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                                                                    Exhibit 10.8

[LOGO]                       733 THIRD AVENUE, NEW YORK, NY 10017 212 297-5600

Commonwealth Associates
INVESTMENT BANKING





Northstar Health Services, Inc.
The Atrium
665 Philadelphia Street
Indiana, PA 15701                                                June 9, 1997


Gentlemen,

     This letter, when executed by the parties hereto, will constitute an
agreement between Northstar Health Services, Inc. ("Northstar" or "the Company")
and Commonwealth Associates ("Commonwealth"), pursuant to which the Company
agrees to retain Commonwealth and Commonwealth agrees to be retained by the
Company under the following terms and conditions:

1.   The Company hereby retains Commonwealth to perform advisory services
     related to corporate finance, capital raising, capital restructuring and
     mergers and acquisitions, and Commonwealth hereby accepts such retention
     for a term commencing on the date hereof and ending on December 31, 1997
     (other than with respect to its retention under paragraphs 3(i) and (ii)
     below), with automatic extensions thereto unless thereafter terminated by
     either party with a minimum of 60 days prior written notice to the other.
     In this regard, and subject to the terms set forth below, Commonwealth
     specifically shall furnish to the Company advice and recommendations with
     respect to (i) the restructuring of the Company's senior indebtedness to
     IBJ Schroder Bank and Trust Co., including its possible acquisition or
     pay-out by another lending institution; (ii) the restructuring of the
     Company's junior indebtedness to Thomas W. Zaucha and his family
     partnership; (iii) the manner and timing of public or private offerings of
     Northstar's securities; and (iv) any inquiries received or to be made by
     the Company with respect to possible sales, mergers, acquisitions or
     business combinations.

2.   As compensation for the services described in paragraph 1 above the Company
     shall issue to Commonwealth, at the execution hereof, as an initial
     non-refundable retainer fee, five year warrants, in a form designated by
     Commonwealth and acceptable to the Company, to purchase up to 100,000
     shares of the Company's Common Stock, at a strike price equal to 120% of
     the average closing bid price of the Company's Common Stock for the five
     preceding business days. As additional compensation the Company shall pay
     monthly non-refundable cash retainer payments of $6,500 payable on the
     first day of each month starting on July 1, 1997. In addition, the exercise
     price of the 87,500 warrants to purchase


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     shares of the Company's Common Stock issued to Commonwealth Associates and
     certain of its directors, officers, and employees in connection with the
     Company's public offering of Common Stock in May 1995 shall be reset to the
     same exercise price as above. Commonwealth also shall receive from the
     Company the following incentive compensation:

     (i)  Upon successful completion of the restructuring of the Company's
          senior indebtedness a cash fee equal to 1.5% of the principal amount
          restructured; and

     (ii) Upon successful completion of the restructuring of the Company's
          junior indebtedness a cash fee equal to .5% of the principal amount
          restructured. However, should Commonwealth Associates arrange or
          provide services in connection with a third party financing, a cash
          fee equal to 1.5% of the principal amount shall be due and payable at
          the closing of such financing.

   3. (i) In the event that the Company engages in a sale to or a merger or
          combination with another entity having an actual or implied value of
          greater than $10 million (value being defined as the sum of all
          consideration to be exchanged or offered to Northstar and/or its
          shareholders, including but not limited to cash, securities,
          assumption of debt and deferred and/or contingent payments),
          Commonwealth shall act as the Company's investment banker in any such
          transaction and shall receive the following cash fees upon its
          closing:

          o  1.5% of the value of the transaction up to and including $50
             million;

          o  1.125% of any value in excess of $50 million up to and
             including $100 million; and

          o  0.75% of any value in excess of $100 million.

     (ii) In the event that the Company engages in an acquisition or the
          purchase of assets of another company having an actual or implied
          value of greater than $10 million, Commonwealth shall act as the
          Company's investment banker in any such transaction and shall receive
          the following cash fees upon its closing:

          o  2.25% of the first $25 million value of the transaction;

          o  1.5% of the second $25 million value of the transaction; and

          o  0.75% of any value in excess of $50 million.

     Commonwealth's rights under these paragraphs 3(i) and (ii) shall survive
     the expiry of this agreement by a period of nine months.

4.   In the event that the Company engages in a transaction or transactions to
     issue its securities (whether publicly or privately), Commonwealth shall
     have the right of first negotiation to lead-manage or co-manage any such
     transaction on terms and conditions to be mutually agreed with the Company.




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5.   The Company will reimburse Commonwealth, monthly in arrears, for
     Commonwealth's reasonable expenses incurred in the performance of its
     duties and Commonwealth shall account for such expenses to the Company
     setting forth in reasonable detail the amount and reason for such cost or
     expense.

6.   All obligations of Commonwealth contained herein shall be subject to
     Commonwealth's reasonable availability for such performance, in view of the
     nature of the requested service and the amount of notice received.
     Commonwealth shall devote time and effort to the performance of its duties
     hereunder as Commonwealth shall determine is reasonably necessary for such
     performance. Commonwealth may look to others for information, investment
     recommendations, economic advice and/or research, upon which to base its
     advice to the Company hereunder, as it shall deem appropriate. The Company
     shall furnish to Commonwealth all information relevant to the performance
     by Commonwealth. In the event that the Company fails to furnish any such
     material or information when reasonably requested by Commonwealth and thus
     prevents or impedes Commonwealth's performance hereunder, any inability of
     Commonwealth to perform shall not be a breach of its obligations

7.   Commonwealth will hold, and will use its commercially reasonable efforts to
     cause its officers, directors, employees, consultants, advisors, and agents
     to hold in confidence any confidential information which the Company
     provides to Commonwealth pursuant to this Agreement. Commonwealth may
     disclose such information to its officers, directors, employees,
     consultants, advisors, and agents, in connection with the services to be
     rendered as contemplated by this Agreement, so long as such persons are
     informed by Commonwealth of the confidential nature of such information and
     are directed by Commonwealth to treat such information confidentially in
     accordance herewith. Notwithstanding the forgoing, Commonwealth shall not
     be required to maintain confidentiality with respect to information (i)
     which is or becomes part of the public domain; (ii) of which Commonwealth
     had independent knowledge prior to disclosure to it by the Company; (iii)
     which comes into the possession of Commonwealth in the normal and routine
     course of its own business from and through independent non-confidential
     sources; or (iv) which is required to be disclosed by Commonwealth by
     governmental requirements. If Commonwealth is requested or required (by
     oral questions, interrogatories, requests of information document
     subpoenas, civil investigative demands, or similar process) to disclose any
     confidential information supplied to it by the Company, or its
     representatives. Commonwealth shall, unless prohibited by law, promptly
     notify the Company of such request(s) so that the Company may seek an
     appropriate protective order.

8.   The Company agrees to the indemnification and other agreements set forth in
     the Indemnification Agreement attached hereto, the provisions of which are
     incorporated herein reference and shall survive the termination,
     expiration per supercession of this Agreement.

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9.   This Agreement may not be transferred, assigned or delegated by any of the
     parties hereto without the prior written consent of the other party hereto.

10.  Any notice hereunder shall be sent to the Company and to Commonwealth at
     their respective addresses set forth above. Any notice shall be given by
     hand delivery, facsimile transmission or overnight delivery or courier
     service, against receipt thereof, and shall be deemed to have been given
     when received. Either party may designate any other address to which notice
     shall be given, by giving written notice to the other of such change of
     address.

11.  This Agreement has been made in the State of New York and shall be
     construed and governed in accordance with the laws as thereof without
     giving effect to principles governing conflicts of law.

12.  This Agreement contains the entire agreement between the parties and, may
     not be altered or modified, except in writing and signed by each party.

13.  In the event any dispute exists hereunder, the prevailing party shall be
     able to recover form the other party its legal fees and expenses in
     addition to any other recovery in such litigation or arbitration. The
     parties hereto agree to arbitrate any such dispute hereunder in New York
     City, State of New York (site of Commonwealth's primary office) in
     accordance with the standards of the AAA.

     If you are in agreement with the foregoing, please execute two copies of
this letter in the space provide below and return them undersigned.

                                             Yours sincerely,
                                         COMMONWEALTH ASSOCIATES



        /s/ MICHAEL R. LYALL                 /s/ ANDRES V. BELLO
        ------------------------             -------------------
        Michael R. Lyall                     Andres V. Bello
        Senior Managing Director             Managing Director



                            [Signature page follows)


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By: Commonwealth Associates Management, Inc
    as General Partner

By:      /s/ BASIL ASCIUTTO
-----------------------------------------
Title:   C.O.O.
Name:    Basil Asciutto




Agreed to and accepted as of this date
NORTHSTAR HEALTH SERVICES, INC.


By:      /s/ THOMAS W. ZAUCHA
-----------------------------------------
Name:    Thomas W. Zaucha
Title:   Chairman & Chief Executive Officer



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                        NORTHSTAR HEALTH SERVICES, INC.
                                   THE ATRIUM
                            665 PHILADELPHIA STREET
                               INDIANA, PA 15701


Commonwealth Associates                                          June 9, 1997
733 Third Avenue
New York, NY 10017


Gentlemen:

     This letter will confirm that we have engaged Commonwealth Associates, to
advise and assist us in connection with the matters referred to in our letter
agreement June 9, 1997 (the "Engagement Letter"). In consideration of your
agreement (the "Agreement") to act on our behalf in connection with such
matters, we agree to indemnify and hold harmless you and your affiliates and you
and your respective officers, directors, employees and agents and each other
person, if any, controlling you or any of your affiliates (you and each such
other person being an "Indemnified Person") from and against any losses, claims,
damages or liabilities related to, arising out of or in connection with the
engagement (the "Engagement") under the Engagement Letter, and will reimburse
each Indemnified Person for all expenses (including, to the extent set forth
below, reasonable fees and expenses of counsel) as they are incurred in
connection with investigating, preparing, pursuing or defending any action,
claim, suit, investigation or proceeding related to, arising out of or in
connection with the Engagement, whether or not pending or threatened and whether
or not any Indemnified Person is a party. Promptly after receipt by an
Indemnified Person of the commencement of any such action, such Indemnified
Person will, if a claim in respect thereof is to be made against us hereunder,
notify us of the commencement thereof; but the failure to so notify us will not
relieve us from liability except to the extent of actual prejudice caused
thereby. Upon such notification, we shall be entitled to participate in the
action and, upon notice thereof to the Indemnified Person, to assume the defense
thereof with counsel of our choice reasonably satisfactory to you who may,
except in the case of manifest conflict, be counsel to us and other parties
similarly situated, whereupon we will not be liable to such Indemnified Party
for any legal or other expenses subsequently incurred by such Indemnified Person
in connection with the defense thereof other than reasonable costs of
investigation. We will not, however, be responsible for any losses, claims,
damages or liabilities (or expenses relating thereto) that are finally
judicially determined to have resulted from the bad faith or gross negligence of
any Indemnified Person. We also agree that no Indemnified Person shall have any
liability, (whether direct or indirect, in contract or tort or otherwise), to us
for or in connection with the Engagement, except for any such liability for
losses, claims, damages or liabilities incurred by us that are finally
judicially determined to have resulted from gross negligence or recklessness of
such Indemnified Person.

     We will not, without your prior written consent, settle, compromise,
consent to the entry of any judgment in or otherwise seek to terminate any
action, claim, suit or


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proceeding in respect of which indemnification may be sought hereunder (whether
or not any Indemnified Person is a party thereto) unless such settlement,
compromise, consent or termination includes a release of each Indemnified Person
from any liabilities arising out of such action, claim, suit or proceeding. No
Indemnified Person seeking indemnification, reimbursement or contribution under
this agreement will, without our prior written consent, settle, compromise,
consent to the entry of any judgment in or otherwise seek to terminate any
action, claim, suit, investigation or proceeding referred to in the preceding
paragraph.


     If the indemnification provided for in the first paragraph of this
agreement is judicially determined to be unavailable (other than in accordance
with the third sentence of the first paragraph hereof) to an Indemnified Person
in respect of any losses, claims, damages or liabilities referred to herein,
then, in lieu of indemnifying such Indemnified Person hereunder, we shall
contribute to the amount paid or payable by such Indemnified Person as a result
of such losses, claims, damages or liabilities (and expenses relating thereto)
(i) in such proportion as is appropriate to reflect the relative benefits to
you, on the one hand, and us, on the other hand, of the Engagement or (ii) if
the allocation provided by clause (i) above is not available, in such proportion
as is appropriate to reflect not only the relative benefits referred to in such
clause (i) but also the relative fault of each of you and us, as well as any
other relevant equitable considerations; provided, however, in no event shall
your aggregate contribution to the amount paid or payable exceed the aggregate
amount of cash fees actually received by you under the Engagement Letter. For
the purposes of this Agreement, the relative benefits to us and you of the
Engagement shall be deemed to be in the same proportion as: (a) the total value
paid or contemplated to be paid or received or contemplated to be received by us
or our shareholders, as the case may be, in the transaction or transactions by
you that are the subject of the Engagement, whether or not any such transaction
is consummated, bears to (b) the cash fees paid or to be paid to you under the
Engagement Letter in respect of such transaction or transactions.

     The provisions of this Agreement shall apply to the Engagement and any
modification thereof and shall remain in full force and effect regardless of
any termination or the completion of your services under the Engagement Letter.

     This Agreement and the Engagement Letter shall be governed by and construed
in accordance with the laws of the State of New York applicable to contracts
executed in and to be performed in that state.

                               Very truly yours,

                        Northstar Health Services, Inc.,

                              /s/ THOMAS W. ZAUCHA
                      -----------------------------------
                                Thomas W. Zaucha
                      Chairman & Chief Executive Officer




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