<PAGE>   1
                                                                    Exhibit 20.1

                    TERMINATION AGREEMENT AND GENERAL RELEASE



     THIS TERMINATION AGREEMENT AND GENERAL RELEASE is made and entered into on
the 4th day of November, 1997, by and between JOHN A. LOMBARDI (hereinafter
"Employee") and NORTHSTAR HEALTH SERVICES, INC. (hereinafter "Company").



                                    RECITALS:

     WHEREAS, the Employee and Company are parties to an Employment Agreement
dated September 16, 1996 (the "Original Employment Agreement"), pursuant to
which, among other things, the Company employed Employee as the Executive
Vice-President, Chief Financial Officer and Treasurer of the Company; and

     WHEREAS, the Employee and Company are also parties to an Employment
Agreement dated March 13, 1997 (the "Subsequent Employment Agreement"), pursuant
to which, among other things, the Company employed Employee as Executive
Vice-President, Chief Financial Officer and Treasurer of the Company; and

     WHEREAS, Employee and Company are desirous of entering into an Agreement
defining the terms of Employee's voluntary termination from the Company's
employment (hereinafter "termination") and certain related terms.


     NOW THEREFORE, in consideration of the mutual promises hereinafter set
forth and intending to be legally bound, Employee and the Company agree as
follows:

     1. Employee's termination shall be effective as of the 10th day of May,
1997. Employee shall have all rights as defined in the Company's established
benefit plans and policies applicable to an individual employee in his position
who voluntarily terminates his employment.

     2. As a further, special separation award, the Company has agreed to pay
Employee the gross amount of $35,000.00, less usual deductions, in consideration
of the undertakings of Employee described herein, but without any admission of
contractual or other legal liability whatsoever to Employee in respect to or in
any way related to his employment, including his recruitment, hire, terms and
conditions of employment, benefits and termination, payable as follows:

     The sum of $15,000.00, less usual deductions, upon the signing of this
     Agreement (the check will be drafted through the Company payroll system,
     dated November 7, 1997, and delivered at the time of the signing of this






<PAGE>   2


     Agreement), the receipt of which is hereby acknowledged by Employee; and

     The sum of $2,500.00, less usual deductions, payable by Company to Employee
     on the following Company payroll dates: November 21, 1997; December 5,
     1997; December 19, 1997; January 2, 1998; January 16, 1998; January 30,
     1998; February 13, 1998; and February 27, 1998.

     3. The Company and Employee agree to terminate all stock options in any and
all agreements between the Company and the Employee, verbal or otherwise,
including the stock options granted in the Employment Agreement of September 16,
1996, Exhibit "A", Section 2, described as follows:

     On September 16, 1996, Employee was granted, under the 1992 Stock Option
     Plan, stock options for 25,000 shares of the Company's Common Stock. Such
     options have an exercise price equal to the fair market value (as defined
     in the 1992 Stock Option Plan) as of September 16, 1996. Employee
     acknowledges that in accordance with said Plan, if the Employee's
     relationship with the Company or affiliated corporation ceases for any
     reason other than termination for death or total disability (and unless by
     its terms the option provides otherwise), the Employee may exercise, for a
     3-month period following cessation, only that portion of the Employee's
     option which was exercisable at the time of cessation. The Company does not
     waive this limitation.

     Employee was also granted stock options to purchase 50,000 shares of the
     Company's Common Stock at $2.00. Such option shares are not exercisable
     until Company's Common Stock has traded in excess of $5.93 for at least ten
     (10) consecutive trading days. Employee acknowledges that these stock
     options must be exercised within twelve (12) months of termination. The
     Company does not waive this limitation.

     The Company and Employee agree that the Employee shall be granted, under
     the Out of Plan Plan, 10,000 shares of the Company's Common Stock in
     connection with the execution of this Termination Agreement and General
     Release. Such options shall be vested immediately, shall have an exercise
     price of $2.00, and shall terminate at 11:59 p.m. on December 31, 1998.

     4. Employee agrees to maintain strict confidentiality with respect to the
terms of this Agreement and to refrain from advising any current or former
employees of the Company or others not needing to know such terms.

     5. The Employee and Company hereby agree that the above-mentioned
Subsequent Employment Agreement was and is null and void ab initio, and had,
has, and shall have no legal force and effect.

<PAGE>   3


     6. Except for the payments due Employee by company as set forth in this
Agreement, Employee does, for himself, his heirs, executors and assigns, hereby
forever releases and discharges the Company, its divisions, subsidiaries,
affiliates, officers, directors, employees, representatives, successors,
assigns, and agents from any and all claims, demands, actions, suits, damages,
fees, costs, and other obligations or liabilities of any kind, whether now known
or unknown, prior to and including this date, relating to any and all losses,
injuries, and other damages incurred by Employee, in respect to or in any way
related to his recruitment, hire, terms and conditions of employment, benefits
of employment, or termination, which are or could have been complained of under
any federal, state or local law, statute, ordinance, regulation or order.
Employee also expressly waives all present and future employment rights with the
Company or any affiliate organization of the Company. Employee represents and
warrants that he has not assigned any such claim or authorized any person or
entity to assert such claim on his behalf.

     7. Company does, for itself, its successors and assigns, hereby forever
releases and discharges the Employee, his heirs and assigns, from any and all
claims, demands, actions, suits, damages, fees, costs, and other obligations or
liabilities of any kind, whether now known or unknown, prior to and including
this date, relating to any and all losses, injuries, and other damages incurred
by Company, in respect to or in any way related to Employee's employment, or
termination, which are or could have been complained of under any federal, state
or local law, statute, ordinance, regulation or order. Company also expressly
waives all present and future employment rights with the Employee.

     8. Employee hereby agrees and recognizes that his employment relationship
with Company has been permanently and irrevocably severed and that Company does
not have any obligation, contractual or otherwise, to hire, re-hire, or
re-employ him in the future.

     9. Employee agrees and acknowledges that the Agreement by Company described
herein, and the settlement and termination of any claims against Employer as set
forth herein, are not and shall not be construed to be an admission of any
violation of any federal, state or local statute or regulation, or of any duty
owed by Company to Employee.

     10. Employee covenants and agrees that he shall not engage in any
communications which shall disparage Company or unlawfully interfere with its
existing or prospective business relationships. Employee agrees, further, that
he shall make himself available and cooperate with Company in any reasonable
manner in connection with any matters including, but not limited to, litigation
now pending or which may arise in the future which Employee was involved in or
which relate to Employee's term of employment with the Company. If requests are
made after the salary continuation period, reasonable compensation may be
considered if time requirements are significant.



<PAGE>   4


     11. Employee hereby certifies that he has read the terms of this
Termination Agreement and General Release, that he has had an opportunity to
discuss it with his attorneys, and that he understands its terms and effects.
Employee acknowledges, further, that he is executing this Termination Agreement
and General Release of his own volition, with a full understanding of its terms
and effects, and with the intention of releasing all claims in exchange for the
consideration described in this Termination Agreement and General Release, which
he acknowledges is adequate and satisfactory to him. Neither Company nor its
agents, representatives, or attorneys have made any representation to him
concerning the terms and effects of this Termination Agreement and General
Release other than those contained herein. Employee further agrees, covenants
and promises that he will not communicate or disclose the terms or amount of
this Termination Agreement and General Release to any person other than members
of his immediate family, his attorney, his accountant, or such other person(s)
to whom disclosure may be necessary to implement and/or enforce this Agreement
or to otherwise conduct personal business.

     INTENDING TO BE LEGALLY BOUND, Employee and Company execute this
Termination Agreement and General Release this 5th day of November, 1997.


WITNESS:                                     EMPLOYEE:

/s/ PAUL A. MANION                           /s/ JOHN A. LOMBARDI (SEAL)
-----------------------                      ---------------------------
                                             JOHN A. LOMBARDI



                                             COMPANY:
ATTEST:                                      NORTHSTAR HEALTH SERVICES, INC.



/s/ JAMES J. ??????????                      BY: /s/ THOMAS W. ZAUCHA
-----------------------                         --------------------------
Assistant Secretary                              THOMAS W. ZAUCHA, CEO


      (SEAL)



<PAGE>   5



                         ABSOLUTE GUARANTEE OF PAYMENT
                                 OF OBLIGATION



     FOR VALUE RECEIVED, I, THOMAS W. ZAUCHA, of 100 Lafayette Circle, Indiana,
Pennsylvania, 15701, absolutely guarantee payment to JOHN A. LOMDARDI of the
special separation award indebtedness due John A. Lombardi as set forth in
paragraph 2 of the Termination Agreement and General Release dated the 4th
day of November, 1997, by and between John A. Lombardi, "Employee", and
Northstar Health Services, Inc., "Company". If Northstar Health Services, Inc.
defaults in the payments, less usual deductions, payable by Company to Employee
as set forth in paragraph 2 of the Termination Agreement and General Release, I
will pay John A. Lombardi the unpaid balance thereon on demand.



DATED:  November 5, 1997


                                        /s/ THOMAS W. ZAUCHA          (SEAL)
                                        -----------------------------
                                        Thomas W. Zaucha