10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-K

xANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2008

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Commission File Number 0-20540

ON ASSIGNMENT, INC.

(Exact name of registrant as specified in its charter)

Delaware	95-4023433
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

26651 West Agoura Road

Calabasas, California 91302

(Address of Principal Executive Offices)

Registrant’s telephone number, including area code: (818) 878-7900

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock, $0.01 par value	The NASDAQ Stock Market, LLC

Securities registered pursuant to Section 12(g) of the Act:

None

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements of the past 90 days.  Yes xNo o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o Accelerated filerx Non-accelerated filero Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of June 30, 2008, the aggregate market value of our common stock held by non-affiliates of the registrant was approximately $188,926,875.

As of March 10, 2009, the registrant had outstanding 36,381,626 shares of Common Stock, $0.01 par value.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s proxy statement for the 2009 Annual Meeting of Stockholders, to be filed within 120 days of the close of the registrant’s fiscal year 2008, are incorporated by reference into Part III of this Annual Report on Form 10-K.

SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements are based upon current expectations, as well as management’s beliefs and assumptions, and involve a high degree of risk and uncertainty. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Statements that include the words “believes,” “anticipates,” “plans,” “expects,” “intends,” and similar expressions that convey uncertainty of future events or outcomes are forward-looking statements. Forward-looking statements include statements regarding our anticipated financial and operating performance for future periods. Our actual results could differ materially from those discussed or suggested in the forward-looking statements herein. Factors that could cause or contribute to these differences or prove our forward-looking statements, by hindsight, to be overly optimistic or unachievable include, but are not limited to actual demand for our services, our ability to attract, train, and retain qualified staffing consultants, our ability to remain competitive in obtaining and retaining temporary staffing clients, the availability of qualified temporary nurses and other qualified contract professionals, our ability to manage our growth efficiently and effectively, continued performance of our information systems and the factors described in Item 1A of this Annual Report on Form 10-K under the Section titled ”Risk Factors.” Other factors also may contribute to the differences between our forward-looking statements and our actual results. In addition, as a result of these and other factors, our past financial performance should not be relied on as an indication of future performance. All forward-looking statements in this document are based on information available to us as of the date we file this Annual Report on Form 10-K, and we assume no obligation to update any forward-looking statement or the reasons why our actual results may differ.

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PART I

Item 1. Business

Overview and History

On Assignment, Inc. is a diversified professional staffing firm providing flexible and permanent staffing solutions in specialty skills including Laboratory/Scientific, Healthcare/Nursing, Physician, Medical Financial, Information Technology and Engineering. We provide clients in these markets with short-term or long-term assignments of contract professionals, contract-to-permanent placement and direct placement of these professionals. As of December 31, 2008, our business consists of four operating segments: Life Sciences, Healthcare, Physician and Information Technology (IT) and Engineering.

The Life Sciences (formerly Lab Support) segment includes our domestic and international life science staffing businesses. Life Sciences segment revenues for 2008 were $129.5 million and represented 20.9 percent of our total revenues. We provide locally-based contract life science professionals to clients in the biotechnology, pharmaceutical, food and beverage, medical device, personal care, chemical, automotive, educational and environmental industries. Our contract professionals include chemists, clinical research associates, clinical lab assistants, engineers, biologists, biochemists, microbiologists, molecular biologists, food scientists, regulatory affairs specialists, lab assistants and other skilled scientific professionals.

The Healthcare segment includes our Nurse Travel and Allied Healthcare (formerly Medical Financial and Allied, or MF&A) lines of business. Healthcare segment revenues for 2008 were $180.7 million and represented 29.2 percent of our total revenues. We offer our healthcare clients locally-based and traveling contract professionals, from more than ten healthcare and medical financial and allied occupations. Our contract professionals include nurses, specialty nurses, health information management professionals, dialysis technicians, surgical technicians, imaging technicians, x-ray technicians, medical technologists, phlebotomists, coders, billers, claims processors and collections staff.

Our Physician segment consists of VISTA Staffing Solutions, Inc. (VISTA), which we acquired on January 3, 2007. The Physician segment revenues for 2008 were $89.2 million and represented 14.4 percent of our total revenues. VISTA is a leading provider of physician staffing, known as locum tenens, and permanent physician search services based in Salt Lake City, Utah. We provide short and long-term locum tenens services and full-service physician search and consulting services, primarily in the United States, with some locum tenens placements in Australia and New Zealand. We work with physicians in a wide range of specialties, placing them in hospitals, community-based practices and federal, state and local facilities.

Our IT and Engineering segment consists of Oxford Global Resources, Inc. (Oxford) which we acquired on January 31, 2007. The IT and Engineering segment revenues for 2008 were $218.7 million and represented 35.4 percent of our total revenues. Oxford, based in Beverly, Massachusetts, delivers high-end consultants with expertise in specialized information technology, hardware and software engineering and mechanical, electrical, validation and telecommunications engineering fields. We combine international reach with local depth, serving clients through a network of Oxford International recruiting centers in the United States and Europe, and Oxford & Associates branch offices in major metropolitan markets across the United States.

We were incorporated on December 30, 1985, and thereafter commenced operation of our Lab Support line of business (now included in our Life Sciences operating segment), our first contract staffing line of business. Utilizing our experience and unique approach in servicing our clients and contract professionals, we expanded our operations into other industries requiring specialty staffing. In 1994, through our acquisition of 1st Choice Personnel, Inc. and Sklar Resource Group, Inc., we established our Healthcare Financial Staffing service line of business (now a part of our Healthcare operating segment). Originally named Finance Support, this service line of business changed its name in 1997 and shifted in its business development focus to medical billing and collections for hospitals, HMO’s and physician groups. In 1996, we acquired Enviro Staff, and began providing contract professionals to the environmental services industry. In 1998, we acquired LabStaffers, Inc. to enhance our Life Sciences business. In 1999, we expanded our Life Sciences operations into Europe. Also in 1999, we formed our Clinical Lab Staff service line of business, and in 2001, we formed our Diagnostic Imaging Staff service line of business. Both of these service lines of business provide scientific and medical professionals to hospitals, physicians’ offices, clinics, reference laboratories and managed care organizations and are currently included as a part of our Healthcare segment. In 2002, we acquired Health Personnel Options Corporation, and established our Nurse Travel line of business, which provides registered nurses to hospitals and managed healthcare organizations. In 2003, we expanded our service offerings for our Life Sciences operating segment to include clinical research and engineering. Our clinical research line of business provides life science professionals in medical and clinical trial research, and engineering line of business provides contract professionals in manufacturing, packaging, research and development and quality control positions. In 2004, we expanded our service offerings in our Healthcare operating segment to include local nursing and health information management, which provides health information professionals to healthcare clients to process insurance claims and manage patient data. On January 3, 2007, we acquired VISTA, and established our Physician operating segment, a company that provides short and long-term physician staffing (locum tenens) solutions to healthcare providers. VISTA was founded in 1990 and its headquarters are located in Salt Lake City, Utah. On January 31, 2007, we acquired Oxford, and established our IT and Engineering operating segment, a company that provides high-end consultants with expertise in specialized information technology, software and hardware engineering, and mechanical, electrical, validation and telecommunications engineering fields. Oxford was founded in 1984 and is headquartered in Beverly, Massachusetts.

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Financial information regarding our operating segments and our domestic and international revenues are included under “Financial Statements and Supplementary Data” in Part II, Item 8 of this Annual Report.

Our principal executive office is located at 26651 West Agoura Road, Calabasas, California 91302, and our telephone number is (818) 878-7900. We have approximately 79 branch offices in 25 states within the United States and in five foreign countries.

Industry and Market Dynamics

 General

Though the most recent U.S. employment figures indicate a significant contraction in the job growth rates, from late 2007 through the present, the latest U.S. Bureau of Labor Statistics estimates that total employment will grow by 15.6 million jobs, or 10 percent, between 2006 and 2016. By comparison, there were 15.9 million new jobs created in the prior ten-year period. Employment growth will continue to be concentrated in the service sector with healthcare and social assistance, and professional and business services providing the strongest employment growth.

The Staffing Industry Analysts Insight: Staffing Industry Forecast 2009 (dated January 9, 2009), an independent staffing industry publication, estimates that total staffing industry revenues were $127 billion in 2008 and will be $114 billion in 2009, down from $133 billion in 2007. The biggest industry segment, contract help, is forecasted to contract at an annual rate of 8.2 percent in 2009 with revenues of $86 billion in 2009, while permanent placement is expected to contract by 25.4 percent. Within the contract help segment, professional staffing is expected to contract at an annual rate of 5.1 percent in 2009 to revenues of $52 billion. While the current economic climate has affected the staffing industry, we believe healthcare, scientific and IT clients will continue to outsource their labor needs to professional staffing firms.  These end users will benefit from cost structure advantages, improved flexibility to fluctuating demand in business and access to greater expertise. Typically, life sciences and healthcare clients' products directly influence an individual’s health, welfare and well being, which will also impact our customers’ decision to use our services.

As of December 31, 2008, our staffing service offerings were grouped under four operating segments: Life Sciences, Healthcare, Physician and IT and Engineering.

 Life Sciences

TheStaffing Industry Analysts Insight: Staffing Industry Forecast 2009(dated January 9, 2009), states that the life sciences professional staffing market will contract 2.0 percent in 2009. Demand for staffing in our Life Sciences segment is driven primarily by clients with research and development projects across a wide array of industries. However, due to the current economic climate customers are delaying projects and slowing work on existing projects.

Our Life Sciences segment includes our domestic and international life science staffing businesses. We provide locally-based, contract life science professionals to clients in the biotechnology, pharmaceutical, food and beverage, personal care, chemical, medical device, automotive, education and environmental industries. Our Life Sciences segment operates from local branch offices in the United States, United Kingdom, Netherlands, Belgium, Ireland and Canada.

 Healthcare

TheStaffing Industry Analysts Insight: Staffing Industry Forecast 2009(dated January 9, 2009), estimates that the healthcare staffing market will grow by 1.5 percent in 2009. Despite the forecasted contraction in the broader staffing industry, healthcare staffing is estimated to have grown by 3.5 percent in 2008. Within the healthcare staffing industry, allied health and locum tenens continue to be the strongest areas with estimated 2008 revenue growth of 7.0 percent and 14.5 percent, respectively.

In prior years, nursing employment levels were affected by cutbacks in the use of agency workers by hospitals and medical groups and their reluctance to pay market rates. Today, as a result of the economy, hospitals are seeing fewer admissions and procedures and are attempting to minimize expenses, which in turn have impacted the demand for our services.  Looking forward, contract nursing employment growth should be stimulated by various factors including a limited supply of nurses, more favorable nurse-patient ratios and an aging population.

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 The combination of increased demand for health services and advances in life science and medical technology is expected to create significant demand for workers with specialized science and medical skills. Also influencing the demand for these workers is the departure of mature professionals from the ranks of full-time employment as they retire, reduce hours worked and pursue other career opportunities.

Our Healthcare segment provides locally-based and traveling contract professionals to healthcare clients, including hospitals, integrated delivery systems, imaging centers, clinics, physician offices, reference laboratories, universities, managed care organizations and third-party administrators. These healthcare clients face shortages of operations-critical staff that limit their ability to generate revenues.

Physician

The Staffing Industry Analysts Insight: Staffing Industry Forecast 2009(dated January 9, 2009), states that the physician staffing market will increase 14.0 percent in 2009. This is one of the fastest growing sectors of the staffing markets. An ongoing shortage of physicians is fueling this growth.

Our Physician staffing business places physicians in a wide range of specialties throughout the United States, as well as Australia and New Zealand, under the brand VISTA. The physician staffing market requires a high degree of specialized knowledge about credentialing and qualifications, as well as unique insurance requirements that make it more difficult to replicate than certain other types of staffing markets. Our Physician segment operates out of one primary recruitment center with several branch offices.

IT and Engineering

The Staffing Industry Analysts Insight: Staffing Industry Forecast 2009(dated January 9, 2009), estimates that the IT staffing market will contract 8.0 percent in 2009 to $18.9 billion. Demand in our IT and engineering business segment is driven by a shortage of highly skilled professionals with specific expertise. However, due to the lack of capital in this economic environment, customers are postponing or canceling projects and extending completion dates.

Our IT and Engineering segment places only very highly qualified professionals across a wide range of disciplines. The segment operates out of several large sales and recruitment centers including one in Cork, Ireland under the brand Oxford International, and a number of domestic branch offices under the brand Oxford & Associates. Placements are highly diversified in that we average less than two contract placements per client.

Sales and Fulfillment

 General

Our strategy is to serve the needs of our targeted industries by effectively understanding and matching client staffing needs with qualified contract professionals. In contrast to the mass market approach generally used for contract office/clerical and light industrial personnel, we believe effective assignments of contract healthcare, life science, physician and IT and engineering professionals require the people involved in making assignments to have significant knowledge of the client’s industry and the ability to assess the specific needs of the client as well as the contract professionals’ qualifications. We believe that face-to-face selling is significantly more effective than the telephonic solicitation of clients, a tactic favored by many of our competitors. We believe our strategy of using industry professionals to develop personal relationships provides us with a competitive advantage in our industry which is recognized by our clients.

Our corporate offices are organized to perform many functions that allow staffing consultants and recruiters to focus more effectively on business development and the assignment of contract professionals. These functions include the recruiting and hiring of staffing consultants, recruiters and support staff, as well as ongoing training, coaching and administrative support. Our corporate offices also select, open and maintain branch offices.

Life Sciences

We have developed a tailored approach to the assignment-making process that utilizes staffing consultants. Unlike traditional approaches that tend to be focused on telephonic solicitation, our Life Sciences staffing consultants are experienced professionals who work in our branch office network in the United States, United Kingdom, Netherlands, Belgium, Ireland and Canada to enable face-to-face meetings with clients and contract professionals. At December 31, 2008, we had 47 Life Sciences segment branch offices. Most of our staffing consultants are either focused on sales and business development or on fulfillment. Sales staffing consultants meet with clients’ managers to understand client needs, formulate position descriptions and assess workplace environments. Fulfillment staffing consultants meet with candidates to assess their qualifications and interests and place these contract professionals on quality assignments with clients.

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Contract professionals assigned to clients are generally our employees, although clients provide on-the-job supervisors for these professionals. Therefore, clients control and direct the work of contract professionals and approve hours worked, while we are responsible for many of the activities typically handled by the client’s human resources department.

Healthcare

The sales and fulfillment functions of our Nurse Travel line of business are aligned with more traditional nurse travel companies. We employ regional sales directors and account managers to identify and sell services to healthcare clients who need nurses. We employ recruiters to find nurses and place them on assignment as contract professionals with healthcare providers for periods ranging from three weeks to thirteen weeks and longer. We serve a diverse collection of healthcare clients, including hospitals, integrated delivery systems and managed care organizations on a national basis. We seek to address occupations that represent “high demand and highly-skilled” staff such as operating room nurses, which are essential to maintaining the hospital’s ability to care for patients and maintain business and revenues. The critical nature of these occupations to drive revenue motivates clients to respond to our ability to rapidly fill open positions with experienced nurses. The recruitment and placement of nurse travel assignments are primarily managed at our locations in Cincinnati, Ohio and San Diego, California.

The nurses we assign to clients are our employees, although clients provide on-the-job supervisors for the nurses. Therefore, clients control and direct the work of nurses and approve hours worked, while we are responsible for many of the activities typically handled by the client’s human resources department.

At December 31, 2008, we had 31 Allied Healthcare branch offices in the United States, of which 16 share office space with the Life Sciences segment. We have developed a tailored approach to the assignment-making process that utilizes staffing consultants. Staffing consultants are experienced professionals who work in our branch offices and personally meet with clients and contract professionals. Our staffing consultants are typically either focused primarily on sales and business development or on fulfillment. Sales staffing consultants meet with clients to understand their staffing needs, formulate position descriptions and assess workplace environments. Fulfillment staffing consultants meet with candidates to assess their qualifications and interests and place these contract professionals on quality assignments with clients.

The contract professionals assigned to our Allied Healthcare clients are usually our employees, although clients provide on-the-job supervisors for these professionals. Therefore, clients control and direct the work of contract professionals and approve hours worked, while we are responsible for many of the activities typically handled by the client’s human resources department.

Physician

The sales and fulfillment functions at our Physician segment are similar to those of our competitors. Our client sales specialists are organized by geographic territories so that a single individual can handle a client’s physician staffing needs for all disciplines. Our recruiters and schedulers are organized by physician specialty and identify physician candidates with the skills, experience and availability to meet our clients’ needs. Our Physician business is headquartered in Salt Lake City, Utah, where the majority of our recruiters and all back-office functions are located. In addition, we have three branch locations that also carry out recruiting functions. We supply doctors in a wide range of specialties throughout the United States, Australia and New Zealand. Assignments are typically booked up to three months in advance and last six weeks.

The physicians we place at clients are independent contractors. Clients assign shifts and approve hours worked, while we are responsible for issuing payments to the physicians for services rendered to our clients.

IT and Engineering

Our IT and Engineering segment is headquartered outside of Boston, Massachusetts, where all of the back-office activities are located along with several large recruiting centers. The segment operates in two separate formats. The first operating format consists of 11 sales and recruiting hubs that manage client orders submitted from anywhere in the country and fulfill those orders with appropriate candidates identified from a nationwide database of skilled IT and engineering professionals. The right candidates for these assignments often reside in locations that are remote from the client worksite and will travel away from their homes to perform the assignments. The second operating format consists of 10 branch offices that typically receive orders from clients in their local market and fulfill those orders with professionals from the local market. In each of these formats, we employ both client-oriented sales people and recruiters. Because our IT and Engineering segment addresses a wide range of disciplines within the IT and engineering markets, our sales people and recruiters generally specialize in a given discipline. We also have sales and recruiting hubs in Cork, Ireland and Utrecht, Netherlands to service the European market. Our competitive advantage in this segment comes from our effort to respond very quickly to a client’s request.

Contract professionals assigned to clients are generally our employees, although clients provide on-the-job supervisors for these professionals. Therefore, clients control and direct the work of contract professionals and approve hours worked, while we are responsible for many of the activities typically handled by the client’s human resources department.

Clients

 General

During the year ended December 31, 2008, we provided contract professionals to approximately 6,313 clients. In 2008, we earned 1.4 percent of our consolidated revenues from a single contract. The revenues from this contract are included in Healthcare segment revenues. No other single client or contract accounted for 1.4 percent or more of total revenues during the 2008 period.

All contract assignments, regardless of their planned length, may be terminated with limited notice by the client or the contract professional.

Life Sciences

Our clients in the Life Sciences segment include biotechnology and pharmaceutical companies, along with a broad range of clients in food and beverage, medical device, personal care, chemical, material sciences, energy, education and environmental industries. Our primary contacts with our clients are a mix of end users and process facilitators. End users consist of lab directors, managers and department heads. Facilitators consist of human resource managers, procurement departments and administrators. Facilitators are more price sensitive than end users who typically are more focused on technical capabilities. Assignments in our Life Sciences segment typically have a term of three to six months.

Healthcare

In our Healthcare segment, we serve a diverse collection of healthcare clients, including hospitals, integrated delivery systems, imaging centers, clinics, physician offices, reference laboratories, universities, managed care organizations and third-party administrators. In doing so, we address occupations that require “high demand and highly-skilled” staff, such as operating room nurses and health information professionals that are essential to the hospital’s ability to care for patients and maintain business and revenues. Today, many clients in our Healthcare segment face shortages of these operations-critical staff. Assignments in our Healthcare segment typically have a term of three to thirteen weeks.

Physician

Clients in our Physician segment include hospitals, doctors’ practice groups, large healthcare systems and government agencies. We are called on to supply temporary and permanent doctors because of the difficulty that healthcare providers have finding qualified practitioners. Assignments in our Physician segment typically have a term of six weeks.

IT and Engineering

In our IT and Engineering segment, we supply services to a very wide range of clients. Our clients range from very large companies that may, for example, be installing new enterprise-wide computer systems and have a need for a project manager with a certain type of experience to a system integrator who is looking for a similar person. We can also provide a person with a specific type of embedded software expertise to a smaller company finishing up the development of a new product. The disciplines in our IT and Engineering segment are quite varied in the information technology, hardware/software, engineering and telecom markets. Assignments in our IT and Engineering segment typically have a term of approximately five months.

The Contract Professional

 General

Contract professionals often work with a number of staffing companies and develop relationships or loyalty based on a variety of factors, including competitive salaries and benefits, availability and diversity of assignments, quality and duration of assignments and responsiveness to requests for placement. Contract professionals seeking traveling positions are also interested in the quality of travel and housing accommodations as well as the quality of the clinical experience while on assignment.

Hourly wage or contract rates for our contract professionals are established based on their specific skills and whether or not the assignment involves travel away from the professional’s primary residence.   Our consultants are our employees or are subcontracted from other corporate entities.  For our consultant employees we pay the related costs of employment including social security taxes, federal and state unemployment taxes, workers’ compensation insurance and other similar costs. After achieving minimum service periods and hours worked, we also provide our contract professional employees with paid holidays, and allow participation in our 401(k) Retirement Savings Plan.

Life Sciences

Our Life Sciences segment’s professionals include chemists, clinical research associates, clinical lab assistants, engineers, biologists, biochemists, microbiologists, molecular biologists, food scientists, regulatory affairs specialists, lab assistants and other skilled scientific professionals. These contract professionals range from individuals with bachelor and/or master degrees and considerable experience, to technicians with limited chemistry or biology backgrounds and lab experience.

Healthcare

Our Healthcare segment’s contract professionals include nurses, specialty nurses, health information management professionals, respiratory therapists, surgical technicians, imaging technicians, x-ray technicians, medical technologists, phlebotomists, coders, billers, medical assistants, dental assistants, hygienists, claims processors and collections staff.

Physician

The physicians in our Physician segment, come from 33 different specialties including emergency medicine, psychiatry, anesthesiology, radiology, family practice, surgical specialties, internal medicine, pediatrics, obstetrics and gynecology. All of these professionals are independent contractors.

IT and Engineering

Our IT and Engineering segment’s professionals come from various information technology, hardware/software, telecom and engineering disciplines. Typically, they have a great deal of knowledge and experience in a fairly narrow field which makes them uniquely qualified to fill a given assignment.

Strategy

We remain committed to growing our operations in the life science, healthcare, physician and IT and engineering markets that we currently serve, primarily through supporting our core service offerings and growing our newer service lines of business.

In 2008, we continued to focus on increasing market share in each of our segments, increasing our gross margins, and controlling our operating costs.  We have increased interaction between our segments so that each can learn best practices from the others.  Late in the year, we began to feel the impact of the weakening worldwide economy.  Given this change in market demand, we shifted our focus to the areas that we can control, which not only includes the management of margins and operating costs, but also the generation of cash.

In January 2007, we completed the acquisitions of VISTA and Oxford. Throughout the balance of 2007, our strategy was in great part focused on assisting the newly acquired Physician and IT and Engineering segments to continue to perform while integrating with and operating as a part of On Assignment. In doing this, we focused on increasing the number of staffing consultants in each segment. We also focused on diversifying our client mix in the Healthcare segment through the expansion of our client base. In addition, during 2007, we were successful maintaining our pricing in all of our segments while controlling operating costs.

As part of our initiative to improve our sales capabilities, we completed Phases I, II and III of the implementation of Vurv Technology (formerly known as RecruitMax), a front office system, for our domestic Life Sciences and certain Allied Healthcare service lines of business in 2006 and 2007. Phase IV of the implementation for our Nurse Travel line of business was completed in the fourth quarter of 2008. The application interfaces with the existing enterprise-wide information system, PeopleSoft, used in our Life Sciences, IT and Engineering, Nurse Travel and Allied Healthcare lines of business and provides additional functionality, including applicant tracking and search tools, customer and candidate contact management and sales management tools. Phase V of the implementation, which will support our IT and Engineering segment, is expected to be completed in 2010. We believe these improvements should continue to increase the productivity of our staffing consultants and streamline corporate operations.

In 2009, we anticipate that we will continue to review acquisition opportunities that may enable us to leverage our current infrastructure and capabilities, increase our service offerings and expand our geographic reach. We periodically engage in discussions with possible acquisition candidates but have no formal commitments at this time.

Competition

 General

Many of our competitors are larger and have substantially greater financial and marketing resources than we do. We also compete with privately-owned temporary staffing companies on a regional and local basis. Frequently, the strongest competition in a particular market is a privately-held local company with established relationships. These companies oftentimes are extremely competitive on pricing. While their pricing strategies are not necessarily sustainable, they can be problematic in the short-term.

The principal competitive factors in attracting qualified candidates for temporary employment or engagements are salaries, contract rates and benefits, availability and variety of assignments, quality and duration of assignments and responsiveness to requests for placement. We believe that many people seeking temporary employment or engagements through us are also pursuing employment through other means, including other temporary staffing or locum tenens companies. Therefore, the speed at which we place prospective contract professionals and the availability of appropriate assignments are important factors in our ability to complete assignments of qualified candidates. In addition to having high quality contract professionals to assign in a timely manner, the principal competitive factors in obtaining and retaining clients in the temporary staffing industry are properly assessing the clients’ specific job requirements, the appropriateness of the contract professional assigned to the client, the price of services and the monitoring of client satisfaction. Although we believe we compete favorably with respect to these factors, we expect competition to continue to increase.

Life Sciences

Our Life Sciences segment competes in the biotechnology, pharmaceutical, food and beverage, medical device, personal care, chemical, material sciences, energy, education and environmental markets. We believe our Life Sciences segment is one of the few nationwide temporary staffing providers specializing exclusively in the placement of life science professionals. Although other nationwide temporary staffing companies compete with us with respect to scientific, clinical laboratory, medical billing and collection personnel, many of these companies focus on office/clerical and light and heavy industrial personnel, which account for a significant portion of the overall contract staffing market. These competitors include Manpower, Inc., Kelly Services, Inc., Adecco SA and the scientific division of the Yoh Company.

Healthcare

Our Healthcare segment competes in the healthcare market, serving hospitals, integrated delivery systems, imaging centers, clinics, physician offices, reference laboratories, universities, managed care organizations and third-party administrators. In the Nurse Travel line of business, our competitors include AMN Healthcare Services, Inc., Cross Country, Inc. and several privately-held companies. In the Allied Healthcare line of business, our competitors include Cross Country, Inc., AMN Healthcare Services, Inc. and Kforce Inc.

Physician

Our Physician segment also competes in the healthcare market, serving hospitals, doctors’ practice groups and private healthcare systems and government administrated healthcare agencies. VISTA’s competitors include the locum tenens divisions of CHG Healthcare Services, TeamHealth, Inc., Cross Country, Inc. and AMN Healthcare Services, Inc., along with several other privately-held companies providing locum tenens.

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IT and Engineering

Our IT and Engineering segment competes in the higher-end of the market for information technology and engineering consultants.  Our IT specialties include enterprise resource planning, business intelligence, customer relationship management, supply chain management, and database administration.  Our engineering specialties include hardware and software, mechanical, electrical, validation, network, and telecommunications. Oxford’s competition ranges from local and regional specialty staffing companies to large IT consulting firms like Accenture, Inc., and international staffing firms such as Aerotek and Robert Half International, Inc.

Seasonality

Demand for our staffing services historically has been lower during the first and fourth quarters due to fewer business days resulting from client shutdowns, adverse weather conditions and a decline in the number of contract professionals willing to work during the holidays.  As is common in the staffing industry, we run special incentive programs to keep our contract professionals, particularly nurses, working through the holidays. Demand for our staffing services usually increases in the second and third quarters of the year. In addition, our cost of services typically increase in the first quarter primarily due to the reset of payroll taxes.

Employees

At December 31, 2008, we employed approximately 1,134 full-time regular employees, including staffing consultants, regional sales directors, account managers, recruiters and corporate office employees. At December 31, 2008, we employed approximately 15,149 contract professionals and 1,090 traveling physicians.

Government Regulation

The healthcare industry is subject to extensive and complex federal and state laws and regulations related to professional licensure, certification, conduct of operations, payment for services, payment for referrals and insurance. Our operations are subject to additional state and local regulations that require temporary staffing companies placing healthcare personnel to be licensed or separately registered to an extent beyond that required by temporary staffing companies that only place non-healthcare personnel. To date, we have not experienced any material difficulties in complying with such regulations and obtaining required licensure.

Some states require state licensure with associated fees for businesses that employ and/or assign certain healthcare personnel at hospitals and other healthcare facilities. We are currently licensed in all the states that require such licenses. In addition, most of the contract healthcare professionals that we employ are required to be individually licensed and/or certified under applicable state laws. We take reasonable steps to ensure that our contract professionals possess all current licenses and certifications required for each placement. We provide state mandated workers’ compensation insurance, unemployment insurance and professional liability insurance for our contract professionals and our regular employees. These expenses have a direct effect on our cost of services, margins and likelihood of achieving or maintaining profitability.

For a further discussion of government regulation associated with our business, see “Risk Factors” within Item 1A of Part I of this Annual Report.

Executive Officers of the Company

The executive officers of On Assignment, Inc. are as follows:

Name	Age	Position
Peter T. Dameris	49	Chief Executive Officer and President
James L. Brill	57	Senior Vice President, Finance and Chief Financial Officer
Emmett B. McGrath	47	President, Life Sciences and Allied Divisions
Mark S. Brouse	55	President, VISTA Staffing Solutions, Inc.
Michael J. McGowan	55	President, Oxford Global Resources, Inc.

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Peter T. Dameris joined the Company in November 2003 as Executive Vice President, Chief Operating Officer and was promoted to President and Chief Executive Officer in September 2004.  He was appointed to the Board of Directors of the Company in February 2005. From February 2001 through October 2002, Mr. Dameris served as Executive Vice President and Chief Operating Officer of Quanta Services, Inc. (NYSE: PWR), a leading provider of specialized contracting services for the electric and gas utility, cable and telecommunications industries. From December 1994 through September 2000, Mr. Dameris served in a number of different positions at Metamor Worldwide, Inc. (formerly, NASDAQ: MMWW), an international, publicly-traded IT consulting/staffing company, including Chairman of the Board, President and Chief Executive Officer, Executive Vice President, General Counsel, Senior Vice President and Secretary. In June 2000, Mr. Dameris successfully negotiated the sale of Metamor for $1.9 billion. From November 2002 to January 2006, Mr. Dameris was a member of the Board of Directors of Bindview Corporation (acquired by Symatec Corporation in January 2006). Mr. Dameris holds a Juris Doctorate from the University of Texas Law School and a Bachelor’s in Business Administration from Southern Methodist University.

James L. Brill joined the Company in January 2007 as Senior Vice President, Finance and Chief Financial Officer. Mr. Brill was Vice President, Finance and Chief Financial Officer of Diagnostic Products Corporation, a manufacturer of immuno-diagnostic kits, from July 1999 until it was acquired by Siemens in July 2006. From August 1998 to June 1999, Mr. Brill served as Chief Financial Officer of Jafra Cosmetics International, a marketing and direct-selling company in the skin care and beauty industry, and as Vice President of Finance and Administration and Chief Financial Officer of Vertel Corporation, a provider of middleware for the telecommunications industry, from 1996 to 1998. Mr. Brill also served as Senior Vice President, Finance and Chief Financial Officer of Merisel, Inc., an internet commerce service provider, from 1988 to 1996. Mr. Brill has been a member of the Board of Directors of Onvia Inc. since March 2004. He holds a Bachelor’s of Science degree from the United States Naval Academy and a Master’s of Business Administration degree from the University of California Los Angeles.

Emmett B. McGrath joined the Company in September 2004 as President, Life Sciences U.S., and in August 2005, Mr. McGrath was appointed as President of Life Sciences Europe. Mr. McGrath was appointed as President of Allied Healthcare in November 2007. From February 1985 through August 2004, Mr. McGrath worked at the Yoh Company, a privately-held technology staffing organization. During his tenure at Yoh, Mr. McGrath held various staffing positions, including Technical Recruiter, Account Manager, Branch and District Management, Vice President and Regional President. As Regional President, Mr. McGrath was responsible for core lines of businesses, including Scientific, Information Technology, Engineering, Healthcare, Telecommunications and Vendor on Premise (VOP) programs. In addition, Mr. McGrath served on Yoh’s Executive Committee and the Chairman’s Board of the Day & Zimmermann Group, Yoh’s parent company. Mr. McGrath received a Bachelor’s of Science degree in Business Administration, with an emphasis in Human Resources, from California State University, Northridge in 1991.

Mark S. Brouse is President of VISTA Staffing Solutions, Inc., On Assignment’s Physician segment. Mr. Brouse joined On Assignment as a result of On Assignment’s January 2007 acquisition of VISTA, a company he co-founded in 1990. Mr. Brouse began his career in pharmaceutical sales in 1980, and in 1986 joined CompHealth, a locum tenens staffing company, where he led specialty teams serving psychiatry and internal medicine clients before founding VISTA. Mr. Brouse holds a Bachelor’s of Science degree in Chemistry from California State, Dominguez Hills, and is a member of the Boards of Directors of the YMCA of Greater Salt Lake and PEHR Technologies, an electronic medical records company.

Michael J. McGowan is President of Oxford Global Resources, Inc., On Assignment’s IT and Engineering segment. He has held this position since 1998. He joined Oxford in May of 1997 as Chief Operating Officer. Formerly, Mr. McGowan was Senior Vice President and General Manager for Kelly Services’ Middle Markets Division, a provider of staffing solutions. Prior to that time he was Vice President & General Manager for The MEDSTAT Group, a healthcare information firm, and held increasingly senior positions for Automatic Data Processing (ADP), a provider of human resources, payroll and tax and benefits administration solutions, during a sixteen year tenure. Mr. McGowan holds a Bachelor’s of Science degree in Electrical Engineering from Michigan State University and a Master’s of Business Administration degree from the Eli Broad Graduate School of Management, also at Michigan State University. Mr. McGowan joined On Assignment as a result of the Company’s acquisition of Oxford in January 2007.

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Available Information and Access to Reports

We electronically file our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those reports with the Securities and Exchange Commission (SEC). You may read and copy any of our reports that are filed with the SEC in the following manner:

·   At the SEC’s Public Reference Room at 100 F Street NE, Washington, DC 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at (800) SEC-0330;

·   At the SEC’s website, http://www.sec.gov;

·   At our website, http://www.onassignment.com; or

·   By contacting our Investor Relations Department at (818) 878-7900.

Our reports are available through any of the foregoing means and are available free of charge on our website as soon as practicable after such material is electronically filed with or furnished to the SEC. Also available on our website (http://www.onassignment.com), free of charge, are copies of our Code of Ethics for the Principle Executive Officer and Senior Financial Officers, Code of Business Conduct and Ethics and the charters for the committees of our Board of Directors. We intend to disclose any amendment to, or waiver from, a provision of our Code of Ethics for Principal Executive Officer and Senior Financial Officers on our website within five business days following the date of the amendment or waiver.

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Item 1A. Risk Factors

Our business is subject to a number of risks, including the following:

Recent U.S. economic conditions have been uncertain and challenging.

Recent global market and economic conditions have been unprecedented and challenging with tighter credit conditions and recession in most major economies continuing into 2009.  Continued concerns about the systemic impact of potential long-term and wide-spread recession, energy costs, geopolitical issues, the availability and cost of credit, and the global housing and mortgage markets have contributed to increased market volatility and diminished expectations for western and emerging economies.  In the second half of 2008, added concerns fueled by the U.S. government conservatorship of the Federal Home Loan Mortgage Corporation and the Federal National Mortgage Association, the declared bankruptcy of Lehman Brothers Holdings Inc., the U.S. government financial assistance to American International Group Inc., Citibank, Bank of America and other federal government interventions in the U.S. financial system lead to increased market uncertainty and instability in both U.S. and international capital and credit markets.  These conditions, combined with volatile oil prices, declining business and consumer confidence and increased unemployment, have contributed to volatility of unprecedented levels.

As a result of these market conditions, the cost and availability of credit has been and may continue to be adversely affected by illiquid credit markets and wider credit spreads.  Concern about the stability of the markets generally and the strength of counterparties specifically has led many lenders and institutional investors to reduce, and in some cases, cease to provide credit to businesses and consumers.  These factors have lead to a decrease in spending by businesses and consumers alike, and a corresponding decrease in global infrastructure spending.  Continued turbulence in the U.S. and international markets and economies and prolonged declines in business consumer spending may adversely affect our liquidity and financial condition, and the liquidity and financial condition of our customers, including our ability to refinance maturing liabilities and access the capital markets to meet liquidity needs.

In addition, our liquidity and our ability to obtain financing may be adversely impacted if any of the lenders under our credit facilities suffers liquidity issues.  In such an event we may not be able to draw on all, or a substantial portion, of our credit facilities.

Our results of operations may vary from quarter to quarter as a result of a number of factors, which may make it difficult to evaluate our business and could cause instability in the trading price of our common stock.

Factors that may cause our quarterly results to fluctuate include:

·   the level of demand for our temporary staffing services and the efficiency with which we source and assign our contract professionals and support our staffing consultants in the execution of their duties;

·   changes in our pricing policies or those of our competitors; and

·   our ability to control costs and manage our accounts receivable balances.

In addition, most temporary staffing companies experience seasonal declines in demand during the first and fourth quarters as a result of fewer business days and the reduced number of contract professionals willing to work during the holidays. Historically, we have experienced variability in the duration and depth of these seasonal declines, which in turn have materially affected our quarterly results of operations and made period-to-period comparisons of our financial and operating performance difficult.

If our operating results are below the expectations of public market analysts or investors in a given quarter, the trading price of our common stock could decline.

Failure to comply with restrictive covenants under our debt instruments could trigger prepayment obligations or additional costs.

Our failure to comply with restrictive covenants under our credit facilities and other debt instruments could result in an event of default, which, if not cured or waived, could result in us being required to repay these borrowings before their due date.  The lenders may require fees and expenses to be paid or other changes to terms in connection with waivers or amendments.  If we are forced to refinance these borrowings on less favorable terms, our results of operations and financial condition could be adversely affected by increased costs and rates.

Failure of internal controls may leave us susceptible to errors and fraud.

Our management, including our CEO and CFO, does not expect that our disclosure controls and internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable assurance that the objectives of the control system are met.  Furthermore, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, would be detected.

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Significant legal actions could subject us to substantial uninsured liabilities.

In recent years, healthcare providers have become subject to an increasing number of legal actions alleging malpractice, vicarious liability, violation of certain consumer protection acts, negligent hiring, product liability or related legal theories. We may be subject to liability in such cases even if the contribution to the alleged injury was minimal. Many of these actions involve large claims and significant defense costs. In addition, we may be subject to claims related to torts or crimes committed by our corporate employees or healthcare professionals. In most instances, we are required to indemnify clients against some or all of these risks. A failure of any of our corporate employees or healthcare professionals to observe our policies and guidelines intended to reduce these risks; relevant client policies and guidelines or applicable federal, state or local laws, rules and regulations could result in negative publicity, payment of fines or other damages.

To protect ourselves from the cost of these types of claims, we maintain workers ’ compensation and professional malpractice liability insurance and general liability insurance coverage in amounts and with deductibles that we believe are appropriate for our operations. Our coverage is, in part, self-insured. However, our insurance coverage may not cover all claims against us or continue to be available to us at a reasonable cost. If we are unable to maintain adequate insurance coverage, we may be exposed to substantial liabilities.

If we are unable to attract and retain qualified contract professionals for our Life Sciences, Healthcare, Physician and IT and Engineering segments, our business could be negatively impacted.

Our business is substantially dependent upon our ability to attract and retain contract professionals who possess the skills, experience and, as required, licenses to meet the specified requirements of our clients. We compete for such contract professionals with other temporary staffing companies and with our clients and potential clients. Currently, there is a shortage of qualified nurses in most areas of the United States. Competition for nursing personnel is increasing and salaries and benefits have risen. Further, there can be no assurance that qualified healthcare, life science, IT and engineering professionals will be available to us in adequate numbers to staff our operating segments. Moreover, our contract professionals are often hired to become regular employees of our clients. Attracting and retaining contract professionals depends on several factors, including our ability to provide contract professionals with desirable assignments and competitive benefits and wages. The cost of attracting and retaining contract professionals may be higher than we anticipate and, as a result, if we are unable to pass these costs on to our clients, our likelihood of achieving or maintaining profitability could decline. If we are unable to attract and retain a sufficient number of contract professionals to meet client demand, we may be required to forgo staffing and revenue opportunities, which may hurt the growth of our business.

We may not successfully make or integrate acquisitions, which could harm our business and growth.

As part of our growth strategy, we intend to opportunistically pursue selected acquisitions. We compete with other companies in the professional staffing and consulting industries for acquisition opportunities, and we cannot assure you that we will be able to effect future acquisitions on commercially reasonable terms or at all. In January 2007, we acquired VISTA and Oxford. With these two acquisitions or to the extent we enter into acquisition transactions in the future, we may experience:

·   delays in realizing or a failure to realize the benefits, cost savings and synergies that we anticipate;

·   difficulties or higher-than-anticipated costs associated with integrating any acquired companies into our businesses;

·   attrition of key personnel from acquired businesses;

·   diversion of management’s attention from other business concerns;

·   inability to maintain the business relationships and reputation of the acquired companies;

·   difficulties in integrating the acquired companies into our information systems, controls, policies and procedures;

·   additional risks relating to the businesses or industry of the acquired companies that are different from ours;

·   unexpected costs or charges; or

·   unforeseen operating difficulties that require significant financial and managerial resources that would otherwise be available for the ongoing development or expansion of our existing operations.

We incurred debt for our recent acquisitions, which increased our interest expense. To undertake more transactions, we may incur additional debt in the future. We may face unexpected contingent liabilities arising from these

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or future acquisitions that could harm our business. We may also issue additional equity in connection with these transactions, which would dilute our existing shareholders.

If we cannot attract, develop and retain qualified and skilled staffing consultants, our business growth will suffer.

A key component of our ability to grow our lines of business is our ability to attract, develop and retain qualified and skilled staffing consultants, particularly persons with industry experience. The available pool of qualified staffing consultant candidates is limited, and further constrained by the industry practice of entering into non-compete agreements with these employees, which may restrict their ability to accept employment with other staffing firms, including us. We cannot assure that we will be able to recruit, develop and retain qualified staffing consultants in sufficient numbers or that our staffing consultants will achieve productivity levels sufficient to enable growth of our business. Failure to attract and retain productive staffing consultants could adversely affect our business, financial condition and results of operations.

Reclassification of our independent contractors by tax authorities could materially and adversely affect our business model and could require us to pay significant retroactive wages, taxes and penalties.

We consider our locum tenens physicians to be independent contractors rather than employees. As such, we do not withhold or pay income or other employment related taxes or provide workers’ compensation insurance for them. Our classification of locum tenens physicians as independent contractors is consistent with general industry standard, but can nonetheless be challenged by the contractors themselves as well as the relevant taxing authorities. If federal or state taxing authorities determine that locums tenens physicians engaged as independent contractors are employees, our business model for that segment would be materially and adversely affected. Although we believe we would qualify for safe harbor under the provisions of Section 530 of the Revenue Act of 1978, Pub. L. No. 95−600 (“Section 530”), and any similar applicable state laws, we could incur significant liability for past wages, taxes, penalties and other employment benefits if we could not so qualify. In addition, many states have laws that prohibit non−physician owned companies from employing physicians. If our independent contractor physicians are classified as employees, we could be found in violation of such state laws, which could subject us to liability in those states and thereby negatively impact on our profitability.

If we lose a major client in our Nurse Travel line of business and are not able to replace the lost business quickly, our business could be negatively impacted.

Our top ten clients in the Nurse Travel line of business accounted for 26.2 percent of Nurse Travel revenues in 2008. The loss of a major client in Nurse Travel and the failure to replace the lost business with existing or new clients could adversely affect our business, financial condition, results of segment operating income and cash flows. In 2008, we earned 1.4 percent of our consolidated revenues from a single contract. The revenues from this contract are included in Healthcare segment revenues. No other single customer or contract accounted for 1.4 percent or more of total revenues during 2008.

If our information systems do not function in a cost effective manner, our business will be harmed.

The operation of our business is dependent on the proper functioning of our information systems. In 2008, we continued to upgrade our information technology systems, including PeopleSoft and Vurv Technology, enterprise-wide information systems. Critical information systems used in daily operations identify and match staffing resources and client assignments, track regulatory credentialing, manage scheduling and also perform billing and accounts receivable functions. If the systems fail to perform reliably or otherwise do not meet our expectations, or if we fail to successfully complete the implementation of other modules of the systems, we could experience business interruptions that could result in deferred or lost sales. Our information systems are vulnerable to fire, storm, flood, power loss, telecommunications failures, physical or software break-ins and similar events. Our network infrastructure is currently located at our facility in Salt Lake City, Utah. As a result, any system failure or service outage at this primary facility could result in a loss of service for the duration of the failure of the outage. Our location in Southern California is susceptible to earthquakes and has, in the past, experienced power shortages and outages, any of which could result in system failures or outages. If our information systems fail or are otherwise unavailable, these functions would have to be accomplished manually, which could impact our ability to respond to business opportunities quickly, to pay our staff in a timely fashion and to bill for services efficiently.

If we are not able to remain competitive in obtaining and retaining temporary staffing clients, our future growth will suffer.

The contract staffing industry is highly competitive and fragmented with limited barriers to entry. We compete in national, regional and local markets with full-service agencies and in regional and local markets with specialized contract staffing agencies. Some of our competitors in the Nurse Travel line of business include AMN Healthcare Services, Inc., Cross Country, Inc. and several privately-held companies. Some of our competitors in the Life Sciences segment and Allied Healthcare line of business include Kelly Services, Inc., Manpower, Inc., Adecco, SA and Yoh Scientific. Competitors for the Physician segment include the locum tenens divisions of CHG Healthcare Services, Cross Country, TeamHealth, Inc. and AMN Healthcare Services, Inc., along with several other privately-held companies specializing in locum tenens. Competitors of our IT and Engineering segment include Robert Half International, Accenture, International Business Machines Corporation (IBM), the Yoh Company and a number of privately held companies. Several of these companies have significantly greater marketing and financial resources than we do. Our ability to attract and retain clients is based on the value of the service we deliver, which in turn depends principally on the speed with which we fill assignments and the appropriateness of the match based on clients’ requirements and the skills and experience of our contract professionals. Our ability to attract skilled, experienced contract professionals is based on our ability to pay competitive wages or contract rates, to provide competitive benefits and to provide multiple, continuous assignments, thereby increasing the retention rate of these employees or contractors. To the extent that competitors seek to gain or retain market share by reducing prices or increasing marketing expenditures, we could lose revenues and our gross and operating margins could decline, which could seriously harm our operating results and cause the trading price of our stock to decline. As we expand into new geographic markets, our success will depend in part on our ability to gain market share from competitors. We expect competition for clients to increase in the future, and the success and growth of our business depend on our ability to remain competitive.

Our contract staffing agreements may be terminated by clients and contract professionals at will and the termination of a significant number of such agreements would adversely affect our revenues and results of operations.

Each contract professional’s employment with us is terminable at will. A locum tenens physician may generally terminate his or her contract with VISTA for non-emergency reasons upon 60 days notice. The duration of agreements with clients are generally dictated by the contract. Usually, contracts with clients may be terminated with 30 days notice by us or by the clients. We cannot assure that existing clients will continue to use our services at historical levels, if at all. If clients terminate a significant number of our staffing agreements and we are unable to generate new contract staffing orders to replace lost revenues or a significant number of our contract professionals terminate their employment with us and we are unable to find suitable replacements, our revenues and results of operations could be harmed.

We are subject to business risks associated with international operations, which could make our international operations significantly more costly.

As of December 31, 2008, we had international operations in the United Kingdom, Netherlands, Belgium, Canada and Ireland. We have limited experience in marketing, selling and, particularly, supporting our services outside of North America.

Operations in certain markets are subject to risks inherent in international business activities, including:

·   fluctuations in currency exchange rates;

·   complicated work permit requirements;

·   varying economic and political conditions;

·   seasonal reductions in business activity during the summer months in Europe and Asia;

·   overlapping or differing tax structures;

·   difficulties collecting accounts receivable; and

·   regulations concerning pay rates, benefits, vacation, union membership, redundancy payments and the termination of employment.

Our inability to effectively manage our international operations could result in increased costs and adversely affect our results of operations.

Improper activities of our contract professionals could result in damage to our business reputation, discontinuation of our client relationships and exposure to liability.

We may be subject to possible claims by our clients related to errors and omissions, misuse of proprietary information, discrimination and harassment, theft and other criminal activity, malpractice and other claims stemming from the improper activities or alleged activities of our contract professionals. We cannot assure that our current liability insurance coverage will be adequate or will continue to be available in sufficient amounts to cover damages or other costs associated with such claims. Claims raised by clients stemming from the improper actions of our contract professionals, even if without merit, could cause us to incur significant expense associated with the costs or damages related to such claims. Further, such claims by clients could damage our business reputation and result in the discontinuation of client relationships.

Claims against us by our contract professionals for damages resulting from the negligence or mistreatment by our clients could result in significant costs and adversely affect our recruitment and retention efforts.

We may be subject to possible claims by our contract professionals alleging discrimination, sexual harassment, negligence and other similar activities by our clients. Our physicians may also be subject to medical malpractice claims. We cannot assure that our current liability insurance coverage will be adequate or will continue to be available in sufficient amounts to cover damages or other costs associated with such claims. Claims raised by our contract professionals, even if without merit, could cause us to incur significant expense associated with the costs or damages related to such claims. Further, any associated negative publicity could adversely affect our ability to attract and retain qualified contract professionals in the future.

If we are required to further write down goodwill or identifiable intangible assets, the related charge could materially impact our reported net income or loss for the period in which it occurs.

In 2004, we recorded a charge of $26.4 million related to impairment of goodwill and an impairment charge of $3.9 million related to our identifiable intangible assets. We did not record any such charges in 2005, 2006, 2007 or 2008. However, we continue to have approximately $202.8 million in goodwill on our balance sheet at December 31, 2008, as well as $31.4 million in identifiable intangible assets. As part of the analysis of goodwill impairment, SFAS No. 142, “Goodwill and Other Intangible Assets” (SFAS 142), requires the Company’s management to estimate the fair value of the reporting units on at least an annual basis. At December 31, 2008, we performed our annual goodwill and indefinite lived intangible assets impairment test and concluded that there was no further impairment of goodwill and intangible assets. In addition, at December 31, 2008, we determined that there were no events or changes in circumstances that indicated that the carrying values of other identifiable intangible assets subject to amortization may not be recoverable. While we believe that our goodwill was not impaired at December 31, 2008, declines in our market capitalization subsequent to the balance sheet date could be an early indication that goodwill may become impaired in the future. Although a future impairment of goodwill and identifiable intangible assets would not affect our cash flow, it would negatively impact our operating results.

If we are subject to material uninsured liabilities under our partially self-insured workers’ compensation program and medical malpractice coverage, our financial results could be adversely affected.

We maintain a partially self-insured workers’ compensation program and medical malpractice coverage. In connection with these programs, we pay a base premium plus actual losses incurred up to certain levels. We are insured for losses greater than certain levels, both per occurrence and in the aggregate. There can be no assurance that our loss reserves and insurance coverage will be adequate in amount to cover all workers’ compensation or medical malpractice claims. If we become subject to substantial uninsured workers’ compensation or medical malpractice liabilities, our results of operations and financial condition could be adversely affected.

Our costs of providing travel and housing for nurses and other traveling contract professionals may be higher than we anticipate and, as a result, our margins could decline.

If our travel and housing costs, including the costs of airline tickets, rental cars, apartments and rental furniture for our nurses and other traveling contract professionals exceed the levels we anticipate, and we are unable to pass such increases on to our clients, our margins may decline. To the extent the length of our apartment leases exceed the terms of our staffing contracts, we bear the risk that we will be obligated to pay rent for housing we do not use. If we cannot source a sufficient number of appropriate short-term leases in regional markets, or if, for any reason, we are unable to efficiently utilize the apartments we do lease, we may be required to pay rent for unutilized or underutilized housing. As we continue to expand our Nurse Travel line of business, effective management of travel costs will be necessary to prevent a decrease in gross profit and gross and operating margins.

Demand for our services is significantly impacted by changes in the general level of economic activity and continued periods of reduced economic activity could negatively impact our business and results of operations.

Demand for the contract staffing services that we provide is significantly impacted by changes in the general level of economic activity, particularly any negative effect on healthcare, research and development and quality control spending. As economic activity slows, many clients or potential clients for our services reduce their usage of and reliance upon contract professionals before laying off their regular, full-time employees. During periods of reduced economic activity, we may also be subject to increased competition for market share and pricing pressure. As a result, continued periods of reduced economic activity could harm our business and results of operations.

We do not have long-term or exclusive agreements with our temporary staffing clients and growth of our business depends upon our ability to continually secure and fill new orders.

We do not have long-term agreements or exclusive guaranteed order contracts with our temporary staffing clients. Assignments for our Life Sciences segment typically have a term of three to six months. Assignments for our Healthcare segment typically have a term of two to thirteen weeks. Assignments for our Physician segment typically have a term of six weeks. Assignments for our IT and Engineering segment typically have a term of approximately five months. The success of our business depends upon our ability to continually secure new orders from clients and to fill those orders with our contract professionals. Our agreements do not provide for exclusive use of our services, and clients are free to place orders with our competitors. As a result, it is imperative to our business that we maintain positive relationships with our clients. If we fail to maintain positive relationships with these clients, we may be unable to generate new contract staffing orders, and the growth of our business could be adversely affected.

Fluctuation in patient occupancy rates at client facilities could adversely affect demand for services of our Healthcare and Physician segments and our results of operations.

Client demand for our Healthcare and Physician segment services is significantly impacted by changes in patient occupancy rates at our hospital and healthcare clients’ facilities. Increases in occupancy often result in increased client need for contract professionals before full-time employees can be hired. During periods of decreased occupancy, however, hospitals and other healthcare facilities typically reduce their use of contract professionals before laying off their regular, full-time employees. During periods of decreased occupancy, we may experience increased competition to service clients, including pricing pressure. Occupancy at certain healthcare clients’ facilities also fluctuates due to the seasonality of some elective procedures. Periods of decreased occupancy at client healthcare facilities could materially adversely affect our results of operations.

The loss of key members of our senior management team could adversely affect the execution of our business strategy and our financial results.

We believe that the successful execution of our business strategy and our ability to build upon the significant recent investments in our business and acquisitions of new businesses depends on the continued employment of key members of our senior management team. If any members of our senior management team become unable or unwilling to continue in their present positions, our financial results and our business could be materially adversely affected.

Future changes in reimbursement trends could hamper our Healthcare and Physician segments clients’ ability to pay us, which would harm our financial results.

Many of our Healthcare and Physician segments’ clients are reimbursed under the federal Medicare program and state Medicaid programs for the services they provide. In recent years, federal and state governments have made significant changes in these programs that have reduced reimbursement rates. In addition, insurance companies and managed care organizations seek to control costs by requiring that healthcare providers, such as hospitals, discount their services in exchange for exclusive or preferred participation in their benefit plans. Future federal and state legislation or evolving commercial reimbursement trends may further reduce, or change conditions for, our clients’ reimbursement. Limitations on reimbursement could reduce our clients’ cash flows, thereby hampering their ability to pay us.

If our insurance costs increase significantly, these incremental costs could negatively affect our financial results.

The costs related to obtaining and maintaining workers’ compensation insurance, medical malpractice insurance, professional and general liability insurance and health insurance for our contract professionals have been increasing. If the cost of carrying this insurance continues to increase significantly, this may reduce our gross and operating margins and financial results.

Healthcare reform could negatively impact our business opportunities, revenues and gross and operating margins.

The U.S. and state governments have undertaken efforts to control increasing healthcare costs through legislation, regulation and voluntary agreements with medical care providers and drug companies. In the recent past, the U.S. Congress has considered several comprehensive healthcare reform proposals. The proposals were generally intended to expand healthcare coverage for the uninsured and reduce the growth of total healthcare expenditures. While the U.S. Congress did not adopt any comprehensive reform proposals, members of Congress may raise similar proposals in the future. If any of these proposals are approved, hospitals and other healthcare facilities may react by spending less on healthcare staffing, including nurses and physicians. If this were to occur, we would have fewer business opportunities, which could seriously harm our business.

Furthermore, third-party payors, such as health maintenance organizations, increasingly challenge the prices charged for medical care. Failure by hospitals and other healthcare facilities to obtain full reimbursement from those third-party payors could reduce the demand or the price paid for our staffing services.

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We operate in a regulated industry and changes in regulations or violations of regulations may result in increased costs or sanctions that could reduce our revenues and profitability.

Our organization is subject to extensive and complex federal and state laws and regulations including but not limited to: professional licensure, payroll tax regulations, conduct of operations, payment for services and payment for referrals. If we fail to comply with the laws and regulations that are directly applicable to our business, we could suffer civil and/or criminal penalties or be subject to injunctions or cease and desist orders.

Extensive and complex laws that apply to our hospital and healthcare facility clients, including laws related to Medicare, Medicaid and other federal and state healthcare programs, could indirectly affect the demand or the prices paid for our services. For example, our hospital and healthcare facility clients could suffer civil and/or criminal penalties and/or be excluded from participating in Medicare, Medicaid and other healthcare programs if they fail to comply with the laws and regulations applicable to their businesses. In addition, our hospital and healthcare facility clients could receive reduced reimbursements or be excluded from coverage because of a change in the rates or conditions set by federal or state governments. In turn, violations of or changes to these laws and regulations that adversely affect our hospital and healthcare facility clients could also adversely affect the prices that these clients are willing or able to pay for our services.

The trading price of our common stock has experienced significant fluctuations, which could make it difficult for us to access the public markets for financing or use our common stock as consideration in a strategic transaction.

In 2008, the trading price of our common stock experienced significant fluctuations, from a high of $9.70 to a low of $4.05. The closing price of our common stock on the NASDAQ Global Market was $2.06 on March 10, 2009. Our common stock may continue to fluctuate widely as a result of a large number of factors, many of which are beyond our control, including:

·   period to period fluctuations in our financial results or those of our competitors;

·   failure to meet previously announced guidance or analysts’ expectations of our quarterly results;

·   announcements by us or our competitors of acquisitions, significant contracts, commercial relationships or capital commitments;

·   commencement of, or involvement in, litigation;

·   any major change in our board or management;

·   changes in government regulations, including those related to Medicare and Medicaid reimbursement policies;

·   recommendations by securities analysts or changes in earnings estimates;

·   announcements about our earnings that are not in line with analyst expectations;

·   the volume of shares of common stock available for public sale;

·   announcements by our competitors of their earnings that are not in line with analyst expectations;

·   sales of stock by us or by our shareholders;

·   short sales, hedging and other derivative transactions in shares of our common stock; and

·   general economic conditions, slow or negative growth of unrelated markets and other external factors.

The stock market has experienced extreme price and volume fluctuations that have affected the market prices of many companies involved in the temporary staffing industry. As a result of these fluctuations, we may encounter difficulty should we determine to access the public markets for financing or use our common stock as consideration in a strategic transaction.

Future sales of our common stock and the future exercise of options may cause the market price of our common stock to decline and may result in substantial dilution.

We cannot predict what effect, if any, future sales of our common stock, or the availability of our common stock for sale will have on the market price of our common stock. Sales of substantial amounts of our common stock in the public market by management or us, or the perception that such sales could occur, could adversely affect the market price of our common stock and may make it more difficult for you to sell your common stock at a time and price which you may deem appropriate.

We have adopted anti-takeover measures that could prevent a change in our control.

In June 2003, we adopted a shareholder rights plan that has certain anti-takeover effects and will cause substantial dilution to a person or group that attempts to acquire us in a manner or on terms that have not been approved by our board of directors. This plan could delay or impede the removal of incumbent directors and could make more difficult a merger, tender offer or proxy contest involving us, even if such events could be beneficial, in the short-

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term, to the interests of our shareholders. In addition, such provisions could limit the price that some investors might be wiling to pay in the future for shares of our common stock. Our certificate of incorporation and bylaws contain provisions that limit liability and provide for indemnification of our directors and officers, and provide that our stockholders can take action only at a duly called annual meeting of stockholders. These provisions and others also may have the affect of deterring hostile takeovers or delaying changes in control or management.

Provisions in our corporate documents and Delaware law may delay or prevent a change in control that our stockholders consider favorable.

Provisions in our certificate of incorporation and bylaws could have the effect of delaying or preventing a change of control or changes in our management. These provisions include the following:

·   Our board of directors has the right to elect directors to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors.

·   Our stockholders may not act by written consent. In addition, a holder or holders controlling a majority of our capital stock would not be able to take certain actions without holding a stockholder’s meeting, and only stockholders owning at least 50 percent of our entire voting stock must request in writing in order to call a special meeting of stockholders (which is in addition to the authority held by our board of directors to call a special stockholder meetings).

·   Stockholders must provide advance notice to nominate individuals for election to the board of directors or to propose matters that can be acted upon at a stockholders’ meeting. These provisions may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our company.

·   Our board of directors may issue, without stockholder approval, up to 1 million shares of undesignated or “blank check” preferred stock. The ability to issue undesignated or “blank check” preferred stock makes it possible for our board of directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt or make it more difficult for a third party to acquire us.

As a Delaware corporation, we are also subject to certain Delaware anti-takeover provisions, including Section 203 of the Delaware General Corporation Law. Under these provisions, a corporation may not engage in a business combination with any large stockholders who hold 15 percent or more of our outstanding voting capital stock in a merger or business combination unless the holder has held the stock for 3 years, the board of directors has expressly approved the merger or business transaction or at least two-thirds of the outstanding voting capital stock not owned by such large stockholder approve the merger or the transaction. These provisions of Delaware law may have the effect of delaying, deferring or preventing a change of control, and may discourage bids for our common stock at a premium over its market price. In addition, our board of directors could rely on these provisions of Delaware law to discourage, prevent or delay an acquisition of us.

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Item 1B. Unresolved Staff Comments

Not applicable.

Item 2. Properties

 As of December 31, 2008, we leased approximately 30,500 square feet of office space through March 2011 for our field support and corporate headquarters in Calabasas, California.  Additionally, we leased 16,600 square feet of  office space for our field support offices in Blue Ash, Ohio.  As of December 31, 2008, we leased approximately 56,000 square feet of office space through December 2016 at our VISTA headquarters in Salt Lake City, Utah, and 48,200 square feet of office space through December 2015 at our Oxford headquarters in Beverly, Massachusetts.

 In addition, we lease approximately 380,000 square feet of office space in approximately 79 branch office locations in the United States, United Kingdom, Netherlands, Belgium, Ireland and Canada. A branch office typically occupies space ranging from approximately 1,000 to 3,000 square feet with lease terms that typically range from six months to five years.

Item 3. Legal Proceedings

We are involved in various legal proceedings, claims and litigation arising in the ordinary course of business. However, based on the facts currently available, we do not believe that the disposition of matters that are pending or asserted will have a material adverse effect on our financial position,results of operations or cash flows.

Item 4. Submission of Matters to a Vote of Security Holders

 There were no matters submitted to a stockholder vote during the fourth quarter of 2008.

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PART II

Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters

Our common stock trades on the NASDAQ Global Market under the symbol ASGN. The following table sets forth the range of high and low sales prices as reported on the NASDAQ Global Market for each quarterly period within the two most recent fiscal years. At March 10, 2009, we had approximately 44 holders of record, approximately 3,800 beneficial owners of our common stock and 36,381,626 shares outstanding.

	Price Range of Common Stock
	High		Low
Year Ended December 31, 2008
First Quarter	$	6.98	$	4.32
Second Quarter	$	8.82	$	6.26
Third Quarter	$	9.70	$	7.26
Fourth Quarter	$	7.92	$	4.05
Year Ended December 31, 2007
First Quarter	$	13.78	$	11.35
Second Quarter	$	12.72	$	9.63
Third Quarter	$	11.63	$	9.00
Fourth Quarter	$	10.13	$	5.81

Since inception, we have not declared or paid any cash dividends on our common stock, and we currently plan to retain all earnings to support the development and expansion of our business and we have no present intention of paying any dividends on our common stock in the foreseeable future. However, the Board of Directors periodically reviews our dividend policy to determine whether the declaration of dividends is appropriate. In addition, the terms of the debt agreement restrict our ability to pay dividends of more than $2.0 million per year.

On June 15, 2001, the Company’s Board of Directors authorized the repurchase of up to 2,940,939 million shares of common stock. As of December 31, 2003, the Company had repurchased 2,662,500 million shares of its common stock at a total cost of $23.0 million. The Company did not repurchase any shares pursuant to this authorization for the years ended December 31, 2004, 2005 or 2006. In December 2007, the Company repurchased the remaining 278,439 million shares of its common stock at a total cost of $2.0 million. At December 31, 2008, the Company has no remaining authorization to repurchase shares.

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Stock Performance Graph

The following graph compares the performance of On Assignment’s common stock price during the period from December 31, 2003 to December 31, 2008 with the composite prices of companies listed on the NASDAQ Stock Market and of companies included in the SIC Code No. 736—Personnel Supply Services Companies Index. The companies listed in the SIC Code No. 736 include peer companies in the same industry or line of business as On Assignment.

The graph depicts the results of investing $100 in On Assignment’s common stock, the NASDAQ Stock Market composite index and an index of the companies listed in the SIC Code No. 736 on December 31, 2003 and assumes that dividends were reinvested during the period.

The comparisons shown in the graph below are based upon historical data, and we caution stockholders that the stock price performance shown in the graph below is not indicative of, nor intended to forecast, potential future performance.

	Year Ended December 31,
	2008		2007		2006		2005		2004		2003
On Assignment, Inc.	$	108.83	$	134.55	$	225.33	$	209.41	$	99.62	$	100.00
SIC Code No. 736 Index—Personnel Supply Services Company Index	$	61.44	$	94.15	$	127.21	$	101.09	$	97.70	$	100.00
NASDAQ Stock Market Index	$	79.25	$	134.29	$	122.16	$	110.79	$	108.41	$	100.00

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Item 6. Selected Financial Data

The following table presents selected financial data of On Assignment as of, and for the years ended December 31, 2008, 2007, 2006, 2005 and 2004. This selected financial data should be read in conjunction with the consolidated financial statements and notes thereto included under “Financial Statements and Supplementary Data” in Part II, Item 8 of this report.

	Year Ended December 31,
	2008			2007(1)			2006			2005			2004
	(in thousands, except per share data)
Income Statement Data:
Revenues	$	618,058		$	567,180		$	287,566		$	237,856		$	193,574
Cost of services		418,602			387,643			209,725			174,627			143,663
Gross profit		199,456			179,537			77,841			63,229			49,911
Selling, general and administrative expenses		155,942			151,942			67,900			64,135			66,695
Impairment of intangibles		—			—			—			—			3,907
Impairment of goodwill		—			—			—			—			26,421
Operating income (loss)		43,514			27,595			9,941			(906	)		(47,112)
Interest expense		(9,998	)		(12,174	)		(54	)		—			(7)
Interest income		715			1,394			1,698			681			402
Income (loss) before income taxes		34,231			16,815			11,585			(225	)		(46,717)
Provision (benefit) for income taxes		15,261			7,493			541	(2)		(129	)		(4,324)
Net income (loss)	$	18,970		$	9,322		$	11,044		$	(96	)	$	(42,393)
Earnings (loss) per share:
Basic	$	0.53		$	0.27		$	0.41		$	(0.00	)	$	(1.68)
Diluted	$	0.53		$	0.26		$	0.39		$	(0.00	)	$	(1.68)
Weighted average number of shares used to calculate earnings (loss) per share:
Basic		35,487			35,138			27,155			25,464			25,231
Diluted		35,858			35,771			28,052			25,464			25,231
Balance Sheet Data:
Cash, cash equivalents, restricted cash and current portion of marketable securities	$	46,271		$	37,764		$	110,161		$	25,365		$	22,787
Working capital		91,192			79,009			135,501			47,629			40,957
Total assets		401,850			384,680			186,995			93,705			92,382
Long-term liabilities		129,805			140,803			627			70			222
Stockholders’ equity		218,514			193,034			165,944			76,637			74,471

(1)Our working capital at December 31, 2008 was $91.2 million including $46.3 million in cash and cash equivalents. On January 3, 2007, we acquired VISTA Staffing Solutions, Inc., and on January 31, 2007, we acquired Oxford Global Resources, Inc.  The Oxford acquisition was completed by utilizing our existing cash and the proceeds from a new $165 million senior secured credit facility.  For further discussion regarding our credit facility, see Note 4 to our Consolidated Financial Statements appearing in Part II, Item 8 of this report.

(2)In 2006, there was a reversal of the valuation allowance of $4.9 million that was recorded against our net deferred income tax assets in 2004 and 2005. Of the $4.9 million valuation allowance reversal, $4.3 million resulted in an income tax benefit and $0.6 million was recorded as an increase to additional paid-in capital resulting from stock option deductions realized in 2006.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements are based upon current expectations that involve risks and uncertainties. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. For example, the words “believes,” “anticipates,” “plans,” “expects,” “intends” and similar expressions that convey uncertainty of future events or outcomes are forward-looking statements. Forward-looking statements include statements regarding our anticipated financial and operating performance for future periods. Our actual results could differ materially from those discussed or suggested in the forward-looking statements herein. Factors that could cause or contribute to such differences or prove our forward-looking statements, by hindsight, to be overly optimistic or unachievable include, but are not limited to, the following:

·   actual demand for our services;

·   our ability to attract, train, and retain qualified staffing consultants;

·   our ability to remain competitive in obtaining and retaining temporary staffing clients;

·   the availability of qualified temporary nurses and other qualified contract professionals;

·   our ability to manage our growth efficiently and effectively; and

·   continued performance of our information systems.

 For a discussion of these and other factors that may impact our realization of our forward-looking statements, see “Business—Risk Factors” within Item 1A of Part I of this Annual Report on Form 10-K. Other factors may also contribute to the differences between our forward-looking statements and our actual results. In addition, as a result of these and other factors, our past financial performance should not be relied on as an indication of future performance. All forward-looking statements in this document are based on information available to us as of the date we file this Annual Report on Form 10-K, and we assume no obligation to update any forward-looking statement or the reasons why our actual results may differ.

Overview

On Assignment, Inc. is a diversified professional staffing firm providing flexible and permanent staffing solutions in specialty skills including Laboratory/Scientific, Healthcare/Nursing, Physicians, Medical Financial, Information Technology and Engineering. We provide clients in these markets with short-term or long-term assignments of contract professionals, contract-to-permanent placement and direct placement of these professionals. Our business currently consists of four operating segments: Life Sciences, Healthcare, Physician, and IT and Engineering.

Consolidated revenues increased 9.0 percent to $618.1 million in 2008 from $567.2 million in the previous year. Consolidated gross margin improved 62 basis points to 32.3 percent from 31.7 percent in 2007 and gross profit increased 11.1 percent to $199.5 million from $179.5 million in 2007.

Despite the weakening of the U.S. economy in the latter end of 2008, we were able to grow our revenues and expand our gross margin in 2008.  However, key indicators of demand have weakened (i.e. permanent placement and conversion revenues, number of new assignments and/or terminations, bill/pay spread, amount of time it takes customers to make a hiring decision on a qualified candidate and the number of billable hours per contract professional). We do not expect to see a dramatic improvement in demand for our services in 2009. However, we do believe our continued focus on items that are within our control (i.e., certain factors impacting gross margins, selling, general and administrative (SG&A) expense management and cash generation) has us well positioned to confront the current economic environment.  We remain cautious going into 2009 given the seasonality of our business, as discussed below, as well as the challenging economic environment in which we are currently operating.  Our Healthcare, Physician and IT and Engineering segments experienced increased demand in 2008, yet demand weakened in the fourth quarter for our Healthcare and IT and Engineering segments.  The demand for services in our Life Sciences segment, which is perhaps most related to the general economic conditions, weakened in 2008.

The initiatives undertaken during the last several years have been key to the growth in revenues and profitability experienced in 2008.  In January of 2007, we acquired VISTA Staffing Solutions, Inc. (VISTA), a privately-owned leading provider of physician staffing, known as locum tenens, and permanent physician search services and Oxford Global Resources, Inc. (Oxford), a leading provider of high-end information technology and engineering staffing services. In 2008, we focused on assisting the newly acquired Physician and IT and Engineering segments to continue to perform while integrating with and operating as a part of On Assignment.

During the past three years, we focused on diversifying our client mix in the Healthcare segment through the expansion of our client base. We made significant progress in

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further strengthening the sales force through the hiring of seasoned professionals with staffing industry experience and committing more resources to our newer services lines, local nursing, health information management, clinical research and our two new acquired segments: Physician and IT and Engineering.

Seasonality

Demand for our staffing services historically has been lower during the first and fourth quarters due to fewer business days resulting from client shutdowns, adverse weather conditions and a decline in the number of contract professionals willing to work during the holidays. As is common in the staffing industry, we run special incentive programs to keep our contract professionals, particularly nurses, working through the holidays. Demand for our staffing services usually increases in the second and third quarters of the year. In addition, our cost of services typically increases in the first quarter primarily due to the reset of payroll taxes.

Results of Operations

The following table summarizes, for the periods indicated, selected income statement data expressed as a percentage of revenues:

	Year Ended December 31,
	2008			2007			2006
Revenues		100.0	%		100.0	%		100.0	%
Cost of services		67.7			68.3			72.9
Gross profit		32.3			31.7			27.1
Selling, general and administrative expenses		25.2			26.8			23.6
Operating income		7.1			4.7			3.5
Interest expense		(1.6	)		(1.9	)		0.0
Interest income		0.1			0.2			0.5
Income before income taxes		5.6			3.0			4.0
Provision for income taxes		2.5			1.4			0.2
Net income		3.1	%		1.6	%		3.8	%

CHANGES IN RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2008

COMPARED WITH THE YEAR ENDED DECEMBER 31, 2007

Revenues.

	Year Ended December 31,				Change
	2008		2007		$			%
Revenues by segment (in thousands):
Life Sciences	$	129,483	$	134,622	$	(5,139	)	(3.8	%)
Healthcare		180,671		175,079		5,592		3.2	%
Physician		89,217		74,599		14,618		19.6	%
IT and Engineering		218,687		182,880		35,807		19.6	%
Total Revenues	$	618,058	$	567,180	$	50,878		9.0	%

Revenues increased $50.9 million, or 9.0 percent as a result of growth in our Healthcare, Physician, IT and Engineering segments. The growth was due to both demand in our end markets, as well as an expanded and more experienced sales and fulfillment team.In the latter half of 2007, we made management changes and realigned certain geographic markets in our Healthcare segment in order to generate higher revenue growth. The 2008 period included twelve months of activity from the IT and Engineering segment, as opposed to only eleven months in the 2007 period.

Life Sciences segment revenues decreased $5.1 million, or 3.8 percent. The decrease in revenues was primarily attributable to a 9.8 percent decrease in the average number of contract professionals on assignment, a $0.6 million, or 28.3 percent, decrease in conversion fee revenues and the deteriorating foreign exchange rate for the British Pound and the Euro combined with a deepening recession in the United Kingdom and the United States.  These decreases were partially offset by a 5.4 percent increase in the average bill rate and a $0.2 million increase in permanent placement fees. The year-over-year decrease in revenues is a direct result of our clients’ decisions to focus more

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on cost containment than on completing projects, developing new products or enhancing existing product lines during this challenging economic period.

The overall increase in Healthcare segment revenues, which include our Nurse Travel and Allied Healthcare lines of business, consisted of an increase in both the Nurse Travel and Allied Healthcare lines of business revenues.Nurse Travel revenues increased $5.3 million, or 4.4 percent, to $125.1 million. The increase in revenues was primarily attributable to a 4.0 percent increase in the average number of nurses on assignment, as well as a 2.9 percent increase in the average bill rate. The Nurse Travel revenues in 2008 also included $2.4 million related to supporting a long standing customer that experienced a labor disruption. The Nurse Travel results include a decrease in revenues derived from hospitals that experienced labor disruptions, which for the year ended December 31, 2007 were $2.8 million.  Allied Healthcare revenues increased $0.3 million, or 0.6 percent due to a 4.8 percent increase in the average bill rate and an increase in billable expenses, partially offset by a 6.7 percent decrease in the average number of contract professionals on assignment. In addition, direct hire revenues in the Allied Healthcare line of business decreased $0.2 million, or 13.5 percent.

Physician segment revenues increased $14.6 million, or 19.6 percent. The increase in revenues in 2008 was primarily due to an 11.2 percent increase in the average number of contract professionals on assignment as well as a 7.3 percent increase in the average bill rate as a result of a strong demand environment as a result of a growing shortage of physicians.

The IT and Engineering segment revenues increased $35.8 million, or 19.6 percent. The increase in revenue was primarily due to a 7.3 percent increase in the average number of contract professionals on assignment, a 3.5 percent increase in the average bill rate as well as an increase in conversion and direct hire fee revenue and billable expenses. In addition, revenues for 2007 only included eleven months of results because the Company completed its acquisition of Oxford on January 31, 2007.

Gross Profit and Gross Margins.

	Year Ended December 31,
	2008					2007
	Gross Profit		Gross Margin			Gross Profit		Gross Margin
Gross Profit by segment (in thousands):
Life Sciences	$	43,502		33.6	%	$	45,024		33.4	%
Healthcare		46,265		25.6	%		44,269		25.3	%
Physician		27,369		30.7	%		21,808		29.2	%
IT and Engineering		82,320		37.6	%		68,436		37.4	%
Total Gross Profit	$	199,456		32.3	%	$	179,537		31.7	%

The year-over-year gross profit increase was due to growth in revenues in the IT and Engineering, Physician and Healthcare segments and a 62 basis point expansion in consolidated gross margin. The expansion in gross margin was primarily attributable to increases in margins in the Physician and Healthcare segments and to a higher proportion of revenues from the IT and Engineering segment, which has higher gross margins than the other segments.  The 2008 period included twelve months of reportable activity from the IT and Engineering segment as compared with only eleven months in the 2007 period.

Life Sciences segment gross profit decreased $1.5 million, or 3.4 percent. The decrease in gross profit was primarily due to a 3.8 percent decrease in the segment revenues partially offset by an increase of 16 basis points in gross margin. The increase in gross margin was predominantly due to a 7.1 percent increase in bill/pay spread as a result of our continued focus on pricing policies and increased direct hire revenues.

Healthcare segment gross profit increased $2.0 million, or 4.5 percent. The increase in gross profit was due to a 3.2 percent increase in the segment revenues and an increase in gross margin. Gross margin for the segment increased 32 basis points due to an increase in the bill/pay spread, partially offset by an increase in other contract employee expenses. This segment includes gross profit from the Nurse Travel and Allied Healthcare lines of business. Allied Healthcare gross profit increased 0.7 percent and gross margin increased 2 basis points while Nurse Travel gross profit increased 7.0 percent and gross margin increased 57 basis points. Gross margins in the first quarter of a year tend to be lower than the fourth quarter of the preceding year due to the reset of certain payroll taxes.

Physician segment gross profit increased $5.6 million, or 25.5 percent. The increase in gross profit was primarily attributable to a 19.6 percent increase in revenues as well as an increase in gross margin. Gross margin for the segment increased 145 basis points primarily due to an increase in bill/pay spread, partially offset by increased medical malpractice expense. The segment began adjusting bill rates simultaneously with adjustments in the pay

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rates when possible which positively impacted the bill/pay spread in 2008.

IT and Engineering segment gross profit increased $13.9 million, or 20.3 percent, primarily due to a 19.6 percent increase in revenues, as the 2008 period included twelve months of reportable activity versus eleven months in 2007, as well as an increase in gross margin for the segment. Gross margin for the segment increased 22 basis points, primarily due to an increase in bill/pay spread and a $0.8 million, or 83.7 percent increase in conversion fee revenue, partially offset by a $3.2 million, or 31.0 percent increase in other contract employment expenses. As with our other divisions, to the extent we employ contract professionals, we may see lower gross margins in the first quarter of 2009 due to the reset of certain payroll taxes.

Selling, General and Administrative Expenses. SG&A expenses include field operating expenses, such as costs associated with our network of staffing consultants and branch offices for our Life Sciences segment and our Allied Healthcare lines of business, including staffing consultant compensation, rent and other office expenses, as well as marketing and recruiting for our contract professionals. Nurse Travel SG&A expenses include compensation for regional sales directors, account managers and recruiters, as well as rent and other office expenses and marketing for traveling nurses. SG&A expenses from our Physician and IT and Engineering segments include compensation for sales personnel, as well as rent and other office expenses and marketing for these segments. SG&A expenses also include our corporate and branch office support expenses, such as the salaries of corporate operations and support personnel, recruiting and training expenses for field staff, marketing staff expenses, rent, expenses related to being a publicly-traded company and other general and administrative expenses.

SG&A expenses increased $4.0 million, or 2.6 percent, to $155.9 million from $151.9 million. The increase in SG&A was primarily due to a $10.2 million increase in compensation and benefits as a result of increased revenues, and SG&A expenses of the IT and Engineering segment being included for twelve months in 2008 compared to only eleven months in 2007.The increase in SG&A expense was partially offset by a $7.0 million decrease in depreciation and amortization expenses, primarily related to a reduction of the amortization amount for other intangibles in 2008. Total SG&A as a percentage of revenues decreased to 25.2 percent in the 2008 period from 26.8 percent in the 2007 period, primarily due to decreased depreciation and amortization expense. Going forward, we will continue to manage our SG&A closely and do not expect any significant changes.

Interest expense and interest income. Interest expense was $10.0 million and $12.2 million for the years ended December 31, 2008 and 2007, respectively.The decrease in interest expense was primarily due to lower average debt balances in 2008 due to $9.7 million principal payments in 2007, and a decrease in average interest rates during 2008. On December 31, 2008 and 2007, the value of our interest rate swap was marked-to-market, and we recorded a loss of $0.1 million and $1.2 million, respectively, for the years then ended, which is shown in interest expense, and the related liability of $1.3 million and $1.2 million, respectively, is included in the Consolidated Balance Sheets in other current liabilities.

 Interest income was $0.7 million and $1.4 million for the years ended December 31, 2008 and 2007, respectively. Interest income in the current period was also lower due to lower average interest rates in 2008.

Provision for Income Taxes. The provision for income taxes was $15.3 million for the year ended December 31, 2008 compared to $7.5 million for the same period in the prior year. The annual effective tax rate was 44.6 percent for 2008 and 2007.

CHANGES IN RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2007

COMPARED WITH THE YEAR ENDED DECEMBER 31, 2006

Revenues.

	Year Ended December 31,				Change
	2007		2006		$		%
Revenues by segment (in thousands):
Life Sciences	$	134,622	$	117,462	$	17,160	14.6	%
Healthcare		175,079		170,104		4,975	2.9	%
Physician (from January 3, 2007)		74,599		―		74,599	N/A
IT and Engineering (from January 31, 2007)		182,880		―		182,880	N/A
Total Revenues	$	567,180	$	287,566	$	279,614	97.2	%

Consolidated year-over-year revenue growth was primarily attributable to the acquisitions of VISTA and Oxford, completed on January 3, 2007 and January 31, 2007, respectively, and included revenues from their respective date of acquisition. We also experienced organic growth in our Life Sciences and Healthcare segments. These organic results were due to both demand in our end markets as well as an expanded and more experienced sales and fulfillment team. Our Healthcare segment revenues began to slow in the latter half of the year, driven by slower than expected progress in replacing a large account that closed its acute care facility following its failure to gain government certification, our reduction in placements at another large customer due to pricing, as well as a generally lackluster Nurse Travel end market. We made management changes and realigned certain geographic markets to facilitate generating a better growth rate in the segment on a go-forward basis. We continued to focus on the growth of our established product lines as well as our newer product lines, including Health Information Management, Clinical Research, Engineering, Local Nursing, Physician, IT and Engineering, and further development of our direct hire business.

Revenues increased $279.6 million or 97.2 percent, from $287.6 million to $567.2 million. This increase was due in great part because of the acquisitions of VISTA and Oxford, which accounted for $257.5 million of the increase. In addition, conversion and direct hire fee revenues increased $4.9 million, or 75.2 percent, from $6.6 million, or 2.3 percent of revenue to $11.5 million, or 2.0 percent of revenue. This was a result of more contract professionals being converted into or hired directly as permanent employees in our legacy businesses, accounting for $2.0 million of the increase, as well as from conversion and direct hire fee revenues generated in the newly acquired Physician and IT and Engineering segments, which accounted for $3.0 million of the increase. Continued development of the direct hire business had a favorable impact on our operating results and remained a focus of management.

Life Sciences segment revenues increased $17.2 million, or 14.6 percent, from $117.5 million to $134.6 million. The increase in revenues was primarily attributable to a 7.6 percent increase in average bill rates, or approximately $9.0 million, as well as a 5.0 percent increase in the average number of contract professionals on assignment, or approximately $5.9 million. In addition, conversion and direct hire fee revenues increased $1.2 million, or 22.3 percent, from $5.5 million to $6.7 million. Our newer service line offerings, Clinical Research and Engineering, continued to grow by generating a larger number of higher-level, higher-revenue placements during 2007 than 2006, with a 17.7 percent increase in contract professionals placed in 2007 than in 2006.

The overall increase in Healthcare segment revenues, which included our Nurse Travel and Allied Healthcare lines of business, resulted from an increase in revenues generated by the Allied Healthcare line of business while the Nurse Travel line remained relatively flat for the period.Healthcare segment revenues increased $5.0 million, or 2.9 percent, from $170.1 million to $175.1 million. Allied Healthcare revenues increased $4.7 million, or 9.4 percent, from $50.5 million to $55.2 million. The increase in revenues was primarily attributable to a 13.0 percent increase in the average number of contract professionals on assignment, or approximately $6.5 million, as well as a 67.6 percent increase in conversion and direct hire fee revenues from $1.1 million to $1.9 million. The increase was offset by a 6.6 percent decrease in hours worked per contract professional, or approximately $5.0 million. Nurse Travel revenues increased $0.2 million, or 0.2 percent, from $119.6 million to $119.8 million. The slight increase in Nurse Travel revenues was due to a 1.0 percent increase in the average bill rate, offset by a 2.6 percent decrease in average hours worked per nurse and a 0.4 percent decrease in average contract professionals on assignment.

Physician segment revenues, which consisted of the recently acquired VISTA, were $74.6 million for the year ended December 31, 2007. Physician segment revenue was 13.2 percent of total revenue for the year ended December 31, 2007. The Physician segment had fourth quarter 2007 revenues of $19.4 million, an increase of 14.6 percent over the pro-forma fourth quarter revenue of 2006.

IT and Engineering segment revenues, which consisted of the recently acquired Oxford, were $182.9 million for the year ended December 31, 2007. IT and Engineering segment revenue was 32.2 percent of total revenue for the year ended December 31, 2007. The IT and Engineering segment revenues for the fourth quarter of 2007 were $53.3 million, an increase of 16.1 percent over the pro-forma fourth quarter of 2006.

 Gross Profit and Gross Margins.

	Year Ended December 31,
	2007					2006
	Gross Profit		Gross Margin			Gross Profit		Gross Margin
Gross Profit by segment (in thousands):
Life Sciences	$	45,024		33.4	%	$	38,143		32.5	%
Healthcare		44,269		25.3	%		39,698		23.3	%
Physician (from January 3, 2007)		21,808		29.2	%		―		N/A
IT and Engineering (from January 31, 2007)		68,436		37.4	%		―		N/A
Total Gross Profit	$	179,537		31.7	%	$	77,841		27.1	%

Gross profit increased $101.7 million from $77.8 million to $179.5 million. Gross margins increased 460 basis points from 27.1 percent to 31.7 percent. On a consolidated basis, gross profit and gross margins increased significantly due the acquisitions of VISTA and Oxford completed on January 3, 2007 and January 31, 2007, respectively, and included gross profit from their respective date of acquisition. The 460 basis point increase in consolidated gross margin year over year was largely attributable to the 37.4 percent gross margin earned in the IT and Engineering segment, which consists entirely of the Oxford acquisition. Additionally, we experienced margin improvement in both of our historical segments, Life Sciences and Healthcare.

Life Sciences segment gross profit increased due to an increase in revenues and improved gross margin. Gross margins for the segment increased 90 basis points from 32.5 percent to 33.4 percent. The Life Sciences segment gross margin increase was primarily related to lower workers’ compensation expense, an increased bill/pay spread and increased direct hire and conversion fee revenues. Direct hire and conversion fee revenues increased $1.2 million, or 22.3 percent, from $5.5 million to $6.7 million. Increases in direct hire and conversion fee revenues had a positive impact on gross margin as there are no associated costs of services. Gross margins in the first quarter of a year tend to be lower than the fourth quarter of the preceding year due to the reset of certain payroll taxes.

Healthcare segment gross profit increased due to an increase in revenues and improved gross margin. This segment includes gross profit from the Nurse Travel and Allied Healthcare lines of business. Gross margin for the segment increased 200 basis points from 23.3 percent to 25.3 percent. The increase was primarily related to an increase in the bill/pay spread, reduced housing and travel costs, lower workers’ compensation expense and increased direct hire and conversion fee revenues, partially offset by an increase in temporary employee per diem expense. Direct hire and conversion fee revenues in the Allied Healthcare line of business increased $0.7 million, or 67.6 percent, from $1.1 million to $1.9 million. Gross margins in the first quarter of a year tend to be lower than the fourth quarter of the preceding year due to the reset of certain payroll taxes.

Gross margins in our Physician and IT and Engineering segments were 29.2 percent and 37.4 percent, respectively, for the year ended December 31, 2007, and as with our other divisions to the extent we employ contract professionals we may see lower gross margins in the first quarter due to the reset of certain payroll taxes.

Selling, General and Administrative Expenses. SG&A expenses increased $84.0 million, or 123.8 percent, from $67.9 million to $151.9 million. The primary reason for the increase was the acquisitions of VISTA and Oxford in the first quarter of 2007. SG&A expenses for VISTA and Oxford were $19.4 million and $57.5 million, respectively. In addition to expenses related to increased sales headcount and corporate support personnel associated with the acquisitions, the amortization of intangible assets acquired caused an increase in amortization expense from $1.0 million to $15.3 million. Additionally, stock-based compensation expense was $3.0 million versus $6.4 million.

Total SG&A as a percentage of revenues increased from 23.6 percent to 26.8 percent, primarily due to increased amortization expense related to the acquisition of VISTA and Oxford.

Interest expense and interest income. Interest expense was $54,000 and $12.2 million for the years ended December 31, 2006 and 2007, respectively. The increase in interest expense was due to the new $165.0 million senior secured credit facility we entered into on January 31, 2007. On December 31, 2007, the value of our interest rate swap was marked-to-market, and we recorded a loss of $1.2 million for the year then ended, which is shown in interest expense, and the related liability of $1.2 million is included in the Consolidated Balance Sheets in other current liabilities.

 Interest income was $1.7 million and $1.4 million for the years ended December 31, 2006 and 2007, respectively. Interest income was lower due to a lower average cash balance in 2007 versus 2006. Average interest rates were marginally higher in the 2007 period versus the 2006 period.

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 Provision for Income Taxes. The provision for income taxes increased from $0.5 million for the year ended December 31, 2006 to $7.5 million for the year ended December 31, 2007. For the year ended December 31, 2007, we recorded a tax provision based on an annual effective tax rate of approximately 44.6 percent while our effective rate was 4.7 percent for the year ended December 31, 2006. The difference in our effective tax rate for the year ended December 31, 2006 as compared with the corresponding period in 2007 was primarily due to the reversal in 2006 of the valuation allowance of $4.9 million that was recorded against our net deferred income tax assets in 2004 and 2005. Of the $4.9 million valuation allowance reversal, $4.3 million resulted in an income tax benefit and $0.6 million was recorded as an increase to additional paid-in capital resulting from stock option deductions realized in the 2006 period.

Liquidity and Capital Resources

Our working capital at December 31, 2008 was $91.2 million, including $46.3 million in cash and cash equivalents. Our operating cash flows have been our primary source of liquidity and historically have been sufficient to fund our working capital and capital expenditure needs. Our working capital requirements consist primarily of the financing of accounts receivable, payroll expenses and the required periodic payments of principal and interest on our term loan. We do not currently pay cash dividends on our outstanding common stock and do not intend to pay cash dividends for the foreseeable future.

Net cash provided by operating activities was $35.4 million for the year ended December 31, 2008 compared with $33.7 million in the same period in 2007.  The increase in net cash provided by operating activities was primarily due to the increase in net income, adjusted to exclude the effect of non-cash charges including a decrease in depreciation and amortization due to a reduction of the amortization for other intangibles in 2008, offset by an increase in prepaid income taxes due to increased operating results and an increase in the medical malpractice provision due to increased claim activity.

Net cash used in investing activities decreased to $17.7 million in the year ended December 31, 2008 from $234.0 million in the same period in 2007, primarily due to our acquisitions of Oxford and VISTA in 2007.  Capital expenditures related to information technology projects, leasehold improvements and various property and equipment purchases for the year ended December 31, 2008 totaled $8.2 million, compared with $5.9 million in the comparable 2007 period. The increase in capital expenditures in 2008 primarily related to the conversion of the Nurse Travel line of business to RecruitMax and PeopleSoft in the fourth quarter of 2008. We expect capital expenditures to be approximately $6.0 million for 2009.

Net cash used in financing activities was $8.4 million for the year ended December 31, 2008 compared with net cash provided by financing activities of $132.1 million for the same period in 2007.  The significant source of cash provided by financing activities in 2007 was due to borrowing activity related to the proceeds from the $145.0 million term loan facility.

During 2008, we used $10.0 million to pay down our term loan facility to $125.9 million. This payment was sufficient to cover the excess cash flow payment required by the bank as well as all minimum quarterly payments for the next four years through 2012.  The term loan facility matures on January 13, 2013, at which time we expect the facilities to be renewed. Under terms of the credit facility, we are required to maintain certain financial covenants, including a minimum total leverage ratio, a minimum interest coverage ratio and a limitation on capital expenditures. In addition, the terms of the credit facility restrict the Company’s ability to pay dividends of more than $2.0 million per year. As of December 31, 2008, we were in compliance with all such covenants. The maximum total leverage ratio, which measures the ratio of total debt to trailing twelve months consolidated earnings before interest, taxes, depreciation and amortization of identifiable intangible assets, as defined in the agreement, decreases to 1.25 from 2.0 for the twelve months ended September 30, 2009.  Based on our current operating plan, we believe we will be in compliance with the covenants contained in our term loan facility.  However, such compliance will likely require us to prepay a portion of our term loan prior to September 30, 2009 depending on our operating results.  If the economy continues to worsen, it may impact our ability to meet these covenants. In order to avoid possible compliance issues related to maximum leverage later in 2009, we will seek an amendment to increase the permitted leverage under our term loan facility.

In April 2008, we paid the earn-outs related to the 2007 operating performance of VISTA and Oxford acquisitions.   As of December 31, 2008, we have accrued $5.3 million and $4.8 million for the payment of the earn-outs related to the 2008 operating performance of VISTA and Oxford, respectively. We also filed for claims indemnifiable by the selling shareholders of VISTA for $1.4 million, which was recorded as a decrease to goodwill and an increase in other current assets as of December 31, 2008. Payment of these earn-outs and claim indemnification is tentatively scheduled for April 2009, pending the agreement of all applicable parties to all terms and provisions related to such payments.

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 We continue to make progress on enhancements to our front-office and back-office information systems. These enhancements include the consolidation of back-office systems across all corporate functions, as well as enhancements to and broader application of our front-office software across all lines of business. The timing of the full integration of information systems used by VISTA and Oxford will remain a consideration of management.

Under our previously board-approved stock repurchase program, we repurchased 2,940,939 shares of our common stock at a total cost of $25.0 million through 2007. As of December 31, 2007, we had no remaining authorization to repurchase shares.

During 2008, certain stock-based awards issued under our approved stock option plan vested. Under the provisions of this plan, a portion of the vested shares were withheld by us in order to satisfy minimum payroll tax obligations of the employee. The vested shares withheld have been recorded as treasury stock, a reduction to stockholder’s equity, at the fair market value on the date that the tax obligation was determined, which was also the vesting date of the awards. As of December 31, 2008, there were 156,425 shares withheld related to stock-based awards and included in treasury stock at a fair-market value of $1.4 million.

We believe that our working capital as of December 31, 2008, our credit facility and positive operating cash flows expected from future activities will be sufficient to fund future requirements of our debt obligations, accounts payable and related payroll expenses as well as capital expenditure initiatives for the next twelve months.

Commitments and Contingencies

 We lease space for our corporate and branch offices. Rent expense was $9.5 million in 2008, $8.8 million in 2007 and $5.1 million in 2006.

 The following table sets forth, on an aggregate basis, at December 31, 2008, the amounts of specified contractual cash obligations required to be paid in the periods shown (in thousands):

Contractual Obligations	2009		2010		2011		2012		2013		Thereafter		Total
Long-term debt	$	―	$	―	$	―	$	―	$	125,913	$	―	$	125,913
Operating lease obligations		6,426		5,456		3,420		2,011		1,512		3,757		22,582
Accrued earn-out payments		10,168		―		―		―		―		―		10,168
Total	$	16,594	$	5,456	$	3,420	$	2,011	$	127,425	$	3,757	$	158,663

 For additional information about these contractual cash obligations, see Note 7 to our Consolidated Financial Statements appearing in Part II, Item 8 of this report. Interest payments related to our bank debt are not set forth in the table above.

 We have accrued $5.3 million and $4.8 million for the estimated payment of the earn-outs related to the 2008 operating performance of VISTA and Oxford, respectively.  These costs have been included in the Consolidated Balance Sheets in Part II, Item 8 of this report in accrued earn-out payments. We also filed for claims indemnifiable by the selling shareholders of VISTA for $1.4 million, which was recorded as a decrease to goodwill and an increase in other current assets as of December 31, 2008.  Payment of the earn-outs and claim indemnification is tentatively scheduled for April 2009, pending the agreement of all applicable parties to all terms and provisions related to such payments.

 We are partially self-insured for our workers' compensation liability related to the Life Sciences, Healthcare and IT and Engineering segments as well as its medical malpractice liability in relation to the Physician segment. In connection with this program, we pay a base premium plus actual losses incurred up to certain levels and are insured for losses greater than certain levels per occurrence and in the aggregate. The self-insurance claim liability is determined based on claims filed and claims incurred but not yet reported. We account for claims incurred but not yet reported based on estimates derived from historical claims experience and current trends of industry data. Changes in estimates, differences in estimates and actual payments for claims are recognized in the period that the estimates changed or payments were made. The self-insurance claim liability was approximately $9.8 million and $8.9 million at December 31, 2008 and 2007, respectively.  Additionally, we have letters of credit outstanding to secure obligations for workers’ compensation claims with various insurance carriers.  The letters of credit outstanding at December 31, 2008 and 2007 were $3.5 million and $4.4 million, respectively.

 As of December 31, 2008 and 2007, we have an income tax reserve in other long-term liabilities related to our uncertain tax positions of $0.3 million.

 We are involved in various other legal proceedings, claims and litigation arising in the ordinary course of business. However, based on the facts currently available, we do not believe that the disposition of matters that are pending or asserted will have a material adverse effect on our financial position.

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Off-Balance Sheet Arrangements

 As of December 31, 2008, the Company had no significant off-balance sheet arrangements other than operating leases and letters of credit outstanding.

Recent Accounting Pronouncements

In September 2006, the Financial Accounting Standards Board (FASB) adopted SFAS No. 157, “Fair Value Measurements” (SFAS 157).  SFAS 157 defines fair value, establishes a framework for measuring fair value in accordance with GAAP and expands disclosures about fair value measurements. While SFAS 157 did not impact the Company’s valuation methods, it expanded disclosures of assets and liabilities that are recorded at fair value. SFAS 157 was effective for financial statements issued for years beginning after November 15, 2007 and interim periods within those years. The Company adopted this standard on January 1, 2008, and the adoption did not have a material impact on the results of operations, financial position or cash flows. See Note 12 to our Consolidated Financial Statements appearing in Part II, Item 8 of this report for the related disclosure.  We are in the process of evaluating the previously-deferred provisions of SFAS 157, which was effective on January 1, 2009, for non-financial assets and liabilities recorded at fair value and the impact on our consolidated financial position or results of operations.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities.” This Statement permits entities to choose to measure many financial instruments and certain other items at fair value, with the objective of mitigating volatility in reported earnings caused by measuring related assets and liabilities differently (without being required to apply complex hedge accounting provisions). The Company was required to make  an election at the beginning of the year after November 15, 2007 to adopt this standard. The Company did not elect the fair value option.

In December 2007, the FASB issued SFAS No. 141(R), “Business Combinations” (SFAS 141R). SFAS 141R expanded the definition of a business, thus increasing the number of transactions that qualify as business combinations. SFAS 141R requires the acquirer to recognize 100 percent of an acquired business’ assets and liabilities, including goodwill and certain contingent assets and liabilities, at their fair values at the acquisition date. Contingent consideration is recognized at fair value on the acquisition date, with changes in fair value recognized in earnings until settled. Likewise, changes in acquired tax contingencies, including those existing at the date of adoption, are recognized in earnings if outside the maximum allocation period (generally one year). Transaction-related expenses and restructuring costs are expensed as incurred, and any adjustments to finalize the purchase accounting allocations, even within the allocation period, are shown as revised in the future financial statements to reflect the adjustments as if they had been recorded on the acquisition date. Finally, a gain could result in the event of a bargain purchase (acquisition of a business below the fair market value of the assets and liabilities), or a gain or loss in the case of a change in the control of an existing investment. SFAS 141R is applied prospectively to business combinations with acquisition dates on or after January 1, 2009. Adoption did not materially impact the Company’s consolidated financial position or results of operations directly when it became effective in 2009, as the only impact that the standard had on recorded amounts at adoption was that related to disposition of uncertain tax positions related to prior acquisitions. Following the date of adoption of the standard, the resolution of such items at values that differ from recorded amounts will be adjusted through earnings, rather than through goodwill. Adoption of this statement will have a significant effect on how acquisition transactions subsequent to January 1, 2009 are reflected in our financial statements.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133,” (SFAS 161), which requires additional disclosures about the objectives of the derivative instruments and hedging activities, the method of accounting for such instruments under SFAS No. 133 and its related interpretations, and a tabular disclosure of the effects of such instruments and related hedged items on the Company’s financial position, financial performance, and cash flows.  SFAS 161 was effective for the Company beginning January 1, 2009. We are currently assessing the potential impact that adoption of SFAS 161 may have on our financial statements.

Critical Accounting Policies

Our accounting policies are described in Note 1 of the Notes to Consolidated Financial Statements in Part II, Item 8 of this report. We prepare our financial statements in conformity with accounting principles generally accepted in the United States, which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year. Actual results could differ from those estimates. We consider the following policies to be most critical in understanding the judgments that are involved in preparing our financial statements and the uncertainties that could impact our results of operations, financial condition and cash flows.

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Allowance for Doubtful Accounts and Billing Adjustments. We estimate an allowance for doubtful accounts as well as an allowance for billing adjustments related to trade receivables based on our analysis of historical collection and adjustment experience. We apply actual collection and adjustment percentages to the outstanding accounts receivable balances at the end of the period. If we experience a significant change in collections or billing adjustment experience, our estimates of the recoverability of accounts receivable could change by a material amount.

Workers’ Compensation and Medical Malpractice Loss Reserves. We are partially self-insured for our workers’ compensation liability related to the Life Sciences, Healthcare and IT and Engineering segments as well as our medical malpractice liability in relation to the Physician segment. In connection with these programs, we pay a base premium plus actual losses incurred, not to exceed certain stop-loss limits. We are insured for losses above these limits, both per occurrence and in the aggregate. The self-insurance claim liability is determined based on claims filed and claims incurred but not reported. We account for claims incurred but not yet reported based on estimates derived from historical claims experience and current trends of industry data. Changes in estimates and differences in estimates and actual payments for claims are recognized in the period that the estimates changed or the payments were made.

Contingencies. We account for contingencies in accordance with Statement of Financial Accounting Standards (SFAS) No. 5, “Accounting for Contingencies.” SFAS 5 requires that we record an estimated loss from a loss contingency when information available prior to issuance of our financial statements indicates it is probable that an asset has been impaired or a liability has been incurred at the date of the financial statements, and the amount of the loss can be reasonably estimated. Accounting for contingencies, such as legal settlements, workers’ compensation matters and medical malpractice insurance matters, requires us to use our judgment. While we believe that our accruals for these matters are adequate, if the actual loss from a loss contingency is significantly different than the estimated loss, results of operations may be over or understated.

Income taxes.  We account for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.  Deferred tax assets are reduced by a valuation allowance if it is more likely than not that a portion of the deferred tax asset will not be realized.

In accordance with the recognition standards established by FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes – an Interpretation of FASB Statement No. 109” (FIN 48 ), we make a comprehensive review of our portfolio of uncertain tax positions regularly.  In this regard, an uncertain tax position represents our expected treatment of a tax position taken in a filed tax return, or planned to be taken in a future tax return or claim, that has not been reflected in measuring income tax expense for financial reporting purposes.  Until these positions are sustained by the taxing authorities, we have not recognized the tax benefits resulting from such positions and report the tax effects as a liability for uncertain tax positions in our consolidated balance sheets.

Goodwill and Identifiable Intangible Assets. Goodwill and other intangible assets having an indefinite useful life are not amortized for financial statement purposes. Intangible assets having finite lives are amortized over their useful lives and are periodically reviewed to ensure that no conditions exist indicating the recorded amount is not recoverable from future undiscounted cash flows.

We perform an annual impairment test in the fourth quarter on goodwill and intangible assets and in the event that facts and circumstances indicate that goodwill and other identifiable intangible assets may be impaired, an interim impairment test would be required. We determine the fair value based upon discounted cash flows prepared for each reporting unit. Cash flows were developed for each reporting unit based on assumptions including revenue growth expectations, gross margins, operating expense projection, working capital and capital expense requirements and tax rates. The principal factors used in the discounted cash flow analysis requiring judgment are the projected results of operations, weighted average cost of capital (WACC), and terminal value assumptions. The WACC takes into account the relative weights of each component of the company’s consolidated capital structure (equity and debt) and represents the expected cost of new capital adjusted as appropriate to consider lower risk profiles associated with longer term contracts and barriers to market entry. The terminal value assumptions are applied to the final year of the discounted cash flow model.

Due to the many variables inherent in the estimation of a business’s fair value and the relative size of the company’s recorded goodwill, differences in assumptions may have a material effect on the results of the company’s impairment analysis.  While we believe that our goodwill was not impaired at December 31, 2008, declines in our market capitalization subsequent to the balance sheet date could be an early indication that goodwill may become impaired in the future which could have a material adverse effect on our results of operations and financial condition.

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Impairment or Disposal of Long-Lived Assets.  We evaluate long-lived assets, other than goodwill and identifiable intangible assets with indefinite lives, for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. An impairment loss is recognized when the sum of the undiscounted future cash flows is less than the carrying amount of the asset, in which case a write-down is recorded to reduce the related asset to its estimated fair value.

Business Combinations.  We record acquisition transactions in accordance with the purchase method of accounting, and therefore this requires us to use judgment and estimates related to the allocation of the purchase price to the intangibles assets of the acquisition and the remaining amount, net of assets and liabilities assumed, to goodwill.

Stock-Based Compensation. As discussed in Note 10 to our Consolidated Financial Statements in Part II, Item 8 of this report, effective January 1, 2006, we account for stock-based compensation in accordance with SFAS No. 123 (revised 2004), “Share-Based Payment” (SFAS 123R), which requires recognition of the fair value of equity-based compensation.  The fair value of stock options and ESPP shares is estimated using a Black-Scholes option valuation model.  This methodology requires the use of subjective assumptions, including expected stock price volatility and the estimated life of each award.  The fair value of equity-based compensation awards less the estimated forfeitures is amortized over the service period of the award.  The fair value of restricted stock awards and stock units is calculated based upon the fair market value of our common stock at the date of grant.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to certain market risks arising from transactions in the normal course of business, principally risks associated with foreign currency fluctuations and interest rates. We are exposed to foreign currency risk from the translation of foreign operations into U.S. dollars. Based on the relative size and nature of our foreign operations, we do not believe that a ten percent change in the value of foreign currencies relative to the U.S. dollar would have a material impact on our financial statements. Our primary exposure to market risk is interest rate risk associated with our debt instruments. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” for further description of our debt instruments.  Excluding the effect of our interest rate swap agreement, a 1 percent change in interest rates on variable rate debt would have resulted in interest expense fluctuating approximately $1.4 million during the year ended December 31, 2008. Including the effect of our interest rate swap agreement, a 1 percent change in interest rates on variable debt would have resulted in interest expense fluctuating approximately $0.6 million during the year ended December 31, 2008.  We have not entered into any market risk sensitive instruments for trading purposes.  See Note 4 to the Consolidated Financial Statements in Part II, Item 8 of this report for additional information on the rate swap agreement entered into by the Company.

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Item 8. Financial Statements and Supplementary Data

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of On Assignment, Inc.

Calabasas, California

We have audited the accompanying consolidated balance sheets of On Assignment, Inc. and subsidiaries (the "Company") as of December 31, 2008 and 2007, and the related consolidated statements of operations and comprehensive income, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2008. Our audits also included the financial statement schedule listed in the Index at Item 15. These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of On Assignment, Inc. and subsidiaries as of December 31, 2008 and 2007, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2008, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

Effective January 1, 2007, the Company adopted FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109,” as discussed in Note 8 to the consolidated financial statements. As discussed in Notes 1 and 10 to the consolidated financial statements, the Company adopted, effective January 1, 2006, Statement of Financial Accounting Standards No. 123R, “Share-Based Payment.”

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of December 31, 2008, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 16, 2009 expressed an unqualified opinion on the Company's internal control over financial reporting.

/s/ Deloitte & Touche LLP

Los Angeles, California

March 16, 2009

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ON ASSIGNMENT, INC. AND SUBSIDIARIES

 CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

	December 31,
	2008		2007
ASSETS
Current Assets:
Cash and cash equivalents	$	46,271	$	37,764
Accounts receivable, net of allowance for doubtful accounts and billing adjustments of  $2,443 and $2,254, respectively		78,370		78,840
Advances and deposits		311		323
Prepaid expenses		4,503		4,143
Prepaid income taxes		3,759		13
Deferred income tax assets		9,347		8,018
Other		2,162		751
Total current assets		144,723		129,852
Property and Equipment, net		17,495		13,898
Goodwill		202,777		193,552
Identifiable intangible assets, net		31,428		40,964
Other assets		5,427		6,414
Total Assets	$	401,850	$	384,680
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	5,204	$	5,718
Accrued payroll and contract professional pay		19,836		19,108
Deferred compensation		1,610		2,037
Workers’ compensation and medical malpractice loss reserves		9,754		8,921
Accrued earn-out payments		10,168		8,525
Other		6,959		6,534
Total current liabilities		53,531		50,843
Deferred income taxes		1,997		1,664
Long-term debt		125,913		135,913
Other long-term liabilities		1,895		3,226
Total liabilities		183,336		191,646
Commitments and Contingencies (Note 7)
Stockholders’ Equity:
Preferred Stock, $0.01 par value, 1,000,000 shares authorized, no shares issued or outstanding		—		—
Common Stock, $0.01 par value, 75,000,000 shares authorized, 38,816,844 and 38,216,421 issued, respectively		388		382
Paid-in capital		227,522		219,217
Retained earnings (accumulated deficit)		16,215		(2,755)
Accumulated other comprehensive income		800		2,190
		244,925		219,034
Less: Treasury Stock at cost, 3,097,364 and 3,038,938 shares, respectively		26,411		26,000
Total stockholders’ equity		218,514		193,034
Total Liabilities and Stockholders’ Equity	$	401,850	$	384,680

See notes to consolidated financial statements.

31

ON ASSIGNMENT, INC. AND SUBSIDIARIES

 CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(In thousands, except per share data)

	Year Ended December 31,
	2008			2007			2006
Revenues	$	618,058		$	567,180		$	287,566
Cost of services		418,602			387,643			209,725
Gross profit		199,456			179,537			77,841
Selling, general and administrative expenses		155,942			151,942			67,900
Operating income		43,514			27,595			9,941
Interest expense		(9,998	)		(12,174	)		(54)
Interest income		715			1,394			1,698
Income before income taxes		34,231			16,815			11,585
Provision for income taxes		15,261			7,493			541
Net income	$	18,970		$	9,322		$	11,044
Earnings per share:
Basic	$	0.53		$	0.27		$	0.41
Diluted	$	0.53		$	0.26		$	0.39
Weighted average number of shares used to calculate earnings per share:
Basic		35,487			35,138			27,155
Diluted		35,858			35,771			28,052

Reconciliation of net income to comprehensive income:
Net income	$	18,970		$	9,322	$	11,044
Foreign currency translation adjustment		(1,390	)		628		569
Comprehensive income	$	17,580		$	9,950	$	11,613

See notes to consolidated financial statements.

32

ON ASSIGNMENT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share data)

	Common Stock				Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income			Treasury Stock						Total
	Shares		Amount											Shares			Amount
Balance at January 1, 2006		28,549,063	$	286	$	121,232		$	(22,904	)	$	993			(2,662,500	)	$	(22,970	)	$	76,637
Stock offering proceeds, net		7,643,141		76		71,302			—			—			—			—			71,378
Exercise of common stock options		338,858		3		2,066			—			—			—			—			2,069
Employee Stock Purchase Plan		78,632		1		543			—			—			—			—			544
Stock issued for acquisition		13,000		—		154			—			—			—			—			154
Stock-based compensation expense		—		—		2,953			—			—			—			—			2,953
Vesting of restricted stock units and restricted stock awards		147,019		1		(1	)		—			—			(49,066	)		(510	)		(510)
Excess tax benefits from stock-based compensation		—		—		1,106			—			—			—			—			1,106
Translation adjustments		—		—		—			—			569			—			—			569
Net income		—		—		—			11,044			—			—			—			11,044
Balance at December 31, 2006		36,769,713		367		199,355			(11,860	)		1,562			(2,711,566	)		(23,480	)		165,944
Exercise of common stock options		362,394		4		2,012			—			—			—			—			2,016
Employee Stock Purchase Plan		126,484		1		1,105			—			—			—			—			1,106
Stock issued for acquisition		795,292		8		9,992			—			—			—			—			10,000
Stock repurchase		—		—		—			—			—			(278,439	)		(1,997	)		(1,997)
Stock-based compensation expense		—		—		6,092			—			—			—			—			6,092
Vesting of restricted stock units and restricted stock awards		162,538		2		(2	)		—			—			(48,933	)		(523	)		(523)
Adjustment for adoption of FIN 48		—		—		—			(217	)		—			—			—			(217)
Excess tax benefits from stock-based compensation		—		—		663			—			—			—			—			663
Translation adjustments		—		—		—			—			628			—			—			628
Net income		—		—		—			9,322			—			—			—			9,322
Balance at December 31, 2007		38,216,421		382		219,217			(2,755	)		2,190			(3,038,938	)		(26,000	)		193,034
Exercise of common stock options		98,187		1		482			—			—			—			—			483
Employee Stock Purchase Plan		315,827		3		1,576			—			—			—			—			1,579
Stock-based compensation expense		—		—		6,288			—			—			—			—			6,288
Vesting of restricted stock units and restricted stock awards		186,409		2		(2)			—			—			(58,426	)		(411	)		(411)
Tax benefit deficiency from stock-based compensation		—		—		(39	)		—			—			—			—			(39)
Translation adjustments		—		—		—			—			(1,390	)		—			—			(1,390)
Net income		—		—		—			18,970			—			—			—			18,970
Balance at December 31, 2008		38,816,844	$	388	$	227,522		$	16,215		$	800			(3,097,364	)	$	(26,411	)	$	218,514

See notes to consolidated financial statements.

33

ON ASSIGNMENT, INC. AND SUBSIDIARIES

 CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Year Ended December 31,
	2008			2007			2006
Cash Flows from Operating Activities:
Net income	$	18,970		$	9,322		$	11,044
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		5,106			6,194			4,672
Amortization of intangible assets		9,436			15,342			957
Provision for doubtful accounts and billing adjustments		641			680			60
Deferred income tax expense (benefit)		9			(4,163	)		(3,906)
Stock-based compensation		6,349			6,359			2,953
Amortization of deferred loan costs		591			542			—
Change in fair value of interest rate swap		139			1,206			—
(Gain) loss on officers’ life insurance policies		851			(166	)		(192)
Gross excess tax benefits from stock-based compensation		(327	)		(860	)		(1,053)
Loss on disposal of property and equipment		112			317			99
Workers’ compensation and medical malpractice provision		5,384			4,095			2,224
Changes in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable		(1,142	)		(7,335	)		(3,557)
Prepaid expenses		(411	)		(70	)		402
Prepaid income taxes		(4,802	)		358			(101)
Income taxes payable		(792	)		1,743			1,973
Accounts payable		(809	)		1,035			(97)
Accrued payroll and contract professional pay		877			1,074			178
Deferred compensation		(427	)		677			677
Workers’ compensation and medical malpractice loss reserves		(4,551	)		(3,321	)		(2,161)
Other		154			629			130
Net cash provided by operating activities		35,358			33,658			14,302
Cash Flows from Investing Activities:
Purchase of property and equipment		(8,201	)		(5,899	)		(4,111)
Increase in other assets		(499	)		(530	)		(292)
Net cash paid for acquisitions		(9,013	)		(232,273	)		(430)
Decrease in restricted cash		—			4,678			200
Net cash used in investing activities		(17,713	)		(234,024	)		(4,633)
Cash Flows from Financing Activities:
Net proceeds from stock transactions		1,653			2,598			2,205
Gross excess tax benefits from stock-based compensation		327			860			1,053
Proceeds from shelf offering		—			—			71,678
Shelf offering costs		—			(300	)		—
Proceeds from issuance of long-term debt		—			145,000			—
Debt issuance costs		—			(4,153	)		—
Repurchase of common stock		—			(1,997	)		—
Payments of long-term liabilities		(383	)		(144	)		—
Principal payments of long-term debt		(10,000	)		(9,725	)		—
Net cash (used in) provided by financing activities		(8,403	)		132,139			74,936
Effect of exchange rate changes on cash and cash equivalents		(735	)		508			391
Net Increase (Decrease) in Cash and Cash Equivalents		8,507			(67,719	)		84,996
Cash and Cash Equivalents at Beginning of Year		37,764			105,483			20,487
Cash and Cash Equivalents at End of Year	$	46,271		$	37,764		$	105,483

(Continued)

See notes to consolidated financial statements.

34

ON ASSIGNMENT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

	Year Ended December 31,
	2008		2007		2006
Supplemental Disclosure of Cash Flow Information
Cash paid for:
Income taxes, net of refunds	$	20,255	$	9,586	$	2,571
Interest	$	9,370	$	10,491	$	―
Acquisitions:
Goodwill	$	9,013	$	177,478	$	513
Intangible assets acquired		—		55,640		68
Net tangible assets acquired		—		18,841		3
Fair value of assets acquired, net of cash received	$	9,013	$	251,959	$	584
Supplemental Disclosure of Non-Cash Transactions
Common stock issued in connection with acquisition	$	—	$	10,000	$	154
Shelf offering costs in accounts payable and other accrued expenses	$	—	$	—	$	300
Deferred acquisition costs in accounts payable and other accrued expenses	$	—	$	—	$	1,546
Accrued earn-out payments and escrow claim receivable	$	8,766	$	8,525	$	—
Acquisition of property and equipment through accounts payable	$	1,251	$	452	$	254

See notes to consolidated financial statements.

35

ON ASSIGNMENT, INC. AND SUBSIDIARIES

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies.

Principles of Consolidation. The consolidated financial statements include the accounts of the Company and its wholly-owned domestic and foreign subsidiaries. All intercompany accounts and transactions have been eliminated.

Cash and Cash Equivalents. The Company considers all highly liquid investments with a maturity of three months or less on the date of purchase to be cash equivalents.

Accounts Receivable. The Company estimates an allowance for doubtful accounts as well as an allowance for billing adjustments related to trade receivables based on an analysis of historical collection and billing adjustment experience. The Company applies actual collection and adjustment percentages to the outstanding accounts receivable balances at the end of the period. If the Company experiences a significant change in collections or billing adjustment experience, the estimates of the recoverability of accounts receivable could change by a material amount.

Property and Equipment. Property and equipment are stated at cost. Depreciation and amortization are provided using the straight-line method over the estimated useful lives of the related assets, generally three to five years. Leasehold improvements are amortized over the shorter of the life of the related asset or the life of the lease. Costs associated with customized internal-use software systems that have reached the application stage and meet recoverability tests are capitalized. Such capitalized costs include external direct costs utilized in developing or obtaining the applications and payroll and payroll-related expenses for employees who are directly associated with the applications

Goodwill and Identifiable Intangibles. Goodwill represents the excess of the purchase price over the fair value of the net assets acquired. Goodwill and other intangible assets having an indefinite useful life are not amortized for financial statement purposes. The Company performs an annual impairment test as of December 31 and in the event that facts and circumstances indicate that goodwill and other identifiable intangible assets may be impaired, an interim impairment test would be required. The Company’s testing approach utilizes a discounted cash flow analysis to determine the fair value of its reporting units for comparison to their corresponding book values.  If the book value exceeds the estimated fair value for a reporting unit, a potential impairment is indicated and Statement of Financial Accounting Standard (SFAS) No. 142, Goodwill and Other Intangible Assets prescribes the approach for determining the impairment amount, if any.  Intangible assets having finite lives are amortized over their useful lives and are periodically reviewed to ensure that no conditions exist indicating the recorded amount is not recoverable from future undiscounted cash flows.  Purchased intangible assets with finite lives are amortized on a straight-line or accelerated basis for staffing databases based on estimated customer attrition rates.

Impairment of Long-Lived Assets. The Company evaluates long-lived assets, other than goodwill and identifiable intangible assets with indefinite lives, for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. An impairment loss is recognized when the sum of the undiscounted future cash flows is less than the carrying amount of the asset, in which case a write-down is recorded to reduce the related asset to its estimated fair value.

Workers’ Compensation and Medical Malpractice Loss Reserves. The Company is partially self-insured for its workers’ compensation and medical malpractice liabilities. In connection with these programs, the Company pays a base premium plus actual losses incurred, not to exceed certain stop-loss limits. The Company is insured for losses above these limits, both per occurrence and in the aggregate. The self-insurance claim liability is determined based on claims filed and claims incurred but not reported.

Contingencies. The Company records an estimated loss from a loss contingency when information available prior to issuance of its financial statements indicates it is probable that an asset has been impaired or a liability has been incurred at the date of the financial statements, and the amount of the loss can be reasonably estimated. Accounting for contingencies, such as legal settlements, workers’ compensation and medical malpractice insurance matters, requires the Company to use judgment. While the Company believes that the accruals for these matters are adequate, if the actual loss from a loss contingency is significantly different than the estimated loss, results of operations could be adversely affected.

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Income Taxes.Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.  Deferred tax assets are reduced by a valuation allowance if it is more likely than not that a portion of the deferred tax asset will not be realized.

Revenue Recognition. Revenues from contract assignments, net of sales adjustments and discounts, are recognized when earned, based on hours worked by the Company’s contract professionals on a weekly basis. Conversion and direct hire fees are recognized when earned, upon conversion or direct hire of a contract professional to a client’s regular employee. In addition, the Company records a sales allowance against consolidated revenues, which is an estimate based on historical billing adjustment experience. The sales allowance is recorded as a reduction to revenues and an increase to the allowance for billing adjustments. The billing adjustment reserve includes an allowance for fallouts. Fallouts are direct hire and conversion fees that do not complete the contingency period. The contingency period is typically 90 days or less. In accordance with EITF 01-14, “Income Statement Characterization of Reimbursements Received for ‘Out-of-Pocket’ Expenses Incurred,” the Company includes reimbursed expenses, including those related to travel and out-of-pocket expenses, in revenues and the associated amounts of reimbursable expenses in cost of services.

Foreign Currency Translation. The functional currency of the Company’s foreign operations is their local currency, and as such, their assets and liabilities are translated into U.S. dollars at the rate of exchange in effect on the balance sheet date. Revenue and expenses are translated at the average rates of exchange prevailing during each monthly period. The related translation adjustments are recorded as cumulative foreign currency translation adjustments in accumulated other comprehensive income as a separate component of stockholders’ equity. Gains and losses resulting from foreign currency transactions, which are not material, are included in SG&A expenses in the Consolidated Statements of Operations and Comprehensive Income.

Stock-Based Compensation. Effective January 1, 2006, the Company adopted the provisions of SFAS No. 123 (revised 2004) “Share-Based Payment” (SFAS 123R) using the modified-prospective transition method. Under this transition method, compensation expense recognized includes: (a) compensation expense for all share-based awards granted prior to, but not yet vested as of January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of SFAS No. 123 “Accounting for Stock-Based Compensation” (SFAS 123), recognized over the remaining vesting period and (b) compensation expense for all share-based awards granted on or after January 1, 2006, based on the grant date fair value estimated in accordance with the provisions of SFAS 123R. In accordance with the modified-prospective transition method, results for prior periods have not been restated.  The fair value of stock options and ESPP shares is estimated using a Black-Scholes option valuation model.  This methodology requires the use of subjective assumptions including expected stock price volatility and the estimated life of each award.  The fair value of equity-based compensation awards less the estimated forfeitures is amortized over the vesting period of the award.  The fair value of restricted stock awards and stock units is calculated based upon the fair market value of the Company’s common stock at the date of grant.

Use of Estimates. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Concentration of Credit Risk. Financial instruments that potentially subject the Company to credit risks consist primarily of cash, cash equivalents and trade receivables. The Company places its cash and cash equivalents in low risk investments with quality credit institutions and limits the amount of credit exposure with any single institution. For the Life Sciences, Physician and IT and Engineering segments and the Allied Healthcare line of business, concentration of credit risk with respect to accounts receivable are limited because of the large number of geographically dispersed customers, thus spreading the trade credit risk. In 2008, the Company earned only 1.4 percent of consolidated revenues from several customers operating under a single contract with Los Angeles County, compared with 2.9 percent and 13.1 percent in 2007 and 2006, respectively. The revenues from this contract are included in Healthcare segment revenues. The Company performs ongoing credit evaluations to identify risks and maintains an allowance to address these risks.

Fair Value of Financial Instruments. The recorded values of cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued expenses approximate their fair value based on their short-term nature.  The amount of the interest rate swap reflected on the Consolidated Balance Sheets in other accrued expenses is equivalent to fair value as the Company marks the swap to market at the end of each reporting period.  See Note 12 for the related disclosure for the interest rate swap.

37

The following table presents the carrying amounts and the related estimated fair values of the Company’s financial instruments not measured at fair value on a recurring basis:

	Year Ended December 31,
	2008				2007
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(In thousands)
ASSETS
Life Insurance Policies	$	1,610	$	1,610	$	2,037	$	2,037
LIABILITIES
Long-Term Debt		125,913		107,026		135,913		135,913

The Company maintains life insurance policies for use as a funding source for its deferred compensation arrangements. See Note 5 for the related disclosure of the deferred compensation arrangements. These life insurance policies are recorded at their cash surrender value as determined by the insurance broker. The fair value of the long-term debt is based on the yields of comparable companies with similar credit characteristics.

Advertising Costs. Advertising costs, which are expensed as incurred, were $4.9 million, $4.3 million and $2.4 million for the years ended December 31, 2008, 2007, and 2006, respectively.

Recent Accounting Pronouncements. In September 2006, the Financial Accounting Standards Board (FASB) adopted SFAS No. 157, “Fair Value Measurements” (SFAS 157).  SFAS 157 defines fair value, establishes a framework for measuring fair value in accordance with GAAP and expands disclosures about fair value measurements. While SFAS 157 did not impact the Company’s valuation methods, it expanded disclosures of assets and liabilities that are recorded at fair value. SFAS 157 was effective for financial statements issued for years beginning after November 15, 2007 and interim periods within those years. The Company adopted this standard on January 1, 2008, and the adoption did not have a material impact on the results of operations, financial position or cash flows.  See Note 12 for the related disclosure.  The Company is in the process of evaluating the previously-deferred provisions of SFAS 157, which was effective on January 1, 2009, for non-financial assets and liabilities recorded at fair value and the impact on its consolidated financial position or results of operations.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities.” This Statement permits entities to choose to measure many financial instruments and certain other items at fair value, with the objective of mitigating volatility in reported earnings caused by measuring related assets and liabilities differently (without being required to apply complex hedge accounting provisions). The Company was required to make an election at the beginning of the year after November 15, 2007 to adopt this standard. The Company did not elect the fair value option.

In December 2007, the FASB issued SFAS No. 141(R), “Business Combinations” (SFAS 141R). SFAS 141R expanded the definition of a business, thus increasing the number of transactions that qualify as business combinations. SFAS 141R requires the acquirer to recognize 100 percent of an acquired business’ assets and liabilities, including goodwill and certain contingent assets and liabilities, at their fair values at the acquisition date. Contingent consideration is recognized at fair value on the acquisition date, with changes in fair value recognized in earnings until settled. Likewise, changes in acquired tax contingencies, including those existing at the date of adoption, are recognized in earnings if outside the maximum allocation period (generally one year). Transaction-related expenses and restructuring costs are expensed as incurred, and any adjustments to finalize the purchase accounting allocations, even within the allocation period, are shown as revised in the future financial statements to reflect the adjustments as if they had been recorded on the acquisition date. Finally, a gain could result in the event of a bargain purchase (acquisition of a business below the fair market value of the assets and liabilities), or a gain or loss in the case of a change in the control of an existing investment. SFAS 141R is applied prospectively to business combinations with acquisition dates on or after January 1, 2009. Adoption did not materially impact the Company’s consolidated financial position or results of operations directly when it became effective in 2009, as the only impact that the standard had on recorded amounts at adoption was that related to disposition of uncertain tax positions related to prior acquisitions. Following the date of adoption of the standard, the resolution of such items at values that differ from recorded amounts will be adjusted through earnings, rather than through goodwill. Adoption of this statement will have a significant effect on how acquisition transactions subsequent to January 1, 2009 are reflected in the financial statements.

38

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133,” (SFAS 161), which requires additional disclosures about the objectives of the derivative instruments and hedging activities, the method of accounting for such instruments under SFAS No. 133 and its related interpretations, and a tabular disclosure of the effects of such instruments and related hedged items on the Company’s financial position, financial performance, and cash flows.  SFAS 161 was effective for the Company beginning January 1, 2009. The Company is currently assessing the potential impact that adoption of SFAS 161 may have on its financial statements.

2. Property and Equipment.

Property and equipment at December 31, 2008 and 2007 consisted of the following (in thousands):

	2008			2007
Furniture and fixtures	$	3,535		$	2,778
Computers and related equipment		4,401			3,801
Computer software		22,773			17,753
Machinery and equipment		1,192			870
Leasehold improvements		3,919			3,667
Work-in-progress		3,596			2,684
		39,416			31,553
Less accumulated depreciation and amortization		(21,921	)		(17,655)
Total	$	17,495		$	13,898

Depreciation and amortization expense related to property and equipment for the years ended December 31, 2008, 2007 and 2006 was $5.1 million, $6.2 million and $4.7 million respectively.

As discussed in Note 1 under Property and Equipment, the Company capitalizes costs associated with customized internal-use software systems that have reached the application stage and meet recoverability tests under the provisions of SOP 98-1. All software costs capitalized under SOP 98-1 are depreciated over an estimated useful life of three to five years.

The Company has capitalized costs related to its various technology initiatives. The net book value of the property and equipment related to software development was $7.6 million and $4.1 million, as of December 31, 2008 and 2007, respectively, which includes work-in-progress of $3.5 million and $2.2 million. The Company has also capitalized website development costs of $0.3 million and $0.4 million as of December 31, 2008 and 2007,respectively, of which no costs were considered work-in-progress.

3. Acquisitions.

On January 3, 2007, the Company acquired VSS Holding, Inc. and its subsidiaries, which includes VISTA Staffing Solutions, Inc. (VISTA), a privately-owned leading provider of physician staffing, known as locum tenens, and permanent physician search services. VISTA is headquartered in Salt Lake City, Utah and works with more than 1,000 physicians covering approximately thirty medical specialties. The primary reasons for the VISTA acquisition were to diversify the Company’s existing healthcare offerings, to complement its existing Nurse Travel business line with cross-selling opportunities and to leverage its SG&A expenses, including housing, travel and credentialing costs.

The total purchase price of $48.5 million consisted of (i) an initial cash payment of $41.1 million, which included a $4.1 million holdback for potential claims indemnified by the selling shareholders, (ii) $0.9 million in direct acquisition costs, (iii) $2.6 million payment in April of 2008 of the earn-out related to the 2007 operating performance, and (iv) $5.3 million for the payment of the earn-out related to the 2008 operating performance. Payment of the 2008 earn-out is tentatively scheduled for April 2009, pending the agreement of all applicable parties to all terms and provisions related to such payments. The earn-out payments have been included in the Consolidated Balance Sheets in accrued earn-out payments. The $4.1 million holdback for potential claims indemnifiable by the selling shareholders is held in escrow and has been included as part of the purchase price allocation. The Company has filed for claims indemnifiable by the selling shareholders of VISTA for $1.4 million, which was recorded as a decrease to goodwill and an increase in other current assets as of December 31, 2008. The holdback is estimated to be reduced for the $1.4 million of claims indemnifiable by the selling shareholders and will be released from escrow to the selling shareholders

39

when agreement is achieved, which is expected to be in the second quarter of 2009.

The Company recorded the acquisition using the purchase method of accounting, and thus the results of operations from VISTA are included in the Company’s consolidated financial statements (Physician segment) from the acquisition date. Pursuant to SFAS No. 141, “Business Combinations” (SFAS 141), the purchase price was allocated to the assets acquired and liabilities assumed based on their fair values as of the date of the acquisition. Adjustments to the purchase price will be reflected in subsequent periods, if and when conditions are met. The purchase price was allocated as follows: $1.8 million to net tangible assets acquired, $3.1 million to identified intangible assets with definite lives, $6.5 million (trademarks) to identified intangible assets with indefinite lives and $37.1 million to goodwill. The weighted average amortization period for the identifiable intangible assets with definite lives is estimated to be 1.1 years. Intangible assets with definite lives include contractor relations of $1.7 million (1.7 year weighted average amortization period), customer relations of $1.4 million (3 month weighted average amortization period) and non-compete agreements of $40,000 (3.0 year weighted average amortization period). Goodwill is not deductible for tax purposes.

On January 31, 2007, the Company acquired Oxford Global Resources, Inc. (Oxford), a leading provider of high-end information technology and engineering staffing services. The primary reasons for the Oxford acquisition were to enter the markets for information technology and engineering staffing services and to leverage the Company’s existing SG&A infrastructure.

The total purchase price of $212.5 million consisted of (i) an initial price of $200.1 million, comprised of $190.1 million paid in cash and 795,292 shares of the Company’s common stock valued at $10.0 million, (ii) $1.3 million in direct acquisition costs, (iii) $6.3 million payment in April 2008 of the earn-out related to the 2007 operating performance of Oxford, and (iv) $4.8 million for the payment of the earn-out related to the 2008 operating performance of Oxford. Payment of the 2008 earn-out is tentatively scheduled for April 2009, pending the agreement of all applicable parties to all terms and provisions related to such payments. These costs have been included in the Consolidated Balance Sheets in accrued earn-out payments. The initial price includes a $20.0 million holdback for potential claims indemnifiable by the Oxford shareholders, which was held in escrow and has been included as part of the purchase price allocation. This holdback was released from escrow to the selling shareholders on August 3, 2008.

 The Company recorded the acquisition using the purchase method of accounting, and thus the results of operations from Oxford are included in the Company’s consolidated financial statements (IT and Engineering segment) from the acquisition date. Pursuant to SFAS 141, the purchase price was allocated to the assets acquired and liabilities assumed based on their fair values as of the date of the acquisition. Adjustments to the purchase price will be reflected in subsequent periods, if and when conditions are met. The purchase price was allocated as follows: $17.1 million to net tangible assets acquired, $30.3 million to intangible assets with definite lives, $15.7 million to identified intangible assets with indefinite lives (trademarks) and $149.6 million to goodwill. The weighted average amortization period for the identifiable intangible assets with definite lives is estimated to be 2.1 years. Intangible assets with definite lives include contractor relations of $20.8 million (1.7 year weighted average amortization period), customer relations of $8.7 million (3.0 year weighted average amortization period), in-use software of $0.5 million (2.0 year weighted average amortization period) and non-compete agreements of $0.3 million (3.0 year weighted average amortization period). The Company expects to reduce its federal and state income tax liability by approximately $5.0 million per year over fifteen years as a result of an election to classify the Oxford acquisition as an asset sale for tax purposes under section 338(h)(10) of the Internal Revenue Code of 1986, as amended.

The Company utilized its existing cash and proceeds from the $165.0 million senior secured credit facility to finance the acquisitions. See Note 4 for a discussion of the credit facility.

The summary below presents the amounts assigned to each major asset and liability caption of VISTA and Oxford and presents pro-forma consolidated results of operations for the years ended December 31, 2006 and 2007 as if the acquisition of VISTA and Oxford described above had occurred at the beginning of each period. The unaudited pro-forma financial information presented below gives effect to certain adjustments, the amortization of intangible assets and interest expense on acquisition related debt, other non-recurring expenses related to VISTA and Oxford’s former owners and the shares issued as a result of the shelf offering as if they had been issued at the beginning of 2006. The pro-forma financial information is not necessarily indicative of the operating results that would have occurred had the acquisition been consummated as of the date indicated, nor are they necessarily indicative of future operating results.

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The purchase price allocation as of December 31, 2008 was as follows (in thousands):

	As of December 31, 2008
	VISTA		Oxford
Current assets	$	12,840	$	24,938
Property and equipment		2,221		3,433
Goodwill		37,143		149,556
Identifiable intangible assets		9,640		45,900
Long-term deposits and other long-term assets		58		644
Total assets acquired	$	61,902	$	224,471
Current liabilities	$	9,128	$	11,073
Long-term liabilities		4,239		853
Total liabilities assumed		13,367		11,926
Total purchase price	$	48,535	$	212,545

 The Pro-Forma Consolidated Statement of Operations for the years ended December 31, 2007 and 2006 were as follows (in thousands):

	Year Ended December 31,
	2007		2006
	(unaudited)
Revenues	$	582,712	$	527,039
Cost of service		397,528		365,704
Gross profit		185,184		161,335
Selling, general and administrative expenses		157,098		151,216
Operating income	$	28,086	$	10,119
Net income	$	8,951	$	3,907
Basic earnings per share	$	0.25	$	0.11

4. Long-Term Debt.

Long-term debt at December 31, 2008 and 2007 consisted of the following (in thousands):

	2008		2007
Senior Secured Debt:
$20 million revolving credit facility, due January 2011	$	—	$	—
$145 million term loan facility, due January 2013		125,913		135,913
Total	$	125,913	$	135,913

 Under terms of the senior credit facility, the Company is required to maintain certain financial covenants, including a minimum total leverage ratio, a minimum interest coverage ratio and a limitation on capital expenditures. In addition, the terms of the credit facility restrict the Company’s ability to pay dividends of more than $2.0 million per year. As of December 31, 2008, the Company was in compliance with all such covenants.  The maximum total leverage ratio, which measures total debt to our trailing twelve months consolidated earnings before interest, taxes, depreciation and amortization of identifiable intangible assets, as defined in the agreement, decreases to 1.25 from 2.0 for the twelve months ended September 30, 2009.  The credit facility is secured by the assets of the Company.

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The payments made on the term loan were sufficient to cover the excess cash flow payment required by the bank as well as all minimum quarterly payments for the next four years through 2012.  The revolving credit facility requires a facility fee based on the average daily unused amount of the commitment and the Company's total leverage ratio and is subject to the same financial covenants and restrictions as the term loan facility.

On May 2, 2007, the Company entered into a transaction with a financial institution to fix the underlying rate on $73.0 million of its outstanding bank loan for a period of two years beginning June 30, 2007. This transaction, commonly known as an interest rate swap, essentially fixes the Company’s base borrowing rate at 4.9425 percent as opposed to a floating rate, which resets at selected periods. The current base rate on the loan balance in excess of $73.0 million, which will be reset on March 31, 2009, is 2.25 percent plus LIBOR (0.47 percent at December 31, 2008). On December 31, 2008 and December 31, 2007, the value of the swap was marked-to-market, and the Company recorded a loss of $0.1 million and $1.2 million, respectively, for the years then ended. The loss is shown in interest expense in the Consolidated Statements of Operations and Comprehensive Income, and the related liability of $1.3 million and $1.2 million, respectively, as of December 31, 2008 and 2007 is included in the Consolidated Balance Sheets in other accrued expenses.

5. Goodwill and Other Identifiable Intangible Assets.

The Company acquired VISTA and Oxford in the first quarter of 2007(see Note 3). In December 2007, a small portion of the Oxford business (RMS) was sold for $1.0 million, reducing the acquired goodwill balance allocated to that respective portion of the business.

The changes in the carrying amount of goodwill for the years ended December 31, 2008 and 2007 are as follows (in thousands):

	Life Sciences		Healthcare		Physician		IT and Engineering			Total
Balance as of December 31, 2008	$	1,197	$	15,912	$	37,143	$	148,525		$	202,777
Additional consideration for earn-outs and escrow claim		―		―		4,299		4,952			9,251
Additional consideration for RMS sale		―		―		―		(26	)		(26)
Balance as of December 31, 2007	$	1,197	$	15,912	$	32,844	$	143,599		$	193,552
Sale of RMS business		―		―		―		(1,035	)		(1,035)
Goodwill related to Oxford acquisition		―		―		―		144,634			144,634
Goodwill related to VISTA acquisition		―		―		32,844		―			32,844
Balance as of December 31, 2006	$	1,197	$	15,912	$	―	$	―		$	17,109

As of December 31, 2008 and December 31, 2007, the Company had the following acquired identifiable intangible assets (in thousands):

		December 31, 2008						December 31, 2007
	Estimated Useful Life	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Intangible assets subject to amortization:
Customer relations	3 months - 7 years	$	17,615	$	14,387	$	3,228	$	17,615	$	11,315	$	6,300
Contractor relations	3 - 7 years		26,012		20,134		5,878		26,096		14,148		11,948
Non-compete agreements	2 - 3 years		390		268		122		390		145		245
In-use software	2 years		500		500		―		500		229		271
			44,517		35,289		9,228		44,601		25,837		18,764
Intangible assets not subject to amortization:
Trademarks			22,200		—		22,200		22,200		—		22,200
Goodwill			202,777		—		202,777		193,552		—		193,552
Total		$	269,494	$	35,289	$	234,205	$	260,353	$	25,837	$	234,516

Amortization expense for intangible assets subject to amortization with finite lives was $9.4 million, $15.3 million and $1.0 million for the years ended December 31, 2008, 2007 and 2006, respectively. Estimated amortization for each of the years ended December 31, 2009 through December 31, 2013 is $6.1 million, $1.7 million, $0.7 million, $0.4 million and $0.3 million, respectively.

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6. 401(k) Retirement Savings Plan, Deferred Compensation Plan and Change in Control Severance Plan.

Under the Company’s 401(k) Retirement Savings Plans, (which consist of a corporate 401(k) Retirement Savings Plan for eligible employees of On Assignment and its wholly-owned subsidiary, On Assignment Staffing Services, Inc., a separate 401(k) Retirement Savings Plan for eligible employees of VISTA and a separate 401(k) Retirement Savings Plan for eligible employees of Oxford), eligible employees may elect to have a portion of their salary deferred and contributed to the plans. The amount of salary deferred, up to certain limits set by the IRS, is not subject to federal and state income tax at the time of deferral, but will together with any earnings on deferred amounts, be subject to taxation upon distribution. The plans cover all eligible employees and permit matching or other discretionary contributions at the discretion of the Company’s Board of Directors. Eligible employees under the corporate plan are must work 1,000 hours prior to entering the Plan. Eligible employees under the VISTA plan are eligible to enroll the first of the month following hire date and eligible employees under the Oxford plan are eligible to enroll once they complete three months of service prior to entering the plan. The Company made contributions to the plans of $1.3 million, $1.1 million and $0.6 million during the years ended December 31, 2008, 2007 and 2006, respectively. These amounts are included in SG&A expenses in the Consolidated Statements of Operations and Comprehensive Income.

Effective January 1, 1998, the Company implemented the On Assignment, Inc. Deferred Compensation Plan. The plan permits a select group of management or highly compensated employees or directors that contribute materially to the continued growth, development and future business success of the Company to annually elect to defer up to 100 percent of their base salary, annual bonus, stock option gain or fees on a pre-tax basis and earn tax-deferred returns on these amounts. On September 4, 2008, effective as of January 1, 2008, the Company amended the On Assignment Deferred Compensation Plan so that it applies to deferrals made before January 1, 2005 only (hereinafter referred to as the 1998 Deferred Compensation Plan) and, also effective January 1, 2008, adopted a new plan, called the On Assignment Deferred Compensation Plan – Effective January 1, 2008, applicable to deferrals made on or after January 1, 2005 (referred to herein as the 2008 Deferred Compensation Plan).  The plans are not intended to be “qualified” within the meaning of IRS Code Section 401(a), rather, the plans are “unfunded and maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees” within the meaning of the Employee Retirement Income Security Act of 1974, as amended (ERISA), Sections 201(2), 301(a)(3) and 401(a)(1).

Distributions from the 1998 Deferred Compensation Plan are commenced within 60 days after the participant’s retirement, death or termination of employment, in a lump sum, or over five, ten or fifteen years, except that payments made upon termination (other than due to death or retirement), are paid in a lump sum if the participant’s account balance at the time of termination is less than $25,000.  Furthermore, if the Company determines in good faith prior to a change in control that there is a reasonable likelihood that any compensation paid to a participant for a taxable year of the Company would not be deductible by the Company solely by reason of the limitation under IRS Code Section 162(m), (“Section 162(m)”) then the Company may defer all or any portion of a distribution until the earliest possible date, as determined by the Company in good faith, on which the deductibility of compensation paid or payable to the participant for the taxable year of the Company during which the distribution is made will not be limited by Section 162(m), or if earlier, the effective date of a change in control.

Distributions from the 2008 Deferred Compensation Plan are commenced within 60 days following the participant’s termination of employment, in a lump sum or in annual installments of up to 15 years, except that if the participant’s account balance is less than the applicable dollar amount specified in IRS Code Section 402(g)(1)(B), in effect for the year in which the distribution is to occur, payment shall be made in a lump sum.  Notwithstanding the foregoing, in compliance with certain requirements of IRS Code Section 409A, plan distributions to “specified employees” will commence the first day after the end of the six month period immediately following the date on which the participant experiences a termination of employment.  Furthermore, if the Company reasonably anticipates that the Company’s deduction with respect to any distribution from the 2008 Deferred Compensation Plan would be limited or eliminated by application of Section 162(m), then to the extent permitted by applicable treasury regulations, payment shall be delayed until the earliest date the Company reasonably anticipates that the deduction of the payment will not be limited or eliminated by application of Section 162(m).

At December 31, 2008 and 2007, the deferred compensation liability under the 1998 Deferred Compensation Plan was approximately $0.2 million and $0.3 million, respectively, and the liability under the 2005 Deferred Compensation Plan for the same periods was approximately $1.4 million and $1.7 million, respectively. Life insurance policies are maintained as a funding source to the plans, under which the Company is the sole owner and beneficiary of such insurance. The cash surrender value of these life insurance policies, which is reflected in other assets in the accompanying Consolidated Balance Sheets, was approximately $1.6 million and $2.0 million at December 31, 2008 and 2007, respectively.

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The Company adopted the On Assignment, Inc. Change in Control Severance Plan (the CIC Plan) to provide severance benefits for officers and certain other employees who are terminated following an acquisition of the Company. This CIC Plan was adopted on February 12, 1998 and amended on August 8, 2004, January 23, 2007, and December 11, 2008. Under the CIC Plan, if an eligible employee is involuntarily terminated within eighteen months after a change in control, as defined in the CIC Plan, then the employee will be entitled to (i) a payment equal to the employee’s annual salary plus the employee’s target bonus, payable in a lump sum, and (ii) a lump sum payment representing the cost of continuation of health and welfare benefits, under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) for periods of time ranging from nine months to eighteen months, for employees with titles of vice president or higher. Severance benefits under the plan range from one month to eighteen months of salary and target bonus, depending on the employee’s length of service and position with the Company.

The Company entered into an Amended and Restated Executive Change of Control Agreements with the Chief Executive Officer and the Chief Financial Officer on December 11, 2008, primarily for the purpose of causing their existing agreements to meet the requirements of Code Section 409A.  These agreements supersede the CIC Plan with respect to these officers and provide, in the event of an involuntary termination occurring within six months and ten days following a change of control of the Company, for the following benefits (i) a lump-sum payment equal to three times (for the Chief Executive Officer’s salary plus target bonus) or two and a half times (for the Chief Financial Officer) the sum of the officer’s, (ii) eighteen months continuation of the officer’s health and welfare benefits and car allowance, (subject to limitations in connection with subsequent employment), (iii) cash payments equal to insurance premiums and retirement and deferred compensation contributions that the Company would have paid (in each case, if any), over a period of eighteen months following termination, and (iv) payment of up to $15,000 of the cost of outplacement services. Additionally, under the arrangements, immediately prior to a change of control, all outstanding Company stock options, restricted stock and stock units held by the officer will become fully vested (and, in the case of options, remain exercisable for an extended period), subject, in the case of certain performance-vesting awards, to any express limitations contained in the officer’s employment or other governing agreement.  In addition, the agreements entitle the executives to tax gross-up payments in the event that any payments to the executives are subject to “golden parachute” excise taxes under Code Section 280G.

7. Commitments and Contingencies.

The Company leases its facilities and certain office equipment under operating leases, which expire at various dates through 2016. Certain leases contain rent escalations and/or renewal options. Rent expense for all significant leases is recognized on a straight-line basis. At December 31, 2008 and 2007, the balance of deferred rent liability was $1.0 million and $0.7 million, respectively, and is reflected in other current and long-term liabilities in the accompanying Consolidated Balance Sheets.

 The following is a summary of specified contractual cash obligation payments by the Company as of December 31, 2008 (in thousands):

	Long-Term Debt		Operating Leases		Accrued Earn-Out Payments		Total
2009	$	―	$	6,426	$	10,168	$	16,594
2010		―		5,456		―		5,456
2011		―		3,420		―		3,420
2012		―		2,011		―		2,011
2013		125,913		1,512		―		127,425
Thereafter		―		3,757		―		3,757
Total	$	125,913	$	22,582	$	10,168	$	158,663

Rent expense for the years ended December 31, 2008, 2007, and 2006 was $9.5 million, $8.8 million and $5.1 million respectively. These amounts are included in SG&A expenses in the Consolidated Statements of Operations and Comprehensive Income.

As discussed in Note 3, the Company has accrued $5.3 million and $4.8 million for the payment of the earn-outs related to the 2008 operating performance of VISTA and Oxford, respectively, and have been included in the Consolidated Balance Sheets in accrued earn-out payments.  We also filed for claims indemnifiable by the selling shareholders of VISTA for $1.4 million, which was recorded as a decrease to goodwill and an increase in other current assets as of December 31, 2008. Payment of the earn-outsand claim indemnification is tentatively scheduled for April 2009, pending the agreement of all applicable parties to all terms and provisions related to such payments.

 As discussed in Note 1, the Company is partially self-insured for its workers’ compensation liability related to the Life Sciences, Healthcare and IT and Engineering segments as well as its medical malpractice liability in the Physician segment. The Company accounts for claims incurred but not yet reported based on estimates derived from historical claims experience and current trends of industry data. Changes in estimates, differences in estimates and

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actual payments for claims are recognized in the period that the estimates changed or the payments were made. The self-insurance claim liability was approximately $9.8 million and $8.9 million at December 31, 2008 and 2007, respectively. Additionally, the Company has letters of credit outstanding to secure obligations for workers’ compensation claims with various insurance carriers.  The letters of credit outstanding at December 31, 2008 and 2007 were $3.5 million and $4.4 million, respectively.

As of December 31, 2008 and 2007, the Company has an income tax reserve in other long-term liabilities related to uncertain tax positions of $0.3 million.

Legal Proceedings

The Company is involved in various legal proceedings, claims and litigation arising in the ordinary course of business. However, based on the facts currently available, we do not believe that the disposition of matters that are pending or asserted will have a material adverse effect on our financial position, results of operations or cash flows.

8. Income Taxes.

Income before provision for income taxes consists of the following (in thousands):

	Year Ended December 31,
	2008		2007		2006
United States	$	32,085	$	14,435	$	9,858
Foreign		2,146		2,380		1,727
	$	34,231	$	16,815	$	11,585

The provision for income taxes consists of the following (in thousands):

	Year Ended December 31,
	2008			2007			2006
Current:
Federal	$	13,319		$	9,804		$	3,763
State		2,314			1,125			216
Foreign		691			727			468
		16,324			11,656			4,447
Deferred:
Federal		(1,292	)		(4,536	)		82
State		232			365			367
Foreign		(3	)		8			(10)
		(1,063	)		(4,163	)		439
Change in Valuation Allowance		―			―			(4,345)
Total	$	15,261		$	7,493		$	541

As of December 31, 2008, the Company had no federal net operating losses and total combined state net operating losses of $10.7 million. The state net operating losses can be carried forward for up to 20 years and begin expiring in 2013.

 At December 31, 2008, the Company had accumulated net foreign earnings of $7.5 million. The Company intends to reinvest the undistributed earnings of its foreign subsidiaries and, therefore, no U.S. income tax has been provided on the foreign earnings.

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 During the quarter and year ended December 31, 2004, the Company established a valuation allowance against its net domestic deferred income tax assets. The valuation allowance was calculated pursuant to SFAS 109, which requires an assessment of both positive and negative evidence when measuring the need for a valuation allowance. Such evidence includes a company’s past and projected future performance, the market environment in which the company operates, the utilization of past tax credits and the length of carryback and carryforward periods of net operating losses. At the end of 2006, the Company evaluated the need for the valuation allowance in accordance with the Company’s valuation allowance reversal methodology and in conjunction with SFAS 109. The Company concluded that as a result of sustained profitability, which was evidenced by consecutive quarters of net income along with projections of pre-tax income in future years, that the criteria had been met for the full reversal of the valuation allowance. Of the $4.9 million valuation allowance reversal, $4.3 million resulted in an income tax benefit and $0.6 million was recorded as an increase to additional paid in capital resulting from stock option deductions taken in 2006.

The Company had gross deferred tax assets of $12.3 million and $9.3 million and gross deferred tax liabilities of $5.0 million and $2.9 million at December 31, 2008 and December 31, 2007, respectively. Foreign deferred tax assets and liabilities were not material as of December 31, 2008 and 2007 and are included in the Federal balances in the table below.

The components of deferred tax assets (liabilities) are as follows (in thousands):

	December 31, 2008						December 31, 2007
	Federal			State			Federal			State
Deferred income tax assets (liabilities):
Current:
Allowance for doubtful accounts	$	836		$	103		$	770		$	101
Employee related accruals		2,321			299			1,639			188
State taxes		776			—			386			—
Workers’ compensation loss reserve		991			139			1,191			177
Medical malpractice loss reserve		2,648			116			2,072			76
Net operating loss carry-forwards		—			138			—			725
Other		850			130			599			94
Total current deferred income tax assets		8,422			925			6,657			1,361
Non-current:
Net operating loss carry-forwards		—			453			—			—
Stock-based compensation		2,259			147			1,040			110
Purchased intangibles, net		(2,584	)		(164	)		(1,256	)		59
Depreciation and amortization expense		(1,833	)		(152	)		(1,454	)		(109)
Other		112			(235	)		111			(165)
Total non-current deferred income tax (liabilities) assets		(2,046	)		49			(1,559	)		(105)
Total deferred income tax assets	$	6,376		$	974		$	5,098		$	1,256

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 The reconciliation between the amount computed by applying the U.S. federal statutory tax rate of 35 percent to income before income taxes and the actual income taxes is as follows (in thousands):

	Year Ended December 31,
	2008			2007			2006
Income tax provision at the statutory rate	$	11,981		$	5,885		$	3,939
State income taxes, net of federal benefit		1,569			892			560
Other		160			18			—
Valuation Allowance		—			—			(4,345)
Income tax contingency		32			(53	)		350
Foreign tax rate		(61	)		(105	)		(109)
Permanent differences		1,580			856			146
Total	$	15,261		$	7,493		$	541

The Company receives a tax deduction for stock-based awards upon exercise of a non-qualified stock option or as the result of disqualifying dispositions made by directors, officers and employees. A disqualifying disposition occurs when stock acquired through the exercise of incentive stock options or the Employee Stock Purchase Plan is disposed of prior to the required holding period. In addition, the Company receives a tax deduction upon the vesting of restricted stock units or restricted stock awards. The Company received tax deductions of $0.8 million from stock-based awards in 2008 and 2007.

The Company adopted the provisions of FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109” (FIN 48) on January 1, 2007. As a result of the implementation of FIN 48, the Company made a comprehensive review of its portfolio of uncertain tax positions in accordance with recognition standards established by FIN 48. In this regard, an uncertain tax position represents the Company’s expected tax treatment of a tax position taken in a filed tax return, or planned to be taken in a future return, that has not been reflected in measuring income tax expense for financial reporting purposes. As a result of this review, the Company adjusted the estimated value of its uncertain tax positions by recognizing additional liabilities totaling $0.2 million, including an accrual for interest and penalties of $21,000, through a charge to retained earnings. Upon the adoption of FIN 48, the estimated value of the Company’s uncertain tax positions was a liability of $0.6 million, which includes penalties and interest, of which $0.2 million was carried in other long-term liabilities and $0.4 million was carried as a reduction to non-current deferred tax assets in the consolidated condensed statement of financial position as of March 31, 2007. As of December 31, 2008 and 2007, the estimated value of the Company’s uncertain tax positions is a liability of $0.5 million, which includes penalties and interest, of which $0.3 million was carried in other long-term liabilities and $0.2 million was carried as a reduction to non-current deferred tax assets.  If the Company’s positions are sustained by the taxing authority in favor of the Company, the entire $0.5 million would reduce the Company’s effective tax rate. The Company recognizes accrued interest and penalties related to uncertain tax positions in income tax expense.

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The following is a reconciliation of the total amounts of unrecognized tax benefits for the years ended December 31, 2008 and 2007 (in thousands):

	For the year ended December 31,
	2008			2007
Unrecognized Tax Benefit beginning of year	$	832		$	841
Gross Decreases - tax positions in prior year		(109	)		(122)
Gross Decreases - tax positions in prior year		—			(46)
Gross Increases - tax positions in current year		89			159
Unrecognized Tax Benefit end of year	$	812		$	832

Related to the unrecognized tax benefits noted above, the Company decreased accrued penalties by $6,000 and gross interest by $12,000 during 2008 and in total, as of December 31, 2008, had recognized a liability for penalties of $12,000 and gross interest of $11,000.

The Company believes that there will be no significant increases or decreases to unrecognized tax benefits within the next twelve months.

The Company is subject to taxation in the United States and various states and foreign jurisdictions. The Internal Revenue Service (IRS) has examined and substantially concluded all tax matters for years through 2006. Open tax years related to federal, state and foreign jurisdictions remain subject to examination but are not considered material.

9. Earnings per Share.

Basic earnings per share are computed based upon the weighted average number of shares outstanding and diluted earnings per share are computed based upon the weighted average number of shares and dilutive share equivalents (consisting of incentive stock options, non-qualified stock options, restricted stock units and restricted stock awards) outstanding during the periods using the treasury stock method.

The following is a reconciliation of the shares used to compute basic and diluted earnings per share (in thousands):

	Year Ended December 31,
	2008		2007		2006
Weighted average number of shares outstanding used to compute basic earnings per share		35,487		35,138		27,155
Dilutive effect of stock-based awards		371		633		897
Number of shares used to compute diluted earnings per share		35,858		35,771		28,052

The following table outlines the weighted average share equivalents outstanding during each period that were excluded from the computation of diluted earnings per share because the exercise price for these options was greater than the average market price of the Company’s shares of common stock during the respective periods. Also excluded from the computation of diluted earnings per share were other share equivalents that became anti-dilutive when applying the treasury stock method.

	Year Ended December 31,
	2008		2007		2006
Anti-dilutive common share equivalents outstanding (in thousands):		2,645		1,974		767

10. Stock Option Plan and Employee Stock Purchase Plan. 

As of December 31, 2008, the Company maintained its Restated 1987 Stock Option Plan (as amended and restated through April 17, 2007) that was most recently approved by shareholders on June 1, 2007 (the Plan). The

48

Company issues stock options, restricted stock units (RSUs) and restricted stock awards (RSAs) in accordance with the Plan and records compensation expense in accordance with SFAS No. 123 (revised 2004), “Share-Based Payment,” (SFAS 123R). Compensation expense charged against income related to stock-based compensation was $6.3 million, $6.4 million and $3.0 million for the years ended December 31, 2008, 2007 and 2006, respectively, and is included in the Consolidated Statements of Operations and Comprehensive Income in selling, general and administrative expenses (SG&A). The Company has recognized an income tax benefit of $2.2 million, $2.0 million, and $0.8 million in the income statement for stock-based compensation arrangements for the years ended December 31, 2008, 2007 and 2006, respectively.

The Plan, which is shareholder-approved, permits the grant of awards, including cash, stock options, RSUs, RSAs, stock appreciation rights, unrestricted stock units and dividend equivalent rights to its employees, officers, members of its Board of Directors, consultants and advisors covering up to 13.9 million shares of common stock, subject to per-recipient, annual and other periodic caps. The Company believes that stock-based compensation better aligns the interests of its employees and directors with those of its shareholders versus exclusively providing cash-based compensation. Stock options are granted with an exercise price equal to the closing market price of the Company’s stock at the date of grant. Stock option awards generally vest over four years of continuous service with the Company and generally have 10-year contractual terms while RSUs and RSAs generally vest over a three year continuous service period, however individual vesting and other terms may vary with respect to all types of awards. Certain awards also provide for accelerated vesting in the event of a change in control and/or upon certain qualifying terminations of service.

The preceding paragraph describes the general terms of most stock-based incentives awarded by the Company. However, the Company issued a discrete set of stock-based awards to its Chief Executive Officer that differs from those generally stated terms. On January 2, 2008, the Chief Executive Officer was granted (1) 78,369 RSUs valued at $0.5 million which vest on the third anniversary of the date of the grant, (2) 78,369 RSAs valued at $0.5 million, which vest December 31, 2009 contingent upon meeting certain performance objectives approved by the Compensation Committee (based on adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA) and (3) 78,369 RSUs valued at $0.5 million, which vest December 31, 2010 contingent upon the Company meeting certain stock price performance objectives relative to its peers over three years from the date of grant. On January 2, 2007, the Chief Executive Officer was granted (1) 42,553 RSUs valued at $0.5 million, which vest on the third anniversary of the date of the grant, (2) 42,553 shares of RSAs valued at $0.5 million, which vest December 31, 2009 contingent upon meeting certain performance objectives approved by the Compensation Committee (based on adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA) and (3) 42,553 RSUs valued at $0.5 million, which vest December 31, 2009 contingent upon the Company meeting certain stock price performance objectives relative to its peers over three years from the date of grant. All awards are subject to the executive’s continued employment through such vesting dates,however, the vesting of certain awards will accelerate upon the occurrence of a change in control of the Company and/or upon certain qualifying terminations of employment. The grant-date fair-value of these awards, which was determined by applying certain provisions of SFAS 123R relative to performance-based and market-based awards, is generally being expensed over the vesting term. The impact of these awards is reflected in the Restricted Stock Units and Restricted Stock Awards section below.

On September 6, 2007, the Company issued RSUs to certain officers. These awards generally vest over three years and are forty percent contingent upon the Company meeting certain performance objectives approved by the Compensation Committee and are subject to the respective officer’s continued employment through such vesting dates. The remaining sixty percent are subject solely to the respective officer’s continued employment through such vesting dates.

The fair value of each option award is estimated on the date of grant using a Black-Scholes option valuation model that incorporates assumptions disclosed in the table below. Expected volatility is based on historical volatility of the underlying stock for a period consistent with the expected lives of the stock options as the Company believes this is a reasonable representation of future volatility. Additionally, the stock option valuation model selected by the Company uses historical data and management judgment to estimate stock option exercise behavior and employee turnover rates to estimate the number of stock option awards that will eventually vest. The expected life, or term, of options granted is derived from historical exercise behavior and represents the period of time that stock option awards are expected to be outstanding. The Company has selected a risk-free rate based on the implied yield available on U.S. Treasury Securities with a maturity equivalent to the options’ expected term. For RSUs and RSAs, the Company records compensation expense based on the fair market value of the awards on the grant date.

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Stock Options

 The following table displays the weighted average assumptions that have been applied to estimate the fair value of stock option awards on the date of grant for the years ended December 31, 2008, 2007 and 2006:

	Year Ended December 31,
	2008	2007	2006
Dividend yield	—	—	—
Risk-free interest rate	1.7%	4.6%	4.7%
Expected volatility	51.5%	47.1%	51.7%
Expected lives	3.4 years	3.4 years	4.0 years

The following summarizes pricing and term information for options outstanding as of December 31, 2008:

					Options Outstanding					Options Exercisable
Range of Exercise Prices					Number Outstanding at December 31, 2008		Weighted Average Remaining Contractual Life	Weighted Average Exercise Price		Number Exercisable at December 31, 2008		Weighted Average Exercise Price
$	3.97	─	$	5.11		741,033	6.4 years	$	4.85		580,513	$	4.95
	5.13	─		9.14		650,284	6.9 years		6.06		388,421		5.97
	9.15	─		11.39		724,337	7.9 years		11.15		452,240		11.19
	11.45	─		13.13		541,537	7.1 years		12.10		333,603		12.07
	13.31	─		13.31		649,252	8.1 years		13.31		292,040		13.31
	13.69	─		29.75		276,230	2.2 years		19.06		276,230		19.06
$	3.97	─	$	29.75		3,582,673	6.9 years	$	10.07		2,323,047	$	10.09

The following table is a summary of stock option activity under the Plan as of December 31, 2008 and changes for the year then ended:

	Incentive Stock Options			Non- Qualified Stock Options			Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding at January 1, 2008		851,761			2,860,726		$	10.40		7.4	$	2,174,000
Granted		―			401,950		$	5.44
Exercised		(52,759	)		(45,428	)	$	4.87
Canceled		(116,694	)		(316,883	)	$	9.79
Outstanding at December 31, 2008		682,308			2,900,365		$	10.07		6.9	$	782,000
Vested or Expected to Vest at December 31, 2008		676,170			2,601,703		$	10.12		6.7	$	693,000
Exercisable at December 31, 2008		631,679			1,691,368		$	10.09		6.0	$	513,000

The table above includes 144,000 of non-employee director stock options outstanding as of December 31, 2008 and 195,000 as of January 1, 2008.

The weighted-average grant-date fair value of options granted during the years ended December 31, 2008, 2007 and 2006 was $2.08, $4.05, and $5.05 per option, respectively.  The total intrinsic value of options exercised during the years ended December 31, 2008, 2007 and 2006 was $0.2 million, $2.4 million, and $1.4 million, respectively.

As of December 31, 2008 there was unrecognized compensation expense of $2.3 million related to unvested stock options based on options that are expected to vest. The unrecognized compensation expense is expected to be recognized over a weighted-average period of 2.6 years.

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Restricted Stock Units and Restricted Stock Awards

 A summary of the status of the Company’s unvested RSUs and RSAs as of December 31, 2008 and changes during the year then ended are presented below:

	Restricted Stock Units / Awards			Weighted Average Grant-Date Fair Value Per Unit / Award
Unvested RSUs and RSAs outstanding at January 1, 2008		477,229		$	10.92
Granted		475,008			6.77
Vested		(186,409	)		10.11
Forfeited		(6,111	)		8.66
Unvested RSUs and RSAs outstanding at December 31, 2008		759,717		$	8.54
Unvested and expected to vest RSUs and RSAs outstanding at December 31, 2008		702,121		$	8.46

The table above includes 23,068 RSUs that were awarded to non-employee directors on August 1, 2008, of which 11,536 shares vested immediately upon issuance and the remaining shares will vest on August 1, 2009 and 11,532 shares are outstanding as of December 31, 2008. The weighted average grant-date fair value of these awards was $8.67. In accordance with SFAS 123R, the Company records compensation expense based on the fair market value of the awards on the grant date. There was unrecognized compensation of $58,000 as of December 31, 2008 related to these RSUs that will be recorded over the remaining term of approximately seven months.

The Company has approved certain awards in which a variable number of shares are to be granted to the employees based on a fixed monetary amount. As such, the provisions of SFAS 123R and SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity” (SFAS 150) require the Company to classify and account for these awards as liability awards until the number of shares is determined. The expense related to these awards for the years ended December 31, 2008 and 2007 was $0.2 million and $0.3 million, respectively, and is included in SG&A in the Consolidated Statements of Operations and Comprehensive Income, and the associated liability of $0.2 million and $0.3 million, respectively, is included in the Consolidated Balance Sheets in other current liabilities.

The weighted-average grant-date fair value of RSUs and RSAs granted during the years ended December 31, 2008, 2007 and 2006 was $6.77, $11.98 and $11.06 per award, respectively.  The total intrinsic value of RSUs and RSAs vested during years ended December 31, 2008, 2007 and 2006 was $1.3 million, $1.7 million and $1.5 million, respectively.

As of December 31, 2008, there was unrecognized compensation expense of $3.7 million related to unvested RSUs and RSAs based on awards that are expected to vest. The unrecognized compensation expense is expected to be recognized over a weighted-average period of 1.9 years.

The Company approved stock-based awards for its Chief Executive Officer with terms as follows: On January 2,  2009, the Chief Executive Officer, pending continued employment through such grant dates, will be granted (1) RSAs valued at $0.5 million, which vest December 31, 2009, contingent upon meeting certain performance objectives, which will be set and approved annually by the Compensation Committee in the first quarter of 2009 (based on adjusted EBITDA) and (2) RSUs valued at $0.5 million, which vest December 31, 2011, contingent upon the Company meeting certain stock price performance objectives relative to its peers over three years from the date of grant, which will be set within 90 days of the first trading day of the day they are granted. All awards are subject to the executive’s continued employment through such vesting dates,however, the vesting of certain awards will accelerate upon the occurrence of a change in control of the Company and/or upon certain qualifying terminations of employment. These awards are not included in the disclosures above and there is no related expense in the current period as the conditions for these awards have not been set.

Employee Stock Purchase Plan

The Employee Stock Purchase Plan (ESPP) allows eligible employees to purchase common stock of the Company, through payroll deductions, at eighty-five percent of the lower of the market price on the first day or the last day of semi-annual purchase periods. The ESPP is intended to qualify as an “employee stock purchase plan” under IRS Code Section 423. Eligible employees may contribute multiples of one percent of their eligible earnings toward the purchase of the stock (subject to certain IRS limitations). Under this plan, 315,827, 126,484 and 78,632 shares of common stock were issued to employees for the years ended December 31, 2008, 2007 and 2006, respectively.

In accordance with the ESPP, shares of common stock are transferred to participating employees at the conclusion of each six month enrollment period, which end on the last business day of the month in February and August each year. The weighted average fair value of stock purchased under the Company’s ESPP was $2.21, $3.02 and $2.58 per share for the years ended December 31, 2008, 2007 and 2006, respectively. Compensation expense of shares purchased under the ESPP is measured based on a Black-Scholes option-pricing model. The model accounts for the discount from market value and applies an expected life in line with each six month purchase period. The amounts recognized as stock-based compensation expense related to the ESPP were $0.6 million, $0.5 million and $0.2 million for the years ended December 31, 2008, 2007 and 2006, respectively.

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11. Business Segments.

The Company has four reportable segments: Life Sciences, Healthcare, Physician and IT and Engineering. The Life Sciences (formerly Lab Support) segment provides contract, contract-to-permanent and direct placement services of laboratory and scientific professionals to the biotechnology, pharmaceutical, food and beverage, medical device, personal care, chemical and environmental industries. These contract staffing specialties include chemists, clinical research associates, clinical lab assistants, engineers, biologists, biochemists, microbiologists, molecular biologists, food scientists, regulatory affairs specialists, lab assistants and other skilled scientific professionals.

The Healthcare segment includes the combined results of the Nurse Travel and Allied Healthcare (formerly Medical Financial and Allied, or MF&A) lines of business. The lines of business have been aggregated into the Healthcare segment based on similar economic characteristics, end-market customers and management personnel. The Healthcare segment provides contract, contract-to-permanent and direct placement of professionals from more than ten healthcare, medical financial and allied occupations. These contract staffing specialties include nurses, specialty nurses, respiratory therapists, surgical technicians, imaging technicians, x-ray technicians, medical technologists, phlebotomists, coders, billers, claims processors and collections staff.

The Physician segment, comprised of VISTA Staffing Solutions, Inc., provides contract and direct placement physicians to healthcare organizations. The Physician segment works with nearly all medical specialties, placing them in hospitals, community-based practices, and federal, state and local facilities.

The IT and Engineering segment, comprised of Oxford Global Resources, Inc., provides high-end contract placement services of information technology and engineering professionals with expertise in specialized information technology; software and hardware engineering; and mechanical, electrical, validation and telecommunications engineering fields.

The Company’s management evaluates the performance of each segment primarily based on revenues, gross profit and operating income. The information in the following table is derived directly from the segments’ internal financial reporting used for corporate management purposes.

All revenues, gross profit and operating income disclosed in the tables below include activity for the Physician and IT and Engineering segments from January 3, 2007 and January 31, 2007, respectively.

 The following table represents revenues, gross profit and operating income by reportable segment (in thousands):

	Year Ended December 31,
	2008		2007		2006
Revenues:
Life Sciences	$	129,483	$	134,622	$	117,462
Healthcare		180,671		175,079		170,104
Physician		89,217		74,599		—
IT and Engineering		218,687		182,880		—
Total Revenues	$	618,058	$	567,180	$	287,566
Gross Profit:
Life Sciences	$	43,502	$	45,024	$	38,143
Healthcare		46,265		44,269		39,698
Physician		27,369		21,808		—
IT and Engineering		82,320		68,436		—
Total Gross Profit	$	199,456	$	179,537	$	77,841
Operating Income:
Life Sciences	$	13,048	$	14,731	$	5,206
Healthcare		6,285		3,099		4,735
Physician		5,869		1,447		—
IT and Engineering		18,312		8,318		—
Total Operating Income	$	43,514	$	27,595	$	9,941

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The Company does not report Life Sciences and Healthcare segments’ total assets separately as the operations are largely centralized. The following table represents total assets as allocated by reportable segment (in thousands):

	Year Ended December 31,
	2008		2007
Total Assets:
Life Sciences and Healthcare	$	115,458	$	107,253
Physician		72,940		59,204
IT and Engineering		213,452		218,223
Total Assets	$	401,850	$	384,680

The Company does not report all assets by segment for all reportable segments. The following table represents certain identifiable assets by reportable segment that are regularly reviewed by management (in thousands):

	Year Ended December 31,
	2008		2007
Gross Accounts Receivable:
Life Sciences	$	15,418	$	18,380
Healthcare		25,108		22,440
Physician		14,978		12,427
IT and Engineering		25,309		27,847
Total Gross Accounts Receivable	$	80,813	$	81,094

 The Company operates internationally, with operations in the United States, Europe, Canada, Australia and New Zealand. The following table represents revenues by geographic location (in thousands):

	Year Ended December 31,
	2008		2007		2006
Revenues:
Domestic	$	584,316	$	539,776	$	269,602
Foreign		33,742		27,404		17,964
Total Revenues	$	618,058	$	567,180	$	287,566

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The following table represents long-lived assets by geographic location (in thousands):

	Year Ended December 31,
	2008		2007		2006
Long-Lived Assets:
Domestic	$	22,300	$	19,479	$	11,964
Foreign		622		833		465
Total Long-Lived Assets	$	22,922	$	20,312	$	12,429

12. Fair Value of Financial Instruments.

The Company adopted SFAS No. 157, “Fair Value Measurements,” (SFAS 157) on January 1, 2008 and there was no material impact to its consolidated financial statements.  SFAS 157 applies to all assets and liabilities that are being measured and reported on a fair value basis. SFAS 157 requires a new disclosure that establishes a framework for measuring fair value in accordance with generally accepted accounting principles (GAAP), and expands disclosure about fair value measurements. This statement enables the reader of the financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values. The statement requires that assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

The fair value of the interest rate swap (used for purposes other than trading) is the estimated amount the Company would receive to terminate the swap agreements at the reporting date, taking into account current interest rates and the creditworthiness of the Company and the swap counterparty depending on whether the swap is in an asset or liability position, referred to as a credit valuation adjustment.  The credit valuation adjustment at December 31, 2008 was not significant.  The Company’s fair value measurement as of December 31, 2008 using significant other observable inputs (Level 2) for the interest rate swap was a $1.3 million liability. The Company’s derivative instrument is a pay-fixed, receive-variable interest rate swap based on a LIBOR swap rate. The LIBOR swap rate is observable at commonly quoted intervals for the full term of the swap and therefore is considered a Level 2 item.

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13. Unaudited Quarterly Results.

The following table presents unaudited quarterly financial information for each of the four quarters ended December 31, 2008 and December 31, 2007. In the opinion of the Company’s management, the quarterly information contains all adjustments, consisting only of normal recurring accruals, necessary for a fair presentation thereof. The operating results for any quarter are not necessarily indicative of the results for any future period.

	(in thousands, except per share data) Quarter Ended
	Dec. 31, 2008			Sep. 30, 2008			June 30, 2008			Mar. 31, 2008			Dec. 31, 2007			Sep. 30, 2007			June 30, 2007			Mar. 31, 2007
Revenues	$	147,616		$	161,947		$	156,082		$	152,413		$	152,040		$	148,657		$	143,854		$	122,629
Cost of services		99,061			109,138			105,418			104,985			103,731			101,130			97,613			85,169
Gross profit		48,555			52,809			50,664			47,428			48,309			47,527			46,241			37,460
Selling, general and administrative expenses		38,229			39,190			38,826			39,697			40,363			38,326			38,992			34,261
Operating income		10,326			13,619			11,838			7,731			7,946			9,201			7,249			3,199
Interest expense		(2,999	)		(1,863	)		(1,252	)		(3,884	)		(3,626	)		(3,855	)		(2,557	)		(2,136)
Interest income		126			158			158			273			412			344			220			418
Earnings before income taxes		7,453			11,914			10,744			4,120			4,732			5,690			4,912			1,481
Provision for income taxes		3,915			4,977			4,652			1,717			2,514			2,435			1,974			570
Net income	$	3,538		$	6,937		$	6,092		$	2,403		$	2,218		$	3,255		$	2,938		$	911
Earnings per share:
Basic	$	0.10		$	0.20		$	0.17		$	0.07		$	0.06		$	0.09		$	0.08		$	0.03
Diluted	$	0.10		$	0.19		$	0.17		$	0.07		$	0.06		$	0.09		$	0.08		$	0.03
Weighted average number of shares outstanding
Basic		35,707			35,546			35,426			35,266			35,387			35,313			35,176			34,667
Dilutive		35,985			36,071			35,838			35,375			35,759			35,886			35,813			35,629

 On January 3, 2007, the Company acquired VISTA, a privately-owned, leading provider of physician staffing and permanent physician search services. On January 31, 2007, the Company acquired Oxford, a leading provider of high-end information technology and engineering staffing services. Further discussion related to the acquisitions can be found in Note 3.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not applicable.

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 Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, the Company’s management carried out an evaluation, under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934). Based on this evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures are effective as of the end of the period covered by this report.  The term “disclosure controls and procedures” means controls and other procedures of the Company that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.  “Disclosure controls and procedures” include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) of the Securities Exchange Act of 1934) for the Company. The term “internal control over financial reporting” is defined as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the Company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

·   Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

·   Provide reasonable assurance that the transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

·   Provide reasonable assurance regarding prevention of timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate.

Management, under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2008. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework. Based on our assessment and those criteria, management believes that the Company maintained effective internal control over financial reporting as of December 31, 2008. Our independent registered public accounting firm, Deloitte & Touche LLP, has included an attestation report on our internal control over financial reporting, which is included below.

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Changes in Internal Controls

There were no changes in the Company’s internal control over financial reporting that occurred during the Company’s fourth quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

57

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of On Assignment, Inc.

Calabasas, California

We have audited the internal control over financial reporting of On Assignment, Inc. and subsidiaries (the "Company") as of December 31, 2008, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2008, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedule as of and for the year ended December 31, 2008 of the Company and our report dated March 16, 2009 expressed an unqualified opinion on those financial statements and financial statement schedule.

/s/ Deloitte & Touche LLP

Los Angeles, California

March 16, 2009

Item 9B. Other Information

None.

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PART III

 Item 10. Directors and Executive Officers of the Registrant

 Information responsive to this item will be set forth under the captions “Proposal One—Election of Directors,” “Continuing Directors,” “Section 16(a) Beneficial Ownership Reporting Compliance,” “Ethics” and “Board Committee Meetings” in the Company’s proxy statement for use in connection with its 2009 Annual Meeting of Stockholders (the “2009 Proxy Statement”) and is incorporated herein by reference. The 2009 Proxy Statement will be filed with the SEC within 120 days after the end of the Company’s year. The information under the heading “Executive Officers of the Registrant” in Item 1 of this Form 10-K is also incorporated by reference in this section.

 Item 11. Executive Compensation

Information responsive to this item will be set forth under the captions “Compensation Discussion and Analysis,” “Summary of Executive Compensation,” “Summary of Grants of Plan Based Awards,” “Employment Contracts and Change in Control Arrangements” “Summary of Outstanding Equity Awards,” “Summary of Option Exercises and Stock Vested,” “Deferred Compensation” and “Board Committees and Meetings” in the 2009 Proxy Statement to be filed with the SEC within 120 days after the end of the Company’s year and is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Information responsive to this item will be set forth under the captions “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information” in the 2009 Proxy Statement to be filed with the SEC within 120 days after the end of the Company’s year and is incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions

 Information responsive to this Item will be set forth under the caption “Certain Relationships and Related Transactions” and “Independent Directors” in the 2009 Proxy Statement to be filed with the SEC within 120 days after the end of the Company’s year and is incorporated herein by reference.

 Item 14. Principal Accountant Fees and Services

 Information responsive to this Item will be set forth under the caption “Report of the Audit Committee” and “Principal Accountant Fees and Services” in the 2009 Proxy Statement, to be filed with the SEC within 120 days after the end of the Company’s year and is incorporated herein by reference.

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PART IV

Item 15. Exhibits and Financial Statement Schedule

(a) List of documents filed as part of this report

1. Financial Statements:

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets at December 31, 2008 and 2007

Consolidated Statements of Operations and Comprehensive Income (Loss) for the Years Ended December 31, 2008, 2007 and 2006

Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2008, 2007 and 2006

Consolidated Statements of Cash Flows for the Years Ended December 31, 2008, 2007 and 2006

Notes to Consolidated Financial Statements

2.Financial Statement Schedule:

Schedule II—Valuation and Qualifying Accounts

Schedules other than those referred to above have been omitted because they are not applicable or not required under the instructions contained in Regulation S-X or because the information is included elsewhere in the financial statements or notes thereto.

(b) Exhibits

See Index to Exhibits.

60

SIGNATURES

Pursuant to the requirements of the Section 13 or 15(d) of the Securities and Exchange Act of 1934, the registrant has duly caused this to report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 16th day of March 2009.

ON ASSIGNMENT, INC.

 

Peter T. Dameris

Chief Executive Officer and President

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated and on the dates indicated.

Signature	Title	Date
	Chief Executive Officer, President and Director	March 16, 2009
Peter T. Dameris	(Principal Executive Officer)
	Senior Vice President, Finance and Chief Financial Officer	March 16, 2009
James L. Brill	(Principal Financial and Accounting Officer)
/s/ William E. Brock	Director	March 16, 2009
William E. Brock
/s/ Jonathan S. Holman	Director	March 16, 2009
Jonathan S. Holman
/s/ Edward L. Pierce	Director	March 16, 2009
Edward L. Pierce
/s/ Jeremy M. Jones	Director	March 16, 2009
Jeremy M. Jones

61

ON ASSIGNMENT, INC. AND SUBSIDIARIES

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS

 Year Ended December 31, 2008, 2007 and 2006

(In thousands)

Description	Balance at beginning of year		Acquired balances		Provisions		Deductions from reserves			Balance at end of year
Year ended December 31, 2008
Allowance for doubtful accounts and billing adjustments	$	2,254		—		641		(452	)	$	2,443
Workers’ compensation and medical malpractice loss reserves	$	8,921		—		5,384		(4,551	)	$	9,754
Year ended December 31, 2007
Allowance for doubtful accounts and billing adjustments	$	1,380		805		680		(611	)	$	2,254
Workers’ compensation and medical malpractice loss reserves	$	3,551		4,596		4,095		(3,321	)	$	8,921
Year ended December 31, 2006
Allowance for doubtful accounts and billing adjustments	$	1,581		—		60		(261	)	$	1,380
Workers’ compensation loss reserves	$	3,488		—		2,224		(2,161	)	$	3,551
Income tax valuation allowance	$	4,928		—		—		(4,928	)	$	—

62

INDEX TO EXHIBITS

Number	Footnote	Description
2.1	(14)	Agreement and Plan of Merger, dated as of January 3, 2007, by and among On Assignment, Inc., On Assignment 2007 Acquisition Corp. and Oxford Global Resources, Inc. and Thomas F. Ryan, as Indemnification Representative.
2.2	(15)	Stock Purchase Agreement, dated as of December 20, 2006, by and among On Assignment, Inc., VSS Holding, Inc., the stockholders of VSS Holding, Inc. and the optionholders of VSS Holding, Inc.
3.1	(1)	Certificate of Amendment of Restated Certificate of Incorporation of On Assignment, Inc.
3.2	(2)	Restated Certificate of Incorporation of On Assignment, Inc., as amended.
3.3	(3)	Amended and Restated Bylaws of On Assignment, Inc.
4.1	(4)	Specimen Common Stock Certificate.
4.2	(9)	Rights Agreement, dated June 4, 2003, between On Assignment, Inc. and U.S. Stock Transfer Corporation as Rights Agent, which includes the Certificate of Designation, Preferences and Rights of Series A Junior Participating Preferred Stock as Exhibit A, the Summary of Rights to Purchase Series A Junior Participating Preferred Stock as Exhibit B and the Form of Rights Certificate as Exhibit C.
10.1	(13)	Form of Indemnification Agreements. †
10.2	(12)	Restated 1987 Stock Option Plan, as amended and restated April 7, 2006. †
10.3	(13)	First Amendment to Restated 1987 Stock Option Plan, dated January 23, 2007. †
10.4	(12)	Second Amendment to the Restated 1987 Stock Option Plan, dated April 17, 2007. †
10.5	(18)	Third Amendment to the Restated 1987 Stock Option Plan, dated December 11, 2008. †
10.6	(12)	Employee Stock Purchase Plan, as amended and restated June 18, 2002. †
10.7	(12)	First Amendment to the Employee Stock Purchase Plan, dated January 23, 2007. †
10.8	(5)	Office Lease, dated December 7, 1993, by and between On Assignment, Inc. and Malibu Canyon Office Partners, LP.
10.9	(6)	Seventh Amendment to Office Lease, dated August 20, 2002.
10.10*		Amended and Restated Change in Control Severance Plan and Summary Plan Description, dated December 11, 2008. †
10.11	(8)	On Assignment, Inc. Amended and Restated Deferred Compensation Plan, effective February 1, 1999. †
10.12	(16)	Amendment No. 1 to the On Assignment, Inc. Amended and Restated Deferred Compensation Plan, dated September 4, 2008. †
10.13	(8)	Master Trust Agreement for On Assignment, Inc. Amended and Restated Deferred Compensation Plan.
10.14	(16)	On Assignment, Inc. Deferred Compensation Plan, effective January 1, 2008. †
10.15	(17)	Separation Agreement between On Assignment, Inc. and Shawn Mohr, dated January 14, 2008. †
10.16*		Amended and Restated Senior Executive Agreement between On Assignment, Inc. and Peter Dameris, dated December 11, 2008. †
10.17*		Amended and Restated Employment Agreement between Oxford Global Resources, Inc., On Assignment, Inc. and Michael J. McGowan dated December 30, 2008. †
10.18*		Amended and Restated Employment Agreement between On Assignment, Inc. and James Brill, dated December 11, 2008. †

63

10.19*		Amended and Restated Employment Agreement between VISTA Staffing Solutions, Inc., On Assignment, Inc. and Mark S. Brouse, dated December 11, 2008. †
10.20*		Amended and Restated Senior Executive Agreement between On Assignment, Inc. and Emmett McGrath, dated December 11, 2008. †
10.21*		Amended and Restated Executive Change in Control Agreement between On Assignment and Peter T. Dameris, dated December 11, 2008. †
10.22*		Amended and Restated Executive Change in Control Agreement between On Assignment, Inc. and James L. Brill, dated December 11, 2008. †
10.23	(13)	Separation Agreement between On Assignment, Inc. and Michael J. Holtzman, dated December 8, 2006. †
10.24	(7)	Form of Option Agreements.
10.25	(10)	Executive Incentive Compensation Plan. †
10.26	(11)	Form of Restricted Stock Unit Agreements.
10.27	(13)	Credit Agreement among On Assignment, Inc., UBS Securities, LLC, UBS AG, Stamford Branch, UBS Loan Finance, LLC and other parties thereto, dated January 31, 2007.
21.1*		Subsidiaries of the Registrant.
23.1*		Consent of Independent Registered Public Accounting Firm.
31.1*		Certification of Peter T. Dameris, Chief Executive Officer and President pursuant to Rule 13a-14(a) or 15d-14(a).
31.2*		Certification of James L. Brill, Senior Vice President, Finance and Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a).
32.1*		Certification of Peter T. Dameris, Chief Executive Officer and President, and James L. Brill, Senior Vice President, Finance and Chief Financial Officer pursuant to 18 U.S.C. Section 1350.

* Filed herewith.

† These exhibits relate to management contracts or compensatory plans, contracts or arrangements in which directors and/or executive officers of the Registrant may participate.

64

(1) Incorporated by reference from an exhibit filed with our Current Report on Form 8-K (File No. 0-20540) filed with the Securities and Exchange Commission on October 5, 2000.

(2) Incorporated by reference from an exhibit filed with our Annual Report on Form 10-K (File No. 0-20540) filed with the Securities and Exchange Commission on March 30, 1993.

(3) Incorporated by reference from an exhibit filed with our Current Report on Form 8-K (File No. 0-20540) filed with the Securities and Exchange Commission on May 3, 2002.

(4) Incorporated by reference from an exhibit filed with our Registration Statement on Form S-1 (File No. 33-50646) declared effective by the Securities and Exchange Commission on September 21, 1992.

(5) Incorporated by reference from an exhibit filed with our Annual Report on Form 10-K (File No. 0-20540) filed with the Securities and Exchange Commission on March 24, 1994.

(6) Incorporated by reference from an exhibit filed with our Quarterly Report on Form 10-Q (File No. 0-20540) filed with the Securities and Exchange Commission on November 14, 2002.

(7) Incorporated by reference from an exhibit filed with our Annual Report on Form 10-K (File No. 0-20540) filed with the Securities and Exchange Commission on March 16, 2005.

(8) Incorporated by reference from an exhibit filed with our Quarterly Report on Form 10-Q (File No. 0-20540) filed with the Securities and Exchange Commission on May 15, 1998.

(9) Incorporated by reference from an exhibit filed with our Current Report on Form 8-K (File No. 0-20540) filed with the Securities and Exchange Commission on June 5, 2003.

(10) Incorporated by reference from an exhibit filed with our Current Report on Form 8-K (File No. 0-20540) filed with the Securities and Exchange Commission on April 1, 2005.

(11) Incorporated by reference from an exhibit filed with our Current Report on Form 8-K (File No. 0-20540) filed with the Securities and Exchange Commission on August 8, 2005.

(12) Incorporated by reference from an exhibit filed with our Registration Statement on Form S−8 (File No. 333−143907) filed with the Securities and Exchange Commission on June 20, 2007.

(13) Incorporated by reference from an exhibit filed with our Annual Report on Form 10-K (File No. 0-20540) filed with the Securities and Exchange Commission on March 16, 2007.

(14) Incorporated by reference from an exhibit filed with our Current Report on Form 8-K (File No. 0-20540) filed with the Securities and Exchange Commission on January 9, 2007.

(15) Incorporated by reference from an exhibit filed with our Current Report on Form 8-K (File No. 0-20540) filed with the Securities and Exchange Commission on December 22, 2006.

65

(16)	Incorporated by reference from an exhibit filed with our Current Report on Form 8-K (File No. 0-20540) filed with the Securities and Exchange Commission on September 9, 2008.
(17)	Incorporated by reference from an exhibit filed with our Quarterly Report on Form 10-Q (File No. 0-20540) filed with the Securities and Exchange Commission on May 12, 2008.

(18) Incorporated by reference from an exhibit filed with our Current Report on Form 8-K (File No. 0-20540) filed with the Securities and Exchange Commission on December 16, 2008.

66

EX-10.10

ON ASSIGNMENT, INC.

 AMENDED AND RESTATED CHANGE IN CONTROL SEVERANCE PLAN

 AND

 SUMMARY PLAN DESCRIPTION

Plan Effective Date:  February 12, 2004

 As Amended and Restated:  December 11, 2008

The On Assignment, Inc. Change in Control Severance Plan (the “Plan”) is primarily designed to provide eligible employees of On Assignment, Inc. (the “Company”) whose employment is terminated on or after February 12, 2004 with separation pay in the event of an involuntary termination.

This Plan is designed to be an “employee welfare benefit plan,” as defined in Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).  This Plan is governed by ERISA and, to the extent applicable, the laws of the State of California.  This document constitutes both the official plan document and the required summary plan description under ERISA.

I.           ELIGIBILITY

You will be an Eligible Employee for purposes of receiving severance benefits under the Plan if:

•      you are a regular, full-time employee of the Company and are identified on Exhibit A (to be supplied separately);

•      your active employment with the Company is Involuntarily Terminated (within the meaning set forth below) within the eighteen (18) month period following a Change in Control;

•      you execute the General Release of All Claims (a “General Release”), within five (5) business days after your termination date or, if you are age forty (40) or over, you execute the General Release, within forty-five (45) business days after your termination and any rescission period specified therein has elapsed without you having rescinded said General Release; and

•      you are not in one of the excluded categories listed below.

Excluded Categories of Employees

You are not eligible for severance benefits under this Plan if:

•     you are a temporary employee, part-time employee working fewer than 30 hours per week (no minimum number of hours shall apply to salaried employees), probationary employee or student employee hired to be placed on assignment with clients of the Company;

•     you have a separate change in control, severance or similar agreement or arrangement with the Company that specifically provides that you are not eligible to participate in the Plan;

•     you voluntarily terminate your employment, unless your termination constitutes an “Involuntary Termination” as defined below;

•     you are employed with a successor employer which directly or indirectly acquires (i) all or any portion of the assets or operations of the Company or any subsidiary, (ii) all or any portion of the outstanding capital stock of the Company, or (iii) fifty percent (50%) or more of the capital stock of any subsidiary of the Company. However, you would be eligible for severance benefits pursuant to the terms of the Plan upon a subsequent termination by the successor employer within 18 months following a Change in Control; or

•     you are dismissed for Cause, whether or not you prior to your dismissal you received notice of a termination which would otherwise qualify you for severance benefits.

II.           HOW THE PLAN WORKS

If you are eligible for severance benefits under the Plan, the amount of your severance pay will be determined in accordance with the guidelines set forth below, subject to the Golden Parachute Tax limitation set forth below.  Subject to the Potential Six Month Delay set forth below, you will receive your severance pay in a lump-sum payment (with appropriate taxes deducted or withheld) which will be made as soon as administratively practicable after you experience a separation from service within the meaning of Section 409A(a)(2)(A)(i) of the Internal Revenue Code of 1986, as amended, and Treasury Regulation Section 1.409A-1(h) (a “Separation from Service”) as a result of your Involuntary Termination within 18 months after a Change in Control, but in no event later than 30 days following the date of your Separation from Service, subject in all cases to the Company’s receipt of your executed General Release and the expiration of any rescission period applicable to your executed General Release.

Severance Guidelines

If your employment is Involuntarily Terminated within eighteen (18) months after a Change in Control and you are an Eligible Employee, you will be paid all Accrued Compensation and the following severance pay:

• A Pro-Rata Bonus;

•     If the Eligible Employee was the Chief Executive Officer of the Company immediately before the Change in Control:  (1) the Eligible Employee will receive 300% of the Eligible Employee’s Annual Base Pay and Target Bonus; (2)  for eighteen months following the Eligible Employee’s Separation from Service, the Eligible Employee may elect to continue the group health, vision and dental coverage he or she had in effect as of the Separation from Service (or generally comparable coverage) for the Eligible Employee, and if applicable, spouse and dependents, under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”)1, and (3) to assist the Eligible Employee in offsetting the cost of such continuing benefits, the Eligible Employee shall receive a lump sum payment in an after-tax amount, calculated based upon the COBRA premium rates as may be charged from time to time for employees of the Company (or any successor) generally for the medical, dental and/or vision coverage the Eligible Employee had elected under the Company’s group health plan at the time of the Eligible Employees Separation from Service, for eighteen months (rounded up, if applicable, to the next full month). For clarification and avoidance of doubt, if the Eligible Employee is not covered under the medical, dental and/or vision portions of the Company’s (or any successor’s group health plan as of the date of Separation from Service, then the Eligible Employee is not eligible for this additional payment.

 

1A separate election form and notice outlining continuation coverage under COBRA will be provided to the Eligible Employee (and, if applicable, his or her eligible dependents) and must be timely returned to effect enrollment.

•     If the Eligible Employee was an executive vice president and Chief Operating Officer of the Company immediately before the Change in Control:  (1)  275% of the Eligible Employee’s Annual Base Pay and Target Bonus; (2) for eighteen months following the Eligible Employee’s Separation from Service, the Eligible Employee may elect to continue the group health, vision and dental coverage he or she had in effect as of the Separation from Service (or generally comparable coverage) for the Eligible Employee, and if applicable, spouse and dependents, under COBRA1;and (3) to assist the Eligible Employee in offsetting the cost of such continuing benefits, the Eligible Employee shall receive a lump sum payment in an after-tax amount, calculated based upon the COBRA premium rates as may be charged from time to time for employees of the Company (or any successor) generally for the medical, dental and/or vision coverage the Eligible Employee had elected under the Company’s group health plan at the time of the Eligible Employees Separation from Service, for eighteen months (rounded up, if applicable, to the next full month). For clarification and avoidance of doubt, if the Eligible Employee is not covered under the medical, dental and/or vision portions of the Company’s (or any successor’s group health plan as of the date of Separation from Service, then the Eligible Employee is not eligible for this additional payment.

•     If the Eligible Employee was an executive vice president and Chief Financial Officer of the Company immediately before the Change in Control:  (1) 250% of the Eligible Employee’s Annual Base Pay and Target Bonus;  (2) for eighteen months following the Eligible Employee’s Separation from Service, the Eligible Employee may elect to continue the group health, vision and dental coverage he or she had in effect as of the Separation from Service (or generally comparable coverage) for the Eligible Employee, and if applicable, spouse and dependents, under COBRA1;and (3) to assist the Eligible Employee in offsetting the cost of such continuing benefits, the Eligible Employee shall receive a lump sum payment in an after-tax amount, calculated based upon the COBRA premium rates as may be charged from time to time for employees of the Company (or any successor) generally for the medical, dental and/or vision coverage the Eligible Employee had elected under the Company’s group health plan at the time of the Eligible Employees Separation from Service, for eighteen months (rounded up, if applicable, to the next full month). For clarification and avoidance of doubt, if the Eligible Employee is not covered under the medical, dental and/or vision portions of the Company’s (or any successor’s group health plan as of the date of Separation from Service, then the Eligible Employee is not eligible for this additional payment.

•     If the Eligible Employee was a senior vice president of the Company and/or president of a division of the Company (whether or not an executive officer) immediately before the Change in Control:  (1) 200% of the Eligible Employee’s Annual Base Pay and Target Bonus; (2) for eighteen months following the Eligible Employee’s Separation from Service, the Eligible Employee may elect to continue the group health, vision and dental coverage he or she had in effect as of the Separation from Service (or generally comparable coverage) for the Eligible Employee, and if applicable, spouse and dependents, under COBRA1;and (3) to assist the Eligible Employee in offsetting the cost of such continuing benefits, the Eligible Employee shall receive a lump sum payment in an after-tax amount, calculated based upon the COBRA premium rates as may be charged from time to time for employees of the Company (or any successor) generally for the medical, dental and/or vision coverage the Eligible Employee had elected under the Company’s group health plan at the time of the Eligible Employees Separation from Service, for eighteen months (rounded up, if applicable, to the next full month). For clarification and avoidance of doubt, if the Eligible Employee is not covered under the medical, dental and/or vision portions of the Company’s (or any successor’s group health plan as of the date of Separation from Service, then the Eligible Employee is not eligible for this additional payment.

•     If the Eligible Employee was a vice president or corporate controller (whether or not an executive officer), of the Company immediately before the Change in Control: (1) 75% of the Eligible Employee’s Annual Base Pay and Target Bonus; (2) for eighteen months following the Eligible Employee’s Separation from Service, the Eligible Employee may elect to continue the group health, vision and dental coverage he or she had in effect as of the Separation from Service (or generally comparable coverage) for the Eligible Employee, and if applicable, spouse and dependents, under COBRA1;and (3) to assist the Eligible Employee in offsetting the cost of such continuing benefits, the Eligible Employee shall receive a lump sum payment in an after-tax amount, calculated based upon the COBRA premium rates as may be charged from time to time for employees of the Company (or any successor) generally for the medical, dental and/or vision coverage the Eligible Employee had elected under the Company’s group health plan at the time of the Eligible Employees Separation from Service, for eighteen months (rounded up, if applicable, to the next full month). For clarification and avoidance of doubt, if the Eligible Employee is not covered under the medical, dental and/or vision portions of the Company’s (or any successor’s group health plan as of the date of Separation from Service, then the Eligible Employee is not eligible for this additional payment.;

•     1 month of the Eligible Employee’s Annual Base Pay and Incentive Compensation for each year or partial year of service to the Company as an employee, up to a maximum of 6 months of Annual Base Pay, with a minimum of two months of Annual Base Pay, if the Eligible Employee was a “director,” “assistant-director,” “manager,” “regional manager,” or “Senior Staffing Consultant” immediately before the Change in Control;

•     1 month of the Eligible Employee’s Annual Base Pay for each year or partial year of service to the Company as an employee, up to a maximum of 3 months of Annual Base Pay, with a minimum of one month of Annual Base Pay, if the Eligible Employee was an exempt employee of the Company (other than those employees described above) immediately before the Change in Control; or

•     1 week of the Eligible Employee’s Annual Base Pay for each year or partial year of service to the Company as an employee, up to a maximum of 3 months of Annual Base Pay, with a minimum of one week of Annual Base Pay, for all other Eligible Employee not included in the above categories.

Accrued Compensation shall mean an amount which shall consist of all amounts earned or accrued through the termination date but not paid as of the termination date including (i) Annual Base Pay, (ii) reimbursement for reasonable and necessary expenses incurred by you on behalf of the Company during the period ending on the termination date, (iii) vacation and sick leave pay (to the extent provided by Company policy or applicable law), and (iv) incentive compensation (if any) earned in respect of any period ended prior to the termination date.  It is expressly understood that incentive compensation shall have been “earned” as of the time that the conditions to such incentive compensation have been met, even if not calculated or payable at such time.

Annual Base Pay generally means your annualized base salary at the rate in effect during the last regularly scheduled payroll period immediately preceding the occurrence of the Change in Control and does not include, for example, bonuses, overtime compensation, incentive pay, fringe benefits, sales commissions or expense allowances.

Cause means your willful breach of duty unless waived by the Company (which willful breach is limited to your deliberate and consistent refusal to perform your duties or the deliberate and consistent refusal to conform to or follow any reasonable policy adopted by the Company provided you have had prior written notice of such refusal and an opportunity of at least thirty (30) days to cure such refusal), your unauthorized use or disclosure of confidential information or trade secrets of the Company, your breach of non-competition or non-solicitation agreements, your conviction of a felony under the laws of the United States or any state thereof, or your gross negligence.

Change in Control shall be deemed to occur upon the consummation of any of the following transactions:

1. a change in the ownership of Company whereby one person, or more than one person acting as a group, acquires ownership of the outstanding voting stock of the Company that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of Company, as determined in accordance with Treas. Reg. §1.409A-3(i)(5)(v).  If a person or group is considered either to own more than 50% of the total fair market value or total voting power of the Company’s stock, or to have effective control of the Company within the meaning of part 2 of the definition, and such person or group acquires additional stock of the Company, the acquisition of the additional stock shall not be considered to cause a change in the ownership of the Company; or

2. a change in the effective control of the Company whereby one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or group) ownership of Company stock possessing 30% or more of the total voting power of the Company stock, as determined in accordance with Treas. Reg. §1.409A-3(i)(5)(vi).  However, if a person or group is considered to possess 30% or more of the total voting power of the stock of the Company, and such person or group acquires additional stock of the Company, the acquisition of additional stock by such person or group shall not be considered to cause a change in the effective control of Company ; or

3. a change in the effective control of the Company whereby a majority of the members of the Company’s board of directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Company’s board of directors before the date of the appointment or election, as determined in accordance with Treas. Reg. §1.409A-3(i)(5)(vi).  In determining whether the event described in the preceding sentence has occurred, the Company to which the event must relate shall only include a corporation identified in accordance with Treas. Reg. §1.409A-3(i)(5)(ii) for which no other corporation is a majority shareholder; or

4.          a change in the ownership of a substantial portion of the assets of the Company, whereby any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all Company assets immediately before such acquisition or acquisitions, as determined in accordance with Treas. Reg. §1.409A-3(i)(5)(vii).  A transfer of assets shall not be treated as a change in the ownership of a substantial portion of the assets when such transfer is made to an entity that is controlled by the shareholders of the Company, as determined in accordance with Treas. Reg. §1.409A-3(i)(5)(vii)(B)..

Incentive Compensation shall mean 100% of the commission, bonus or other incentive-type pay paid to you (excluding stock options) for the fiscal year immediately preceding the Change in Control.

Involuntary Termination shall mean the termination of your employment with the Company (or, if applicable, successor entity) other than by reason of death or disability:

(A)           involuntarily upon your discharge or dismissal other than for Cause, or

(B)           upon your resignation following (I) a reduction in your level of Annual Base Pay or any Target Bonus, (II) a material reduction in your benefits or (III) a relocation of your place of employment which is more than 35 miles from your place of employment prior to the Change in Control, such that it constitutes a material change in the geographic location at which you must perform services (within the meaning of Section 409A), provided and only if such change or reduction is effected without your written concurrence, or

(C) upon your resignation in the case of an employee who was an executive officer or vice president immediately before the applicable Change in Control following a change in the employee’s position with the Company (or, if applicable, with the successor entity) that is effected without the employee’s consent and materially reduces his or her level of responsibility or authority.

Pro Rata Bonus means an amount equal to 100% of the target bonus that you would have been eligible to receive for the Company’s fiscal year in which your employment terminates following a Change of Control, multiplied by a fraction, the numerator of which is the number of days in such fiscal year through the Termination Date and the denominator of which is 365.

Target Bonus shall mean the bonus which would have been paid to you for full achievement of specific performance objectives pertaining to the business of the Company or any of its specific business units or divisions, or to individual performance criteria applicable to you, which objectives have been established by the Board of Directors (or the Compensation Committee thereof) for the year in question.  “Target Bonus” shall not mean the “maximum bonus” which you might have been paid for overachievement of such performance objectives or criteria or any purely discretionary bonus.

Golden Parachute Tax Gross-Up

In the event that any payment or benefit made or provided to or for your benefit in connection with this Plan and/or your employment with the Company or the termination thereof (a “Payment” ) is determined to be subject to any excise tax (“Excise Tax” ) imposed by Section 4999 of the Code (or any successor to such Section), the Company shall pay to you, prior to the time any Excise Tax is payable with respect to such Payment (through withholding or otherwise), an additional amount (a “Gross-Up Payment” ) which, after the imposition of all income, employment, excise and other taxes, penalties and interest thereon, is equal to the sum of (i) the Excise Tax on such Payment plus (ii) any penalty and interest assessments associated with such Excise Tax.  The determination of whether any Payment is subject to an Excise Tax and, if so, the amount and time of any Gross-Up Payment pursuant to this Plan shall be made by an independent auditor (the “Auditor”) selected and paid by the Company.  The parties shall cooperate with each other in connection with any proceeding or claim relating to the existence or amount of any liability for Excise Tax.

Potential Six Month Delay

Notwithstanding anything to the contrary in this Plan, no compensation or Benefits, shall be paid to you during the 6-month period following your “separation from service” (within the meaning of Section 409A(a)(2)(A)(i) of the Internal Revenue Code of 1986, as amended (the “Code”)) to the extent the Plan Administrator determines Executive is a “specified employee” at the time of such Separation from Service (within the meaning of Section 409A) and that that paying such amounts at the time or times indicated in this Plan would be a prohibited distribution under Section 409A(a)(2)(b)(i) of the Code and/or cause you to incur additional taxes under Section 409A of the Code.  If the payment of any such amounts is delayed as a result of the previous sentence, then on the first business day following the end of such 6-month period, (or such earlier date upon which such amount can be paid under Section 409A without being subject to such additional taxes, including as a result of your death), the Company shall pay you a lump-sum amount equal to the cumulative amount that would have otherwise been payable to you during such 6-month period, without interest thereon.

III.           OTHER IMPORTANT INFORMATION

 Plan Administration.  As the Plan Administrator, the Company has full discretionary authority to administer and interpret the Plan, including discretionary authority to determine eligibility for benefits under the Plan and the amount of benefits (if any) payable per participant. Any determination by the Plan Administrator will be final and conclusive upon all persons.  When benefits are due, they will be paid from the general assets of the Company.  The Company is not required to establish a trust to fund the Plan.  The benefits provided under this Plan are not assignable and may be conditioned upon your compliance with any confidentiality agreement you have entered into with the Company or upon your compliance with any Company policy or program communicated to you in writing.

Claims Procedure.  If you believe you are incorrectly denied a benefit or are entitled to a greater benefit than the benefit you receive under the Plan, you may submit a signed, written application to the Plan Administrator within ninety (90) days of your termination.  You will be notified of the approval or denial of this claim within ninety (90) days of the date that the Plan Administrator receives the claim, unless special circumstances require an extension of time for processing the claim.  If your claim is denied, the notification will state specific reasons for the denial and you will have sixty (60) days from receipt of the written notification of the denial of your claim to file a signed, written request for a review of the denial with the Plan Administrator.  This request should include the reasons you are requesting a review, facts supporting your request and any other relevant comments.  Pursuant to its discretionary authority to administer and interpret the Plan and to determine eligibility for benefits under the Plan, the Plan Administrator will generally make a final, written determination of your eligibility for benefits within sixty (60) days of receipt of your request for review.

Plan Terms.  Except as otherwise set forth herein, this Plan supersedes any and all prior separation, severance and salary continuation arrangements, programs and plans which were previously offered by the Company for the purpose of paying benefits to any Eligible Employee upon a termination following a Change in Control, including pursuant to an employment agreement or offer letter.  Nothing in this Plan shall affect an Eligible Employee’s right to severance benefits under circumstances not involving a termination following a Change in Control.  In no event, however, shall any individual receive severance benefits under both this Plan and any other separation, severance pay or salary continuation program, plan or other arrangement with the Company.

Plan Amendment or Termination.  The Company reserves the right to terminate or amend the Plan at any time upon the vote of a two-thirds majority of the Board of Directors; provided, however, that no amendment which materially impairs the rights of an Eligible Employee under the Plan may be made after the occurrence of a Change in Control or after discussions have commenced with another entity which results in the occurrence of a Change in Control within 270 days of when such discussions commenced.  Any termination or amendment of the Plan may be made effective immediately with respect to any benefits not yet paid, whether or not prior notice of such amendment or termination has been given to affected employees.

Taxes.  The Company will withhold all applicable taxes and other payroll deductions from any payment made pursuant to this Plan.

No Right To Employment.  This Plan does not provide you with any right to continue employment with the Company or affect the Company’s right, which right is hereby expressly reserved, to terminate the employment of any individual at any time for any reason with or without Cause.

IV.           STATEMENT OF ERISA RIGHTS

As a participant in the Plan, you are entitled to certain rights and protections under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).  ERISA provides that all Plan participants shall be entitled to:

1.           Examine, without charge, at the Plan Administrator’s office, all Plan documents, including all documents filed by the Plan with the U.S. Department of Labor.

2. Obtain copies of all Plan documents and other Plan information upon written request to the Plan Administrator.  The Plan Administrator may make a reasonable charge for the copies.

3.           Receive a summary of the Plan’s annual financial report.

4. File suit in a federal court, if you, as a participant, request materials and do not receive them within thirty (30) days of your request.  In such a case, the court may require the Plan Administrator to provide the materials and to pay you a fine of up to $110 for each day’s delay until the materials are received, unless the materials were not sent because of reasons beyond the control of the Plan Administrator.

In addition to creating rights for certain employees of the Company under the Plan, ERISA imposes obligations upon the people who are responsible for the operation of the Plan.  The people who operate the Plan (called “fiduciaries”) have a duty to do so prudently and in the interest of the Company’s employees who are covered by the Plan.

No one, including your employer or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a benefit to which you are entitled under the Plan or from exercising your rights under ERISA.

If your claim for a severance benefit is denied or ignored, in whole or in part, you have a right to file suit in a federal or a state court.  If Plan fiduciaries are misusing the Plan’s assets (if any) or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor or file suit in a federal court.  The court will decide who should pay court costs and legal fees.  If you are successful in your lawsuit, the court may, if it so decides, order the party you have sued to pay your legal costs, including attorney fees.  However, if you lose, the court may order you to pay these costs and fees, for example, if it finds that your claim or suit is frivolous.

If you have any questions about the Plan, this statement or your rights under ERISA, you should contact the Plan Administrator or the nearest Area Office of the  Employee Benefits Security Administration, listed in your telephone directory, or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue, N.W., Washington, D.C. 20210

V.   SECTION 409A

The payments and benefits provided hereunder are intended to be exempt from or compliant with the requirements of Section 409A.  Notwithstanding any provision of this Plan to the contrary, in the event that following the effective date hereof, the Company reasonably determines that any payments or benefits hereunder are not either exempt from or compliant with the requirements of Section 409A, the Company reserves the right (without any obligation to do so or to indemnify you for failure to do so), in its discretion, to amend this Plan,or adopt such other policies and procedures (including amendments to policies and procedures with retroactive effect), or take any other actions, that the Company reasonably determines to be necessary or appropriate (i) to preserve the intended tax treatment of the payments and benefits provided hereunder, to preserve the economic benefits with respect to such payments and benefits, and/or to avoid less favorable accounting or tax consequences and/or (ii) to exempt such payments and benefits from Section 409A or to comply with the requirements of Section 409A and thereby avoid the application of penalty taxes thereunder.

To the extent that any reimbursements hereunder constitute taxable compensation to you,such reimbursements shall be made to you promptly, but in no event after December 31st of the year following the year in which the expense was incurred, the amount of any such amounts reimbursed in one year shall not affect the amount eligible for reimbursement in any subsequent year, and your right to reimbursement of any such expenses shall not be subject to liquidation or exchange for any other benefit.

ADDITIONAL PLAN INFORMATION

Name of Plan:	On Assignment, Inc. Change in Control Severance Plan
Company Sponsoring Plan:	On Assignment, Inc. 26651 West Agoura Road Calabasas, California  91302
Employer Identification Number:	95-4023433
Plan Number:	505
Plan Year:	The calendar year; the first plan year is a short plan year starting February 12, 1998 and ending December 31, 1998
Plan Administrator:	On Assignment, Inc. 26651 West Agoura Road Calabasas, California 91302 (818) 878-7900
Agent for Service of Legal Process:	Plan Administrator
Type of Plan:	Severance Plan/Employee Welfare Benefit Plan
Plan Costs:	The cost of the Plan is paid by On Assignment, Inc.

Exhibit A

• Category 1.

•Category 2.

• Category 3.

• Category 4.  Eligible Employee who was a senior vice president of the Company and/or president of a division of the Company (whether or not an executive officer) immediately before the Change in Control;

1.   Emmett McGrath

2.   Michael Payne

3.   Mark Brouse

4.   Michael McGowan

• Category 5.  Eligible Employee who was a vice president or corporate controller (whether or not an executive officer), of the Company immediately before the Change in Control;

1.   Christina Gibson

2.   Karen Keppel

3.   Carol McNamara

4.   Angela Kolarek

5.   Samanthe Beck

·   Category 6.  Eligible Employee who was a “director” or an “assistant-director” immediately before the Change in Control.

1.   Dave Garaway

2.   Jeffrey Hanestad

3.   Michael Leroy

4.   Eric Radke

5.   Tarini Ramaprakash

EX-10.16

AMENDED AND RESTATED SENIOR EXECUTIVE AGREEMENT

THIS AMENDED AND RESTATED AGREEMENT by and between ON ASSIGNMENT, INC., a Delaware corporation (the “Company”) and PETER T. DAMERIS (“Executive”) is entered into on December 11, 2008.

Recitals

A.     The Company and Executive previously entered into an agreement, dated October 27, 2003, pursuant to which Executive is employed as the Chief Executive Officer and President of the Company, as amended on December 14, 2006 (the “Prior Agreement”).

B.      The Company and Executive wish to amend and restate the Prior Agreement to implement changes required under Internal Revenue Code (“Code”)Section 409A (together with the regulations and official interpretations thereof, “Section 409A”)

C.         Certain definitions are set forth in Section 4 of this Agreement.

Agreement

The parties hereto agree as follows:

1.            Employment.  The Company hereby engages Executive to serve as the Chief Executive Officer and President of the Company, and Executive agrees to serve the Company, during the Service Term (as defined in Section 1(f) hereof) in the capacities, and subject to the terms and conditions, set forth in this Agreement.

(a)         Services.During the Service Term, Executive, as Chief Executive Officer and President of the Company, shall have all the duties and responsibilities customarily rendered by Chief Executive Officers and Presidents of companies of similar size and nature and as may be reasonably assigned from time to time by the Board (as defined below).  Executive will report directly to the Board.  Executive will devote his best efforts and substantially all of his business time and attention (except for vacation periods and periods of illness or other incapacity) to the business of the Company and its Affiliates.  Notwithstanding the foregoing, and provided that such activities do not interfere with the fulfillment of Executive’s obligations hereunder, Executive may (A) serve as an officer, director or trustee of any charitable or non-profit entity; (B) own a passive investment in any private company and own up to 5% of the outstanding voting securities of any public company; or (C) with the prior approval of the Board, serve as a director of up to two other companies so long as such companies do not compete with the Company and Executive notifies the Board in advance of accepting any such position.  Unless the Company and Executive agree to the contrary, Executive’s place of employment shall be at the Company’s principal executive offices in Calabasas, California; provided, however, that Executive shall be permitted under the terms of this Agreement, upon conditions approved by the Board, to relocate his principal residence to Texas and to perform his duties and responsibilities under this Agreement from such location and commute from time to time to the Company’s principal executive offices so long as such relocation does not materially interfere with Executive’s satisfactory performance of his duties and responsibilities under this Agreement and, provided, further, that Executive will travel to such other locations as may be reasonably necessary in order to discharge his duties and responsibilities hereunder.  Executive shall have the right to attend all meetings of the Board of Directors of the Company and will be nominated for election as a director for each term for which he is eligible to serve during the Service Term.

(b)           Salary, Bonus and Benefits.

(i)           Salary and Bonus.During the Service Term, effective from and after August 1, 2006, the Company will pay Executive a base salary (the “Annual Base Salary”) as the Board may designate from time to time, at the rate of not less than $635,250 per annum; provided, however,that the Annual Base Salary shall be subject to review annually (beginning in the third quarter of each fiscal

year of the Company) by the Board for upward increases thereon.  With respect to calendar year 2006 and thereafter during the Service Period, Executive will be eligible to receive an annual bonus in an amount of up to 120% of Executive’s Annual Base Salary for each fiscal year, as determined by the Compensation Committee of the Board of Directors (the “Compensation Committee”) based upon the Company’s achievement of budgetary and other objectives set by the Compensation Committee after review of a financial performance plan that is prepared by Executive and recommended to the Compensation Committee.  Such annual bonus opportunity shall be comprised of (A) a 60% bonus opportunity applicable to achievement of plan targets that are a combination of targets for revenue and EBITDA (“Component A”), and (B) an additional 60% bonus opportunity (thereby making the total bonus opportunity 120% of Executive’s Annual Base Salary) for performance exceeding plan targets based upon revenue and EBITDA performance (“Component B”).  The performance targets for Component A and Component B may be revised in future years by the Compensation Committee after consultation with Executive.  Within 90 days of the beginning of each calendar year during the Service Period, the Compensation Committee will determine, after consultation with Executive, the targets applicable to Executive based on the Company’s performance plan.  All performance plan targets will be defined in terms that exclude the effects of any nonrecurring charges, including without limitation, charges related to goodwill write-offs, acquisitions, dispositions or changes in accounting treatment.  The annual bonus, if any, shall be due and payable to Executive, in cash, on or prior to March 15th of the year immediately following that in which such annual bonus is earned (for the avoidance of doubt, this deadline is intended to comply with the “short-term deferral” exemption from the application of Section 409A).

(ii)          Benefits.  During the Service Term, Executive shall be entitled to participate in and shall receive all benefits under pension benefit plans provided by the Company (including without limitation participation in any Company incentive, savings and retirement plans, practices, policies and programs) to the extent applicable generally to other peer executives of the Company.  In addition, during the Service Term, Executive and/or Executive’s family shall be entitled to participate and shall receive all benefits under welfare plans provided by the Company (including without limitation medical prescriptions, dental, disability, employee life, group life, accidental life and travel accident insurance plans and plans) to the extent and on the same basis applicable generally to other peer executives of the Company.  Executive shall be reimbursed for customary travel and other expenses, subject to standard and reasonable documentation requirements.  In addition, Executive will receive a stipend of $450 per month for lease of an automobile and other related expenses during the Service Term, payable in equal monthly increments during the Service Term.  Executive shall also be eligible to receive four weeks paid vacation per annum.  Any unused vacation time during each fiscal year shall be “rolled-over” to the following fiscal year to the extent permitted by the Company’s policies for other senior executives of the Company.

(iii)         INTENTIONALLY OMITTED

(iv)   INTENTIONALLY OMITTED

(v)            Additional Equity Grants.

(A)                 Stock Option Grants.

(1)           Initial Grant.  Promptly following the date of the first amendment to this Agreement on December 14, 2006 (the “Amendment Date”), the Company granted to Executive, under the Company’s Restated 1987 Stock Option Plan (As Amended and Restated April 7, 2006) (the “Equity Plan), a nonqualified  stock option (“Stock Option”) to purchase 500,0001 shares of the Company’s common stock (the “Initial Stock Option”).  The Initial Stock Option was granted to Executive at an exercise price per share equal to the closing price of the Company’s common stock on the Nasdaq Stock Market on the date of grant (the “Fair Market Value”) and vests and becomes exercisable, subject to Executive’s continued employment with the Company through each such vesting

 

1 This number and the number in the following paragraph were calculated based on an assumed pre-tax gain of $1.5 million after three years of 6% common stock price appreciation.

date, as follows: 11% on December 31, 2006, 1.83% on the last day of each month in 2007 (such that 33% has vested as of December 31, 2007), 2.83% on the last day of each month in 2008 (such that 67% would be vested as of December 31, 2008), 1.83% on the last day of each month in 2009 (such that 89% would be vested as of December 31, 2009) and 0.92% on the last day of each month in 2010 (such that 100% would be vested as of December 31, 2010).  The terms and conditions of the Initial Stock Option, including the applicable vesting conditions, have been set forth in a stock option agreement entered into by the Company and Executive which evidences the grant of the Initial Stock Option and, except as otherwise expressly provided herein, is consistent with the terms and conditions contained in stock option agreements provided to other key executives of the Company (any agreement evidencing a Stock Option grant, a “Stock Option Agreement”).  The Initial Stock Option is, subject to the provisions of this Section 1(b)(v)(A)(1), Sections 1(b)(v)(F) and (G) and 1(c)(iii)(A) below, governed in all respects by the terms of the Equity Plan and the applicable Stock Option Agreement.

(2)           Subsequent Grant.  On January 2, 2007, the Company granted to Executive, under the Equity Plan, a nonqualified Stock Option to purchase 188,000 shares of the Company’s common stock (the “Subsequent Stock Option”).  The Subsequent Stock Option was granted to Executive at an exercise price per share equal to the Fair Market Value and vests and becomes exercisable, subject to Executive’s continued employment with the Company through each such vesting date, as follows: 11% immediately and 1.83% on the last day of each month in 2007 (such that 33% vested as of December 31, 2007), 2.83% on the last day of each month in 2008 (such that 67% would be vested as of December 31, 2008), 1.83% on the last day of each month in 2009 (such that 89% would be vested as of December 31, 2009) and 0.92% on the last day of each month in 2010 (such that 100% would be vested as of December 31, 2010).  The terms and conditions of the Subsequent Stock Option, including the applicable vesting conditions, have been set forth in a stock option agreement entered into by the Company and Executive which evidences the grant of the Subsequent Stock Option and, except as otherwise expressly provided herein, is consistent with the terms and conditions contained in Stock Option Agreements provided to other key executives of the Company.  The Subsequent Stock Option is, subject to the provisions of this Section 1(b)(v)(A)(2), Sections 1(b)(v)(F) and (G) and 1(c)(iii)(A) below, governed in all respects by the terms of the Equity Plan and the applicable Stock Option Agreement.

(B)                 Time-Vesting Restricted Stock Unit Grants.  The grant, vesting and payment of the restricted stock unit grants described in this Section 1(b)(v)(B) are each subject to the provisions of Sections 1(b)(v)(F), (G), (I) and (J), Section 1(c)(iii)(A) and Section 1(g) below, as applicable.

(1)           Initial Grant.  On January 2, 2007, the Company granted to Executive, under the Equity Plan, a number of restricted stock units (“RSUs”) covering shares of Company common stock with a Fair Market Value of $500,000 (the “Initial Time-Vesting RSU Grant”).  The InitialTime-VestingRSU Grant, except as otherwise expressly provided herein, has been set forth in a restricted stock unit agreement between Executive and the Company that is consistent with the terms and conditions contained in restricted stock unit agreements provided to other key executives of the Company (any agreement evidencing a grant of RSUs, a “RSU Agreement”).  The InitialTime-Vesting RSU Grant shall vest on the third anniversary of the InitialTime-Vesting RSU Grant date, subject to Executive’s continued employment with the Company through such vesting date and the other provisions of this Agreement.  Shares of Company common stock shall be delivered in respect of RSUs vesting in accordance with this Section 1(b)(v)(B)(1) on or as soon as practicable after the third anniversary of the grant date of such RSUs, but in no event more than fifteen days after such third anniversary, with the exact payment date to be determined by the Company in its sole discretion.

(2)           Subsequent Grants.  On the first business day of each of 2008 and 2009, subject, in the case of 2009, to Executive’s continued employment with the Company through such date, the Company granted or shall grant to Executive, as applicable, under the Equity Plan, RSUs covering shares of Company common stock with a with a Fair Market Value of $500,000 (any such grant, a “Subsequent Time-Vesting RSU Grant”).  Each Subsequent Time-VestingRSU Grant is or shall be, as applicable, set forth in a RSU Agreement and shall vest, subject to Executive’s continued employment with the Company through each vesting date and the other provisions of this

Agreement, (i) with respect to the 2008 Subsequent Time-Vesting RSU Grant, as to 23/36ths  of the shares subject thereto on December 31, 2009 and as to  1/36th of the shares subject thereto on each monthly anniversary of the grant date thereafter, and (ii) with respect to the 2009 Subsequent Time-Vesting RSU Grant, as to 11/36ths  of the shares subject thereto on December 31, 2009 and as to 1/36th of the shares subject thereto on each monthly anniversary of the grant date thereafter, in each case, such that the Subsequent Time-Vesting RSU Grant shall have vested as to all shares subject thereto as of the third anniversary of the applicable grant date.  Shares of Company common stock shall be delivered in respect of RSUs vesting in accordance with this Section 1(b)(v)(B)(2) on or as soon as practicable after the third anniversary of the grant date of such RSUs, but in no event more than fifteen days after such third anniversary, with the exact payment date to be determined by the Company in its sole discretion.

(C)                 TSR Performance-Vesting RSU Grants.  The grant, vesting and payment of the restricted stock unit grants described in this Section 1(b)(v)(C) are each subject to the provisions of Sections 1(b)(v)(F), (G), (I) and (J), Section 1(c)(iii)(A) and Section 1(g) below, as applicable.

(1)           Initial Grant.  On January 2, 2007, the Company granted to Executive, under the Equity Plan, RSUs covering shares of Company common stock with a Fair Market Value of $500,000 (the “Initial TSR Performance-Vesting RSU Grant”).  The Initial TSR Performance-VestingRSU Grant is set forth in a RSU Agreement.  Subject to Executive’s continued employment with the Company through the end of the third calendar year following the date of grant (December 31, 2009) and the other provisions of this Agreement, on the last day of the third calendar year following the date of grant (December 31, 2009), a 0-100% percentage of the Initial TSR Performance-VestingRSU Grant shall vest based on the Company’s total share return performance compared to that of certain peer companies for the three years following the date of the grant (2007, 2008 and 2009), as specified below (the “Initial TSR Performance Goals”).  Shares of Company common stock shall be delivered in respect of RSUs vesting in accordance with this Section 1(b)(v)(C)(1) on December 31, 2009.

(2)           Subsequent Grants.  On the first business day of each of 2008 and 2009, subject, in the case of 2009, to Executive’s continued employment with the Company through such date, the Company granted or shall grant to Executive, as applicable, under the Equity Plan, RSUs covering shares of Company common stock with a Fair Market Value of $500,000 (any such grant, a “Subsequent TSR Performance-Vesting RSU Grant”).  Each Subsequent TSR Performance-VestingRSU Grant is or shall be, as applicable, set forth in a RSU Agreement.  Subject to Executive’s continued employment with the Company through the end of the third calendar year following the date of grant (inclusive of the year in which the grant is made) and the other provisions of this Agreement, on the last day of such third calendar year following the date of grant, a 0-100% percentage of the Subsequent TSR Performance-VestingRSU Grant shall vest based on the Company’s total share return performance compared to that of certain peer companies for such three-year period, as specified below (such performance goals determined with respect to any Subsequent TSR Performance-Vesting RSU Grant, “Subsequent TSR Performance Goals” and, together with the Initial TSR Performance Goals, the “TSR Performance Goals”).  Shares of Company common stock shall be delivered in respect of RSUs vesting in accordance with this Section 1(b)(v)(C)(2) on December 31, 2010 in respect of the 2008 grant and December 31, 2011 in respect of the 2009 grant.

(3)           TSR Performance Goals.  The TSR Performance Goals shall be based on the appreciation in the price of the Company’s common stock and dividends (assuming reinvestment in the stock) compared to certain peer companies agreed to by the Executive and the Company within the first 90 days of the first year of the grant and set forth in the minutes of the Compensation Committee.  The price appreciation will be measured as the difference between the average closing prices of the common stock of the Company and the peer companies on the first 20 trading days of the first calendar year and the last 20 trading days of the third calendar year.  For purposes of the calculation, the Company’s common stock price at the beginning of the first year shall be adjusted such that it would equal the price/EBITDA multiple for the peer companies.2  The mean (50th percentile) percentage

return of the peer companies will be calculated as the arithmetic average of the percentages of each.  The highest return of the peer companies will be the 100th percentile and the lowest return of the peer companies shall be the 0th percentile.3  On such basis compared to the selected companies, (1) for less than the 42.5th percentile the vesting percentage shall be 0%, (2) for between the 42.5th percentile and the mean (50th percentile) the vesting percentage shall be between 25% and 50% (based on a sliding scale), (3) for between the mean (50th percentile) and the 70th percentile the vesting percentage shall be between 50% and 83.5% (based on a sliding scale), (4) for between the 70th percentile and the 80th percentile the vesting percentage shall be between 83.5% and 100% (based on a sliding scale) and (5) for above the 80th percentile the vesting percentage shall be 100%.4

(D)                 EBITDA Performance-Vesting Restricted Stock Grants. The grant and vesting of the restricted stock described in this Section 1(b)(v)(D) are each subject to the provisions of Sections 1(b)(v)(F), (G), (I) and (J) below, as applicable.

(1)           Initial Grant.  On January 2, 2007, the Company granted to Executive, under the Equity Plan, a number of restricted shares of Company common stock (“Restricted Stock”) with a Fair Market Value of $500,000 (the “Initial EBITDA Performance-Vesting Restricted Stock Grant”).  The Initial EBITDA Performance-VestingRestricted Stock Grant is subject to restrictions (“Restrictions”) set forth in an agreement between Executive and the Company consistent with the terms and conditions contained in restricted stock agreements provided to other key executives of the Company (any agreement evidencing a grant of Restricted Stock, a “Restricted Stock Agreement”).  At the end of the third calendar year following the date of grant (December 31, 2009), a 0-100% percentage of the shares subject to the Initial EBITDA Performance-VestingRestricted Stock Grant specified (or certified) by the Compensation Committee shall vest and all Restrictions thereon shall lapse, if (and only if) (1) the Company has attained (with a target of 50%) the annual EBITDA growth goals for the first year following the date of the grant (2007) (the “Initial EBITDA Performance Goals”) and (2) Executive remains continuously employed with the Company through the end of the third calendar year following the date of grant (December 31, 2009).

(2)           Subsequent Grants.  On the first business day of 2008 and 2009, subject in the case of 2009 to Executive’s continued employment with the Company through such date, the Company granted or shall grant to Executive, as applicable, under the Equity Plan, a number of shares of Restricted Stock with a Fair Market Value of $500,000 (any such grant, a “Subsequent EBITDA Performance-Vesting Restricted Stock Grant”).  Each Subsequent EBITDA Performance-VestingRestricted Stock Grant is or shall be, as applicable, set forth in a Restricted Stock Agreement.  As of December 31, 2009, a 0-100% percentage of the shares subject to the Subsequent EBITDA Performance-VestingRestricted Stock Grant specified (or certified) by the Compensation Committee shall vest and all Restrictions thereon shall lapse, if (and only if) (1) the Company has attained (with a target of 50%) the annual EBITDA growth goals for the first year following the date of the grant (such EBITDA growth goals determined with respect to any Subsequent EBITDA Performance-Vesting Restricted Stock Grant, “Subsequent EBITDA Performance Goals” and, together with the Initial EBITDA Performance Goals, the “EBITDA Performance Goals” and, together with the TSR Performance Goals, the “Performance Goals”) and (2) Executive remains continuously employed with the

 

2 For example, if the Company’s closing stock price at the beginning of the first year reflects a multiple of the EBITDA for the twelve months ended September 30, 2006 of 12 and the mean closing stock price of the peer companies reflects a multiple of 10, the Company’s stock price at the beginning of the first year for purposes of the calculation would be reduced by 16.67%.

 

3 For example, if the total shareholder return for peer companies is 3%, 5% and 7%, (1) the 0th percentile shall be 3%, (2) the 35th percentile shall be 4.4%, (3) the 42.5th percentile shall be 4.7%, (4) the mean (50th percentile) shall be 5% (5) the 70th percentile shall be 5.8%, (6) the 80th percentile shall be 6.2%, and (7) the 100th percentile shall be 7%.

 

4 For example, if the median total shareholder return for the peer companies for 2007, 2008 and 2009 is 5% and the difference between the adjusted stock price of the Company’s common stock at the beginning of 2007 and the actual stock price of the Company’s common stock at the end of 2009 is 5%, 50% of the shares subject to the Initial TSR Performance-Vesting RSU Grant shall vest on December 31, 2009 subject to the other provisions of this Agreement.

Company through December 31, 2009.

(3)           EBITDA Performance Goals.  The EBITDA Performance Goals shall be adopted by the Compensation Committee in consultation with Executive no later than 90 days after the applicable grant date and shall be set such that that there is a reasonable likelihood of attainment of the target, which would result in 50% vesting of the Initial EBITDA Performance-Vesting Restricted Stock Grant or Subsequent EBITDA Performance-Vesting Restricted Stock Grant, as applicable.

(E)                 Stock Bonus.  Promptly following the Amendment Date, the Company made a one-time grant to Executive, under the Equity Plan, of 25,000 fully vested and unrestricted shares of the Company’s common stock (the “Stock Bonus”).

(F)                 Certain Events.  Notwithstanding the foregoing and the Executive Change of Control Agreement between the Company and Executive, dated December 11, 2008 (the “Executive Change of Control Agreement”), immediately prior to the earliest to occur of a Corporate Transaction (as defined in the Equity Plan) (and notwithstanding Section 18.3 of that Equity Plan), or a Change of Control (as defined in the Executive Change of Control Agreement) (together, “Corporate Events”) occurring during the Service Period, subject to Section 1(b)(iii)(I) and (J) and Section 1(g) hereof, as applicable:

(1)           any unvested Initial Stock Option and Subsequent Stock Option shall vest fully as set forth in the Executive Change of Control Agreement;

(2)           any Initial Time-Vesting RSU Grant and Subsequent Time-Vesting RSU Grant shall vest fully as set forth in the Executive Change of Control Agreement.  Shares in respect of such vested RSUs shall be delivered, (a) if such Corporate Event constitutes a “change in control event” within the meaning of Section 409A, on or as soon as practicable after the date on of such Corporate Event, but in no event more than fifteen days after such Corporate Event, with the exact payment date to be determined by the Company in its sole discretion, or (b) if such Corporate Event does not constitute a “change in control event” within the meaning of Section 409A, then within fifteen days after (with the exact payment date to be determined by the Company in its sole discretion) the earliest to occur of Executive’s “separation from service” (within the meaning of Section 409A(a)(2)(A)(i) of the Code, and Treasury Regulation Section 1.409A-1(h)) (“Separation from Service”), death or Disability, the occurrence of a “change in control event” with respect to Executive within the meaning of Section 409A or the third anniversary of the applicable grant date;

(3)           any unvested Initial TSR Performance-Vesting RSU Grant and Subsequent TSR Performance-Vesting RSU Grant shall vest in accordance with the attainment of the Performance Goals through the date of the Corporate Event (and not pro-rated for any time elapsed during the period).5  Shares in respect of such vested RSUs shall be delivered (a) if such Corporate Event constitutes a “change in control event” within the meaning of Section 409A, on or as soon as practicable after the date of such Corporate Event, but in no event more than fifteen days after such Corporate Event, with the exact payment date to be determined by the Company in its sole discretion, or (b) if such Corporate Event does not constitute a “change in control event” within the meaning of Section 409A, then within fifteen days after (with the exact payment date to be determined by the Company in its sole discretion) the earliest to occur of Executive’s Separation from Service, death or Disability, the occurrence of a “change in control event” with respect to Executive within the meaning of Section 409A or the third anniversary of the applicable grant date; and

(4)           any unvested Initial EBITDA Performance-Vesting Restricted Stock Grant and Subsequent EBITDA Performance-Vesting Restricted Stock Grant

 

5 For example, if such event occurs on June 30, 2008 and the TSR Performance Goals had been met at the maximum levels through such date, 100% of the Initial TSR Performance-Vesting RSU Grant and the Subsequent TSR Performance-Vesting RSU Grant made in 2008 shall vest.

shall vest (a) for years that have been completed, in accordance with the attainment of the Performance Goals for such year, and (b) for the year in which such event occurs, in accordance with the greater of the attainment of the Performance Goals for the prior year and the attainment of the Performance Goals to date in such year (and not pro-rated for any time elapsed during the year).6

(G)                 Forfeiture.

(1)           General.  Except as otherwise provided in this Agreement, all shares subject to the Initial Stock Option, the Subsequent Stock Option, the Initial Time-Vesting RSU Grant, any Subsequent Time-Vesting RSU Grant, the Initial TSR Performance-Vesting RSU Grant, any Subsequent TSR Performance-Vesting RSU Grant, the Initial EBITDA Performance-Vesting Restricted Stock Grant and any Subsequent EBITDA Performance-Vesting Restricted Stock Grant (together, the “2006 Equity Awards”) that have not vested and, in the case of any options, become exercisable, or with respect to which the Restrictions have not lapsed (after taking into consideration any vesting, exercisability and/or Restriction lapsing that may occur prior to or in connection with any termination of employment, as provided in this Agreement or any other agreement with Executive), as applicable, as of the earlier to occur of Executive’s termination of employment for any reason, a Corporate Event, the third anniversary of the applicable grant date or, in the case of Subsequent EBITDA Performance-Vesting Restricted Stock Grants only, December 31, 2009 (after taking into consideration any vesting and lapsing of Restrictions that may occur in connection with any termination or Corporate Event), shall be forfeited and canceled upon the earliest such event to occur , without consideration therefor.

(2)           Time-Vesting RSUs.  Notwithstanding Section 1(b)(v)(B) above, on or prior to December 31, 2009, in the event of Executive’s death, Disability or termination by the Company without Cause, and after December 31, 2009, in the event of  termination of Executive’s employment for any reason, including voluntarily by Executive, any unvested Initial Time-Vesting RSU Grant and Subsequent Time-Vesting RSU Grant shall vest immediately prior to such events, on a pro-rata basis (based on the number of months Executive worked since the date of grant) with respect to the shares constituting such grant.  Shares of Company common stock shall be delivered in respect of RSUs vesting in accordance with this Section 1(b)(v)(G)(2) on or as soon as practicable after the date of Executive’s Separation from Service or, if earlier, Executive’s death or Disability, but in no event more than fifteen days after any such event, subject to Section 1(g) of this Agreement, with the exact payment date to be determined by the Company in its sole discretion.

(3)           Performance-Vesting RSUs.  Notwithstanding Section 1(b)(v)(C) above, on or prior to December 31, 2009, in the event of Executive’s death, Disability or termination by the Company without Cause, and after December 31, 2009, in the event of  termination of Executive’s employment for any reason, including voluntarily by Executive, any unvested Initial TSR Performance-Vesting RSU Grant and Subsequent TSR Performance-Vesting RSU Grant shall vest in accordance with the attainment of the Performance Goals through the date of such event (and shall be pro-rated for time elapsed during the period).7 Shares in respect of RSUs that vest in accordance with this Section 1(b)(v)(G)(3) shall be delivered, subject to Section 1(g) of this Agreement, as soon as practicable after the earliest to occur of Executive’s Separation from Service, death, Disability or the third anniversary of the applicable grant date, but in no event more than fifteen days after such event, with the exact payment date to be determined by the Company in its sole discretion, and

(4)           EBITDA Performance-Vesting Restricted Stock.   Notwithstanding Section 1(b)(v)(D) above, on or prior to December 31, 2009, in the event of

 

6 For example, if such event occurs on June 30, 2008 and the EBITDA Performance Goals had been met at the maximum levels for 2007 and the first half of 2008, 100% of the Initial EBITDA Performance-Vesting Restricted Stock Grant and the Subsequent EBITDA Performance-Vesting Restricted Stock Grant made in 2008 shall vest.

 

7 For example, if such event occurs on June 30, 2008 and the TSR Performance Goals had been met at the maximum levels through such date, 50% of the Initial TSR Performance-Vesting RSU Grant and 16.67% of the Subsequent TSR Performance-Vesting RSU Grant made in 2008 shall vest.

Executive’s death, Disability or termination by the Company without Cause, any unvested Initial EBITDA Performance-Vesting Restricted Stock Grant and Subsequent EBITDA Performance-Vesting Restricted Stock Grant shall vest (I) for years that have been completed, in accordance with the attainment of the Performance Goals for such year, and (II) for the year in which such event occurs, in accordance with the attainment of the Performance Goals to date in such year (and pro-rated for time elapsed during the year).8

(5)           Cause.  If the Company terminates Executive’s employment for Cause, any outstanding 2006 Equity Awards (other than vested shares of Restricted Stock) shall be forfeited, as of the commencement of business on the date of such termination, with respect to all then-unpaid shares subject thereto, whether or not vested at the time of termination, without consideration therefor.

(H)                   INTENTIONALLY OMITTED

(I)                 Internal Revenue Code Section 162(m).  Notwithstanding anything contained herein to the contrary, if the Compensation Committee determines in its reasonable discretion that the Company’s tax deduction that would otherwise arise under Section 162 of the Code in connection with the vesting and delivery of any shares of Company common stock in respect of the Initial Time-Vesting RSU Grant, any Subsequent Time-Vesting RSU Grant, the Initial TSR Performance-Vesting RSU Grant and/or any Subsequent TSR Performance-Vesting RSU Grant, in any case, would be materially limited or reduced by the application of Section 162(m) of the Code, then, to the extent necessary to prevent such limitation or reduction, the Company may delay the delivery of such shares until the earliest practicable date in the earlier to occur of (a) the first year in which the Company reasonably anticipates that the delivery of such shares will not result in such limitation or reduction, or (b) the year in which Executive’s employment with the Company terminates, subject to Section 1 (g) of this Agreement.  For the avoidance of doubt, the provisions contained in this Section 1(b)(v)(I) are intended to comply with the permissible delay of certain payments described in Treas. Reg. Section 1.409A-2(b)(7)(i).

(J)           Employment Taxes.  Notwithstanding anything contained herein to the contrary, to the extent that any compensation payable hereunder, including without limitation, under any of the 2006 Equity Awards, constitutes “nonqualified deferred compensation” within the meaning of Section 409A, the payment of any such compensation may be accelerated to the greatest extent permitted under Treasury Regulation 1.409A-3(j)(4)(vi) to pay any taxes imposed under the Federal Insurance Contribution Act (“FICA”) on such compensation or under Code Section 3401 or corresponding withholding provisions of applicable state, local or foreign tax laws as income tax obligations arising in connection with any such acceleration, including any additional taxes attributable to pyramiding wages and taxes, provided, that the total of any such accelerated payment shall not exceed the applicable FICA and income tax obligations to which such accelerated payments relate.

(c)           Termination.

(i)           Events of Termination.  Executive’s employment with the Company shall cease upon:

(A) Executive’s death.

(B) Executive’s voluntary retirement.

(C)          Executive’s “Disability” means Executive has become disabled within the meaning of Section 409A.

 

8 For example, if such event occurs on June 30, 2008 and the EBITDA Performance Goals had been met at the maximum levels for 2007 and the first half of 2008, 100% of the Initial EBITDA Performance-Vesting Restricted Stock Grant and 50% of the Subsequent EBITDA Performance-Vesting Restricted Stock Grant made in 2008 shall vest.

(D)          Termination by the Company by the delivery to Executive of a written notice from the Board or the CEO that Executive has been terminated (“Notice of Termination”) with or without Cause.   “Cause” shall mean:

(1)           Executive’s (aa) conviction of a felony; (bb) Executive’s commission of any other material act or omission involving dishonesty or fraud with respect to the Company or any of its Affiliates or any of the customers, vendors or suppliers of the Company or its Subsidiaries; (cc) Executive’s misappropriation of material funds or assets of the Company for personal use; or (dd) Executive’s engagement in unlawful harassment or other discrimination with respect to the employees of the Company or its Subsidiaries;

(2)           Executive’s continued substantial and repeated neglect of his duties, after written notice thereof from the Board, and such neglect has not been cured within 30 days after Executive receives notice thereof from the Board;

(3)           Executive’s gross negligence or willful misconduct in the performance of his duties hereunder that is materially and demonstrably injurious to the Company;

(4)           Executive’s engaging in conduct constituting a breach of Sections 2  or 3  hereof that is not cured in full within 15 days, and is materially and demonstrably injurious to the Company, after  notice of default thereof, from the Company, as determined by a court of law.

In order for the termination to be effective: Executive must be notified in writing (which writing shall specify the cause in reasonable detail) of any termination of his employment for Cause.  Executive will then have the right, within ten days of receipt of such notice, to file a written request for review by the Company.  In such case, Executive will be given the opportunity to be heard, personally or by counsel, by the Board and a majority of the Directors must thereafter confirm that such termination is for Cause.  If the Directors do not provide such confirmation, the termination shall be treated as other than for Cause.  Notwithstanding anything to the contrary contained in this paragraph, Executive shall have the right after termination has occurred to appeal any determination by the Board that such termination was for “Cause” in accordance with the provisions of Section 7(f)  hereof.

The delivery by the Company of notice to Executive that it does not intend to renew this Agreement as provided in Section 1(f)  shall constitute a termination by the Company without Cause if, at the time of such notice, Executive is willing and able to renew the Agreement and continue providing services on terms and conditions substantially similar to those contained in this Agreement, provided, that in no event shall notice which fulfills the requirements of Section 1(c)(i)(D)(1) , (2) , (3) or (4)  above constitute a termination by the Company without Cause.

(E)           Executive’s voluntary resignation by the delivery to the Company and the Board of at least 30 days written notice from Executive that Executive has resigned with or without Good Reason.   “Good Reason” shall mean Executive’s resignation from employment with the Company after the occurrence of any one of the following:

(1)           the failure of the Company to pay an amount owing to Executive in breach of this Agreement; or

(2)           without Executive’s consent, a relocation of Executive’s principal work location from the Calabasas, California metropolitan area  that constitutes a material change in the geographic location at which he must perform services under this Agreement (within the meaning of Section 409A);

provided, that Executive’s resignation shall only constitute a resignation for “Good Reason” hereunder if

(I) Executive provides the Company with written notice setting forth in reasonable detail the facts or circumstances constituting Good Reason within thirty days after Executive becomes reasonably aware of the existence of such facts and circumstances, (or reasonably aware that there is a controversy between the Company’s interpretation of any payment obligation or principal work location requirement of this Agreement and the Executive’s interpretation of same), (II) the Company has failed to cure such facts or circumstances within thirty days after receipt of such written notice, and (III) the date of Executive’s Separation from Service occurs no later than thirty-five days after Executive gives notice of the event constituting Good Reason.

The delivery by Executive of notice to the Company that he does not intend to renew this Agreement as provided in Section 1(f)  shall constitute a resignation by Executive without Good Reason unless such notice fulfills the requirements of Section 1(c)(i)(E)(1) or (2)  above.

For the avoidance of doubt, in no event shall Executive’s ceasing to serve as the President of the Company, whether voluntarily or involuntarily, constitute Good Reason.

(ii)          Date of Termination.  “Date of Termination” means the date on which Executive experiences a Separation from Service.

(iii)         Rights on Termination.

(A)            In the event that termination is by the Company without Cause (including by operation of the last paragraph of Section 1(c)(i)(D) above) or by Executive with Good Reason and Executive experiences a Separation from Service as a result of such termination, subject to Section 1(g) below:

(1)                 The Company will pay Executive (i) an amount equal to 150% of the Annual Base Salary, payable over a period of eighteen (18) months commencing on the Date of Termination (the “Severance Period”) in substantially equal installments in accordance with Company payroll procedures applicable to senior executives of the Company, as in effect from time to time (but no less often than monthly), provided, that payment of the amounts described in this Section 1(c)(iii)(A)(1)(i) shall not commence until the Company’s first payroll date occurring on or after the 30th day following the Date of Termination (the “First Payroll Date”) and any amounts that would otherwise have been paid prior to the First Payroll Date shall instead be paid on the First Payroll Date, and (ii) a cash amount equal to the aggregate premiums that the Company would have paid for basic life insurance, accidental death and dismemberment insurance and long- and short-term disability insurance, each as in effect on the Date of Termination, had Executive remained employed by the Company during the Severance Period (together, “Insurance Benefits”).  In addition, during the Severance Period, subject to Executive’s proper election to continue healthcare coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), the Company will pay Executive’s COBRA premiums in respect of COBRA benefits to be provided through third-party insurance maintained by the Company under the Company’s benefit plans in a manner that causes such COBRA benefits to be exempt from the application of Section 409A under Treasury Regulation Section 1.409A-1(a)(5), provided, that if during the period of continuation coverage, any plan pursuant to which such benefits are to be provided ceases to be exempt from the application of Section 409A under Treasury Regulation Section 1.409A-1(a)(5), then an amount equal to each such remaining premium shall thereafter be paid to Executive as currently taxable compensation in substantially equal monthly installments over the remainder of the continuation coverage period; and

(2)                  Any unvested Initial Time-Vesting RSU Grant,  Subsequent Time-Vesting RSU Grant, Initial TSR Performance-Vesting RSU Grant, Initial EBITDA Performance-Vesting Restricted Stock Grant, Subsequent TSR Performance-Vesting RSU Grant and Subsequent EBITDA Performance-Vesting Restricted Stock Grant shall vest and be paid as provided elsewhere in this Agreement.

For purposes of paragraph (e) below, payments of Annual Base Salary, amounts in lieu of Insurance

Benefits, COBRA premiums and the accelerated vesting and lapsing of Restrictions with respect to any 2006 Equity Awards, in each case, as described in this Section 1(c)(iii)(A), are collectively referred to as “Severance Payments.”In addition, the Company will pay to Executive in a lump-sum the value of any accrued but unused vacation time.  This Section 1(c)(iii)(A)  shall not apply unless Executive has executed and not revoked a release in a form mutually acceptable to both the Company and Executive that is subject to paragraph (e) below.  In addition, the Company agrees that concurrently with Executive’s execution of such release, the Company shall execute a contingent mutual release in a form that is mutually acceptable to both the Company and Executive that is subject to paragraph (e) below.  Each payment under Section 1(c)(iii)(A) above shall be treated as a separate payment for purposes of Section 409A.

(B)           If the Company terminates Executive’s employment for Cause, or if Executive resigns without Good Reason (including by operation of the last paragraph of Section 1(c)(i)(E)), the Company’s obligations to pay any compensation or benefits under this Agreement (other than accrued but unused vacation time which shall be paid to Executive in a lump sum payment) and all vesting under all equity awards held by Executive will cease effective as of the date of termination.  Executive’s right to receive any other health or other benefits, if any, will be determined under the provisions of applicable plans, programs or other coverages.

(C)           If Executive’s employment terminates because of  Executive’s death or Disability,  then Executive or his estate shall be entitled to any disability income or life insurance payments from any insurance policies (other than any  “key man” life insurance policy) maintained by the Company.  In addition, in the event of such a termination, for a period of six (6) months commencing on the Date of Termination, Executive or his estate shall be entitled to payment of an amount equal to 50% of the Annual Base Salary, payable over six months from Executive’s death or Disability in approximately equal installments on regular salary payment dates.

Notwithstanding the foregoing, the Company’s obligation to Executive for Severance Payments shall cease if Executive is found by a court of law to be in material violation of the provisions of Sections 2 or 3  hereof. 

(d)          Mitigation. The Company’s obligation to continue to provide Executive with the Severance Payments pursuant to Section 1(c)(iii)(A)  above and the benefits pursuant to the second sentence of Section 1(c)(iii)(C)  above shall cease if Executive becomes employed as a senior executive by a third party.

(e)         Liquidated Damages. The parties acknowledge and agree that damages which will result to Executive for termination by the Company without Cause shall be extremely difficult or impossible to establish or prove, and agree that the Severance Payments shall constitute liquidated damages for any breach of this Agreement by the Company through the Date of Termination.  Executive agrees that, except for such other payments and benefits to which Executive may be entitled as expressly provided by the terms of this Agreement or any applicable Benefit Plan, such liquidated damages shall be in lieu of all other claims that Executive may make by reason of termination of his employment or any such breach of this Agreement and that, as a condition to receiving the Severance Payments, Executive will execute a contingent mutual release of claims in a form reasonably satisfactory to both the Company and Executive.

 (f)           Term of Employment.  Unless Executive’s employment under this Agreement is sooner terminated as a result of Executive’s termination in accordance with the provisions of Section 1(c) above, Executive’s employment under this Agreement shall continue through December 31, 2009 (the “Service Term”); provided, however, that Executive’s employment under this Agreement, and the Service Term, shall be automatically renewed for additional one-year periods commencing on December 31, 2009 and, thereafter, on each successive anniversary of such date unless either the Company or Executive notify the other party in writing within ninety (90) days prior to any such anniversary that it or he desires not to renew Executive’s employment under this Agreement.  All references herein to “Service Term” shall include any renewals thereof after the third anniversary of the Amendment Date.

(g)         Potential Six-Month Delay.  Notwithstanding anything to the contrary in this Agreement,  no compensation or benefits, including without limitation any Severance  Payments or payments in respect of any 2006 Equity Awards in connection with a Separation from Service, shall be paid to Executive during the 6-month period following his Separation from Service to the extent that the Company reasonably determines that Executive is a “specified employee” at the time of such Separation from Service (within the meaning of Section 409A) and that paying such amounts at the time or times indicated in this Agreement would be a prohibited distribution under Section 409A(a)(2)(b)(i) of the Code.  If the payment of any such amounts is delayed as a result of the previous sentence, then on the first business day following the end of such 6-month period (or such earlier date upon which such amount can be paid under Section 409A without being subject to such additional taxes, including as a result of Executive’s death), the Company shall pay to Executive a lump-sum amount equal to the cumulative amount that would have otherwise been payable to Executive during such 6-month period, without interest thereon.

2.             Confidential Information; Proprietary Information, etc.

(a)          Obligation to Maintain Confidentiality. Executive acknowledges that any Proprietary Information disclosed or made available to Executive or obtained, observed or known by Executive as a direct or indirect consequence of his employment with or performance of services for the Company or any of its Affiliates during the course of his performance of services for, or employment with, any of the foregoing Persons (whether or not compensated for such services) and during the period in which Executive is receiving Severance Payments, are the property of the Company and its Affiliates.  Therefore, Executive agrees that he will not at any time (whether during or after Executive’s term of employment) disclose or permit to be disclosed to any Person or, directly or indirectly, utilize for his own account or permit to be utilized by any Person any Proprietary Information or Records for any reason whatsoever without the Board’s consent, unless and to the extent that (except as otherwise provided in the definition of Proprietary Information) the aforementioned matters become generally known to and available for use by the public other than as a direct or indirect result of Executive’s acts or omissions to act. Executive agrees to deliver to the Company at the termination of his employment, as a condition to receipt of the next or final payment of compensation, or at any other time the Company may request in writing (whether during or after Executive’s term of employment), all Records which he may then possess or have under his control. Executive further agrees that any property situated on the Company’s or its Affiliates’ premises and owned by the Company or its Affiliates, including disks and other storage media, filing cabinets or other work areas, is subject to inspection by Company or its Affiliates and their personnel at any time with or without notice.  Nothing in this Section 2(a) shall be construed to prevent Executive from using his general knowledge and experience in future employment so long as Executive complies with this Section 2(a) and the other restrictions contained in this Agreement.

(b)          Ownership of Property. Executive acknowledges that all inventions, innovations, improvements, developments, methods, processes, programs, designs, analyses, drawings, reports and all similar or related information  (whether or not patentable) that relate to the Company’s or any of its Affiliates’ actual or anticipated business, research and development, or existing or future products or services and that are conceived, developed, contributed to, made, or reduced to practice by Executive (either solely or jointly with others) while employed by the Company or any of its Affiliates (including any of the foregoing that constitutes any Proprietary Information or Records) (“Work Product”) belong to the Company or such Affiliate and Executive hereby assigns, and agrees to assign, all

of the above Work Product to the Company or such Affiliate.  Any copyrightable work prepared in whole or in part by Executive in the course of his work for any of the foregoing entities shall be deemed a “work made for hire” under the copyright laws, and the Company or such Affiliate shall own all rights therein. To the extent that any such copyrightable work is not a “work made for hire,” Executive hereby assigns and agrees to assign to Company or such Affiliate all right, title and interest, including without limitation, copyright in and to such copyrightable work.  Executive shall promptly disclose such Work Product and copyrightable work to the Board and perform all actions reasonably requested by the Board (whether during or after Executive’s term of employment) to establish and confirm the Company’s or its Affiliate’s ownership (including, without limitation, execution of assignments, consents, powers of attorney and other instruments).  Notwithstanding anything contained in this Section 2(b)  to the contrary, the Company’s ownership of Work Product does not apply to any invention that Executive develops entirely on his own time without using the equipment, supplies or facilities of the Company or its Affiliates or Subsidiaries or any Proprietary Information (including trade secrets), except that the Company’s ownership of Work Product does include those inventions that:  (a) relate to the business of the Company or its Affiliates or Subsidiaries or to the actual or demonstrably anticipated research or development relating to the Company’s business; or (b) result from any work that Executive performs for the Company or its Affiliates or Subsidiaries.

(c)          Third Party Information. Executive understands that the Company and its Affiliates will receive from third parties confidential or proprietary information (“Third Party Information”) subject to a duty on the Company’s and its Affiliates’ part to maintain the confidentiality of such information and to use it only for certain limited purposes.  During the term of Executive’s employment and thereafter, and without in any way limiting the provisions of Sections 2(a)  and 2(b)  above, Executive shall hold Third Party Information in the strictest confidence and shall not disclose to anyone (other than personnel of the Company or its Affiliates who need to know such information in connection with their work for the Company or its Affiliates) or use, except in connection with his work for the Company or its Affiliates, Third Party Information unless expressly authorized by a member of the Board in writing.

(d)          Use of Information of Prior Employers, etc. Executive will abide by any enforceable obligations contained in any agreements that Executive has entered into with his prior employers or other parties to whom Executive has an obligation of confidentiality.

(e)          Compelled Disclosure. If Executive is required by law or governmental regulation or by subpoena or other valid legal process to disclose any Proprietary Information or Third Party Information to any Person, Executive will immediately provide the Company with written notice of the applicable law, regulation or process so that the Company may seek a protective order or other appropriate remedy.  Executive will cooperate fully with the Company and the Company’s Representatives in any attempt by the Company to obtain any such protective order or other remedy.  If the Company elects not to seek, or is unsuccessful in obtaining, any such protective order or other remedy in connection with any requirement that Executive disclose Proprietary Information or Third Party Information, and if Executive furnishes the Company with a written opinion of reputable legal counsel acceptable to the Company confirming that the disclosure of such Proprietary Information or Third Party Information is legally required, then Executive may disclose such Proprietary Information or Third Party Information to the extent legally required;  provided, however,  that Executive will use his reasonable best efforts to ensure that such Proprietary Information is treated confidentially by each Person to whom it is disclosed.

3.             Nonsolicitation.

(a)          Nonsolicitation. As long as Executive is an employee of the Company or any Affiliate thereof, and for eighteen (18) months thereafter, Executive shall not directly or indirectly through another entity: (i) induce or attempt to induce any employee of the Company or any Affiliate to leave the employ of the Company or such Affiliate, or in any way interfere with the relationship between the Company or any Affiliate and any employee thereof; (ii) hire or employ any person who was an employee of the Company or any Affiliate at any time during the nine (9) month period immediately

preceding the date of such Executive’s termination; (iii) induce or attempt to induce any customer, client, supplier, licensee or other business relation of the Company or any Affiliate to cease doing business with the Company or such Affiliate, or in any way interfere with the relationship between any such customer, client, supplier, licensee or business relation and the Company or any Affiliate; (iv) call on, solicit or service any Person who was a customer or client of the Company or any Affiliate or (v) call on, solicit or service any Person who was Prospective Client for any purpose which directly or indirectly competes with the business of the Company.  For purposes hereof, a  “Prospective Client”  means any Person whom the Company or any of its Affiliates has entertained discussions with to become a client or customer at any time during the twelve (12) month period immediately preceding the date of such Executive’s termination.

(b)          Acknowledgment. Executive acknowledges that in the course of his employment with the Company and its Affiliates, he has and will become familiar with the trade secrets and other Proprietary Information of the Company and its Affiliates. It is specifically recognized by Executive that his services to the Company and its Subsidiaries are special, unique and of extraordinary value, that the Company has a protectable interest in prohibiting Executive as provided in this Section 3 , that money damages are insufficient to protect such interests, that there is adequate consideration being provided to Executive hereunder, that such prohibitions are necessary and appropriate without regard to payments being made to Executive hereunder and that the Company would not enter this Agreement with Executive without the restriction of this Section 3 . Executive further acknowledges that the restrictions contained in this Section 3 do not impose an undue hardship on him and, since he has general business skills which may be used in industries other than that in which the Company and its Subsidiaries conduct their business, do not deprive Executive of his livelihood.  Executive further acknowledges that the provisions of this Section 3 are separate and independent of the other sections of this Agreement.

(c)          Enforcement, etc.  If, at the time of enforcement of Section 2 or 3 of this Agreement, a court holds that the restrictions stated herein are unreasonable under circumstances then existing, the parties hereto agree that the maximum duration, scope or geographical area reasonable under such circumstances as determined by the court shall be substituted for the stated period, scope or area.  Because Executive’s services are unique, because Executive has access to Proprietary Information and for the other reasons set forth herein, the parties hereto agree that money damages would be an inadequate remedy for any breach of this Agreement.  Therefore, without limiting the generality of Section 7(g), in the event of a breach or threatened breach of this Agreement, the Company or its successors or assigns may, in addition to other rights and remedies existing in their favor, apply to any court of competent jurisdiction for specific performance and/or injunctive or other relief in order to enforce, or prevent any violations of, the provisions hereof.

(d)           Submission to Jurisdiction.  The parties hereby: (i) submit to the jurisdiction of any state or federal court sitting in California in any action or proceeding arising out of or relating to Section 2 and/or 3 of this Agreement; (ii) agree that all claims in respect of such action or proceeding may be heard or determined in any such court; and (iii) agree not to bring any action or proceeding arising out of or relating to Section 2 and/or 3 of this Agreement in any other court.  The parties hereby waive any defense of inconvenient forum to the maintenance of any action or proceeding so brought and waives any bond, surety or other security that might be required of any other party with respect thereto. The parties hereby agree that a final judgment in any action or proceeding so brought shall be conclusive and may be enforced by suit on the judgment or in any other manner provided by law.

GENERAL PROVISIONS

4.             Definitions.

“Affiliate” of any Person means any other Person which directly or indirectly controls, is controlled by or is under common control with such Person.

“Board” means the Company’s board of directors or the board of directors or similar management body of any successor of the Company.

“EBITDA” means adjusted earnings before interest, taxes, depreciation and amortization, as the term adjusted EBITDA is defined in the Company’s Annual Incentive Award Targets for the applicable calendar year.

“Proprietary Information” means any and all data and information concerning the business affairs of the Company or any of its Affiliates and not generally known in the industry in which the Company or any of its Affiliates is or may become engaged, and any other information concerning any matters affecting or relating to the Company’s or its Affiliates businesses, but in any event Proprietary Information shall include, any of the Company’s and its Affiliates’ past, present or prospective business opportunities, including information concerning acquisition opportunities in or reasonably related to the Company’s or its Affiliates businesses or industries, customers, customer lists, clients, client lists, the prices the Company and its Affiliates obtain or have obtained from the sale of, or at which they sell or have sold, their products, unit volume of sales to past or present customers and clients, or any other information concerning the business of the Company and its Affiliates, their manner of operation, their plans, processes, figures, sales figures, projections, estimates, tax records, personnel history, accounting procedures, promotions, supply sources, contracts, know-how, trade secrets, information relating to research, development, inventions, technology, manufacture, purchasing, engineering, marketing, merchandising or selling, or other data without regard to whether all of the foregoing matters will be deemed confidential, material or important.  Proprietary Information does not include any information which Executive has obtained from a Person other than an employee of the Company, which was disclosed to him without a breach of a duty of confidentiality.

“Records” means (i) any and all procedure manuals, books, records and accounts; (ii) all property of the Company and its Affiliates, including papers, note books, tapes and similar repositories containing Proprietary Information; (iii) all invoices and commission reports; (iv) customer lists — partial and/or complete; (v) data layouts, magnetic tape layouts, diskette layouts, etc.; (vi) samples; (vii) promotional letters, brochures and advertising materials; (viii) displays and display materials; (ix) correspondence and old or current proposals to any former, present or prospective customer of the Company and its Affiliates; (x) information concerning revenues and profitability and any other financial conditions of the Company and its Affiliates; (xi) information concerning the Company and its Affiliates which was input by Executive or at his direction, under his supervision or with his knowledge, including on any floppy disk, diskette, cassette or similar device used in, or in connection with, any computer, recording devices or typewriter; (xii) data, account information or other matters furnished by customers of the Company and its Affiliates; and (xiii) all copies of any of the foregoing data, documents or devices whether in the form of carbon copies, photo copies, copies of floppy disks, diskettes, tapes or in any other manner whatsoever.

“Person” means an individual, a partnership, a limited liability company, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof.

“Subsidiary” means any corporation of which the Company owns securities having a majority of the ordinary voting power in electing the board of directors directly or through one or more subsidiaries.

5.            Notices. Any notice provided for in this Agreement must be in writing and must be either personally delivered, mailed by first class United States mail (postage prepaid, return receipt requested) or sent by reputable overnight courier service (charges prepaid) or by facsimile to the recipient at the address below indicated:

If to Executive:
	Peter T. Dameris
	26651 West Agoura Road
	Calabasas, California 91302

	Tel No.:			(818) 878-7900
If to the Company:
		26651 West Agoura Road
		Calabasas, California 91302
		Attention:				General Counsel
		Tel No.:				(818) 871-3300
		Fax No.:				(818) 880-0056
			with a copy to:
			Hogan & Hartson, LLP
			555 Thirteenth Street, N.W.
			Washington, D.C.  20004
			Attention:		J. Hovey Kemp
			Tel No.:		(202) 637-5623
			Fax No.:		(202) 637-5910

 or such other address or to the attention of such other person as the recipient party shall have specified by prior written notice to the sending party.

6.            Executive’s Representations and Warranties.  Executive represents and warrants that he has full and authority to enter into this Agreement and fully to perform his obligations hereunder, that he is not subject to any non-competition agreement, and that his past, present and anticipated future activities have not and will not infringe on the proprietary rights of others, including, but not limited to, proprietary information rights or interfere with any agreements he has with any prior employee.  Executive further represents and warrants that he is not obligated under any contract (including licenses, covenants or commitments of any nature) or other agreement, or subject to any judgment, decree or order of any court or administrative agency, which would conflict with or result in a breach of this Agreement or which would in any manner interfere with the performance of his duties for the Company.

7.        Section 409A.

(a)           General.  The payments and benefits provided hereunder are intended to be exempt from or compliant with the requirements of Section 409A.  Notwithstanding any provision of this Agreement to the contrary, in the event that following the effective date hereof, the Company reasonably determines that any payments or benefits hereunder are not either exempt from or compliant with the requirements of Section 409A, the Company and Executive shall work together to adopt such amendments to this Agreement or adopt such other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that are necessary or appropriate (i) to preserve the intended tax treatment of the payments and benefits provided hereunder, to preserve the economic benefits with respect to such payments and benefits, and/or (ii) to exempt such payments and benefits from Section 409A or to comply with the requirements of Section 409A and thereby avoid the application of penalty taxes thereunder, provided¸ that the Company shall have no obligation to take any action described in this Section 7(a) or to indemnify Executive for any failure to take any such action.

(b)           Certain Reimbursements.  To the extent that any reimbursements hereunder constitute taxable compensation to Executive, such reimbursements shall be made to Executive promptly, but in no event after December 31st of the year following the year in which the expense was incurred, the amount of any such amounts reimbursed in one year shall not affect the amount eligible for reimbursement in any subsequent year, and Executive’s right to reimbursement of any such expenses shall

not be subject to liquidation or exchange for any other benefit.

8.         General Provisions.

(a)          Expenses. Each party shall bear his or its own expenses in connection with the negotiation and execution of this Agreement and the consummation of the transactions contemplated by this Agreement.

(b)          Severability.  Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

(c)          Complete Agreement. This Agreement and those documents expressly referred to herein embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way, including without limitation, the Prior Agreement (as amended).

(d)          Counterparts; Facsimile Transmission. This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement. Each party to this Agreement agrees that it will be bound by its own telecopied signature and that it accepts the telecopied signature of each other party to this Agreement.

(e)          Successors and Assigns. Except as otherwise provided herein, this Agreement shall bind and inure to the benefit of and be enforceable by Executive, the Company and their respective successors and assigns; provided that the rights and obligations of Executive under this Agreement shall not be assignable and, provided further that, the rights and obligations of the Company may be assigned to any Affiliate of the Company.

(f)           Choice of Law; Jurisdiction. All questions concerning the construction, validity and interpretation of this Agreement and the exhibits hereto will be governed by and construed in accordance with the internal laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.  The parties hereby: (i) submit to the jurisdiction of any state or federal court sitting in California in any action or proceeding arising out of or relating to Agreement; (ii) agree that all claims in respect of such action or proceeding may be heard or determined in any such court; and (iii) agree not to bring any action or proceeding arising out of or relating to this Agreement in any other court. Executive hereby waives any defense of inconvenient forum to the maintenance of any action or proceeding so brought and waives any bond, surety or other security that might be required of any other party with respect thereto. The parties hereby agree that a final judgment in any action or proceeding so brought shall be conclusive and may be enforced by suit on the judgment or in any other manner provided by law.

(g)          Remedies. Each of the parties to this Agreement will be entitled to enforce its rights under this Agreement specifically, to recover damages and costs (including attorney’s fees) caused by any breach of any provision of this Agreement and to exercise all other rights existing in its favor. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that any party may in its sole discretion apply to any court of law or equity of competent jurisdiction (without posting any bond or deposit) for specific performance and/or other injunctive relief in order to enforce or prevent any violations of the provisions of this Agreement.

(h)          Amendment and Waiver. The provisions of this Agreement may

be amended or waived only with the prior written consent of the Company and Executive.

(i)           Business Days. If any time period for giving notice or taking action hereunder expires on a day which is a Saturday, Sunday or holiday in the state in which the Company’s chief executive office is located, the time period shall be automatically extended to the business day immediately following, such Saturday, Sunday or holiday.

(j)           Termination. This Agreement shall survive the termination of Executive’s employment with the Company and shall remain in full force and effect after such termination.

(k)          No Waiver. A waiver by any party hereto of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which such party would otherwise have on any future occasion.  No failure to exercise nor any delay in exercising on the part of any party hereto, any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  The rights and remedies herein provided are cumulative and may be exercised singly or concurrently, and are not exclusive of any rights or remedies provided by law.

(l)           Insurance.  The Company, at its discretion, may apply for and procure in its own name for its own benefit life and/or disability insurance on Executive in any amount or amounts considered available. Executive agrees to cooperate in any medical or other examination, supply any information, and to execute and deliver any applications or other instruments in writing as may be reasonably necessary to obtain and constitute such insurance. Executive hereby represents that he has no reason to believe that his life is not insurable at rates now prevailing for healthy men of his age.

(m)         Offset.  Whenever the Company or any of its Subsidiaries is obligated to pay any sum to Executive or any Affiliate or related person thereof pursuant to this Agreement, any bona fide debts that Executive or such Affiliate or related person owes to the Company or any of its Subsidiaries may be deducted from that sum before payment, to the greatest extent permitted under applicable law.

 (n)          Indemnification and Reimbursement of Payments on Behalf of Executive.  The Company and its Subsidiaries shall be entitled to deduct or withhold from any amounts owing from the Company or any of its Subsidiaries to Executive any federal, state, provincial, local or foreign withholding taxes, excise taxes, or employment taxes ( “Taxes” ) imposed with respect to Executive’s compensation or other payments from the Company or any of its Subsidiaries or Executive’s ownership interest in the Company, including, but not limited to, wages, bonuses, dividends, the receipt or exercise of stock options and/or the receipt or vesting of restricted stock.

(o)         Insurance and Indemnification.  For the period from the date of this Agreement through at least the tenth anniversary of the Employee’s termination of employment from the Employer, the Employer shall maintain Executive as an insured party on all directors’ and officers’ insurance maintained by the Employer for the benefit of its directors and officers on at least the same basis as all other covered individuals and provide the Employee with at least the same corporate indemnification as it provides to the peer executives of the Employer.

(p)        Clawback.  To the extent permitted under applicable law, Executive agrees to reimburse the Company for amounts determined by final judicial process to be due to the Company pursuant to Section 304 of the Sarbanes-Oxley Act of 2002.

[THIS SPACE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS]

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

ON ASSIGNMENT, INC.
By:	/s/ Jeremy Jones
	JEREMY JONES
/s/ Peter T. Dameris
PETER T. DAMERIS

EX-10.17

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as of December 30, 2008, (the “Effective Date”) by and among Oxford Global Resources, Inc. (the “Company”), On Assignment, Inc. (“OA”) and Michael J. McGowan (“Executive”).

RECITALS

A.     The Company, OA and Executive previously entered into an agreement, dated January 3, 2007, pursuant to which Executive is employed as the President of the Company (the “Prior Agreement”).

B.      The Company, OA and Executive wish to amend and restate the Prior Agreement to implement changes required under Internal Revenue Code Section 409A (together with the regulations and official interpretations thereof, “Section 409A”).

AGREEMENT

1.           Employment Term.  Subject to the provisions for earlier termination hereinafter provided, Executive’s employment shall continue for a term commencing on the Effective Date and ending on December 31, 2009 (the “Initial Termination Date”); provided, that this Agreement shall be automatically extended for one additional year on the Initial Termination Date and on each subsequent anniversary of the Initial Termination Date unless either Executive or the Company elects not to so extend such term by notifying the other party, in accordance with Section 8 below, of such election not less than ninety (90) days prior to the Initial Termination Date, or any anniversary thereof, as applicable (in any case, the “Employment Period”).

2.           Position and Duties.

(a)           Position.  During the Employment Period, Executive shall serve as President of the Company and shall perform such employment duties as are usual and customary for such position.  Executive shall report to the Chief Executive Officer of OA (currently Peter Dameris).  OA shall retain full direction and control of the means and methods by which Executive performs the above services.  At OA’s reasonable request, Executive shall serve OA, the Company and/or their Affiliates in such other offices and capacities in addition to the foregoing as the Company shall designate, consistent with Executive’s position, without additional compensation beyond that specified in this Agreement.  For purposes of this Agreement, “Affiliate” shall mean each entity in any chain of parent entities or subsidiary entities with either of OA or the Company, as well as each majority-owned entity of any such parent entity or subsidiary entity, and their respective successors.

(b)           Place of Employment.  During the Employment Period, Executive shall

perform the services required by this Agreement at the Company’s principal offices in Beverly, MA, unless otherwise mutually agreed upon by the parties.  Notwithstanding the foregoing, Executive may from time to time be required to travel temporarily to other locations on the Company’s or its Affiliates’ business, as may be reasonably requested.

(c)           Right to Attend Board Meetings.  Executive shall be entitled, during the Employment Period, to attend in-person meetings of the Board of Directors of OA (the “Board”), attend telephonic Board meetings and receive Board packages, in each case, to the same extent as other  Division Presidents of the Company, provided, that nothing herein shall or shall be construed so as to entitle Executive to be elected to serve on the Board or to participate (beyond being present in person or telephonically, as applicable) in any such meeting.

(d)           Exclusivity.  During the Employment Period, except for such other activities as the Board’s Compensation Committee (the “Committee”) shall approve in writing in its sole discretion, Executive shall devote his entire business time, attention and energies to the business and affairs of the Company and its Affiliates, to the performance of Executive’s duties under this Agreement and to the promotion of the Company’s interests, and shall not (i) accept any other employment, directorship or consultancy, or (ii) engage, directly or indirectly, in any other business activity (whether or not pursued for pecuniary advantage) that is or may be competitive with, or that might place Executive in a competing position to, that of the Company or its Affiliates.

3.           Compensation.

(a)           Base Salary.  During the Employment Period, the Company shall pay Executive a base salary (the “Base Salary”), (i) initially set at three hundred and twenty thousand dollars ($320,000) per year, and (ii) beginning in calendar year 2008, at no less than three hundred and forty-five thousand dollars ($345,000) per year, subject thereafter to annual review and increase (but not decrease) in the sole discretion of the Committee and payable in accordance with the Company’s normal payroll procedures applicable to similarly situated executives of the Company, as in effect from time to time.

(b)           Annual Bonus.  In addition to the Base Salary, Executive shall be eligible to earn an annual bonus in respect of each calendar year during the Employment Period beginning in calendar year 2007, as described below (each, an “Annual Bonus”), subject in each case to Executive’s continued employment through the date on which annual bonuses are paid generally to the Company’s senior executives or, if earlier, March 30th of the year immediately following that in which such Annual Bonus is earned (if March 30th precedes the date on which annual bonuses are paid generally to the Company’s senior executives for any year, then the Annual Bonus for such year shall, to the extent payable, be paid to Executive as soon as practicable after such March 30th , but in no event later than ninety (90) days following the Executive’s Date of Termination).  In respect of calendar years during the Employment Period beginning after 2007, any Annual Bonus shall be determined by reference to the attainment of objective performance criteria, which criteria shall be determined by the Committee within sixty (60) days after the start of the applicable calendar year.  The potential amount of each such subsequent Annual Bonus shall range from zero to one hundred percent (0 – 100%) of the then-applicable Base Salary, with payouts structured substantially similar to the 2007 Annual Bonus

payouts (e.g., cliff payout of fifty percent (50%) of Base Salary upon attainment of target(s) and then incremental payout to one hundred percent (100%) of Base Salary for above-target performance; for the avoidance of doubt, the performance criteria and targets applicable to such subsequent Annual Bonuses may vary from those applicable to the 2007 Annual Bonus).

(c)           Additional Synergy Incentive Bonus.  In addition to the Base Salary and any Annual Bonuses, during each of the first two years of the Employment Period, Executive shall be eligible to earn an additional synergy incentive bonus of up to one hundred thousand dollars  ($100,000) per year (the “Synergy Bonus”) in respect of certain synergy savings relating to the post-Merger integration of OA and the Company, as follows: (i) the Synergy Bonus shall become payable as to twenty thousand dollars ($20,000) on each quarterly anniversary of the Effective Date during the first two (2) years of the Employment Period, subject to Executive’s continued employment through each such quarterly anniversary (“Component A”), and (ii) if, during the first two (2) years of the Employment Period, the Company attains synergy performance objectives established by the Committee, the Synergy Bonus may become payable with respect to up to an additional twenty thousand dollars ($20,000) for each such year (“Component B”), at such time or times as the Committee shall determine, subject to Executive’s continued employment through date on which the Committee determines that Component B has been attained, which shall be the payment date of such Component B.  Determinations as to whether and when Component B performance objectives have been attained shall be made in the sole discretion of the Committee.  Provided that the Committee determines that such Component B performance objectives have been attained, payment of Component B shall occur as soon as reasonably practicable following the determination of the Committee, but in no event more than fifteen (15) days after such determination, with the exact payment date to be set by the Company in its sole discretion. No Synergy Bonus shall become payable with respect to employment beyond the second anniversary of the Effective Date.

(d)           Stock Option.  Subject to approval by the Committee, as soon as practicable following January 3, 2007, OA shall grant to Executive a nonqualified option to purchase one hundred twenty thousand (120,000) shares of OA common stock (the “Option”).  The Option shall be granted to Executive at an exercise price per share equal to one hundred percent (100%) of the fair market value of a share of OA common stock on the date of grant, as determined by the Committee. Subject to Executive’s continued employment with the Company through each such date, the Option shall vest and become exercisable with respect to seven thousand, five hundred (7,500) of the shares subject thereto on each quarterly anniversary of the date of grant of the Option (the “Option Grant Date”), such that the Option shall be vested and exercisable with respect to all shares subject thereto (subject to Executive’s continued employment) on the fourth (4th) anniversary of the Option Grant Date.  Consistent with the foregoing, the terms and conditions of the Option, including the applicable vesting conditions, shall be set forth in an Option grant agreement to be entered into by OA and Executive in a form prescribed by OA which shall evidence the grant of the Option (the “Option Agreement”).  The Option shall, subject to the provisions of this Section 3(d), be governed in all respects by the terms of the applicable Option Agreement.

(e)           Restricted Stock Units.  Subject to approval by the Committee, as soon as practicable following the January 3, 2007, OA shall grant to Executive sixty thousand (60,000) restricted stock units (the “RSUs”) under the OA Restated 1987 Stock Option Plan, as amended

and restated April 7, 2006 (the “Equity Plan”).  The RSU grant shall vest as to three thousand, seven hundred and fifty (3,750) RSUs on each quarterly anniversary of the date of grant of the RSUs (the “RSU Grant Date”), subject to Executive’s continued employment with the Company through each such vesting date, such that all of the RSUs shall be vested (subject to Executive’s continued employment) on the fourth (4th) anniversary of the RSU Grant Date.  Shares of the Company common stock shall be delivered in respect of RSUs vesting in accordance with this Section 3(e) on or as soon as practicable after the applicable vesting date of such RSUs, but in no event more than fifteen (15) days after such vesting date, with the exact payment date to be determined by the Company in its sole discretion. Consistent with the foregoing, the terms and conditions of the RSUs shall be set forth in a RSU grant agreement to be entered into by OA and Executive in a form prescribed by OA which shall evidence the grant of the RSUs (the “RSU Agreement”).  The RSUs shall, subject to the provisions of this Section 3(e), be governed in all respects by the terms of the Equity Plan and the applicable RSU Agreement.

(f)           Benefit Plans.  During the Employment Period, Executive and Executive’s legal dependents shall be eligible to participate in the welfare benefit plans, policies and programs (including, if applicable, medical, dental, disability, life and accidental death insurance plans and programs) maintained by the Company for its senior executives.  In addition, Executive shall be eligible to participate in such incentive, savings and retirement plans, policies and programs as are made available to similarly situated executives of the Company, provided, that the Company shall have no obligation, in any case, to adopt, maintain or continue any such plans, policies or programs.

(g)           Additional Perquisites.  In addition to the compensation and benefits described above in this Section 3, during the Employment Period, the Company shall pay or reimburse Executive for actual, properly substantiated expenses incurred by Executive in connection with (i) the lease or purchase of an automobile, not to exceed five hundred dollars ($500) per month; (ii) an annual physical examination, not to exceed one thousand, five hundred dollars ($1,500) per calendar year; and (iii) tax preparation and financial planning, not to exceed two thousand, five hundred dollars ($2,500) per calendar year.  On all international and all transcontinental North American airplane flights, Executive shall be entitled to fly business class or, if any flight offers only two classes of service, first class.

(h)           Vacation.  During the Employment Period, Executive shall be entitled to four (4) weeks of paid vacation per calendar year, pro rated for any service by Executive during any partial calendar year, provided, that Executive shall not accrue any vacation time in excess of four (4) weeks (for the avoidance of doubt, vacation shall stop accruing at four (4) weeks and accrual shall not re-commence until accrued vacation falls below four (4) weeks, but up to four (4) weeks of accrued vacation may be carried forward to any succeeding calendar year).

(i)           Expenses.  During the Employment Period, Executive shall be entitled to receive prompt reimbursement of all reasonable business expenses incurred by Executive in accordance with the Company expense reimbursement policy applicable to senior executives of the Company, as in effect from time to time, provided that Executive properly substantiates such expenses in accordance with such policy.

(j)           Insurance and Indemnification. For the period from the Effective Date

through at least the tenth (10th) anniversary of the Date of Termination, the Company shall maintain Executive as an insured party on all directors’ and officers’ insurance maintained by the Company for the benefit of its directors and officers on at least the same basis as all other covered individuals and provide Executive with at least the same corporate indemnification as it provides to its similarly situated executives.

4.           Termination of Employment.

Either the Company or Executive may terminate Executive’s employment at any time for any reason or no reason.  The following provisions shall control any such termination of Executive’s employment.

(a)           Termination by the Company Without Cause.  The Company may terminate Executive’s employment without Cause (as defined below) at any time during the Employment Period upon written notice to Executive provided in accordance with Section 8 below.  If Executive’s employment is terminated as provided in this Section 4(a), the Company shall, upon the Date of Termination, or in the case of obligations described in clause (iv) below, as such obligations become due to Executive, pay or provide to Executive, (i) Executive’s earned but unpaid Base Salary accrued through such Date of Termination, (ii) accrued but unpaid vacation time through such Date of Termination, (iii) reimbursement of any properly submitted business expenses incurred by Executive prior to the Date of Termination that are reimbursable under Sections 3(g) or 3(i) above, and (iv) any vested benefits and other amounts due to Executive under any plan, program or policy of the Company (together, all of these benefits shall be referred to as the “Accrued Obligations”). The Accrued Obligations will be paid to Executive as soon as practicable, in accordance with applicable law, but in no event later than thirty (30) days following the Date of Termination (provided, in the case of reimbursable expenses, that such expenses have been properly submitted to the Company within at least fourteen (14) calendar days following the Date of Termination).  In addition, subject to Sections 4(g) and 4(i) below, Executive’s execution and non-revocation of a binding Release (as defined below) in accordance with Section 4(h) below and Executive’s continued compliance with the Confidentiality Agreement (as defined below), Executive shall be entitled to the following payments and benefits from the Company (together, all of these benefits shall be referred to as the “Severance”):

(1) payment of  one hundred percent (100%) of Executive’s Base Salary at the rate in effect as of the Date of Termination, in substantially equal installments for a period of twelve (12) months following the Date of Termination, in accordance with the Company’s normal payroll procedures applicable to senior executives of the Company, as in effect from time to time (but no less often than monthly), provided, that payment of the amounts described in this Section 4(a)(1) shall not commence until the Company’s first payroll date occurring on or after the thirtieth (30th) day following the Date of Termination (the “First Payroll Date”) and any amounts that would otherwise have been paid prior

to the First Payroll Date shall instead be paid on the First Payroll Date;

(2) subject to Executive’s proper election to continue healthcare coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”),for a period of twelve (12) months from the Date of Termination, the Company will pay Executive the difference between Executive’s COBRA premiums (in respect of COBRA benefits to be provided through third-party insurance maintained by the Company under the Company’s benefit plans for Executive and his legal dependents to the extent each such individual received healthcare coverage provided by the Company immediately prior to such termination of employment), and the cost to Executive of such coverage immediately prior to such termination (subject to premium increases affecting participants in such plan(s) generally).  The Company shall provide this premium cost offset in a manner that causes such COBRA benefits to be exempt from the application of Section 409A under Treasury Regulation Section 1.409A-1(a)(5), provided, that if during the twelve (12) month period, any plan pursuant to which such benefits are to be provided ceases to be exempt from the application of Section 409A under Treasury Regulation Section 1.409A-1(a)(5), then an amount equal to each such remaining premium cost offset shall thereafter be paid to Executive as currently taxable compensation in substantially equal monthly installments over the remainder of the twelve (12) month period; following such twelve (12)-month continuation period, any further continuation of such coverage under applicable law shall be at Executive’s sole expense; and

(3) a pro-rated portion of Component A of the Synergy Bonus that would otherwise become payable in respect of the quarter in which the Date of Termination occurs (if any), had Executive remained employed by the Company through the last day of such quarter, determined by multiplying twenty-thousand dollars ($20,000) by a fraction, the numerator of which equals number of days elapsed in such quarter through the Date of Termination and the denominator of which equals ninety-one point twenty-five (91.25).  Such bonus shall be paid to Executive as soon as reasonably

practicable following Executive’s Date of Termination, but in no event later than ninety (90) days following the Date of Termination.

Each payment under this Section 4(a)(1)(2) and (3) above shall be treated as a separate payment for the purposes of Section 409A.

(b)           Death; Disability.  If Executive dies during the Employment Period or Executive’s employment is terminated due to Executive’s Disability (constituting a “disability” within the meaning of Section 409A), Executive or Executive’s estate, as applicable, shall be entitled to receive the Accrued Obligations upon the Date of Termination, or, in the case of benefits described in Section 4(a)(iv), as such obligations become due to Executive.  In addition, subject to Sections 4(g) and 4(i) below, Executive’s (or Executive’s estate’s) execution and non-revocation of a binding Release in accordance with Section 4(h) below and Executive’s continued compliance with the Confidentiality Agreement (upon a Disability termination), Executive (or Executive’s estate) shall be entitled to receive the Severance (as defined above).  .

(c)           Change In Reporting Relationship; Relocation.  If, during the Employment Period, the Company changes the terms of Executive’s employment such that (i) Executive is required to report directly to any person that is subordinate to OA’s Chief Executive Officer, or (ii) Executive’s principal work location is relocated more than fifty (50) miles from Beverly Massachusetts, such that it constitutes a material change in the geographic location at which he must perform services under this Agreement (within the meaning of Section 409A), upon Executive’s written notification to the Company within sixty (60) days following the occurrence of either such change, in accordance with Section 8 below, and the Company’s failure, within thirty (30) days of the Company’s receipt of such notice to remedy such change, Executive may terminate his employment due to such change, such that the date of Executive’s Separation from Service occurs no later than thirty-five (35) days after Executive furnishes notice.  If Executive terminates Executive’s employment pursuant to this Section 4(c), Executive shall be entitled to receive the Accrued Obligations upon the Date of Termination or, in the case of benefits described in Section 4(a)(iv), as such obligations become due to Executive.  In addition, subject to Sections 4(g) and 4(i) below, Executive’s execution and non-revocation of a binding Release in accordance with Section 4(h) below and Executive’s continued compliance with the Confidentiality Agreement, Executive shall be entitled to receive that portion of the Severance benefits described in each of Section 4(a)(1) and Section 4(a)(2) above.  For the avoidance of doubt, Executive shall not be entitled to receive any other component of the Severance (as defined above) upon a termination in accordance with this Section 4(c).

(d)           Voluntary Termination.  Executive may voluntarily terminate Executive’s employment (for any reason other than that described in Section 4(c) above) upon ninety (90) days’ notice to OA provided in accordance with Section 8 below, subject to the Company’s right to waive any or all of such notice period.  If Executive so terminates Executive’s employment, Executive shall be entitled to receive the Accrued Obligations upon the Date of Termination or, in the case of benefits described in Section 4(a)(iv), as such obligations become due to Executive.  If the Company elects to waive all or any portion of the notice period provided for in this Section 4(d), Executive shall, subject to Sections 4(g) and 4(i) below, Executive’s execution

and non-revocation of a binding Release in accordance with Section 4(h) below and Executive’s continued compliance with the Confidentiality Agreement, be entitled to payment of the Base Salary that would otherwise become payable in respect of such waived period absent the Company’s waiver, but shall, for all other purposes, be treated as having terminated employment prior to such waived notice period.

                      (e)           Cause.  If Executive’s employment becomes terminable by the Company for Cause (as defined below), then the Company shall provide Executive with written notice setting forth in reasonable detail the nature of such Cause and, to the extent capable of cure, Executive shall have a period of fifteen (15) days to cure such Cause (or such longer period as may be permitted under the definition of Cause below).  If Executive has not cured such Cause within fifteen (15) days of the Company’s provision of such notice (to the extent capable of cure), then the Company may terminate Executive’s employment immediately and Executive shall be entitled to receive the Accrued Obligations upon the Date of Termination or, in the case of benefits described in Section 4(a)(iv), as such obligations become due to Executive.

(f)           Non-Renewal of Employment Period.  If the Company elects not to renew the Employment Period (or any extension thereof), Executive shall be entitled to receive the Accrued Obligations upon the Date of Termination or, in the case of benefits described in Section 4(a)(iv), as such obligations become due to Executive.   In addition, if, at the time of Executive’s receipt of the Company’s notice of election not the renew the Employment Period (or any extension thereof), Executive is willing and able to extend the Agreement and continue providing services on terms and conditions substantially similar to those contained in this Agreement, then subject to Sections 4(g) and 4(i) below, Executive’s execution and non-revocation of a binding Release in accordance with Section 4(h) below and Executive’s continued compliance with the Confidentiality Agreement (as defined below), Executive shall be entitled to receive that portion of the Severance benefits described in each of Section 4(a)(1) and Section 4(a)(2) above for a period of six (6) months (instead of twelve (12) months).  For the avoidance of doubt, Executive shall not be entitled to receive any other component of the Severance (as defined above) upon a termination in accordance with this Section 4(f).

(g)           Change in Control Benefits.  During the Employment Period, Executive shall be eligible to participate in the On Assignment, Inc. Change in Control Severance Plan (the “CIC Plan”) at the level of “Division President,” as such plan may be amended from time to time in accordance with its terms.  In the event that Executive actually receives benefits under the CIC Plan, such benefits shall be in lieu and full replacement of any benefits to which Executive would otherwise become entitled under this Section 4 and Executive shall not be entitled to receive any of the benefits described in this Section 4.

(h)           Release; Exclusivity of Benefits.  Notwithstanding anything in this Agreement to the contrary, it shall be a condition to Executive’s right to receive the Severance (as defined above) that Executive (or his estate) execute, deliver to the Company and not revoke a general release of claims in a form prescribed by the Company and attached hereto as Exhibit B (the “Release”).  Except as expressly provided in this Agreement and/or by applicable law, upon the termination of Executive’s employment, the Company shall have no obligation to Executive in connection with Executive's employment with the Company or the termination thereof.

(i)           Potential Six-Month Delay.  Notwithstanding anything to the contrary in this Agreement, no compensation or benefits, including without limitation any Severance payments, shall be paid to Executive during the six (6)-month period following Executive’s “separation from service” (within the meaning of Section 409A(a)(2)(A)(i) of the Internal Revenue Code of 1986, as amended (the “Code”)) to the extent the Committee reasonably determines Executive is a “specified employee” at the time of such Separation from Service (within the meaning of Section 409A) and that that paying such amounts at the time or times indicated in this Agreement would be a prohibited distribution under Section 409A(a)(2)(b)(i) of the Code and/or cause Executive to incur additional taxes under Section 409A of the Code.  If the payment of any such amounts is delayed as a result of the previous sentence, then on the first business day following the end of such six (6)-month period, (or such earlier date upon which such amount can be paid under Section 409A without being subject to such additional taxes, including as a result of Executive’s death), the Company shall pay Executive a lump-sum amount equal to the cumulative amount that would have otherwise been payable to Executive during such six (6)-month period, without interest thereon.

(j)           Definitions.

“Cause” means Executive’s willful breach of duty unless waived by the Company (which willful breach is limited to Executive’s deliberate and consistent refusal to perform Executive’s duties or Executive’s deliberate and consistent refusal to conform to or follow any reasonable policy adopted by the Company provided Executive has had prior written notice of such refusal and an opportunity of at least thirty (30) days to cure such refusal); Executive’s unauthorized use or disclosure of confidential information or trade secrets of the Company; Executive’s breach of an applicable non-competition or non-solicitation agreement; Executive’s conviction of a felony under the laws of the United States or any state thereof; or Executive’s gross negligence.

“Date of Termination” shall mean the date on which Executive experiences a separation from service within the meaning of Section 409A(a)(2)(A)(i) of the Internal Revenue Code of 1986, as amended, and Treasury Regulation Section 1.409A-1(h). (a “Separation from Service”).

“Separation from Service” has the meaning assigned pursuant to Section 409A(a)(2)(A)(i) of the Internal Revenue Code of 1986, as amended, and Treasury Regulation Section 1.409A-1(h).

5.           Confidentiality, Non-Solicitation and Non-Competition Agreement.  Concurrently herewith, Executive agrees to execute and comply with the terms of the Confidentiality, Non-Solicitation and Non-Competition Agreement attached hereto as Exhibit A (the “Confidentiality Agreement”).  The compensation and benefits provided under this Agreement, together with compensation and benefits provided under the Merger Agreement, any Severance obligations arising hereunder and other good and valuable consideration are hereby acknowledged by the parties hereto to constitute adequate consideration for Executive’s entering into the Confidentiality Agreement.

6.           Intentionally Omitted.

7.           Representations.

(a)           No Violation of Other Agreements. Executive hereby represents and warrants to the Company that (i) he is entering into this Agreement voluntarily and that the performance of his obligations hereunder will not violate any agreement between him and any other person, firm, organization or other entity, including without limitation, any agreements with the Company or Barton and Associates, Inc., or any of the respective Affiliates thereof, and (ii) he is not bound by the terms of any agreement with any previous employer or other party to refrain from competing, directly or indirectly, with the business of such previous employer or other party that would be violated by his entering into this Agreement and/or providing services to the Company pursuant to the terms of this Agreement.

(b)           No Disclosure of Confidential Information. Executive’s performance of his duties under this Agreement will not require him to, and he shall not, rely on in the performance of his duties or disclose to the Company or any other person or entity or induce the Company in any way to use or rely on any trade secret or other confidential or proprietary information or material belonging to any previous employer of Executive.

8.           Notice.  Any notice or other communication required or permitted under this Agreement shall be effective only if it is in writing and delivered personally or sent by fax, email or registered or certified mail, postage prepaid, addressed as follows (or if it is sent through any other method agreed upon by the parties):

If to OA:

On Assignment, Inc.

26651 W. Agoura Road

Calabasas, CA 91302

Tel: (818) 878-7900

Attention: Chief Executive Officer

If to Executive: to the most current home address on file with the Company’s Human Resources department,

or to such other address as any party hereto may designate by notice to the other in accordance with this Section 8, and shall be deemed to have been given upon receipt.

9.            Section 409A.

(a)           General.  The payments and benefits provided hereunder are intended to be exempt from or compliant with the requirements of Section 409A.  Notwithstanding any provision of this Agreement to the contrary, in the event that following the Effective Date hereof,  either party reasonably determines that any payments or benefits hereunder are not either exempt from or compliant with the requirements of Section 409A, the Company and Executive shall work together to adopt such amendments to this Agreement or adopt such other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions that are necessary or appropriate (i) to preserve the intended tax treatment of the payments and benefits provided hereunder, to preserve the economic benefits with respect to such payments and benefits, and/or (ii) to exempt such

payments and benefits from Section 409A or to comply with the requirements of Section 409A and thereby avoid the application of penalty taxes thereunder, provided that the Company shall have no obligation to take any action described in this Section 9(a) or to indemnify Executive for any failure to take any such action.

(b)         Certain Reimbursements.  To the extent that any reimbursements hereunder constitute taxable compensation to Executive, such reimbursements shall be made to Executive promptly, but in no event after December 31st of the year following the year in which the expense was incurred, the amount of any such amounts reimbursed in one year shall not affect the amount eligible for reimbursement in any subsequent year, and Executive’s right to reimbursement of any such expenses shall not be subject to liquidation or exchange for any other benefit.

10.           Miscellaneous.

(a)           Governing Law.  This is a Massachusetts contract and shall be construed and enforced under and be governed in all respects by the laws of the Commonwealth of Massachusetts, without regard to the conflict of laws principles thereof.  The parties hereto consent to the jurisdiction of the state and federal courts located in the Commonwealth of Massachusetts to adjudicate any disputes among such parties.

(b)           Captions.  The captions of this Agreement are not part of the provisions hereof, rather they are included for convenience only and shall have no force or effect.

(c)           Amendment.  The terms of this Agreement may not be amended or modified other than by a written instrument executed by the parties hereto or their respective successors.

(d)           Withholding.  The Company shall withhold from any amounts payable under this Agreement all federal, state, local and/or foreign taxes, as the Company determines to be legally required pursuant to any applicable laws or regulations.

(e)           No Waiver.  Failure by either party hereto to insist upon strict compliance with any provision of this Agreement or to assert any right such party may have hereunder shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

(f)           Severability.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.

(g)           Construction.  The parties hereto acknowledge and agree that each party has reviewed and negotiated the terms and provisions of this Agreement and has had the opportunity to contribute to its revision.  Accordingly, the rule of construction to the effect that ambiguities are resolved against the drafting party shall not be employed in the interpretation of this Agreement.  Rather, the terms of this Agreement shall be

construed fairly as to both parties hereto and not in favor or against either party by the rule of construction abovementioned.

(h)           Assignment.  This Agreement is binding on and for the benefit of the parties hereto and their respective successors, heirs, executors, administrators and other legal representatives.  Neither this Agreement nor any right or obligation hereunder may be assigned by Executive, except as provided in this Agreement.

(i)           Entire Agreement.  As of the Effective Date, this Agreement, together with the Confidentiality Agreement, any applicable Stock Option Agreement and RSU Agreement and applicable provisions of each of the CIC Plan and the Equity Plan, constitute the final, complete and exclusive agreement and understanding between Executive and the Company with respect to the subject matter hereof and replaces and supersedes any and all other agreements, including the Prior Agreement, offers or promises, whether oral or written, made to Executive by the Company or any representative thereof.   Without limiting the generality of the foregoing, this agreement expressly supersedes and replaces in its entirety the employment agreement between Michael J. McGowan, Oxford & Associates, Inc. and Centennial Associates, Inc. dated May 15, 1997, as such agreement has been amended from time to time, and all rights and obligations arising under or in connection with such agreement shall be extinguished upon the Effective Date.

(j)           Counterparts.  This Agreement may be executed in several counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument.

IN WITNESS WHEREOF, Executive has hereunto set his hand and, pursuant to the authorization from the Committee, the Company has caused these presents to be executed in its name on its behalf, all as of the day and year first above written.

ON ASSIGNMENT, INC.
By:	/s/ Peter Dameris
	Name: Peter Dameris
	Title: Chief Executive Officer

OXFORD GLOBAL RESOURCES, INC.
By:	/s/ Robert Brown
	Name: Robert Brown
	Title: Senior Corporate Counsel

/s/ Michael J. McGowan

Name: Michael J. McGowan

Exhibit A

[CONFIDENTIALITY AGREEMENT]

Exhibit B

[RELEASE AGREEMENT]

EX-10.18

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as of December 11, 2008 (the “Effective Date”), by and between On Assignment, Inc. (the “Company”) and James Brill (“Executive”).

Recitals

A.     The Company and Executive previously entered into an agreement, dated January 1, 2007, pursuant to which Executive is employed as the Senior Vice President and Chief  Financial Officer of the Company (the “Prior Agreement”).

B.      The Company and Executive wish to amend and restate the Prior Agreement to implement changes required under Internal Revenue Code Section 409A (together with the regulations and official interpretations thereof, “Section 409A”).

AGREEMENT

1.           Employment Term.  Subject to the provisions for earlier termination hereinafter provided, Executive’s employment shall continue for a term which commenced on January 1, 2007 and ends on December 31, 2008 (the “Initial Termination Date”); provided, that this Agreement shall be automatically extended for one additional year on the Initial Termination Date and on each subsequent anniversary of the Initial Termination Date unless either Executive or the Company elects not to so extend such term by notifying the other party, in accordance with Section 7 below, of such election not less than sixty days prior to the Initial Termination Date, or any anniversary thereof, as applicable (in any case, the “Employment Period”).

2.           Position and Duties.

(a)           Position.  During the Employment Period, Executive shall serve as Senior Vice President and Chief Financial Officer of the Company and shall perform such employment duties as are usual and customary for such position, including without limitation, oversight and management of the Company’s Finance and Accounting, Risk Management and Investor Relations departments.  Executive shall report to the Chief Executive Officer of the Company (“CEO”).  The Company shall retain full direction and control of the means and methods by which Executive performs the above services.  At the Company’s request, Executive shall serve the Company and/or its subsidiaries and affiliates in such other offices and capacities in addition to the foregoing as the Company shall designate, consistent with Executive’s position, without additional compensation beyond that specified in this Agreement.

(b)           Place of Employment.  During the Employment Period, Executive shall perform the services required by this Agreement at the Company’s principal offices in Calabasas, California, unless otherwise mutually agreed upon by the parties.  Notwithstanding the foregoing, Executive may from time to time be required to travel temporarily to other locations on the Company’s business.

(d)           Exclusivity.  During the Employment Period, except for such other activities as the Compensation Committee of the Board of Directors (the “Committee”) shall approve in writing in its sole discretion and as otherwise provided in this Section 2(d), Executive shall devote his entire business time, attention and energies to the business and affairs of the Company, to the performance of Executive’s duties under this Agreement and to the promotion of the Company’s interests, and shall not (i) accept any other employment, directorship or consultancy, or (ii) engage, directly or indirectly, in any other business activity (whether or not pursued for pecuniary advantage) that is or may be competitive with, or that might place Executive in a competing position to, that of the Company.  Notwithstanding the foregoing, (i) for a period not to exceed ninety days from and after the Effective Date, Executive may provide the consulting services described on Schedule A hereto to Diagnostic Products Corporation and the provision of such consulting services shall not constitute a breach of this Section 2(d), and (ii) provided that such activities do not interfere with the fulfillment of Executive’s obligations hereunder, Executive may (A) serve as an officer, director or trustee of any charitable or non-profit entity; (B) own a passive investment in any private company and own up to 5% of the outstanding voting securities of any public company; or (C) with the prior approval of the CEO, serve as a director of up to two other companies so long as such companies do not compete with the Company and Executive notifies the CEO in advance of accepting any such position.

3.           Compensation.

(a)           Base Salary.  During the Employment Period, the Company shall pay Executive a base salary (the “Base Salary”) set at $275,000 per year for calendar year 2007 and subject thereafter to annual review and increase (but not decrease) in the sole discretion of the Committee.  The Base Salary shall be payable in accordance with the Company’s normal payroll procedures applicable to senior executives of the Company, as in effect from time to time.

(b)           Annual Bonus.  In addition to the Base Salary, Executive shall be eligible to earn an annual cash bonus in respect of each calendar year during the Employment Period beginning in calendar year 2007, as described below (each, an “Annual Bonus”), subject in each case to Executive’s continued employment through the date on which annual bonuses are paid generally to the Company’s senior executives.  In respect of calendar year 2007, Executive shall be eligible to earn an Annual Bonus ranging from $0 - $275,000, determined by reference to the Company’s earnings before interest, tax, depreciation and amortization as reported on its consolidated financial statements for such period (“EBITDA”).  The EBITDA targets applicable to Executive’s 2007 Annual Bonus shall be consistent with those applicable to the determination of the CEO’s 2007 annual bonus and shall be determined by the Committee, after consultation with the CEO and Executive, no later than March 31, 2007.  In respect of calendar years during the Employment Period beginning after 2007, any Annual Bonus shall be determined by reference to the attainment of objective performance criteria, which criteria shall be determined by the Committee within sixty days after the start of the applicable calendar year.  Each Annual Bonus shall be paid to Executive, to the extent that any such Annual Bonus becomes payable, within thirty days after the date on which the Committee conclusively determines the extent to which the applicable performance criteria have (or have not) been met.

(c)           Stock Option.  Subject to approval by the Committee, as soon as practicable following the Effective Date, the Company shall grant to Executive a nonqualified option to purchase 100,024 shares of Company common stock (the “Option”).  The Option shall be granted to Executive at an exercise price per share equal to 100% of the fair market value of a share of Company common stock on the date of grant, as determined by the Committee. Subject to Executive’s continued employment with the Company through each such date, the Option shall vest and become exercisable with respect to 25,000 of the shares subject thereto on the first anniversary of the date of grant of the Option (the “Option Grant Date”) and with respect to 2,084 of the shares subject thereto on each monthly anniversary of the Option Grant Date thereafter, such that the Option shall be vested and exercisable with respect to all shares subject thereto (subject to Executive’s continued employment) on the fourth anniversary of the Option Grant Date.  Consistent with the foregoing, the terms and conditions of the Option, including the applicable vesting conditions, shall be set forth in an Option grant agreement to be entered into by the Company and Executive in a form prescribed by the Company which shall evidence the grant of the Option (the “Option Agreement”).  The Option shall, subject to the provisions of this Section 3(c), be governed in all respects by the terms of the applicable Option Agreement.

(d)           Restricted Stock Units.  Subject to approval by the Committee, as soon as practicable following the Effective Date, the Company shall grant to Executive, under the OA Restated 1987 Stock Option Plan (the “Equity Plan”), 60,000 restricted stock units (the “RSUs”).  Subject to Executive’s continued employment with the Company through each such date, the RSU grant shall vest with respect to 15,000 RSUs on the first anniversary of the date of grant of the RSUs (the “RSU Grant Date”) and with respect to 1,250 of the RSUs on each monthly anniversary of the RSU Grant Date thereafter, such that the RSU grant shall be vested with respect to all RSUs (subject to Executive’s continued employment) on the fourth anniversary of the RSU Grant Date.  Shares of Company common stock shall be delivered in respect of RSUs vesting in accordance with this Section 3(d) on or as soon as practicable after the applicable vesting date of such RSUs, but in no event more than fifteen days after such vesting date, with the exact payment date to be determined by the Company in its sole discretion.Consistent with the foregoing, the terms and conditions of the RSUs, including the applicable vesting and share delivery conditions, shall be set forth in a RSU grant agreement to be entered into by the Company and Executive which shall evidence the grant of the RSUs and, except as otherwise expressly provided herein, shall be consistent with the terms and conditions contained in RSU grant agreements provided to other key executives of the Company (the “RSU Agreement”). The RSUs shall, subject to the provisions of this Section 3(d), be governed in all respects by the terms of the Equity Plan and the applicable RSU Agreement.

(e)           Additional Incentive Bonus.  In addition to the Base Salary, any Annual Bonuses and the RSU and Option grants, the Company may, in its sole discretion, pay to Executive a one-time additional bonus of up to $50,000 (the “Additional Bonus”) upon the attainment of performance objectives relating to the post-transaction integration of the Company with each of Vista Staffing Solutions, Inc. and Oxford, Inc., including synergy savings and other criteria selected by the Committee (the “Additional Bonus Objectives”).  The Additional Bonus Objectives shall be established, after consultation with Executive, in the sole discretion of the Committee, and the Additional Bonus shall become payable, if at all, at such date or dates as are determined by the Committee, subject to Executive’s continued employment through any such date(s).  Determinations as to whether the Additional Bonus performance objectives have been attained shall be made in the sole discretion of the Committee.

           (f)           Benefit Plans.  During the Employment Period, Executive and Executive’s legal dependants shall be eligible to participate in the welfare benefit plans, policies and programs (including, if applicable, medical, dental, disability, life and accidental death insurance plans and programs) maintained by the Company for its senior executives.  In addition, Executive shall be eligible to participate in such incentive, savings and retirement plans, policies and programs as are made available to senior executives of the Company, provided, that the Company shall have no obligation, in any case, to adopt, maintain or continue any such plans, policies or programs.

(g)           Additional Perquisites.  In addition to the compensation and benefits described above in this Section 3, during the Employment Period, the Company shall (i) pay to Executive an automobile allowance of $450 per month and, (ii) pay or reimburse Executive for actual, properly substantiated expenses incurred by Executive in connection with (A) an annual physical examination, not to exceed $1,500 per calendar year; and (B) tax preparation and financial planning services, not to exceed $2,500 per calendar year.

(h)           Vacation.  During the Employment Period, Executive shall be entitled to four weeks of paid vacation per calendar year, pro rated for any service by Executive during any partial calendar year, provided, that Executive shall not accrue any vacation time in excess of four weeks.

(i)           Expenses.  During the Employment Period, Executive shall be entitled to receive prompt reimbursement of all reasonable business expenses incurred by Executive in accordance with the Company expense reimbursement policy applicable to senior executives of the Company, as in effect from time to time, provided that Executive properly substantiates such expenses in accordance with such policy.

4.           Termination of Employment.

Either the Company or Executive may terminate Executive’s employment at any time for any reason or no reason.  The following provisions shall control any such termination of Executive’s employment, subject to Section 8 below:

(a)           Termination Without Cause.  The Company may terminate Executive’s employment without Cause (as defined below) at any time during the Employment Period upon written notice to Executive provided in accordance with Section 7 below.  If Executive’s employment is terminated as provided in this Section 4(a), the Company shall promptly, or in the case of obligations described in clause (iv) below, as such obligations become due to Executive, pay or provide to Executive, (i) Executive’s earned but unpaid Base Salary accrued through such Date of Termination (as defined below), (ii) accrued but unpaid vacation time through such Date of Termination, (iii) reimbursement of any business expenses incurred by Executive prior to the Date of Termination that are reimbursable under Sections 3(g) or 3(i) above, and (iv) any vested benefits and other amounts due to Executive under any plan, program or policy of the Company (together, the “Accrued Obligations”).  In addition, subject to Section 4(h) below, Executive’s execution and non-revocation of a binding Release (as defined below) in accordance with Section 4(f) below and Executive’s continued compliance with the Confidentiality Agreement (as defined below), Executive shall be entitled to receive 100% of Executive’s Base Salary at the rate in effect as of the Date of Termination, in substantially equal installments, for a period of twelve months following the Date of Termination, in accordance with the Company’s normal payroll procedures applicable to senior executives of the Company, as in effect from time to time, (but no less often than monthly), (the “Severance”), provided, that payment of the amounts described in this Section 4(a) shall not commence until the Company’s first payroll date occurring on or after the 30th day following the Date of Termination (the “First Payroll Date”) and any amounts that would otherwise have been paid prior to the First Payroll Date shall instead be paid on the First Payroll Date.

(b)           Death; Disability.  If Executive dies during the Employment Period or Executive’s employment is terminated due to Executive’s total and permanent disability (that constitutes a “disability” within the meaning of Section 409A), Executive or Executive’s estate, as applicable, shall be entitled to receive the Accrued Obligations promptly or, in the case of benefits described in Section 4(a)(iv), as such obligations become due to Executive.  In addition, subject to Section 4(h) below, Executive’s (or Executive’s estate’s) execution and non-revocation of a binding Release in accordance with Section 4(g) below and Executive’s continued compliance with the Confidentiality Agreement (upon a disability termination), Executive (or Executive’s estate) shall be entitled to receive the Severance.

(c)           Cause.  If Executive’s employment becomes terminable by the Company for Cause, the Company may terminate Executive’s employment immediately and Executive shall be entitled to receive the Accrued Obligations promptly or, in the case of benefits described in Section 4(a)(iv), as such obligations become due to Executive.

(d)           Resignation.  Executive may terminate Executive’s employment upon sixty days’ notice to the Company provided in accordance with Section 7 below, subject to the Company’s right to waive any or all of such notice period.  If Executive so terminates Executive’s employment, Executive shall be entitled to receive the Accrued Obligations promptly, or, in the case of benefits described in Section 4(a)(iv), as such obligations become due to Executive.  If the Company elects to waive the notice period provided for in this Section 4(d), Executive shall not be entitled to any compensation in respect of such period.

(e)           Other Terminations.  If Executive’s employment terminates for any reason other than those specified in Sections 4(a), (b), (c) or (d) above (including without limitation, the Company’s election not to extend the Employment Period, if, at the time of such notice, Executive is willing and able to extend the Agreement and continue providing services on terms and conditions substantially similar to those contained in this Agreement), the Company shall promptly, or in the case of items described in Section 4(a)(iv), as such obligations become due to Executive, pay or provide to Executive the Accrued Obligations.

(f)           Release; Exclusivity of Benefits.  Notwithstanding anything in this Agreement to the contrary, it shall be a condition to Executive’s right to receive the Severance that Executive (or his estate) execute, deliver to the Company and not revoke a general release of claims in a form prescribed by the Company (the “Release”).  Except as expressly provided in this Section 4, upon the termination of Executive’s employment, the Company shall have no obligations to Executive in connection with his employment with the Company or the termination thereof.

(g)           Definitions.

“Cause” shall mean (i) a material breach of this Agreement by Executive; (ii) the willful or repeated failure or refusal by Executive substantially to perform Executive’s duties hereunder; (iii) the indictment of Executive for any felony or other crime involving moral turpitude, (iv) fraud, embezzlement or misappropriation by Executive relating to the Company or its funds, properties, corporate opportunities or other assets to the extent that the Company reasonably determines such act to be materially injurious to the Company, or (v) Executive repeatedly acting in a manner or repeatedly making any statements, in either case, which the Company reasonably determines to be detrimental or damaging to the reputation, operations, prospects or business relations of the Company.

“Date of Termination” shall mean the date on which Executive experiences a separation from service within the meaning of Section 409A(a)(2)(A)(i) of the Internal Revenue Code of 1986, as amended, and Treasury Regulation Section 1.409A-1(h) (a “Separation from Service”).

(h)           Potential Six-Month Delay.  Notwithstanding anything to the contrary in this Agreement, no compensation or benefits, including without limitation any Severance payments, shall be paid to Executive during the 6-month period following Executive’s “separation from service” (within the meaning of Section 409A(a)(2)(A)(i) of the Internal Revenue Code of 1986, as amended (the “Code”)) to the extent the Committee reasonably determines that Executive is a “specified employee” at the time of such Separation from Service (within the meaning of Section 409A) and paying such amounts at the time or times indicated in this Agreement would be a prohibited distribution under Section 409A(a)(2)(b)(i) of the Code and/or cause Executive to incur additional taxes under Section 409A of the Code.  If the payment of any such amounts is delayed as a result of the previous sentence, then on the first business day following the end of such 6-month period, (or such earlier date upon which such amount can be paid under Section 409A without being subject to such additional taxes, including as a result of Executive’s death), the Company shall pay Executive a lump-sum amount equal to the cumulative amount that would have otherwise been payable to Executive during such 6-month period, without interest thereon.

5.           Confidential Information and Employee Developments.  Concurrently herewith, Executive agrees to execute and comply with the terms of the Confidential Information and Employee Development Agreement attached hereto as Exhibit A (the “Confidentiality Agreement”).  The compensation and benefits provided under this Agreement, together with any Severance obligations arising hereunder and other good and valuable consideration are hereby acknowledged by the parties hereto to constitute adequate consideration for Executive’s entering into the Confidentiality Agreement.

6.           Representations.

(a)           No Violation of Other Agreements. Executive hereby represents and warrants to the Company that (i) he is entering into this Agreement voluntarily and that the performance of his obligations hereunder will not violate any agreement between him and any other person, firm, organization or other entity, and (ii) he is not bound by the terms of any agreement with any previous employer or other party to refrain from competing, directly or indirectly, with the business of such previous employer or other party that would be violated by his entering into this Agreement and/or providing services to the Company pursuant to the terms of this Agreement.

(b)           No Disclosure of Confidential Information. Executive’s performance of his duties under this Agreement will not require him to, and he shall not, rely on in the performance of his duties or disclose to the Company or any other person or entity or induce the Company in any way to use or rely on any trade secret or other confidential or proprietary information or material belonging to any previous employer of Executive.

7.           Notice.  Any notice or other communication required or permitted under this Agreement shall be effective only if it is in writing and delivered personally or sent by fax, email or registered or certified mail, postage prepaid, addressed as follows (or if it is sent through any other method agreed upon by the parties):

If to the Company:

On Assignment, Inc.

26651 W. Agoura Road

Calabasas, CA 91302

Tel: (818) 878-7900

Attention: Chief Executive Officer

If to Executive: to the most current home address on file with the Company’s Human Resources department, or to such other address as any party hereto may designate by notice to the other in accordance with this Section 7, and shall be deemed to have been given upon receipt.

8.           Change of Control Agreement.  Notwithstanding anything contained in this Agreement, the parties hereto acknowledge that Executive and the Company have entered into an Executive Change of Control Agreement of even date herewith (the “COC Agreement”) and, that, in the event that Executive becomes entitled to compensation or benefits under the COC Agreement (as determined solely under the terms of the COC Agreement), this Agreement shall be superseded by the COC Agreement and no further compensation or benefits in any form shall become payable under this Agreement.

9.           Section 409A.

(a)           General.  The payments and benefits provided hereunder are intended to be exempt from or compliant with the requirements of Section 409A.  Notwithstanding any provision of this Agreement to the contrary, in the event that following the effective date hereof, the Company reasonably determines that any payments or benefits hereunder are not either exempt from or compliant with the requirements of Section 409A, the Company and Executive shall work together to adopt such amendments to this Agreement or adopt such other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions that are necessary or appropriate (i) to preserve the intended tax treatment of the payments and benefits provided hereunder, to preserve the economic benefits with respect to such payments and benefits, and/or (ii) to exempt such payments and benefits from Section 409A or to comply with the requirements of Section 409A and thereby avoid the application of penalty taxes thereunder, provided that the Company shall have no obligation to take any action described in this Section 9(a) or to indemnify Executive for any failure to take any such action.

(b)         Certain Reimbursements.  To the extent that any reimbursements hereunder constitute taxable compensation to Executive, such reimbursements shall be made to Executive promptly, but in no event after December 31st of the year following the year in which the expense was incurred, the amount of any such amounts reimbursed in one year shall not affect the amount eligible for reimbursement in any subsequent year, and Executive’s right to reimbursement of any such expenses shall not be subject to liquidation or exchange for any other benefit.

10.           Miscellaneous.

(a)           Governing Law.  The rights and duties of the parties will be governed by the local law of the State of California, excluding any choice-of-law rules that would require the application of the laws of any other jurisdiction.  The parties hereto consent to the jurisdiction of the state and federal courts located in the state of California to adjudicate any disputes between such parties.

(b)           Captions.  The captions of this Agreement are not part of the provisions hereof, rather they are included for convenience only and shall have no force or effect.

(c)           Amendment.  The terms of this Agreement may not be amended or modified other than by a written instrument executed by the parties hereto or their respective successors.

(d)           Withholding.  The Company shall withhold from any amounts payable under this Agreement all federal, state, local and/or foreign taxes, as the Company determines to be legally required pursuant to any applicable laws or regulations.

(e)           No Waiver.  Failure by either party hereto to insist upon strict compliance with any provision of this Agreement or to assert any right such party may have hereunder shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

(f)           Severability.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.

(g)           Construction.  The parties hereto acknowledge and agree that each party has reviewed and negotiated the terms and provisions of this Agreement and has had the opportunity to contribute to its revision.  Accordingly, the rule of construction to the effect that ambiguities are resolved against the drafting party shall not be employed in the interpretation of this Agreement.  Rather, the terms of this Agreement shall be construed fairly as to both parties hereto and not in favor or against either party by the rule of construction abovementioned.

(h)           Assignment.  This Agreement is binding on and for the benefit of the parties hereto and their respective successors, heirs, executors, administrators and other legal representatives.  Neither this Agreement nor any right or obligation hereunder may be assigned by Executive.

(i)           Entire Agreement.  As of the Effective Date, this Agreement, together with the Confidentiality Agreement, any applicable Stock Option Agreement and RSU Agreement and the COC Agreement, constitute the final, complete and exclusive agreement and understanding between Executive and the Company with respect to the subject matter hereof and replace and supersede any and all other agreements, offers or promises, including the Prior Agreement, whether oral or written, made to Executive by the Company or any representative thereof.

(j)           Counterparts.  This Agreement may be executed in several counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument.

[Signature Page Follows]

IN WITNESS WHEREOF, Executive has hereunto set his hand and, pursuant to the authorization from the Committee, the Company has caused these presents to be executed in its name on its behalf, all as of the day and year first above written.

ON ASSIGNMENT, INC.
By:	/s/ Peter Dameris
	Name: Peter Dameris
	Title: Chief Executive Officer

/s/ James Brill

Name: James Brill

Schedule A

DESCRIPTION OF CONSULTING SERVICES

During the first ninety days of the Employment Period, Executive shall be permitted to devote up to two business days per week to the performance of consulting services for Executive’s former employer, Diagnostic Products Corporation, relating to the successful transition of Executive’s former position at Diagnostic Products Corporation and the duties and responsibilities associated therewith to Executive’s successor at Diagnostic Products Corporation.

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Exhibit A

ON ASSIGNMENT, INC.

CONFIDENTIAL INFORMATION AND

DEVELOPMENT AGREEMENT

In consideration of my engagement by On Assignment, Inc. (the “Company”) to provide the services (the “ Services ”) described in the Employment Agreement entered into between the Company and me, dated January 1, 2007 (the “ Employment Agreement ”), I hereby agree as follows (in this “ Agreement ”):

1. Confidential Information.

a.             General.  I acknowledge and understand that I will be given access to certain confidential, secret and proprietary information and materials owned by the Company or which relate to the Company’s historical, current or planned business or business activities, including but not limited to, all information not generally known to the public that relates to the inventions, processes, formulas, designs, developments, technology, technical data, research and development, products, policies, practices, supplier information, markets, marketing plans, subscribers and proposals of the Company, the identity of all actual and prospective clients, client lists, files and all information relating to individual clients, and information on all persons for whom the Company performs services or with whom I have contact during the course of my employment related to the Company’s current or planned business or business activities, and all other information the Company designates as “confidential” (hereafter the “ Confidential Information ”),  provided , that Confidential Information does not include information which (i) is or becomes publicly known other than as a result of my actions in violation of this Agreement; (ii) has been made available by the Company, directly or indirectly, to a non-affiliated third party without obligation of confidentiality; or (iii) I am obligated to produce as a result of a court order or pursuant to governmental action or proceeding, provided that I give the Company prompt written notice of such requirement prior to such disclosure and assistance in obtaining an order protecting such Confidential Information from public disclosure.

b.             Use of Confidential Information.  I acknowledge and agree that all Confidential Information shall be considered trade secrets of the Company and shall be entitled to all protections given by law to trade secrets.  Confidential Information shall apply to every form in which information shall exist, whether written, film, tape, computer disk or other form of media, including original materials and any copies thereof.  I agree that the Confidential Information shall be the sole and exclusive property of the Company.  I will not, during my employment with the Company or at any time after the termination thereof for any reason whatsoever, disclose or make known or use for myself or others (except as required in the course of my employment with the Company or when otherwise authorized to do so in writing signed by an authorized representative of the Company) any Confidential Information or information

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about clients to any person, firm, corporation or other entity.  Moreover, I will not directly or indirectly help or assist any other person to do any of the prohibited acts listed in this section.

2. Documents.  All notes, memoranda, files, records, writings and other documents, whether on tangible or electronic media (“ Documents ”), which I shall prepare, use or come into contact with during my employment with the Company which relate to or are useful in any manner to the business now or hereafter conducted by the Company are and shall remain the sole and exclusive property of the Company.  I shall not remove from the Company’s premises the original or any reproduction of any such Documents nor any of the information contained therein except as required in the course of employment with the Company or otherwise with the prior written consent of an authorized representative of the Company, and all such Documents and information in my possession or under my custody or control shall be turned over to the Company immediately upon the termination of my service relationship with the Company.

3.   `                                    Developments.

a.             Property of the Company.  I agree that all Developments (as defined below) shall be at the instant of creation or expression the sole property of the Company, to the greatest extent possible shall be deemed “works made for hire” and that I shall retain no rights or interest of any kind therein.  The Company shall own all right, title and interest of any kind in and to all Developments and all related intellectual property, ownership and other rights and I shall have no claims, interest, rights or title in and to each of the Developments and all related intellectual, ownership and other rights thereto.

b.             Waiver of Rights; License.  In the event that, by operation of law or otherwise, I retain any rights to any Developments or any related intellectual property, ownership or other rights, I hereby transfer and assign to the Company, without further consideration, my entire right, title and interest in and to such Developments and all related intellectual property, ownership and other rights, and I hereby waive any and all rights or interest of any kind therein including any moral rights; and to the extent any right, title or interest in and to any Developments or any related intellectual property, ownership or other rights cannot fully be assigned by me to the Company, I hereby grant to the Company an exclusive, royalty-free, transferable, irrevocable, perpetual, worldwide license (with rights to sublicense) to use, exploit and practice such non-assignable right, title and interest.

c.             Cooperation.  I agree to assist the Company in protecting the Company’s sole interest in the Developments, and to execute any and all documents required to ensure that all intellectual property rights in the Developments are owned solely and exclusively by the Company.  I hereby irrevocably appoint the Company as my true and lawful attorney-in-fact, which appointment is coupled with an interest to act for and on my behalf to execute, verify and file any such documents and to do all other acts to

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further the purposes of this Section 3 with the same legal force and effect as if executed by me (including without limitation the right to execute assignments of and to register any and all rights to the Developments), and this appointment shall survive termination of this Agreement.  I agree to promptly and fully disclose in writing to the Company all Developments during the term of the Employment Agreement and for a period of one year immediately following the termination of my service relationship with the Company for any reason (the “ Restricted Period ”).

d.             Limited Scope.  This Section 3 shall not apply to any inventions that I have made prior to my service relationship with the Company (all of which are listed on Annex A, attached hereto), or to any inventions that I develop entirely on my own time without use of the Company’s equipment, supplies, facilities or Confidential Information and which do not relate to the Company’s present, future or prospective business, products, research and development, processes or the work I perform for the Company.  If, in the course of my employment with the Company, I incorporate an invention identified on Annex A into a Development, I hereby grant the Company a nonexclusive, royalty-free, irrevocable, perpetual, worldwide license (with rights to sublicense) to make, have made, modify, use, distribute and sell such prior invention.  Notwithstanding the foregoing, I agree that I will not incorporate, or permit to be incorporated, prior inventions in any Developments without the Company’s prior written consent.

e.             Developments Definition.  As used in this Section 3, “Developments” means any and all: (i) ideas, designs, designations, concepts, inventions, products, discoveries, improvements, processes, machines, manufacturing, marketing, service methods and techniques, formulae, designs, composition of matter, styles and specifications, (ii) works of authorship or information fixed in any tangible medium of expression or mask works, (iii) trademarks, service marks or trade names, (iv) trade secrets and know-how (including, without limitation, any of the foregoing relating to formulae, patterns, compilations, programs, methods, techniques or processes), (v) subject matter otherwise protectable under patent, copyright, moral right, mask work, trademark, trade secret or other laws, and (vi) products, systems, equipment, or devices which are conceived, reduced to practice, created, derived, developed or made from any of the foregoing clauses, and with respect to such foregoing clauses other than clause (v), whether or not protectable under patent, copyright, moral right, mask work, trademark, trade secret or other laws, which are conceived, reduced to practice, created, derived, developed, improved or made by me (whether at the request or suggestion of Company or otherwise, whether alone or in conjunction with others, and whether during regular hours of work or otherwise) during the period of my employment with the Company, which may pertain to the present, future or prospective business, products, research and development, or processes of the Company.

4. Employee Non-Solicitation.  I acknowledge that I have or will gain valuable information about the identity, qualifications and on-going performance of the employees of the Company.  During the Restricted Period, I agree that I will not

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directly or indirectly solicit or encourage any of the Company’s employees to seek or accept employment with me or any other person or entity, or disclose any information about any such employee to any prospective employer.

5. Injunctive Relief.  I agree that it is impossible to measure in money the damages that will accrue to the Company in the event that I breach any of the restrictions provided in this Agreement.  Accordingly, in the event that I breach any such restriction, the Company shall be entitled to an injunction restraining me from further violating such restriction without the need to post any bond therefor.  If the Company shall institute any action or proceeding to enforce any such restrictions, I hereby waive the claim or defense that the Company has an adequate remedy at law and agree not to assert such claim or defense.  The foregoing shall not prejudice the Company’s right to require me to account for and pay over to the Company, and I hereby agree to account for and pay over to the Company, the compensation, profits, monies, accruals or other benefits derived or received by me as a result of any transaction constituting a breach of any of the restrictions provided in this Agreement and, if so determined, I hereby agree to account for and pay over to the Company such amounts.

6. Severability.  If any portion of this Agreement is held to be invalid or unenforceable, or excessively broad, the remaining covenants and restrictions or portions thereof shall remain in full force and effect to the fullest degree possible to achieve the purposes of this Agreement and to afford the Company the maximum protections allowed by law and, if with respect to any of the covenants contained in Section 4 above, the invalidity or unenforceability is due to the deemed unreasonableness of time or geographical restrictions, such covenants and restrictions shall be effective for such period of time and for such area as may be determined to be reasonable by a court of competent jurisdiction.  The parties agree that the Court shall construe any invalid or unenforceable provisions in the manner that most closely reflects the effect and intent of the original language.

7. Governing Law.  The rights and duties of the parties will be governed by the local law of the State of California, excluding any choice-of-law rules that would require the application of the laws of any other jurisdiction, and I consent to the jurisdiction of the state and federal courts located in the State of California to adjudicate any disputes between me and the Company.  I acknowledge that I cannot amend, terminate or otherwise modify this Agreement, except with the prior written consent of the Company.

8. Captions.  The captions of this Agreement are not part of the provisions hereof, rather they are included for convenience only and shall have no force or effect.

[signature page follows]

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I acknowledge that I have read all of this Agreement, that I understand each and every provision of this Agreement, and that nothing I have been told by or on behalf of the Company is in any way at variance or in conflict with the provisions of this Agreement.

EXECUTIVE

/s/ James Brill

Name: James Brill

Date: January 1, 2007

ACCEPTED FOR ON ASSIGNMENT, INC.

/s/ Peter Dameris

Name: Peter Dameris

Title: Chief Executive Officer

ANNEX A

LIST OF INVENTIONS MADE BY EXECUTIVE PRIOR TO PROVIDING SERVICES TO THE COMPANY:

EX-10.19

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as of December 11, 2008, (the “Effective Date”) by and between Vista Staffing Solutions, Inc. (together with its affiliates, the “Company”), On Assignment, Inc. (“OA”) and Mark S. Brouse (“Executive”).  The Company, OA and Executive are later in this Agreement sometimes referred to individually as a “Party” or collectively as the “Parties.”

RECITALS

A.           The Company, OA and Executive previously entered into an agreement, dated December 20, 2006, pursuant to which Executive is employed as the President of the Company, and an Amendment 1 to Employment Agreement dated July 2, 2008 (the “Prior Agreement”).

B.      The Company, OA and Executive wish to amend and restate the Prior Agreement to implement changes required under Internal Revenue Code Section 409A (together with the regulations and official interpretations thereof, “Section 409A”).

AGREEMENT

1.           Employment Term.  Subject to the provisions for earlier termination hereinafter provided, Executive’s employment shall continue for a term commencing on the Effective Date and ending on December 31, 2010 (the “Initial Termination Date”); provided, that this Agreement shall be automatically extended for one additional year on the Initial Termination Date and on each subsequent anniversary of the Initial Termination Date unless either Executive or the Company elects not to so extend such term by notifying the other Party, in accordance with Section 7 below, of such election not less than sixty days prior to the Initial Termination Date, or any anniversary thereof, as applicable (in any case, the “Employment Period”).

2.           Position and Duties.

(a)           Position.  During the Employment Period, Executive shall serve as the President of the Company and shall perform such employment duties and shall have such rights, privileges and authority as are usual and customary for such position.  Executive shall report to Chief Executive Officer of OA (currently Peter Dameris).  OA shall retain full direction and control of the means and methods by which Executive performs the above services.  At OA’s reasonable request, Executive shall serve OA, the Company and/or their subsidiaries and affiliates in such other offices and capacities in addition to serving as the President of the Company as the Company shall designate, consistent with Executive’s position as President of the Company, without additional compensation beyond that specified in this Agreement.

(b)           Place of Employment.  During the Employment Period, Executive shall perform the services required by this Agreement at the Company’s principal offices in Salt Lake City, Utah, unless otherwise mutually agreed upon by the Parties.  Notwithstanding the foregoing, Executive may from time to time be required to travel temporarily to other locations on the Company’s business.

(c)           Exclusivity.  During the Employment Period, except for such other activities as the Compensation Committee of OA (the “Committee”) shall approve in writing in its sole discretion and as provided below in this Section 2(c), Executive shall devote Executive’s entire business time, business attention and business energies to the business and affairs of the Company, to the performance of Executive’s duties under this Agreement and to the promotion of the Company’s interests, and shall not (i) accept any other employment, directorship or consultancy, or (ii) engage, directly or indirectly, in any other business activity (whether or not pursued for pecuniary advantage) that is or may be competitive with, or that might place Executive in a competing position to, that of the Company or OA. Notwithstanding the foregoing, nothing herein shall prohibit Executive from (x) serving on up to two boards (or similar bodies) of charitable organizations, or (y) continuing to own his current ownership interest and to serve as a member of the Board of Directors (or comparable body) of Phar Technology, LLC, to the extent, in all cases, that such activities do not materially interfere with Executive’s duties and responsibilities to the Company, as determined in the reasonable discretion of the Committee.

3.           Compensation.

(a)           Base Salary.  During the Employment Period, the Company shall pay Executive a base salary (the “Base Salary”) initially set at $261,000 per year, payable in accordance with the Company’s normal payroll procedures applicable to similarly situated senior executives of OA, as in effect from time to time.  Beginning in calendar year 2008 and thereafter during the Employment Period, the Base Salary shall be subject to annual review and increase (but not decrease) in the sole discretion of the Committee.

                      (b)           Annual Bonus.  In addition to the Base Salary, Executive shall be eligible to earn an annual cash bonus in respect of each calendar year during the Employment Period beginning in calendar year 2007, as described below (each, an “Annual Bonus”), subject in each case to Executive’s continued employment through the 31st day of December in the year in respect of which any Annual Bonus becomes payable.  In respect of calendar year 2007, Executive shall be eligible to earn, and if and to the extent earned, shall be paid, an Annual Bonus of up to $195,750, determined as follows: (i) if, during 2007, the Company attains earnings before income, tax, depreciation and amortization, each determined in accordance with United States GAAP, consistently applied, as reported on its consolidated financial statements for such period (“EBITDA”) of no less than 110% of budgeted EBITDA (“2007 Target EBITDA”), the 2007 Annual Bonus shall equal no less than $97,875, and (ii) for each percentage point by which the Company’s 2007 EBITDA exceeds 2007 Target EBITDA up to 130% of 2007 Target EBITDA, the 2007 Annual Bonus shall be increased by no less than $4,893.75, up to an additional 2007 Annual Bonus amount of $97,875 (and  up to a total 2007 Annual Bonus of $195,750), provided, that if the Company does not attain 2007 Target EBITDA, an Annual Bonus shall only become payable to Executive in respect of calendar year 2007 if the Committee, in its sole discretion, so determines.  In respect of calendar years during the Employment Period beginning after 2007, any Annual Bonus shall be determined by reference to the attainment of objective performance criteria, which criteria shall be determined by the Committee within sixty days after the start of the applicable calendar year.

Each Annual Bonus shall be paid to Executive, to the extent that any such Annual Bonus becomes payable, within thirty days after the date on which the Committee conclusively determines the extent to which the applicable performance criteria have (or have not) been met.

(c)           Credit Card Reward Miles.  During the Employment Period, the Company shall provide Executive with a corporate American Express card (or similar major credit card) to be used solely for the purpose of paying expenses that would otherwise be reimbursable pursuant to Section 3(f) below.  To the extent that Executive accrues miles (or comparable reward credit, “Miles”) based on Executive’s use of such corporate credit card (i) for expenses incurred directly by Executive for Executive’s travel, lodging and/or other individual business expenses, Executive shall be permitted to apply any Miles so accrued to personal and/or business use in Executive’s sole discretion, and (ii) for expenses incurred on behalf of other employees or consultants of the Company (including without limitation, other employees’ or consultants’ travel and lodging) or items or services purchased on behalf of the Company, Executive shall apply such Miles to the purchase of travel, lodging and/or  related upgrades associated with business-related travel only.  To the extent that any Miles accrued for expenses described in clause (ii) of this section 3(c) are not applied by Executive as described in such clause (ii), such Miles shall be and remain the sole property of the Company.

(d)           Benefit Plans; Technology.  During the Employment Period, Executive and Executive’s legal dependants shall be eligible to participate in the welfare benefit plans, policies and programs (including, if applicable, medical, dental, disability, life and accidental death insurance plans and programs) maintained by OA generally for its senior executives.  In addition, during the Employment Period, Executive shall be eligible to participate in such incentive, savings and retirement plans, policies and programs as are made available to similarly situated senior executives of OA, provided, that the OA shall have no obligation, in any case, to adopt, maintain or continue any such plans, policies or programs.  During the Employment Period, Executive shall be eligible to receive technology equipment and support commensurate with Executive’s position and comparable to that provided to similarly situated senior executives of OA.

(e)           Vacation.  During the Employment Period, Executive shall be entitled to four weeks of paid vacation per calendar year, pro rated for any service by Executive during any partial calendar year, provided, that Executive shall not accrue any vacation time in excess of four weeks.

(f)           Expenses.  During the Employment Period, Executive shall be entitled to receive prompt reimbursement of all reasonable business expenses incurred by Executive in accordance with the expense reimbursement policy of OA applicable to senior executives of OA, as in effect from time to time, provided that Executive properly substantiates such expenses in accordance with such policy.

(g)           Charitable Contributions.  Beginning in calendar year 2007, each year during the Employment Period, Executive may designate a charitable organization that is exempt from taxation under Section 501(c)(3) of the Internal Revenue Code to which the Company shallcontribute up to $5,000 prior to the end of such year, as directed by Executive, provided that Executive remains employed by the Company through the end of such year.

4.           Termination of Employment.

Either the Company or Executive may terminate Executive’s employment at any time for any reason or no reason, subject to the terms and conditions of this Section 4.  The following provisions shall control any such termination of Executive’s employment:

(a)           Termination Without Cause.  The Company may terminate Executive’s employment without Cause (as defined below) at any time during the Employment Period upon written notice to Executive provided in accordance with Section 7 below.  If Executive’s employment is terminated as provided in this Section 4(a), the Company shall promptly, or in the case of obligations described in clause (v) below, as such obligations become due to Executive, pay or provide to Executive, (i) Executive’s earned but unpaid Base Salary accrued through the Date of Termination, (ii) accrued but unpaid vacation time through the Date of Termination, (iii) any Annual Bonus required to be paid to Executive pursuant to this Agreement for any calendar year of the Company ending prior to the Date of Termination, to the extent payable, but not previously paid, (iv) reimbursement of any business expenses incurred by Executive prior to the Date of Termination that are reimbursable under Section 3(f) above, and (v) any vested benefits and other amounts due to Executive under any plan, program or policy of the Company or OA (together, the “Accrued Obligations”).  In addition, subject to Section 4(i) below, Executive’s execution and non-revocation of a binding Release (as defined below) in accordance with Section 4(g) below and Executive’s continued compliance with the Confidentiality Agreement (as defined below), Executive shall be entitled to the following payments and benefits from the Company (the “Severance”):

(1) continued payment of 100% of Executive’s Base Salary at the rate in effect as of the Date of Termination, in substantially equal installments, for a period of twelve months following the Date of Termination, in accordance with the Company’s normal payroll procedures applicable to senior executives of OA, as in effect from time to time (but no less often than monthly), provided, that payment of the amounts described in this Section 4(a)(1) shall not commence until the Company’s first payroll date occurring on or after the 30th day following the Date of Termination (the “First Payroll Date”) and any amounts that would otherwise have been paid prior to the First Payroll Date shall instead be paid on the First Payroll Date;

(2) subject to Executive’s proper election to continue healthcare coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), for a period of twelve months

from the Date of Termination, the Company will pay Executivethe difference between Executive’s COBRA premiums (in respect of COBRA benefits to be provided through third-party insurance maintained by the Company under the Company’s benefit plans for Executive and his legal dependents, to the extent each such individual received healthcare coverage provided by the Company immediately prior to such termination of employment), and the cost to Executive of such coverage immediately prior to such termination (subject to premium increases affecting participants in such plan(s) generally). The Company shall provide this premium cost offset in a manner that causes such COBRA benefits to be exempt from the application of Section 409A under Treasury Regulation Section 1.409A-1(a)(5), provided, that if during the twelve month period, any plan pursuant to which such benefits are to be provided ceases to be exempt from the application of Section 409A under Treasury Regulation Section 1.409A-1(a)(5), then an amount equal to each such remaining premium cost offset shall thereafter be paid to Executive as currently taxable compensation in substantially equal monthly installments over the remainder of the twelve month period.   Following such twelve-month continuation period, any further continuation of such coverage shall be at Executive’s sole expense, as and to the extent provided by law; and

(3) a pro rated portion of the Annual Bonus that would otherwise become payable in respect of the year in which the Date of Termination occurs (if any), if and to the extent that, as of the Date of Termination, the Company is on track to attain the performance objectives applicable to such Annual Bonus, as determined in the reasonable discretion of the Committee, provided, that if performance objectives have not yet been determined for such Annual Bonus, then no amount shall become payable pursuant to this Section 4(a)(3).

Each payment under this Section 4(a)(1)(2) and (3) above shall be treated as a separate payment for the purposes of Section 409A.

(b)           Constructive Termination.  Executive may terminate Executive’s employment upon the occurrence of a Constructive Termination (as defined below) at any time during the Employment Period upon written notice to OA provided in accordance with Section 7 below.  If Executive’s employment is terminated as provided in this Section 4(b), theCompany shall promptly, or in the case of obligations described in

clause 4(a)(v) above, as such obligations become due to Executive, pay or provide to Executive the Accrued Obligations.  In addition, upon a Constructive Termination, subject to Section 4(i) below, Executive’s execution and non-revocation of a binding Release in accordance with Section 4(g) below and Executive’s continued compliance with the Confidentiality Agreement, Executive shall be entitled to receive the Severance.

(c)           Death; Disability.  If Executive dies during the Employment Period or Executive’s employment is terminated due to Executive’s Disability (as defined below), Executive or Executive’s estate, as applicable, shall be entitled to receive the Accrued Obligations promptly, or, in the case of benefits described in Section 4(a)(v) above, as such obligations become due to Executive.  In addition, subject to Executive’s (or Executive’s estate’s) execution and non-revocation of a binding Release in accordance with Section 4(g) below and Executive’s continued compliance with the Confidentiality Agreement (upon a Disability termination), Executive (or Executive’s estate) shall be entitled to receive the Severance.

(d)           Cause.  If Executive’s employment becomes terminable by the Company for Cause, the Company may terminate Executive’s employment immediately upon notice to Executive provided in accordance with Section 7 below, and Executive shall be entitled to receive the Accrued Obligations promptly or, in the case of benefits described in Section 4(a)(v) above, as such obligations become due to Executive.

(e)           Resignation.  Executive may terminate Executive’s employment upon sixty days’ notice to OA provided in accordance with Section 7 below, subject to OA’s right to waive any or all of such notice period.  If Executive so terminates Executive’s employment, Executive shall be entitled to receive the Accrued Obligations promptly, or, in the case of benefits described in Section 4(a)(v) above, as such obligations become due to Executive.  If the Company elects to waive the notice period provided for in this Section 4(e), Executive shall not be entitled to any compensation in respect of such period.

(f)           Other Terminations.  If Executive’s employment terminates for any reason other than those specified in Sections 4(a), (b), (c), (d) or (e) above (including without limitation, expiration of the Employment Period or election by the Company or Executive not to extend the Employment Period), the Company shall promptly, or in the case of items described in Section 4(a)(v) above, as such obligations become due to Executive, pay or provide to Executive the Accrued Obligations.

(g)           Release; Exclusivity of Benefits.  Notwithstanding anything in this Agreement to the contrary, it shall be a condition to Executive’s right to receive the Severance that Executive (or Executive’s estate) execute, deliver to the Company and not revoke a general release of claims in a form reasonably prescribed by the Company (the “Release”).  Except as expressly provided in this Section 4, upon the termination of Executive’s employment, the Company shall have no obligations to Executive in connection with Executive’s employment with the Company or the termination thereof.

(h)           Definitions.

“Cause” shall mean (i) a material breach of this Agreement by Executive; (ii) the willful or repeated failure or refusal by Executive substantially to perform Executive’s material duties hereunder; (iii) Executive’s commission of any felony or other crime involving moral turpitude, (iv) fraud, embezzlement or misappropriation by Executive relating to the Company or its funds, properties, corporate opportunities or other assets to the extent that the Company reasonably determines such act to be materially injurious to the Company, or (v) Executive repeatedly acting in a manner or repeatedly making any statements, in either case, which the Company reasonably determines to be detrimental or damaging to the reputation, operations, prospects or business relations of the Company.

“Disability” shall mean that Executive has become entitled to receive benefits under the applicable provisions of a Company long-term disability insurance program or, if no such program is applicable to Executive, then Disability means Executive’s incapacity due to physical or mental illness during which Executive is unable to substantially perform Executive’s duties under this Agreement for a period of 6 consecutive months or for 180 days within any 365-day period or which can reasonably be expected to continue indefinitely, in any case, as determined by the Committee.

“Constructive Termination” shall mean (i) a material reduction in Executive’s duties or responsibilities; (ii) a material reduction of the Base Salary to which Executive is entitled as of the Effective Date; (iii) the assignment to Executive of duties or responsibilities that are materially inconsistent with Executive’s position as the President of the Company; (iv) any action by the Company or OA that requires, or would require, Executive to take any action that is illegal or unethical; or (v) the relocation by the Company of Executive’s principal place of work to a location outside of Salt Lake County, Utah, such that it constitutes a material change in the geographic location at which he must perform services under this Agreement (within the meaning of Section 409A).  Notwithstanding the foregoing, no such act(s) or omission(s) shall constitute Constructive Termination unless Executive notifies the Company in accordance with Section 7 below within 60 days after the occurrence of the act(s) or omission(s) that Executive believes constitute Constructive Termination,  the Company fails to cure any such act(s) or omission(s) within 30 days of receipt of such notice, and the date of Executive’s Separation from Service occurs no later than 45 days after Executive furnishes notice.

“Date of Termination” shall mean the date on which Executive experiences a separation from service within the meaning of Section 409A(a)(2)(A)(i) of the Internal Revenue Code of 1986, as amended, and Treasury Regulation Section 1.409A-1(h) (a “Separation from Service”).

(i)           Potential Six-Month Delay.  Notwithstanding anything to the contrary in this Agreement, no compensation or benefits, including without limitation any Severance payments, shall be paid to Executive during the 6-month period following Executive’s “separation from service” (within the meaning of Section 409A(a)(2)(A)(i) of the Internal Revenue Code of 1986, as amended (the “Code”)) to the extent the Committee reasonably determines Executive is a “specified employee” at the time of such Separation from Service (within the meaning of Section 409A) and that that paying such amounts at the time or timesindicated in this Agreement would be a prohibited

distribution under Section 409A(a)(2)(b)(i) of the Code and/or cause Executive to incur additional taxes under Section 409A of the Code.  If the payment of any such amounts is delayed as a result of the previous sentence, then on the first business day following the end of such 6-month period, (or such earlier date upon which such amount can be paid under Section 409A without being subject to such additional taxes, including as a result of Executive’s death), the Company shall pay Executive a lump-sum amount equal to the cumulative amount that would have otherwise been payable to Executive during such 6-month period, without interest thereon.

5.           Confidentiality, Nonsolicitation and Noncompetition.  Concurrently herewith, Executive agrees to execute and comply with the terms of the Confidentiality, Nonsolicitation and Noncompetition Agreement attached hereto as Exhibit A (the “Confidentiality Agreement”).  The compensation and benefits provided under this Agreement, together with the compensation and benefits provided under the Stock Purchase Agreement, any Severance obligations arising hereunder and other good and valuable consideration are hereby acknowledged by the Parties hereto to constitute adequate consideration for Executive’s entering into the Confidentiality Agreement.

6.           Representations.

(a)           No Violation of Other Agreements. Executive hereby represents and warrants to the Company that (i) Executive is entering into this Agreement voluntarily and that the performance of Executive’s obligations hereunder will not violate any agreement between Executive and any other person, firm, organization or other entity, including without limitation, any agreements with the Company or any of its affiliates, and (ii) Executive is not bound by the terms of any agreement with any previous employer or other Party to refrain from competing, directly or indirectly, with the business of such previous employer or other Party that would be violated by Executive’s entering into this Agreement and/or providing services to the Company pursuant to the terms of this Agreement.

(b)           No Disclosure of Confidential Information. Executive’s performance of Executive’s duties under this Agreement will not require Executive to, and Executive shall not, rely on in the performance of Executive’s duties or disclose to the Company or any other person or entity or induce the Company in any way to use or rely on any trade secret or other confidential or proprietary information or material belonging to any previous employer of Executive.

7.           Notice.  Any notice or other communication required or permitted under this Agreement shall be effective only if it is in writing and delivered personally or sent by fax, email or registered or certified mail, postage prepaid, addressed as follows (or if it is sent through any other method agreed upon by the Parties):

If to OA:

On Assignment, Inc.

26651 W. Agoura Road

Calabasas, CA 91302

Tel: (818) 878-7900

Attention: Chief Executive Officer

If to Executive: to the most current home address on file with the Company’s Human Resources Department,or to such other address as any Party may designate by notice to the other in accordance with this Section 7, and shall be deemed to have been given upon actual receipt.

8.           Effectiveness.  Although this Agreement will be executed by the Parties prior to the Closing, the effectiveness of this Agreement is subject to and conditioned upon the occurrence of the Closing.  Therefore, this Agreement shall become effective only upon the Closing, it being understood that this Agreement shall be null and void and of no force or effect if the Closing is not consummated for any reason.

9.           Section 409A.

(a)           General.  The payments and benefits provided hereunder are intended to be exempt from or compliant with the requirements of Section 409A.  Notwithstanding any provision of this Agreement to the contrary, in the event that following the effective date hereof, the Company reasonably determines that any payments or benefits hereunder are not either exempt from or compliant with the requirements of Section 409A, the Company and Executive shall work together in good faith to adopt such amendments to this Agreement or adopt such other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions that are necessary or appropriate (i) to preserve the intended tax treatment of the payments and benefits provided hereunder, to preserve the economic benefits with respect to such payments and benefits, and/or (ii) to exempt such payments and benefits from Section 409A or to comply with the requirements of Section 409A and thereby avoid the application of penalty taxes thereunder, provided that the Company shall have no obligation to take any action described in this Section 9(a), to the extent the Company determines that taking any such action would be detrimental to Company, or to indemnify Executive for any failure to take any such action.

(b)           Certain Reimbursements.  To the extent that any reimbursements hereunder constitute taxable compensation to Executive, such reimbursements shall be made to Executive promptly, but in no event after December 31st of the year following the year in which the expense was incurred, the amount of any such amounts reimbursed in one year shall not affect the amount eligible for reimbursement in any subsequent year, and Executive’s right to reimbursement of any such expenses shall not be subject to liquidation or exchange for any other benefit.

10.           Miscellaneous.

(a)           Governing Law.  The rights and duties of the Parties will be governed by the local law of the State of Utah, excluding any choice-of-law rules that would require the application of the laws of any other jurisdiction.  The Parties consent to the jurisdiction of the state and federal courts located in the state of Utah to adjudicate any disputes between the Parties.

(b)           Captions.  The captions of this Agreement are not part of the provisions hereof, rather they are included for convenience only and shall have no force or effect.

(c)           Amendment.  The terms of this Agreement may not be amended or modified other than by a written instrument executed by the Parties or their respective successors.

(d)           Withholding.  The Company shall withhold from any amounts payable under this Agreement all federal, state, local and/or foreign taxes, as the Company determines to be legally required pursuant to any applicable laws or regulations.

(e)           No Waiver.  Failure by any Party to insist upon strict compliance with any provision of this Agreement or to assert any right such Party may have hereunder shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

(f)           Severability.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.

(g)           Construction.  The Parties hereto acknowledge and agree that each Party has reviewed and negotiated the terms and provisions of this Agreement and has had the opportunity to contribute to its revision.  Accordingly, the rule of construction to the effect that ambiguities are resolved against the drafting Party shall not be employed in the interpretation of this Agreement.  Rather, the terms of this Agreement shall be construed fairly as to all Parties and not in favor or against any Party by the rule of construction abovementioned.

(h)           Assignment.  This Agreement is binding on and for the benefit of the Parties and their respective permitted successors, heirs, executors, administrators and other legal representatives.  Neither this Agreement nor any right or obligation hereunder may be assigned by Executive.

(i)           Payment of Fees and Expenses.  In the event that any Party initiates legal proceedings seeking legal or equitable relief, including without limitation, any arbitration proceedings pursuant to Section 9(k) below, relating to one or more issues of or concerning an alleged breach of any provision of this Agreement or seeking enforcement of any provision of this Agreement, the Party that prevails in such legal proceeding with respect to any such issue shall be entitled to payment from the non-prevailing Party of all reasonable attorneys’ fees and expenses incurred by the prevailing Party in connection with any such legal proceeding.  “Expenses” shall include, but not be limited to, all reasonable expenses and will not be limited to costs as defined by Rule 54 of the Utah Rules of Civil Procedure.

(j)           Entire Agreement.  As of the Effective Date, this Agreement, together with the Confidentiality Agreement, constitutes the final, complete and exclusive agreement and understanding between Executive, OA the Company with respect to the subject matter hereof and replaces and supersedes any and all other agreements, including the Prior Agreement, offers or promises, whether oral or written, made to Executive by the Company, OA or any representative thereof.

(k)           Arbitration of Disputes.  Any dispute, controversy, or claim arising out of or relating to this Agreement, or the breach of this Agreement, shall be settled or resolved by binding arbitration administered by the American Arbitration Association in accordance with its Employment Arbitration Rules and Mediation Procedures (which rules are available at www.adr.org), as said rules may be amended, supplemented, or replaced by action of the American Arbitration Association, and judgment on the award rendered by the arbitrator may be entered in and fully enforced by any court having jurisdiction thereof.

(l)           Counterparts.  This Agreement may be executed in several counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument.

(m)           Construction.  Where the context requires, the singular shall include the plural, the plural shall include the singular and any gender shall include both genders.

IN WITNESS WHEREOF, Executive has hereunto set Executive’s hand and the Company and OA have each caused these presents to be executed in their respective names on their respective behalves, all as of the day and year first above written.

ON ASSIGNMENT, INC.
By:	/s/ Peter Dameris
	Name: Peter Dameris
	Title:  Chief Executive Officer

VISTA STAFFING SOLUTIONS, INC.
By:	/s/  Kathryn E. Hoffman-Abby
	Name: Kathryn E. Hoffman-Abby
	Title: Executive Vice President

/s/ Mark S. Brouse

Name: Mark S. Brouse 

Exhibit A

[CONFIDENTIALITY AGREEMENT]

Exhibit B

[RELEASE AGREEMENT]

EX-10.20

AMENDED AND RESTATED SENIOR EXECUTIVE AGREEMENT

THIS AMENDED AND RESTATED AGREEMENT by and between ON ASSIGNMENT, INC., a Delaware corporation (the “Company”) and EMMETT MCGRATH (“Executive”) is entered into on  December 11, 2008.

Recitals

 A.     The Company and Executive previously entered into an agreement, dated July 23, 2004, as renewed and amended on October 16, 2006 and as further amended on November 29, 2007, pursuant to which Executive is employed as the President of Lab Support and Allied Divisions of the Company (the “Prior Agreement”).

B.      The Company and Executive wish to amend and restate the Prior Agreement to implement changes required under Internal Revenue Code (“Code”)Section 409A (together with the regulations and official interpretations thereof, “Section 409A”).

C.            Certain definitions are set forth in Section 4 of this Agreement.

Agreement

The parties hereto agree as follows:

1.             Employment.  The Company engaged Executive as of August 30, 2004 (the “Start Date”) to serve the Company, during the Service Term in the capacities, and subject to the terms and conditions, set forth in this Agreement.

(a)           Services.  During the Service Term, Executive, as President of the Company’s Lab Support Division and Allied Division, shall be responsible for the day-to-day operations of the Company’s Lab Support line of business and Allied healthcare line of business and all other duties and responsibilities as may be reasonably assigned to him from time to time by the Company’s Chief Executive Officer (the “CEO”).  Executive will report directly to the CEO.  Executive will devote his best efforts and substantially all of his business time and attention (except for vacation periods and periods of illness or other incapacity) to the business of the Company and its Affiliates.  Notwithstanding the foregoing, and provided that such activities do not interfere with the fulfillment of Executive’s obligations hereunder, Executive may (A) serve as an officer, director or trustee of any charitable or non-profit entity; (B) own a passive investment in any private company that is not a competitor of the Company and own up to 2% of the outstanding voting securities of any public company; and/or (C) subject to the Company’s reasonable approval, serve as a director of a for-profit company, provided  that Executive reasonably believes that such service would be in the interests of the Company.  Executive’s place of employment shall be one of the Company’s offices in or around Santa Clara, California; provided, however, that Executive shall spend a minimum of five (5) days per month in the Company’s headquarters in Calabasas, California and shall travel to such other locations of the Company and its Affiliates as may be reasonably necessary in order to discharge his duties hereunder.  Executive shall not be required to re-locate his place of employment to the Company’s headquarters; however, in the event that the CEO and Executive mutually determine that it would be in the interests of the Company for Executive to re-locate his place of employment to the Company’s headquarters, Executive shall be entitled to reimbursement and/or compensation for certain costs and expenses incurred in connection with such relocation, as negotiated by Executive and the Company.

(b)           Salary, Bonus and Benefits.

(i)            Salary and Bonus.  During the Service Term, the Company will pay Executive a base salary (the “Annual Base Salary”) as the Board (or Compensation Committee thereof) may designate from time to time, at the rate of not less than $200,000 per annum; provided, however, that the Annual Base Salary for fiscal year 2008 shall be $310,000 and shall be subject to review annually (at the end of each fiscal year of the Company) by the Board (or Compensation Committee thereof) for upward increases thereto.  Commencing with fiscal year 2009, Executive shall be eligible to receive an annual bonus in an amount of up to 100% of Executive’s Annual Base Salary for such fiscal year, as determined by the Compensation Committee of the Board based upon the following:  at the beginning of each fiscal year of the Company that commences during the Service Term, the CEO and Executive shall cooperate with each other in good faith to determine plan targets (the “Financial Targets”), which shall be a combination of targets for revenue, gross profit and operating margin of the Company’s Lab Support Division and Allied Division operations.  The Financial Targets shall be subject to approval by the Compensation Committee of the Board.  Executive shall be entitled to a bonus of up to 50% of the Annual Base Salary if the Financial Targets, as approved by the Compensation Committee, are met.  Executive shall be eligible for an additional bonus of up to 50% of the Annual Base Salary (thereby making the total bonus opportunity 100% of the Annual Base Salary), upon over-achievement of Financial Targets and/or accomplishment of key operating objectives determined by the CEO, each as approved by the Compensation Committee.

With respect to fiscal year 2008 only, Executive shall be eligible to earn an annual bonus of up to $278,250 for performance relating to the Lab Support Division, as determined by the Compensation Committee of the Board based upon the following:  at the beginning of fiscal year 2008, the CEO and Executive shall cooperate with each other in good faith to determine plan targets (the “Financial Targets”), which shall be a combination of targets for revenue, gross profit and operating margin of the Company’s Lab Support Division operations.  The Financial Targets shall be subject to approval by the Compensation Committee of the Board.  Executive shall be entitled to a bonus of up to 50% of $278,250 (i.e. $139,125) if the Financial Targets, as approved by the Compensation Committee, are met.  Executive shall be eligible for an additional bonus of up to 50% of $278,250 (thereby making the total bonus opportunity 100% of $278,250), upon over-achievement of the Lab Support Division Financial Targets and/or accomplishment of key operating objectives determined by the CEO, each as approved by the Compensation Committee.  With respect to fiscal year 2008 only, Executive shall be entitled to a guaranteed bonus of $15,000 and shall be eligible to earn an additional annual bonus of up to $35,000 for performance relating to the Allied Division, as determined by the Compensation Committee of the Board based upon the following:  at the beginning of fiscal year 2008, the CEO and Executive shall cooperate with each other in good faith to determine plan targets (the “Financial Targets”), which shall be a combination of targets for revenue, gross profit and operating margin of the Company’s Allied Division operations.  The Financial Targets shall be subject to approval by the Compensation Committee of the Board.  Executive shall be entitled to a bonus of up to 50% of $35,000 (i.e. $17,500) if the Financial Targets, as approved by the Compensation Committee, are met.  Executive shall be eligible for an additional bonus of up to 50% of $35,000 (thereby making the total bonus opportunity 100% of $35,000), upon over-achievement of the Allied Division Financial Targets and/or accomplishment of key operating objectives determined by the CEO, each as approved by the Compensation Committee.

(ii)           Benefits.  Executive shall be entitled to the benefits set forth in this Section 1(b)(ii) during the Service Term, but only during the Service Term unless explicitly provided to the contrary.  Executive shall be entitled to participate in and shall receive all benefits under pension benefit plans provided by the Company (including without limitation participation in any Company incentive, savings and retirement plans, practices, policies and programs) to the extent applicable generally to other peer executives of the Company.  In addition, the Executive and/or the Executive’s family shall be entitled to participate and shall receive all benefits under welfare plans provided by the Company (including without limitation medical prescriptions, dental, disability, employee life, group life, accidental life and travel accident insurance plans) to the extent and on the same basis applicable generally to other peer executives of the Company.  In the event that Executive is not eligible to participate in any of the Company’s welfare benefit plans as of the Start Date, the Company shall reimburse

Executive for any payments Executive is required to make to his former employer to continue his participation in each of such employer’s welfare benefit plans, until such time as Executive is eligible to participate in the analogous welfare benefit plan of the Company;  provided ,  however , that Executive shall be entitled to such reimbursement only (a) so long as his eligibility for the Company’s welfare benefit plans relates to his time of service with the Company, and (b) upon presentation of reasonably acceptable documentation and evidence of payment; and  provided further  that “analogous” shall relate to the subject matter covered by such plan ( e.g. , medical or dental) and shall not be construed to require the provision to Executive of identical or substantially equivalent benefits to those provided by the former employer’s plans.  Executive shall be reimbursed for customary travel and other expenses, subject to standard and reasonable documentation requirements.  Such travel reimbursement shall apply to Executive’s travel to and from the Company’s headquarters in Calabasas, California, for so long as Executive’s primary place of business is outside of Calabasas, California.  In addition, Executive will receive a car allowance of $450 per month, which allowance may be used in Executive’s discretion toward lease or financing payments, maintenance and/or other car-related expenses.  Executive shall also be eligible to receive four weeks paid vacation per annum.

(iii)         Stock Options.

(A)          On the Start Date, Executive received a non-qualified stock option grant for the purchase of 75,000 shares of the common stock of the Company (the “Common Stock”).  Such option (i) had an exercise price of the fair market value of the Common Stock on the date of grant, as determined in accordance with the Company’s Restated 1987 Stock Option Plan (the “Stock Plan”); (ii) vested over a four-year period with 25% vesting on the first anniversary of the date of grant and monthly thereafter at the rate of 1/36 th  of the remainder of the grant (subject to accelerated vesting upon a change of control or permanent disability to the extent permitted by the Stock Plan); and (iii) expires not later than the tenth anniversary of the date of grant.

(1)           On January 2, 2008, (the “Grant Date”) Executive received a non-qualified stock option grant for the purchase of 15,000 shares of the common stock of the Company (the “Common Stock”).  Such option  (i) had an exercise price of the fair market value of the Common Stock on the Grant Date, (as determined in accordance with the Company’s Stock Plan; (ii) vests in equal, consecutive, monthly installments over a four-year period, commencing one month following the Grant Date (subject to accelerated vesting upon a change of control or permanent disability to the extent permitted by the Stock Plan); and (iii) expires not later than the tenth anniversary of the Grant Date.

(2)           On January 2, 2008, (the “Grant Date”) Executive  received a grant of Restricted Stock Units (“RSUs”), each representing the right to receive one share of Company common stock upon vesting.   The dollar value of the RSU grant was $50,000 (the “RSU Dollar Value”).  The number of RSUs comprising Executive’s award was determined by dividing the RSU Dollar Value by the fair market value (as that term is defined in the Stock Plan) of a share of the Company’s common stock on the Grant Date.   The award (i) vests in three equal, consecutive, annual installments, commencing one year following the Grant Date (subject to accelerated vesting upon a change of control or permanent disability to the extent permitted by the Stock Plan).  Shares of Company common stock shall be delivered in respect of RSUs vesting in accordance with this Section 1(b)(iii)(A)(2) on or as soon as practicable after the vesting date of such RSUs, but in no event more than fifteen days after such vesting date(s), with the exact payment dates to be determined by the Company in its sole discretion.

(B)           The other terms and conditions of the foregoing option shall be set in accordance with the Stock Plan and shall be consistent with the terms contained in stock option agreements provided to other peer executives of the Company.

(iv)          Change of Control; Sale of Division.  Executive shall be entitled to participate in the Company’s existing Change of Control Severance Plan as well as any successor plan thereto. In the event the Company sells the U.S. Lab Support Division to a third party, Executive shall be entitled to a lump-sum payment equal tothe then applicable Annual Base Salary, which payment shall (A) be

made within 30 days following the closing of the sale of the Division, and (B) be in lieu of any other severance or similar payment to which Executive may be entitled as a result of such sale or Executive’s termination of employment with the Company in connection therewith, unless such other payment is (or payments in the aggregate are) greater than the then applicable Annual Base Salary, or unless Executive otherwise elects in his sole discretion to receive such other payment(s), in either of which cases Executive shall be entitled to such other payment(s) but not the lump-sum payment provided by this  Section 1(b)(iv).

(c)           Termination.

(i)            Events of Termination.  Executive’s employment with the Company shall cease upon:

(A)          Executive’s death.

(B)           Executive’s voluntary retirement.

    (C)           Executive’s “Disability” means Executive has become disabled within the meaning of Section 409A.

    (D)          Termination by the Company by the delivery to Executive of a written notice from the Board or the CEO that Executive has been terminated (“Notice of Termination”) with or without Cause.   “Cause” shall mean:

(1)           Executive’s (aa) conviction of a felony; (bb) Executive’s commission of any other material act or omission involving dishonesty or fraud with respect to the Company or any of its Affiliates or any of the customers, vendors or suppliers of the Company or its Subsidiaries; (cc) Executive’s misappropriation of material funds or assets of the Company for personal use; or (dd) Executive’s engagement in unlawful harassment or other discrimination with respect to the employees of the Company or its Subsidiaries;

    (2)           Executive’s continued substantial and repeated neglect of his duties, after written notice thereof from the Board or the CEO  and such neglect has not been cured within 30 days after Executive receives notice thereof;

    (3)           Executive’s gross negligence or willful misconduct in the performance of his duties hereunder that is materially and demonstrably injurious to the Company; or

    (4)           Executive’s engaging in conduct constituting a breach of Sections 2  or  3  hereof that is not cured in full within 15 days, and is materially and demonstrably injurious to the Company, after notice of default thereof, from the Company, as determined by a court of law.

The delivery by the Company of notice to Executive that it does not intend to renew this Agreement as provided in  Section 1(f)  shall constitute a termination by the Company without Cause if, at the time of such notice, Executive is willing and able to renew the Agreement and continue providing services on terms and conditions substantially similar to those contained in this Agreement, provided, that in no event shall notice which  fulfills the requirements of  Section 1(c)(i)(D)(1), (2), (3) or (4)  above constitute a termination by the Company without Cause.

    (E)           Executive’s voluntary resignation for whatever reason by the delivery to the Company and the Board of at least 14 days’ prior written notice from Executive (or 90 days in the case of notice to the Company that Executive does not intend to renew this Agreement as provided in Section 1(f)).

(ii)           Date of Termination.  “Date of Termination” means the date on which Executive experiences a separation from service within the meaning of Section 409A(a)(2)(A)(i) of the Internal Revenue Code of 1986, as amended, and Treasury Regulation Section 1.409A-1(h) (a “Separation from Service”).

(iii)         Rights on Termination.

(A)          In the event that termination is by the Company without Cause (including by operation of the last paragraph of Section 1(c)(i)(D) above), the Company will pay Executive (i) an amount equal to 100% of the Annual Base Salary, payable over  a period of twelve (12) months commencing on the Date of Termination (the  “Severance Period” ), in substantially equal installments,  on regular salary payment dates (but no less often than monthly), provided, that payment of the amounts described in this Section 1(c)(iii)(A) shall not commence until the Company’s first payroll date occurring on or after the 30th day following the Date of Termination (the “First Payroll Date”) and any amounts that would otherwise have been paid prior to the First Payroll Date shall instead be paid on the First Payroll Date, and (ii) a cash amount equal to the aggregate premiums that the Company would have paid for basic life insurance, accidental death and dismemberment insurance and long- and short-term disability insurance, each as in effect on the Date of Termination, had Executive remained employed by the Company during the Severance Period (together, “Insurance Benefits”).  In addition, during the Severance Period, subject to Executive’s proper election to continue healthcare coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), the Company will pay Executive’s COBRA premiums in respect of COBRA benefits to be provided through third-party insurance maintained by the Company under the Company’s benefit plans in a manner that causes such COBRA benefits to be exempt from the application of Section 409A under Treasury Regulation Section 1.409A-1(a)(5), provided, that if during the period of continuation coverage, any plan pursuant to which such benefits are to be provided ceases to be exempt from the application of Section 409A under Treasury Regulation Section 1.409A-1(a)(5), then an amount equal to each such remaining premium shall thereafter be paid to Executive as currently taxable compensation in substantially equal monthly installments over the remainder of the continuation coverage period.  The payments of Annual Base Salary, COBRA benefits and amounts in lieu of Insurance Benefits in accordance with this Section 1(c)(iii)(A)  are collectively referred to as  “Severance Payments”. In addition, the Company will pay to Executive in a lump sum any accrued but unused vacation time. This Section 1(c)(iii)(A) shall not apply unless the Company and Executive have executed a general release in a form acceptable to the Company. Each payment under Section 1(c)(iii)(A) above shall be treated as a separate payment for the purposes of Section 409A.

(B)           If the Company terminates Executive’s employment for Cause, or if Executive resigns for whatever reason (including by the Executive’s non-renewal of the Service Term under Section 1(f)  below), the Company’s obligations to pay any compensation or benefits under this Agreement (other than accrued but unused vacation time which shall be paid to Executive in a lump sum payment) and all vesting under all stock options held by Executive will cease effective as of the Date of Termination.  In such event, Executive’s rights under stock options vested prior to the Date of Termination shall not be affected, except to the extent that Executive’s termination of employment accelerates the termination of such stock options.  Executive’s right to receive any other health or other benefits, if any, will be determined under the provisions of applicable plans, programs or other coverages.

(C)           If Executive’s employment terminates because of Executive’s death or Disability, then Executive or his estate shall be entitled to any disability income or life insurance payments from any insurance policies (other than any  “key man” life insurance policy) maintained by the Company.  In addition, in the event of such a termination, for a period of six (6) months commencing on the Date of Termination, Executive or his estate shall be entitled to payment of an amount equal to 50% of the Annual Base Salary, payable over six months from Executive’s death or Disability in approximately equal installments on regular salary payment dates.

Notwithstanding the foregoing, the Company’s obligation to Executive for Severance Payments shall cease if Executive is found by a court of law to be in material violation of the provisions of  Sections 2 or 3  hereof. 

(d)           Mitigation. The Company’s obligation to continue to provide Executive with the Severance Payments pursuant to  Section 1(c)(iii)(A)  above and the benefits pursuant to the second sentence of  Section 1(c)(iii)(C)  above shall cease if Executive becomes employed as a senior executive by a third party.  Executive shall be under no obligation to seek or accept any employment during the Severance Period.

(e)           Liquidated Damages. The parties acknowledge and agree that damages which may result to Executive for termination by the Company without Cause would be extremely difficult or impossible to establish or prove, and agree that the Severance Pay shall constitute liquidated damages for any breach of this Agreement by the Company through the Date of Termination.  Executive agrees that, except for such other payments and benefits to which Executive may be entitled as expressly provided by the terms of this Agreement or any applicable Benefit Plan, such liquidated damages shall be in lieu of all other claims that Executive may make by reason of termination of his employment or any such breach of this Agreement and that, as a condition to receiving the Severance Payments, Executive will execute a contingent mutual release of claims in a form reasonably satisfactory to both the Company and Executive.

(f)            Term of Employment.  Unless Executive’s employment under this Agreement is sooner terminated as a result of Executive’s termination in accordance with the provisions of  Section 1(c)  above, Executive’s employment under this Agreement shall commence on the Start Date and shall terminate on the second anniversary thereof (the  “Service Term” );  provided, however,  that Executive’s employment under this Agreement, and the Service Term, shall be automatically renewed for additional one-year periods commencing on such second anniversary and, thereafter, on each successive anniversary of such date unless either the Company or Executive notifies the other party in writing at least ninety (90) days prior to any such anniversary that it or he desires not to renew Executive’s employment under this Agreement.  All references herein to “Service Term” shall include any renewals thereof after the second anniversary of the Start Date.

(g)         Potential Six-Month Delay.  Notwithstanding anything to the contrary in this Agreement,  no compensation or benefits, including without limitation any Severance  Payments in connection with a Separation from Service, shall be paid to Executive during the 6-month period following his Separation from Service to the extent that the Company reasonably determines that Executive is a “specified employee” at the time of such Separation from Service (within the meaning of Section 409A) and that paying such amounts at the time or times indicated in this Agreement would be a prohibited distribution under Section 409A(a)(2)(b)(i) of the Code.  If the payment of any such amounts is delayed as a result of the previous sentence, then on the first business day following the end of such 6-month period (or such earlier date upon which such amount can be paid under Section 409A without being subject to such additional taxes, including as a result of Executive’s death), the Company shall pay to Executive a lump-sum amount equal to the cumulative amount that would have otherwise been payable to Executive during such 6-month period, without interest thereon.

2.             Confidential Information; Proprietary Information, etc.

(a)           Obligation to Maintain Confidentiality. Executive acknowledges that any Proprietary Information disclosed or made available to Executive or obtained, observed or known by Executive as a direct or indirect consequence of his employment with or performance of services for the Company or any of its Affiliates during the course of his performance of services for, or employment with, any of the foregoing Persons (whether or not compensated for such services) and during the period in which Executive is receiving Severance Payments, are the property of the Company and its Affiliates.  Therefore, Executive agrees that he will not at any time (whether during or after Executive’s term of employment) disclose or permit to be disclosed to any Person or, directly or indirectly, utilize for his own account or permit to be utilized by any Person any Proprietary

Information or Records for any reason whatsoever without the Board’s consent.  Executive agrees to deliver to the Company at the termination of his employment, as a condition to receipt of the next or final payment of compensation, or at any other time the Company may request in writing (whether during or after Executive’s term of employment), all Records which he may then possess or have under his control. Executive further agrees that any property situated on the Company’s or its Affiliates’ premises and owned by the Company or its Affiliates, including disks and other storage media, filing cabinets or other work areas, is subject to inspection by Company or its Affiliates and their personnel at any time with or without notice.

(b)           Ownership of Property. Executive acknowledges that all inventions, innovations, improvements, developments, methods, processes, programs, designs, analyses, drawings, reports and all similar or related information (whether or not patentable) that relate to the Company’s or any of its Affiliates’ actual or anticipated business, research and development, or existing or future products or services and that are conceived, developed, contributed to, made, or reduced to practice by Executive (either solely or jointly with others) while employed by the Company or any of its Affiliates (including any of the foregoing that constitutes any Proprietary Information or Records) (“Work Product”) belong to the Company or such Affiliate and Executive hereby assigns, and agrees to assign, all of the above Work Product to the Company or such Affiliate.  Any copyrightable work prepared in whole or in part by Executive in the course of his work for any of the foregoing entities shall be deemed a “work made for hire” under the copyright laws, and the Company or such Affiliate shall own all rights therein. To the extent that any such copyrightable work is not a “work made for hire,” Executive hereby assigns and agrees to assign to Company or such Affiliate all right, title and interest, including without limitation, copyright in and to such copyrightable work.  Executive shall promptly disclose such Work Product and copyrightable work to the Board and perform all actions reasonably requested by the Board (whether during or after Executive’s term of employment) to establish and confirm the Company’s or its Affiliate’s ownership (including, without limitation, execution of assignments, consents, powers of attorney and other instruments).  Notwithstanding anything contained in this  Section 2(b)  to the contrary, the Company’s ownership of Work Product does not apply to any invention that Executive develops entirely on his own time without using the equipment, supplies or facilities of the Company or its Affiliates or Subsidiaries or any Proprietary Information (including trade secrets), except that the Company’s ownership of Work Product does include those inventions that:  (a) relate to the business of the Company or its Affiliates or Subsidiaries or to the actual or demonstrably anticipated research or development relating to the Company’s business; or (b) result from any work that Executive performs for the Company or its Affiliates or Subsidiaries.

(c)           Third Party Information. Executive understands that the Company and its Affiliates will receive from third parties confidential or proprietary information (“Third Party Information”) subject to a duty on the Company’s and its Affiliates’ part to maintain the confidentiality of such information and to use it only for certain limited purposes.  During the term of Executive’s employment and thereafter, and without in any way limiting the provisions of  Sections 2(a)  and  2(b) above, Executive shall hold Third Party Information in the strictest confidence and shall not disclose to anyone (other than personnel of the Company or its Affiliates who need to know such information in connection with their work for the Company or its Affiliates) or use, except in connection with his work for the Company or its Affiliates, Third Party Information unless expressly authorized by a member of the Board in writing.

(d)           No Restriction on Executive’s Use of Prior Knowledge.  Nothing in this Section 2 or in the definitions of Proprietary Information or Third Party Information shall be construed to prevent Executive from disclosing or using in future employment or business ventures (i) any information known to him prior to the Start Date, (ii) his general knowledge and experience or (iii) information known or which becomes generally known to and available for use by the public other than as a direct or indirect result of Executive’s acts or omissions to act.

(e)           Use of Confidential Information of Prior Employers, etc. Executive will abide by any enforceable obligations contained in any agreements that Executive has entered into with his prior employers or other parties to whom Executive has an obligation of confidentiality.

(f)            Compelled Disclosure. If Executive is required by law or governmental regulation or by subpoena or other valid legal process to disclose any Proprietary Information or Third Party Information to any Person, Executive will immediately provide the Company with written notice of the applicable law, regulation or process so that the Company may seek a protective order or other appropriate remedy.  Executive will cooperate fully with the Company and the Company’s Representatives in any attempt by the Company to obtain any such protective order or other remedy.  If the Company elects not to seek, or is unsuccessful in obtaining, any such protective order or other remedy in connection with any requirement that Executive disclose Proprietary Information or Third Party Information, and if Executive furnishes the Company with a written opinion of reputable legal counsel acceptable to the Company confirming that the disclosure of such Proprietary Information or Third Party Information is legally required, then Executive may disclose such Proprietary Information or Third Party Information to the extent legally required;  provided, however,  that Executive will use his best efforts to ensure that such Proprietary Information is treated confidentially by each Person to whom it is disclosed.

3.             Nonsolicitation.

(a)           Nonsolicitation.  As long as Executive is an employee of the Company or any Affiliate thereof, and for one (1) year thereafter, Executive shall not directly or indirectly through another Person:

(i)            induce or attempt to induce any employee of the Company or any Affiliate to leave the employ of the Company or such Affiliate, or in any way interfere with the employment relationship between the Company or any Affiliate and any employee thereof;

(ii)           hire or seek to hire any Person who is or was an employee of the Company or any Affiliate as of the earlier of (A) the date that notice of termination of Executive’s employment is given by Executive or the Company pursuant to this Agreement, and (B) the Date of Termination;  provided, however , that Executive shall be permitted to hire any such employee who, at his or her own initiative and not at the direct or indirect suggestion or behest of Executive, approaches Executive after the Date of Termination for the purpose of gaining employment with Executive, or responds to a general employment advertisement that is not specifically directed at the employee, the Company’s employees generally or any subset of the Company’s employees; or

(iii)          induce or attempt to induce any customer, client, supplier, licensee or other business relation of the Company or any Affiliate (each, a “Business Relation”) to cease doing business with the Company or such Affiliate, or in any other way interfere with the business relationship between any Business Relation and the Company or an Affiliate;  provided, however , that this restriction shall not apply to (A) Executive’s response to an indication by a Business Relation, at his, her or its own initiative and not at the direct or indirect suggestion or behest of Executive, of interest in procuring services offered (directly or indirectly) by Executive, or (B) any general advertisement that is not specifically directed at such Business Relation, the Business Relations of the Company generally or any subset of the Company’s Business Relations.

(b)           Acknowledgment. Executive acknowledges that in the course of his employment with the Company and its Affiliates, he has and will become familiar with the trade secrets and other Proprietary Information of the Company and its Affiliates. It is specifically recognized by Executive that his services to the Company and its Subsidiaries are special, unique and of extraordinary value, that the Company has a protectable interest in prohibiting Executive as provided in this  Section 3 , that money damages are insufficient to protect such interests, that there is adequate consideration being provided to Executive hereunder, that such prohibitions are necessary and appropriate without regard to payments being made to Executive hereunder and that the Company would not enter this Agreement with Executive without the restrictions of this Section 3 .  Executive further acknowledges that the provisions of this Section 3 are separate and independent of the other sections of this Agreement.

(c)           Enforcement, etc.  If, at the time of enforcement of Section 2 or 3 of this Agreement, a court holds that the restrictions stated herein are unreasonable under circumstances then existing, the parties hereto agree that the maximum duration, scope or geographical area reasonable under such circumstances as determined by the court shall be substituted for the stated period, scope or area.  Because Executive’s services are unique, because Executive has access to Proprietary Information and for the other reasons set forth herein, the parties hereto agree that money damages would be an inadequate remedy for any breach of this Agreement.  Therefore, without limiting the generality of Section 7(g), in the event of a breach or threatened breach of this Agreement, the Company or its successors or assigns may, in addition to other rights and remedies existing in their favor, apply to any court of competent jurisdiction for specific performance and/or injunctive or other relief in order to enforce, or prevent any violations of, the provisions hereof.

(d)          Submission to Jurisdiction.  The parties hereby: (i) submit to the jurisdiction of any state or federal court sitting in California in any action or proceeding arising out of or relating toSection 2 and/or 3 of this Agreement; (ii) agree that all claims in respect of such action or proceeding may be heard or determined in any such court; and (iii) agree not to bring any action or proceeding arising out of or relating to Section 2 and/or 3 of this Agreement in any other court.  The parties hereby waive any defense of inconvenient forum to the maintenance of any action or proceeding so brought.  The parties hereby agree that a final judgment in any action or proceeding so brought shall be conclusive and may be enforced by suit on the judgment or in any other manner provided by law.

GENERAL PROVISIONS

4.             Definitions.

“Affiliate” of any Person means any other Person that directly or indirectly controls, is controlled by or is under common control with such Person.

“Board” means the Company’s board of directors or the board of directors or similar management body of any successor of the Company.

“Person” means an individual, a partnership, a limited liability company, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof.

“Proprietary Information” means any and all data and information concerning the business affairs of the Company or any of its Affiliates and not generally known in the industry in which the Company or any of its Affiliates is or may become engaged, and any other information concerning any matters affecting or relating to the Company’s or its Affiliates businesses, but in any event Proprietary Information shall include, any of the Company’s and its Affiliates’ past, present or prospective business opportunities, including information concerning acquisition opportunities in or reasonably related to the Company’s or its Affiliates businesses or industries, customers, customer lists, clients, client lists, the prices the Company and its Affiliates obtain or have obtained from the sale of, or at which they sell or have sold, their products, unit volume of sales to past or present customers and clients, or any other information concerning the business of the Company and its Affiliates, their manner of operation, their plans, processes, figures, sales figures, projections, estimates, tax records, personnel history, accounting procedures, promotions, supply sources, contracts, know-how, trade secrets, information relating to research, development, inventions, technology, manufacture, purchasing, engineering, marketing, merchandising or selling, or other data without regard to whether all of the foregoing matters will be deemed confidential, material or important.  Proprietary Information does not include any information that Executive has obtained from a Person other than an employee of the Company, which was disclosed to him without a breach of a duty of confidentiality.

“Records” means (i) any and all procedure manuals, books, records and accounts; (ii) all property of the Company and its Affiliates, including papers, note books, tapes and similar repositories containing Proprietary Information; (iii) all invoices and commission reports; (iv) customerlists — partial and/or complete; (v) data layouts, magnetic tape layouts, diskette layouts, etc.; (vi) samples; (vii) promotional letters, brochures and advertising materials; (viii) displays and display materials; (ix) correspondence and old or current proposals to any former, present or prospective customer of the Company and its Affiliates; (x) information concerning revenues and profitability and any other financial conditions of the Company and its Affiliates; (xi) information concerning the Company and its Affiliates which was input by Executive or at his direction, under his supervision or with his knowledge, including on any floppy disk, diskette, cassette or similar device used in, or in connection with, any computer, recording devices or typewriter; (xii) data, account information or other matters furnished by customers of the Company and its Affiliates; and (xiii) all copies of any of the foregoing data, documents or devices whether in the form of carbon copies, photo copies, copies of floppy disks, diskettes, tapes or in any other manner whatsoever.

“Subsidiary” means any corporation of which the Company owns securities having a majority of the ordinary voting power in electing the board of directors directly or through one or more subsidiaries.

5.            Notices. Any notice provided for in this Agreement must be in writing and must be either personally delivered, mailed by first class United States mail (postage prepaid, return receipt requested) or sent by reputable overnight courier service (charges prepaid) or by facsimile to the recipient at the address below indicated:

If to Executive: to the most current home address on file with the Company’s Human Resources department,

If to the Company:

26651 West Agoura Road

Calabasas, California 91302

Attention:	Chief Executive Officer and Vice President of Human Resources
Tel No.:	(818) 871-3300
Fax No.:	(818) 880-0056

or such other address or to the attention of such other person as the recipient party shall have specified by prior written notice to the sending party.

6.            Executive’s Representations and Warranties.  Executive represents and warrants that he has full and authority to enter into this Agreement and fully to perform his obligations hereunder, that he is not subject to any non-competition agreement, and that his past, present and anticipated future activities have not and will not infringe on the proprietary rights of others, including, but not limited to, proprietary information rights or interfere with any agreements he has with any prior employee.  Executive further represents and warrants that he is not obligated under any contract (including licenses, covenants or commitments of any nature) or other agreement, or subject to any judgment, decree or order of any court or administrative agency, which would conflict with or result in a breach of this Agreement or which would in any manner interfere with the performance of his duties for the Company.

7.           Section 409A.  

(a)         General.  The payments and benefits provided hereunder are intended to be exempt from or compliant with the requirements of Section 409A.  Notwithstanding any provision of this Agreement to the contrary, in the event that following the effective date hereof, the Company reasonably determines that any payments or benefits hereunder

are not either exempt from or compliant with the requirements of Section 409A, the Company and Executive shall work together to adopt such amendments to this Agreement or adopt such other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that are necessary or appropriate (i) to preserve the intended tax treatment of the payments and benefits provided hereunder, to preserve the economic benefits with respect to such payments and benefits, and/or (ii) to exempt such payments and benefits from Section 409A or to comply with the requirements of Section 409A and thereby avoid the application of penalty taxes thereunder, provided¸ that the Company shall have no obligation to take any action described in this Section 7(a) or to indemnify Executive for any failure to take any such action.

          (b)            Certain Reimbursements.  To the extent that any reimbursements hereunder constitute taxable compensation to Executive, such reimbursements shall be made to Executive promptly, but in no event after December 31st of the year following the year in which the expense was incurred, the amount of any such amounts reimbursed in one year shall not affect the amount eligible for reimbursement in any subsequent year, and Executive’s right to reimbursement of any such expenses shall not be subject to liquidation or exchange for any other benefit.

8.          General Provisions.

(a)          Expenses. Each party shall bear his or its own expenses in connection with the negotiation and execution of this Agreement and the consummation of the transactions contemplated by this Agreement.

(b)          Severability.  Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

(c)          Complete Agreement. This Agreement and those documents expressly referred to herein embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way, including without limitation, the Prior Agreement (as amended).

(d)          Counterparts; Facsimile Transmission. This Agreement may be executed in two counterparts, each of which shall deemed to be an original and both of which taken together shall constitute one and the same agreement.  Each party to this Agreement agrees that it will be bound by its own telecopied signature and that it accepts the telecopied signature of each other party to this Agreement.

(e)          Successors and Assigns. Except as otherwise provided herein, this Agreement shall bind and inure to the benefit of and be enforceable by Executive, the Company and their respective successors and assigns; provided that the rights and obligations of Executive under this Agreement shall not be assignable and, provided further that, the rights and obligations of the Company may be assigned to any Affiliate of the Company.

(f)           Choice of Law; Jurisdiction. All questions concerning the construction, validity and interpretation of this Agreement will be governed by and construed in accordance with the internal laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.  The parties hereby: (i) submit to the jurisdiction of any state or federal court sitting in California in any action or proceeding arising out of or relating to Agreement; (ii) agree that all claims in respect of such action or proceeding may be heard or determined in any such court; and (iii) agree not to bring any action or proceeding arising out of or relating to this Agreement

in any other court. Executive hereby waives any defense of inconvenient forum to the maintenance of any action or proceeding so brought and waives any bond, surety or other security that might be required of any other party with respect thereto. The parties hereby agree that a final judgment in any action or proceeding so brought shall be conclusive and may be enforced by suit on the judgment or in any other manner provided by law.

(g)          Remedies. Each of the parties to this Agreement will be entitled to enforce its rights under this Agreement specifically to recover damages and costs (including reasonable attorney’s fees) caused by any breach of any provision of this Agreement and to exercise all other rights existing in its favor. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that any party may in its sole discretion apply to any court of law or equity of competent jurisdiction (without posting any bond or deposit) for specific performance and/or other injunctive relief in order to enforce or prevent any violations of the provisions of this Agreement.

(h)          Amendment and Waiver. The provisions of this Agreement may be amended or and waived only with the prior written consent of the Company and Executive.

(i)           Business Days. If any time period for giving notice or taking action hereunder expires on a day which is a Saturday, Sunday or holiday in the state in which the Company’s chief executive office is located, the time period shall be automatically extended to the business day immediately following such Saturday, Sunday or holiday.

(j)            Termination. This Agreement shall survive the termination of Executive’s employment with the Company and shall remain in full force and effect after such termination.

(k)          No Waiver. A waiver by any party hereto of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy that such party would otherwise have on any future occasion.  No failure to exercise nor any delay in exercising on the part of any party hereto, any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  The rights and remedies herein provided are cumulative and may be exercised singly or concurrently, and are not exclusive of any rights or remedies provided by law.

(l)           Insurance.  The Company, at its discretion, may apply for and procure in its own name for its own benefit life and/or disability insurance on Executive in any amount or amounts considered available. Executive agrees to cooperate in any medical or other examination, supply any information, and to execute and deliver any applications or other instruments in writing as may be reasonably necessary to obtain and constitute such insurance. Executive hereby represents that he has no reason to believe that his life is not insurable at rates now prevailing for healthy men of his age.

(m)         Offset.  Except as prohibited by applicable law, whenever the Company or any of its Subsidiaries is obligated to pay any sum to Executive or any Affiliate or related person thereof pursuant to this Agreement, any bona fide debts that Executive or such Affiliate or related person owes to the Company or any of its Subsidiaries may be deducted from that sum before payment, to the greatest extent permitted under applicable law.

(n)          Withholding.  The Company and its Subsidiaries shall be entitled to deduct or withhold from any amounts owing from the Company or any of its Subsidiaries to Executive any federal, state, provincial, local or foreign withholding taxes, excise taxes, or employment taxes ( “Taxes” ) imposed with respect to Executive’s compensation or other payments from the Company or any of its Subsidiaries or Executive’s ownership interest in the Company, including, but not limited to, wages, bonuses, the receipt or exercise of stock options and/or the receipt or vesting of restricted stock.

(o)          Insurance and Indemnification.  For the period from the date of this Agreement through at least the tenth anniversary of Executive’s termination of employment from the Company, the Company shall maintain Executive as an insured party on all directors’ and officers’ insurance maintained by the Company for the benefit of its directors and officers on at least the same basis as all other covered individuals and provide Executive with at least the same corporate indemnification as it provides to the peer executives of the Company.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date set forth in the Preamble hereto.

On Assignment, Inc.
By:	/s/ Peter Dameris
Name:	Peter Dameris
Title:	Executive Vice President
/s/ Emmett McGrath
Emmett McGrath

EX-10.21

AMENDED AND RESTATED EXECUTIVE CHANGE OF CONTROL AGREEMENT

This Executive Change of Control Agreement (this “Agreement”), made as of the 31st day of December, 2004, by and between On Assignment, Inc., a Delaware corporation (the “Company”), and Peter T. Dameris (the “Executive”), is amended and restated as of December 11, 2008.

Recitals

A. The Executive currently serves as the President and Chief Executive Officer of the Company.  The Company and the Executive are parties to that certain Senior Executive Agreement dated as of October 27, 2003 (as amended from time to time, the “Employment Agreement ”).

B. Pursuant to the terms of the Employment Agreement and the terms of the Company’s Change in Control Severance Plan (the “ASGN Severance Plan ”), the Executive was entitled to receive certain severance benefits in the event of a change in control of the Company.

C. The Board of Directors of the Company (the “Board”), has determined that it is in the best interests of the Company and its stockholders to assure that the Company will have the continued dedication of the Executive, notwithstanding the possibility, threat or occurrence of a Change of Control (as defined herein).  The Board believes it is imperative to diminish the inevitable distraction of the Executive by virtue of the personal uncertainties and risks created by a pending or threatened Change of Control and to encourage the Executive’s full attention and dedication to the current Company in the event of any threatened or pending Change of Control, and to provide the Executive with compensation and benefits arrangements upon a Change of Control that ensure that the compensation and benefits expectations of the Executive will be satisfied and that are competitive with those of other corporations.  Therefore, in order to accomplish these objectives, the Board has caused the Company to modify the ASGN Severance Plan to eliminate its coverage of the Executive and to enter into this Agreement.

Agreement

In consideration of the foregoing and the mutual covenants and promises contained herein, the parties agree as follows:

1. Certain Definitions.  Capitalized terms (such as “Cause”) not otherwise defined herein shall have the meanings set forth in the Employment Agreement.  In addition to the terms defined elsewhere herein, the following terms shall have the respective meanings set forth below:

(a) “Accrued Compensation” means an amount including all amounts earned or accrued through the termination date but not paid as of the termination date including (i) Base Salary, (ii) reimbursement for reasonable and necessary expenses incurred by you on behalf of the Company during the period ending on the termination date, (iii) vacation and sick leave pay (to the extent provided by Company policy or applicable law), and (iv) incentive compensation (if any) earned in respect of any period ended prior to the termination date.   It is expressly understood that incentive compensation shall have been “earned” as of the time that the conditions to such incentive compensation have been met, even if not calculated or payable at such time.

(b) “Affiliated Company” means any company controlled by, controlling or under common control with the Company.

(c) “Base Salary” means the Executive’s Annual Base Salary (as defined in Section 1(b)(i) of the Employment Agreement) at the rate in effect during the last regularly scheduled payroll period immediately preceding the occurrence of the Change in Control and does not include, for example, bonuses, overtime compensation, incentive pay, fringe benefits, sales commissions or expense allowances.

(d) “Cause” has the meaning given to it in the Employment Agreement.

(e) “Change of Control” shall be deemed to occur upon the consummation of any of the following transactions:

(i) a merger or consolidation in which the Company is not the surviving entity, except for a transaction the principal purpose of which is to change the state of the Company’s incorporation or a transaction in which 50% or more of the surviving entity’s outstanding voting stock following the transaction is held by holders who held 50% or more of the Company’s outstanding voting stock prior to such transaction; or

(ii) the sale, transfer or other disposition of all or substantially all of the assets of the Company; or

(iii) any reverse merger in which the Company is the surviving entity, but in which 50% or more of the Company’s outstanding voting stock is transferred to holders different from those who held the stock immediately prior to such merger; or

(iv) the acquisition by any person (or entity) directly or indirectly of 50% or more of the combined voting power of the outstanding shares of Company capital stock; or

(v) during any period of two (2) consecutive years (not including any period prior to the date of this Agreement), individuals who at the beginning of such period constitute the Board (and any new director, whose election by the Company’s stockholders was approved by a vote of at least [two-thirds (2/3)] of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was so approved), cease for any reason to constitute a majority thereof; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least [a majority] of the directors then comprising the Board on the date hereof (the “Incumbent Board ”) shall be considered as though such individual were a member of the Incumbent Board, but excluding, for purposes of this proviso, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board.

(f) “Change of Control Period” means the period commencing on the date hereof and ending on the third anniversary of the date hereof; provided, however, that, commencing on the date two years after the date hereof, and on each annual anniversary of such date (such date and each annual anniversary thereof, the “Renewal Date ”), the Change of Control Period shall be automatically extended so as to terminate two years from such Renewal Date, unless at least 60 days prior to the Renewal Date, the Company gives notice to the Executive that the Change of Control Period shall not be extended.

(g) “Date of Termination” means the date on which the Executive experiences a Separation from Service.

(h) “Involuntary Termination” shall mean the termination of Executive’s employment with the Company (or, if applicable, successor entity) other than by reason of death or disability:

(i) upon Executive’s involuntary discharge or dismissal other than for Cause,

(ii) upon Executive’s resignation for Good Reason in accordance with the terms of Section 1(c)(i)(E) of the Employment Agreement,

(iii) upon Executive’s resignation following (A) a reduction in Executive’s level of Base Salary or any Target Bonus (unless, in the case of a reduction in any Target Bonus, there is a corresponding increase in the level of Base Salary such that, in the aggregate, Executive is no worse off) or (B) a material reduction in Executive’s benefits, provided and only if such change or reduction is effected without Executive’s written concurrence, or

(iv) upon Executive’s resignation following a change in the Executive’s position with the Company (or, if applicable, with the successor entity) that is effected without the Executive’s consent and that materially reduces his level of responsibility or authority, other than reductions attributable to the Company ceasing to be a publicly held company or becoming a subsidiary or division of another company.

Except as provided in Section 2(b), for purposes of this Agreement any determination of “Involuntary Termination” made by the Company or the Executive shall be made in good faith.  Any dispute regarding same shall be promptly resolved by arbitration in accordance with the provisions of Sections 8(g) and (h) below.

(i) “Pro Rata Bonus” means an amount equal to 100% of the Target Bonus that the Executive would have been eligible to receive for the Company’s fiscal year in which the Executive’s employment terminates following a Change of Control, multiplied by a fraction, the numerator of which is the number of days in such fiscal year through the Termination Date and the denominator of which is 365.

(j)             “Separation from Service” means a “separation from service” within the meaning of Section 409A(a)(2)(A)(i) of the Code, and Treasury Regulation Section 1.409A-1(h).

(k) “Target Bonus” shall mean the bonus which would have been paid to the Executive for full achievement of the Company’s base business plan or budget and/or for the attainment of specific performance objectives pertaining to the business of the Company or any of its specific business units or divisions, or to individual performance criteria applicable to the Executive or his position, which objectives have been established by the Board of Directors (or the Compensation Committee thereof) for the Executive relating to such plan or budget for the year in question.  “Target Bonus ” shall not mean the “maximum bonus” which the Executive might have been paid for overachievement of such plan.

2. Involuntary Termination of Employment Following a Change in Control.

(a) Subject to the terms of this Agreement, the Executive shall be entitled to receive severance payments from the Company for services previously rendered to the Company and its Affiliated Companies if all of the following conditions are met:  (1) a Change of Control occurs during the Change of Control Period, (2) the Executive’s employment is terminated under circumstances constituting an Involuntary Termination, and (3) the Date of Termination occurs during the period commencing upon such Change of Control and ending on the date that is six (6) calendar months and ten (10) business days following the Change of Control.  In such event, the severance provisions of this Agreement shall control and take precedence over any inconsistent terms of the Employment Agreement (including without limitation Section 1(c)(iii)), and the Company shall, subject to Section 8 below:

(i) within 30 days after the Date of Termination (or such earlier date as may be required by applicable law), pay to the Executive the Executive’s Accrued Compensation and Pro-Rata Bonus;

(ii) within 30 days after the Date of Termination (with the exact payment date to be determined in the sole discretion of the Company), pay to the Executive the amount equal to the product of (i) 3.00 and (ii) the sum of (A) the Executive’s Base Salary and (B) the Executive’s Target Bonus;

(iii)            for a period of eighteen (18) months after the Date of Termination, continue to provide the Executive with his car allowance as in effect immediately prior to the Change of Control, payable in substantially equal monthly installments commencing on the Date of Termination, provided, however that if the Executive becomes reemployed with another employer and is eligible to receive a car allowance, the Company shall be relieved of its obligation to pay the Executive’s car allowance;

(iv)          for eighteen (18) months after the Date of Termination, orsuch longer period as may be provided by the terms of the appropriate plan, program, practice or policy,

subject to the Executive’s proper election to continue healthcare coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), the Company will pay the Executive’s and/or the Executive’s family’s COBRA premiums in respect of COBRA benefits to be provided at the levels being provided to the Executive and/or the Executive’s family immediately prior to the Change of Control through third-party insurance maintained by the Company under the Company’s benefit plans in a manner that causes such COBRA benefits to be exempt from the application of Section 409A under Treasury Regulation Section 1.409A-1(a)(5); provided, however, that if the Executive becomes reemployed with another employer and is eligible to receive medical or other welfare benefits under another employer provided plan, the benefits described in this Section 2(a)(iv) shall be secondary to those provided under such other plan during such applicable period of eligibility, provided, further, that if during the period of continuation coverage, any plan pursuant to which such benefits are to be provided ceases to be exempt from the application of Section 409A under Treasury Regulation Section 1.409A-1(a)(5), then an amount equal to each such remaining premium shall thereafter be paid to the Executive as currently taxable compensation in substantially equal monthly installments over the remainder of the continuation coverage period;

(v)                  within 30 days after the Date of Termination (with the exact payment date to be determined in the sole discretion of the Company), subject to Section 8(c) below, pay to the Executive a cash amount equal to the aggregate premiums that the Company would have paid for basic life insurance, accidental death and dismemberment insurance and long- and short-term disability insurance, each as in effect on the Date of Termination, had the Executive remained employed by the Company for eighteen (18) months after the Date of Termination;

(vi)                   during the eighteen (18) month period immediately following the Date of Termination, pay to the Executive, in substantially equal monthly installments, an amount equal to the aggregate contribution (if any) to the Company’s Deferred Compensation Plan and other retirement plans that the Company would have made on behalf of the Executive (including matching contributions) if the Executive’s employment continued for eighteen (18) months after the Date of Termination, assuming for this purpose that all benefits under such retirement plans are fully vested and that the Executive’s compensation during such eighteen (18) months were the same as it had been immediately prior to the Change of Control, (for clarification and avoidance of doubt, the foregoing provision applies only to amounts contributed by the Company to Executive’s Deferred Compensation Plan account, such as amounts contributed by the Company to match the Executive’s deferral amounts, but does not apply to any amounts deferred by Executive, the payout of which shall remain subject to and governed by the terms and conditions of the Deferred Compensation Plan); and

(vii) provide the Executive, at the Company’s expense, with outplacement services reasonably selected by the Executive,  provided, however, that the cost to the Company shall not exceed $15,000 and such services shall be provided to Executive no later than the end of the second calendar year following that in which the Date of Termination occurs.

(b) Anything in this Agreement to the contrary notwithstanding, a termination of employment by the Executive for any reason or for no reason during the period commencing on the date that is six months after the date of a Change of Control and ending ten (10) business days thereafter shall be deemed to be an “Involuntary Termination” for all purposes of this Agreement.

3. Termination of Employment Following a Change of Control for Cause or Other Than in Connection with an Involuntary Termination.  If following a Change of Control the Executive’s employment is terminated for Cause or the Executive resigns other than in connection with an Involuntary Termination or due to the Executive’s death or disability, this Agreement shall terminate without further obligations to the Executive and all obligations and rights of the Executive and the Company shall be governed by the appropriate operative provisions of the Employment Agreement.  The Executive shall not be deemed to have been terminated for Cause under this Agreement, unless such termination is made in full compliance with the terms of Section 1(c)(i)(D) of the Employment Agreement, including without limitation the provisions relating to notice, the opportunity to be heard by the Board, the

determination of “Cause” being made by a majority of the directors of the Company and the Executive’s right to appeal any such determination.

4. Effect on Option, Restricted Stock and Restricted Unit Agreements.  Immediately prior to a Change in Control, the vesting and exercisability of all stock options, restricted stock and restricted stock unit grants made to the Executive by the Company which are outstanding at the time of such event shall be accelerated with respect to all shares subject thereto, provided, however, that notwithstanding the foregoing, (i) all outstanding TSR Performance-Vesting RSU Grants and EBITDA Performance-Vesting Restricted Stock Grants (each as defined in the Employment Agreement) which have not previously vested (and in the case of outstanding EBITDA Performance-Vesting Restricted Stock Grants, have not previously been earned and/or vested) shall vest only in accordance with the attainment of applicable Performance Goals (as defined in the Employment Agreement) in accordance with the terms of the Employment Agreement applicable to such Grants in the event of a Change in Control, and (ii) payment in respect of any restricted stock units shall be made in accordance with the terms of such restricted stock units.  Accordingly, all stock options shall be exercisable at such time in accordance with their terms.  This Agreement is intended to amend all stock option, restricted stock and restricted stock unit grants previously awarded to the Executive to accelerate vesting as described above to the extent vesting would not otherwise be accelerated under the terms of such stock option, restricted stock and restricted stock unit grants.  The Company agrees for purposes of determining the continued exercisability of Executive’s stock options outstanding on the Date of Termination, Executive shall be considered to have remained employed by the Company until the date that is eighteen (18) months from the Date of Termination, provided, however, that in no event shall any stock option remain exercisable beyond the earlier to occur of the tenth anniversary of the applicable grant date or the stock option’s stated expiration date.

5. Certain Additional Payments by the Company.

(a) Anything to the contrary in this Agreement or any other agreement, plan, contract or understanding entered into between Executive and Company notwithstanding, and except as set forth below, in the event it shall be determined that any Payment would be subject to the Excise Tax, then the Executive shall be entitled to receive an additional payment (the “Gross-Up Payment”) in an amount such that, after payment by the Executive of all taxes (and any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.  The Company’s obligation to make Gross-Up Payments under this Section 5 shall not be conditioned upon the Executive’s termination of employment.

(b) Subject to the provisions of Section 5(c), all determinations required to be made under this Section 5, including whether and when a Gross-Up Payment is required, the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by Deloitte & Touche, LLP, or such other nationally recognized certified public accounting firm as may be designated by the Executive (the “Accounting Firm”).  The Accounting Firm shall provide detailed supporting calculations both to the Company and the Executive within 15 business days of the receipt of notice from the Executive that there has been a Payment or such earlier time as is requested by the Company.  In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Executive may appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder).  All fees and expenses of the Accounting Firm shall be borne solely by the Company.   Any determination by the Accounting Firm shall be binding upon the Company and the Executive.  As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments that will not have been made by the Company should have been made (the “Underpayment”), consistent with the calculations required to be made hereunder.  In the event the Company exhausts its remedies pursuant to Section 5(c) and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Executive within ten (10) businessdays after the Accounting Firm has given the Company notice

of the amount it has determined to be the Underpayment.  Any Gross-Up Payment, as determined pursuant to this Section 5, shall be paid by the Company to the Executive within 5 days of the receipt of the Accounting Firm’s determination, provided, however, that notwithstanding anything herein to the contrary, in no event shall any Gross-Up Payment or any payment of any income or other taxes to be paid by the Company under this Section 5 be made later than the end of the Executive’s taxable year next following the Executive’s taxable year in which the Executive remits the related taxes.  Any costs and expenses incurred by the Company on behalf of the Executive under this Section 5 due to any tax contest, audit or litigation will be paid by the Company by the end of the Executive’s taxable year following the Executive’s taxable year in which the taxes that are the subject of the tax contest, audit or litigation are remitted to the taxing authority, or where as a result of such tax contest, audit or litigation no taxes are remitted, the end of the Executive’s taxable year following the Executive’s taxable year in which the audit is completed or there is a final and non-appealable settlement or other resolution of the contest or litigation.

(c) The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment.  Such notification shall be given as soon as practicable, but no later than 10 business days after the Executive is informed in writing of such claim.  The Executive shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid.  The Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which the Executive gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due).  If the Company notifies the Executive in writing prior to the expiration of such period that the Company desires to contest such claim and the Company has a good faith basis to contest the claim, the Executive shall:

(i) give the Company any information reasonably requested by the Company relating to such claim,

(ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company,

(iii) cooperate with the Company in good faith in order effectively to contest such claim, and

(iv) permit the Company to participate in any proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest, and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties) imposed as a result of such representation and payment of costs and expenses, which payments, if any, shall be paid in accordance with the last sentence of Section 5(b) above.  Without limitation on the foregoing provisions of this Section 5(c), the Company shall control all proceedings taken in connection with such contest, and, at its sole discretion, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the applicable taxing authority in respect of such claim and may, at its sole discretion, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive agrees that he will, to the extent reasonably requested by the Company, prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall reasonably determine;  provided, however,  that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount.  Furthermore, the Company’s control of the contest shall be limited to issues with respect to which the Gross-Up Payment would be payable hereunder, and the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

(d) Notwithstanding any other provision of this Section 5, the Company may, in its sole discretion, withhold and pay over to the Internal Revenue Service or any other applicable taxing authority, for the benefit of the Executive, all or any portion of the Gross-Up Payment, and the Executive hereby consents to such withholding.

(e) Definitions.  The following terms shall have the following meanings for purposes of this Section 5:

(i) “Code” means the Internal Revenue Code of 1986, as amended.

(ii) “Excise Tax” shall mean the excise tax imposed by Section 4999 of the Code, together with any interest or penalties imposed with respect to such excise tax.

(iii) “Parachute Value” of a Payment shall mean the present value as of the date of the change of control for purposes of Section 280G of the Code of the portion of such Payment that constitutes a “parachute payment” under Section 280G(b)(2), as determined by the Accounting Firm for purposes of determining whether and to what extent the Excise Tax will apply to such Payment.

(iv) A “Payment” shall mean any payment or distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of the Executive, whether paid or payable pursuant to this Agreement or otherwise.

(v) “Value” of a Payment shall mean the economic present value of a Payment as of the date of the change of control for purposes of Section 280G of the Code, as determined by the Accounting Firm using the discount rate required by Section 280G(d)(4) of the Code.

6. Full Settlement.  The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense, or other claim, right or action that the Company may have against the Executive or others.  In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement, and subject to the effect of the provisos at the end of Section 2(a)(iii) above, such amounts shall not be reduced whether or not the Executive obtains other employment.  The Company agrees to pay  as incurred (within 10 days following the Company’s receipt of an invoice from the Executive), to the full extent permitted by law, subject to Section 8 below, all legal fees and expenses that the Executive may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Company, the Executive or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof (including as a result of any contest by the Executive about the amount of any payment pursuant to this Agreement), plus, in each case, interest on any delayed payment at the applicable federal rate provided for in Section 7872(f)(2)(A) of the Code.

7. Successors.

(a) This Agreement is personal to the Executive, and, without the prior written consent of the Company, shall not be assignable by the Executive other than by will or the laws of descent and distribution.  This Agreement shall inure to the benefit of and be enforceable by the Executive’s legal representatives.

(b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.  Except as provided in Section 7(c), without the prior written consent of the Executive this Agreement shall not be assignable by the Company.

(c) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same

extent that the Company would be required to perform it if no such succession had taken place.  For purposes

hereof, “Company” means the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid that assumes and agrees to perform this Agreement by operation of law or otherwise.

8.Code Section 409A.

(a)           The payments and benefits provided hereunder are intended to be exempt from or compliant with the requirements of Code Section 409A.  Notwithstanding any provision of this Agreement to the contrary, in the event that following the effective date hereof, the Company reasonably determines that any payments or benefits hereunder are not either exempt from or compliant with the requirements of Code Section 409A, the Company and the Executive shall work together to adopt such amendments to this Agreement or adopt such other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that are necessary or appropriate (i) to preserve the intended tax treatment of the payments and benefits provided hereunder, to preserve the economic benefits with respect to such payments and benefits, and/or (ii) to exempt such payments and benefits from Code Section 409A or to comply with the requirements of Code Section 409A and thereby avoid the application of penalty taxes thereunder, provided¸ however, that the Company shall have no obligation to take any action described in this Section 8 or to indemnify the Executive for any failure to take any such action.

(b)           Notwithstanding anything to the contrary in this Agreement, no compensation or benefits, including without limitation any termination payments or benefits payable under Section 2 above, shall be paid to the Executive during the 6-month period following the Executive’s Separation from Service to the extent that the Company reasonably determines that paying such amounts at the time or times indicated in this Agreement would be a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code.  If the payment of any such amounts is delayed as a result of the previous sentence, then on the first business day following the end of such 6-month period (or such earlier date upon which such amount can be paid under Section 409A of the Code without resulting in a prohibited distribution, including as a result of the Executive’s death), the Company shall pay the Executive a lump-sum amount equal to the cumulative amount that would have otherwise been payable to the Executive during such 6-month period.

(c)           To the extent that any reimbursements hereunder constitute taxable compensation to the Executives, including without limitation, any reimbursements made in accordance with Section 6 above (but excluding any reimbursements made in accordance with Sections 2 and 5 above, which reimbursements shall be provided in accordance with such Sections), such reimbursements shall be made to the Executive promptly, but in no event after December 31st of the year following the year in which the expense was incurred, the amount of any such amounts reimbursed in one year shall not affect the amount eligible for reimbursement in any subsequent year, and the Executive’s right to reimbursement of any such expenses shall not be subject to liquidation or exchange for any other benefit.

9.         Miscellaneous.

(a) The captions of this Agreement are not part of the provisions hereof and shall have no force or effect.  This Agreement may not be amended or modified other than by a written agreement executed by the parties hereto or their respective successors and legal representatives.

(b) All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

if to the Executive:

Peter T. Dameris

if to the Company:

On Assignment, Inc.

26651 West Agoura Road

Calabasas, CA 91302

Attention:  Chairman of the Board

or to such other address as either party shall have furnished to the other in writing in accordance herewith.  Notice and communications shall be effective when actually received by the addressee.

(c) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement or the Employment Agreement.

(d) The Company may withhold from any amounts payable under this Agreement such United States federal, state or local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.

(e) The Executive’s or the Company’s failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right the Executive or the Company may have hereunder, including, without limitation, the right of the Executive to terminate employment for Good Reason pursuant to Section 2, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

(f) For clarification, this Agreement is intended to supplement the terms of the Executive’s previously executed Employment Agreement and shall control in the event of any termination for Good Reason or other than for Cause of the Executive’s employment by the Company in connection with or following any Change of Control;  provided, however,  that the Executive shall not be entitled to payments or benefits in respect of the termination of his employment under both this Agreement and the Employment Agreement, except to the extent that such other payments or benefits are complementary to (and not duplicative of) payments and/or benefits provided hereunder.  Simultaneously with the execution of this Agreement by a duly authorized officer of the Company and the Executive, the Executive shall no longer be eligible to participate in the ASGN Severance Plan.

(g) All claims by the Executive for payments or benefits under this Agreement shall first be directed to and determined by the Company’s Compensation Committee of the Board of Directors and shall be in writing.  Any denial by the Compensation Committee of a claim for benefits under this Agreement shall be delivered to the Executive in writing and shall set forth the specific reasons for the denial and the specific provisions of this Agreement relied upon.  The Compensation Committee shall afford the Executive a reasonable opportunity for a review of the decision denying a claim and shall further allow the Executive make a written demand upon the Company to submit the disputed matter to arbitration in accordance with the provisions of paragraph (h)  below.  The Company shall pay all expenses of the Executive, including reasonable attorneys and expert fees, in connection with any such arbitration.  If for any reason the arbitrator has not made his award within ninety (90) days from the date of Executive’s demand for arbitration, such arbitration proceedings shall be immediately suspended and the Company shall be deemed to have agreed to Executive’s position and the Company shall, as soon as practicable and in any event within 10 business days after the expiration of such 90 day period, pay Executive his expenses and all amounts claimed by him that were the subject of such dispute and arbitration proceedings.

(h) Subject to the terms of paragraph (g) above, any dispute arising from, or relating to, this Agreement shall be resolved at the request of either party through binding arbitration in accordance with this paragraph (h).  Within 10 business days after demand for arbitration has been made by either party, the parties, and/or their counsel, shall meet to discuss the issues involved, to discuss a suitable arbitrator and arbitration procedure, and to agree on arbitration rules particularly tailored to the matter in dispute, with a view to the dispute’s prompt, efficient, and just resolution.  Upon the failure of the parties to agree upon arbitration rules and procedures within a reasonable time (not longer than 15 business days from the demand), the Commercial Arbitration Rules of the American Arbitration Association shall be applicable.  Likewise, upon the failure of the parties to agree upon an arbitrator within a reasonable time (not longer than 15 business days from demand), there shall be a panel comprised of three arbitrators, one to be appointed by each party and the third one to be selected by the two arbitrators jointly, or by the American Arbitration Association, if the two arbitrators cannot decide on a third arbitrator.  At least 30 days before the arbitration hearing (which shall be set for a date no later than 60 days from the demand), the parties shall allow each other reasonable written discovery including the inspection and copying of documents and other tangible items relevant to the issues that are to be presented at the arbitration hearing.  The arbitrator(s) shall be empowered to decide any disputes regarding the scope of discovery.  The award rendered by the arbitrator(s) may include, without limitation, special, punitive and/or consequential damages, if and to the extent deemed appropriate by the arbitrator(s).  The award rendered by the arbitrator(s) shall be final and binding upon both parties.  The arbitration shall be conducted in Los Angeles County, California.  The California State Superior Court located in Los Angeles County, California shall have exclusive jurisdiction over disputes between the parties in connection with such arbitration and the enforcement thereof, and the parties consent to the jurisdiction and venue of such court for such purpose.

(i) This Agreement shall be governed by the laws of the State of Delaware, without giving effect to any choice of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.

(j) This Agreement shall terminate and be of no further force and effect immediately upon the Executive’s voluntary termination of his employment with the Company (irrespective of whether such termination constitutes retirement or resignation),  provided  that such termination is not with Good Reason and does not constitute an Involuntary Termination.

[Execution Page Follows]

IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and, pursuant to the authorization from the Board, the Company has caused these presents to be executed in its name on its behalf, all as of the day and year first above written.

/s/ Peter T. Dameris
Peter T. Dameris
ON ASSIGNMENT, INC.
By	/s/ Jeremy Jones
	Jeremy Jones
	Chairman of the Board

EX-21.1

EXHIBIT 21.1

SUBSIDIARIES OF THE REGISTRANT

Assignment Ready, Inc., a Delaware corporation

On Assignment Staffing Services, Inc., a Delaware corporation

VSS Holding, Inc., a Nevada corporation

VISTA Staffing Solutions, Inc., a Utah corporation

VISTA Physician Search and Consulting, Inc., a Utah corporation

VISTA Staffing International, Inc., a Nevada corporation

VISTA Holdings (Hong Kong) Limited, a Hong Kong corporation

Oxford Global Resources, Inc., a Delaware corporation

Other subsidiaries of the Registrant are omitted from this exhibit pursuant to Regulation S-K 601(b)(21)(ii)

EX-23.1

EX-31.1

Exhibit 

Exhibit 31.1

CERTIFICATION PURSUANT TO RULES 13a-14(a) AND 15d-14(a)

 UNDER THE SECURITIES EXCHANGE ACT OF 1934 AS ADOPTED PURSUANT TO

 SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Peter T. Dameris, certify that:

1. I have reviewed this annual report on Form 10-K of On Assignment, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this annual report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 16, 2009
	Peter T. Dameris
	Chief Executive Officer and President

EX-31.2

  
    ex31_2.htm




    
    

EX-32.1

  
    ex32_1.htm




    
    

EX-10.22

AMENDED AND RESTATED EXECUTIVE CHANGE OF CONTROL AGREEMENT

This Executive Change of Control Agreement (this “Agreement”), made as of the 1st day of January, 2007, by and between On Assignment, Inc., a Delaware corporation (the “Company”), and James Brill (the “Executive”), is amended and restated as of December 11, 2008.

Recitals

A.            The Executive has been hired as of the date hereof to serve as the Chief Financial Officer of the Company, in connection with which, the Executive has entered into an Employment Agreement of even date herewith providing for severance and termination benefits in certain circumstances.

B.            Absent the execution and delivery of this Agreement, pursuant to the Company’s Change in Control Severance Plan (the “ASGN Severance Plan”), the Executive would be entitled to receive certain severance benefits in the event of a change in control (within the meaning set forth in the ASGN Severance Plan).

C.            The Board of Directors of the Company (the “Board”) has determined that it is in the best interests of the Company and its stockholders to assure that the Company will have the continued dedication of the Executive, notwithstanding the possibility, threat or occurrence of a Change of Control (as defined herein).  The Board believes it is imperative to diminish the inevitable distraction of the Executive by virtue of the personal uncertainties and risks created by a pending or threatened Change of Control and to encourage the Executive’s full attention and dedication to the current Company in the event of any threatened or pending Change of Control, and to provide the Executive with compensation and benefits arrangements upon a Change of Control that ensure that the compensation and benefits expectations of the Executive will be satisfied and that are competitive with those of other corporations.  Therefore, in order to accomplish these objectives, the Board has caused the Company to modify the ASGN Severance Plan to eliminate its coverage of the Executive and to enter into this Agreement and has provided that this Agreement will supersede the Employment Agreement in the event that the Executive becomes entitled to any compensation or benefits under this Agreement.

Agreement

In consideration of the foregoing and the mutual covenants and promises contained herein, the parties agree as follows:

1.             Certain Definitions.  In addition to the terms defined elsewhere herein, the following terms shall have the respective meanings set forth below:

(a)           “Accrued Compensation” means an amount including all amounts earned or accrued through the termination date but not paid as of the termination date including (i) Base Salary, (ii) reimbursement for reasonable and necessary expenses incurred by you on behalf of the Company during the period ending on the termination date, (iii) vacation and sick leave pay (to the extent provided by Company policy or applicable law), and (iv) incentive compensation (if any) earned in respect of any period ended prior to the termination date.   It is expressly understood that incentive compensation shall have been “earned” as of the time that the conditions to such incentive compensation have been met, even if not calculated or payable at such time.

(b)           “Affiliated Company” means any company controlled by, controlling or under common control with the Company.

(c)           “Base Salary” means the Executive’s annual base salary at the rate in effect during the last regularly scheduled payroll period immediately preceding the occurrence of the Change in Control and does not include, for example, bonuses, overtime compensation, incentive pay, fringe benefits, sales commissions or expense allowances.

(d)           “Cause” means any of the following:

(i)            the Executive’s (A) conviction of a felony; (B) commission of any other material act or omission involving dishonesty or fraud with respect to the Company or any of its Affiliated Companies or any of the customers, vendors or suppliers of the Company or its subsidiaries; (C) misappropriation of material funds or assets of the Company for personal use; or (D) engagement in unlawful harassment or other discrimination with respect to the employees of the Company or its subsidiaries;

(ii)           the Executive’s continued substantial and repeated neglect of his duties, after written notice thereof from the Board, and such neglect has not been cured within 30 days after the Executive receives notice thereof from the Board;

(iii)          the Executive’s gross negligence or willful misconduct in the performance of his duties hereunder that is materially and demonstrably injurious to the Company; or

(iv)          the Executive’s engaging in conduct constituting a breach of his written obligations to the Company in respect of confidentiality and/or the use or ownership of proprietary information.

(e)           “Change of Control” shall be deemed to occur upon the consummation of any of the following transactions:

(i)            a merger or consolidation in which the Company is not the surviving entity, except for a transaction the principal purpose of which is to change the state of the Company’s incorporation or a transaction in which 50% or more of the surviving entity’s outstanding voting stock following the transaction is held by holders who held 50% or more of the Company’s outstanding voting stock prior to such transaction; or

(ii)           the sale, transfer or other disposition of all or substantially all of the assets of the Company; or

(iii)          any reverse merger in which the Company is the surviving entity, but in which 50% or more of the Company’s outstanding voting stock is transferred to holders different from those who held the stock immediately prior to such merger; or

(iv)          the acquisition by any person (or entity) directly or indirectly of 50% or more of the combined voting power of the outstanding shares of Company capital stock; or

(v)           during any period of two (2) consecutive years (not including any period prior to the date of this Agreement), individuals who at the beginning of such period constitute the Board (and any new director, whose election by the Company’s stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was so approved), cease for any reason to constitute a majority thereof; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Board on the date hereof (the “Incumbent Board ”) shall be considered as though such individual were a member of the Incumbent Board, but excluding, for purposes of this proviso, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board.

(f)            “Change of Control Period” means the period commencing on the date hereof and ending on the third anniversary of the date hereof; provided, however, that, commencing on

the date two years after the date hereof, and on each annual anniversary of such date (such date and each annual anniversary thereof, the “Renewal Date ”), the Change of Control Period shall be automatically extended so as to terminate two years from such Renewal Date, unless at least 60 days prior to the Renewal Date the Company gives notice to the Executive that the Change of Control Period shall not be extended.

(g)           “Date of Termination” means the date on which the Executive experiences a Separation from Service.

(h)           “Good Reason” means either of the following:

(i)            the failure of the Company to pay an amount owing to the Executive, which amount constitutes salary, bonus or other compensatory amount related to his employment, after the Executive has provided the Board with written notice of such failure and such payment has not thereafter been made within 15 days of the delivery of such written notice; or

(ii)           the relocation of the Executive from the corporate headquarters metropolitan area (as of the date of this Agreement) without his consent.

(i)            “Involuntary Termination” shall mean the termination of Executive’s employment with the Company (or, if applicable, successor entity) other than by reason of death or disability:

(i)            upon Executive’s involuntary discharge or dismissal other than for Cause,

(ii)           upon Executive’s resignation for Good Reason within 30 days after the occurrence of the facts constituting Good Reason,

(iii)          upon Executive’s resignation following (A) a reduction in Executive’s level of Base Salary or any Target Bonus (unless, in the case of a reduction in any Target Bonus, there is a corresponding increase in the level of Base Salary such that, in the aggregate, Executive is no worse off) or (B) a material reduction in Executive’s benefits, provided and only if  such change or reduction is effected without Executive’s written concurrence, or

(iv)          upon Executive’s resignation following a change in the Executive’s position with the Company (or, if applicable, with the successor entity) that is effected without the Executive’s consent and that materially reduces his level of responsibility or authority, other than reductions attributable to the Company ceasing to be a publicly held company or becoming a subsidiary or division of another company.

Except as provided in Section 2(b), for purposes of this Agreement any determination of “Involuntary Termination” made by the Company or the Executive shall be made in good faith. Any dispute regarding same shall be promptly resolved by arbitration in accordance with the provisions of Sections 8(g) and (h) below.

(j)            “Pro Rata Bonus” means an amount equal to 100% of the Target Bonus that the Executive would have been eligible to receive for the Company’s fiscal year in which the Executive’s employment terminates following a Change of Control, multiplied by a fraction, the numerator of which is the number of days in such fiscal year through the Termination Date and the denominator of which is 365.

(k)        “Separation from Service” means a “separation from service” within the meaning of Section 409A(a)(2)(A)(i) of the Code, and Treasury Regulation Section 1.409A-1(h).          

(l)        “Target Bonus” shall mean the bonus which would have been paid to

the Executive for full achievement of the Company’s base business plan or budget and/or for the attainment of specific performance objectives pertaining to the business of the Company or any of its specific business units or divisions, or to individual performance criteria applicable to the Executive or his position, which objectives have been established by the Board of Directors (or the Compensation Committee thereof) for the Executive relating to such plan or budget for the year in question.  “Target Bonus” shall not mean the “maximum bonus” which the Executive might have been paid for overachievement of such plan.

2.             Involuntary Termination of Employment Following a Change in Control.

(a)           Subject to the terms of this Agreement, the Executive shall be entitled to receive severance payments from the Company for services previously rendered to the Company and its Affiliated Companies if all of the following conditions are met:  (1) a Change of Control occurs during the Change of Control Period, (2) the Executive’s employment is terminated under circumstances constituting an Involuntary Termination, and (3) the Date of Termination occurs during the period commencing upon such Change of Control and ending on the date that is six (6) calendar months and ten (10) business days following the Change of Control.  In such event, the severance provisions of this Agreement shall control and take precedence over any inconsistent terms of any currently existing employment or severance arrangement between the Company and the Executive, and the Company shall, subject to Section 8 below:

(i)            within 30 days after the Date of Termination (or such earlier date as may be required by applicable law), pay to the Executive the Executive’s Accrued Compensation and Pro-Rata Bonus;

(ii)           within 30 days after the Date of Termination (with the exact payment date to be determined in the sole discretion of Company), pay to the Executive the amount equal to the product of (i) 2.50 and (ii) the sum of (A) the Executive’s Base Salary and (B) the Executive’s Target Bonus;

(iii)            for a period of eighteen (18) months after the Date of Termination, continue to provide the Executive with his car allowance as in effect immediately prior to the Change of Control, payable in substantially equal monthly installments commencing on the Date of Termination, provided, however that if the Executive becomes reemployed with another employer and is eligible to receive a car allowance, the Company shall be relieved of its obligation to pay the Executive’s car allowance;         

(iv)            for eighteen (18) months after the Date of Termination, or such longer period as may be provided by the terms of the appropriate plan, program, practice or policy, subject to the Executive’s proper election to continue healthcare coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), the Company will pay the  the Executive and/or the Executive’s COBRA premiums in respect of COBRA benefits to be provided at the levels being provided to the Executive and/or the Executive’s family immediately prior to the Change of Control, through third-party insurance maintained by the Company under the Company’s benefit plans in a manner that causes such COBRA benefits to be exempt from the application of Section 409A under Treasury Regulation Section 1.409A-1(a)(5);  provided, however , that if the Executive becomes reemployed with another employer and is eligible to receive medical or other welfare benefits under another employer provided plan, the benefits described in this Section 2(a)(iv) shall be secondary to those provided under such other plan during such applicable period of eligibility; and  provided further, that if during the period of continuation coverage, any plan pursuant to which such benefits are to be provided ceases to be exempt from the application of Section 409A under Treasury Regulation Section 1.409A-1(a)(5), then an amount equal to each such remaining premium shall thereafter be paid to the Executive as currently taxable compensation in substantially equal monthly installments over the remainder of the continuation coverage period.

(v)       within 30 days after the Date of Termination (with the exact payment date to be determined in the sole discretion of the Company), subject to Section 8(c) below, pay to the Executive a cash amount equal to the aggregate premiums that the Company would have paid for basic life insurance, accidental death and dismemberment insurance and long- and short-term disability insurance, each as in effect on the Date of Termination, had the Executive remained employed by the Company for eighteen (18) months after the Date of Termination;         

 (vi)            during the eighteen (18) month period immediately following the Date of Termination, pay to Executive, in substantially equal monthly installments, an amount equal to the aggregate contribution (if any) to the Company’s Deferred Compensation Plan and other retirement plans  that the Company  would have  made on behalf of the Executive (including matching contributions)  if the Executive’s employment continued for eighteen (18) months after the Date of Termination, assuming for this purpose that all benefits under such retirement plans are fully vested and that the Executive’s compensation during such eighteen (18) months were the same as it had been immediately prior to the Change of Control; and

(vii)           provide the Executive, at the Company’s expense, with outplacement services reasonably selected by the Executive,  provided, however,  that the cost to the Company shall not exceed $15,000 and such services shall be provided to Executive no later than the end of the second calendar year following that in which the Date of Termination occurs.

(b)           Anything in this Agreement to the contrary notwithstanding, a termination of employment by the Executive for any reason or for no reason during the period commencing on the date that is six months after the date of a Change of Control and ending ten (10) business days thereafter shall be deemed to be an “Involuntary Termination” for all purposes of this Agreement.

3.             Termination of Employment Following a Change of Control for Cause or Other Than in Connection with an Involuntary Termination.  If following a Change of Control the Executive’s employment is terminated for Cause or the Executive resigns other than in connection with an Involuntary Termination or due to the Executive’s death or disability, this Agreement shall terminate without further obligations to the Executive and all obligations and rights of the Executive and the Company shall be governed by the appropriate provisions of any then existing employment or severance agreement or arrangement between the Executive and the Company.  The Executive shall not be deemed to have been terminated for Cause under this Agreement, unless the following procedures have been observed.  To terminate the Executive for Cause, the Board must deliver to the Executive notice of such termination in writing, which notice must specify the facts purportedly constituting Cause in reasonable detail.  The Executive will have the right, within 10 days of receipt of such notice, to submit a written request for review by the Company.  If such request is timely made, within a reasonable time thereafter, the Board (with all directors attending in person or by telephone) shall give the Executive the opportunity to be heard (personally or by counsel).  Following such hearing, a majority of the directors then in office must confirm that the Executive’s termination was for Cause, otherwise the executive’s termination shall be deemed to have been made by the Company without Cause for purposes of this Agreement.  The Company’s compliance with the procedure set forth above shall not be in lieu of, or otherwise deprive the Executive of, his right to challenge the Company’s determination that such termination was for Cause in accordance with Sections 8(g), (h) and (i).

4.             Effect on Option, Restricted Stock and Restricted Unit Agreements.  Immediately prior to a Change in Control, the vesting and exercisability of all stock options, restricted stock and restricted unit grants made to the Executive by the Company which are outstanding at the time of such event shall be accelerated with respect to all shares subject thereto, provided, however, that notwithstanding the foregoing, payment in respect of any restricted stock units shall be made in accordance with the terms of such restricted stock units.  Accordingly, all stock options shall be exercisable at such time in accordance with their terms.  This Agreement is intended to amend all stock option, restricted stock and restricted stock unit grants awarded to the Executive to accelerate vesting as described above to the extent vesting would not otherwise be accelerated under the terms of such stock option, restricted stock and

restricted stock unit grants.  The Company agrees for purposes of determining the continued exercisability of Executive’s stock option outstanding on the Date of Termination, Executive shall be considered to have remained employed by the Company until the date that is eighteen (18) months from the Date of Termination.

5.             Certain Additional Payments by the Company.

(a)           Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any Payment would be subject to the Excise Tax, then the Executive shall be entitled to receive an additional payment (the “ Gross-Up Payment ”) in an amount such that, after payment by the Executive of all taxes (and any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.  The Company’s obligation to make Gross-Up Payments under this Section 5 shall not be conditioned upon the Executive’s termination of employment.

(b)           Subject to the provisions of Section 5(c), all determinations required to be made under this Section 5, including whether and when a Gross-Up Payment is required, the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by Deloitte & Touche, LLP, or such other nationally recognized certified public accounting firm as may be designated by the Executive (the “Accounting Firm”).  The Accounting Firm shall provide detailed supporting calculations both to the Company and the Executive within 15 business days of the receipt of notice from the Executive that there has been a Payment or such earlier time as is requested by the Company.  In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Executive may appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder).  All fees and expenses of the Accounting Firm shall be borne solely by the Company.   Any determination by the Accounting Firm shall be binding upon the Company and the Executive.  As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments that will not have been made by the Company should have been made (the “Underpayment”), consistent with the calculations required to be made hereunder.  In the event the Company exhausts its remedies pursuant to Section 5(c) and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be paid by the Company to or for the benefit of the Executive within ten (10) business days after the Accounting Firm has given the Company notice of the amount it has determined to be the Underpayment.  Any Gross-Up Payment, as determined pursuant to this Section 5, shall be paid by the Company to the Executive within 5 days of the receipt of the Accounting Firm’s determination, provided, however, that notwithstanding anything herein to the contrary, in no event shall any Gross-Up Payment or any payment of any income or other taxes to be paid by the Company under this Section 5 be made later than the end of the Executive’s taxable year next following the Executive’s taxable year in which the Executive remits the related taxes.  Any costs and expenses incurred by the Company on behalf of the Executive under this Section 5 due to any tax contest, audit or litigation will be paid by the Company by the end of the Executive’s taxable year following the Executive’s taxable year in which the taxes that are the subject of the tax contest, audit or litigation are remitted to the taxing authority, or where as a result of such tax contest, audit or litigation no taxes are remitted, the end of the Executive’s taxable year following the Executive’s taxable year in which the audit is completed or there is a final and non-appealable settlement or other resolution of the contest or litigation.

(c)           The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment.  Such notification shall be given as soon as practicable, but no later than 10 business days after the Executive is informed in writing of such claim.  The Executive shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid.  The Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which the Executive gives

such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due).  If the Company notifies the Executive in writing prior to the expiration of such period that the Company desires to contest such claim and the Company has a good faith basis to contest the claim, the Executive shall:

(i)            give the Company any information reasonably requested by the Company relating to such claim,  

(ii)           take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company,

(iii)          cooperate with the Company in good faith in order effectively to contest such claim, and

(iv)          permit the Company to participate in any proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest, and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties) imposed as a result of such representation and payment of costs and expenses, which payments, if any, shall be paid in accordance with the last sentence of Section 5(b) above.  Without limitation on the foregoing provisions of this Section 5(c), the Company shall control all proceedings taken in connection with such contest, and, at its sole discretion, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the applicable taxing authority in respect of such claim and may, at its sole discretion, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive agrees that he will, to the extent reasonably requested by the Company, prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall reasonably determine;  provided, however,  that, if the Company directs the Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Executive, on an interest-free basis, and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties) imposed with respect to such advance or with respect to any imputed income in connection with such advance; and provided, further,  that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount.  Furthermore, the Company’s control of the contest shall be limited to issues with respect to which the Gross-Up Payment would be payable hereunder, and the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

(d)           If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 5(c), the Executive becomes entitled to receive any refund with respect to such claim, the Executive shall (subject to the Company’s complying with the requirements of Section 5(c)) pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto), within ten (10) business days after the Executive’s receipt thereof (which receipt shall include without limitation the recordation by the applicable taxing authority of any credit against the Executive’s taxes).  If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 5(c), a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.

(e)           Notwithstanding any other provision of this Section 5, the Company

may, in its sole discretion, withhold and pay over to the Internal Revenue Service or any other applicable taxing authority, for the benefit of the Executive, all or any portion of the Gross-Up Payment, and the Executive hereby consents to such withholding.

(f)            Definitions.  The following terms shall have the following meanings for purposes of this Section 5:

(i)            “Code” means the Internal Revenue Code of 1986, as amended.

(ii)           “Excise Tax” shall mean the excise tax imposed by Section 4999 of the Code, together with any interest or penalties imposed with respect to such excise tax.

(iii)          “Parachute Value” of a Payment shall mean the present value as of the date of the change of control for purposes of Section 280G of the Code of the portion of such Payment that constitutes a “parachute payment” under Section 280G(b)(2), as determined by the Accounting Firm for purposes of determining whether and to what extent the Excise Tax will apply to such Payment.

(iv)          A “Payment” shall mean any payment or distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of the Executive, whether paid or payable pursuant to this Agreement or otherwise.

(v)           “Value” of a Payment shall mean the economic present value of a Payment as of the date of the change of control for purposes of Section 280G of the Code, as determined by the Accounting Firm using the discount rate required by Section 280G(d)(4) of the Code.

6.             Full Settlement.  The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense, or other claim, right or action that the Company may have against the Executive or others.  In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement, and subject to the effect of the provisos at the end of Section 2(a)(iii) above, such amounts shall not be reduced whether or not the Executive obtains other employment.  The Company agrees to pay as incurred (within 10 days following the Company’s receipt of an invoice from the Executive), to the full extent permitted by law, all legal fees and expenses that the Executive may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Company, the Executive or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof (including as a result of any contest by the Executive about the amount of any payment pursuant to this Agreement), plus, in each case, interest on any delayed payment at the applicable federal rate provided for in Section 7872(f)(2)(A) of the Code.

7.             Successors.

(a)           This Agreement is personal to the Executive, and, without the prior written consent of the Company, shall not be assignable by the Executive other than by will or the laws of descent and distribution.  This Agreement shall inure to the benefit of and be enforceable by the Executive’s legal representatives.

(b)           This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.  Except as provided in Section 7(c), without the prior written consent of the Executive this Agreement shall not be assignable by the Company.

(c)           The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.  For

purposes hereof, “ Company ” means the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid that assumes and agrees to perform this Agreement by operation of law or otherwise.

8.             Code Section 409A.

(a)         The payments and benefits provided hereunder are intended to be exempt from or compliant with the requirements of Code Section 409A.  Notwithstanding any provision of this Agreement to the contrary, in the event that following the effective date hereof, the Company reasonably determines that any payments or benefits hereunder are not either exempt from or compliant with the requirements of Code Section 409A, the Company and the Executive shall work together to adopt such amendments to this Agreement or adopt such other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that are necessary or appropriate (i) to preserve the intended tax treatment of the payments and benefits provided hereunder, to preserve the economic benefits with respect to such payments and benefits, and/or (ii) to exempt such payments and benefits from Code Section 409A or to comply with the requirements of Code Section 409A and thereby avoid the application of penalty taxes thereunder, provided¸ however, that the Company shall have no obligation to take any action described in this Section 8 or to indemnify the Executive for any failure to take any such action.

(b)           Notwithstanding anything to the contrary in this Agreement, no compensation or benefits, including without limitation any termination payments or benefits payable under Section 2 above, shall be paid to the Executive during the 6-month period following the Executive’s Separation from Service to the extent that the Company reasonably determines that paying such amounts at the time or times indicated in this Agreement would be a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code.  If the payment of any such amounts is delayed as a result of the previous sentence, then on the first business day following the end of such 6-month period (or such earlier date upon which such amount can be paid under Section 409A of the Code without resulting in a prohibited distribution, including as a result of the Executive’s death), the Company shall pay the Executive a lump-sum amount equal to the cumulative amount that would have otherwise been payable to the Executive during such 6-month period.

(c)           To the extent that any reimbursements hereunder constitute taxable compensation to the Executives, including without limitation, any reimbursements made in accordance with Section 6 above (but excluding any reimbursements made in accordance with Sections 2 and 5 above, which reimbursements shall be provided in accordance with such Sections), such reimbursements shall be made to the Executive promptly, but in no event after December 31st of the year following the year in which the expense was incurred, the amount of any such amounts reimbursed in one year shall not affect the amount eligible for reimbursement in any subsequent year, and the Executive’s right to reimbursement of any such expenses shall not be subject to liquidation or exchange for any other benefit.

9.            Miscellaneous.

(a)           The captions of this Agreement are not part of the provisions hereof and shall have no force or effect.  This Agreement may not be amended or modified other than by a written agreement executed by the parties hereto or their respective successors and legal representatives.

(b)           All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

if to the Company:

On Assignment, Inc.

26651 West Agoura Road

                                           Calabasas, CA 91302

                                           Attention:  Chief Executive Officer

if to the Executive, to the most recent address on file with the Company’s Human Resources Department,

or to such other address as either party shall have furnished to the other in writing in accordance herewith.  Notice and communications shall be effective when actually received by the addressee.

(c)           The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.

(d)           The Company may withhold from any amounts payable under this Agreement such United States federal, state or local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.

(e)           The Executive’s or the Company’s failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right the Executive or the Company may have hereunder, including, without limitation, the right of the Executive to terminate employment for Good Reason pursuant to Section 2, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

(f)            Simultaneously with the execution of this Agreement by a duly authorized officer of the Company and the Executive, the Executive shall no longer be eligible to participate in the ASGN Severance Plan.

(g)           All claims by the Executive for payments or benefits under this Agreement shall first be directed to and determined by the Company’s Compensation Committee of the Board of Directors and shall be in writing.  Any denial by the Compensation Committee of a claim for benefits under this Agreement shall be delivered to the Executive in writing and shall set forth the specific reasons for the denial and the specific provisions of this Agreement relied upon.  The Compensation Committee shall afford the Executive a reasonable opportunity for a review of the decision denying a claim and shall further allow the Executive make a written demand upon the Company to submit the disputed matter to arbitration in accordance with the provisions of paragraph (h)  below.  The Company shall pay all expenses of the Executive, including reasonable attorneys and expert fees, in connection with any such arbitration.  If for any reason the arbitrator has not made his award within ninety (90) days from the date of Executive’s demand for arbitration, such arbitration proceedings shall be immediately suspended and the Company shall be deemed to have agreed to Executive’s position and the Company shall, as soon as practicable and in any event within 10 business days after the expiration of such 90 day period, pay Executive his expenses and all amounts claimed by him that were the subject of such dispute and arbitration proceedings.

(h)           Subject to the terms of paragraph (g) above, any dispute arising from, or relating to, this Agreement shall be resolved at the request of either party through binding arbitration in accordance with this paragraph (h).  Within 10 business days after demand for arbitration has been made by either party, the parties, and/or their counsel, shall meet to discuss the issues involved, to discuss a suitable arbitrator and arbitration procedure, and to agree on arbitration rules particularly tailored to the matter in dispute, with a view to the dispute’s prompt, efficient, and just resolution.  Upon the failure of the parties to agree upon arbitration rules and procedures within a reasonable time (not longer than 15 business days from the demand), the Commercial Arbitration Rules of the American Arbitration Association shall be applicable.  Likewise, upon the failure of the parties to agree upon an arbitrator within a reasonable time (not longer than 15 business days from demand), there shall be a panel comprised of three arbitrators, one to be appointed by each party and the third one to be selected by the two arbitrators jointly, or by the American Arbitration Association, if the two arbitrators cannot decide on a third arbitrator.  At least 30 days before the arbitration hearing (which shall be set for a date no later than 60 days from the demand), the parties shall allow each other reasonable written discovery including the inspection and copying of documents and other tangible items relevant to the issues that are to be presented at the arbitration hearing.  The arbitrator(s) shall be empowered to decide any disputes regarding the scope of discovery.  The award rendered by the arbitrator(s) may include, without limitation, special, punitive and/or consequential damages, if and to the extent deemed appropriate by the arbitrator(s).  The award rendered by the arbitrator(s) shall be final and binding upon both parties.  The arbitration shall be conducted in Los Angeles County, California.  The California State Superior Court located in Los Angeles County, California shall have exclusive jurisdiction over disputes between the parties in connection with such arbitration and the enforcement thereof, and the parties consent to the jurisdiction and venue of such court for such purpose.

(i)            This Agreement shall be governed by the laws of the State of Delaware, without giving effect to any choice of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.

(j)            This Agreement shall terminate and be of no further force and effect immediately upon the Executive’s voluntary termination of his employment with the Company (irrespective of whether such termination constitutes retirement or resignation),  provided  that such termination is not with Good Reason and does not constitute an Involuntary Termination.

IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and, pursuant to the authorization from the Board, the Company has caused these presents to be executed in its name on its behalf, all as of the day and year first above written.

/s/ James Brill
James Brill
Chief Financial Officer
ON ASSIGNMENT, INC.
By:	/s/ Peter Dameris
	Peter Dameris
	Chief Executive Officer