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                                                                    Exhibit 10.3

                             EMPLOYMENT AGREEMENT


TO: MICHAEL J. KULMOSKI, JR.
    2030 Clare Drive
    Pittsburgh, PA 15237

    In consideration of your agreement to enter into the non-compete contained
herein and to continue to serve as the Treasurer and Vice President of Finance,
the undersigned,

NORTHSTAR HEALTH SERVICES, INC., a Delaware corporation (the "Company"), hereby
agrees effective as of November 1, 1995 (the "Effective Date"), to extend to you
an Employment Agreement on the following terms and conditions:

      1.  POSITION AND RESPONSIBILITIES.
          ------------------------------

          1.1  You shall serve as the Treasurer and Vice President of Finance of
the Company and in such position you will exercise such executive authority,
duties, powers and responsibilities as customarily attend such position in the
Company from time to time.  You shall at all times have a direct reporting
relationship to the Company's Chief Executive Officer and President.  You shall
not be required to relocate from the Pittsburgh, Pennsylvania metropolitan area
without the Company obtaining your prior written consent.  In your position as
Treasurer and Vice President of Finance, and you shall assist Mark A. DeSimone
and you shall be responsible for (i) arranging and negotiating all of the
Company's debt and equity financing, including all acquisition financing; (ii)
arranging and managing the Company's cash management program; and (iii)
assisting with the integration of accounting and operating systems between the
Company and entities acquired by the Company or which merge with the Company.
You shall be responsible for assisting and coordinating the day to day
accounting and financial reporting obligations of the Company with the Chief
Financial Officer of the Company.  Provided, however, you agree to perform such
additional executive duties consistent with the aforementioned provisions of
this Agreement as may be assigned to you from time to time by the President and
Chief Executive Officer of the Company, the Company's Board of Directors or any
committee of the Board of Directors.

          1.2  You will, to the best of your knowledge, skill and ability,
devote your time and best efforts to the performance of your duties hereunder
and the business and affairs of the Company.

          1.3  You will duly, punctually, competently and faithfully perform and
discharge your duties in  accordance with all applicable laws and all policies,
rules and regulations which the Company may now or shall hereafter establish
governing the conduct of its business.

      2.  TERM OF EMPLOYMENT.
          ------------------

          2.1  The initial term of this Agreement shall be for a period of two
(2) years commencing on November 1, 1995.  Unless earlier terminated, on
November 1, 1996 and on each
<PAGE>

subsequent annual anniversary thereof, the expiration date of this Agreement
shall be automatically extended for an additional one (1) year period, provided
that neither you or the Company give the other party written notice at least
sixty (60) days prior to such annual anniversary date of that party's intention
not to have this Agreement so extended.  Provided, however, upon the occurrence
of a Change of Control, as hereinafter defined, the then remaining term of the
Agreement shall be automatically extended for an additional twelve (12) month
period, and thereafter the expiration date of the Agreement shall be
automatically extended on subsequent annual anniversary dates of the Agreement
to the extent and in accordance with the procedure set forth in the prior
sentence.  In the event that either party hereto shall give such notice to the
other party of their intention not to extend the then existing term of this
Agreement, which the Company may do by delivery of a resolution adopted by the
unanimous vote of the Company's Compensation and Stock Option Committee so
stating the Company's intention not to extend the Agreement, this Agreement
shall expire at the end of the then existing term.  In the event that, during
the term of this Agreement, your employment is terminated hereunder either by
the Company other than for "Cause" (as defined herein), or by you as the result
of the Company's breach of this Agreement, which breach the Company fails to
cure within thirty (30) days after the Company's receipt of written notice from
you specifying the specific nature of the Company's breach, the Company shall
pay you severance in an amount set forth on Exhibit A hereto.
                                            ---------

          For purposes of this Agreement, a "Change of Control" shall be deemed
to have occurred if (i) there shall be consummated (x) any consolidation or
merger of the Company in which the Company is not the continuing or surviving
corporation or pursuant to which shares of the Company's common stock would be
converted into cash, securities or other property, other than a merger of the
Company in which the holders of the Company's common stock immediately prior to
the merger have the same proportionate ownership of common stock of the
surviving corporation immediately after the merger, or (y) any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of the Company, or
(ii) the shareholders of the Company approved any plan or proposal for the
liquidation or dissolution of the Company, or (iii) any person (as such term is
used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), shall become the beneficial owner (within the
meaning of Rule 13d-3 under the Exchange Act) of 30% or more of the Company's
outstanding common stock.  Provided, however, the proposed transaction between
the Company or its affiliate and Keystone Rehabilitation Services, Inc. shall in
no event be deemed to involve or result in a Change of Control.

          2.2  Employee acknowledges and agrees that he shall serve in such
office at the pleasure of the Company's Board of Directors and Employee may be
removed from said office at any time with or without "Cause" pursuant to the
terms hereof; provided, that any such removal shall be without prejudice to any
contract rights the Employee may have hereunder.

         2.3   The Company may at any time terminate your employment hereunder
for "Cause." In such event, the Company shall deliver to you a resolution
adopted by the Company's Board of Directors setting forth in reasonable detail
the particular conduct which provides the basis for the termination of your
employment for "Cause." For purposes of this Agreement, "Cause"

                                      -2-
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shall mean any of the following by you: (i) Material breach of any material
provision of this Agreement, which breach you shall have failed to cure within
ten (10) days after your receipt of written notice from the Company specifying
the specific nature of your breach; (ii) Willful misconduct by you that is
materially inimical to the best interests, monetary or otherwise, of the
Company; and (iii) Conviction of a felony or any crime involving moral turpitude
or fraud.  For purposes of this definition of "Cause," no act, or failure to act
on the Employee's part shall be considered "willful" unless done, or omitted to
be done, by the Employee not in good faith and without reasonable belief that
his action or omission was in the best interests of the Company.  In the event
of your termination for "Cause," the Company shall pay you any accrued salary
and benefits due you as of such date, less applicable taxes and other required
withholdings and any amounts you may owe to the Company.

     3. COMPENSATION.  You shall receive the compensation and benefits set
        ------------
forth on Exhibit A hereto ("Compensation") for all services to be rendered by
         ---------
you hereunder.

     4. OTHER ACTIVITIES DURING EMPLOYMENT. You acknowledge and agree that you
        -----------------------------------
may serve on boards of directors and hold other leadership positions in
non-profit organizations unless the objectives and requirements of such
position are determined by the Board of Directors to be inconsistent with the
performance of your duties.  You also acknowledge and agree that the approval
of the Board of Directors shall be required before you accept or serve as a
director, officer or employee of any other for profit corporation or entity
during the term of this Agreement.

     5.   ILLNESS, INCAPACITY AND DEATH.
          ------------------------------


          (a) If, during the term of this Agreement, you shall be prevented from
performing your duties by reason of illness or physical or mental disability
(hereinafter referred to collectively as "incapacity") for a continuous period
greater than 120 days in any 12-month period, the Company may terminate your
employment and this Agreement hereunder by giving written notice thereof to you,
effective on the date set forth in the notice (which date shall be not less than
15 business days after the notice is given), and the Company shall pay you any
accrued salary and benefits due to you as of such date, less applicable taxes
and other required withholdings and any amounts you owe the Company.

          (b) For purposes of this Agreement, a continuous period of incapacity
shall not be deemed interrupted until you return to substantially full time work
for a period of at least thirty (30) consecutive business days.

          (c)  In the event of your death during the term of this Agreement,
your employment hereunder and this Agreement shall terminate on the date of your
death, and the Company shall pay your estate any accrued salary and benefits due
to you as of such date, less applicable taxes and other required withholdings
and any amounts you owe the Company.

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     6.  FORMER EMPLOYERS. You represent and warrant that your employment
         ----------------
by the Company will not conflict with and will not be constrained by any prior
or current employment, consulting agreement or relationship whether oral or
written.  You represent and warrant that you do not possess confidential
information arising out of any such employment, consulting agreement or
relationship which, in your best judgment, would be utilized in connection with
your employment by the Company.

     7.  CONFIDENTIALITY. You agree to keep confidential, except as the
         ---------------
Company may otherwise consent in writing, and, except for the Company's benefit,
not to disclose, publish, transfer or make any use of at any time either during
or subsequent to your employment with the Company, any trade secrets,
confidential information, knowledge, data or other information of the Company
relating to services, treatment procedures, processes, know-how, designs,
marketing data, test data, customer lists, referral services, business plans,
marketing plans and strategies, pricing strategies, or other subject matter
pertaining to any business of the Company or any of its affiliates, which you
may produce, obtain, or otherwise acquire during the term of this Agreement,
except as herein provided.  You further agree not to disclose, publish, deliver,
reproduce or in any way allow any such trade secrets, confidential information,
knowledge, data or other information, or any documentation relating thereto, to
be delivered to or used by any third parties without specific direction or
consent of a duly authorized officer of the Company.  In the event your
employment with the Company terminates for any reason whatsoever, you agree to
promptly surrender and deliver to the Company all records, materials, equipment,
drawings, documents and data which you may obtain or produce during the term of
this Agreement, and you will not take with you any summaries, outlines or
descriptions of any confidential information, knowledge or data of the Company
which you may produce or obtain during the term of this Agreement.

     8.   NON-COMPETITION.
          ----------------

          8.1  During the term of your employment hereunder, and for a period
equal to the greater of:

               (x) two (2) years after the termination of your employment with
the Company, including without limitation termination by the Company for Cause
or without Cause, hereunder, or

               (y) any period under which you receive compensation from the
Company under Exhibit A hereto, absent the Company's prior written approval,
              ---------
you will not engage, directly or indirectly, whether as principal or as agent,
officer, director, employee, consultant, shareholder, or otherwise, alone or in
association with any other person, corporation or other entity, in any
Competing Business.  For purposes of this Agreement, the term "Competing
Business" shall mean: any person, corporation or other entity which
solicits, trades with, advises, calls upon or otherwise does, or attempts to
do, directly or indirectly, business with any patients, referral sources,
customers or accounts of the Company, its successors, assigns or

                                      -4-
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affiliates, that have done business With the Company at any time or from time to
time during the period of your employment hereunder.

          8.2  You agree that during your employment with the Company and for
two (2) years following termination of your employment with the Company,
including without limitation termination by the Company for Cause or without
Cause, you shall not, directly or indirectly, solicit, trade with, advise, call
upon any patient, referral source, customer, prospective customer, supplier, or
prospective supplier of the Company for any business purpose other than for the
benefit of the Company, without the prior written consent of the Company.

          8.3  You agree that during your employment with the Company and for
two (2) years following termination of your employment with the Company,
including without limitation termination by the Company for Cause or without
Cause, you shall not, directly or indirectly, solicit or induce, or attempt to
solicit or induce, any employee of the Company to leave the Company for any
reason whatsoever, or hire any employee of the Company, without the prior
written consent of the Company.

          8.4  You represent that your experience and capabilities are such
that the provisions of this Agreement will not prevent you from earning a
livelihood and you acknowledge that it would cause the Company serious and
irreparable injury and cost if you were to use your ability and knowledge in
competition with the Company or to otherwise breach the obligations contained
in this Agreement.

     9.  REMEDIES.  In the event of a breach by you of the terms of this
         --------
Agreement, the Company shall be entitled, if it shall so elect, to institute
legal proceedings to obtain damages for any such breach, or to enforce the
specific performance of this Agreement by you and to enjoin you from any
further violation of this Agreement and to exercise such remedies cumulatively
or in conjunction with all other rights and remedies provided by law.  You
acknowledge, however, that the remedies at law for any breach by you of the
provisions of this Agreement may be inadequate and that the Company shall be
entitled to injunctive relief against you in the event of any breach.

     10. ASSIGNMENT.  This Agreement shall be binding upon and inure to the
         ----------
benefit of the successors and assigns of the Company, and the Company shall be
obligated to require any successor to expressly acknowledge and assume the
Company's obligations hereunder.  This Agreement shall inure to the extent
provided hereunder to the benefit of and be enforceable by you or your legal
representatives, executors, administrators, successors and heirs.  You may not
assign any of your rights or delegate any of your duties, responsibilities,
obligations or positions hereunder to any person and any such purported
assignment or delegation by you shall be void and of no force and effect.

     11. SEVERABILITY. The Company and you acknowledge and agree that in the
         -------------
event any one or more of the provisions contained in this Agreement shall, for
any reason, be held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability

                                      -5-
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shall not affect the other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein.

     12. NOTICES. Any notice given by the Company hereunder shall be by personal
         --------
delivery or registered or certified mail, return receipt requested, addressed to
you at your address of record with the Company.  Any notice which you are
required or may desire to deliver to the Company may be given by you by personal
delivery or by registered or certified mail, return receipt requested, addressed
to the Company's Chief Executive Officer and President at the Company's
principal office.  The date of personal delivery or three (3) business days
after the date of mailing any notice shall be deemed to be the date of delivery
thereof.

     13. WAIVERS. If either party should waive any breach of any provision of
         --------
this Agreement, such waiver shall not operate or be construed as a waiver of
any subsequent breach of any provision of this Agreement.

     14. COMPLETE AGREEMENT; AMENDMENTS. This Agreement, including Exhibit A
         ------------------------------                            ---------
hereto, is the entire agreement of the parties with respect to the subject
matter hereof, superseding all previous oral or written communications,
representations, understandings or agreements with the Company or any officer or
representative thereof.  Any amendment to this Agreement or waiver by the
Company of any right hereunder shall be effective only if evidenced by a written
instrument executed by the parties hereto, upon authorization of the Company's
Board of Directors.

     15. HEADINGS. The headings of the Sections hereof are inserted for
         ---------
convenience only and shall not be deemed to constitute a part hereof nor to
affect the meaning of this Agreement.

     16. COUNTERPARTS. This Agreement may be signed in counterparts, each of
         -------------
which shall be deemed an original and both of which shall together constitute
one agreement.

     17.  GOVERNING LAW.  This Agreement shall be governed by and construed in
          -------------
accordance with the laws of the Commonwealth of Pennsylvania

     18.   ARBITRATION.   Except as otherwise provided herein, in the event of
           -----------
any controversy, dispute or claim arising out of, or relating to, this
Agreement, or the breach thereof, or arising out of any other matter relating
to the your employment with the Company or the termination of such employment,
the parties may seek recourse only for temporary or preliminary injunctive
relief to the courts having jurisdiction thereof and if any relief other than
injunctive relief is sought, the Company and you agree that such underlying
controversy, dispute or claim shall be settled by arbitration conducted in
Pittsburgh, Pennsylvania in accordance with this Section 18 of the Agreement
and the Commercial Arbitration Rules of the American Arbitration Association
("AAA"). The matter shall be heard and decided, and awards rendered by a panel
of three (3) arbitrators (the "Arbitration Panel").  The Company and you shall
each select one arbitrator from the AAA National Panel of Commercial
Arbitrators (the "Commercial Panel") and AAA shall select a third arbitrator
from the Commercial Panel.  The award rendered

                                      -6-
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by the Arbitration Panel shall be final and binding as between the parties
hereto and their respective heirs, executors, administrators, successors and
assigns, and judgment on the award may be entered by any court having
jurisdiction thereof

     19. RELEASE. You hereby acknowledge and agree that prior to the occurrence
         --------
of your's or your dependents right to receive from the Company or any of its
representatives or agents any compensation or benefit to be paid or provided to
you or your dependents pursuant to Sections 2.1, 2.3, 3, or 5 of this Agreement,
you may be required by the Company, in its sole discretion, to execute a release
in a form reasonably acceptable to the Company, which releases any and all
claims you have or may have against the Company or its affiliates agents,
officers, directors, successors or assigns with respect to matters relating to
your employment and termination of employment.

  If you are in agreement with the foregoing, please sign your name below,
whereupon this Agreement shall become binding in accordance with its terms.
Please then return this Agreement to the Company. (You may retain for your
records the accompanying counterpart of this Agreement enclosed herewith.)


                                      Very truly yours,
                                      NORTHSTAR HEALTH SERVICES, INC.

                                      By: /s/ Mark A. DeSimone
                                         --------------------------------
                                            Authorized Officer

ACCEPTED AND AGREED WITH THE
INTENT TO BE LEGALLY BOUND
THIS 27th DAY OF OCTOBER, 1995:

/s/ Michael J. Kulmoski, Jr.
------------------------------
MICHAEL J. KULMOSKI, JR.

                                      -7-
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                                                                    Exhibit A

                  EMPLOYMENT TERM, COMPENSATION AND BENEFITS
                          OF MICHAEL J. KULMOSKI, JR.

1. COMPENSATION.
   ------------


   a.   BASE SALARY.  Employee's base salary shall be $85,000, which shall be
        payable in equal installments in accordance with the Company's payroll
        policy, but in any event no less frequently than monthly.  Commencing
        on January 1, 1996 and on January 1 of each year thereafter, Employee
        shall receive such salary increases as determined to be appropriate by
        the Compensation and Stock Option Committee of the Board of Directors
        consistent with the Company's declaration of salary increases to other
        of the Company's executive officers.


   b.   SIGNING BONUS.  The Company shall pay the Employee a one time signing
        bonus of Ten Thousand Dollars ($ 10,000) within thirty (30) days of the
        Employee's execution and delivery of this Agreement.


   c.   Bonus.  Employee shall be entitled to receive such bonuses, if any, as
        determined by the Compensation Committee of the Board of Directors.

   d.   Stock Options.  Employee shall be eligible to participate in the
        Company's 1992 Stock Option Plan or any other stock bonus or stock
        option plan authorized by the Company for its employees, officers and
        consultants. Within thirty (30) days of the Effective Date of this
        Agreement, Employee shall be granted, under the 1992 Stock Option Plan,
        stock options (the "Options") for forty thousand (40,000) shares of the
        Company's Common Stock in connection with the Employee's execution of
        this Agreement.  Such Options shall have an exercise price equal to the
        fair market value (as defined in the 1992 Stock Option Plan) as of the
        record date of grant by the Compensation and Stock Option Committee of
        the Board of Directors. Options covering all forty thousand (40,000)
        shares shall vest and become immediately exercisable on the Effective
        Date.  The Options shall be exercisable for ten years from the date of
        grant.

        Upon the Employee's execution and delivery of this Agreement, the
        "Vesting" provision of that certain Northstar Health Services, Inc.
        Non-Qualified Stock


                                      A-1
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        Option Agreement, which has a date of grant of November 3, 1994, shall
        be amended to read as follows "The shares underlying the options shall
        become purchasable by the Optionee on November 1, 1995."

        In the event of a Change of Control, all of the Employee's unvested
        Options shall immediately vest and become exercisable.

        In connection with the granting of the aforementioned options, Employee
        hereby acknowledges prior receipt of the Company's Form 10-KSB for the
        fiscal year ending December 31, 1994, Proxy Statement dated May 8,
        1995, Form 10-QSB for the quarter ended September 30, 1995, 1992 Stock
        Option Plan and related stock option plan disclosure documents.
        Employee also acknowledges that he has had ample opportunity to review
        each of the aforementioned documents prior to the execution of this
        Agreement.

2. VACATION.  Employee shall be entitled to all legal and religious holidays,
   --------
   and a total of twenty (20) paid vacation days per annum.  Employee shall not
   be permitted to accrue unused vacation days to subsequent periods but
   Employee shall have the option to collect payment for any unused vacation at
   the end of each fiscal year at Employee's then applicable base salary level.

3. INSURANCE AND BENEFITS. Employee shall be eligible to participate in all
   -----------------------
   employee and executive benefit plans and programs currently available to
   other Company employees of a comparable status and title as well as any such
   plans and programs adopted and generally available to the Company's other
   executive officers during the term of this Agreement.  The Company shall
   provide health insurance to Employee and Employee's eligible dependents
   pursuant to Company policy.

4. RETIREMENT PLAN.  Employee will be eligible to participate in the Company's
   ---------------
   401(k) Plan in accordance with its terms.  The Company will provide a
   matching contribution in accordance with its matching contribution plan for
   all employees, with such matching contribution not to exceed fifteen percent
   (15%) of Employee's income as permitted by the Internal Revenue Service.

5. AUTOMOBILE. Employee shall be entitled to receive a $400 per month
   -----------
   automobile allowance during the term of this Agreement, plus Company
   reimbursement for insurance upon the vehicle.

6. SEVERANCE. In the event Employee's employment is terminated either by the
   ----------
   Company other than for "Cause," or by Employee as the result of the
   Company's breach of this Agreement, which breach the Company fails to cure
   in accordance with Section 2.3 of the Agreement, Employee shall be entitled
   to continued salary and benefits coverage (which

                                      A-2
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   shall be deemed to include medical and dental insurance, if any, and
   automobile allowance) under this Agreement when and as due under this
   Agreement during the term of this Agreement remaining as of such date, plus
   payment of any other amounts, if any, otherwise due to Employee.

7. EXPENSE REIMBURSEMENT.  During the, term of this Agreement, the
   ----------------------
   Company shall reimburse the Employee for all reasonable and necessary
   out-of-pocket expenses incurred by Employee in connection with the
   performance of Employee's duties hereunder, upon the presentation of proper
   verification therefor in accordance with Company policy.

8. TAXES-AND WITHHOLDINGS.  The Company shall be authorized to withhold from
   -----------------------
   any payment to the Employee, his estate or his beneficiaries hereunder all
   such amounts, if any, that the Company may reasonably determine is required
   to withhold pursuant to any applicable law or regulation.  The Company shall
   also be authorized to withhold any other amounts which the Company
   reasonably believes are due the Company by the Employee.



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