ASSET PURCHASE AGREEMENT



                                  by and among


                           Outsourcing Solutions Inc.,

                          NSA Acquisition Corporation,

                            North Shore Agency, Inc.,

                        Automated Mailing Services, Inc.,

                        Mailguard Security Systems, Inc.,

                                DMM Consultants,

                                       and

                              Certain Stockholders
<PAGE>
                                TABLE OF CONTENTS
                            ASSET PURCHASE AGREEMENT


SECTION                                                                    PAGE


ASSET PURCHASE AGREEMENT......................................................1


RECITALS......................................................................1


ARTICLE I.....................................................................1

   DEFINITIONS................................................................1
   AFFILIATE..................................................................1
   ARBITER....................................................................1
   ASSETS.....................................................................1
   ASSIGNMENT AND ASSUMPTION AGREEMENT........................................2
   ASSUMED LIABILITIES........................................................2
   BALANCE SHEET DATE.........................................................3
   BILL OF SALE...............................................................3
   BUSINESS...................................................................3
   BUYER......................................................................3
   CANADIAN SHARES............................................................3
   CLOSING....................................................................3
   CLOSING CASH CONSIDERATION.................................................3
   CLOSING DATE...............................................................3
   CLOSING DATE BALANCE SHEET.................................................3
   CLOSING DATE STATEMENT.....................................................3
   CLOSING FINANCIAL STATEMENTS...............................................3
   CLOSING STOCK CONSIDERATION................................................3
   CLOSING WORKING CAPITAL....................................................3
   CODE.......................................................................3
   CONTRACT...................................................................4
   COURT......................................................................4
   CURRENT ASSETS.............................................................4
   CURRENT LIABILITIES........................................................4
   DOLLARS....................................................................4
   EARN-OUT AGREEMENT.........................................................4
   EFFECTIVE TIME.............................................................4
   EMPLOYMENT AGREEMENTS......................................................4
   EXCLUDED ASSETS............................................................4
   FINAL PURCHASE PRICE.......................................................4
   FINANCIAL STATEMENTS.......................................................4
   GAAP.......................................................................4
   GOVERNMENT.................................................................4
   INTELLECTUAL PROPERTY......................................................5
   INTERIM BALANCE SHEET......................................................5
   INTERIM STATEMENTS.........................................................5
   LAW........................................................................5
   LIABILITIES................................................................5
   LIEN.......................................................................5
   NORTH SHORE AFFILIATED GROUP...............................................5
   NORTH SHORE CANADA.........................................................5
   NOTICE OF DISPUTE..........................................................5
   ORDINARY COURSE............................................................6
   PARTY......................................................................6
   PERMITTED LIENS............................................................6
   PERSON.....................................................................6
   PLAN.......................................................................6
   PURCHASED ASSETS...........................................................6
   RETURNS....................................................................6
   SELLERS....................................................................6
   SELLERS GROUP..............................................................6
   SELLERS GROUP PERSON.......................................................6
   TAXES......................................................................7

ARTICLE II....................................................................7

   PURCHASE AND SALE OF ASSETS................................................7
   2.1 ASSETS TO BE PURCHASED.................................................7
   2.2 ASSUMED LIABILITIES....................................................7
   2.3 CLOSING CONSIDERATION..................................................7
   2.4 POST-CLOSING ADJUSTMENTS TO CLOSING CONSIDERATION......................8
   2.5 ALLOCATION OF CONSIDERATION............................................8
   2.6 CLOSING................................................................8
   2.7 DELIVERIES OF SELLERS AT CLOSING.......................................8
   2.8 DELIVERIES OF BUYER AT CLOSING.........................................8
   2.9 CLOSING DATE BALANCE SHEET AND STATEMENT...............................9

ARTICLE III..................................................................10

   REPRESENTATIONS AND WARRANTIES OF SELLERS.................................10
   3.1 CORPORATE EXISTENCE AND POWER OF SELLERS..............................10
   3.2 APPROVAL AND ENFORCEABILITY OF AGREEMENT..............................10
   3.3 FINANCIAL STATEMENTS..................................................11
   3.4 EVENTS SUBSEQUENT TO DECEMBER 31, 1996................................12
   3.5 ASSETS IN POSSESSION OF OTHERS........................................13
   3.6 ACCOUNTS AND NOTES RECEIVABLE.........................................13
   3.7 UNDISCLOSED LIABILITIES...............................................13
   3.8 TAXES.................................................................13
   3.9 REAL PROPERTY - OWNED.................................................14
   3.10 PERSONAL PROPERTY - OWNED............................................14
   3.11 REAL AND PERSONAL PROPERTY - LEASED FROM SELLERS.....................14
   3.12 REAL AND PERSONAL PROPERTY - LEASED TO SELLERS.......................15
   3.13 INTELLECTUAL PROPERTY................................................16
   3.14 NECESSARY PROPERTY AND TRANSFER OF PURCHASED ASSETS..................16
   3.15 USE AND CONDITION OF PROPERTY........................................17
   3.16 LICENSES AND PERMITS.................................................17
   3.17 CONTRACTS--DISCLOSURE................................................17
   3.18 CONTRACTS--VALIDITY, ETC.............................................19
   3.19 NO BREACH OF LAW OR GOVERNING DOCUMENT...............................19
   3.20 LITIGATION AND ARBITRATION...........................................20
   3.21 DIRECTORS, OFFICERS, EMPLOYEES AND CONSULTANTS.......................20
   3.22 INDEBTEDNESS TO AND FROM DIRECTORS, OFFICERS AND OTHERS..............20
   3.23 OUTSIDE FINANCIAL INTERESTS..........................................21
   3.24 PAYMENTS, COMPENSATION AND PERQUISITES OF AGENTS AND EMPLOYEES.......21
   3.25 LABOR CONTRACTS, EMPLOYEE BENEFIT PLANS, AND EMPLOYMENT CONTRACTS....21
   3.26 ERISA................................................................21
   3.27 TERMINATED PLANS.....................................................22
   3.28 OVERTIME, BACK WAGES, VACATION AND MINIMUM WAGES.....................22
   3.29 DISCRIMINATION AND OCCUPATIONAL SAFETY AND HEALTH....................22
   3.30 ALIEN EMPLOYMENT ELIGIBILITY.........................................23
   3.31 LABOR DISPUTES; UNFAIR LABOR PRACTICES...............................23
   3.32 INSURANCE POLICIES...................................................23
   3.33 GUARANTEES...........................................................23
   3.34 ENVIRONMENTAL MATTERS................................................23
   3.35 BROKER'S FEES........................................................25
   3.36 CAPITALIZATION AND RELATED MATTERS...................................25
   3.37 CANADIAN LAW.........................................................25
   3.38 FOREIGN ASSETS AND OPERATIONS........................................26
   3.39 METER MAIL PROGRAMS..................................................26
   3.40 BOOKS AND RECORDS....................................................26
   3.41 TRUTHFULNESS.........................................................26

ARTICLE IV...................................................................26

   REPRESENTATIONS AND WARRANTIES OF BUYER...................................26
   4.1 CORPORATE EXISTENCE OF BUYER..........................................26
   4.2 APPROVAL OF AGREEMENT.................................................27
   4.3 NO BREACH OF ARTICLES OR INDENTURES...................................27
   4.4 INVESTMENT REPRESENTATION.............................................27
   4.5 BROKER'S FEES.........................................................27
   4.6 CAPITAL STOCK ETC.....................................................28

ARTICLE V....................................................................28

   COVENANTS CONCERNING SELLERS..............................................28
   5.1 OPERATION OF THE BUSINESS.............................................28
   5.2 PRESERVATION OF BUSINESS..............................................30
   5.3 INSURANCE AND MAINTENANCE OF PROPERTY.................................30
   5.4 FULL ACCESS...........................................................30
   5.5 BOOKS, RECORDS AND FINANCIAL STATEMENTS...............................30
   5.6 GOVERNMENTAL FILINGS..................................................30
   5.7 TAX MATTERS...........................................................31

ARTICLE VI...................................................................31

   OTHER AGREEMENTS..........................................................31
   6.1 CHANGE OF NAME........................................................31
   6.2 EMPLOYEES.............................................................31
   6.3 SUPPLEMENTAL DISCLOSURE...............................................32

ARTICLE VII..................................................................32

   CONDITIONS TO BUYER'S OBLIGATIONS.........................................32
   7.1 REPRESENTATIONS AND WARRANTIES OF SELLERS.............................32
   7.2 PERFORMANCE OF THIS AGREEMENT.........................................32
   7.3 MATERIAL ADVERSE CHANGE AND EXTRAORDINARY DISTRIBUTIONS...............32
   7.4 CERTIFICATE OF SELLERS................................................33
   7.5 OPINION OF COUNSEL....................................................33
   7.6 EMPLOYMENT AGREEMENTS.................................................33
   7.7 EARN-OUT AGREEMENT....................................................33
   7.7 NO LAWSUITS...........................................................33
   7.8 NO RESTRICTIONS.......................................................34
   7.9 CONSENTS..............................................................34
   7.10 RELEASES.............................................................34
   7.11 DOCUMENTS............................................................34
   7.13 LEASE ASSIGNMENT AND OTHER MATTERS...................................34
   7.14 FURTHER ASSURANCES...................................................35

ARTICLE VIII.................................................................35

   CONDITIONS TO SELLERS' OBLIGATIONS........................................35
   8.1 REPRESENTATIONS AND WARRANTIES OF BUYER...............................35
   8.2 PERFORMANCE OF THIS AGREEMENT.........................................35
   8.3 CERTIFICATE OF BUYER..................................................35
   8.4 EARN-OUT AGREEMENT....................................................35
   8.5 EMPLOYMENT AGREEMENTS.................................................35
   8.6 PAYMENT OF CLOSING CONSIDERATION AND ASSUMPTION OF ASSUMED LIABILITIES36
   8.7 NO LAWSUITS...........................................................36
   8.8 OPINION OF COUNSEL....................................................36
   8.9 BANK LOAN.............................................................36
   8.10 FURTHER ASSURANCES...................................................36

ARTICLE IX...................................................................37

   INDEMNIFICATION...........................................................37
   9.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES............................37
   9.2 SELLERS' INDEMNIFICATION..............................................37
   9.3 BUYER'S INDEMNIFICATION...............................................37
   9.4 NOTICE OF CLAIM.......................................................37
   9.5 RIGHT TO CONTEST CLAIMS OF THIRD PERSONS..............................38
   9.6 SOURCES OF INDEMNIFICATION............................................39
   9.7 LIMITATIONS...........................................................39

ARTICLE X....................................................................40

   MISCELLANEOUS.............................................................40
   10.1 ASSIGNMENT; BINDING AGREEMENT........................................40
   10.2 TERMINATION OF AGREEMENT.............................................40
   10.3 MANNER AND EFFECT OF TERMINATION.....................................40
   10.4 NON-DISCLOSURE OF INFORMATION........................................41
   10.5 TRANSFER TAXES AND EXPENSES..........................................41
   10.6 BULK SALES...........................................................41
   10.7 REMEDIES.............................................................41
   10.8 ENTIRE AGREEMENT AND MODIFICATION....................................42
   10.9 SEVERABILITY.........................................................42
   10.10 COUNTERPARTS........................................................42
   10.11 HEADINGS; INTERPRETATION............................................42
   10.12 GOVERNING LAW.......................................................42
   10.13 PAYMENT OF FEES AND EXPENSES........................................42
   10.14 SELLERS GROUP REPRESENTATIVE........................................42
   10.15 NOTICES.............................................................43
<PAGE>
                            ASSET PURCHASE AGREEMENT


     THIS ASSET PURCHASE  AGREEMENT (the "Agreement") is made as of this 8th day
of October  1997,  by and among,  on one hand,  Outsourcing  Solutions  Inc.,  a
Delaware  corporation  ("OSI"),  and NSA  Acquisition  Corporation,  a New  York
corporation  and a subsidiary  of OSI  ("Buyer"),  and on the other hand,  North
Shore Agency,  Inc., a New York corporation  ("North Shore"),  Automated Mailing
Services,  Inc., a New York corporation  ("AMS"),  Mailguard  Security  Systems,
Inc., a New York corporation ("Mailguard"),  and David Klein, in connection with
his sole proprietorship operated as DMM Consultants("DMM  Consultants") (each, a
"Seller" and together, the "Sellers") and those certain individual  stockholders
listed and identified on Exhibit 1 attached hereto (the "Stockholders"). Certain
defined terms are set forth in Article I.

                                    RECITALS

     Buyer  desires  to  purchase  from  Sellers  the  Purchased  Assets  on the
following terms and conditions; and

     Sellers desire to sell to Buyer the Purchased Assets on the following terms
and conditions.

     NOW,  THEREFORE,  in consideration of the foregoing recitals and the mutual
covenants,  representations,  warranties,  conditions and agreements hereinafter
expressed, the Parties agree as follows:

                                    ARTICLE I
                                   DEFINITIONS

     "Affiliate" means a Person that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with, the
Person referred to. In this definition,  "control" means the possession,  direct
or indirect, of the power to direct or cause the direction of the management and
policies of a Person,  whether through ownership of securities,  by contract, or
otherwise.

     "Arbiter" means the individual appointed under Section
2.9(d).

     "Assets" means all assets and property and associated rights and interests,
real,  personal and mixed,  tangible and intangible,  of whatever kind, owned or
used by Sellers;  provided,  however, with respect to the assets of David Klein,
Assets  shall only mean  those used in  connection  with the  Business.  Without
limiting the  generality  of the  foregoing,  the Assets  include the  following
items:

            (a) all assets  reflected  and/or  described on the Interim  Balance
Sheet, except any such assets which have been disposed of in the Ordinary Course
since the Balance Sheet Date;

            (b) all  assets  owned or used by  Sellers  which  have  been  fully
depreciated or written off;

            (c) all assets acquired by Sellers since the Balance Sheet Date;

            (d)  all accounts receivable of Sellers;

            (e)  all inventories of Sellers, including but not limited to all
supplies;

            (f) all Intellectual  Property of Sellers and documentation  thereof
and the right and power to assert,  defend and  recover  title  thereto  and the
right to recover for past  damages on account of the  infringement,  misuse,  or
theft thereof;

            (g) all records, including business, computer, engineering and other
records,  and all  associated  documents,  discs,  tapes  and other  storage  or
recordkeeping  media of  Sellers,  including  but not limited to all sales data,
customer lists, accounts,  bids, contracts,  supplier records and other data and
information of the Business;

            (h)  the Canadian Shares;

            (i)  all  of  Sellers'   rights  and  claims  against  others  under
Contracts; and

            (j) all other claims  against  others,  rights and choses in action,
liquidated or  unliquidated,  of Sellers  arising from the  Business,  including
those  arising  under  insurance  policies  and  those  related  to the  Assumed
Liabilities.

       "Assignment and Assumption Agreement" means the form of
instrument set forth as Exhibit 1.1(a).

       "Assumed Liabilities" means Liabilities of Sellers to the
extent they are:

            (a) Current  Liabilities that are (i) quantified on the Closing Date
Balance Sheet and the Closing Date  Statement,  and if incurred on or before the
Balance Sheet Date,  quantified thereon, (ii) included in the calculation of the
Final  Purchase  Price or (iii) if  incurred  after the date of this  Agreement,
incurred in compliance with this Agreement; or

            (b) executory  obligations  arising from the Business  which are not
required under GAAP to be quantified and included in the financial statements of
the Business and which (i) if required to be set forth on a Schedule, are so set
forth,  (ii) are  incurred  under a Contract  with a Person other than a Sellers
Group  Person  for the sale of goods or  services  by  Sellers,  (iii) are to be
performed  after the Effective  Time or (iv) if incurred  after the date of this
Agreement, are incurred in compliance with this Agreement.

       "Balance Sheet Date" means May 31, 1997.

       "Bill of Sale" means the form of instrument set forth as
Exhibit 1.1(b).

       "Business" means the business and operations of Sellers including without
limitation the business  generally  conducted under the trade names "North Shore
Agency, Inc.," "Automated Mailing Services,  Inc.," "Mailguard Security Systems,
Inc." and/or "DMM Consultants."

       "Buyer" means NSA Acquisition Corporation, a New York
corporation.

       "Canadian  Shares " means all of the capital  stock of North Shore Canada
owned by North Shore.

       "Closing" means the consummation of the transactions
contemplated by this Agreement.

       "Closing Cash Consideration" means Nineteen Million Five
Hundred Thousand Dollars ($19,500,000) in cash.

       "Closing Date" means October 8, 1997 or, if the conditions to Closing are
not by then  satisfied,  on such  Closing  Date as the  Parties  may agree to in
writing.

       "Closing Date Balance Sheet" means the balance sheet prepared pursuant to
Section 2.9.

       "Closing Date Statement" means the statement prepared
pursuant to Section 2.9.

       "Closing Financial Statements" means the Closing Date
Balance Sheet and the Closing Date Statement prepared pursuant to
Section 2.9.

       "Closing Stock  Consideration" means 40,000 shares of voting common stock
of OSI ($25.00 per share for $1 million).

       "Closing  Working Capital" means total Current Assets minus total Current
Liabilities,  as  determined on the Closing Date  Statement  pursuant to Section
2.9.

       "Code" means the Internal Revenue Code of 1986, as
amended.

       "Contract"  means  any  contract,   agreement,   binding   commitment  or
instrument, purchase order or offer, written or oral, entered into or made by or
on behalf of Sellers.

       "Court" means any court or judicial body of any
Government.

       "Current  Assets" shall be  determined in accordance  with GAAP and shall
mean (a) cash, (b) accounts receivable (less an allowance for doubtful accounts)
and (c) prepaid expenses and supplies.

       "Current  Liabilities"  shall be determined  in accordance  with GAAP and
shall mean (a) accounts payable and accrued  expenses,  (b) current  obligations
under capital leases and (c) bank loans payable.

       "Dollars" or "$" means United States Dollars.

       "Earn-out  Agreement"  means  the form of  earn-out  agreement  set forth
hereto as Exhibit 2.3.

       "Effective Time" means the effective time of the Closing,
which shall be as of 12:01 a.m. on October 1, 1997.

       "Employment Agreements" means the forms of employment and non-competition
agreements set forth as Exhibits 7.6(a), 7.6(b) and 7.6(c).

       "Excluded Assets" means the Assets identified in
Schedule 1.1(a).

       "Final Purchase Price" means the Closing Cash  Consideration  as adjusted
pursuant to Section 2.4.

       "Financial  Statements" means the 1996 Financial  Statements and the 1995
Financial  Statements.   "1996  Financial  Statements"  means  the  North  Shore
Affiliated  Group's audited  combined balance sheet at December 31, 1996 and the
related  statements of income and retained  earnings and combined  statements of
cash  flows  for the 12 month  period  then  ended,  together  with any notes or
schedules thereto.  "1995 Financial Statements" means the North Shore Affiliated
Group's  reviewed  combined  balance  sheet at December 31, 1995 and the related
statements of income and retained earnings and combined statements of cash flows
for the 12  month  period  then  ended,  together  with any  notes or  schedules
thereto.

       "GAAP" means generally accepted accounting principles.

       "Government"  means the United  States of  America,  any other  nation or
state, and any federal,  bilateral or multilateral  governmental authority;  and
any  possession,  territory,  county,  district,  municipality,  city  or  other
governmental unit or subdivision of any of the foregoing.

       "Intellectual  Property" means trademarks,  trade names, corporate names,
service marks and registrations thereof and applications therefor, together with
that  part  of the  goodwill  of the  Business  connected  with  the  use of and
symbolized by such marks; patents, copyrights and computer software, both source
code and  executable  code  (but  excluding  any  non-transferable  licenses  of
commercially available software not created or customized for the Business), and
registrations  thereof  and  applications  therefor;  inventions,   discoveries,
processes,  ideas,  designs,  methods,  formulae,  trade  secrets,  unregistered
copyrights,  proprietary  technical  information,  know-how and data;  licenses,
sublicenses,  assignments and agreements with respect to the foregoing;  and all
manuals, records and documentation with respect to the foregoing.

       "Interim  Balance Sheet" means the balance sheet at May 31, 1997 included
in the Interim Statements.

       "Interim  Statements"  means the  Interim  Balance  Sheet and the related
statements of income and retained earnings and combined statements of cash flows
of the North  Shore  Affiliated  Group for the five  month  period  then  ended,
together with any notes or schedules thereto.

       "Law"  means any  statute,  law,  treaty,  ordinance,  rule,  regulation,
instrument,   directive,   decree,   order  or  injunction  of  any  Government,
quasi-governmental  authority or Court, and includes rules or regulations of any
regulatory or  self-regulatory  authority  compliance  with which is required by
Law.

       "Liabilities"  means all liabilities and/or  obligations,  whether or not
required to be reflected on the financial statements of a business.

       "Lien" means any security interest,  mortgage,  pledge,  charge,  adverse
claim or other encumbrance.

       "North Shore  Affiliated  Group" means North Shore,  AMS,  Mailguard  and
North Shore Canada and for purposes of Article III (other than  Sections  3.1(a)
and (b) and 3.3) and  Article V, the term North  Shore  Affiliated  Group  shall
include DMM Consultants.

      "North Shore Canada" means North Shore Agency Collection
Corporation, Canada.

      "Notice of Dispute" means a notice  to Buyer delivered pursuant to Section
2.9, specifying in reasonable detail all points of disagreement with the Closing
Date Balance Sheet and Closing Date Statement.

       "Ordinary Course" means, with respect to the Business,  only the ordinary
course of  commercial  operations  customarily  engaged in by such  business and
specifically does not include (a) activity (i) involving the purchase or sale of
such  business  or  of  any  product  line  or  business  unit,  (ii)  involving
modification  or adoption of any Plan or (iii)  which  requires  approval by the
board of directors or  shareholders of an entity engaged in such business or (b)
the incurrence of any liability for any breach or violation of any Law.

       "Party" means any of Buyer, OSI, Sellers or Stockholders,
and "Parties" means all of them.

       "Permitted Liens" means liens set forth on Schedule
1.1(b).

       "Person" means any natural person; any corporation,  partnership, company
or other corporate entity; and any Government.

       "Plan" means any  agreement,  arrangement,  plan or policy,  qualified or
non-qualified,  whether or not considered legally binding, that involves (a) any
pension, retirement, profit sharing, deferred compensation, bonus, stock option,
stock purchase, phantom stock, health, welfare or incentive plan; or (b) welfare
or "fringe"  benefits,  including  without  limitation any voluntary  employees'
beneficiary  associations or related trusts,  vacation,  severance,  disability,
medical,  hospitalization,  dental, life and other insurance,  tuition,  company
car, club dues,  income tax  preparation,  sick leave,  maternity,  paternity or
family leave, child care or other benefits.

       "Purchased  Assets" means the Assets  excluding the Excluded  Assets.  In
addition, for purposes of Article III and Article V of this Agreement, Purchased
Assets shall include all assets of North Shore Canada.

       "Returns"  means  returns,  reports,   estimated  tax  and  informational
statements and returns  relating to Taxes which are, were or will be required by
Law to be filed by Sellers,  and all information  returns (e.g.,  Form W-2, Form
1099) and reports relating to Taxes or Plans.  Any one of the foregoing  Returns
may be referred to sometimes as a "Return."

       "Sellers" means North Shore, AMS, Mailguard, and David
Klein.

       "Sellers Group" means Sellers and Stockholders.

       "Sellers Group Person" means a Person included in the
Sellers Group.

       "Taxes" means all taxes, charges,  fees, levies or other like assessments
imposed or assessed by any  Government,  including  without  limitation  income,
gross receipts, profits, windfall profit, employment (including Social Security,
state  pension  plans  and  unemployment   insurance),   withholding,   payroll,
franchise,  gross receipts,  sales, use, transfer,  stamp,  occupation,  real or
personal property,  ad valorem,  value added,  premium and excise taxes; Pension
Benefit Guaranty Corporation premiums and any other like Government charges; and
shall include all penalties,  fines, assessments,  additions to tax and interest
resulting  from,  attributable  to, or incurred in connection with such Taxes or
any contest or dispute  thereof.  Any one of the foregoing Taxes may be referred
to sometimes as a "Tax."


                                   ARTICLE II
                           PURCHASE AND SALE OF ASSETS

     2.1 Assets to be Purchased.  Subject to the terms and conditions hereof, on
the Closing Date and as of the Effective  Time,  Sellers agree to sell to Buyer,
free and clear of all Liens other than  Permitted  Liens,  all right,  title and
interest of Sellers to and in all of the Purchased Assets.


     2.2 Assumed Liabilities

          (a) Subject to the terms and  conditions  hereof,  on the Closing Date
and  as of  the  Effective  Time,  Buyer  agrees  to  assume  only  the  Assumed
Liabilities.

          (b)  Notwithstanding  the foregoing,  if the assignment or transfer of
any  obligation  or  instrument  would cause a breach  thereof and if a required
consent to such  assignment or transfer has not been obtained,  then, at Buyer's
election  and in its sole  discretion,  and subject to Buyer's  right to require
strict compliance with Section 7.10 hereof,  such obligation or instrument shall
not be  assigned  or  transferred  to Buyer,  but  Buyer  shall act as agent for
Sellers  in order to obtain for Buyer the  benefits  under  such  obligation  or
instrument.

          (c) EXCEPT AS  EXPRESSLY  AND  UNAMBIGUOUSLY  PROVIDED IN THIS SECTION
2.2, NEITHER BUYER NOR ANY AFFILIATE OF BUYER ASSUMES OR AGREES TO BECOME LIABLE
FOR OR SUCCESSOR TO ANY  LIABILITIES  OR OBLIGATIONS  WHATSOEVER,  LIQUIDATED OR
UNLIQUIDATED, KNOWN OR UNKNOWN, CONTINGENT OR OTHERWISE, WHETHER OF SELLERS, ANY
AFFILIATE OF SELLERS,  ANY PREDECESSOR  THEREOF,  OR ANY OTHER PERSON, OR OF THE
BUSINESS.  NO OTHER  STATEMENT IN OR PROVISION  OF THIS  AGREEMENT  AND NO OTHER
STATEMENT, WRITTEN OR ORAL, ACTION OR FAILURE TO ACT INCLUDES OR CONSTITUTES ANY
SUCH ASSUMPTION OR AGREEMENT, AND ANY STATEMENT TO THE CONTRARY BY ANY PERSON IS
UNAUTHORIZED AND HEREBY DISCLAIMED.

     2.3 Closing Consideration. The consideration for the Purchased Assets shall
consist of (i) the Closing  Cash  Consideration  payable on the Closing  Date by
wire  transfer  of  immediately  available  funds  to the  account  or  accounts
specified in writing by the Sellers two business  days prior to the Closing Date
(subject to  adjustment  as described in Section  2.4),  (ii) the Closing  Stock
Consideration, (iii) the earn-out consideration provided for in Section 2 of the
Earn-out  Agreement,  the form of which is set forth  hereto as Exhibit 2.3, and
(iv) the assumption by Buyer of the Assumed Liabilities.

     2.4 Post-Closing Adjustments to Closing Consideration

          (a) To the extent the Closing Working Capital is greater than $750,000
(the  "Working  Capital  Target"),  the Closing Cash  Consideration  shall (on a
post-closing   basis   pursuant   to   Section   2.4(b))  be   increased   on  a
dollar-for-dollar  basis by an amount  equal to such  excess.  To the extent the
Closing Working  Capital is less than the Working  Capital  Target,  the Closing
Cash Consideration shall (on a post-closing basis pursuant to Section 2.4(b)) be
decreased on a dollar-for-dollar  basis by an amount equal to such deficit.  The
Closing  Cash  Consideration  as so adjusted is  hereinafter  referred to as the
"Final Purchase Price." The Closing Working Capital and the Final Purchase Price
shall be  determined  based on the Closing Date  Balance  Sheet and Closing Date
Statement (as finally determined under Section 2.9).

          (b) Not more than 5 business  days after  final  determination  of the
Final  Purchase  Price,  (i) Buyer shall pay to Sellers  the amount,  if any, by
which the Final Purchase Price exceeds the Closing Cash  Consideration  and (ii)
Sellers shall pay to Buyer the amount, if any, by which the Final Purchase Price
is less than the Closing Cash  Consideration.  Any payment or distribution  from
Buyer or Sellers so required to be made shall be by wire transfer of immediately
available  funds and shall bear  interest from the Closing Date through the date
of  payment  at the  prime  lending  rate of  Citibank,  N.A.  from time to time
prevailing.

     2.5 Allocation of Consideration.  The consideration provided for in Section
2.4 shall be allocated among the Sellers and the Purchased Assets as provided in
Schedule 2.5 hereto,  or as mutually  agreed to in writing by the Parties  after
the determination of the Final Purchase Price. Such allocation shall be prepared
in accordance with Section 1060 of the Code.

     2.6 Closing. The Closing shall take place at 10:00 a.m. on the Closing Date
at the offices of Pryor, Cashman, Sherman & Flynn, New York, New York. --------

     2.7 Deliveries of Sellers at Closing. At Closing, subject to the conditions
to the Sellers'  obligations in Article VIII,  Sellers shall execute and deliver
or cause to be delivered the documents identified in Article VII.

     2.8 Deliveries of Buyer at Closing.  At Closing,  subject to the conditions
to the Buyer's  obligations  in Article VII, Buyer shall (a) execute and deliver
or cause to be delivered the documents  identified in Article VIII, (b) transfer
the Closing Cash Consideration by wire transfer of  immediately-available  funds
to an account or accounts  designated  by Sellers and (c)  transfer  the Closing
Stock  Consideration  to the  Stockholders,  as  assignees  of Sellers and David
Klein.

     2.9 Closing Date Balance Sheet and Statement.

          (a) Buyer, in cooperation  with Sellers,  shall prepare a closing date
balance sheet of the North Shore Affiliated Group ("Closing Date Balance Sheet")
and a closing date  statement  (the  "Closing Date  Statement"),  each as of the
Effective Time and each prepared in accordance with Section 2.9(b).  The Closing
Date Balance Sheet shall also be prepared in accordance with Section 5.7(a). The
Closing  Date  Statement  shall  reflect  Closing  Working  Capital,  as of  the
Effective  Time.  The Closing Date Balance Sheet and the Closing Date  Statement
are herein  referred  to as the  "Closing  Financial  Statements."  Buyer  shall
deliver the Closing  Financial  Statements to Sellers Group  Representative  not
later than 60 calendar days after the Closing Date. After such delivery and upon
request of the Seller Group Representative,  Buyer will provide the Seller Group
Representative with reasonable access to its records relating to the preparation
of the Closing Date Balance Sheet and the Closing Date Statement.

          (b) The Closing  Date  Balance  Sheet shall be prepared in  accordance
with  GAAP with all  appropriate  accruals  and  reserves  consistent  with past
practice.

          (c) If Sellers dispute the Closing  Financial  Statements as delivered
by  Buyer,  Sellers  Group  Representative  shall  deliver  to Buyer a Notice of
Dispute  within 30 calendar  days after the date  Sellers  Group  Representative
receives the Closing Financial  Statements(the  "Dispute Period"). If during the
Dispute  Period  Sellers  Group  Representative  fails to  deliver  a Notice  of
Dispute,  the Closing Financial  Statements shall be deemed final and binding at
the end of the Dispute Period.

          (d) Upon receipt of the Notice of Dispute  within the Dispute  Period,
Buyer shall promptly consult with Sellers Group  Representative  with respect to
Sellers'  specified  points of disagreement in an effort to resolve the dispute.
If any such dispute cannot be resolved by Buyer and Sellers Group Representative
within 20 calendar days after Buyer  receives the Notice of Dispute,  they shall
refer the  dispute  to a  partner  in Price  Waterhouse  LLP,  certified  public
accountants (the "Arbiter"),  as an arbitrator to finally determine,  as soon as
practicable,  and in any event within 30 calendar days after such reference, all
points of disagreement  with respect to the Closing  Financial  Statements.  For
purposes of such arbitration, each Party shall submit proposed Closing Financial
Statements.  The  Arbiter  shall  apply  the  terms of  Section  2.9(b)  of this
Agreement and shall otherwise  conduct the arbitration  under such procedures as
the Parties may agree or, failing such agreement,  under the Commercial Rules of
the American Arbitration  Association.  The fees and expenses of the arbitration
and the  Arbiter  incurred in  connection  with the  arbitration  of the Closing
Financial  Statements shall be allocated,  to the extent practical,  between the
Parties by the Arbiter in  proportion to the extent either Party did not prevail
on items in dispute in the Closing  Financial  Statements;  provided,  that such
fees and  expenses  shall not  include  the other  Party's  outside  counsel  or
accounting fees. All  determinations  by the Arbiter shall be final,  conclusive
and binding with respect to the Closing Financial  Statements and the allocation
of arbitration fees and expenses.


                                   ARTICLE III
                    REPRESENTATIONS AND WARRANTIES OF SELLERS

     Sellers and Stockholders,  jointly and severally, hereby make the following
representations and warranties, each of which Sellers and Stockholders represent
and  warrant  is true and  correct on the date  hereof  and each of which  shall
survive the Closing Date and the  transactions  contemplated  hereby pursuant to
Section 9.1.

     3.1 Corporate Existence and Power of Sellers.

          (a) Each member of the North Shore  Affiliated  Group has delivered to
Buyer a copy of its certificate of incorporation. Each member of the North Shore
Affiliated Group is a corporation  duly organized,  validly existing and in good
standing under the laws of the state of its incorporation.

          (b) Each member of the North Shore  Affiliated Group has the corporate
power and  authority  to own and use its assets and to transact  the business in
which it is engaged, is duly licensed (other than as set forth in Schedule 3.16)
or qualified to do business as a foreign  corporation and is in good standing in
each jurisdiction  where such license or qualification is required except to the
extent such failure to qualify or be  authorized  would have a material  adverse
effect on the business,  condition (financial or otherwise) or operations of the
North Shore Affiliated  Group,  taken as a whole (a "Material  Adverse Effect").
Each  Seller  has the  power  to enter  into  this  Agreement,  to  perform  its
obligations hereunder and to consummate the transactions contemplated hereby.

          (c) North  Shore is,  and will at  Closing  be, a holder of record and
beneficial owner of the Canadian Shares. The Canadian Shares consist of 10 Class
A shares and  10,000,000  Class B shares of North Shore  Canada and are owned by
North Shore free and clear of all security interests, claims and restrictions.

     3.2 Approval and Enforceability of Agreement.

          (a) The execution and delivery of this Agreement and the  consummation
of the transactions contemplated hereby have been duly authorized,  approved and
ratified  by all  necessary  action  on the part of the  Sellers  Group.  At the
Closing,  each Seller will deliver to Buyer  correct and complete  copies of the
resolutions of such Seller, certified by its secretary, giving authorization and
approval of the transactions  contemplated  hereby.  Such resolutions  shall not
have been altered,  amended or revoked.  Each Seller has full authority to enter
into and deliver  this  Agreement  and the  Earn-out  Agreement,  to perform its
obligations   hereunder  and  thereunder  and  to  consummate  the  transactions
contemplated hereby and thereby.

          (b)  Assuming  due  execution  and  delivery  hereof  by  Buyer,  this
Agreement  is the legal,  valid and binding  obligation  of each  Sellers  Group
Person,  enforceable  against  each  according to its terms except that (i) such
enforcement  may  be  limited  by or  subject  to  any  bankruptcy,  insolvency,
reorganization,  moratorium or similar laws now or hereafter in effect  relating
to or  limiting  creditors'  rights  generally  and (ii) the remedy of  specific
performance  and injunctive  and other forms of equitable  relief are subject to
certain  equitable  defenses and to the discretion of the court before which any
proceeding therefor may be brought.

          (c) Sellers are acquiring the shares of common stock consisting of the
Closing Stock  Consideration for their own account,  for investment purposes and
without any view to resale or distribution of such shares or any portion thereof
except that such shares may be distributed to the  Stockholders and David Klein.
Jerome Goodman and David Klein are "accredited investors" as defined in Rule 501
of Regulation D under the Securities Act of 1933, as amended.  The  Stockholders
and  Sellers  acknowledge  receipt  of  Amendment  No. 5 to  OSI's  Registration
Statement on Form S-4, as filed with the Securities  and Exchange  Commission on
April 24, 1997, and OSI's quarterly  reports on Form 10-Q for the periods ending
March 31 and June 30, 1997 (collectively,  "OSI SEC Reports").  Each Stockholder
and Seller  represents  that he has had a reasonable time prior to the execution
of this  Agreement to review the OSI SEC Reports and has had the  opportunity of
ask an officer of OSI questions related to the OSI SEC Reports.


     3.3 Financial Statements.

          (a) Sellers have delivered to Buyer correct and complete copies of the
Financial  Statements and Interim Statements.  The 1996 Financial Statements are
audited by Weisberg,  Polonsky,  Kulberg,  Einhorn & Mole, LLP, certified public
accountants, and their report is appended thereto. The 1995 Financial Statements
are reviewed by Weisberg,  Polonsky,  Kulberg,  Einhorn & Mole,  LLP,  certified
public accountants, and their review report is appended thereto.

          (b) The Financial  Statements and Interim Statements were derived from
the books and  records  of the North  Shore  Affiliated  Group and (i) are true,
complete  and correct in all material  respects,  (ii)  present  fairly,  in all
material respects, the financial position,  results of operations and cash flows
of the Business at the dates and for the periods  indicated  and (iii) have been
prepared in  accordance  with GAAP applied on a basis  consistent  with previous
periods.

     3.4 Events Subsequent to December 31, 1996. Since December 31, 1996, except
as set forth on  Schedule  3.4,  there has been no: (a) change in the  business,
condition  (financial  or  otherwise)  or  operations of any member of the North
Shore  Affiliated  Group  other  than  changes  in the  Ordinary  Course,  which
individually or in the aggregate has been materially adverse to the Business;

          (b) material damage, destruction or loss, whether covered by insurance
or not, affecting any Purchased Assets;

          (c) declaration, setting aside or payment of any distribution (in cash
or in kind) with  respect to any  securities  of Sellers or with  respect to any
securities  of North Shore Canada,  including  without  limitation  the Canadian
Shares;

          (d) increase in or  commitment to increase  compensation,  benefits or
other  remuneration  to or for the benefit of any officer,  employee or agent of
any member of the North  Shore  Affiliated  Group,  or, in  connection  with the
Business,  any other Person or any benefits  granted  under any Plan with or for
the benefit of any such officer, employee, agent or Person;

          (e) transaction entered into or carried out by any member of the North
Shore Affiliated Group other than in the Ordinary Course;

          (f) borrowing or incurrence of any indebtedness,  contingent or other,
by or on  behalf  of any  member of the North  Shore  Affiliated  Group,  or any
endorsement,   assumption  or  guarantee  of  payment  or   performance  of  any
Indebtedness  or  Liability  of any other  Person or entity by any member of the
North Shore Affiliated Group;

          (g) change made by any member of the North Shore  Affiliated  Group in
its Tax or financial accounting or any Tax election including without limitation
the  election  to be treated as an S  Corporation  within the meaning of Section
1361 of the Code;

          (h) grant of any Lien with respect to the Purchased Assets;

          (i) transfer of any Assets other than arm's  length  sales,  leases or
dispositions in the Ordinary Course;

          (j)  modification  or  termination  (other than a  termination  due to
expiration) of any material Contract or any material term thereof;

          (k)  lease  or  acquisition  of any  capital  assets  included  in the
Purchased Assets with a value greater than $25,000 per item;

          (l) loan or advance to any Person; or

          (m)  commitment  or  agreement  by  any  member  of  the  North  Shore
Affiliated Group to do any of the foregoing items (c) through (l).

     3.5 Assets in Possession of Others. No member of the North Shore Affiliated
Group holds title to or  ownership  of any Assets in the  possession  of Persons
others than members of the North Shore Affiliated Group.

     3.6  Accounts  and Notes  Receivable.  All  accounts  and notes  receivable
reflected on the Interim  Balance Sheet,  and all accounts and notes  receivable
accruing  subsequently  to the Balance  Sheet Date (except those which have been
collected  since the Balance  Sheet Date and except with  respect to  applicable
reserves),  are (a) valid,  genuine and subsisting,  (b) subject to no defenses,
set-offs,  counterclaims,  security  interests  or other  encumbrances,  and (c)
current and collectible.  All accounts receivable of Sellers in existence on the
Closing Date will be paid in full, net of applicable reserves,  on or before 240
calendar days after the Closing Date.

     3.7 Undisclosed Liabilities.  No member of the North Shore Affiliated Group
has any  Liabilities  whatsoever,  known or  unknown,  asserted  or  unasserted,
liquidated or unliquidated,  accrued, absolute, contingent or otherwise, and, to
the best knowledge of any Sellers Group Person,  there is no basis for any claim
against any member of the North Shore  Affiliated  Group for any such  Liability
except (a) to the extent  reflected  on the Interim  Balance  Sheet,  (b) to the
extent set forth on  Schedule  3.4 and 3.7, or (c)  Liabilities  incurred in the
Ordinary  Course of the  Business  since the Balance  Sheet Date,  none of which
will, or could,  have a material  adverse  effect upon the  business,  condition
(financial or otherwise) or operations of the Business.

     3.8 Taxes.

          (a) Each member of the North Shore Affiliated Group has paid all Taxes
due and payable prior to the Closing and filed all Returns  required to be filed
prior to the Closing with respect to each North Shore  Affiliated  Group and the
Business  for which the Buyer could be held  liable or a claim made  against the
Purchased  Assets.  Except as set forth on Schedule 3.20, there are no audits or
other proceedings by any Government  pending or, to the knowledge of any Sellers
Group Person,  threatened,  with respect to Taxes of any North Shore  Affiliated
Group or the  Business  for which the Buyer could be held liable or a claim made
against the  Purchased  Assets.  No  assessment  of Taxes is currently  proposed
against any North Shore  Affiliated  Group or the  Purchased  Assets.  Since the
Balance  Sheet Date, no member of the North Shore  Affiliated  Group has assumed
any liabilities that would otherwise  constitute Assumed  Liabilities to pay any
Taxes. No member of the North Shore  Affiliated  Group is a party to, and has no
liability  under any  indemnification,  allocation  or  sharing  agreement  with
respect to Taxes.

          (b) (i) All  Returns  of the North  Shore  Affiliated  Group are true,
correct  and  complete  in all  material  respects;  (ii)  there is no waiver or
extension  of any statute of  limitations  in effect with  respect to any of the
Returns;  and (iii) any  unpaid  Taxes  which  relate to any  period or  portion
thereof prior to the Effective  Time will be properly  reflected as a reserve on
the Closing Date  Balance  Sheet in an amount  sufficient  to fully pay the same
("Reserved Taxes").

          (c) Each member of the North Shore Affiliated Group and/or each Seller
is not and has not been a member of an "affiliated  group" within the meaning of
Section 1504 of the Code.

     3.9 Real Property - Owned.  No member of the North Shore  Affiliated  Group
has any interest in, or any right or  obligation to acquire any interest in, any
parcel of real property.

     3.10 Personal Property - Owned.  Except for Permitted Liens or as set forth
on Schedule  3.10 hereto,  each member of the North Shore  Affiliated  Group has
good  and  marketable  title to all of the  personal  property  included  in the
Purchased Assets owned by such member, including all personal property reflected
on the Interim  Balance  Sheet or acquired  after the date  thereof  (except any
personal property  subsequently sold in the Ordinary Course),  free and clear of
all  options,  Liens,  leases,  covenants,  conditions,   agreements  and  other
restrictions  of every  kind  and  there  exists  no  restriction  on the use or
transfer of such property.

     3.11  Real and  Personal  Property  - Leased  from  Sellers.  Set  forth on
Schedule  3.11(a)  hereto is a list of each lease  under which any member of the
North  Shore  Affiliated  Group or Wayne  Street  Associates  is the  lessor  or
sublessor of any real property,  and on Schedule 3.11(b) hereto is a description
of each lease under which any member of the North Shore  Affiliated Group is the
lessor of any personal property. Sellers have delivered to Buyer a true, correct
and  complete  copy of each written  lease  identified  on Schedules  3.11(a) or
3.11(b).  The premises  described in such leases are  presently  occupied by the
respective lessees under the terms of such leases. All rentals or other payments
due under such leases have been paid,  and, to the best knowledge of any Sellers
Group  Person,  there  exists no default  under the terms of any of such leases,
and, to the best  knowledge of any Sellers Group  Person,  no event has occurred
which,  upon passage of time or the giving of notice,  or both,  would result in
any event of default or prevent the  applicable  Sellers or members of the North
Shore  Affiliated Group from exercising and obtaining the benefits of any rights
contained  therein.  No consent is necessary for the assignment or conveyance of
such leases to Buyer,  and upon  Closing,  Buyer will have all right,  title and
interest of the lessor under the terms of such leases, free of all Liens.

     3.12 Real and Personal Property - Leased to Sellers.

          (a) Set forth on Schedule 3.12(a) hereto is a list of each lease under
which any member of the North Shore  Affiliated  Group is the lessee of any real
property,  and on Schedule  3.12(b)  hereto is a description of each lease under
which any  member  of the  North  Shore  Affiliated  Group is the  lessee of any
personal property.  Sellers have delivered to Buyer a true, correct and complete
copy of each lease identified on Schedules  3.12(a) or 3.12(b).  The premises or
property  described in said leases are presently occupied or used by such member
of the North Shore  Affiliated  Group as lessee  under the terms of such leases.
Except as set forth on Schedules 3.12(a) or 3.12(b),  all rentals due under such
leases have been paid,  and, to the best  knowledge of any Seller Group  Person,
there  exists  no  default  under  the terms of such  leases,  and,  to the best
knowledge of any Seller Group Person,  no event has occurred which, upon passage
of time or the giving of notice,  or both,  would result in any event of default
or prevent  Sellers from  exercising and obtaining the benefits of any rights or
options  contained  therein.  Sellers have all right,  title and interest of the
lessee under the terms of said leases, free of all Liens and all such leases are
valid and in full force and effect.

          (b) Except as set forth on Schedules 3.12(a) or 3.12(b), no consent is
necessary for the  assignment of such leases under which any member of the North
Shore  Affiliated  Group or any Seller is lessee to Buyer.  Upon Closing,  Buyer
will have all right,  title and  interest of the lessee  under the terms of such
leases, free of all Liens other than Permitted Liens.

          (c) To the best  knowledge of any Sellers  Group  Person,  there is no
default  or basis  for  acceleration  or  termination  under,  nor has any event
occurred  nor does any  condition  exist  which with the  passage of time or the
giving of notice,  or both, would constitute a default or basis for acceleration
under any underlying lease, agreement,  mortgage or deed of trust, which default
or basis for acceleration would materially  adversely affect any lease described
on Schedules  3.12(a) or 3.12(b) or the property or use of the property  covered
by such lease. There will be no default or basis for acceleration under any such
underlying  lease,  agreement,  mortgage  or deed of trust  as a  result  of the
transactions provided for in this Agreement.

     3.13 Intellectual Property. Set forth on Schedule 3.13 hereto is a complete
list of all licenses, patents, trade names, trademarks,  copyrights, and service
marks included in the Intellectual Property of the Sellers.  Except as set forth
on Schedule 3.13:

          (a)  all  Intellectual  Property  included  in  the  Purchased  Assets
("Sellers' Intellectual Property") is valid and enforceable;

          (b) good and marketable  title to, or the  unrestricted  right to use,
all Sellers' Intellectual  Property,  together with all common law rights to the
subject matter thereof,  is held by Sellers and/or any member of the North Shore
Affiliated Group, free and clear of all Liens;

          (c) the use,  licensing or sale by or to Sellers  and/or any member of
the North Shore  Affiliated Group of any of the Sellers'  Intellectual  Property
does not require the acquiescence,  agreement or consent of any third party, and
there exists no restriction on the use or transfer of any such item;

          (d) to the best knowledge of each Sellers Group Person, the conduct of
the Business does not  contravene,  conflict with,  violate or infringe upon any
Intellectual  Property right of a third party and no proprietary  information or
trade  secret  has  been  misappropriated  by  any  member  of the  North  Shore
Affiliated Group and/or from any other Seller from any third party.

          (e) to the best  knowledge  of each  Sellers  Group  Person,  Sellers'
Intellectual  Property is not subject to a challenge  or claim of  infringement,
interference or unfair  competition or other claim and, to the best knowledge of
each Sellers Group Person, Sellers' Intellectual Property is not being infringed
upon or violated by any third party.

          (f)   there  are  no   interferences,   challenges,   proceedings   or
infringement  suits  pending or, to the best  knowledge  of each  Sellers  Group
Person, threatened with respect to any of Sellers' Intellectual Property; and

          (g) except as set forth on Schedule  3.13, no Sellers Group Person has
granted a license in Sellers'  Intellectual  Property to any other party, and to
the best knowledge of each Sellers Group Person, no license, assignment or other
transfer of Sellers' Intellectual Property has been granted or made by any third
party  having  a right  to do so that  would  materially  adversely  affect  the
Business.

     3.14  Necessary  Property and Transfer of Purchased  Assets.  The Purchased
Assets  constitute all of Sellers' property and property rights now used, useful
or  necessary  for the  conduct of the  Business in the manner and to the extent
presently conducted by Sellers. Except as set forth on Schedule 3.12, 3.14, 3.16
or 3.18 hereto,  no consent is necessary to, and there exists no restriction on,
the transfer of any of the Purchased  Assets to Buyer.  To the best knowledge of
any Sellers Group Person, there exists no condition,  restriction or reservation
affecting the title to or utility of the Purchased Assets or Assumed Liabilities
which would  prevent Buyer from  occupying or utilizing the Purchased  Assets or
enforcing the rights  thereunder,  or any part thereof,  to the same full extent
that  Sellers  might  continue  to do so if the sale and  transfer  contemplated
hereby did not take place.  Upon the Closing,  good and marketable  title to the
Purchased  Assets shall be vested in Buyer free and clear of all taxes and Liens
other than Permitted Liens.

     3.15 Use and Condition of Property.

          (a) All of the Purchased  Assets are in good  operating  condition and
repair (normal wear and tear excepted) as required for their use in the Business
as presently conducted. No notice of any violation of any Law relating to any of
the Purchased Assets has been received by Sellers except such as have been fully
complied with. All improvements  located on, and the use presently being made of
all real property  included in, the Purchased  Assets or leased  pursuant to the
Assumed  Liabilities  comply  with  all  applicable  zoning  and  building  code
ordinances  and all  applicable  fire,  environmental,  occupational  safety and
health  standards  and similar  standards  established  by Law, and the same use
thereof by Buyer will not result in any violation of any such code, ordinance or
standard.  There is no  pending or  proposed  or, to the best  knowledge  of any
Sellers Group Person,  threatened change in any such code, ordinance or standard
which would have a Material Adverse Effect.

          (b) There is no pending or proposed  or, to the best  knowledge of any
Sellers  Group Person,  threatened  condemnation  proceeding  or similar  action
affecting  the  Purchased  Assets  or with  respect  to any  streets  or  public
amenities  appurtenant  thereto or in the  vicinity  thereof  which would have a
Material Adverse Effect.

     3.16  Licenses and  Permits.  To the best  knowledge  of any Sellers  Group
Person,  set forth on Schedule  3.16 hereto is a list of each  license or permit
required for the conduct of the Business and a list of where licenses or permits
may be  required  together  with the name of the  government  agency  or  entity
issuing such  license or permit.  The licenses and permits set forth on Schedule
3.16 (other than those  listed in Section 1b and 1c of Schedule  3.16) are valid
and in full force and  effect.  Except as noted on  Schedule  3.16,  to the best
knowledge  of any Sellers  Group  Person,  such  licenses and permits are freely
transferable by Sellers,  and upon Closing Buyer will have all right,  title and
interest of the holder thereof.

     3.17  Contracts--Disclosure.  Except as set forth in Schedule 3.17 there is
not outstanding:

               (i) Any single  Contract  providing for an  expenditure by any of
Sellers in excess of $25,000 over the  remaining  life of such  Contract for the
purchase of any real property, machinery,  equipment or other items which are in
the nature of capital investment.

               (ii) Any single  Contract  providing for an expenditure by any of
Sellers in excess of $25,000 over the  remaining  life of such  Contract for the
purchase  of raw  materials,  supplies,  component  parts or any other  items or
services.

               (iii) Any  Contract to sell  products  or to provide  services to
third  Persons  which (a) is at a price which would  result in a net loss on the
sale of such  products or providing of such services or (b) is pursuant to terms
or conditions  which any of Sellers or any member of the North Shore  Affiliated
Group cannot reasonably expect to satisfy or fulfill in their entirety.

               (iv) Any Contract for  materials,  supplies,  component  parts or
other items or services  in excess of the  normal,  ordinary,  usual and current
requirements  of the Business or at a price in excess of the current  reasonable
market price.

               (v) Any revocable or irrevocable indemnity or power of attorney.

               (vi) Any evidence of  indebtedness,  loan  agreement,  indenture,
promissory note, letter of credit, foreign exchange contract,  conditional sales
agreement or other similar type of agreement.

               (vii) Any Contract which involves (i) a sharing of profits with a
Person other than a member of the North Shore Affiliated Group or (ii) any joint
venture, partnership or similar arrangement.

               (viii)  Any   Contract   involving   any  sales   agency,   sales
representation, distributorship or franchise.

               (ix) Any Contract  containing  covenants  expressly  limiting the
freedom of any of Sellers to compete in any line of  business or with any Person
or in any area.

               (x) Any Contract not made in the Ordinary Course providing for an
expenditure in excess of $10,000 over the remaining life of such Contract.

               (xi) Any other material Contract which is not cancelable  without
penalty  on 30  calendar  days'  notice  or less and  which is not set  forth on
another Schedule.

     3.18 Contracts--Validity, Etc.

          (a) Each  Contract is a valid and binding  obligation of the member of
the North Shore Affiliated  Group,  enforceable in accordance with its terms and
in full force and effect  and to the best  knowledge  of any member of the North
Shore  Affiliated  Group each Contract is a valid and binding  obligation of the
other party thereto.

          (b) No member  of the  North  Shore  Affiliated  Group is in  material
breach or material violation thereof or material default under any Contract.  To
the best knowledge of any member of the North Shore  Affiliated  Group, no other
party to any such Contract is in material breach or material  violation  thereof
or material default thereunder. No event has occurred which, through the passage
of time or the giving of notice,  or both,  would  constitute,  and  neither the
execution  of this  Agreement  nor the  completion  of the Closing  does or will
constitute or result in, a material breach or material  violation of or material
default under any Contract, or would cause the acceleration of any obligation of
any party thereto or the creation of a Lien upon any Asset.

          (c) Each  Contract  will be duly assigned to Buyer on the Closing Date
and upon such assignment,  subject to obtaining any consents, Buyer will acquire
all right,  title and  interest of Sellers in and to such  Contract  and will be
substituted  for such Sellers  under the terms of such  Contract.  Except as set
forth on Schedule 3.18, no consent is required for such assignment.

     3.19 No Breach of Law or Governing  Document.  No member of the North Shore
Affiliated  Group  is in  default  under or in  violation  of,  in any  material
respect,  (a)  any  applicable  Law  of  any  Government   (including,   without
limitation,  the  Fair  Debt  Collection  Practices  Act and any  state or local
counterpart or equivalent),  (b) any franchise or license,  or (c) any provision
of its  articles or  certificate  of  incorporation  or  association  or bylaws;
provided,  however,  that the  representations  contained in clauses (a) and (b)
shall be without  regard to  whether  any state  license or permit is  required,
which matter is covered by Section 3.16. Neither the execution of this Agreement
nor the completion of the Closing does or will  constitute or result in any such
default, breach or violation. Except as set forth on Schedule 3.19(a), no member
of the North Shore Affiliated Group is required to obtain any Government permits
or consents to effect the transactions  contemplated  hereby.  Based upon and in
reliance upon the  correspondence,  dated August 25, 1997 to Richard B. Smith of
the Federal  Trade  Commission  (the "FTC  Letter")  and the related  voice mail
transcription  from Mr.  Smith,  all attached as Schedule  3.19(b),  no Ultimate
Parent  Entity of Sellers,  together  with all  entities it  controls,  is a $10
million person under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, or
the rules  relating  thereto (the  "H-S-R").  As used in this Section 3.19,  the
terms  "Ultimate  Parent  Entity,"  "control" and "$10 million  person" shall be
defined by the H-S-R.  The factual matters set forth in the FTC Letter are true,
complete and correct.

     3.20  Litigation  and  Arbitration.  Except as set forth on  Schedule  3.20
hereto,  there is no suit,  claim,  action or proceeding  now pending or, to the
best knowledge of any Sellers Group Person,  threatened before any Court,  grand
jury,  administrative or regulatory body,  governmental  agency,  arbitration or
mediation  panel or similar body,  to which any of Sellers  and/or any member of
the North Shore Affiliated Group is a party or which may result in any judgment,
order,  decree,  liability,  award or other  determination which will, or could,
have any material  adverse effect upon any Purchased Asset or upon the business,
condition  (financial or  otherwise)  or  operations  of the  Business.  No such
judgment,  order,  decree or award has been  entered  against  any of Sellers or
against  any  member  of the  North  Shore  Affiliated  Group,  nor has any such
liability  been  incurred  which has, or could have,  such  effect.  There is no
claim, action or proceeding now pending or, to the best knowledge of any Sellers
Group  Person,  threatened  before  any Court,  grand  jury,  administrative  or
regulatory body, governmental agency,  arbitration or mediation panel or similar
body  which  will,  or  could,  prevent  the  consummation  of the  transactions
contemplated by this Agreement.

     3.21 Directors,  Officers, Employees and Consultants. Set forth on Schedule
3.21 hereto is a complete list of:


          (a) all directors of each of Sellers;

          (b) all officers (with office held) of each of Sellers;

          (c) all hourly  employees of Sellers who earn $25,000 or more per year
and all salaried employees of Sellers; and

          (d) all  consultants  to  Sellers  who were paid more than  $10,000 by
Sellers during the first six months of 1997;

together,  in the case of officers and  employees  of Sellers,  with the current
rate of compensation payable to each.

     3.22 Indebtedness to and from Directors, Officers and Others. Except as set
forth on Schedule  3.22,  (a) no member of the North Shore  Affiliated  Group or
other  Seller is indebted  to any  director,  officer,  employee or agent of any
member of the North Shore  Affiliated  Group or other Seller  except for amounts
due as normal  salaries,  wages and  bonuses  and in  reimbursement  of ordinary
expenses on a current basis and (b) no officer,  employee or agent of any member
of the North Shore Affiliated Group or other Seller is indebted to any member of
the North Shore Affiliated Group or other Seller.

     3.23 Outside Financial  Interests.  No director or officer of any member of
the North  Shore  Affiliated  Group or other  Seller has any direct or  indirect
financial  interest in any  competitor  with or supplier or customer of any such
member  or  Sellers;  provided,  however,  that for this  purpose  ownership  of
corporate  securities having no more than 5% of the outstanding  voting power of
any  competitor,  supplier or customer  for which  securities  are listed on any
national  securities  exchange or  authorized  for  quotation  on the  Automated
Quotations System of the National Association of Securities Dealers,  Inc. shall
not be deemed to be such a financial  interest provided such Person has no other
connection or relationship with such competitor, supplier or customer.

     3.24 Payments, Compensation and Perquisites of Agents and Employees. To the
best knowledge of any Sellers Group Person, all payments to agents,  consultants
and  others  made by any  member of the North  Shore  Affiliated  Group or other
Seller in  connection  with the Business  have been in payment of bona fide fees
and commissions and not as bribes, illegal or improper payments.  Each member of
the North Shore  Affiliated  Group or other Seller has  properly and  accurately
reflected  on its books and records  all  compensation  paid to and  perquisites
provided  to or on  behalf  of  its  consultants,  agents  and  employees.  Such
compensation and perquisites have been properly and accurately  disclosed in the
Financial Statements and Interim Statements and other public or private reports,
records or filings of any member of the North  Shore  Affiliated  Group or other
Seller, to the extent required by Law.

     3.25 Labor Contracts,  Employee  Benefit Plans,  and Employment  Contracts.
Except as set  forth on  Schedule  3.25  hereto,  no  member of the North  Shore
Affiliated  Group  is a party  to (a) any  union  collective  bargaining,  works
council,  joint or  multi-employer  association,  employee  committee or similar
Contract,  (b) any  Plan or (c)  any  employment  Contract.  True,  correct  and
complete  copies of all documents  creating or  evidencing  any such Contract or
Plan  listed  on  Schedule  3.25  have been  delivered  to  Buyer.  There are no
negotiations,  demands or  proposals  which are  pending or which have been made
since  January 1, 1994  which  concern  matters  now  covered,  or that would be
covered, by the type of Contracts or Plans listed in this Section.

     3.26 ERISA.

          (a) All Plans  disclosed  on  Schedule  3.26  comply  in all  material
respects  with,  and have been operated and  maintained in compliance  with, the
Employee  Retirement Income Security Act of 1974, as amended ("ERISA"),  and all
other  applicable  Laws, to the extent  applicable.  No  "reportable  event" (as
defined in Section 4043(b) of ERISA) or "prohibited  transaction" (as defined in
Section  4975(c)(1)  of the Code or  Section  406 of ERISA)  has  occurred  with
respect to any Plan and, except as may result from Closing,  there is no fact or
circumstance  which  may  lead to the  occurrence  of any  reportable  event  or
prohibited  transaction.  Sellers  do not  maintain  and  are  not  required  to
contribute  to, nor have they ever  maintained or been required to contribute to
(i) a defined  benefit  pension plan or (ii) a defined  contribution  plan which
requires minimum contributions.

          (b) No member of the North Shore  Affiliated Group or Sellers has ever
been a party to or  participant  in, or been  required  to  contribute  to,  any
multi-employer plan (as defined in Section 3(37) of ERISA).

          (c) All members of the North Shore  Affiliated Group and other Sellers
have  complied  in all  material  respects  with the  health  care  continuation
requirements of the Consolidated  Omnibus Budget  Reconciliation Act of 1985, as
amended ("COBRA").

     3.27  Terminated  Plans.  Except as set  forth on  Schedule  3.27,  none of
Sellers,  nor any member of the North Shore Affiliated  Group, has terminated or
taken action to terminate any employee  benefit plan.  None of Sellers,  nor any
member of the North Shore  Affiliated  Group, has any liability to any Person or
entity,  including without limitation the Pension Benefit Guaranty  Corporation,
any other Government agency or any participant in or beneficiary of any employee
plan of another entity, and none of Sellers is liable for any excise,  income or
other tax or  penalty as a result of the  termination  of any  employee  benefit
plan.

     3.28  Overtime,  Back  Wages,  Vacation  and  Minimum  Wages.  To the  best
knowledge  of any Sellers  Group  Person,  no present or former  employee of any
member of the North  Shore  Affiliated  Group has any claim  against the Sellers
Group  (whether  under  U.S.,  federal,  state or local law,  foreign  law,  any
employment agreement, or otherwise) on account of or for (a) overtime pay, other
than overtime pay for the current payroll period, (b) wages or salary (excluding
current bonus,  accruals and amounts  accruing under pension and  profit-sharing
plans) for any period other than the current payroll period, (c) vacation,  time
off or pay in lieu of vacation or time off, other than that earned in respect of
the current  fiscal  year or (d) any  violation  of any  statute,  ordinance  or
regulation relating to minimum wages or maximum hours of work.

     3.29  Discrimination  and  Occupational  Safety  and  Health.  To the  best
knowledge of any Seller Group  Person,  no Person or party  (including,  but not
limited  to,  any  Government)  has  any  claim,  or  basis  for any  action  or
proceeding,  against  any member of the North  Shore  Affiliated  Group or other
Seller  arising  out  of  any  statute,  ordinance  or  regulation  relating  to
discrimination in employment or employment  practices or occupational safety and
health standards. Since January 1, 1990, no member of the North Shore Affiliated
Group or other  Seller has  received  any notice from any U.S.  federal,  state,
local or foreign  Government  alleging a  violation  of  occupational  safety or
health standards.

     3.30 Alien Employment Eligibility.  With respect to each Person employed by
any member of the North Shore  Affiliated Group or of Sellers on or after May 1,
1987, and who actually  commenced such  employment on or after November 6, 1986,
(a) such member or Seller hired such Person in compliance  with the  Immigration
Reform and Control Act of 1986 and the rules and regulations thereunder ("IRCA")
and (b) each of Sellers and/or each member of the North Shore  Affiliated  Group
has  complied  in  all  material  respects  with  all  recordkeeping  and  other
regulatory requirements under IRCA.

     3.31 Labor Disputes; Unfair Labor Practices.  There is neither pending nor,
to the best  knowledge  of any  Sellers  Group  Person,  threatened,  any  labor
dispute, strike or work stoppage which affects or which may affect the Business,
and no member of the North Shore  Affiliated  Group is currently  covered by any
injunction issued by any Court.  Since January 1, 1994,  neither Sellers nor any
member of the North Shore Affiliated Group, nor the agents,  representatives  or
employees of each of them, has committed any unfair labor practice as defined in
the National Labor  Relations Act of 1947, as amended.  There is not now pending
or  threatened  any charge or  complaint  against  any member of the North Shore
Affiliated  Group or other Seller by the National  Labor  Relations  Board,  any
state or local labor or employment agency or any representative thereof, and the
execution of this  Agreement  and the Closing  hereunder  will not result in any
such charge or complaint,  nor is there  pending or threatened  any grievance or
arbitration under any labor or employment  Contract.  No right of representation
by a labor  organization  exists  respecting  the employees of any member of the
North  Shore  Affiliated  Group  or  other  Seller,   nor  is  there  pending  a
representation  election.  No collective  bargaining Contract is currently being
negotiated and no organizing  effort is currently being made with respect to the
employees of any member of the North Shore Affiliated Group or other Seller.  No
member of the North Shore  Affiliated  Group and none of Sellers has any ongoing
or future  liabilities or obligations  under any settlement  Contract or consent
decree with respect to labor matters.

     3.32 Insurance Policies. Set forth on Schedule 3.32 hereto is a list of all
insurance  policies  and bonds in force  covering or  relating to the  Purchased
Assets or the Business, including without limitation all properties,  operations
or personnel of each of Sellers.

     3.33  Guarantees.  Except as set forth on  Schedule  3.33  hereto,  none of
Sellers is a guarantor,  indemnitor,  surety or accommodation party or otherwise
liable for any indebtedness of any other Person, firm or corporation,  except as
endorser of checks received and deposited in the Ordinary Course.

     3.34 Environmental Matters

          (a) Except as  disclosed on Schedule  3.34(a)  attached  hereto,  each
member of the North Shore Affiliated  Group's use of the real property set forth
on Schedule  3.12(a)  ("Property")  complies in all material  respects  with all
Laws,  including  without  limitation  the codes,  licenses  and  permits of all
Governments  relating to the  protection of health,  safety or the  environment,
including by way of  illustration  and not by way of  limitation:  the Clean Air
Act; the Federal  Water  Pollution  Control Act; the Resource  Conservation  and
Liability Act; the Toxic Substance Control Act; the Comprehensive  Environmental
Response and Liability  Act; the  Hazardous  Materials  Transportation  Act; the
Atomic Energy Act; the Emergency  Planning and Community  Right-to-Know Act; and
the Oil Pollution  Prevention  Act; and all amendments to each thereto,  and all
other applicable environmental Laws (collectively, "Environmental Laws"). Except
as disclosed on Schedule 3.34(a)  attached hereto,  to the best knowledge of any
Sellers Group Person,  each member of the North Shore Affiliated  Group's use of
the  Property  has at all  times  complied  in all  material  respects  with all
Environmental  Laws.  Except as disclosed on Schedule  3.34(a)  attached hereto,
none of Sellers or members of the North Shore  Affiliated  Group is in violation
in any material respect, in connection with the ownership,  use,  maintenance or
operation of the Property and the conduct of the Business,  of any Environmental
Laws.

          (b) Except as set forth on Schedule 3.34(b) attached hereto, there are
no past,  pending  or,  to the  best  knowledge  of any  Sellers  Group  Person,
threatened  investigations,  inquiries,  notices  or  other  proceedings  by any
Government or any foreign  governmental entity with respect to any of Sellers in
connection with the actual or alleged  violation of, or liability arising under,
any Environmental Laws with respect to the Property.

          (c) Except as  disclosed on Schedule  3.34(c)  attached  hereto,  each
member of the North Shore Affiliated Group has all necessary  material  permits,
registrations,  approvals,  certificates and licenses relating to the protection
of health,  safety or the  environment  as required by the  Environmental  Laws,
except for such permits, registration,  approvals, certificates and licenses the
failure of which to obtain  would not have a Material  Adverse  Effect.  Sellers
have previously  delivered to Buyer or its  representatives  true,  accurate and
complete  copies  of  any  and  all  such  permits,  registrations,   approvals,
certificates and licenses.

          (d) Except as disclosed on Schedule 3.34(d)  attached  hereto,  to the
best  knowledge of any Sellers Group  Person,  there are no  Environmental  Laws
which  require any work,  repairs,  construction  or capital  expenditures  with
respect to the Property, nor has any Seller and/or any member of the North Shore
Affiliated Group received any notice of any of the same.

          (e) Except as disclosed on Schedule 3.34(e),  to the best knowledge of
any  Sellers  Group  Person,  during  any member of the North  Shore  Affiliated
Group's  or of  Sellers'  occupancy  of the  Property  there  has been no spill,
discharge,  leak, emission,  injection,  disposal,  dumping,  emptying,  escape,
leaching,  pumping or release of any kind on,  beneath or above the  Property or
into the  environment  surrounding or adjoining the Property of any  pollutants,
contaminants,   hazardous  substances,  hazardous  chemicals,  toxic  chemicals,
extremely hazardous substances,  petroleum products, petroleum substances, toxic
substances, hazardous wastes, infectious wastes, radioactive materials, asbestos
fibers or solid wastes  (collectively as "Hazardous  Materials"),  including but
not limited to those defined in the Environmental Laws.

          (f) Except as disclosed on Schedule 3.34(f),  to the best knowledge of
any  Sellers  Group  Person,  during  any member of the North  Shore  Affiliated
Group's or of Sellers'  period of occupancy  of the  Property  there has been no
past,  and  there  is  no  current  or  anticipated,   storage,  disposal,  use,
generation, manufacture, refinement, transportation,  production or treatment of
any Hazardous Materials at or upon the Property.

          (g) Except as disclosed on Schedule 3.34(g) attached hereto, no member
of the North Shore  Affiliated Group or of Sellers knows of any information that
any  person,  including  any  employee,  may have any  life  threatening  health
condition or long term  disability  as a result of the prior use of the Property
or as a result of the release of any Hazardous Materials on the Property or into
the environment surrounding the Property.

          (h) Except as disclosed on Schedule 3.34(h),  to the best knowledge of
any Sellers Group  Person,  no asbestos  fibers or materials or  polychlorinated
biphenyls (PCBs) are on the Property.

     3.35 Broker's Fees.  Except as described on Schedule 3.35,  none of Sellers
nor any other member of Sellers  Group has retained any broker,  finder or agent
or agreed to pay any brokerage fees,  finder's fees or commissions  with respect
to the transactions contemplated by this Agreement.

     3.36  Capitalization  and Related Matters.  The authorized capital of North
Shore Canada consists solely of an unlimited  number of Class A Shares and Class
B Shares.  All of the Canadian Shares were validly issued and are outstanding as
fully paid and  non-assessable  shares.  Except for the  Canadian  Shares and 90
Class A Shares of North Shore Canada  registered in the name of Perry Simardone,
(a) there are no outstanding (i) other securities of North Shore Canada, or (ii)
rights or options to acquire securities of North Shore Canada (excluding Buyer's
rights hereunder) except as set forth in the Unanimous  Shareholders'  Agreement
dated April 27, 1994 between Simardone,  North Shore and North Shore Canada, and
(b)  neither  Sellers  nor North Shore  Canada is subject to any  obligation  to
issue, deliver, redeem or otherwise acquire or retire the Canadian Shares or any
other securities of North Shore Canada.

     3.37  Canadian  Law.North  Shore  Canada is in  compliance  in all material
respects with the Laws of Canada and its provinces  relating to or in connection
with the collection of debts.

     3.38 Foreign Assets and  Operations.  Except as set forth on Schedule 3.38,
none of Sellers has an interest in any real  property or tangible or  intangible
property located outside of the United States,  including any stock,  securities
or investments in, claims against,  or receivables  from any entities or Persons
with  substantially  all their  property or  business so located.  Except as set
forth on Schedule 3.38 and for the  operations of North Shore Canada,  no member
of the North Shore  Affiliated  Group has  conducted  the  Business  outside the
United States.

     3.39  Meter  Mail  Programs  .  As  of  the  date  of  this  Agreement,  no
correspondence is being mailed pursuant to which such correspondence  appears to
be from a member of the North Shore  Affiliated  Group  (whether  because of the
letterhead utilized or otherwise) but such correspondence is not produced by and
delivered to the postal  authorities  by a member of the North Shore  Affiliated
Group (a "Meter Mail Program").  There are no current plans by any member of the
North Shore Affiliated Group to initiate a Meter Mail Program.

     3.40 Books and Records. The books of account, stock record books and minute
books  and  other  corporate  records  of each of  Sellers  are in all  material
respects  complete and correct,  have been  maintained in  accordance  with good
business practices and the matters contained therein are accurately reflected on
the Financial Statements and Interim Statements, to the extent appropriate.

     3.41  Truthfulness.  To the best knowledge of any Sellers Group Person,  no
representation  or warranty of Sellers  herein and no statement  or  certificate
furnished  or to be  furnished  by or on  behalf  of  Sellers  pursuant  to this
Agreement  contains or will contain any untrue  statement of a material  fact or
omits  or will  omit to state a  material  fact  necessary  in order to make the
statements contained herein or therein not misleading.


                                   ARTICLE IV
                     REPRESENTATIONS AND WARRANTIES OF BUYER

     Buyer and OSI hereby make the  following  representations  and  warranties,
each of which is true and  correct on the date  hereof  and each of which  shall
survive the Closing Date and the sale  contemplated  hereby  pursuant to Section
9.1.

     4.1 Corporate  Existence of Buyer.  Buyer is a corporation  duly organized,
validly  existing and in good  standing  under the laws of the State of New York
Buyer has the corporate power and authority to own and use its properties and to
transact  the  business  in  which  it is  engaged.  OSI is a  corporation  duly
organized,  validly existing and in good standing under the laws of the State of
Delaware.  OSI  has  the  corporate  power  and  authority  to own  and  use its
properties and to transact the business in which it is engaged.

     4.2 Approval of Agreement.

          (a) The execution and delivery of this Agreement and the  consummation
of the transactions  contemplated  hereby have been duly authorized and approved
by all necessary  corporate action of Buyer and OSI, and such  authorization and
approval have not been  revoked.  Pursuant to such  authorization  and approval,
each of Buyer and OSI has full power and authority to enter into this Agreement,
the  Earn-out  Agreement  and the  Employment  Agreements,  and to  perform  its
obligations  hereunder  and  thereunder,  and  to  consummate  the  transactions
contemplated hereby and thereby.

          (b) Assuming due execution  and delivery  hereof by each Sellers Group
Person,  this Agreement is the legal, valid and binding obligation of each Buyer
and OSI,  enforceable  against each  according to its terms except that (i) such
enforcement  may  be  limited  by or  subject  to  any  bankruptcy,  insolvency,
reorganization,  moratorium or similar laws now or hereafter in effect  relating
to or  limiting  creditors'  rights  generally  and (ii) the remedy of  specific
performance  and injunctive  and other forms of equitable  relief are subject to
certain  equitable  defenses and to the discretion of the court before which any
proceeding therefor may be brought.

          (c)  Neither  Buyer  nor OSI is  required  to obtain  any third  party
contractual consents to effect the transactions contemplated hereby

     4.3 No Breach of Articles or  Indentures.  The execution of this  Agreement
and the consummation of the transactions  contemplated  hereby have not and will
not  constitute  or  result  in the  breach  of any of  the  provisions  of,  or
constitute a default under any material  indenture,  evidence of indebtedness or
other  commitment  to which Buyer or OSI is a party or by which either is bound,
which  breach or default  would have a  material  adverse  effect on OSI and its
subsidiaries,  taken  as a  whole.  The  execution  of  this  Agreement  and the
consummation  of the  transactions  contemplated  hereby  have  not and will not
constitute  or result in the breach of any of the  provisions of the articles of
incorporation or by-laws of Buyer or the certificate of incorporation or by-laws
of OSI.

     4.4 Investment  Representation.  Buyer is acquiring the Canadian Shares for
its own  account,  for  investment  purposes  and  without any view to resale or
distribution of the Canadian Shares or any portion thereof.

     4.5 Broker's  Fees.  OSI has  retained  Bowles  Hollowell  Conner & Co. and
agreed to pay its fees with  respect to the  transactions  contemplated  by this
Agreement.  Except with respect to its agreement with Bowles  Hollowell Conner &
Co., neither Buyer nor OSI has retained any broker, finder or agent or agreed to
pay any  brokerage  fees,  finder's  fees or  commissions  with  respect  to the
transactions contemplated by this Agreement.

     4.6 Capital Stock, Capitalization of OSI; SEC Filings

          (a) The shares of common stock of OSI to be received by the Sellers in
accordance  with the terms of this  Agreement will be duly  authorized,  validly
issued, fully paid and nonassessable.

          (b) The  authorized  capital  stock of OSI  consists of (i)  7,500,000
shares  of OSI  voting  common  stock,  of which  3,425,126.01  shares  are duly
authorized and validly issued and outstanding,  fully paid and  nonassessable on
the date hereof, (ii) 7,500,000 shares of OSI Class A nonvoting common stock, of
which 391,740.58  shares are duly authorized and validly issued and outstanding,
fully paid and  nonassessable  on the date hereof,  (iii) 500,000  shares of OSI
Class B nonvoting  common stock, of which 400,000 shares are duly authorized and
validly issued and outstanding, fully paid and nonassessable on the date hereof,
(iv) 1,500,000  shares of OSI Class C nonvoting common stock, of which 1,040,000
shares are duly  authorized and validly issued and  outstanding,  fully paid and
nonassessable  on the date  hereof  and (v)  1,000,000  shares of OSI  preferred
stock,  of which  935,886.85  shares  are duly  authorized  validly  issued  and
outstanding,  fully  paid and  nonassessable  as of the date of this  Agreement.
Except for the OSI  preferred  stock,  OSI nonvoting  common  stock,  for rights
contained in that certain Amended and Restated  Stockholders  Agreement dated as
of February  16,  1996,  by and among OSI and certain  stockholders  of OSI (the
"Stockholders  Agreement")  and for options to be granted under OSI's 1995 Stock
Option and Stock Award Plan,  there are no  outstanding  securities  convertible
into or  exchangeable  for the capital stock of OSI and no outstanding  options,
rights  (preemptive or  otherwise),  or warrants to purchase or to subscribe for
any shares of such stock or other securities of OSI.

          (c) The reports and other  documents filed by OSI under the Securities
Exchange  Act of 1934,  as amended  (the "1934  Act"),  complied  as to form and
content in all material respects with all requirements  under the 1934 Act as of
the respective dates of filing.

          (d) The most recent stock option grants awarded under OSI's 1995 Stock
Option and Stock Award Plan have an exercise price of $25.00 per share.


                                    ARTICLE V
                          COVENANTS CONCERNING SELLERS

     Each of Sellers covenants and agrees with Buyer that:

     5.1 Operation of the Business.  Without the prior written consent of Buyer,
from and after the date of this  Agreement and until the Closing Date, no member
of the North Shore Affiliated Group will:

          (a) Grant  any  increase  in the rate of pay of any of its  employees,
grant any increase in the salaries of any officer, employee or agent, enter into
or increase the benefits  provided  under any bonus,  profit-sharing,  incentive
compensation,  pension, retirement, medical, hospitalization,  life insurance or
other  insurance plan or plans,  or other  contracts or  commitments,  or in any
other way  increase  in any  amount the  benefits  or  compensation  of any such
officer, employee or agent.

          (b)  Enter  into any  employment  Contract  or  collective  bargaining
agreement.

          (c) Enter into any Contract or engage in any transaction  which is not
in the usual and Ordinary Course or which is inconsistent with past practices.

          (d) Sell or  dispose  of or  encumber  any  Assets  other  than in the
Ordinary Course.

          (e) Make, or enter into any Contract for, any capital  expenditure  or
enter into,  modify,  amend,  or cancel any lease of capital  equipment  or real
property other than in the Ordinary Course.

          (f) Enter  into any  Contract,  whether  for the  purchase  or sale of
inventory,  supplies,  other products or services or otherwise other than in the
Ordinary Course.

          (g) Create, assume, incur or guarantee any indebtedness other than (i)
in the usual and Ordinary  Course of the  Business  and with a maturity  date of
less  than  one  year or (ii)  that  incurred  pursuant  to  existing  Contracts
disclosed in the Schedules delivered pursuant to this Agreement.

          (h) Declare or pay any dividend or make any sale of or distribution in
respect of its  capital  stock or  directly or  indirectly  redeem,  purchase or
otherwise acquire any of its capital stock.

          (i) Make or institute any unusual  method of  transacting  business or
change any accounting procedures or practices or its financial structure.

          (j) Make any  amendments to or changes in its articles or  certificate
of incorporation or association or bylaws.

          (k)  Perform  any act,  or attempt to do any act, or permit any act or
omission to act, which will cause a breach of any material Contract.


     5.2 Preservation of Business. From and after the date of this Agreement and
until the Closing Date, each member of the North Shore Affiliated Group shall:

          (a)  Use  reasonable  commercial  efforts  to  carry  on the  Business
substantially in the same manner as heretofore conducted.

          (b)  Use   reasonable   commercial   efforts  to  keep  its   business
organization  intact,  including  keeping  available the services of its present
employees and preserving its present  relationships with suppliers and customers
and others having business relations with it.

          (c) Perform all  obligations  required to be performed by it under any
Contract or lease.

     5.3 Insurance and Maintenance of Property.  From and after the date of this
Agreement and until the Closing Date, Sellers and each member of the North Shore
Affiliated  Group will  maintain all  insurance  policies and bonds set forth on
Schedule  3.32,  and will  maintain the Purchased  Assets in good  condition and
repair.

     5.4 Full Access.  From and after the date of this  Agreement  and until the
Closing Date,  representatives of Buyer shall have full access at all reasonable
times to all premises,  properties,  books, records,  Contracts, tax records and
documents  of Sellers and of the North Shore  Affiliated  Group  relating to the
Business  and/or the  Canadian  Shares,  and Sellers  will  furnish to Buyer any
information  in respect of the Business as Buyer may from time to time  request.
Such examination and  investigation by Buyer shall not affect the warranties and
representations of Sellers contained in this Agreement.

     5.5 Books,  Records and  Financial  Statements.  From and after the date of
this  Agreement and until the Closing Date,  each of Sellers shall  maintain its
books and financial records in accordance with GAAP consistently applied, and on
a basis  consistent  with the past  practices  of such  Seller.  Said  books and
financial  records  shall fairly and  accurately  reflect the  operations of the
Business.  Each of  Sellers  shall  furnish  to Buyer  promptly,  as  available,
financial  statements  and operating  reports  applicable to the Business  since
March  31,  1997,  all of which  shall  be  prepared  in  accordance  with  GAAP
consistently applied and shall present fairly the financial position and results
of operations of the Business at the dates and for the periods indicated.

     5.6  Governmental  Filings.  Each of Sellers will  cooperate  with Buyer in
making,  as soon as  practicable  following  the execution  hereof,  all filings
required by any Government in connection with the  transactions  contemplated by
this  Agreement.  All  information  provided by Sellers in connection  with such
filings  will,  to the best  knowledge  of the Seller  Group  Persons,  be true,
accurate and complete and will comply with all applicable laws and regulations.

     5.7 Tax Matters.

          (a) The  Parties  agree  that the  amount  for  Reserved  Taxes on the
Closing Date Balance Sheet will be broken down on a schedule to the Closing Date
Balance Sheet into its separate components,  with each component identifying the
specific taxable period and specific Tax for which a particular reserve is being
created or continued  (each  separate  component  being  referred to herein as a
"Reserve").

          (b) Each of Sellers  agrees to furnish,  or cause to be furnished,  to
Buyer, upon request, as promptly as practicable, such information and assistance
(including access to books and records) relating to the Purchased Assets and the
Assumed  Liabilities as is reasonably  necessary for the  preparation of any Tax
Return,  claim for refund or audit or prosecution or defense of any claim,  suit
or proceeding relating to any Taxes.

          (c) All real estate, personal property, ad valorem and any other local
or state taxes  relating to the Purchased  Assets or the Business which shall be
accrued but unpaid as of the  Effective  Time,  or which shall be paid as of the
Effective Time but relate in whole or in part to periods after the Closing Date,
shall be prorated to the  Effective  Time and shall be  reflected on the Closing
Date Balance  Sheet.  Any such prorated  taxes which may be ultimately  assessed
after the Effective  Time shall be paid by Sellers to Buyer or Buyer to Sellers,
as the case may be, within 30 calendar days of such determination.



                                   ARTICLE VI
                                OTHER AGREEMENTS

     6.1 Change of Name.  Within ten business days after the Closing Date, North
Shore, AMS, and Mailguard,  in such manner as is reasonably  requested by Buyer,
shall each change its name to some name other than "North Shore Agency,  Inc.,",
"Automated Mailing Services, Inc.," or "Mailguard Security Systems, Inc." or any
variations or abbreviations  thereof,  and file appropriate  notification of its
change of name in all jurisdictions where such notification is required.

     6.2 Employees.  As of 12:01 a.m. on the Closing Date, all employees of each
North Shore  Affiliated  Group shall cease to be  employees  of each North Shore
Affiliated Group and shall become employees of the Buyer,  unless such employees
are listed on Schedule  6.2(a) as individuals  who will not become  employees of
Buyer.  At  Closing,  each  member of the North  Shore  Affiliated  Group  shall
transfer  sponsorship to Buyer of all of the Plans set forth on Schedule  6.2(b)
and Buyer agrees to assume all such Plans pursuant to the terms of the Change of
Sponsorship  and  Assumption  Agreement  attached  as Exhibit  6.2  ("Change  of
Sponsorship Agreement").

     6.3 Supplemental Disclosure.  The Sellers shall have the right from time to
time prior to the Closing to  supplement  or amend their  disclosure  schedules,
with respect to any matter  hereafter  arising which, if existing or known as of
the date of this  Agreement,  would have been required to set forth or described
in such Schedule. Any such supplemental disclosure,  however, will not be deemed
to have  been  disclosed  as of the  date  of this  Agreement  for  purposes  of
determining  whether or not the  conditions set forth in Section 7.1 hereof have
been satisfied. If Buyer determines to consummate the transactions  contemplated
by this Agreement  notwithstanding such supplemental  disclosure,  however, such
supplemental  disclosure  will  be  deemed  to  have  cured  any  breach  of any
representation   or  warranty  made  in  this  Agreement  for  purposes  of  the
indemnification  obligations  set forth in  Article IX hereof  unless  otherwise
agreed to in writing by the parties.



                                   ARTICLE VII
                        CONDITIONS TO BUYER'S OBLIGATIONS

     The  obligations  of Buyer to consummate the  transactions  provided for in
this  Agreement  shall be subject to the  satisfaction  of each of the following
conditions on or before the Closing Date, subject to the right of Buyer to waive
any one or more of such conditions:

     7.1  Representations  and Warranties of Sellers.  The  representations  and
warranties of Sellers and the  Stockholders  contained in this  Agreement and in
the  certificates  and papers to be  delivered to Buyer  pursuant  hereto and in
connection  herewith  shall be true and correct in all material  respects on the
date hereof and on the Closing Date (except for changes  specifically  permitted
hereunder)  as  though  such  representations  and  warranties  were made on the
Closing Date.

     7.2 Performance of this  Agreement.  Each of Sellers and each member of the
North Shore  Affiliated  Group shall have duly performed or complied with all of
the  obligations  to be performed or complied with by it under the terms of this
Agreement on or prior to the Closing Date.

     7.3 Material Adverse Change and  Extraordinary  Distributions.  There shall
have been no material  adverse  change in the Business  (including the Purchased
Assets and Assumed  Liabilities),  whether or not covered by insurance.  Between
the date of this  Agreement  and the  Closing  Date,  there  shall  have been no
extraordinary distribution by any member of the North Shore Affiliated Group, by
the officers of such member, or by any of Sellers, by the officers of Sellers or
by any Stockholders of any assets or dividends of the Business.

     7.4 Certificate of Sellers.  Buyer shall have received a certificate signed
by the  President  and Treasurer of each of Sellers dated as of the Closing Date
and subject to no  qualification  certifying  that the  conditions  set forth in
Sections 7.1, 7.2, 7.3, 7.8, 7.9 and 7.11 hereof have been fully satisfied. Such
certificate  shall be  deemed a  representation  and  warranty  of  Sellers  and
Stockholders under this Agreement.

     7.5 Opinion of  Counsel.  Buyer shall have  received  from Pryor,  Cashman,
Sherman & Flynn counsel to the Sellers Group, an opinion dated the Closing Date,
to the effect that:

          (a) Each member of the North Shore  Affiliated  Group,  other than DMM
Consultants,  is a  corporation  duly  organized,  validly  existing and in good
standing under the laws of the state of its incorporation.

          (b) This  Agreement  and the  Earn-out  Agreement  have  received  all
requisite  approval by the Stockholders and by the Board of Directors of each of
Sellers, have been duly executed and delivered by each Sellers Group Person, and
are binding and enforceable against each Sellers Group Person in accordance with
their terms,  except that (i) such  enforcement  may be limited by or subject to
any bankruptcy,  insolvency,  reorganization,  moratorium or similar laws now or
hereafter in effect relating to or limiting creditors' rights generally and (ii)
the remedy of specific  performance  and injunctive and other forms of equitable
relief are subject to certain  equitable  defenses and to the  discretion of the
court before which any proceeding therefor may be brought.

     7.6 Employment Agreements. Jerome Goodman shall have executed and delivered
an Employment  Agreement in  substantially  the form attached  hereto as Exhibit
7.6(a), David M. Klein shall have executed and delivered an Employment Agreement
in  substantially  the form attached  hereto as Exhibit 7.6(b) and the employees
listed on the schedule to Exhibit  7.6(c) shall have  executed and  delivered an
Employment  Agreement  in  substantially  the form  attached  hereto as  Exhibit
7.6(c).

     7.7 Earn-Out  Agreement.  Sellers  shall have  executed and  delivered  the
Earn-out Agreement in substantially the form attached hereto as Exhibit 2.3.

     7.8 No Lawsuits. No suit, action or other proceeding or investigation shall
be threatened or pending  before or by any Court or Government  concerning  this
Agreement or the consummation of the  transactions  contemplated  hereby,  or in
connection with any claim against any member of the North Shore Affiliated Group
or of Sellers not disclosed on the Schedules  hereto.  No Government  shall have
threatened or directed any request for  information  concerning  this Agreement,
the transactions contemplated hereby or the consequences or implications of such
transaction to Buyer, to the members of the North Shore  Affiliated  Group or to
Sellers, or any officer, director, employee or agent of any of them.

     7.9 No  Restrictions.  Except with  respect to  obtaining  the licenses set
forth on Schedule  3.16 and not  obtaining  the  consents  set forth on Schedule
7.10,  there shall exist no conditions,  restrictions or reservations  affecting
the title to or utility of the  Purchased  Assets which would prevent Buyer from
occupying and utilizing the Purchased Assets,  or any part thereof,  to the same
full  extent  that  Sellers  might  continue  to do so if the sale and  transfer
contemplated hereby did not take place.

     7.10  Consents.  All consents and approvals  necessary to ensure that Buyer
will continue to have the same full rights in respect to the Purchased Assets as
Sellers  had   immediately   prior  to  the   consummation  of  the  transaction
contemplated hereunder shall have been obtained; provided, however, with respect
to the consent to the  assignment of customer  agreements,  Sellers shall not be
required to obtain the consents  required in connection  with the  assignment of
the agreements listed on Schedule 7.10.

     7.11  Releases.  At or  prior  to the  Closing  Date,  Sellers  shall  have
delivered to Buyer the written  release of all Liens other than Permitted  Liens
relating to the  Purchased  Assets  executed by the holder of or parties to each
such Lien. The releases shall be reasonably  satisfactory  in substance and form
to Buyer and its counsel.

     7.12  Documents.  Buyer  shall  have  received  from each of Sellers on the
Closing Date:

          (a) Bills of Sale and other appropriate  documents  conveying to Buyer
good and marketable title to the Purchased Assets.

          (b) The  Assignment  and  Assumption  Agreement and other  appropriate
assignments, with related consents, if any are so required.

          (c) A certificate or certificates evidencing the Canadian Shares, duly
endorsed or accompanied by a duly executed stock power.

          (d) A Change of Sponsorship Agreement.

     7.13 Lease Assignment and Other Matters.

          (a) Wayne  Street  Associates  shall have  assigned  all of its rights
under the Leases with Kermit Enterprises,  dated as of July 12, 1995 and May 15,
1996, to Buyer.

          (b) North Shore shall have  assigned all of its rights under the lease
agreement for 117 Cuttermill Road in  substantially  the form attached hereto as
Exhibit 7.13(a) to Buyer.

          (c)  The   Stockholders  and  David  Klein  shall  have  executed  the
Stockholders Agreement.

          (d) Jerome Goodman and Buyer shall have executed the License Agreement
in  substantially  the form  attached  hereto as Exhibit  7.13(b) (the  "License
Agreement").

     7.14 Further Assurances. Buyer shall have received such further instruments
and  documents  as may  reasonably  be  required  to carry out the  transactions
contemplated  hereby and to evidence the  fulfillment of the  agreements  herein
contained and the  performance  of all  conditions to the  consummation  of such
transactions.



                                  ARTICLE VIII
                       CONDITIONS TO SELLERS' OBLIGATIONS

     The obligations of Sellers to consummate the  transactions  provided for in
this  Agreement  shall be subject to the  satisfaction  of each of the following
conditions  on or before the  Closing  Date,  subject to the right of Sellers to
waive any one or more of such conditions:

     8.1  Representations  and  Warranties  of Buyer.  The  representations  and
warranties  of Buyer  contained in this  Agreement and in the  certificates  and
papers to be delivered to Sellers  pursuant  hereto and in  connection  herewith
shall be true and correct in all material respects on the date hereof and on the
Closing Date (except for changes  specifically  permitted  hereunder)  as though
such representations and warranties were made on the Closing Date.

     8.2  Performance  of this  Agreement.  Buyer shall have duly  performed  or
complied  with all of the  obligations  to be performed  or complied  with by it
under the terms of this Agreement on or prior to the Closing Date.

     8.3 Certificate of Buyer.  Sellers shall have received a certificate signed
by an  officer  of  Buyer  dated  as of  the  Closing  Date  and  subject  to no
qualification certifying that the conditions set forth in Sections 8.1, 8.2, 8.7
and 8.9 hereof have been fully  satisfied.  Such  certificate  shall be deemed a
representation and warranty of Buyer hereunder.

     8.4 Earn-out Agreement.  Buyer and OSI shall have executed and delivered an
Earn-out  Agreement in  substantially  the form attached  hereto as Exhibit 2.3.

     8.5 Employment Agreements.  Buyer and OSI shall have executed and delivered
Employment  Agreements in  substantially  the form  attached  hereto as Exhibits
7.6(a), 7.6(b) and 7.6(c).

     8.6 Payment of Closing Consideration and Assumption of Assumed Liabilities.
On the Closing  Date,  Sellers  shall have  received from Buyer the Closing Cash
Consideration,  the Closing Stock  Consideration,  the Assignment and Assumption
Agreement,  the Change of Sponsorship  Agreement and the License  Agreement.  In
addition,  Jerome  Goodman shall be released from any and all  guarantees he has
made on behalf of the North Shore Affiliated Group.

     8.7 No Lawsuits. No suit, action or other proceeding or investigation shall
be threatened or pending  before or by any Court or Government  concerning  this
Agreement  or the  consummation  of the  transactions  contemplated  hereby.  No
Government  shall have  threatened  or  directed  any  request  for  information
concerning  this  Agreement,   the  transactions   contemplated  hereby  or  the
consequences or implications of such transaction to Buyer, to the members of the
North Shore Affiliated Group or to Sellers, or any officer,  director,  employee
or agent of any of them.

     8.8 Opinion of Counsel.  Sellers  shall have  received from Bryan Cave LLP,
counsel to Buyer and OSI, an opinion dated the Closing Date, to the effect that:

          (a) Each of Buyer and OSI is a  corporation  duly  organized,  validly
existing and in good standing under the laws of the state of its incorporation.

          (b) This  Agreement  and the  Earn-out  Agreement  have  received  all
requisite approval by the Board of Directors of each of Buyer and OSI, have been
duly  executed  and  delivered  by each of Buyer and OSI,  and are  binding  and
enforceable against each of Buyer and OSI in accordance with their terms, except
that (i) such  enforcement  may be  limited  by or  subject  to any  bankruptcy,
insolvency,  reorganization,  moratorium  or similar  laws now or  hereafter  in
effect relating to or limiting  creditors'  rights generally and (ii) the remedy
of specific  performance and injunctive and other forms of equitable  relief are
subject to certain equitable  defenses and to the discretion of the court before
which any proceeding therefor may be brought.

          (c)  The  shares  of  common  stock  of  OSI  to be  delivered  to the
Stockholders  on the date  hereof  have been duly  authorized  by OSI and,  when
delivered in accordance with the terms of the Asset Purchase Agreement,  will be
fully paid and non-assessable.

     8.9 Bank Loan On the Closing Date, the bank loan payable of the North Shore
Affiliated Group included within the Assumed Liabilities shall have been paid in
full by Buyer pursuant to  instructions  contained in a pay-off letter  obtained
from such bank by North Shore.

     8.10  Further   Assurances.   Sellers  shall  have  received  such  further
instruments  and  documents  as may  reasonably  be  required  to carry  out the
transactions  contemplated  hereby  and  to  evidence  the  fulfillment  of  the
agreements  herein  contained  and  the  performance  of all  conditions  to the
consummation of such transactions.


                                   ARTICLE IX
                                 INDEMNIFICATION

     9.1 Survival of Representations  and Warranties.  The  representations  and
warranties   made  in  this  Agreement   shall  survive  the  Closing  and  sale
contemplated  hereby for a period of 18 months from the Closing Date;  provided,
however the foregoing shall not apply to  representations  and warranties  under
Sections 3.2(b), 3.8 and 3.34 and the last sentence of Section 3.14, which shall
survive until the expiration of the applicable statute of limitations.

     9.2  Sellers'  Indemnification.  Each  Sellers  Group  Person,  jointly and
severally,  hereby agrees to hold Buyer,  OSI and the  shareholders,  directors,
officers, successors, assigns and agents of each of them (the "Buyer Indemnified
Persons")  harmless  and  indemnify  each of them from and  against  any and all
claims,  losses,  damages,  liabilities,  expenses  or  costs  ("Losses"),  plus
reasonable  attorneys'  fees and  expenses  incurred in  connection  with Losses
and/or  enforcement  of this  Agreement,  plus  interest  from the date incurred
through the date of payment at the prime lending rate of Citibank N.A. from time
to time prevailing (in all,  "Indemnified Losses") incurred or to be incurred by
any of them (a) to the extent  resulting  from or  arising  out of any breach or
violation of the  representations,  warranties,  covenants or  agreements of any
Sellers Group Person  contained in this  Agreement,  including the provisions of
this Article IX, (b) to the extent  resulting from or arising out of the matters
disclosed on Schedule 3.20 and (c) to the extent  resulting  from or arising out
of any liability or obligation of any Sellers Group Person not expressly assumed
by Buyer  hereunder as an Assumed  Liability  (such  non-assumed  liabilities to
include  without  limitation  any  violation  by any  member of the North  Shore
Affiliated  Group of the Fair  Debt  Collection  Practices  Act and any state or
local counterpart or equivalent prior to the Closing Date).

     9.3 Buyer's Indemnification. Buyer and OSI hereby agree to hold Sellers and
the Stockholders (the "Sellers Indemnified Persons") harmless and indemnify each
of them  from and  against  any and all  Indemnified  Losses  incurred  or to be
incurred by any of them, (a) to the extent  resulting from or arising out of any
breach or violation of the representations, warranties, covenants and agreements
of Buyer and OSI contained in this  Agreement,  including the provisions of this
Article IX and (b) to the extent  resulting from or arising out of any liability
or obligation of Buyer with respect to the Assumed Liabilities.

     9.4  Notice of Claim.  In the event  that Buyer  seeks  indemnification  on
behalf of a Buyer Indemnified Person, or any of Sellers seeks indemnification on
behalf of a Sellers Indemnified Person, such Party seeking  indemnification (the
"Indemnified  Party")  shall  give  written  notice  to the  Indemnifying  Party
specifying the facts  constituting  the basis for such claim and the amount,  to
the extent known, of the claim asserted. With respect to claims other than Third
Person Claims (as defined below),  the Indemnifying Party shall have 20 calendar
days after the Indemnified  Party provides notice to the  Indemnifying  Party to
make such  investigation of the claim as the Indemnifying  Party deems necessary
or desirable.  For purposes of such  investigation,  the claimant agrees to make
available to the  Indemnifying  Party or its  authorized  representative(s)  the
information  relied  upon by the  claimant  to  substantiate  the claim.  If the
claimant and the Indemnifying  Party agree at or prior to the expiration of such
20 day period (or any mutually  agreed upon  extension  thereof) to the validity
and amount of such claim,  the  Indemnifying  Party shall pay the amount of such
claim not more than 10 calendar  days after  agreement.  If the claimant and the
Indemnifying  Party do no agree within such period (or any mutually  agreed upon
extension thereof), the Claimant may seek any available legal remedy.

     9.5 Right to Contest  Claims of Third Persons.  If an Indemnified  Party is
entitled  to  indemnification  hereunder  because  of a  claim  asserted  by any
claimant (other than an indemnified  person  hereunder)  ("Third  Person"),  the
Indemnified  Party shall give the Indemnifying  Party  reasonably  prompt notice
thereof  after  such  assertion  is  actually  known to the  Indemnified  Party;
provided,  however,  that the right of a person to be  indemnified  hereunder in
respect of claims made by a Third Person  shall not be  adversely  affected by a
failure  to give such  notice  unless,  and then  only to the  extent  that,  an
Indemnifying Party is prejudiced thereby.  The Indemnifying Party shall have the
right,  upon  written  notice  to  the  Indemnified  Party,  and  using  counsel
reasonably  satisfactory  to the  Indemnified  Party,  to  investigate,  secure,
contest  or settle  the claim  alleged  by such  Third  Person (a  "Third-Person
Claim"),  provided that the Indemnifying Party has unconditionally  acknowledged
to the  Indemnified  Party in writing his or its  obligation  to  indemnify  the
persons to be indemnified hereunder with respect to such Third-Person Claim; the
Indemnified Party may thereafter participate in (but not control) the defense of
any such  Third-Person  Claim with its own  counsel at its own  expense,  unless
separate  representation is necessary to avoid a conflict of interest,  in which
case such  representation  shall be at the  expense of the  Indemnifying  Party.
Unless and until the Indemnifying Party so acknowledges his or its obligation to
indemnify,  the Indemnified Party shall have the right, at its option, to assume
and control defense of the matter and to look to the Indemnifying  Party for the
full amount of the costs of defense.  The failure of the  Indemnifying  Party to
respond in writing to the aforesaid notice of the Indemnified Party with respect
to such  Third-Person  Claim within 20 calendar days after receipt thereof shall
be deemed an election not to defend the same. If the Indemnifying Party does not
so acknowledge  his or its obligation to indemnify and assume the defense of any
such  Third-Person  Claim,  (a) the  Indemnified  Party may defend  against such
claim, in such manner as it may deem appropriate, including, but not limited to,
settling such claim, after giving notice of the same to the Indemnifying  Party,
on such  terms  as the  Indemnified  Party  may  deem  appropriate,  and (b) the
Indemnifying  Party may  participate  in (but not  control)  the defense of such
action,  with its own  counsel at its own  expense.  If the  Indemnifying  Party
thereafter seeks to question the manner in which the Indemnified  Party defended
such  Third-Person  Claim or the  amount or nature of any such  settlement,  the
Indemnifying  Party  shall  have the  burden  to prove by clear  and  convincing
evidence that conduct of the Indemnified  Party in the defense and/or settlement
of such Third-Person  Claim constituted gross negligence or willful  misconduct.
The Parties shall make available to each other all relevant information in their
possession  relating to any such  Third-Person  Claim and shall cooperate in the
defense thereof.

     9.6 Sources of Indemnification  Subject to complying with the procedures of
Sections  9.4 and/or  9.5,  Buyer or OSI shall have the right to seek,  in their
sole discretion,  satisfaction of Indemnified Losses: subject to the limitations
of  Section  9.7,  (a)  from  any  Sellers  Group  Person  or (b) by  offsetting
Indemnified  Losses  against the payments of additional  earn-out  consideration
otherwise payable to Sellers pursuant to Section 2.3 and Exhibit 2.3.

     9.7 Limitations.

          (a) The Buyer  Indemnified  Persons  shall not be  entitled to recover
Indemnified  Losses to the  extent  such  Indemnified  Losses  exceed the sum of
$10,000,000  (the "Cap"),  once any Sellers Group Person has made payments to or
on behalf of Buyer Indemnified  Persons with respect to such Indemnified  Losses
in such amount.

          (b) The Buyer  Indemnified  Persons  shall not be  entitled to recover
Indemnified  Losses(i) for a breach of a representation  or warranty (other than
those in Section 3.2, Section 3.6 and the last sentence of Section 3.14) or (ii)
pursuant to Section 9.2(b) unless such Indemnified Losses exceed $375,000 in the
aggregate,  and only to the extent such Indemnified Losses exceed such amount.

          (c) Each  Stockholder  (other than Jerome  Goodman,  who shall have no
limitation  pursuant  to this  Section  9.7(c))  and  David  Klein  shall not be
obligated to indemnify the Buyer Indemnified Persons in excess of the amount set
forth  opposite  his name on  Schedule  9.7(c).  Schedule  9.7(c)  reflects  the
proportional  interest of each Stockholder  (other the Jerome Goodman) and David
Klein in the Cap.

          (d) For purposes of Section 9. 2, "Indemnified Losses" for a breach of
Section  3.19 shall not  include or be  recoverable  by any person to the extent
covered by insurance carried by the indemnified  person.

     9.8  Exclusive  Remedy.  The  obligations  of each Seller  Group  Person to
indemnify the Buyer for any breach described in Section 9.2 shall constitute the
Buyer's  sole and  exclusive  remedy  with  respect to any such  breaches to the
exclusion of any statutory, contractual or common law rights. Buyer's obligation
to indemnify Sellers Indemnified Persons for any breach described in Section 9.3
shall  constitute  the sole and  exclusive  remedy  of the  Sellers  Indemnified
Persons with  respect to any such  breaches to the  exclusion of any  statutory,
contractual or common law rights.



                                    ARTICLE X
                                  MISCELLANEOUS

     10.1 Assignment; Binding Agreement.

          (a)  This  Agreement  and  all or  any  part  of  Buyer's  rights  and
obligations  hereunder  may be  assigned by Buyer at any time to any one or more
Affiliates  of Buyer.  Buyer  shall  cause such  Affiliate(s)  to perform any of
Buyer's obligations hereunder which are assigned to such Affiliate(s).

          (b) Neither this  Agreement nor any of the Sellers  Group's  rights or
obligations hereunder may be assigned by any member of the Sellers Group without
Buyer's prior written consent.

          (c) This  Agreement  shall be  binding  upon  and  shall  inure to the
benefit of the parties hereto and to their  respective  successors and permitted
assigns.

     10.2  Termination  of  Agreement.   This  Agreement  and  the  transactions
contemplated hereby may be terminated prior to the Closing Date only as follows:

          (a) By mutual consent of Buyer and Sellers.

          (b) By either Buyer or Sellers if the Closing  shall not have occurred
on or before  October 15, 1997, or such other date, if any, as Buyer and Sellers
shall agree upon.

     10.3 Manner and Effect of Termination.

          (a)  Any  action  by  Sellers  to  terminate  this  Agreement  and the
transactions  contemplated  hereby, as provided in Section 10.2 hereof, shall be
taken by the Sellers Group  Representative  (as defined in Section  10.14).  Any
such action by Buyer shall be taken by its Chairman of the Board,  its President
or any appropriately authorized officer.

          (b) If this  Agreement is  terminated  pursuant to Section 10.2 hereof
without fault of either party or breach of this  Agreement,  all  obligations of
Sellers and Buyer hereunder  shall  terminate,  without  liability of Sellers to
Buyer or of Buyer to Sellers.  In such event,  each party  hereto  shall pay all
legal and other costs and  expenses  incurred by such party in  connection  with
this Agreement and the transactions contemplated hereby.

          (c) Subject to Section  9.8,  nothing in this  Section or elsewhere in
this  Agreement  shall impair or restrict the rights of any party to any and all
remedies  at law or in equity in the event of a breach of or default  under this
Agreement.

     10.4  Non-Disclosure  of Information.  Without the prior written consent of
Buyer, Sellers will not disclose or reveal to any third Person any confidential,
non-public or commercially  valuable  information (a) concerning  Buyer to which
Sellers were exposed in connection  with this  Agreement or (b)  concerning  the
Business.  Notwithstanding  anything to the contrary  contained  herein, if this
Agreement  is  terminated  pursuant  to Section  10.2  hereof,  the terms of the
Confidentiality  Agreement  among Sellers and OSI shall remain in full force and
effect.

     10.5 Transfer Taxes and Expenses.

          (a) Sellers  shall pay all  documentary  stamp,  intangible  and other
transfer  taxes  which  arise as a result  of the sale of the  Purchased  Assets
contemplated under this Agreement.

          (b) Buyer and Sellers shall use their respective reasonable efforts to
provide or obtain from any taxing  authority any  certificate  or other document
necessary  to  mitigate,  reduce or  eliminate  any Taxes  (including  additions
thereto or interest and penalties  thereon) that otherwise would be imposed with
respect to the transactions contemplated in this Agreement.

     10.6 Bulk Sales.  Buyer hereby waives  compliance with any applicable State
Uniform  Commercial  Code or other  statutory  provisions  governing bulk sales.
Sellers  agree to  indemnify,  defend and hold  harmless  Buyer from any and all
loss, cost or expenses,  resulting from the assertion of claims made against the
Purchased  Assets sold  hereunder or against Buyer by creditors of Sellers under
any bulk sales law with respect to  liabilities  and  obligations of Sellers not
assumed  by  Buyer  hereunder,  such  indemnity  to be in  accordance  with  the
provisions of Article IX hereof.

     10.7  Remedies.  Except as  expressly  set forth in  Section  9.8,  nothing
contained  herein is intended  to or shall be  construed  to limit the  remedies
which  either  party may have  against  the other in the event of a breach of or
default  under this  Agreement,  it being  intended  that any remedies  shall be
cumulative and not exclusive.

     10.8 Entire  Agreement  and  Modification.  This  Agreement,  including the
Schedules  attached hereto and the documents to be delivered pursuant to Article
VII and Article VIII, and Exhibits, constitutes the entire agreement between the
parties,  subject  to  the  last  sentence  of  Section  10.4.  No  changes  of,
modifications  of, or additions to this Agreement shall be valid unless the same
shall be in writing and signed by all parties hereto.

     10.9  Severability.  If any provision of this Agreement shall be determined
to be  contrary  to law and  unenforceable  by any court of law,  the  remaining
provisions shall be severable and enforceable in accordance with their terms.

     10.10 Counterparts. This Agreement may be executed in one or more identical
counterparts,  each of  which  shall  be  deemed  an  original  but all of which
together will  constitute  one and the same  instrument.  This  Agreement may be
executed and thereafter  transmitted by telecopier,  and the telecopier  receipt
shall constitute an original.

     10.11  Headings;  Interpretation.  The table of  contents  and  article and
section  headings  contained in this Agreement are inserted for convenience only
and shall not affect in any way the meaning or  interpretation of the Agreement.
Both  parties  have  participated  substantially  in  the  negotiation  of  this
Agreement,  and each party  hereby  disclaims  any defense or  assertion  in any
litigation or arbitration that any ambiguity herein should be construed  against
the draftsman.

     10.12  Governing  Law. This  Agreement  shall be construed and  interpreted
according to the laws of the State of New York without regard to the conflict of
laws rules of such state.

     10.13  Payment of Fees and  Expenses.  Each Party hereto shall pay all fees
and expenses incurred by such Party incident to the negotiation, preparation and
execution of this Agreement and the consummation of the transaction contemplated
hereby,  including  the fees of counsel,  accountants  and other experts of such
Party and any finder's or brokerage fees incurred by such Party.

     10.14  Sellers  Group  Representative  By  execution  and  delivery of this
Agreement,  each Sellers Group Person  hereby  constitutes  and appoints  Jerome
Goodman as the  representative  of such person  hereunder  (the  "Sellers  Group
Representative")  with full  power and  authority  to give or make all  notices,
objections,  directions  and other  communications  to be given or made by or on
behalf of any Sellers Group Person,  to take any actions or give any consents of
waivers which may be taken or given by or on behalf of any Sellers Group Person,
to bind and act on behalf of the Sellers Group with respect to any matters which
may  arise  or in  connection  with  this  Agreement  and  the  exhibits  hereto
(including  without  limitation  the  Earn-out  Agreement,   but  excluding  the
Employment  Agreements)  and to  otherwise  act for and on behalf of the Sellers
Group (except in connection with the Employment  Agreements).  In the event that
the  Sellers  Group  Representative  should  die or  become  incapacitated,  his
successor shall be selected by the estate or personal  representative of Sellers
Group  Representative,  and written notice of such  selection  shall be given to
Buyer and OSI.

     10.15  Notices.  All notices,  requests,  demands and other  communications
hereunder  shall be  deemed  to have  been  duly  given if the same  shall be in
writing and shall be delivered (i)  personally,  (ii) by registered or certified
mail,  postage  prepaid,  (iii) by facsimile  transmission  or (iv) by overnight
delivery service and addressed as set forth below:

          (a) If to Buyer or OSI:

              Outsourcing Solutions, Inc.
              390 South Woods Mill Road, Suite 150
              Chesterfield, MO  63017
              Attention:  Timothy G. Beffa
              Fax: 314-576-1867

              copy to (which shall not constitute notice):

              Bryan Cave LLP
              One Metropolitan Square
              N. Broadway, Suite 3600
              St. Louis, MO  63102
              Attention:  Peter D. Van Cleve
              Fax: 314-259-2020

          (b) If to any member of the Sellers Group:

              Jerome Goodman and Kevin Goodman
              North Shore Agency, Inc.
              117 Cuttermill Road
              Great Neck, NY  11021
              Fax: (516)466-9391

              copies to(which shall not constitute notice):

              Pryor, Cashman, Sherman & Flynn
              410 Park Avenue
              New York, NY 10022
              Attention: Eric B. Woldenberg
              Fax: (212) 326-0806

                            and

                  David Klein
                  2 Richmond Road
                  Lido Beach, NY 11561


     Any such notice shall be effective  upon receipt.  Any party may change the
address to which notices are to be addressed by giving the other parties  notice
in the manner herein set forth.


THIS AGREEMENT  CONTAINS AN ARBITRATION  PROVISION  WHICH MAY BE ENFORCED BY THE
PARTIES HERETO.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement, on the
day and year first above written.


NSA ACQUISITION CORPORATION


By: /s/ Peter D. Waldstein
   -----------------------------------
   Peter D. Waldstein
   Vice President



OUTSOURCING SOLUTIONS INC.


By: /s/ Timothy G. Beffa
   -----------------------------------
   Timothy G. Beffa
   President and Chief Executive Officer



NORTH SHORE AGENCY, INC.


By: /s/ Jerome Goodman
   -----------------------------------
   Jerome Goodman
   President



AUTOMATED MAILING SERVICES, INC.


By: /s/ Jerome Goodman
   -----------------------------------
   Jerome Goodman
   President



MAILGUARD SECURITY SYSTEMS, INC.


By: /s/ Jerome Goodman
   -----------------------------------
   Jerome Goodman
   President


/s/ David Klein
--------------------------------------
David Klein, as sole proprietor of
DMM Consultants


/s/ Jerome Goodman
--------------------------------------
Jerome Goodman


/s/ Kevin Goodman
--------------------------------------
Kevin Goodman


/s/ Abby Goodman
--------------------------------------
Abby Goodman


/s/ Peter Goodman
--------------------------------------
Peter Goodman


<PAGE>


                               TABLE OF SCHEDULES


1.1(a)                Excluded Assets
1.1(b)                Permitted Liens
2.5                   Allocation of Consideration
3.4                   Events Subsequent to December 31, 1996
3.7                   Undisclosed Liabilities
3.10                  Personal Property - Owned
3.11(a)               Real Property - Leased from Sellers
3.11(b)               Personal Property - Leased from Sellers
3.12(a)               Real Property - Leased to Sellers
3.12(b)               Personal Property - Leased to Sellers
3.13                  Intellectual Property
3.14                  Necessary Property and Transfer of Purchased Assets
3.16                  Licenses and Permits
3.17                  Contracts--Disclosure
3.18                  Contracts--Validity
3.20                  Litigation and Arbitration
3.21                  Directors, Officers, Employees and Consultants
3.22                  Indebtedness to and from Officers, Directors and Others
3.25                  Labor Agreements, Employee Benefit Plans and Employment
                        Agreements
3.26                  ERISA
3.32                  Insurance Policies
3.33                  Guarantees
3.34(a)-(h)           Environmental Matters
3.35                  Broker's Fees
3.38                  Foreign Assets
7.10                  Consents