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                           OUTSOURCING SERVICES GROUP, INC.

                                STOCK OPTION AGREEMENT


       THIS STOCK OPTION AGREEMENT (this "Agreement") is made this 30th day
of June, 1998, by and between OUTSOURCING SERVICES GROUP, INC., a Delaware
corporation having its principal place of business at 425 South Ninth Avenue,
City of Industry, California 91716-3382 (the "Company"), and DENNIS NOLAN, whose
address is 46 Chandler Road, Burlington, MA 01803 (the "Employee").


                                       RECITALS

  A.   As an inducement to retain Employee as an employee in the Company, the
Company has agreed to grant to Employee options to purchase shares of the
Company's common stock in connection with the Employment and Non-Competition
Agreement, of even date, by and among Employee and the Company and certain of
its subsidiaries (the "Employment Agreement").

  B.   The Company and Employee desire to enter into this Agreement to
memorialize the grant of the options to Employee.

       NOW, THEREFORE, the parties hereto agree as follows:

       1.        GRANT.  Upon the effectiveness of this Agreement, as 
described in Section 19, the Company hereby grants to Employee the right to 
purchase up to twenty thousand (20,000) shares of common stock of the Company 
at a price of $10.00 per share (which price equals the fair market value of a 
share of the Company's common stock as determined by the Company's Board of 
Directors in good faith) (the "Initial Option"), on the terms and conditions 
set forth herein. For each of the first five years after the Effective Date 
(as defined herein) Employee shall participate, along with other executives 
of the Company, in the annual award to all such participants in the 
aggregate, of options to purchase up to 60,000 shares of the Company's common 
stock at an exercise price equal to the then fair market value as determined 
by the Board of Directors at the time of the grant.  Any such options granted 
to Employee shall be referred to herein as "Subsequent Options."  The 
Subsequent Options shall be issued on the terms and conditions set forth 
herein.  The Initial Option and Subsequent Options are also referred to as 
the "Options").  Employee agrees that Employee and any other person who may 
be entitled hereunder to exercise the Options shall be bound by all terms and 
conditions of this Agreement.  Unless otherwise defined herein, capitalized 
terms have the meaning given in the Company's 1998 Stock Option Plan (the 
"Plan").

       2.        EXERCISABILITY.   Subject to the terms of this Agreement, 
the Options granted herein shall become exercisable at the following times 
and in the following amounts:

       The Initial Option shall become exercisable on the 

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       third anniversary of the Effective Date described below.  Each 
       Subsequent Option shall become exercisable at a rate of 20% per year 
       on each anniversary of the effective date of the grant of such 
       Subsequent Option until it is fully vested. All unvested Options shall 
       become exercisable on the earliest of the date (i) the Company's 
       common stock becomes publicly traded on a national securities exchange 
       or the Nasdaq stock market, (ii) the Company completes an initial 
       public offering of its common stock with proceeds in excess of 
       $15,000,000, (iii) the Company, or its assets or business, is sold 
       substantially as an entirety.  Each Option granted hereunder shall 
       lapse and expire on the tenth (10th) anniversary of the effective date 
       of its grant.

                 If Employee does not purchase the full number of shares 
Employee is entitled to purchase in any one year, the right to purchase such 
shares carries over to the subsequent years during the term of the Option.

       3.        EXERCISE.  The Options may be exercised on the terms and 
conditions contained herein by giving three (3) day's prior written notice of 
exercise to the Company, specifying the number of shares to be purchased and 
the price to be paid therefor and by delivering a check in the amount of the 
purchase price payable to the Company.  The purchase price may also be paid, 
in whole or in part, by delivery to the Company of outstanding shares of the 
Company's common stock previously held by the Employee valued at "Fair Market 
Value".

                 For the purposes of this Agreement, "Fair Market Value" as 
of a certain date (the "Determination Date") means: (a) the closing price of 
a share of the Company's common stock on the principal exchange on which 
shares of the Company's common stock are then trading, if any, on the 
Determination Date, or, if shares were not traded on the Determination Date, 
then on the nearest preceding trading day during which a sale occurred; or 
(b) if such stock is not traded on an exchange but is quoted on NASDAQ or a 
successor quotation system, (i) the last sales price (if the stock is then 
listed as a National Market Issue under The Nasdaq National Market System) or 
(ii) the mean between the closing representative bid and asked prices (in all 
other cases) for the stock on the Determination Date as reported by NASDAQ or 
such successor quotation system; or (c) if the Company's stock is not 
publicly traded, the fair market value established in good faith by the Board.

       4.        TERMINATION OF EMPLOYMENT.

                 (a)  TERMINATION OF EMPLOYEE. Employee shall forfeit all 
unexercised Options if Employee's employment terminates because of Employee's 
resignation (unless such resignation is for "good reason" as described below) 
or

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because of Employee's termination for any of the grounds specified in Section 
4.01 of the Employment Agreement.

                 (b)  TERMINATION BY EMPLOYEE FOR "GOOD REASON."  If 
Employee's employment is terminated by Employee for "good reason" as 
described in Section 4.02 of the Employment Agreement, Employee shall have 
the right to exercise the (i) initial Option at any time prior to the Initial 
Option's expiration; and (ii) subsequent Options for twelve (12) months 
following Employee's termination, but only to the extent that the Subsequent 
Options were exercisable on such date of termination.

                 (c)  DEATH.  If Employee's employment is terminated for 
death, or having ceasing to be an employee, but during the period during 
which Employee could have exercised the Options granted hereunder in 
accordance with the terms of this Agreement, Employee should die, Employee's 
executor or administrator of Employee's estate shall have the right for 
twelve (12) months following such death to exercise the Options, but only to 
the extent that the Options were exercisable on the date of Employee's death. 
 
                 (d)  DISABILITY.  If Employee's employment is terminated for 
disability, Employee or his administrator or legal guardian, shall have the 
right for six (6) months following such termination to exercise the Options 
granted hereunder, but only to the extent that the Options were exercisable 
on the date of termination.

                 (e)  OTHER.  If Employee's employment is terminated for any 
reason other than as set forth in Sections 4(a), (b), (c) and (d) above, 
including without limitation, Retirement, Employee shall have ninety (90) 
days following such termination to exercise the Options granted hereunder, 
but only to the extent that the Options were exercisable on the date of 
termination.

       5.        TRANSFERABILITY.  The Options shall be transferable only by 
will or by the laws of descent and distribution to the estate (or other 
personal representative) of Employee and shall be exercisable during 
Employee's lifetime only by Employee.  Except as otherwise provided herein, 
any attempt at alienation, assignment, pledge, hypothecation, transfer, sale, 
attachment, execution or similar process, whether voluntary or involuntary, 
with respect to all or any part of this option or any right under this 
Agreement, shall be null and void and, at the Company's option, shall cause 
Employee's rights under this Agreement to terminate.

       6.        WITHHOLDING REQUIREMENTS.  In the event the Company 
determines that it is required to withhold state or federal income taxes as a 
result of the exercise of the Options, Employee shall be required, as a 
condition to the exercise thereof, to make arrangements satisfactory to the 
Company to enable it to satisfy such withholding requirements.

       7.        RIGHTS AS A STOCKHOLDER.  Employee, or any permitted 
transferee of Employee, shall have no rights as a stockholder with respect to 
any shares covered by the Options until the date of the issuance of a stock 
certificate for such shares.  No 

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adjustment shall be made for dividends (ordinary or extraordinary, whether in 
cash, securities or other property), distributions or other rights for which 
the record date is prior to the date such stock certificate is issued, except 
as provided in Section 8 of this Agreement.  This Agreement shall not confer 
upon Employee any right of continued employment by the Company or interfere 
in any way in the Company's right to terminate Employee.

       8.        RECAPITALIZATION.  The number of shares of Common Stock 
covered by the Options and the exercise price thereof shall be 
proportionately adjusted for any increase or decrease in the number of issued 
shares of common stock resulting from a subdivision or consolidation of such 
shares or the payment of a stock dividend (but only of common stock) or any 
other increase or decrease in the number of issued shares of common stock 
effected without receipt of consideration qqby the Company.  Subject to any 
required action by stockholders, if the Company is the surviving corporation 
in any merger or consolidation, the Options shall pertain and apply to the 
securities to which a holder of the number of shares of common stock subject 
to the Options would have been entitled. 

                 The foregoing adjustments shall be made by the Company's 
Board of Directors, whose determination shall be conclusive and binding on 
the Company and Employee.

                 Except as expressly provided in this Section 8, Employee 
shall have no rights by reason of any subdivision or consolidation of shares 
of stock of any class, the payment of any stock dividend or any other 
increase or decrease in the number of shares of stock of any class, or by 
reason of any dissolution, liquidation, merger, consolidation or spin-off of 
assets or stock of another corporation, and any issue by the Company of 
shares of stock of any class, or securities convertible into shares of stock 
of any class, shall not affect, and no adjustment by reason thereof shall be 
made with respect to, the number of shares subject to the Options or the 
exercise price thereof.

                 The Options shall not affect in any way the right or power 
of the Company to make adjustments, reclassifications, reorganizations or 
changes of its capital or business structure, to merge or consolidate or to 
dissolve, liquidate, sell or transfer all or any part of its business or 
assets.

       9.        SECURITIES ACT AND OTHER REGULATORY REQUIREMENTS.  If 
through any act or omission of Employee the exercise of the Options or the 
sale of any of the underlying shares of stock would, in the opinion of 
counsel for the Company, violate the Securities Act of 1933 (or any other 
federal or state statutes having similar requirements) as it may be in effect 
at that time, then the Options shall not be exercisable and the Company shall 
not be obligated to sell any shares subject to the Options.

                 Further, the Board of Directors of the Company may require 
as a

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condition of issuance of any shares under the Options that Employee furnish a 
written representation that Employee is acquiring the shares for investment 
and not with a view to distribution to the public. 

       10.       SHARES SUBJECT TO SHAREHOLDER AGREEMENT.  Shares issued to 
Employee upon exercise of the Options granted hereunder shall be subject to 
the Company's Amended and Restated Stockholder Agreement, dated as of June 
30, 1997, as it may be amended from time to time, including by the Amendment 
to Stockholder Agreement dated as of December 31, 1997, as amended (the 
"Stockholder Agreement").  In connection with the issuance of the shares of 
Company common stock, Employee shall take such actions and shall execute such 
documents as the Company shall require for Employee to become a party to the 
Stockholder Agreement.

       11.       LEGENDS.  Each certificate representing shares of the 
Company's common stock issued upon exercise of the Options shall bear upon 
its face the following legends in addition to any legends required by 
applicable state law:

       (a)       "THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE BEEN ACQUIRED 
                 FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE 
                 SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT 
                 BE OFFERED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR 
                 OTHERWISE DISPOSED OF UNLESS AND UNTIL REGISTERED UNDER THE 
                 ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR UNLESS, IN 
                 THE OPINION OF COUNSEL TO THE STOCKHOLDER, WHICH COUNSEL 
                 MUST BE, AND THE FORM AND SUBSTANCE OF WHICH OPINION ARE, 
                 SATISFACTORY TO THE ISSUER, SUCH OFFER, SALE, ASSIGNMENT, 
                 PLEDGE, HYPOTHECATION, TRANSFER OR OTHER DISPOSITION IS 
                 EXEMPT FROM REGISTRATION OR IS OTHERWISE IN COMPLIANCE WITH 
                 THE ACT, SUCH LAWS AND THE STOCKHOLDER AGREEMENT, DATED AS 
                 OF JUNE 30, 1997, AS AMENDED."

       (b)       "THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE 
                 SUBJECT TO RESTRICTIONS ON TRANSFER AND OTHER CONDITIONS, AS 
                 SPECIFIED IN A STOCKHOLDER AGREEMENT ENTERED INTO AS OF THE 
                 30TH DAY OF JUNE, 1997, AS AMENDED, COPIES OF WHICH ARE ON 
                 FILE AT THE OFFICE OF THE ISSUER AND WILL BE FURNISHED 
                 WITHOUT CHARGE TO THE HOLDER OF SUCH SHARES UPON WRITTEN 
                 REQUEST."

       Employee shall be bound by the requirements of such legends to the 
extent that such legends are applicable.

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       12.       EFFECT OF EXERCISE.  Upon the exercise of all or any part of 
the Options, the number of shares of common stock subject to the Options 
under this Agreement shall be reduced by the number of shares with respect to 
which such exercise is made.

       13.       NOTICES.  Any notices to be given hereunder by either party 
to the other shall be in writing and may be effected by personal delivery, by 
courier, or by mail (registered or certified), postage prepaid with return 
receipt requested, or by facsimile confirmed by mail.  Mailed notices shall 
be addressed to the parties at the addresses appearing in the introductory 
paragraph.  Mailed notices shall be deemed communicated as of four (4) 
calendar days after mailing.  Notices delivered personally or by courier 
shall be deemed delivered when actually received.

       14.       ENTIRE AGREEMENT.  This Agreement supersedes any and all 
other agreements (other than the Employment Agreement), either oral or in 
writing, between the parties hereto with respect to the employment of the 
employee by the company and contains all the covenants and agreements between 
the parties with respect to such employment in any manner whatsoever.  Each 
party to this Agreement acknowledges that no representations, inducements, 
promises or agreements, orally or otherwise, have been made by any party, 
which are not embodied herein, and that no other prior agreement, statement 
or promise not contained in this Agreement shall not be valid or binding.  
Any modification of this Agreement will be effective only if it is in writing 
signed by the party to be charged.  To the extent that this Agreement and the 
Plan are in conflict, the term of this Agreement controls.  

       15.       PARTIAL INVALIDITY.  If any provision in this Agreement is 
held by a court of competent jurisdiction to be invalid, void or 
unenforceable, the remaining provisions shall nevertheless continue in full 
force without being impaired or invalidated in any way.

       16.       CHOICE OF LAW; COUNTERPARTS.  This Agreement, and all rights 
and obligations hereunder, shall be governed by the laws of the State of New 
York. This Agreement may be executed in one or more counterparts, each of 
which when so executed and delivered shall be deemed an original, but all 
such counterparts together shall constitute but one and the same instrument.  

       17.       SUCCESSOR.  This Agreement shall be binding upon and inure 
to the benefit of the parties hereto and their respective successors, heirs, 
beneficiaries, executors and administrators.

       18.       PARAGRAPH HEADINGS.  Paragraph headings are for convenience 
only and are not part of the context. 

       19.       EFFECTIVE DATE.  The"Effective Date" for purposes of this 
Agreement is February 1, 1998.

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                              [Signature Page Attached]

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                         [SIGNATURE PAGE -- OPTION AGREEMENT]


       IN WITNESS WHEREOF, this Agreement is executed as of the date first
written above.

                                "Company"

                                OUTSOURCING SERVICES GROUP, INC.



                                By: /s/ Chistopher Denney
                                   -------------------------------------------
                                Name:   Chistopher Denney
                                     -----------------------------------------
                                Title:  CEO and President
                                      ----------------------------------------



                                "Employee"

                                /s/ Dennis Nolan
                                ----------------------------------------------
                                DENNIS NOLAN

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