Outsourcing Services Group, Inc.

OUTSOURCING SERVICES GROUP, INC.
425 South Ninth Avenue
City of Industry, California 91746


January 8, 1998


HarbourVest Partners LLC Attention: Robert Wadsworth One Financial Center 44th Floor Boston, Massachusetts 02111


Re: Advisory and Financial Services Fees


Gentlemen:


In consideration for your agreeing to provide a representative to serve on our Board of Directors and for rendering financial and business advice to our Company from time to time, as needed, we have agreed with you as follows:


1. We will reimburse you or the individual serving on the Board of Directors of our Company and its subsidiaries for all reasonable expenses incurred in connection with attending meetings of the Board of Directors or committees thereof, on the same basis as such expenses are reimbursed to other directors from time to time.


2. For as long as HarbourVest Venture Partners IV - Direct Fund LP and/or an affiliate thereof ("Fund IV") holds at least 33% of the greatest number of shares of our common stock owned by you and your affiliates (after adjustment for stock splits and similar events), we will annually pay to you a financial advisory fee of $115,000, commencing with the year 1998. Of the $115,000 financial advisory fee, $50,000 will be paid in cash in equal quarterly installments of $12,500 each unless payment of fees to outside directors is prohibited by our financing arrangements and the balance ($65,000 per year, or such amount as is incurred during any applicable portion of the year) will be accrued on the Company's financial statements. Such amount shall continue as a liability of the Company but shall not bear interest or otherwise increase by reason of nonpayment and shall be due and payable only following the repayment (i) of all indebtedness under the Senior Subordinated Credit Agreement dated as of January 8, 1998, among Outsourcing Services Group, Inc., as borrower, various lenders and Bankers Trust Company, as agent, or any refinancing thereof which does not increase the principal amount (the "Subordinated Agreement"), and (2) of all indebtedness under that certain Credit Agreement dated as of January 8, 1998, among us, various institutions and BT Commercial Corporation, as agent (the "Senior Credit Facility"). Further, the accrued amounts shall not be paid except following one of the listed events:


(i) A sale of the Company's assets or substantially all of such assets;


(ii) An initial public offering providing proceeds sufficient to repay the indebtedness described in the preceding paragraph and provide net proceeds to the Company thereafter; and


(iii) A merger or similar transaction in which (A) the Company's shareholders before such transaction, including the Gordon + Morris Investment Partnership, L.P., Fund IV and ASC Investment Partners, L.P., control less than 50% of the stock they hold on the present date, and (B) the shareholders of the Company prior to such transaction continue, following such transaction, to hold less than 50% of the shares of the surviving entity.


If in the future we increase the management fees paid to The Gordon + Morris Group, your fee will increase by one third of the increase given The Gordon + Morris Group. The increase will be paid currently and not deferred.


You will also receive, in cash, a fee equal to one-third of any fee received by The Gordon + Morris Group or any of its affiliates on the sale of OSG or any of its subsidiaries or, if approved by the Company's Board of Directors, any other transaction described in paragraph (c) ...