC&R's.................................................. 4

ARTICLE 5 - CONSTRUCTION OF INITIAL IMPROVEMENTS.................................... 4
5.1 Improvement Work........................................................ 4

ARTICLE 6 - ALTERATIONS AND ADDITIONS............................................... 4
6.1 Alterations............................................................. 4
6.2 Removal of Improvements................................................. 4

ARTICLE 7 - UTILITIES AND SERVICES.................................................. 5
7.1 Utilities and Services.................................................. 5

ARTICLE 8 - INDEMNIFICATION......................................................... 5
8.1 Indemnity and Defense................................................... 5
8.2 Exculpation............................................................. 6

ARTICLE 9 - INSURANCE............................................................... 6

ARTICLE 10 - CARE OF LEASED SPACE.................................................... 7
10.1 Subtenant's Obligation.................................................. 7

ARTICLE 11 - PAYMENT OF OPERATING COSTS, PROPERTY - TAXES
AND UTILITY CHARGES..................................................... 8
11.1 Costs, Taxes, and Utility Charges....................................... 8
11.2 Payment .......................................................... 8
11.3 Subtenant's Proportionate Share......................................... 8

ARTICLE 12 - BROKERAGE COMMISSIONS................................................... 9
12.1 Representations......................................................... 9
12.2 Payment................................................................. 9

ARTICLE 13 - RIGHTS RESERVED BY SUBLANDLORD.......................................... 9
13.1 Reserved Rights......................................................... 9

ARTICLE 14 - ASSIGNMENT AND SUBLETTING............................................... 9
14.1 Assignment.............................................................. 9
14.2 Subleasing.............................................................. 10

ARTICLE 15 - QUIET ENJOYMENT......................................................... 10
15.1 Quiet Enjoyment......................................................... 10

ARTICLE 16 - DEFAULT................................................................. 10
16.1 Subtenant's Default..................................................... 10
16.2 Remedies................................................................ 11
16.3 Damages................................................................. 11
16.4 Worth at Time of Award.................................................. 11
16.5 Waiver.................................................................. 12
16.6 Curing Subtenant's Default.............................................. 12

ARTICLE 17 - ATTORNEYS' FEES......................................................... 12

ARTICLE 18 - DESTRUCTION OR DAMAGE................................................... 12

ARTICLE 19 - CONDEMNATION............................................................ 13

ARTICLE 20 - ASSIGNMENT OF PRIME LEASE............................................... 13

ARTICLE 21 - STATEMENT OF STATUS (ESTOPPEL).......................................... 13
21.1 Certificate............................................................. 13
21.2 Estoppel................................................................ 14

ARTICLE 22 - PARKING................................................................. 14
22.1 Parking Rights.......................................................... 14

ARTICLE 23 - SECURITY DEPOSIT........................................................ 14
23.1 Security Deposit........................................................ 14

ARTICLE 24 - CERTAIN ALLOWANCES...................................................... 14
24.1 Moving Allowance........................................................ 14
24.2 Termination Fee Allowance............................................... 15

ARTICLE 25 - GENERAL PROVISIONS...................................................... 15
25.1 Successors.............................................................. 15
25.2 Entire Agreement........................................................ 15
25.3 Terms and Headings...................................................... 15
25.4 Light/Air............................................................... 15
25.5 Time ................................................................... 16
25.6 Examination............................................................. 16
25.7 No Recording............................................................ 16
25.8 Governing Law........................................................... 16
25.9 Provisions Severable.................................................... 16
25.10 Notices................................................................. 16
25.11 Waiver of Jury Trial.................................................... 17

SUBLEASE

THIS SUBLEASE (the "Sublease") is made this 1st day of April,
1997 between CMS DEVELOPMENT AND MANAGEMENT COMPANY, INC., a Delaware
corporation ("Sublandlord") and PMR CORPORATION, a Delaware corporation
("Subtenant").

BACKGROUND

A. Pursuant to a Master Lease dated July 10, 1996 (the "Prime Lease"),
Sublandlord leases from an affiliate of Lennar Partners, successor in interest
to Xxxxxx XxXxxxxx Village Hillcrest 2, L.P. (the "Prime Landlord") the fifth
floor (the "Fifth Floor") in the medical building located at 000 Xxxxxxxxxx
Xxxxxx, Xxx Xxxxx, Xxxxxxxxxx (the "Building"). The Building is part of a larger
"mixed use" condominium project known as the Village Hillcrest (the "Project"),
which includes a rehabilitation hospital, medical offices, retail uses, a
multi-screen movie theater, offices and a multi-level subterranean parking
structure. Capitalized terms used herein without definition shall have the same
meanings ascribed to those terms in the Prime Lease.

B. Subtenant desires to lease the Fifth Floor for use as executive and
administrative offices for Subtenant. Sublandlord is willing to sublease the
Fifth Floor to Subtenant on the terms and conditions hereinafter set forth.

ARTICLE 1
DESCRIPTION OF LEASED SPACE, PRIME LEASE

1.1 Demise of Leased Space. Sublandlord hereby leases to Subtenant
and Subtenant hereby hires from Sublandlord, pursuant to the terms, covenants,
conditions and uses herein set forth, the Fifth Floor, consisting of
approximately 20,717 square feet of space (the "Leased Space"), outlined in
black on the floor plan attached hereto as Exhibit "A".

1.2 Prime Lease. The Prime Lease is incorporated herein by this
reference. Subtenant acknowledges receipt of a copy of the Prime Lease, and
agrees that Subtenant's rights with respect to the use and occupancy of the
Leased Space are in all respects subject to the terms, conditions and
limitations of the Prime Lease. Subtenant shall be responsible for all
obligations of Sublandlord under the Prime Lease relating to the use and
occupancy of the Leased Space, provided that the Monthly Base

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Rent payable by Subtenant shall be as provided in Article 3 of this Sublease.

1.3. Protection of Prime Lease. Subtenant shall not do or cause to
be done or suffer or permit any act or thing which would constitute a default
under the Prime Lease or cause the Prime Lease or the rights of Sublandlord as
lessee thereunder to be terminated or which would cause Sublandlord to become
liable for any damages, costs, claims or penalties or would increase the rent or
other charges or obligations of Sublandlord as lessee under the Prime Lease, or
would adversely affect or reduce any of Sublandlord's rights or benefits under
the Prime Lease.

1.4 Sublandlord's Prime Lease Obligations. Sublandlord agrees that
it shall pay all amounts due and perform all obligations required of it under
the Prime Lease in a timely manner. Sublandlord agrees that it shall not amend,
modify, terminate or otherwise change the Prime Lease in any manner which
affects Subtenant or this Sublease without first obtaining the approval of
Subtenant, which approval shall not be unreasonably withheld.

ARTICLE 2
TERM

2.1 Commencement and Expiration. The term of this Sublease shall be
for a term (the "Term") commencing on the earlier of (i) substantial completion
of Sublandlord's Improvement Work to the Leased Space as provided in Article 5
and Exhibit B hereto or (ii) Subtenant's occupancy of all or any substantial
portion of the Leased Space ("Commencement Date"), and expiring, subject to
earlier termination as provided elsewhere in this Sublease, on April 3, 2002.
Under no circumstances shall the Term extend beyond the expiration, surrender or
termination of the Prime Lease, whether the Prime Lease expires by its own
terms, is terminated due to default or for any other reason. Provided that this
Sublease is not terminated due to Subtenant's default hereunder, Sublandlord
shall not attempt to extend the Prime Lease or otherwise compete with Subtenant
for occupancy of the Leased Space or any part thereof upon the expiration of the
Term.

ARTICLE 3
RENT

3.1 Monthly Base Rent. Subtenant agrees to pay to Sublandlord,
without prior notice or demand, in advance, on the first (1st) day of each and
every calendar month during the Term,

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and Sublandlord shall accept, monthly base rent ("Monthly Base Rent") as
follows: for the period beginning on the Commencement Date and expiring on the
day preceding the nine (9) month anniversary of the Commencement Date, the
Monthly Base Rent shall be Sixteen Thousand Five Hundred Ninety Dollars
($16,590) per month; for the period from and after the nine (9) month
anniversary of the Commencement Date the Monthly Base Rent shall be Twenty One
Thousand Seven Hundred Fifty Two Dollars ($21,752.85) per month, subject to
annual increase as set forth in Section 3.2. Notwithstanding the foregoing, the
Monthly Base Rent for the first full month of the Term shall be paid by Tenant
upon the execution of this Sublease. If the Term shall commence or end on a day
other than the first day of a month, the Monthly Base Rent for said first and
last partial month shall be prorated on a per diem basis, and the Monthly Base
Rent for the month in which the nine month anniversary of the Commencement Date
falls shall be adjusted on a per diem basis to reflect the adjustment in Monthly
Base Rent as of such anniversary as provided above.

3.2 Annual Increase in Rent. On the one year anniversary of the
Commencement Date (or, if the Commencement Date is other than the first day of a
calendar month, the one year anniversary of the first day of the first calendar
month following the Commencement Date), and on each annual anniversary of such
date during the term of this Agreement (each, an "Anniversary Date"), the
Monthly Base Rent then payable under this Sublease shall be increased by a fixed
four percent (4%) of the Monthly Base Rent in effect immediately preceding such
Anniversary Date.

3.3 Late Charge. In the event that any payment of Monthly Base Rent
or any other sum payable by Subtenant to Sublandlord hereunder (all of which
sums shall be collectable as additional rent hereunder) is not paid within ten
(10) days after its due date, Subtenant agrees (i) that liquidated damages for
the late payment of such rent in the amount of six percent (6%) of such rent
shall be and become due to Sublandlord on the eleventh day after such payment is
due and (ii) to pay such liquidated damages to Sublandlord upon demand.
Subtenant agrees that the foregoing liquidated damages are reasonable under the
circumstances existing at the time this Sublease is executed, and understands
that the foregoing liquidated damages represent compensation to Sublandlord for
damages incurred by reason of Subtenant's failure to make payment of rent within
ten (10) days after the date when due.

ARTICLE 4
USE; LIMITATIONS

4.1 Uses. The Leased Space may be used only for executive and
administrative offices for a health care company or any other use permitted
under the Prime Lease. Any other use of

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the Leased Space shall require Sublandlord's consent, which may be granted or
withheld in its sole discretion.

4.2 Regulations and CC&R's. In addition to the Prime Lease, this
Sublease and the interest of all parties hereto shall be subject to any and all
Rules and Regulations promulgated from time to time by the Prime Landlord as
well as the Master Declaration and the Hospital/Medical Declaration
(collectively, the "CC&R's") and to all of the covenants, conditions,
restrictions, reservations, easements, liens and provisions therein contained,
and Subtenant, by acceptance of this Sublease, hereby covenants and agrees to
comply with the provisions of such Rules and Regulations and the CC&R's in its
use and occupation of the Leased Space. Subtenant acknowledges that this
Sublease shall be subordinate to the CC&R's and any amendments or modifications
thereof.

ARTICLE 5
CONSTRUCTION OF INITIAL IMPROVEMENTS

5.1 Improvement Work. Sublandlord shall construct initial
improvements to the Leased Space in accordance with the Improvement Work Letter
Agreement attached hereto as Exhibit B.

ARTICLE 6
ALTERATIONS AND ADDITIONS

6.1 Alterations. Subtenant shall not make any structural
alterations, improvements or additions to the Leased Space without obtaining the
prior written consent of Sublandlord, which consent shall not be unreasonably
withheld or delayed. Sublandlord's consent shall be conditioned upon Subtenant's
removing any such additions, alterations, or improvements upon the expiration or
termination of this Sublease and restoring the Leased Space to the same
condition as on the date Subtenant took possession, provided that Sublandlord
shall not require such removal if the Prime Landlord does not require such
removal. All work performed by Subtenant pursuant to this Article shall be
subject to the requirements of the Prime Lease, including but not limited to the
obligation to post notices of non-responsibility and provide lien and completion
bonds in certain circumstances as provided in Article 6 of the Prime Lease.

6.2 Removal of Improvements. Unless their removal is required by the
Prime Landlord under the Prime Lease, all additions, alterations, and
improvements made to the Leased Space by or on behalf of Subtenant shall become
the property of Sublandlord and be surrendered with the Leased Space upon the
expiration

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or termination of this Sublease, provided that Subtenant's personal property and
trade fixtures that can be removed without material damage to the Leased Space
shall remain the property of Subtenant and may be removed. Subtenant shall
promptly repair any damage to the Leased Space or to the Building resulting from
such removal.

ARTICLE 7
UTILITIES AND SERVICES

7.1 Utilities and Services. Sublandlord shall not be obligated to
provide any utilities or services to Subtenant, it being understood that
Subtenant shall be entitled to receive directly from the Prime Landlord the
utilities and services to be provided by the Prime Landlord to the Leased Space
under the Prime Lease. If Prime Landlord shall default or delay in providing or
performing any utility, service, repair, restoration or other obligation under
the Prime Lease as such items pertain to the Leased Space, Sublandlord's only
obligations to Subtenant on account thereof shall be (i) to permit Subtenant, at
its expense, to prosecute an action against Prime Landlord for damages or
specific performance for Subtenant's benefit, and (ii) to make a good faith
effort, and to reasonably cooperate with Subtenant (at Subtenant's expense) in
attempting, to cause Prime Landlord to provide or perform such service or
obligation. Any condition resulting from such default or delay by Prime Landlord
shall not constitute an eviction, actual or constructive, of Subtenant. No such
default or delay shall excuse Subtenant from the payment of rent or performance
or observance of any of its other obligations hereunder.

ARTICLE 8
INDEMNIFICATION

8.1 Indemnity and Defense. Subtenant agrees to indemnify Sublandlord
and to hold Sublandlord free and harmless from and against any and all
liabilities, costs, expenses, damages, claims, and losses of every kind and
nature whatsoever arising out of or related to: (a) Subtenant's use and
occupancy of the Leased Space, or any work, activity, or other thing done in,
on, or about the Leased Space by Subtenant or anyone claiming under Subtenant;
or (b) any breach or default by Subtenant under this Sublease or of any
obligations of Subtenant imposed by law; or (c) any negligent or otherwise
tortious act or omission of Subtenant, its agents, employees, invitees, or
contractors. The foregoing indemnity includes, but is not limited to, injuries,
death, and property damage suffered by Subtenant's employees except to the
extent caused by the active (as opposed to passive)

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negligence or willful acts of Sublandlord, its agents or employees. Subtenant
shall, at Subtenant's sole cost and expense, and by legal counsel reasonably
satisfactory to Sublandlord, defend Sublandlord in any action or proceeding
arising from any such matter and shall indemnify Sublandlord and hold
Sublandlord free and harmless from and against all costs, attorneys' fees,
expert witness fees, and any other expenses incurred in such action or
proceeding. As a material part of the consideration for Sublandlord's execution
of this Sublease, Subtenant hereby assumes all risk of damage or injury to any
person or property in, on, or about any part of the Leased Space in the physical
possession of Subtenant or anyone claiming under Subtenant, from any cause,
except to the extent of the active negligence or willful acts of Sublandlord and
Sublandlord's agents and employees.

Sublandlord agrees to indemnify Subtenant and to hold Subtenant free
and harmless from and against any and all liabilities, costs, expenses, damages,
claims and losses of every kind and nature whatsoever arising out of or related
to any breach or default by Sublandlord under this Sublease or any injury, death
or property damage resulting from the active (as opposed to passive) negligence
or willful misconduct of Sublandlord, its agents or employees.

8.2 Exculpation. Sublandlord shall not be liable for injury or
damage that may be sustained by the person or property of the Subtenant, its
employees, invitees, or customers, or any other person in or about the Leased
Space, caused by or resulting from fire, steam, electricity, gas, water, or rain
or from the breakage, leakage, obstruction, or other defects of pipes,
sprinklers, wires, appliances, plumbing, air conditioning, or lighting fixtures,
whether such damage or injury results from conditions arising upon the Leased
Space or upon other portions of the Building or from other sources, except to
the extent such damage or injury results from the active (as opposed to passive)
negligence or willful acts of Sublandlord. Sublandlord shall not be liable for
any damages arising from any act or omission of Prime Landlord or any other
occupant of the Tower, Building or Project.

ARTICLE 9
INSURANCE

9.1 Subtenant shall maintain at its own cost and expense (i)
insurance against fire and such other perils as may be included in a standard
fire and special extended coverage insurance form on all of Subtenant's property
located in the Leased Space in an amount adequate to cover at least ninety
percent (90%) of their replacement cost; and (ii) commercial general liability
insurance on an occurrence basis with limits of liabil-

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ity in an amount not less than $1,000,000 combined single limit for each
occurrence with respect to loss of life, bodily or personal injury and damage to
property by water or otherwise. All such insurance shall be issued by insurers
approved by Sublandlord, shall provide for a deductible not greater than
$10,000.00 from any loss payable, shall contain appropriate endorsements denying
Subtenant's insurers the right of subrogation against Sublandlord and all
parties to, or bound by, the CC&R's, and shall contain a provision whereby each
insurer agrees not to cancel such insurance without 30 days prior written notice
to Sublandlord. With respect only to the general liability insurance,
Sublandlord and the Prime Landlord shall be named as an additional insured. On
or before the Commencement Date, Subtenant shall furnish Sublandlord with
certificates evidencing the aforesaid insurance coverage, and renewal
certificates shall be furnished to Sublandlord at least ten (10) days prior to
the expiration date of such insurance.

9.2 Sublandlord shall maintain at its own cost and expense
commercial general liability insurance on an occurrence basis with limits of
liability in an amount not less than $1,000,000 combined single limit for each
occurrence with respect to loss of life, bodily or personal injury and damage to
property. The liability insurance maintained by Sublandlord shall be secondary
to the liability insurance maintained by Subtenant with respect to occurrences
in, on or about the Leased Premises. Upon Subtenant's request, but not more
frequently than once per year, Sublandlord shall provide Subtenant a certificate
of insurance evidencing this insurance coverage.

ARTICLE 10
CARE OF LEASED SPACE

10.1 Subtenant's Obligation. Except for the obligations of Prime
Landlord under Article 7 and Section 10.2 of the Prime Lease, and except for the
provisions of Article 18, Subtenant shall keep the Leased Space in good
condition and repair, including replacements as needed, and shall not commit or
permit any waste upon the Leased Space. If Subtenant fails to keep the Leased
Space in reasonable repair, Sublandlord may at Sublandlord's option, after
reasonable prior written notice to Subtenant, enter the Leased Space in order to
keep the Leased Space in good condition and repair, and Subtenant shall
immediately pay to Sublandlord the cost thereof.

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ARTICLE 11
PAYMENT OF OPERATING COSTS, PROPERTY
TAXES AND UTILITY CHARGES

11.1 Costs, Taxes, and Utility Charges. Subtenant agrees to pay to
Sublandlord, as additional rent under this Sublease, and at the times and in the
manner provided in this Article 11, (i) Subtenant's Proportionate Share (as
defined below) of the amounts by which Operating Costs and Property Taxes (as
defined in the Prime Lease) for any calendar year exceed $218,265.00 (the
"Expense Stop") and (ii) Subtenant's Proportionate Share of the cost of all
Utilities (as defined in the Prime Lease). Subtenant's Proportionate Share of
said amounts is hereinafter called "Subtenant's Share of Costs, Taxes, and
Utilities."

11.2 Payment. If Prime Landlord bills Subtenant directly for
Subtenant's Share of Costs, Taxes and Utilities, Subtenant shall pay the amount
so billed directly to Prime Landlord as and when due. Otherwise, Subtenant's
Share of Costs, Taxes, and Utilities for any calendar year shall be due and
payable to Sublandlord no later than twenty (20) days after Sublandlord delivers
to Subtenant, after the calendar year has ended, a copy of the statement of
Costs, Taxes and Utilities provided by Prime Landlord to Sublandlord. If
pursuant to the Prime Lease Sublandlord is required to pay estimated monthly
installments on account thereof, Subtenant shall upon demand pay to Sublandlord
estimated monthly installments of Subtenant's Share of Costs, Taxes and
Utilities. If the monthly installments paid by Subtenant on account of Costs,
Taxes and Utilities for any year is more or less than the actual Subtenant's
Share of such costs for such year, Subtenant shall pay the amount due or receive
a credit as provided in Section 11.2 of the Prime Lease.

If the Commencement Date is other than January 1, Subtenant's Share
of Costs, Taxes, and Utilities for the calendar year in which the Commencement
Date occurs shall be multiplied by a fraction, the numerator of which shall be
the number of days from the Commencement Date to the following December 31 and
the denominator of which shall be 365 and Subtenant's Share of Costs, Taxes, and
Utilities for the calendar year in which the Term expires shall be multiplied by
a fraction, the numerator of which shall be the number of days in the calendar
year to the expiration date and the denominator of which shall be 365.

11.3 Subtenant's Proportionate Share. "Subtenant's Proportionate
Share" shall mean, with respect to Costs and Taxes, 100% of the total such costs
allocated to the Fifth Floor. With respect to Utilities that are charged to
tenants in the Tower without regard to occupancy or usage, Subtenant's
Proportionate

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Share shall be 100% of the total such costs allocated to the Fifth Floor;
otherwise Subtenant's Proportionate Share with respect to Utilities shall mean
the percentage obtained by dividing the rentable area of the Leased Space by the
total occupied area of the Fifth Floor.

ARTICLE 12
BROKERAGE COMMISSIONS

12.1 Representations. Sublandlord and Subtenant each represent and
warrant to the other that it has not dealt with any broker or agent other than
Xxxxxxx Xxxxx Hampton (San Diego), Inc. (the "Broker"). Subtenant and
Sublandlord agree to indemnify and hold the other harmless for, from and against
any claims for brokerage commissions with respect to this Sublease made by any
broker or agent other than the Broker with whom, as applicable, Subtenant or
Sublandlord may have dealt with respect to this Sublease. The foregoing
indemnification shall include the reasonable attorneys' fees of the party being
indemnified.

12.2 Payment. Sublandlord shall pay the Broker a commission for its
services in connection with this Sublease in accordance with the terms of a
separate agreement between Sublandlord and the Broker.

ARTICLE 13
RIGHTS RESERVED BY SUBLANDLORD

13.1 Reserved Rights. In addition to the rights reserved by Prime
Landlord pursuant to Section 13.1 of the Prime Lease, Sublandlord shall have the
right to enter upon the Leased Space at reasonable times and with reasonable
notice for the purposes of making inspections and for access to any pipe or
utility chases or similar areas accessible from the Leased Space.

ARTICLE 14
ASSIGNMENT AND SUBLETTING

14.1 Assignment. Subtenant shall not assign this Sublease without
Sublandlord's prior written consent, which consent shall not be unreasonably
withheld so long as the financial condition of the proposed assignee is
acceptable to Sublandlord. No assignment shall relieve Subtenant of its
obligations hereunder.

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14.2 Subleasing. Subtenant shall not sublease the Leased Space or
any portion thereof without the prior written consent of Sublandlord, which
consent shall not be unreasonably withheld so long as the financial condition of
the proposed sublessee is acceptable to Sublandlord. No sublease shall release
Subtenant from responsibility for performance of the terms, covenants and
conditions of this Sublease with respect to the space covered by any sublease.

ARTICLE 15
QUIET ENJOYMENT

15.1 Ouiet Enjoyment. Subtenant, provided no default exists
hereunder and is continuing, shall have quiet and peaceable enjoyment of the
Leased Space throughout the Term without hindrance or molestation by Sublandlord
or by anyone claiming by, through or under Sublandlord.

ARTICLE 16
DEFAULT

16.1 Subtenant's Default. The occurrence of any one or more of the
following events shall constitute a default and breach of this Sublease by
Subtenant: (a) if Subtenant fails to pay any Rent or any other charges required
to be paid by Subtenant under this Sublease when due and payable for a period
of five (5) days after written notice thereof is received by Subtenant
specifying such failure, provided that Subtenant shall not be entitled to such
notice and grace period more than two times in any consecutive twelve (12) month
period; or (b) if Subtenant fails to perform promptly and fully any other
covenant, condition, or agreement contained in this Sublease and such failure
continues for twenty (20) days after receipt of written notice thereof from
Sublandlord to Subtenant or such longer time as is reasonably required by
Subtenant to cure; or (c) if Subtenant makes a general assignment for the
benefit of creditors or provides for an arrangement, composition, extension, or
adjustment with its creditors; or (d) if Subtenant files a voluntary petition
for relief, or if a petition against Subtenant in a proceeding under the federal
bankruptcy laws or other insolvency laws is filed and not withdrawn or dismissed
within ninety (90) days thereafter, or if under the provisions of any law
providing for reorganization or winding up of corporations any court of
competent jurisdiction assumes jurisdiction, custody, or control of Subtenant or
any substantial part of its property and such jurisdiction, custody, or control
remains in force unrelinquished, unstayed, or unterminated for a period of
ninety (90) days; or (e) if, in any proceeding or action in which Subtenant

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is a party, a trustee, receiver, agent, or custodian is appointed to take charge
of the Leased Space or any of Subtenant's property (or has the authority to do
so) for the purpose of enforcing a lien against the Leased Space or Subtenant's
property.

16.2 Remedies. In the event of Subtenant's default hereunder, then
in addition to all other rights or remedies available to Sublandlord,
Sublandlord shall have the right, at Sublandlord's option, without further
notice or demand of any kind, to the following: (a) terminate this Sublease and
Subtenant's right to possession of the Leased Space and reenter the Leased Space
and take possession thereof, and Subtenant shall have no further claim to the
Leased Space under this Sublease; or (b) continue this Sublease in effect and
collect Rent or other charges that have or thereafter become due and payable; or
(c) elect the remedy set forth in subpart (b) of this Section 16.2, and
thereafter elect to terminate this Sublease and Subtenant's right to possession
of the Leased Space under subpart (a) of this Section 16.2.

16.3 Damages. Should Sublandlord elect to terminate this Sublease
under the provisions of Section 16.2, Sublandlord may recover as damages from
Subtenant the following: (a) the worth at the time of the award of any unpaid
Rent which had been earned at the time of termination; plus (b) the worth at the
time of the award of the amount by which the unpaid Rent which would have been
earned after termination until the time of award exceeds the amount of such
rental loss that Subtenant proves could have been reasonably avoided; plus (c)
the worth at the time of the award of the amount by which the unpaid Rent for
the balance of the Term after the time of the award exceeds the amount of the
rental loss that Subtenant proves could be reasonably avoided; plus (d) any
other actual and reasonable amount necessary to compensate Sublandlord for all
detriment proximately caused by Subtenant's failure to perform its obligations
under this Sublease or that in the ordinary course of things would be likely to
result therefrom, limited to any costs or expenses (including attorneys, fees)
incurred by Sublandlord in (i) retaking possession of the Leased Space, (ii)
maintaining the Leased Space after Subtenant's default, (iii) preparing the
Leased Space for reletting to a new Subtenant, including any repairs or
alterations, and (iv) reletting the Leased Space, including brokers,
commissions. The term "Rent," as used in this Sublease, includes the Monthly
Base Rent plus all additional rent under this Sublease and all other sums
becoming due that are the equivalent of rent.

16.4 Worth at Time of Award. "The worth at the time of the award,"
as that phrase is used in Section 16.3(a) and (b), is to be computed by allowing
interest at the maximum rate allowed by law at the time of the award. "The worth
at the time of the award" as that phrase is used in Section 16.3(c), is to be

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computed by discounting the amount at the discount rate of the Federal Reserve
Bank at the time of the award plus one percent (l%).

16.5 Waiver. Waiver by Sublandlord of any breach of any term,
covenant, or condition of this Sublease shall not be deemed a waiver of such
term, covenant, or condition. Acceptance of Rent by Sublandlord subsequent to
any breach hereof shall not be deemed a waiver of any preceding breach other
than the failure to pay the particular Rent so accepted, regardless of
Sublandlord's knowledge of any breach at the time of such acceptance of Rent.
Sublandlord shall not be deemed to have waived any term, covenant, or condition
unless Sublandlord gives Subtenant written notice of such waiver.

16.6 Curing Subtenant's Default. If Subtenant defaults in the
performance of any of its obligations under this Sublease, then, after prior
written notice to Subtenant of its intention to do so, Sublandlord may, but
shall not be obligated to, and without waiving such default, perform the same
for the account and at the expense of Subtenant. Subtenant shall pay Sublandlord
all costs of such performance promptly upon receipt of a xxxx therefor.

ARTICLE 17
ATTORNEYS' FEES

17.1 In the event that either party to this Sublease commences any
action or proceeding against the other by reason of any default or alleged
default of any term or condition of this Sublease, or for interpretation of this
Sublease, the prevailing party in such action or proceeding will be entitled to
recover such amount as the court may judge to be reasonable attorneys, fees. The
court shall determine the prevailing party.

ARTICLE 18
DESTRUCTION OR DAMAGE

18.1 If the Building or any portion thereof, including the Leased
Space, is damaged or destroyed by fire or other casualty, the provisions of
Article 18 of the Prime Lease shall apply. Anything contained in this Sublease
to the contrary notwithstanding, Sublandlord may, in its sole discretion,
exercise any option available to Sublandlord under the Prime Lease to terminate
the Prime Lease in the event of fire or other casualty.

18.2 If the Leased Space is partially damaged or destroyed by fire
or other casualty, the Monthly Base Rent shall

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equitably xxxxx, to the extent that the Leased Space is rendered untenantable,
for the period from the date of such damage or destruction to the date the
damage is repaired or restored, but only to the extent that the monthly base
rent payable by Sublandlord under the Prime Lease and allocable to the Leased
Space is similarly abated. Thus, for example, if one third of the monthly base
rent under the Prime Lease allocable to the Leased Space is abated, one third of
the Monthly Base Rent payable hereunder shall be abated for the same period.

ARTICLE 19
CONDEMNATION

19.1 If the Leased Space is condemned and taken by any authority,
the provisions of Article 19 of the Prime Lease shall apply.

ARTICLE 20
ASSIGNMENT OF PRIME LEASE

20.1 Sublandlord may assign, in whole or in part, Sublandlord's
interest in this Sublease and may assign all of its interest under the Prime
Lease. In the event of any assignment by Sublandlord of the Prime Lease and this
Sublease, Sublandlord shall be, and is hereby entirely free and relieved of, all
liability under any and all covenants and obligations contained in or derived
from this Sublease or arising out of any act, occurrence or omission relating to
the Leased Space which occurs after the consummation of such sale, exchange, or
assignment, except for obligations, if any, owing at the time of such sale,
exchange or assignment.

ARTICLE 21
STATEMENT OF STATUS (ESTOPPEL)

21.1 Certificate. Within ten (10) days after written request from
one party to the other, the party so requested shall execute and deliver to the
other or its named designee a written statement certifying that (a) this
Sublease is unmodified and in full force and effect or is in full force and
effect as modified and stating the modifications; (b) the amount of the Monthly
Base Rent and the date to which Monthly Base Rent and additional rent have been
paid in advance; (c) the amount of any security deposited with Sublandlord; and
(d) that Sublandlord or Subtenant, as the case may be, is not in default
hereunder or, if either is

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claimed to be in default, setting forth the nature of any claimed default.

21.2 Estoppel. Any such statement described in Section 22.1 may be
relied upon by a purchaser, assignee, or lender.

ARTICLE 22
PARKING

22.1 Parking Rights. Tenant shall have the right, pursuant to
Article 23 of the Prime Lease and any applicable rules and regulations adopted
by Prime Landlord, to park automobiles in the Parking Structure. Subtenant must
make arrangements for such parking, and pay all required fees directly to, Prime
Landlord.

ARTICLE 23
SECURITY DEPOSIT

23.1 Security Deposit. Upon the execution of this Sublease Subtenant
shall deposit with Sublandlord the sum of Forty Three Thousand Five Hundred Six
Dollars ($43,506.00) (the "Security Deposit") to be held as collateral security
for the payment of Base Rent and all other sums of money payable by Subtenant
under this Sublease, and for the faithful performance of all other covenants and
agreements of Subtenant under this Sublease. The Security Deposit, without
interest, shall be repaid to Subtenant within thirty (30) days after the
expiration or sooner termination of this Sublease, provided Subtenant shall have
made all such payments and performed all such covenants and agreements. Upon any
default by Subtenant hereunder, at Sublandlord's sole option, Sublandlord may
apply all or part of the Security Deposit on account of such default, and
thereafter Subtenant shall promptly restore the original amount of the Security
Deposit.

ARTICLE 24
CERTAIN ALLOWANCES

24.1 Moving Allowance. In consideration for the faithful performance
by Subtenant of all of its obligations under this Sublease, Sublandlord shall
pay Subtenant a moving allowance in the amount of $16,590.00 to reimburse
Subtenant for third party costs incurred in connection with the relocation of
its

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offices to the Leased Space. Sublandlord shall pay this moving allowance to
Subtenant within thirty (30) days after Subtenant takes possession of the Leased
Space and commences payment of Monthly Base Rent.

24.2 Termination Fee Allowance. In consideration for the faithful
performance by Subtenant of all of its obligations under this Sublease,
Sublandlord shall pay Subtenant a termination fee allowance in the amount of
$50,000 to reimburse Subtenant for the termination fee payable by Subtenant to
its existing landlord to terminate its existing lease and other costs to be
incurred by Subtenant. Sublandlord shall pay this termination fee allowance
within thirty (30) days after Subtenant takes possession of the Leased Space and
commences the payment of Monthly Base Rent.

ARTICLE 25
GENERAL PROVISIONS

25.1 Successors. The terms and conditions herein contained shall,
subject to the provisions as to assignment, apply to and bind the heirs,
successors, executors, administrators, and assigns of the parties hereto.

25.2 Entire Agreement. This Sublease together with the Exhibits
attached hereto contains the entire agreement between the parties and shall not
be modified in any manner except by an instrument in writing executed by the
parties or their respective successors in interest. All such Exhibits are
incorporated into and made a part of this Sublease.

25.3 Terms and Headings. The words "Sublandlord" and "Subtenant" as
used herein shall include the plural as well as the singular. Words used in any
gender include other genders. If there be more than one Subtenant the
obligations hereunder imposed upon Subtenant shall be joint and several.
Introductory headings at the beginning of each numbered Article and Section of
this Sublease are solely for the convenience of the parties and should not be
deemed to be a limitation upon or description of the contents of any such
paragraph.

25.4 Light/Air. No rights to light or air over any property whether
belonging to Sublandlord or to any other person, are granted to Subtenant by
this Sublease.

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25.5 Time. Time is of the essence of this Sublease with the
exception of Sublandlord's delivery of possession hereunder.

25.6 Examination. Submission of this instrument for examination or
signature by Subtenant does not constitute a reservation of or option for lease,
and it is not effective as a lease or otherwise until execution by and delivery
to both Sublandlord and Subtenant.

25.7 No Recording. Subtenant shall not record this Sublease without
the prior consent of Sublandlord.

25.8 Governing Law. This Sublease shall be governed by and construed
in accordance with the laws of the State of California.

25.9 Provisions Severable. If any provision of the Sublease shall be
determined to be illegal or unenforceable, such provision shall be deemed
severable from the balance of this Sublease, which shall remain in full force
and effect.

25.10 Notices. All notices given between the parties will be given
in writing and mailed or delivered to the following addresses:

To the Sublandlord:

Horizon/CMS Healthcare Corporation
0000 Xxxxxx Xxxxxx Xxxx, XX
Xxxxx 000
Xxxxxxxxxxx, XX 00000

Attention: Xx. Xxxx Xxxxx

To the Subtenant:

PMR Corporation
Fifth Floor
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxx, XX

Attention:_________________________________

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25.11 Waiver of Jury Trial. Each of Sublandlord and Subtenant waive
trial by jury in any action arising out of or in connection with the Sublease.

IN WITNESS WHEREOF, the parties have signed this Sublease as of the
day and year first above written.

SUBLANDLORD:

CMS DEVELOPMENT AND MANAGEMENT COMPANY,
INC., a Delaware corporation

By: /s/ J. XXXX XXXXX
------------------------------------
SUBTENANT:

PMR CORPORATION, a Delaware corporation

By: /s/ XXXX XXXXXX
------------------------------------

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21
[EXHIBITS EXCLUDED]

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SUBLEASE BETWEEN CMS DEVELOPMENT AND MANAGEMENT COMPANY, INC. as Sublandlord AND PMR CORPORATION as Subtenant

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