Edgar Filing: ON ASSIGNMENT INC

prem14a.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934 (Amendment No. ___ )

Filed by the Registrant x

Filed by a Party other than the Registrant o

Check the appropriate box:

x	Preliminary Proxy Statement

o	Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

o	Definitive Proxy Statement

o	Definitive Additional Materials

o	Soliciting Material under Rule 14a-12

ON ASSIGNMENT, INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

o	No fee required.

x	Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1)

Title of each class of securities to which transaction applies:

Common Stock, par value $0.01 per share, of On Assignment, Inc.

(2)

Aggregate number of securities to which transaction applies:

17,485,898 shares of common stock (the maximum number of shares issuable pursuant to the merger)

(3)

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

$17.45 per share of On Assignment common stock. For purposes of this determination, in accordance with paragraph (a)(4) and (c)(1)(i) of Exchange Act Rule 0-11, the price per share of On Assignment common stock to be issued in the merger is equal to the average of the high and low prices of On Assignment common stock as reported on the NASDAQ Global Select Market on March 28, 2012 (a date within five business days prior to the filing of this preliminary Proxy Statement). In accordance with Section 14(g) of the Exchange Act, the filing fee was determined by multiplying 0.0001146 by the maximum aggregate value of the merger, which was determined based upon the sum of (a) 17,485,898 shares of On Assignment common stock multiplied by the per share value of On Assignment common stock equal to $17.45 as determined above, plus (b) $383,000,000 in cash.

(4)

Proposed maximum aggregate value of transaction:

$688,128,920

(5)

Total fee paid:

$78,860

o	Fee paid previously with preliminary materials.

o	Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

(1)

Amount Previously Paid:

(2)

Form, Schedule or Registration Statement No.:

(3)

Filing Party:

(4)

Date Filed:

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26745 Malibu Hills Road

Calabasas, California 91301

, 2012

Dear Shareholder:

On behalf of your Board and management, you are cordially invited to attend the 2012 Annual Meeting of Shareholders of On Assignment, Inc., at which you will be asked to vote upon a proposal relating to the merger between a subsidiary of On Assignment, Inc. and Apex Systems, Inc., a Virginia corporation, as well as other matters. Upon completion of the merger, based on the amount of shares of On Assignment common stock outstanding as of March 31, 2012 of 37,575,777 shares, On Assignment shareholders prior to the merger will own between 68.2% and 72.4% of On Assignment’s outstanding shares of common stock and the Apex Systems shareholders prior to the merger will own between 27.6% and 31.8% of On Assignment’s outstanding shares of common stock.

We believe the merger will create a strong company that will deliver important benefits to our shareholders. We enthusiastically support the merger and recommend that you vote “FOR” the proposal related to the merger (which is the share issuance proposal), each of the Board’s nominees and the other proposals described in the accompanying Notice of Annual Meeting of Shareholders and Proxy Statement.

The Annual Meeting will be held on , May , 2012, at 10:00 a.m. Pacific Daylight Time, at our corporate headquarters located at 26745 Malibu Hills Road, Calabasas, California 91301.

The Notice of Annual Meeting of Shareholders and Proxy Statement accompanying this letter describe the business to be acted upon.

Before voting, you should carefully review all the information contained in the accompanying Proxy Statement. For a discussion of risk factors which you should consider in evaluating the merger, please see “RISK FACTORS” beginning on page 15 of the accompanying Proxy Statement.

Your vote is important no matter how many shares you own. In order to ensure that your shares will be represented at the Annual Meeting, we have enclosed a proxy card by which you can direct the voting of your shares. Please sign and promptly return the enclosed proxy card whether or not you plan to attend the Annual Meeting. If you attend the Annual Meeting and desire to vote in person, you may do so even though you have previously submitted your proxy card.

We thank you for your continued interest in On Assignment, Inc. and look forward to seeing you at the Annual Meeting.

	Sincerely,


	Peter T. Dameris
	President and Chief Executive Officer

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26745 Malibu Hills Road

Calabasas, California 91301

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

To Be Held on , May , 2012

The 2012 Annual Meeting of Shareholders of On Assignment, Inc. will be held on , May , 2012, at 10:00 a.m. Pacific Daylight Time, at our corporate headquarters located at 26745 Malibu Hills Road, Calabasas, California 91301, for the purpose of considering and voting upon:

a proposal to approve the issuance of up to 17,485,898 shares of On Assignment common stock in the merger contemplated by the Agreement of Merger, dated as of March 20, 2012, by and among On Assignment, Inc., OA Acquisition Corp., a Virginia corporation, Apex Systems, Inc., a Virginia corporation, and Jeffrey E. Veatch, as the representative of the shareholders of Apex Systems;

the election of Jeremy M. Jones and Edward L. Pierce as directors for three-year terms to expire at our 2015 Annual Meeting;

an advisory vote to approve named executive officer compensation;

the ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2012; and

such other business as may properly come before the Annual Meeting or any adjournments or postponements thereof.

The foregoing items of business are more fully described in the Proxy Statement accompanying this notice. The expenses of printing proxy materials, including expenses involved in forwarding materials to beneficial owners of stock will be paid by On Assignment, Inc. Only shareholders of record at the close of business on April , 2012 are entitled to notice of and to vote at the Annual Meeting.

All shareholders are cordially invited to attend the Annual Meeting in person. Please call (818) 878-7900 to obtain directions. However, to ensure your representation at the Annual Meeting, you are urged to sign and return the enclosed proxy card as promptly as possible in the envelope enclosed for that purpose. Any shareholder of record attending the Annual Meeting may vote in person even if he or she has previously returned a proxy card. If you hold your shares in “street name,” you must obtain a proxy in your name from your bank, broker or other holder of record in order to vote by ballot at the Annual Meeting.

	By Order of the Board,


	Tarini Ramaprakash
	Secretary
, 2012
Calabasas, California

2012 PROXY STATEMENT

TABLE OF CONTENTS

Section	Pages

GENERAL INFORMATION ABOUT THE MERGER, ANNUAL MEETING AND VOTING	1
SUMMARY	5
NOTE REGARDING FORWARD-LOOKING STATEMENTS	13
RISK FACTORS	15
THE MERGER	17
The Companies	17
The Share Issuance Proposal	18
Background of the Merger	18
Recommendation of the Board	21
Reasons for the Merger	21
Opinion of On Assignment’s Financial Advisor	24
Anticipated Accounting Treatment	28
Material United States Federal Income Tax Consequences to Existing On Assignment Shareholders	28
Regulatory Approval	28
Federal Securities Law Consequences	29
NASDAQ Listing	29
Appraisal Rights	29
Nominees to the Board	29
Additional Interests of Directors, Executive Officers and Certain Beneficial Owners	30
RSU Grants	30
Severance and Change-in-Control Benefits	31
Other Agreements and Benefits	31
Golden Parachute Compensation Payable to Apex Systems Executive Officers	31
The Merger Agreement	32
The Investor Rights Agreement	40
The Non-Competition Agreements	42
INFORMATION ABOUT APEX SYSTEMS	44
Apex Systems Business	44
Management’s Discussion and Analysis of Financial Condition and Results of Operations	44
Liquidity and Capital Resources	46
Commitments and Contingencies	46
Off-Balance Sheet Arrangements	47
Critical Accounting Policies	47
Quantitative and Qualitative Disclosures about Market Risk	49
Selected Financial Information	50
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS	51
PROPOSAL TWO – ELECTION OF DIRECTORS	57
Approval of Proposal Two	57
Continuing Directors	58
Independent Directors and Material Proceedings	59
Role of the Board	60
Board Leadership Structure	60
Board Committees and Meetings	60
Director Compensation	63
Communicating with the Board	64
Ethics	64
Compensation Committee Interlocks and Insider Participation	64
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT	65
EXECUTIVE AND DIRECTOR COMPENSATION	70
Executive Summary	70
Compensation Philosophy	71
Say-on-Pay	72

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Compensation Program Elements	72
Summary Compensation Table	81
Grants of Plan Based Awards	82
Narrative to Summary Compensation Table and Grants of Plan-Based Awards Table	83
Summary of Outstanding Equity Awards	85
Summary of Option Exercises and Stock Vested	86
Deferred Compensation	86
Payments Upon Termination or Change in Control	88
Equity Compensation Plan Information	93
Compensation Committee Report	93
PROPOSAL THREE – ADVISORY VOTE ON EXECUTIVE COMPENSATION	94
Vote Required	94
Board Recommendation	94
PROPOSAL FOUR – RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS	95
Principal Accountant Fees and Services	95
Vote Required	95
Approval of Proposal Four	95
REPORT OF THE AUDIT COMMITTEE	95
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS	96
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE	97
OTHER MATTERS	98
WHERE YOU CAN FIND ADDITIONAL INFORMATION	98
INCORPORATION BY REFERENCE	98
PROPOSALS BY SHAREHOLDERS	98
MISCELLANEOUS	99
Annex A: Merger Agreement
Annex B: Opinion of On Assignment’s Advisor
Annex C: Apex Systems Audited Financial Statements

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On Assignment, Inc.

26745 Malibu Hills Road

Calabasas, California 91301

PROXY STATEMENT

For the Annual Meeting of Shareholders to be Held

, May , 2012

On Assignment, Inc. (the Company, On Assignment, we, our, us) is providing these proxy materials in connection with the solicitation by the Board of Directors of On Assignment, Inc. (the Board) of proxies to be voted at On Assignment’s 2012 Annual Meeting of Shareholders to be held on , May , 2012 at 10:00 a.m. Pacific Daylight Time, or at any adjournment or postponement thereof. This Proxy Statement, the proxy card and On Assignment’s Annual Report to Shareholders will be mailed to each shareholder entitled to vote at the 2012 Annual Meeting of Shareholders commencing on or about , 2012.

GENERAL INFORMATION ABOUT THE MERGER, ANNUAL MEETING AND VOTING

The following questions and answers address briefly some questions you may have regarding the matters to be voted upon at the Annual Meeting. These questions and answers may not address all questions that may be important to you as an On Assignment shareholder. Please refer to the more detailed information contained elsewhere in this Proxy Statement, the annexes to this Proxy Statement and the documents referred to or incorporated by reference in this Proxy Statement. In this Proxy Statement, the term “Apex Systems” refers to Apex Systems, Inc., a Virginia corporation.

Who is soliciting my vote?

The Board of On Assignment is soliciting your vote at the 2012 Annual Meeting of Shareholders.

How does this Annual Meeting differ from On Assignment’s typical Annual Meeting?

In addition to the annual task of electing directors, conducting an advisory vote on executive compensation and ratifying the appointment of our independent registered public accounting firm, our shareholders will be asked to vote upon a proposal relating to a merger with Apex Systems (which we refer to in this Proxy Statement as the “merger”) which, if completed, will significantly expand our scale of operations, increase our geographic scope, and position us for future growth by adding substantial customers, client relationships and other financial and operational resources.

Why has On Assignment decided to merge with Apex Systems?

We believe that the merger will provide substantial strategic and financial benefits to our company, our shareholders and our customers, including the following:

increased size and scale of our company;

complimentary areas of expertise for our businesses; and

accretive impact to our earnings per share.

Please see “Reasons for the Merger” beginning on page 21 for a detailed discussion of the reasons for and benefits of the merger.

When do you expect the merger to be completed?

We hope to complete the merger as soon as reasonably practicable. We are working to complete the merger by the end of the second quarter of 2012. We cannot consummate the merger until the On Assignment shareholders approve the proposal related to the merger described in this Proxy Statement and until the other conditions set forth in the Agreement of Merger, dated as of March 20, 2012, by and among On Assignment, OA Acquisition Corp., a Virginia corporation, Apex Systems, and Jeffrey E. Veatch, as the representative of the shareholders of Apex systems (which we refer to in this Proxy Statement as the “Merger Agreement”), are satisfied or waived by the respective parties to the Merger Agreement. In addition, other factors outside of our control could require us to complete the merger at a later time or not to complete it at all. For a discussion of the conditions to the completion of the merger and of the risks associated with the failure to satisfy such conditions, please see “The Merger Agreement” beginning on page 32 and “Risk Factors—The merger may not be completed, which could adversely affect On Assignment’s business operations and stock price.” on page 15.

What are the specific proposals that shareholders will consider with respect to the merger?

There is one proposal related to the merger:

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Proposal 1: a proposal to approve the issuance of up to 17,485,898 shares of On Assignment common stock in the merger contemplated by the Merger Agreement, referred to in this Proxy Statement as the “share issuance proposal.”

What other proposals will be voted on at the Annual Meeting?

The other items scheduled to be voted on at the Annual Meeting are:

Proposal 2: the election of Jeremy M. Jones and Edward L. Pierce as directors for three-year terms to expire at our 2015 Annual Meeting;

Proposal 3: an advisory vote to approve named executive officer compensation;

Proposal 4: the ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2012; and

such other business as may properly come before the Annual Meeting or any adjournments or postponements thereof.

If any such other matters properly come before the Annual Meeting or any adjournments or postponements thereof, the persons named as proxies shall vote the shares represented thereby in their discretion.

Are there risks I should consider in deciding how to vote on the share issuance proposal?

Yes. In evaluating the share issuance proposal, you should carefully read this Proxy Statement, including the factors discussed in the section “Risk Factors” beginning on page 15. You are urged to read this Proxy Statement in its entirety prior to voting or submitting a proxy.

What is included in the proxy materials?

Proxy materials include this Proxy Statement for the Annual Meeting and the Company’s Annual Report on Form 10-K. This Proxy Statement and our Annual Report on Form 10-K filed with the SEC on March 14, 2012 are available free of charge on our website (http://www.onassignment.com).

Who may vote at the Annual Meeting?

The Board has set April , 2012, as the record date for the Annual Meeting. If you were the owner of shares of On Assignment, Inc. common stock at the close of business on April , 2012, you may vote at the Annual Meeting. You are entitled to one vote for each share of common stock you held on the record date, including shares:

held directly in your name with our transfer agent as a “holder of record”; and

held for you in an account with a broker, bank or other nominee (shares held in “street name”).

A list of shareholders entitled to vote at the Annual Meeting will be open to the examination of any shareholder, for any purpose germane to the Annual Meeting, during normal business hours for a period of ten days before the Annual Meeting at our corporate offices at 26745 Malibu Hills Road, Calabasas, California 91301, and at the time and place of the Annual Meeting.

How many shares must be present to hold the meeting?

A majority of On Assignment’s outstanding shares of common stock as of the record date must be present in person or represented by proxy at the Annual Meeting in order to hold the meeting and conduct business. This is called a quorum. Abstentions and broker non-votes will be counted for purposes of establishing a quorum at the meeting. On March 31, 2012, there were 37,575,777 shares of On Assignment common stock outstanding.

How many votes are required to approve each item?

The share issuance proposal requires a FOR vote of the holders of a majority of the total votes cast on the proposal. The actions contemplated by the share issuance proposal, even if approved by our shareholders, will not occur unless we complete the merger.

Directors are elected by a plurality of the votes cast at the Annual Meeting. This means that the nominees who receive the largest number of FOR votes cast will be elected as directors.

The advisory vote on executive compensation requires a FOR vote of the holders of a majority of the shares having voting power present in person or represented by proxy at the Annual Meeting.

The ratification of the appointment of the independent accountants requires the FOR vote of the holders of a majority of the shares having voting power present in person or represented by proxy at the Annual Meeting.

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How may I cast my votes?

You may vote FOR, AGAINST or ABSTAIN on the vote on the share issuance proposal.

You may either vote FOR or WITHHOLD AUTHORITY TO VOTE for the director nominees. If you withhold authority to vote with respect to the director nominees, your shares will be counted for purposes of establishing a quorum, but will have no effect on the election of the nominees.

You may vote FOR, AGAINST or ABSTAIN on the advisory vote on executive compensation and the ratification of the appointment of our independent accountants.

If you sign and submit your proxy card without voting instructions, your shares will be voted FOR the share issuance proposal, FOR the director nominees put forth by the Board, FOR the approval of the advisory vote on executive compensation and FOR the appointment of Deloitte & Touche LLP as our independent accountants.

What if I abstain from voting?

If you attend the Annual Meeting or send in your signed proxy card, but abstain from voting on any proposal, your shares will still be counted for purposes of determining whether a quorum exists. If you abstain from voting on the advisory vote on executive compensation and the appointment of our independent accountants, your abstention will have the same effect as a vote against the proposals. If you abstain from voting on the share issuance proposal, your abstention will have no effect on the outcome of the vote on the share issuance proposal.

Will my shares be voted if I do not sign and return my proxy card or vote in person?

If you do not sign and return your proxy card or vote in person, your shares will not be voted at the Annual Meeting. If your shares are held in “street name” and you do not issue instructions to your broker, your broker may vote your shares at its discretion on routine matters, but may not vote your shares on non-routine matters. If a broker who holds shares for another person does not vote on a particular proposal because that broker does not have discretionary voting power for the proposal and has not received voting instructions from the owner of the shares, then a “broker non-vote” will occur. It is important that you vote your shares.

The share issuance proposal, the election of directors and the advisory vote on executive compensation are non-routine matters, whereas the appointment of our independent accountants is a routine matter. Therefore, if your shares are held in “street name” by your broker and you do not provide your broker with instructions on how to vote your “street name” shares, your broker will not be permitted to vote on the share issuance proposal, the election of directors or the advisory vote on executive compensation. However, with regards to the appointment of our independent accountants, your broker will be permitted to vote your shares as its discretion. You should therefore be sure to provide your broker with instructions on how to vote your shares. Please check the voting form used by your broker to see if it offers telephone or Internet submission of proxies.

Broker non-votes are counted as present for purposes of determining the presence or absence of a quorum for the transaction of business, but they will not be counted for purposes of determining whether the proposals have been approved.

How does the Board recommend that I vote?

The Board recommends that you vote your shares:

Proposal 1: FOR the share issuance proposal regarding the issuance of up to 17,485,898 shares of On Assignment common stock in the merger;

Proposal 2: FOR Mr. Jones and Mr. Pierce, the director nominees named in this Proxy Statement;

Proposal 3: FOR the proposal regarding an advisory vote to approve named executive officer compensation; and

Proposal 4: FOR the ratification of the appointment of Deloitte & Touche LLP as our independent accountants.

What do I need to do now?

After carefully reading and considering the information in this Proxy Statement, please submit your proxy in accordance with the instructions set forth in the enclosed proxy card, or fill out, sign and date the proxy card, and then mail your signed proxy card in the enclosed prepaid envelope so that your shares may be voted at the Annual Meeting.

Do I need to send in my stock certificates if the merger is completed?

No. You will not be required to exchange your certificates representing shares of On Assignment common stock in connection with the merger. Apex Systems is merging with a wholly owned subsidiary of On Assignment. In the merger, On Assignment will issue additional shares of its common stock to the shareholders of Apex Systems in exchange for their shares of Apex Systems common stock. The previously outstanding shares of On Assignment common stock will continue to remain outstanding following the merger. You will not receive any cash or securities in connection with the merger, but instead you will continue to hold your existing shares of On Assignment common stock.

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How do I vote my shares without attending the Annual Meeting?

Shareholders of Record. If you hold shares directly in your name with On Assignment’s transfer agent, Computershare Investor Services, you are a shareholder of record and you may direct your vote without attending the Annual Meeting. You may vote by signing and dating your proxy card and mailing it in the postage-paid envelope provided. You should sign your name exactly as it appears on the proxy card. If you are signing in a representative capacity (for example, as guardian, executor, trustee, custodian, attorney or officer of a corporation), you should indicate your name and title or capacity.

Beneficial Owner of Shares/Shares Held in Street Name. If you hold shares in “street name,” you may direct your vote without attending the Annual Meeting by following the voting directions provided by your broker, bank, broker-dealer or similar organization. You may complete and mail a voting instruction card to your broker or nominee or, in most cases, submit voting instructions by telephone or the Internet. If you provide specific voting instructions by mail, telephone or the Internet, your shares will be voted by your broker or nominee as you have directed.

How do I vote my shares in person at the Annual Meeting?

Even if you plan to attend the Annual Meeting, we encourage you to vote by signing, dating and returning the enclosed proxy card so your vote will be counted if you later decide not to attend the Annual Meeting.

If you choose to vote in person at the Annual Meeting:

if you are a shareholder of record, you may vote by the ballot to be provided at the Annual Meeting; or

if you hold your shares in “street name,” you must obtain a proxy in your name from your bank, broker or other holder of record in order to vote by ballot at the Annual Meeting.

Please call (818) 878-7900 to obtain directions to attend the Annual Meeting.

What happens if my shares are held in more than one account?

If your shares are held in more than one account, you will receive a proxy card for each account. To ensure that all of your shares in each account are voted, you must sign, date and return each proxy card you receive.

If you and other residents at your mailing address own shares of On Assignment stock in “street name,” your bank, broker or other holder of record may have notified you that your household will receive only one Annual Report and Proxy Statement for each company in which you hold stock through that bank, broker or other holder of record. This practice is known as “householding.” Unless you responded that you did not want to participate in householding, you were deemed to have consented to the process. Therefore, your bank, broker or other holder of record will send only one copy of our Annual Report and Proxy Statement to your address. Each shareholder in your household will continue to receive a separate voting instruction form.

If you would like to receive your own set of our Annual Report and Proxy Statement in the future, or if you share an address with another On Assignment shareholder and together both of you would like to receive only a single set of On Assignment annual disclosure documents, please contact our Investor Relations department by telephone at (818) 878-3136. As a part of this process, you will be asked to provide your name, the name of your bank, broker or other holder of record and your account number. The revocation of your consent to householding should be effective 30 days following receipt of your instructions.

If you did not receive an individual copy of this year’s Annual Report or Proxy Statement, we will send a copy to you upon a written or oral request. Written requests for such copies should be addressed to On Assignment, Inc., Attention: Investor Relations, 26745 Malibu Hills Road, Calabasas, California 91301. Please contact our Investor Relations department by telephone at (818) 878-3136 with any oral requests for such copies.

May I revoke my proxy and change my vote?

You may revoke your proxy at any time before it is voted by:

submitting a properly signed proxy card with a later date;

delivering to the Secretary of On Assignment a written revocation notice bearing a later date than the proxy card; or

voting in person at the Annual Meeting.

How can I find out the results of the Annual Meeting?

The preliminary voting results will be announced at the Annual Meeting. The final voting results will be published on a Form 8-K which will be filed with the SEC within four business days after the Annual Meeting.

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SUMMARY

This summary highlights selected information from this Proxy Statement with respect to the proposed merger and may not contain all of the information that is important to you. To understand the merger fully and for a more complete description of the legal terms of the Merger Agreement and the related agreements, you should carefully read this entire Proxy Statement. Please see “Where You Can Find Additional Information” beginning on page 98. We have included references to other portions of this Proxy Statement to direct you to a more complete description of the topics presented in this summary, which you should review carefully in their entirety.

The Companies (see page 17)

On Assignment and OA Acquisition Corp., 26745 Malibu Hills Road, Calabasas, California 91301 (818) 878-7900.

On Assignment is a diversified professional staffing firm providing flexible and permanent staffing solutions in specialty skills including Life Sciences, Healthcare, Physician, and 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 consists of four operating segments: Life Sciences, Healthcare, Physician and Information Technology and Engineering.

OA Acquisition Corp. is a Virginia corporation and a wholly owned subsidiary of On Assignment. It was formed solely for the purposes of entering into the Merger Agreement with On Assignment and Apex Systems and completing the merger. It has not conducted any business operations other than those contemplated by the Merger Agreement.

Apex Systems, Inc., 4400 Cox Road, Suite 200, Glen Allen, Virginia 23060 (804) 342-9090.

Apex Systems is an information technology staffing and services firm specializing in recruiting and placing information technology professionals for contract, contract-to-hire and direct placements. Apex Systems also offers related workforce solutions to their clients. Apex Systems was founded in 1995 and is headquartered in Richmond, Virginia. As of March 31, 2012, Apex Systems has a presence in 49 markets throughout the United States, approximately 1,000 full-time employees and over 950 clients.

The Merger (see page 17) and the Merger Agreement (see page 32)

In the merger, OA Acquisition Corp. will merge with and into Apex Systems, with Apex Systems surviving the merger and continuing as a wholly owned subsidiary of On Assignment.

The merger will be completed only after the satisfaction or waiver of the conditions to the completion of the merger set forth in the Merger Agreement. The Merger Agreement as executed is attached as Annex A to this Proxy Statement. We encourage you to read the Merger Agreement carefully and fully, as it is the legal document that governs the merger.

Merger Consideration (see page 33)

In the merger, On Assignment will pay $383 million in cash (subject to various adjustments) and issue between 14,304,548 and 17,485,898 shares of On Assignment common stock to the Apex Systems shareholders in exchange for their shares of Apex Systems common stock. Upon completion of the merger, based on the amount of shares of On Assignment common stock outstanding as of March 31, 2012 of 37,575,777 shares, On Assignment shareholders prior to the merger will own between 68.2% and 72.4% of On Assignment’s outstanding shares of common stock and Apex Systems shareholders prior to the merger will own between 27.6% and 31.8% of On Assignment’s outstanding shares of common stock. In this Proxy Statement, we refer to the Apex Systems shareholders immediately prior to the merger, who will receive On Assignment common stock in connection with the merger, as “the former Apex Systems shareholders,” and to Jeffrey E. Veatch, in his capacity as the representative of the former Apex Systems shareholders in connection with the merger, as “the Shareholder Representative.”

Based on the closing price per share of On Assignment common stock of $13.68 on March 20, 2012, which is the date on which we publicly announced execution of the Merger Agreement after the end of the full trading day, the dollar value of the shares of On Assignment common stock to be issued as consideration for the merger was approximately $217 million. On a preliminary basis, we estimate that the purchase price will be allocated to the net assets of Apex Systems as follows:

Net tangible assets as of December 31, 2011 at estimated fair value: $71.9 million

Identifiable intangible assets: $284.3 million

Goodwill: $243.8 million

The preliminary estimated amount of goodwill resulting from the merger of $243.8 million generally represents the value of Apex System’s geographic market presence, customer base, management team and staffing platform, growth opportunities and the ability of these elements to contribute to the generation of significant future cash flows.

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Based on these amounts, and after reflecting the pro forma adjustments described in the section of this Proxy Statement entitled “Unaudited Pro Forma Condensed Combined Financial Statements” beginning on page 51, the pro forma diluted earnings per common share of On Assignment for the year ended December 31, 2011 is $0.58. The unaudited pro forma condensed combined financial statements apply certain assumptions and adjustments which are based upon available information and assumptions that the managements of On Assignment and Apex Systems believe reasonably reflect the merger.

The Investor Rights Agreement (see page 40)

In connection with the closing of the merger, On Assignment, the Shareholder Representative and the former Apex Systems shareholders who will become On Assignment shareholders pursuant to the merger will enter into an Investor Rights Agreement. In this Proxy Statement, we refer to this agreement as the “Investor Rights Agreement.”

The Investor Rights Agreement imposes certain restrictions on, and provides certain rights to, the former Apex Systems shareholders, in particular with respect to the shares of On Assignment common stock they will receive in the merger. The terms of the Investor Rights Agreement (i) provide the Shareholder Representative the right to designate up to two directors to the Board, (ii) provide that certain of the former Apex Systems shareholders must vote their shares in favor of matters approved by the Board that are subject to a vote of On Assignment shareholders for a period of 12 months from the closing, and (iii) include provisions intended to prevent a disorderly sale of the shares of On Assignment common stock to be issued in the merger.

The Investor Rights Agreement includes further voting restrictions providing that until the date on which Brian J. Callaghan, Edwin A. Sheridan, IV and Jeffrey E. Veatch collectively own less than 10% of the outstanding shares of On Assignment common stock, Messrs. Callaghan, Sheridan and Veatch must be present, in person or by proxy, at all shareholders’ meetings of On Assignment so that all their shares of On Assignment common stock may be counted for purposes of determining the presence of a quorum at the meetings.

In addition, the Investor Rights Agreement includes transfer restrictions with respect to the shares of On Assignment common stock to be received in the merger. These restrictions provide that none of the former Apex Systems shareholders may sell or otherwise transfer any shares of On Assignment common stock for three years after the completion of the merger (subject to certain exceptions and limitations, including, but not limited to, sales pursuant to certain registered offerings). The Investor Rights Agreement also provides the former Apex Systems shareholders with registration rights with respect to their shares of On Assignment common stock acquired pursuant to the merger. The former Apex Systems shareholders have certain rights to require On Assignment to register their shares of On Assignment common stock for public resale under the terms of the Investor Rights Agreement. In addition, if we propose to register any of our shares in a registered public offering, the former Apex Systems shareholders have a right to include their shares in such offering through a valid piggyback registration of shares, subject to the right of the underwriters of an offering to limit the number of shares included in such registration. Certain of the former Apex Systems shareholders also have a right to transfer shares pursuant to a Rule 10b5-1 plan.

Please see “The Investor Rights Agreement” beginning on page 40 for a description of the terms of the Investor Rights Agreement.

The Share Issuance Proposal (see page 18)

At the Annual Meeting, among other matters, the holders of On Assignment common stock will be asked to consider and vote on the following proposal related to the merger:

Proposal 1: A proposal to approve the issuance of up to 17,485,898 shares of On Assignment common stock in the merger contemplated by the Merger Agreement.

The action contemplated by this proposal, even if approved by our shareholders, will not occur unless we complete the merger.

THE MERGER WILL NOT BE COMPLETED UNLESS, AMONG OTHER THINGS, THE ON ASSIGNMENT SHAREHOLDERS APPROVE THE SHARE ISSUANCE PROPOSAL. UNDER THE MERGER AGREEMENT, COMPLETION OF THE MERGER IS SUBJECT TO THE SATISFACTION (OR, IF LEGALLY PERMITTED, WAIVER) OF SPECIFIED CLOSING CONDITIONS. APPROVAL BY THE ON ASSIGNMENT SHAREHOLDERS OF THE SHARE ISSUANCE PROPOSAL IS SUCH A CONDITION, WHICH MAY NOT BE WAIVED BY EITHER ON ASSIGNMENT OR APEX SYSTEMS.

Required Shareholder Approvals (see page 38)

Under the NASDAQ Global Select Market rules, approval of the share issuance proposal requires the affirmative vote of the holders of a majority of the total votes cast on the proposal.

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Under the Merger Agreement, completion of the merger is subject to the satisfaction (or, if legally permitted, waiver) of specified closing conditions. Approval by On Assignment shareholders of the share issuance proposal is one of these conditions, and neither Apex Systems nor On Assignment may waive this condition.

On the record date, directors and executive officers of On Assignment and their affiliates beneficially owned or had the right to vote shares of On Assignment common stock representing approximately % of the shares of On Assignment common stock outstanding on the record date. To On Assignment’s knowledge, directors and executive officers of On Assignment and their affiliates intend to vote their shares of On Assignment common stock in favor of the share issuance proposal.

Recommendations of the Board (see page 33)

The Board unanimously (i) determined that it was advisable to and in the best interests of On Assignment and its shareholders for On Assignment to execute, deliver and perform its obligations under the Merger Agreement and to consummate the transactions contemplated thereby, including the merger and the issuance of On Assignment shares in connection with the merger, (ii) adopted resolutions approving the Merger Agreement and the transactions contemplated thereby and (iii) recommended that On Assignment’s shareholders vote for the share issuance proposal.

THE BOARD RECOMMENDS THAT ON ASSIGNMENT SHAREHOLDERS VOTE “FOR” THE SHARE ISSUANCE PROPOSAL.

Opinion of On Assignment’s Financial Advisor (see page 24)

On March 19, 2012, Moelis & Company LLC (which we refer to in this Proxy Statement as “Moelis”), financial advisor to On Assignment in connection with the merger, delivered its oral opinion to the Board, which was subsequently confirmed by delivery of Moelis’ written opinion, dated March 19, 2012, to the effect that, as of such date, subject to assumptions and qualifications described in the opinion, the consideration to be paid by On Assignment in the merger was fair from a financial point of view to On Assignment.

The full text of Moelis’ opinion is attached as Annex B to this Proxy Statement. Moelis’ opinion was provided to the Board for the use and benefit of the Board in its evaluation of the merger. Moelis’ opinion is directed only to the fairness from a financial point of view to On Assignment of the consideration paid by On Assignment in connection with the merger. The opinion does not address On Assignment’s underlying business decision to effect the merger or the relative merits of the merger as compared to any alternative business strategies or transactions that might be available to On Assignment.

The opinion does not constitute a recommendation to any shareholder of On Assignment as to how such shareholder should vote with respect to the merger or any other matter. On Assignment encourages you to read Moelis’ opinion carefully in its entirety for a description of the assumptions made, procedures followed, matters considered and limitations on the review undertaken by Moelis.

Risk Factors (see page 15)

There are a number of significant risks related to the merger, including the following:

If the public markets assign lower values to the Apex Systems business than the values used in negotiating the terms of the merger, the trading price of On Assignment common stock may decline;

The merger may not be completed, which could adversely affect On Assignment’s business operations and stock price;

The issuance of shares of On Assignment common stock in the merger will substantially reduce the percentage interests of current On Assignment shareholders in the earnings, voting power and market value of On Assignment;

On Assignment will incur significant transaction, compliance and other merger-related fees and costs;

The public resale by former Apex Systems shareholders of On Assignment common stock received in the merger could have a negative effect on the trading price of On Assignment common stock following completion of the merger;

On Assignment will record goodwill and identifiable intangible assets that could become impaired and adversely affect its operating results; and

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On Assignment will have continuing obligations, which will impact its business and corporate governance.

In addition, On Assignment will be subject to a number of significant risks related to the markets in which it will operate as well as other risks, including the following:

If Apex Systems is unable to sustain its rate of growth, the growth prospects and future results of On Assignment are likely to be adversely affected.

Conditions to the Completion of the Merger (see page 38)

The completion of the merger is subject to the satisfaction or, to the extent legally permissible, the waiver of a number of conditions in the Merger Agreement, such as:

the following conditions in favor of both On Assignment and Apex Systems (subject to certain limitations and exceptions):

the approval by On Assignment shareholders of the share issuance proposal;

the expiration or termination of the waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (which condition we expect to be satisfied on April 30, 2012);

the absence of any law, judgment, injunction or other order by a governmental entity prohibiting or enjoining completion of the merger;

the receipt of the approval for listing by the NASDAQ Global Select Market of On Assignment common stock to be issued pursuant to the merger, subject to the official notice of issuance of the stock;

compliance in all material respects by the parties with their respective obligations under the Merger Agreement;

the absence of breaches of representations and warranties in the Merger Agreement, subject to a material adverse effect qualification;

the following conditions in favor of Apex Systems (subject to certain limitations and exceptions):

the absence since December 31, 2011 of any change, event or development that has had a material adverse effect on On Assignment;

receipt of payment by On Assignment of the merger consideration;

the following conditions in favor of On Assignment (subject to certain limitations and exceptions):

the receipt of required third-party consents under certain contracts, agreements, licenses, orders or other commitments;

the absence since December 31, 2011 of any change, event or development that has had a material adverse effect on Apex Systems; and

the receipt of financing for the merger.

Termination of the Merger Agreement (see page 39)

The Merger Agreement may be terminated at any time prior to the completion of the merger in any of the following ways:

by mutual written consent of On Assignment and Apex Systems;

by either On Assignment or Apex Systems (subject to certain limitations and exceptions):

if the merger has not been completed by July 18, 2012 (or such other date to which On Assignment and Apex Systems may agree upon in writing); or

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if a court or other governmental entity issues an order or injunction preventing completion of the merger, and such order or injunction is final and cannot be appealed;

by On Assignment (subject to certain limitations and exceptions):

if there has been an uncured breach of any representation, warranty, covenant or other agreement made by Apex Systems in the Merger Agreement, and the breach or failure to perform would result in the applicable closing condition to the merger not being satisfied; and

by Apex Systems (subject to certain limitations and exceptions):

if there has been an uncured breach of any representation, warranty, covenant or other agreement made by On Assignment or Merger Sub in the Merger Agreement, and the breach or failure to perform would result in the applicable closing condition to the merger not being satisfied.

NASDAQ Listing (see page 29)

It is a condition to the merger that the shares of On Assignment common stock to be issued in the merger be approved for listing on the NASDAQ Global Select Market, subject to official notice of issuance. Shares of On Assignment common stock will continue to be traded on the NASDAQ Global Select Market under the symbol “ASGN” immediately following the completion of the merger.

Appraisal Rights (see page 29)

Holders of On Assignment common stock do not have dissenters or appraisal rights under Delaware law in connection with the merger.

Material United States Federal Income Tax Consequences to Existing On Assignment Shareholders (see page 28)

The existing On Assignment shareholders generally should not be subject to any material United States federal income tax consequences solely as a result of the merger.

Anticipated Accounting Treatment (see page 28)

The merger will be accounted for using the acquisition method of accounting in accordance with accounting principles generally accepted in the United States (GAAP) under Accounting Standards Codification (ASC) Topic 805, Business Combinations (ASC 805). On Assignment will be the acquiring entity for financial reporting purposes and Apex Systems will be treated as the “acquired” company for financial reporting purposes, and the assets and liabilities of Apex Systems will be recorded, as of the completion of the merger, based on their estimated fair values and added to those of On Assignment.

Additional Interests of Directors, Executive Officers and Certain Beneficial Owners (see page 30)

In connection with the merger, none of our directors or officers will receive any transaction bonuses, none of their existing equity awards will vest or become payable on an accelerated basis, and no director or officer of On Assignment has any “change of control” arrangement under an employment agreement or any pension or other benefit plan that would entitle such director or officer to additional compensation or other benefits following completion of the merger.

Selected Historical Data

On Assignment Selected Historical Financial Information

The selected historical financial data set forth below is derived in part from and should be read together with On Assignment’s consolidated financial statements, the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which are included in previously filed annual reports on Form 10-K of On Assignment. The consolidated statement of income data for each of the years ended December 31, 2007, 2008, 2009, 2010 and 2011 and the consolidated balance sheet data as of December 31, 2007, 2008, 2009, 2010 and 2011 were derived from On Assignment’s audited consolidated financial statements, which are included in previously filed annual reports on Form 10-K of On Assignment. Historical results are not necessarily indicative of results to be expected for future periods.

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	Year Ended December 31,
	(in thousands, except share and per share data)
	2011			2010			2009			2008			2007
Revenues	$	597,281		$	438,065		$	416,613		$	618,058		$	567,180
Cost of services		397,176			288,609			280,245			418,602			387,643
Gross profit		200,105			149,456			136,368			199,456			179,537
Selling, general and administrative expenses		155,706			130,830			121,141			155,942			151,942
Impairment of goodwill		-			15,399			-			-			-
Operating income		44,399			3,227			15,227			43,514			27,595
Interest expense		(2,975	)		(8,309	)		(6,612	)		(9,998	)		(12,174	)
Interest income		39			141			170			715			1,394
Income (loss) before income taxes		41,463			(4,941	)		8,785			34,231			16,815
Provision for income taxes		17,166			4,956			4,078			15,261			7,493
Net income (loss)	$	24,297		$	(9,897	)	$	4,707		$	18,970		$	9,322

Earnings (loss) per share:
Basic	$	0.66		$	(0.27	)	$	0.13		$	0.53		$	0.27
Diluted	$	0.64		$	(0.27	)	$	0.13		$	0.53		$	0.26
Number of shares and share equivalents used to calculate earnings (loss) per share:
Basic		36,876			36,429			36,011			35,487			35,138
Diluted		37,758			36,429			36,335			35,858			35,771

Balance Sheet Data (at end of period):
Cash and cash equivalents	$	17,739		$	18,409		$	25,974		$	46,271		$	37,764
Working capital		74,705			50,596			62,238			91,192			79,009
Total assets		410,665			341,116			343,462			401,850			384,680
Long-term liabilities		107,513			76,579			84,847			129,805			140,803
Shareholders’ equity		246,743			219,487			226,661			218,514			193,034

Apex Systems Selected Historical Financial Information

The selected historical financial data set forth below is derived in part from and should be read together with Apex System’s financial statements, the related notes and “Information about Apex Systems—Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this Proxy Statement. The statement of income data for each of the years ended December 29, 2007, December 27, 2008, December 26, 2009, December 25, 2010 and December 31, 2011 and the balance sheet data as of the same dates were derived from Apex System’s audited financial statements appearing in the annexes to this Proxy Statement and the books and records of Apex Systems. Historical results are not necessarily indicative of results to be expected for future periods.

	Year Ended
	(in thousands)
	December 31, 2011			December 25, 2010			December 26, 2009			December 27, 2008			December 29, 2007
Net sales	$	705,228		$	546,996		$	383,468		$	402,233		$	398,481
Cost of sales		511,825			391,589			270,456			273,974			272,691
Gross margin		193,403			155,407			113,012			128,259			125,790
Operating expenses		146,190			127,238			83,780			93,785			102,392
Income from operations		47,213			28,169			29,232			34,474			23,398
Total other expenses		(3,060	)		(2,644	)		(1,359	)		(3,964	)		(2,570	)
Net income	$	44,153		$	25,525		$	27,873		$	30,510		$	20,828


Balance Sheet Data (at end of period):
Cash	$	7,132		$	7,588		$	977		$	6,020		$	73
Working capital		72,907			70,117			52,730			51,444			32,795
Total assets		135,915			124,817			73,343			76,193			72,155
Long-term liabilities		95,623			75,387			39,691			54,315			4,009
Shareholders’ equity (deficit)		(13,520	)		4,387			16,563			6,176			31,367

Selected Unaudited Pro Forma Condensed Combined Financial Information

The merger will be accounted for by using the acquisition method of accounting in accordance with accounting principles generally accepted in the United States of America, or GAAP. The tangible and identifiable intangible assets and liabilities of Apex Systems will be recorded as of the closing date of the merger, at their respective estimated fair values, and assumed by and added to those of On Assignment. For a detailed description of the purchase accounting method, please see “The Merger—Anticipated Accounting Treatment” beginning on page 28.

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The following selected unaudited pro forma condensed combined balance sheet information as of December 31, 2011 and the selected unaudited pro forma condensed combined statement of income information for the year ended December 31, 2011 are based on the separate historical consolidated financial statements of On Assignment and Apex Systems, and reflect the merger and related events and apply the assumptions and adjustments described in the notes to the unaudited pro forma condensed combined financial statements. The pro forma adjustments are more fully described in the notes to the unaudited pro forma condensed combined financial statements beginning on page 53 of this Proxy Statement. The selected unaudited pro forma condensed combined balance sheet as of December 31, 2011 reflects the merger and related events as if they had been consummated on December 31, 2011. The selected unaudited pro forma condensed combined statement of income for the year ended December 31, 2011 reflects the merger and related events as if they had been consummated on January 1, 2011.

The pro forma adjustments are based upon available information and assumptions that the managements of On Assignment and Apex Systems believe reasonably reflect the merger. The selected unaudited pro forma condensed combined financial statements do not include the effects of the costs associated with any integration activities resulting from the transaction. In addition, the selected unaudited pro forma condensed combined financial statements do not include the realization of any cost savings from operating efficiencies or synergies resulting from the transaction, nor do they include any potential incremental revenues and earnings that may be achieved with the combined capabilities of the companies. The final purchase price allocation, which will be determined subsequent to the closing of the merger, and its effect on results of operations may differ significantly from the pro forma amounts included in the selected unaudited pro forma condensed combined financial statements. The amounts allocated to identifiable intangible assets and goodwill represent the managements’ best estimate as of the date of this Proxy Statement. We present the unaudited pro forma condensed combined financial statements for informational purposes only. The selected pro forma condensed combined financial statements are not necessarily indicative of what our financial position or results of operations actually would have been had we completed the merger as of the dates indicated. In addition, the selected unaudited pro forma condensed combined financial statements do not purport to project the future financial position or operating results of On Assignment.

The following selected unaudited pro forma condensed combined financial information (a) has been derived from, and should be read together with, the unaudited pro forma condensed combined financial statements and the accompanying notes included in this Proxy Statement beginning on page 51 and (b) should be read together with the consolidated financial statements of On Assignment and Apex Systems and other information filed by On Assignment with the SEC and incorporated by reference in this Proxy Statement. Please see “Where You Can Find Additional Information” beginning on page 98.

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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

For the Year Ended December 31, 2011

(in thousands, except share and per share data)

Income Statement Data:	Pro Forma Combined
Revenues	$	1,302,509
Cost of services		909,001
Gross profit		393,508
Selling, general and administrative expenses		317,372
Operating income		76,136
Interest income		39
Interest expense		(24,734	)
Other expense		(156	)
Income before income taxes		51,285
Provision for income taxes		21,095
Net income	$	30,190

Basic earnings per share	$	0.59
Weighted average number of shares outstanding		51,181

Diluted earnings per share	$	0.58
Weighted average number of shares and dilutive shares outstanding		52,063

Balance Sheet Data (at end of period):
Cash and cash equivalents	$	13,489
Working capital		158,711
Total assets		1,077,609
Long-term liabilities		529,352
Shareholders’ equity		454,337

Closing Price of On Assignment Common Stock

The following table includes the closing prices per share of On Assignment common stock as reported on the NASDAQ Global Select Market on:

March 20, 2012, the last trading day prior to the public announcement of the execution of the Merger Agreement, and

, 2012, the most recent practicable date prior to the mailing of this Proxy Statement to the On Assignment shareholders.

	On Assignment Common Stock Closing Price Per Share
March 20, 2012	$	13.68
, 2012	$

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NOTE REGARDING FORWARD-LOOKING STATEMENTS

We have made forward-looking statements in this Proxy Statement, and in documents that are incorporated by reference in this Proxy Statement, that are subject to risks and uncertainties. These statements are based on the current beliefs and assumptions of our management. Generally, forward-looking statements include information concerning possible or assumed future actions, events or results of operations of On Assignment or Apex Systems. Forward-looking statements include the information in this Proxy Statement regarding:

management forecasts;

regulatory matters;

financial projections and estimates;

efficiencies/cost avoidances;

cost savings;

income and margins;

earnings per share;

growth;

economies of scale;

combined operations;

the economy;

future economic performance;

conditions to, and the timetable for, completing the merger;

future acquisitions and dispositions;

litigation;

potential and contingent liabilities;

management’s plans;

business portfolios;

taxes; and

merger and integration-related expenses.

These statements may be preceded by, followed by or otherwise include the words “may,” “will,” “should,” “could,” “would,” “potential,” “possible,” “believes,” “expects,” “anticipates,” “intends,” “plans,” “estimates,” “hopes” or similar expressions. We claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 for all forward-looking statements.

Forward-looking statements are not guarantees of performance. You should understand that the following important factors, in addition to those discussed in “Risk Factors” beginning on page 15 and elsewhere in this Proxy Statement, and in the documents which are incorporated by reference in this Proxy Statement, could affect the future results of On Assignment, and could cause those results or other outcomes to differ materially from those expressed or implied in our forward-looking statements:

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the ability of On Assignment and Apex Systems to satisfy all conditions precedent to the completion of the merger;

the ability of On Assignment and Apex Systems to integrate their operations successfully;

the timing of the integration of On Assignment and Apex Systems necessary to achieve enhanced earnings or realize cost savings;

the retention of existing, and continued attraction of additional customers and employees;

unexpected costs or unexpected liabilities related to the merger, or the effects of purchase accounting that may be different from our current expectations;

the effects of uncertainty surrounding the merger that may cause the business of On Assignment to suffer;

other economic, business and competitive factors;

the costs and other effects of any legal proceedings;

the impact on the trading price of On Assignment common stock of resales in the public market of shares of On Assignment common stock received by former Apex Systems shareholders in the merger;

changes in accounting policies, practices or their interpretations; and

the factors described in On Assignment’s reports filed with the SEC.

Because forward-looking statements are subject to assumptions and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Shareholders are cautioned not to place undue reliance on such statements, which speak only as of the date of this Proxy Statement or the date of any document incorporated by reference.

All written and oral forward-looking statements concerning the merger or other matters addressed in this Proxy Statement or incorporated by reference in this Proxy Statement and attributable to On Assignment or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except to the extent required by applicable law or regulation, On Assignment undertakes no obligation to release any revisions or updates to such forward-looking statements to reflect events or circumstances after the date of this Proxy Statement or to reflect the occurrence of unanticipated events.

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RISK FACTORS

On Assignment shareholders should carefully read and consider the following risk factors, as well as the other information contained and referred to in this Proxy Statement, before voting at the Annual Meeting.

Risks Relating to the Merger

If the public markets assign lower values to the Apex Systems business than the values used in negotiating the terms of the merger, the trading price of On Assignment common stock may decline.

The stock of Apex Systems is not publicly traded, so there is no current market-based valuation for Apex Systems’ business. In negotiating the merger, we used what we believe to be a reasonable valuation for Apex Systems and considered the advice of our financial advisor in the merger. The public markets may not value the Apex Systems business in the same manner as we have valued it for purposes of negotiating the terms of the merger. If either On Assignment’s future financial performance is materially better than projected (and Apex Systems does not also perform materially better), or if Apex Systems’ future financial performance is materially lower than projected (and On Assignment’s performance is not similarly lower), the market may conclude that the value assigned to Apex Systems in the merger was too high. In any of these events, the trading price of On Assignment common stock may decline.

The merger may not be completed, which could adversely affect On Assignment’s business operations and stock price.

To complete the merger, On Assignment shareholders must approve the issuance of shares of On Assignment common stock as contemplated by the Merger Agreement.

In addition, the Merger Agreement contains additional closing conditions, which are described in the section “The Merger Agreement” on page 32, including On Assignment’s receipt of debt financing in the amount of $540 million, which we refer to in this proxy as the “debt financing,” from Wells Fargo Bank, National Association, Bank of America, N.A., and Deutsche Bank Trust Company Americas. These conditions may not be satisfied or waived.

If we are unable to complete the merger, On Assignment would be subject to a number of risks, including the following:

On Assignment would not realize the benefits of the merger; and

the trading price of On Assignment common stock may decline to the extent that the current market price reflects a market assumption that the merger will be completed.

The occurrence of either of these events individually or in combination could have a material adverse effect on the results of operations, financial position and cash flows of On Assignment or the trading price of our common stock.

On Assignment will issue between 14,304,548 and 17,485,898 shares of On Assignment common stock in the merger. Upon completion of the merger and the issuance of these shares, based on the amount of shares of On Assignment common stock outstanding as of March 31, 2012 of 37,575,777 shares, On Assignment shareholders prior to the merger will own between 68.2% and 72.4% of On Assignment’s outstanding shares of common stock and the former Apex Systems shareholders will own between 27.6% and 31.8% of On Assignment’s outstanding shares of common stock. The issuance of shares of On Assignment common stock in the merger will cause a significant reduction in the relative percentage interests of current On Assignment shareholders in earnings, voting power and market value of On Assignment.

The merger is expected to be accretive to On Assignment shareholders in 2012, and the accretive nature of the transaction is expected to result in increased earnings per share over time. The extent and duration of any accretion will depend on several factors, including the amount of merger-related expenses it incurs that are charged against its earnings, the number of shares which will be issued to the former Apex shareholders under the Merger Agreement and the results of operations of Apex Systems, which will not be known until after the merger is completed. If expenses charged against earnings are higher than the Board expected, the number of shares which will be issued to the former Apex shareholders under the Merger Agreement is greater than expected or Apex Systems does not achieve the revenue and earnings growth projected by the Board, the amount of accretion in 2012 could be less than currently anticipated and the merger may not turn out to be accretive to current On Assignment shareholders (or may be less accretive than currently anticipated). In such event, the trading price of On Assignment common stock may decline.

After reflecting the pro forma adjustments as described in “Unaudited Pro Forma Condensed Combined Financial Statements” beginning on page 51, the pro forma diluted earnings per common share of On Assignment for the year ended December 31, 2011 is $0.58. These unaudited pro forma condensed combined financial statements apply certain assumptions and adjustments which are based upon available information and assumptions that the managements of On Assignment and Apex Systems believe reasonably reflect the merger.

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On Assignment will incur significant transaction, compliance and other merger-related fees and costs.

On Assignment expects to incur costs associated with combining the operations of its business with those of Apex Systems, as well as transaction fees and other costs related to the merger. The total cost to consummate the transaction is estimated to be approximately $7.5 million, which does not include the costs to be borne by Apex Systems. The amount of transaction costs expected to be incurred is a preliminary estimate and subject to change. In addition, it is expected that On Assignment’s costs related to legal and regulatory compliance may increase substantially, at least in the near term, because Apex Systems has not previously been required to comply with the reporting, internal control, public disclosure and similar legal and regulatory compliance obligations and requirements applicable to publicly traded companies. Although On Assignment expects that the elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the businesses, may offset incremental transaction and merger-related costs over time, this net benefit may not be achieved in the near term or at all.

In the merger, we will issue between 14,304,548 and 17,485,898 shares of On Assignment common stock to the shareholders of Apex Systems. None of these shares will be registered under the Securities Act of 1933, and they will only be able to be resold pursuant to a separate registration statement or an applicable exemption from registration (under both federal and state securities laws). The shares will be subject to contractual restrictions under the terms of the Investor Rights Agreement. The former Apex Systems shareholders have certain rights to require On Assignment to register their shares for public resale under the terms of the Investor Rights Agreement. In addition, if we propose to register any of our shares in a registered public offering, the former Apex Systems shareholders have a right to include their shares in such offering through a valid piggyback registration of shares, subject to the right of the underwriters of an offering to limit the number of shares included in such registration. Please see “The Investor Rights Agreement” beginning on page 40 for a description of the terms of the Investor Rights Agreement.

If all or a substantial portion of these shares of our common stock issued in the merger are resold into the public markets, such transactions may cause a decline in the trading price of our common stock.

On Assignment will record goodwill and identifiable intangible assets that could become impaired and adversely affect its operating results.

Under GAAP, the merger will be accounted for under the acquisition method of accounting as a purchase by On Assignment of Apex Systems. Under the acquisition method of accounting, the total implied purchase price paid by On Assignment in the merger will be allocated to Apex Systems’ tangible assets and liabilities and identifiable intangible assets based on their fair values as of the date of completion of the merger. The excess of the purchase price over those fair values will be recorded as goodwill. We expect that the merger will result in the creation of goodwill based upon the application of acquisition accounting. The unaudited pro forma condensed combined financial statements contained in this Proxy Statement beginning on page 51 reflect an estimate of goodwill resulting from the merger amounting to $243.8 million. As a result of the merger, total pro forma goodwill of $473.0 million would represent 44% of the total combined pro forma assets of $1.1 billion. Please see Note 3(c), “Goodwill” of Notes to Unaudited Pro Forma Condensed Combined Financial Statements beginning on page 55 for a discussion of the factors contributing to the estimated amount of goodwill resulting from the merger. To the extent the value of goodwill or identifiable intangible assets become impaired, On Assignment may be required to incur material non-cash charges relating to such impairment. Such a potential impairment charge could have a material and adverse impact on On Assignment’s operating results.

On Assignment will have continuing contractual obligations, which will impact its business and corporate governance.

The Merger Agreement includes obligations of On Assignment and the former Apex Systems shareholders, which will continue following completion of the merger. These obligations include indemnification obligations, which may entitle On Assignment to seek recovery from the former Apex Systems shareholders for losses related to representations and pre-merger actions or omissions of Apex Systems. In addition, the Investor Rights Agreement and Non-Compete Agreements include obligations that will be in effect after the completion of the merger, including board matters, registration rights and restrictions on competitive activities by former Apex shareholders.

If Apex Systems is unable to sustain its rate of growth, the growth prospects and future results of On Assignment are likely to be adversely affected.

Over the past eight years, Apex Systems has undergone revenue and earnings growth. This growth has come from Apex Systems’ focus on information technology staffing, increased market share with existing clients, addition of new clients, national presence and infrastructure that promotes high operating leverage. There is no assurance that Apex Systems will be able to continue this pace of growth in the future. Such growth also could be negatively affected by many factors, including future technology industry conditions, the effects of integration with the On Assignment business or macroeconomic events. If, following the merger, Apex Systems’ growth rate slows, or if it fails to grow at the pace anticipated by On Assignment, the growth prospects and future results of On Assignment are likely to be adversely affected.

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THE MERGER

The Companies

On Assignment, Inc.

OA Acquisition Corp.

26745 Malibu Hills Road

Calabasas, California 91301

(818) 878-7900

On Assignment is a diversified professional staffing firm providing flexible and permanent staffing solutions in specialty skills including Life Sciences, Healthcare, Physician, 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 consists of four operating segments: Life Sciences, Healthcare, Physician and Information Technology and Engineering.

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, 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, biostatisticians, drug safety specialists, SAS programmers, medical writers, and other skilled scientific professionals.

Our Healthcare segment includes our Nurse Travel and Allied Healthcare lines of business. We offer our healthcare clients locally-based and traveling contract professionals, from a number of healthcare 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, medical assistants, pharmacists, pharmacy technicians, respiratory therapists, phlebotomists, coders, billers, claims processors and collections staff, and dental professionals - including dental assistants, hygienists and dentists and rehabilitation therapists.

Our Physician segment consists of VISTA Staffing Solutions, Inc., or VISTA, which we acquired on January 3, 2007. VISTA, based in Salt Lake City, Utah, is a leading provider of physician staffing, known as locum tenens, and permanent physician search services. 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 Information Technology and Engineering segment consists of Oxford Global Resources, Inc., or Oxford, which we acquired on January 31, 2007. 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.

On Assignment was incorporated in 1985. Our principal executive office is located at 26745 Malibu Hills Road, Calabasas, California 91301, and our telephone number is (818) 878-7900. We have approximately 76 branch offices in 24 states within the United States and in six foreign countries.

Shares of On Assignment common stock are traded on the NASDAQ Global Select Market under the symbol “ASGN.”

For additional information about On Assignment and its business, please see “Incorporation by Reference” beginning on page 98 and “Where You Can Find Additional Information” beginning on page 98.

Apex Systems, Inc.

4400 Cox Road

Suite 200

Glen Allen, Virginia 23060

(804) 342-9090

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Apex Systems serves Fortune 500, mid-market and emerging companies from a wide variety of industries including financial services, business services, consumer industrials, technology, healthcare, government services, communications and others. Since 2006, it has placed over 55,000 candidates at over 2,100 clients. Apex Systems has a full service of offerings, including staff augmentation, recruitment process outsourcing, sourcing through skill-based recruiting centers and managed solutions.

Apex Systems provides skilled professionals to clients that require technical, network and telecommunications support related to information technology infrastructure, technical project management, business application expertise in a variety of technical areas and other technical expertise.

Apex Systems is a privately held corporation. Its principal shareholders are Brian J. Callaghan, Edwin A. Sheridan, IV and Jeffrey E. Veatch.

For additional information about Apex Systems and its business, please see “Information about Apex Systems” beginning on page 44 and “Where You Can Find Additional Information” beginning on page 98.

The Share Issuance Proposal

At the Annual Meeting, among other matters, the holders of On Assignment common stock will be asked to consider and vote on the following proposal related to the merger:

Proposal 1: A proposal to approve the issuance of up to 17,485,898 shares of On Assignment common stock in the merger contemplated by the Agreement of Merger, dated as of March 20, 2012, by and among On Assignment, OA Acquisition Corp., Apex Systems and Jeffrey E. Veatch, as Shareholder Representative.

The share issuance proposal is intended to satisfy the listing requirements of the NASDAQ Global Select Market.

Background of the Merger

The Board of On Assignment regularly reviews with senior management strategic direction, opportunities available for growth and developments in the staffing industry. These reviews include periodic internal discussions of projected financial performance and potential acquisitions, dispositions and business combinations with third parties that would increase shareholder value and further On Assignment’s strategic objectives, as well as the potential benefits and risks of those potential transactions.

Mr. Dameris, the Chief Executive Officer and President of On Assignment, and Mr. Sheridan, the Co-Chief Executive Officer of Apex Systems, have met from time to time to discuss the industry and their companies. In April 2010, Mr. Dameris contacted Mr. Sheridan regarding a meeting about their companies and a potential transaction in which On Assignment would acquire Apex Systems. On May 14, 2010, Mr. Dameris and Mr. Brill, Senior Vice President of Finance and Chief Financial Officer of On Assignment, met with Mr. Sheridan and Mr. Hanson, Chief Financial Officer of Apex Systems, in Alexandria, Virginia, so they could become familiar with each other and their respective companies.

On May 20, 2010, the Board met in a regularly scheduled meeting and discussed acquisition opportunities. Mr. Dameris and Mr. Brill updated the Board on their communications with and regarding Apex Systems. On May 24, 2010, On Assignment furnished a preliminary and non-binding proposal to Apex Systems that reflected On Assignment’s interest in exploring the possibility of the acquisition of all of Apex Systems’ outstanding capital stock for a total consideration in the range of $300 million to $340 million in the form of cash, equity and an earn-out. Afterwards, Mr. Dameris kept the members of the Board updated on the status and progress of discussions with Apex Systems.

On June 4, 2010, On Assignment entered into a Non-Disclosure Agreement with Apex Systems. On June 8, 2010, Mr. Dameris, Mr. Brill, Mr. McGowan, President of On Assignment’s Information Technology and Engineering division, Oxford, Mr. Hanson, Mr. Sheridan and Mr. Veatch, Co-Chief Executive Officer of Apex Systems, met in New York. Representatives from On Assignment and Apex Systems made management presentations about each company.

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On June 11, 2010, Mr. Dameris and Mr. Brill met with Mr. Hanson and Mr. Callaghan, Co-Chief Executive Officer of Apex Systems, at the offices of Apex Systems. On June 17, 2010, management representatives from On Assignment and Apex Systems participated on a conference call together.

On June 29, 2010, Mr. Dameris apprised the Board on the status and progress of discussions with Apex Systems. Mr. Dameris informed the Board regarding the potential terms of the acquisition, the importance of a financing contingency in the merger, and Apex Systems’ fit into On Assignment’s overall corporate strategy.

During the months of June and July 2010, members of On Assignment’s senior management continued to evaluate the potential combination with Apex Systems and discussed with members of Apex Systems senior management the general parameters of a mutually agreeable potential transaction. Mr. Dameris kept the members of the Board updated on the status and progress of discussions with Apex Systems. In mid-July 2010, Mr. Sheridan informed Mr. Dameris that Apex Systems would not participate in further acquisition discussions with On Assignment at that time.

On September 2, 2010, the Board met at a regularly scheduled meeting. During this meeting, the Board reviewed with senior management potential business combinations. Mr. Dameris discussed acquisition activities and philosophies to position the company for growth.

On October 6, 2010, Mr. Hanson visited On Assignment’s offices in Calabasas.

During 2011, Mr. Dameris and Mr. Sheridan kept in contact about the status of their businesses. In December 2011, Mr. Dameris spoke with Mr. Sheridan and discussed a potential transaction in which On Assignment would acquire Apex Systems.

On January 15, 2012, at the request of Apex Systems, Wells Fargo Securities, LLC (which we refer to in this Proxy Statement as “Wells Fargo Securities”), financial advisor to Apex Systems, discussed the framework for a potential On Assignment and Apex Systems combination with Mr. Dameris.

On January 25, 2012, in order to engage in further discussions with Apex Systems and to ensure the confidentiality of non-public information regarding the two companies, On Assignment and Apex Systems entered into a Mutual Non-Disclosure Agreement.

On January 27, 2012, the Board met to discuss various acquisition opportunities. During this meeting, the Board reviewed with senior management the potential acquisition of Apex Systems. Following these discussions, the Board authorized management to continue to explore the potential acquisition of Apex Systems.

On February 1, 2012, Mr. Dameris sent to Apex Systems a letter of intent providing for an acquisition of Apex Systems for $573 million in consideration, consisting of $370 million in cash and approximately $203 million in shares of On Assignment common stock. Mr. Dameris also proposed that Apex Systems should be able to appoint two directors to the Board, with additional observation rights. During the first part of February 2012, Mr. Dameris spoke with a representative of Wells Fargo Securities and discussed potential parameters of the acquisition.

On February 3, 2012, Apex Systems entered into a written engagement letter with Wells Fargo Securities to act as its financial advisor in connection with the merger.

Also on February 3, 2012, the Board met and On Assignment’s senior management provided updates as to the progress of discussions with Apex Systems regarding the potential business combination. The Board asked questions to representatives of Moelis, financial advisor to On Assignment, regarding the potential financial aspects of a transaction with Apex Systems. Following these discussions, the Board authorized management to continue to explore the potential acquisition of Apex Systems.

On February 14, 2012, Wells Fargo Securities delivered to On Assignment a draft of Apex Systems’ counterproposal providing for $620 million in consideration, consisting of $370 million in cash and approximately $250 million in shares of On Assignment common stock. Representatives of Wells Fargo Securities also provided updated financial information regarding Apex Systems. The counterproposal provided for registration rights for Apex Systems shareholders who would receive shares of On Assignment common stock pursuant to the merger, including demand registration rights immediately after the closing of the merger and an unlimited number of underwritten shelf offerings and piggyback registrations until the Apex Systems shareholders owned less than 5% of the outstanding shares of On Assignment common stock. The counterproposal also provided for no escrow, no survival of Apex Systems’ representations and warranties after the closing of the merger, subject to certain exceptions, and the right to appoint three new directors to the Board so long as Apex Systems shareholders own at least 30% of the outstanding shares of On Assignment.

On February 17, 2012, the Board met and senior management provided the Board with, among other things, an update as to the progress of discussions with Apex Systems. The Board asked questions to representatives of Moelis regarding the counterproposal from Apex Systems. The Board authorized the On Assignment senior management to continue to pursue a potential acquisition of Apex Systems.

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During the weeks of February 19, 2012 and February 26, 2012, Mr. Dameris individually updated On Assignment’s outside directors to discuss the potential acquisition and a counterproposal to Apex Systems.

On February 20, 2012, Moelis delivered to Wells Fargo Securities an updated summary of terms of the acquisition of Apex Systems by On Assignment that provided for the acquisition of Apex Systems for $600 million of consideration, consisting of $368 million in cash and $232 million in shares of On Assignment common stock. The proposal also provided for Apex Systems to nominate two directors to the Board. On February 22, 2012, a representative from Wells Fargo Securities called Mr. Dameris and informed him that Apex Systems was willing to explore the potential acquisition if a deal could be possible on the proposed financial terms, subject to resolution of corporate governance and employee benefits issues.

On February 23, 2012, Mr. Blazer, Mr. Hanson, Mr. Sheridan, Mr. Veatch and Mr. Callaghan from Apex Systems, as well as representatives from Wells Fargo Securities, met with Mr. Dameris, Mr. Brill and representatives from Moelis at On Assignment’s corporate headquarters.

On February 24, 2012, On Assignment and Apex Systems signed an Exclusivity Agreement to facilitate further discussion between the parties on an exclusive basis.

During the week of February 27, 2012, the parties began exchanging due diligence lists and commenced diligence, a process which continued until the signing of the Merger Agreement.

On March 1, 2012, representatives of Moelis delivered to Wells Fargo Securities an updated summary of terms of the acquisition of Apex Systems by On Assignment that provided for the acquisition of Apex Systems for $600 million of consideration, consisting of $368 million in cash and $232 million in shares of On Assignment common stock. The proposal also provided for Apex Systems to nominate two directors to the Board.

On March 5, 2012, the Board met, together with representatives of Moelis, to discuss the potential acquisition. Representatives of Moelis informed the Board of the current terms of the On Assignment proposal and the Apex Systems counter-proposal, as well as a comparison of potential financing structures and terms. The Board authorized the On Assignment senior management to continue to pursue a potential acquisition of Apex Systems.

On March 8, 2012, management of On Assignment and Apex Systems and representatives of Moelis and Wells Fargo Securities met in New York to discuss the status of the transaction and negotiations, as well as the due diligence and reverse due diligence process, potential financing structures and terms and the status of the legal documentation. Representatives of each of Deutsche Bank Trust Company Americas, Wells Fargo Bank, National Association and Bank of America, N.A. joined the meeting to discuss the potential financing structures and terms.

Also on March 8, 2012, Troutman Sanders LLP distributed a proposed draft of the Merger Agreement to On Assignment’s outside legal counsel, Latham & Watkins LLP. On March 10, 2012, Latham & Watkins LLP distributed drafts of the Investor Rights Agreement and non-competition agreements to Troutman Sanders LLP.

During the week of March 12, 2012, representatives of each of On Assignment, Moelis, Latham & Watkins LLP, Apex Systems, Wells Fargo Securities and Troutman Sanders LLP continued to negotiate the terms of the Merger Agreement, the Investor Rights Agreement, the non-competition agreements and related agreements, and continued their due diligence.

On March 13, 2011 Latham & Watkins LLP distributed a revised draft of the Merger Agreement, which provided for more fulsome representations and warranties from Apex Systems and related indemnification provisions, among other changes.

Also on March 13, 2012, the Board met and received an update on the discussions with Apex Systems. Representatives of Latham & Watkins LLP advised the Board with respect to the key terms of the agreements. Also at this meeting, representatives of Moelis reviewed with the Board preliminary accretion and dilution analyses in connection with the potential On Assignment common stock to be issued to Apex Systems shareholders as part of the aggregate merger consideration.

Troutman Sanders LLP distributed a revised draft of the Merger Agreement and the Investor Rights Agreement on March 13, 2012. From March 13 to March 20, 2012, representatives of each of On Assignment, Apex Systems and their financial and legal advisors negotiated the final terms of the Merger Agreement, including the working capital amounts, indemnification, reverse break-up fee and corporate governance provisions.

On March 15, 2012, On Assignment entered into a written engagement letter with Moelis to act as its financial advisor in connection with the transaction.

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On March 18, 2012, the Apex Systems board of directors met and reviewed an update on the discussions with On Assignment. Representatives of Troutman Sanders LLP summarized the key terms of the agreements. The Apex Systems board of directors asked questions to Troutman Sanders LLP regarding the agreements, and asked questions to Wells Fargo Securities regarding the financial terms in the proposed transaction.

On March 19, 2012, the Board met and received an update on the discussions with Apex Systems. Representatives of Latham & Watkins LLP summarized the key terms of the agreements and representatives of Moelis rendered an oral opinion, which was confirmed by delivery of a written opinion of Moelis dated March 19, 2012, to the effect that, as of such date, and subject to the assumptions and qualifications set forth in its opinion, the consideration to be paid by On Assignment in the merger was fair from a financial point of view to On Assignment. The Board asked questions of representatives of Moelis and Latham & Watkins LLP and discussed the financial and legal terms of the transaction. Following extensive discussion, the Board unanimously (1) determined that it was advisable to and in the best interests of On Assignment and its shareholders for the Company to execute, deliver and perform its obligations under the proposed Merger Agreement and to consummate the transactions contemplated thereby, including the merger and the issuance of On Assignment shares in connection with the merger, (2) adopted resolutions approving the issuance of the shares in connection with the proposed Merger Agreement and the transactions contemplated thereby and (3) recommended that On Assignment’s shareholders vote for the issuance of the shares in connection with the acquisition. The Board authorized the appropriate officers of On Assignment to finalize, execute and deliver the Merger Agreement and related documentation.

On March 20, 2012, the Apex Systems board of directors met and reviewed an update on the status of the key terms discussed by Troutman Sanders LLP at a prior meeting. Troutman Sanders LLP also advised the Apex Systems board of directors regarding its fiduciary duties under Virginia law and the members of the Apex Systems board of directors had an opportunity to ask questions. Wells Fargo Securities provided an update of the financial terms of the proposed transaction. Following discussion, the Apex Systems board of directors unanimously (1) determined that the proposed merger, the Merger Agreement and related plan of merger were advisable, fair to, and in the best interests of Apex Systems and its shareholders, and (2) recommended that the Apex Systems shareholders adopt and approve the proposed merger, Merger Agreement and related plan of merger.

On March 20, 2012, On Assignment executed commitment letters from Wells Fargo Bank, National Association, Bank of America, N.A. and Deutsche Bank Trust Company Americas providing for up to $540 million in loans to finance the transaction.

On March 20, 2012, Latham & Watkins LLP and Troutman Sanders LLP finalized negotiation of the Merger Agreement, which was signed that day after the close of market trading by authorized officers of On Assignment and Apex Systems.

On Assignment and Apex Systems issued a joint press release announcing the merger and the execution of the agreements on March 20, 2012.

On March 21, 2012, the shareholders of Apex Systems approved the proposed merger, Merger Agreement and related plan of merger by unanimous written consent.

Recommendation of the Board

The Board unanimously determined that the Merger Agreement and the transactions contemplated thereby, including the merger and the issuance of shares of On Assignment common stock in the merger, are advisable, fair to and in the best interests of On Assignment and On Assignment shareholders and approved the Merger Agreement and the transaction contemplated thereby. THE BOARD RECOMMENDS THAT ON ASSIGNMENT SHAREHOLDERS VOTE “FOR” THE SHARE ISSUANCE PROPOSAL.

Reasons for the Merger

The Board, with the advice and assistance of its independent legal and financial advisors, evaluated and negotiated the terms of the merger on behalf of On Assignment, including the terms and conditions of the Merger Agreement and the other related agreements. On March 19, 2012, the Board unanimously determined that the Merger Agreement and the transactions contemplated thereby, including the merger and the issuance of shares of On Assignment common stock in the merger, are advisable, fair to and in the best interests of On Assignment and the On Assignment shareholders, approved the Merger Agreement and the transaction contemplated thereby and recommended that On Assignment shareholders vote “FOR” the share issuance proposal.

In reaching its decision to approve the Merger Agreement and the transactions contemplated thereby and recommend that On Assignment shareholders vote “FOR” the share issuance proposal, the Board consulted with On Assignment management and independent advisors in connection with the merger, including Moelis, On Assignment’s financial advisor, and Latham & Watkins LLP, On Assignment’s outside legal counsel, considered various material factors described below, and received presentations from Latham & Watkins LLP regarding the Merger Agreement, the Investor Rights Agreement and the related transaction documents and from Moelis regarding its financial analyses. Among the material information and factors considered by the Board were the following:

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Strategic Considerations. The Board considered a number of factors pertaining to the strategic rationale for the merger, including the following:

Increased Size and Scale. On Assignment will have enhanced size and scale, including approximately double the number of revenues and employees. The merger immediately creates one of the largest publicly traded professional staffing companies in the United States with a focus on the information technology sector, which is benefiting from the most favorable secular trends in staffing. The increased scale and scope enhances the cross-selling and marketing opportunities across business segments. The larger size and scale of On Assignment also should result in additional access to customers and markets and opportunities for cost efficiencies.

Complementary Areas of Expertise. The merger will create a company that can offer clients a wide range of information technology professionals from high-end skill sets through Oxford to staffing and support functions through Apex Systems, which is the largest segment of the information technology staffing industry. Currently, there is little to no channel conflict with less than 1% of On Assignment’s 2011 revenue derived from overlapping clients.

Continuity of Operations. Apex Systems will maintain its brand and continue to operate substantially as it has in the past. Apex Systems’ three co-founders, Jeffrey E. Veatch, Brian J. Callaghan and Edwin A. Sheridan, IV will continue to focus on Apex Systems’ strategy as they have done for the last three years and will also have representation on the Board. Apex Systems’ executive and senior management will remain in place and continue to oversee the day-to-day operations of the business.

Proven Track Record of Integrating Acquired Businesses. On Assignment has a strong track record of successfully integrating large acquisitions. In 2007, the Company acquired Oxford and VISTA, which effectively doubled the size of On Assignment. These businesses were successfully integrated and are now two of the main divisions within On Assignment. The Board took note of these considerations in evaluating the likelihood that the operations of the two companies could be integrated successfully and efficiently.

Increased Shareholder Base and Market Capitalization. With the acquisition of Apex Systems, On Assignment will have enhanced access to capital markets and institutional investors by increasing scale and volume of shares traded in the capital markets and through a potential increase in market capitalization of On Assignment’s common stock.

Financial Considerations. The Board considered the expected financial impact of the merger on On Assignment, including that the merger is expected to be immediately accretive to earnings per share in 2012 and accretive to On Assignment shareholders in 2013 and beyond. The Board also considered that On Assignment will benefit from having the acquisition treated as an asset sale under Section 338(h)(10) of the Internal Revenue Code. The election is expected to result in an estimated $14 million of annual cash tax savings over the next 15 years. Given the low working capital requirements and the low capital expenditure of Apex Systems, similar to On Assignment, its free cash flow generation is also similar to that of On Assignment. On Assignment expects its increased scale, along with strong revenue and free cash flow generation, to result in the ability to repay debt, creating further equity value for shareholders. The Board also considered the historic financial condition, operating results and businesses of On Assignment and Apex Systems, including information with respect to their respective earnings histories. Please see “Summary—Selected Historical Data” beginning on page 9, “Information about Apex Systems” beginning on page 44 and Annex C to this Proxy Statement.

Financial Presentation and Opinion of Moelis. The Board considered the financial analyses and presentation of Moelis, as presented to the Board on March 19, 2012, and the opinion of Moelis rendered orally to the Board on March 19, 2012, which was subsequently confirmed by delivery of Moelis’ written opinion, dated March 19, 2012, to the effect that, as of such date, and based upon and subject to the assumptions and qualifications described in the opinion, the consideration to be paid by On Assignment in the merger was fair from a financial point of view to On Assignment, as more fully described below under “Opinion of On Assignment’s Financial Advisor” beginning on page 24.

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Post-Merger Corporate Governance; Terms of the Investor Rights Agreement. The Board considered the corporate governance provisions of the Investor Rights Agreement, including that, upon completion of the merger, the Board will continue to be comprised of a majority of independent directors selected by the Nominating and Corporate Governance Committee of the Board (all of whom are current directors of On Assignment). Please see “The Investor Rights Agreement” beginning on page 40 for further information and a detailed discussion of the terms and conditions of the Investor Rights Agreement.

Terms of the Merger Agreement. The Board reviewed and considered the terms of the Merger Agreement and considered that, in its view, the material terms of the Merger Agreement, taken as a whole, were reasonable for an arms’-length acquisition transaction. In particular, the Board considered the representations and warranties made by Apex Systems in the Merger Agreement, the restrictions on the operation of the Apex Systems business from the signing of the Merger Agreement until the closing of the merger and the other covenants of Apex Systems and its shareholders in the Merger Agreement, the conditions to each party’s obligation to complete the merger and the rights of indemnification of each party to the Merger Agreement for losses as a result of breaches of the Merger Agreement. Please see “The Merger Agreement” beginning on page 32 for a detailed discussion of the terms and conditions of the Merger Agreement.

Likelihood of Completion of the Merger. The Board considered the likelihood that the merger will be completed on a timely basis, including the likelihood that the merger will receive all necessary regulatory approvals without unacceptable conditions.

Due Diligence. The Board considered the scope of the due diligence investigation of Apex Systems conducted by members of On Assignment management and On Assignment’s outside advisors and evaluated the results.

Impact of the Merger on Customers and Employees. The Board evaluated the expected impact of the merger on On Assignment’s customers and employees and the benefits that would be derived from the merger by enhancing operations and by providing more opportunities for employees in a larger company.

The Board also considered potential risks associated with the merger, including the following:

Apex Systems Business Risks. The Board considered risks associated with Apex Systems’ business and operations, including the likelihood of winning future significant customers, the fact that Apex Systems has grown significantly over the last eight years, potential exposure to the financial services industry and the fact that Apex Systems’ customers include those in the financial services industry that may have short-lived projects. In particular, the Board considered the rate of projected growth of Apex Systems, as compared to other comparable companies (including On Assignment on a stand-alone basis), and considered the risks that such projected growth would not be achievable and, if not achieved, the adverse effects that could have on the Board expectations for On Assignment’s performance. Please see “Risk Factors” beginning on page 15 for additional information on business risks relating to Apex Systems’ impact on the combined business.

No Public Market Value for Apex Systems. Apex Systems is a privately held corporation and, accordingly, there is no public equity market valuation of Apex Systems. Furthermore, any valuation of Apex Systems is dependent on an estimate of the extent to which Apex Systems will be able to achieve its forecasted operating results, which include growth rates that may or may not be obtained. While the Board recommended that the On Assignment shareholders approve the issuance of shares in connection with the merger, the Board considered these uncertainties and limitations and took into account the possibility that the public markets might reach a different conclusion in assessing the value of Apex Systems or might be uncertain (or skeptical) about any value because of the informational limits and inherent uncertainties in valuing a privately owned business. The Board also considered that the actual operating results of Apex Systems could be significantly different from its expectations, and accordingly the market price of On Assignment common stock could be volatile as a result of the merger. Please see “Risk Factors—If the public markets assign lower values to the Apex Systems business than the values used in negotiating the terms of the merger, the trading price of On Assignment common stock may decline.” beginning on page 15.

Employee Matters. The Board considered the impact that the merger could have on the ability to attract, retain and motivate key personnel.

Diversion of Management. The Board considered the possible diversion of management’s time and attention from On Assignment’s ongoing business due to the substantial time and effort necessary to complete the merger and plan for and implement the integration of the operations of On Assignment and Apex Systems.

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The Board believed that, overall, the potential benefits of the merger to On Assignment and its shareholders outweighed the risks.

Please see “Reasons for the Merger—Additional Information about Factors Considered by the Board” beginning on page 24 for further information about the considerations of the Board.

THE BOARD RECOMMENDS THAT ON ASSIGNMENT SHAREHOLDERS VOTE “FOR” THE SHARE ISSUANCE PROPOSAL.

Additional Information about Factors Considered by the Board

The foregoing discussion summarizes the material factors considered by the Board in its considerations of the merger, however, it is not intended to be exhaustive. In view of the wide variety of factors considered by the Board in connection with their evaluations of the merger, the Board did not consider it practical to, nor did it attempt to, quantify, rank or otherwise assign relative weights to the specific factors that it considered in reaching its decisions. In considering the factors described above, individual members of the Board may have given different weight to different factors. The Board considered this information as a whole and overall considered the information and factors to be favorable to, and in support of, its determinations and recommendations.

The Board realized that there can be no assurance about future results, including results considered or expected as described in the factors listed above. It should be noted that this explanation of the factors considered by the Board and all other information presented in this are forward-looking in nature and, therefore, should be read in light of the factors discussed under the heading “Note Regarding Forward-Looking Statements” beginning on page 13.

Opinion of On Assignment’s Financial Advisor

At the meeting of the Board on March 19, 2012, Moelis delivered its oral opinion, which was later confirmed in writing, that based upon and subject to the conditions and limitations set forth in its written opinion, as of March 19, 2012, the Consideration (as defined in Moelis’ opinion) to be paid by On Assignment in the Transaction (as defined in Moelis’ opinion) is fair from a financial point of view to On Assignment.

The full text of Moelis’ written opinion dated March 19, 2012, which sets forth the assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex B to this Proxy Statement and is incorporated herein by reference. Shareholders are urged to read Moelis’ written opinion carefully and in its entirety. The following summary describes the material analyses underlying Moelis’ opinion, but does not purport to be a complete description of the analyses performed by Moelis in connection with its opinion and is qualified in its entirety by the full text of the opinion. Moelis’ opinion is directed to the Board and is limited solely to the fairness of the Consideration to be paid by On Assignment in the Transaction from a financial point of view of On Assignment as of the date of the opinion and does not address On Assignment’s underlying business decision to effect the Transaction or the relative merits of the Transaction as compared to any alternative business strategies or transactions that might be available to On Assignment. Moelis’ opinion does not constitute a recommendation to any shareholder of On Assignment as to how such shareholder should vote with respect to the Transaction or any other matter. Moelis’ opinion was approved by a Moelis fairness opinion committee. In arriving at its opinion, Moelis, among other things: (i) reviewed certain publicly available business and financial information relating to Apex Systems and On Assignment that Moelis deemed relevant; (ii) reviewed certain internal information relating to the business of Apex Systems, including financial forecasts, earnings, cash flow, assets, liabilities and prospects furnished to Moelis by On Assignment and Apex Systems; (iii) reviewed certain internal information relating to the business of On Assignment, including financial forecasts, earnings, cash flow, assets, liabilities and prospects, and an estimate of annual cash tax savings resulting from an election pursuant to Section 338(h)(10) of the Internal Revenue Code in connection with the Transaction, all furnished to Moelis by On Assignment; (iv) conducted discussions with members of senior management and representatives of On Assignment and Apex Systems concerning the matters described in clauses (i)-(iii) of this paragraph, as well as the respective businesses of On Assignment and Apex Systems and prospects before and after giving effect to the Transaction; (v) compared financial data for Apex Systems with publicly available financial and stock market data for On Assignment and certain other companies that Moelis deemed relevant; (vi) compared the proposed financial terms of the Transaction with the financial terms of certain other transactions that Moelis deemed relevant; (vii) considered certain potential pro forma effects of the Transaction; (viii) reviewed a draft of the Merger Agreement dated March 19, 2012 and a draft of the Investor Rights Agreement dated March 19, 2012; (ix) participated in certain discussions and negotiations among representatives of On Assignment and Apex Systems and their financial and legal advisors; and (x) conducted such other financial studies and analyses and took into account such other information as Moelis deemed appropriate.

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In connection with its review, Moelis did not assume any responsibility for independent verification of any of the information supplied to, discussed with, or reviewed by Moelis for the purpose of its opinion and has, with the consent of the Board, relied on such information being complete and accurate in all material respects. In addition, at the direction of the Board, Moelis did not make any independent evaluation or appraisal of any of the assets or liabilities (contingent, derivative, off-balance-sheet, or otherwise) of Apex Systems, nor was Moelis furnished with any such evaluation or appraisal. With respect to the forecasted financial information referred to above, Moelis assumed, at the direction of the Board, that (i) such forecasted financial information was reasonably prepared on a basis reflecting the best currently available estimates and judgments of (x) the management of On Assignment and Apex Systems as to the future performance of Apex Systems and (y) the management of On Assignment as to the future performance of On Assignment and (ii) that On Assignment and Apex Systems will achieve such forecasted financial results at the times and in the amounts forecasted. Moelis did not express any opinion as to any tax or other consequences that might result from the Transaction, nor did the opinion address any legal, tax, regulatory or accounting matters.

Moelis’ opinion was necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to Moelis as of, the date of Moelis’ opinion. Moelis assumed, with the consent of the Board, that all governmental, regulatory or other consents and approvals necessary for the consummation of the Transaction would be obtained without the imposition of any delay, limitation, restriction, divestiture or condition that would have an adverse effect on Apex Systems or On Assignment or on the expected benefits of the Transaction.

The following is a summary of the material financial analyses presented by Moelis to the Board at its meeting held on March 19, 2012, in connection with the delivery of its oral opinion at that meeting and its subsequent written opinion, dated March 19, 2012.

Some of the summaries of financial analyses below include information presented in tabular format. In order to fully understand Moelis’ analyses, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the analyses. Considering the data described below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of Moelis’ analyses.

Selected Publicly Traded Companies Analysis

Moelis reviewed selected financial and stock market data of the following six publicly traded companies in the staffing services industry:

Robert Half International, Inc.

Manpower Inc. d/b/a ManpowerGroup

Kforce Inc.

Kelly Services, Inc.

CDI Corp.

Computer Task Group, Incorporated

Moelis reviewed, as of March 16, 2012, among other metrics, the enterprise value as a multiple of 2011 actual and 2012 projected revenue and adjusted EBITDA (defined as earnings before interest, taxes, depreciation and amortization, as further adjusted to add back stock-based compensation and certain non-recurring expenses), price to 2012 projected earnings-per-share multiple, revenue growth, adjusted EBITDA growth, adjusted EBITDA margin and EPS of these companies and compared them to Apex Systems based on the implied Apex Systems enterprise value computed from the aggregate merger consideration and to On Assignment, both against On Assignment management projections and Wall Street research consensus estimates. Financial and operating data for the selected companies were based on publicly available Wall Street research and consensus estimates, public filings with the SEC and other publicly available information. Financial and operating data for Apex Systems were based on management projections provided by On Assignment and Apex Systems. Financial and operating data for On Assignment were based on On Assignment management’s projections and Wall Street consensus estimates. This analysis indicated the following implied low, mean, median and high multiples for the selected companies, as compared to corresponding multiples implied for Apex Systems and On Assignment:

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Valuation Statistics

Implied multiples for selected companies

Implied Multiples for

Low

Mean

Median

High

On Assignment

(based on On

Assignment

management

projections)

On Assignment

(based on Wall

Street consensus

estimates)

Apex (based on

aggregate merger

consideration

value)

Enterprise value as a multiple of revenue

Actual calendar year 2011

0.10

0.50

0.44

1.12

1.04

0.85

Projected calendar year 2012

0.10

0.46

0.41

1.02

0.89

0.91

0.72

Enterprise value as a multiple of Adjusted EBITDA

Actual calendar year 2011

5.6

9.1

9.4

12.3

10.2

9.2

Projected calendar year 2012

4.5

7.6

7.7

10.1

8.4

9.0

7.6

Closing stock price as a multiple of EPS

Projected calendar year 2012

11.5

17.4

16.9

22.7

16.4

17.6

Operating Statistics
	Low			Mean			Median			High			On Assignment Management Projections			On Assignment Wall Street Consensus Estimates			On Assignment and Apex Systems Projections for Apex Systems
Revenue growth
Actual calendar year 2011 to projected calendar year 2012		(2.1	%)		5.7	%		7.5	%		9.5	%		17.5	%		14.7	%		18.0	%
Adjusted EBITDA growth
Actual calendar year 2011 to projected calendar year 2012		(6.8	%)		20.1	%		24.0	%		34.3	%		20.7	%		12.6	%		20.7	%
Adjusted EBITDA margin
Actual calendar year 2011		1.7	%		4.9	%		4.5	%		9.3	%		10.3	%		10.3	%		9.3	%
Projected calendar year 2012		2.3	%		5.5	%		5.2	%		10.8	%		10.5	%		10.1	%		9.5	%

Based on the selected publicly traded companies analysis for projected 2012 adjusted EBITDA and the foregoing considerations, Moelis derived an aggregate valuation range for Apex Systems of $551 million to $669 million.

Selected Transaction Analysis

On Assignment’s financial advisors reviewed transaction values in the following nine selected transactions announced since March 2008 involving companies in the staffing and services industry:

Announcement Date	Target	Acquiror

10/17/11	Staffmark Holdings	Recruit Co.

07/20/11	SFN Group	Randstad

11/02/10	Comforce Corp.	ABRY Partners

07/28/10	Medfinders	AMN Healthcare Services

02/02/10	COMSYS IT Partners	Manpower

10/20/09	MPS Group	Adecco

08/11/09	Spring Group	Adecco

07/22/08	MDA Holdings	Cross Country Healthcare

03/14/08	Corporate Services Group	Impellam Group

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Moelis reviewed, among other things, transaction values in the selected transactions, calculated as the purchase price paid for the target’s equity, plus debt at book value, preferred stock at liquidation value and minority interests at book value, less cash, cash equivalents and short-term investments, as multiples of latest 12 months revenue and adjusted EBITDA (as per the above and as further adjusted for announced synergies) as well as adjusted EBITDA margin (as reported excluding synergies and including announced synergies). Multiples derived for the selected transactions were then compared with corresponding multiples implied for Apex Systems based on the implied merger consideration value. Financial data for the selected transactions were based on publicly available information at the time of announcement of the relevant transaction. Projected financial data for Apex Systems were based on internal estimates of On Assignment’s and Apex Systems’ management. This analysis indicated the following implied high, mean, median and low multiples for the selected transactions, as compared to the corresponding multiples implied for Apex Systems:

	Enterprise Value as a multiple of LTM									LTM Adjusted EBITDA Margin
	Revenue			Adjusted EBITDA			Adjusted EBITDA, including synergies			Excluding Synergies			Including Synergies
High		0.73	x		16.8	x		16.8	x		8.4	%		9.9	%
Mean		0.44	x		10.5	x		9.2	x		4.2	%		5.1	%
Median		0.35	x		9.5	x		7.7	x		3.9	%		4.1	%
Low		0.12	x		5.9	x		5.9	x		0.9	%		0.9	%
On Assignment’s acquisition of Apex Systems		0.85	x		9.2	x		–			9.3	%		–

Based on the precedent transaction analysis and the foregoing considerations, Moelis derived an aggregate valuation range for Apex Systems of $587 million to $685 million.

Apex Systems Discounted Cash Flow Analysis

Moelis performed a discounted cash flow analysis of Apex Systems using financial forecasts and estimates relating to Apex Systems prepared by On Assignment’s and Apex Systems’ management. Moelis calculated a range of implied present values (as of March 16, 2012), without giving effect to any potential synergies, of the standalone unlevered free cash flows that Apex Systems was forecasted to generate from the fiscal year ended December 31, 2012 until December 31, 2016 and of terminal values for Apex Systems based on Apex System’s calendar year 2016 projected adjusted EBITDA. Implied terminal values were derived by applying to Apex System’s calendar year 2016 projected adjusted EBITDA a range of next 12 months projected EBITDA terminal value multiples of 7.5x to 9.5x. In performing the illustrative discounted unlevered free cash flow analysis, Moelis applied discount rates ranging from 14.0% to 16.0% to projected unlevered free cash flows of Apex Systems for each of the years ending December 31, 2012, 2013, 2014, 2015 and 2016 and assuming a 40% tax rate for Apex Systems.

Based on the discounted cash flow analysis and the foregoing considerations, Moelis derived an aggregate valuation range for Apex Systems of $588 million to $670 million.

Selected Pro Forma Transaction Analyses

Moelis analyzed certain pro forma effects resulting from the Transaction. In conducting its analysis, Moelis relied upon certain assumptions and financial projections provided by the respective managements of On Assignment and Apex Systems. Moelis analyzed the pro forma financial effect of combining On Assignment and Apex Systems. The analysis showed that the Transaction would result in accretion in pro forma On Assignment standalone fully diluted GAAP earnings per share of 4.2% in the second half of 2012 and 10.4% at fiscal year end 2013, and accretion in pro forma On Assignment standalone fully diluted cash earnings per share (which excludes amortization of acquired intangibles and amortization of deferred financing fees and includes tax benefits from Section 338(h)(10)) of 52.1% in the second half of 2012 and 57.3% at fiscal year end 2013. The results of the pro forma combination analysis are not necessarily indicative of future operating results or financial position.

The preparation of a fairness opinion is a complex analytical process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Moelis’ opinion. In arriving at its fairness determination, Moelis considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis. Rather, Moelis made its fairness determination on the basis of its experience and professional judgment after considering the results of all of its analyses.

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No company or transaction used in the analyses described above for purposes of comparison is directly comparable to Apex Systems, On Assignment or the Transaction. In addition, such analyses do not purport to be appraisals, nor do they necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by such analyses. Because the analyses described above are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, neither On Assignment, nor Moelis or any other person assumes responsibility if future results are materially different from those forecast.

Other Information

The aggregate merger consideration was determined through arms’ length negotiations between Apex Systems and On Assignment and was approved by the Board. Moelis provided advice to On Assignment during these negotiations. Moelis did not, however, recommend any specific exchange ratio or amount of consideration to On Assignment or its board of directors, or that any specific amount or type of consideration constituted the only appropriate consideration for the Transaction.

Moelis’ opinion was prepared for the use and benefit of the Board in its evaluation of the Transaction. Moelis was not asked to address, and its opinion does not address, the fairness to, or any other consideration of, the holders of any class of securities, creditors or other constituencies of On Assignment. In addition, Moelis’ opinion does not express any opinion as to the fairness of the amount or nature of any compensation to be received by any of On Assignment’s officers, directors or employees, or any class of such persons, relative to the Consideration. At the direction of the Board, Moelis was not asked to, nor did it, offer any opinion as to the material terms of the Agreement or the Investor Rights Agreement or the form of the Transaction. Moelis did not express any opinion as to what the value of the On Assignment common stock will be when issued pursuant to the Merger Agreement or the prices at which it will trade following announcement or consummation of the Transaction. In rendering its opinion, Moelis assumed, with the consent of the Board, that the final executed form of the Merger Agreement and the Investor Rights Agreement would not differ in any material respect from the drafts that Moelis examined, and that On Assignment and Apex Systems would comply with all the material terms of the Merger Agreement and the Investors’ Rights Agreement. Moelis acted as financial advisor to On Assignment in connection with the Transaction and will receive a fee of $5.7 million for its services, $4.7 million of which is contingent upon the consummation of the Transaction. Moelis also received a fee of $1.0 million upon delivery of its opinion. In addition, On Assignment has agreed to indemnify Moelis for certain liabilities arising out of its engagement.

The Board selected Moelis as its financial advisor in connection with the Transaction because Moelis has substantial experience in similar transactions. Moelis is regularly engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, strategic transactions, corporate restructurings, and valuations for corporate and other purposes. Moelis’ affiliates, employees, officers and partners may at any time own securities of On Assignment, or hold long or short positions in respect of On Assignment’s securities. In addition, Moelis may provide investment banking and other financial services to On Assignment and its affiliates in the future and would receive compensation in connection therewith.

Anticipated Accounting Treatment

The merger will be accounted for using the acquisition method of accounting in accordance with ASC 805. On Assignment will be the acquiring entity for financial reporting purposes. Under the acquisition method of accounting, the cost of the transaction will be allocated to the tangible and identifiable intangible assets and liabilities assumed from the acquired entity based on their estimated fair values, with any excess being recognized as goodwill. Under ASC Topic 350, Intangibles - Goodwill and Other, goodwill will not be amortized, but will be subject to an annual impairment test.

Material United States Federal Income Tax Consequences to Existing On Assignment Shareholders

The existing On Assignment shareholders generally should not be subject to any material United States federal income tax consequences solely as a result of the merger.

Regulatory Approval

Under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, or HSR Act, and the rules and regulations promulgated thereunder, certain transactions, including the merger between On Assignment and Apex Systems, may not be consummated until required information and materials have been furnished to the Department of Justice, or DOJ, and the Federal Trade Commission, or FTC, and certain waiting period requirements have expired or been terminated. On March 29, 2012, each of On Assignment and Apex Systems filed a Pre-merger Notification and Report Form pursuant to the HSR Act with the DOJ and FTC. The statutory waiting period under the HSR Act will expire on April 30, 2012. At any time before the completion of the merger, the DOJ, the FTC or others could take action under the antitrust laws with respect to the merger, including seeking to enjoin the completion of the merger, rescinding the merger or requiring divestiture of certain assets of On Assignment or Apex Systems. There can be no assurance that a challenge to the acquisition on antitrust grounds will not be made or, if such challenge is made, that it would not be successful.

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Federal Securities Law Consequences

In the merger, we will issue between 14,304,548 and 17,485,898 shares of On Assignment common stock to the shareholders of Apex Systems. None of these shares will be registered under the Securities Act of 1933. It is intended that such shares will be issued pursuant to a private placement exemption under Section 4(2) of the Securities Act or other available exemptions, and they will only be able to be resold pursuant to a separate registration statement or an applicable exemption from registration (under both federal and state securities laws). The shares that will be received will be subject to contractual restrictions and the holders will be entitled to registration rights under the terms of the Investor Rights Agreement. These restrictions are described in detail in “The Investor Rights Agreement—Transfer Restrictions” beginning on page 41.

NASDAQ Listing

Appraisal Rights

Holders of On Assignment common stock do not have dissenters or appraisal rights under Delaware law in connection with the merger.

Nominees to the Board

The Investor Rights Agreement provides that the Shareholder Representative under the Merger Agreement (which will initially be Jeffrey E. Veatch) has the right to designate up to two nominees for election to the Board, subject to certain conditions and limitations. The Shareholder Representative has designated Brian J. Callaghan and Edwin A. Sheridan, IV as the board designees, and they will be appointed as new members of the Board upon the completion of the merger. In addition, Jeffrey E. Veatch will be the non-executive observer and Randolph C. Blazer and Theodore S. Hanson will be the observers. Please see “The Investor Rights Agreement—Composition of the Board” beginning on page 40 for a detailed summary of the Shareholder Representative’s rights with respect to the composition of the Board. Set forth below are the biographies which include the skills, qualities and experiences of each of the two directors and the non-executive observer to be appointed to the Board upon consummation of the merger.

Name	Age	Principal Occupation

Brian J. Callaghan, Director Appointee	41	Mr. Callaghan co-founded Apex Systems in 1995. Mr. Callaghan served as co-CEO during his time with Apex Systems. His duties at Apex Systems ranged from working directly with customers, leading staff, strategizing and forecasting, and building systems to support growth. Mr. Callaghan was recognized as Ernst & Young’s Entrepreneur of the Year in 2003. Prior to co-founding Apex Systems, Mr. Callaghan began his career as a telecommunications recruiter for a staffing firm based in Reston, Virginia. Mr. Callaghan is a 1993 graduate of Virginia Polytechnic Institute and State University, where he earned a B.S. in Psychology. Mr. Callaghan is also part-owner of the Richmond Flying Squirrels, the Double-A affiliate of the San Francisco Giants. Mr. Callaghan brings eighteen years of staffing experience to the Board and provides extensive knowledge about all aspects of the information technology staffing business and business growth strategies.

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Edwin A. Sheridan, IV, Director Appointee	42	Mr. Sheridan co-founded Apex Systems in 1995. Mr. Sheridan served as co-CEO during his time with Apex Systems. His roles at Apex Systems have included technical recruiter, account manager, and regional operations manager. He also managed the sales and recruiting operations for the company. Mr. Sheridan was recognized as Ernst & Young’s Entrepreneur of the Year in 2003. Prior to co-founding Apex Systems, Mr. Sheridan began his career as a telecommunications recruiter for a staffing firm based in Reston, Virginia. Mr. Sheridan is a 1994 graduate of Virginia Polytechnic Institute and State University, where he earned a B.A. in English and Political Science, with a minor in Business Administration. Mr. Sheridan also serves on the boards of several non-profit organizations including the Advisory Board of the Virginia Commonwealth University Massey Cancer Research Center; the Greater Washington Sports Alliance; the Virginia Tech Athletic Fund; and Peace Players International, a community improvement and leadership organization with operations in Northern Ireland, South Africa, Cyprus and the Middle East. Mr. Sheridan brings 18 years of staffing experience to the Board and provides extensive knowledge about all aspects of the information technology staffing business and business growth strategies.

Jeffrey E. Veatch, Non-Executive Observer Appointee	41	Mr. Veatch co-founded Apex Systems in 1995. Mr. Veatch served as co-CEO during his time with Apex Systems. In addition to serving as the executive in charge of national sales for Apex Systems, Mr. Veatch has held account management, branch management, and regional operations management positions. Mr. Veatch also serves as the Executive Sponsor for the American Cancer Society’s Relay for Life National Partner team at Apex Systems. Mr. Veatch was recognized as Ernst & Young’s Entrepreneur of the Year in 2003. Prior to co-founding Apex Systems, Mr. Veatch began his career as a telecommunications recruiter for a staffing firm based in Reston, Virginia. Mr. Veatch is a 1993 graduate of Virginia Polytechnic Institute and State University, where he earned a B.S. in Finance. Mr. Veatch serves on the Board of Directors for the INOVA Alexandria Hospital Foundation. Mr. Veatch brings 18 years of staffing experience to the Board and provides extensive knowledge about all aspects of the information technology staffing business and business growth strategies.

Additional Interests of Directors, Executive Officers and Certain Beneficial Owners

Apex Systems leases two properties, Cox Road and Sadler Place, located in Glen Allen, Virginia and Apex Systems uses these properties as corporate headquarters. Cox Road and Sadler Place are owned by ASI Partners, LLC and ASI Partners Sadler Place, LLC, respectively. These entities are wholly owned by Jeffrey E. Veatch, Edwin A. Sheridan, IV, Brian J. Callaghan and Theodore S. Hanson. The lease for Cox Place expires in 2015, with the option to renew for an additional term of 60 months. The lease for Sadler Place expires in 2017, with an automatic one-year extension unless either party gives written notice of termination. Rent paid for these properties aggregated approximately $1.1 million in 2009, $1.2 million in 2010 and $1.2 million in 2011.

In connection with the merger, assuming the minimum and maximum number of shares of On Assignment common stock are issued, (i) each of Brian J. Callaghan, Edwin A. Sheridan, IV and Jeffrey E. Veatch will own between 3,797,432 and 4,641,986 shares of On Assignment common stock which represents 7.3% and 8.4%, respectively, of On Assignment common stock, based on the number of issued and outstanding shares of On Assignment common stock as of March 31, 2012, (ii) Theodore S. Hanson will own between 695,225 and 849,844 shares of On Assignment common stock which represents 1.3% and 1.5%, respectively, of On Assignment common stock, based on the number of issued and outstanding shares of On Assignment common stock as of March 31, 2012, and (iii) Randolph C. Blazer will own between 261,901 and 320,148 shares of On Assignment common stock, which represents 0.5% and 0.6%, respectively, of On Assignment common stock, based on the number of issued and outstanding shares of On Assignment common stock as of March 31, 2012. These calculations are based upon Apex Systems’ estimated capitalization immediately prior to the closing of the merger.

As described below, certain directors and executive officers of Apex Systems have interests in the merger and have arrangements that are different from, or in addition to, those of Apex Systems shareholders generally.

RSU Grants

Theodore S. Hanson and Randolph C. Blazer will each receive a grant of 32,895 restricted stock units, which will be granted as “inducement awards” within the meaning of NASDAQ Rule 5635(C)(4). Each restricted stock unit will represent the right to receive one share of On Assignment common stock, subject to vesting and payment conditions set forth in the applicable plan governing such grants. Additionally, these restricted stock units are expected to vest (assuming continued employment through the applicable vesting date) 60% ratably over a number of years (to be determined by On Assignment, Mr. Hanson and Mr. Blazer) and 40% upon achievement of performance conditions (to be established by On Assignment, Mr. Hanson and Mr. Blazer).

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Severance and Change-in-Control Benefits

Apex Systems has entered into an employment agreement with each of its shareholders who are named executive officers. These employment agreements, which were entered into prior to any contemplation of the merger, provide for severance payments to be provided upon various circumstances of termination of employment. In the case of Brian J. Callaghan, Edwin A. Sheridan, IV and Jeffrey E. Veatch, such severance payments are not dependent upon and do not vary based on the occurrence of the merger. In the case of Theodore S. Hanson, such severance payments are not dependent upon and do not vary based on the occurrence of the merger; however, Mr. Hanson’s employment agreement provides that upon the occurrence of certain transactions (including the merger), Apex Systems will issue Mr. Hanson 43,263 additional shares of Apex Systems common stock at the time of the merger. In connection with this share issuance, Mr. Hanson also is entitled to receive a tax gross up bonus of approximately $1,909,109, calculated so that the after-tax amount payable to Mr. Hanson equals the federal and state income taxes that he must pay in connection with such share issuance. In the case of Randolph C. Blazer, if Apex Systems terminates the employment of Mr. Blazer in connection with the merger without cause, Mr. Blazer shall receive severance pay on a monthly basis for the three immediately subsequent months after the effective date of his termination in an amount equal to one-twelfth of his salary in effect as of the date of termination. These severance payments shall be payable monthly in accordance with Apex Systems’ current payroll procedures. Mr. Blazer’s salary as of May 29, 2012 is expected to be $650,000.

Other Agreements and Benefits

In connection with the closing of the merger, it is intended that the employment agreements with each of the Apex Systems shareholders who are named executive officers will be terminated. Pursuant to the terms of the Merger Agreement, On Assignment has agreed to negotiate new employment agreements prior to the closing of the merger in good faith with Theodore S. Hanson and Randolph C. Blazer. These new employment agreements have not yet been agreed upon by the parties, but are expected to include terms and conditions consistent with the executives’ currently effective employment agreements.

Pursuant to the Investor Rights Agreement, On Assignment will enter into a consulting or other agreement with each non-executive observer, who will initially be Jeffrey E. Veatch, pursuant to which such non-executive observer will receive the same fees and stock awards as the other members of the Board and may attend meetings, executive sessions or meetings of a committee of the Board; provided that such non-executive observer will not be entitled to vote on matters determined by the Board or any committee of the Board.

Golden Parachute Compensation Payable to Apex Systems Executive Officers

The information below is intended to comply with Items 402(t) of Regulation S-K, which requires the disclosure of information about compensation for each “named executive officer” of Apex Systems that is based on or otherwise relates to the merger. As a private company, Apex Systems has not previously determined any “named executive officers” for purposes of securities law requirements; however, Apex Systems has identified each of Brian J. Callaghan, Edwin A. Sheridan, IV, Jeffrey E. Veatch, Theodore S. Hanson and Randolph C. Blazer as the officers who would currently be its “named executive officers” if Apex Systems were a public company. Of these individuals, none of Messrs. Callaghan, Sheridan or Veatch will receive any compensatory payments or benefits that constitute “golden parachute” payments within the meaning of Item 402(t) of Regulation S-K. Furthermore, the named executive officers of On Assignment will not receive any such compensatory payments or benefits in connection with the merger. The following disclosure summarizes the payments and benefits to which Messrs. Hanson and Blazer may become entitled in connection with the merger.

The information included below assumes that the merger occurs on May 29, 2012, in accordance with the terms of the Merger Agreement. Additionally, it assumes that the severance payments pursuant to Mr. Blazer’s current employment agreement are triggered due to a termination of his employment by Apex Systems without cause in connection with the merger. These severance amounts are “double trigger” payments because, in addition to the occurrence of the merger, these payments are contingent upon Apex Systems terminating the executive’s employment without cause in connection with the merger. In the event of such a termination, Mr. Blazer shall receive the aggregate severance pay set forth below on a monthly basis for the three immediately subsequent months after the effective date of his termination in an amount equal to one-twelfth of his salary in effect as of the date of termination. These severance payments shall be payable monthly in accordance with Apex Systems’ current payroll procedures.

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Name(1)	Cash ($)			Tax Reimbursements ($)			Other ($)			Total ($)
Theodore S. Hanson	$	–		$	1,909,109	(2)	$	3,157,945	(3)	$	5,067,054
Randolph C. Blazer	$	162,500	(4)	$	–		$	569,742	(5)	$	732,242

(1)	This table quantifies the “golden parachute” compensation payable to each named executive officer of Apex Systems, in connection with the merger.

(2)

Represents the approximated assumed value of the tax gross up bonus that would be paid to Mr. Hanson by Apex Systems in connection with the issuance by the Company of 43,263 additional shares of Apex Systems common stock to Mr. Hanson at the time of the merger pursuant to the terms of his employment agreement. This amount is estimated based an aggregate value of $2,588,203 for the 43,263 shares of Apex Systems common stock issued to Mr. Hanson, as well as an assumed combined federal and state tax rate of 42.45% for Mr. Hanson. This amount is estimated based on multiple assumptions that may or may not actually occur. As a result, the amount Mr. Hanson may actually receive may materially differ from the approximated amount set forth herein.

(3)

Represents (i) the approximated value of the 43,263 additional shares of Apex Systems common stock that would be received by Mr. Hanson at the time of the merger pursuant to the terms of his employment agreement and (ii) the approximated value of 32,895 restricted stock units covering the same number of shares of On Assignment common stock that On Assignment expects to grant to Mr. Hanson following the completion of the merger. The approximated assumed value of the 43,263 shares of Apex Systems common stock is comprised of $1,398,861 in cash proceeds and $1,189,342 in On Assignment common stock proceeds. The approximated value of these On Assignment shares is calculated pursuant to the Merger Agreement based on a $17.32 share price of On Assignment common stock, which is the average closing market price of On Assignment’s common stock over the first five business days following the public announcement of the Merger Agreement. The approximated value of the On Assignment restricted stock units is also calculated based on a $17.32 share price of On Assignment common stock. The calculations are based upon Apex Systems’ estimated capitalization immediately prior to the closing of the merger and, with respect to the calculation of the cash consideration to be issued in the connection with the merger, assume $91.6 million in Apex Systems debt. These amounts are estimated based on multiple assumptions that may or may not actually occur. As a result, the amount or amounts Mr. Hanson may actually receive may materially differ from the approximated aggregate amount set forth herein.

(4)

Represents severance payments to which the executive would be entitled pursuant to the terms of his employment agreement upon termination of his employment by Apex Systems without cause in connection with the merger. In the event of such a termination, Mr. Blazer shall receive severance pay on a monthly basis for the three immediately subsequent months after the effective date of his termination in an amount equal to one-twelfth of his salary in effect as of the date of termination. These severance payments shall be payable monthly in accordance with Apex Systems’ current payroll procedures. This amount is estimated based on Mr. Blazer’s salary as of May 29, 2012, which is expected to be $650,000. This amount is estimated based on multiple assumptions that represent our current expectations, but which cannot be predicted with certainty at this time and may or may not actually occur. As a result, the amount Mr. Blazer may actually receive may materially differ from the approximated amount set forth herein.

(5)

Represents the approximate value of 32,895 restricted stock units covering the same number of shares of On Assignment common stock that On Assignment expects to grant to Mr. Blazer following the completion of the merger. This approximated value is calculated based on a $17.32 share price of On Assignment common stock, which is the average closing market price of On Assignment’s common stock over the first five business days following the public announcement of the Merger Agreement. This amount is estimated based on multiple assumptions may or may not actually occur. As a result, the amount Mr. Blazer may actually receive may materially differ from the approximated amount set forth herein.

The Merger Agreement

The following is a summary of the material terms of the Merger Agreement. This summary does not purport to describe all the terms of the Merger Agreement and is qualified by reference to the complete Merger Agreement, the executed version of which is attached as Annex A to this Proxy Statement, which is incorporated by reference in this Proxy Statement. All shareholders of On Assignment are urged to read the Merger Agreement carefully and in its entirety.

The Merger Agreement is being summarized in this Proxy Statement and has been included as an annex to this Proxy Statement to provide you with information regarding its terms. The Merger Agreement contains representations and warranties that the parties thereto made to each other as of specific dates. The assertions embodied in those representations and warranties were made solely for purposes of the contract and the transactions and agreements contemplated thereby among the respective parties thereto and may be subject to important qualifications and limitations agreed to by On Assignment and Apex Systems in connection with negotiating the terms thereof. Moreover, some of those representations and warranties may not be accurate or complete as of any specified date, may be subject to a contractual standard of materiality different from those generally applicable to shareholders or may have been used for the purpose of allocating risk among the parties to the Merger Agreement rather than establishing matters as facts. On Assignment will provide additional disclosure in its public reports to the extent that it is aware of the existence of any material facts that are required to be disclosed under federal securities laws and that might otherwise contradict the representations and warranties contained in the Merger Agreement and will update such disclosure as required by federal securities laws.

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General

The Merger Agreement provides for the merger of OA Acquisition Corp., a newly formed, wholly owned subsidiary of On Assignment, which is referred to in this Proxy Statement as “Merger Sub,” with and into Apex Systems, with Apex Systems continuing as the surviving entity. As a result of the merger, Apex Systems will become a wholly owned subsidiary of On Assignment.

Closing Matters

Closing. Unless the parties agree otherwise, the closing of the merger will take place on the fifth business day after all closing conditions have been satisfied or waived (other than any condition that by its nature cannot be satisfied until the closing), unless the Merger Agreement has been terminated. Please see “The Merger Agreement—Conditions to the Completion of the Merger” beginning on page 38 for a more complete description of the conditions that must be satisfied or waived prior to the closing of the merger.

Effective Time of the Merger. At the closing of the merger, On Assignment and Apex Systems will file the articles of merger with the State Corporation Commission of the Commonwealth of Virginia in accordance with the relevant provisions of the Virginia Stock Corporation Act and make all other required filings or recordings. The merger will become effective at 5:00 p.m., Richmond, Virginia time on the closing date or at such later time as Apex Systems and we agree and specify in the articles of merger.

The parties are working to complete the merger by the second quarter of 2012. However, because completion of the merger is subject to the receipt of regulatory approvals and the satisfaction or waiver of other conditions, we cannot predict the actual timing of the completion of the merger.

Composition of the Board on the Closing Date. The parties will take all actions reasonably necessary such that as of the closing date the Board composition will be in compliance with the Investor Rights Agreement. Please see “The Investor Rights Agreement—Composition of the Board” beginning on page 40 for additional information on the composition of the Board following the closing of the merger.

Consideration to be Paid Pursuant to the Merger

Under the Merger Agreement, Apex Systems shareholders, other than shareholders who are not “accredited investors,” who will receive only cash, may elect to receive consideration consisting of shares of On Assignment common stock, or a combination of cash and shares of On Assignment common stock in exchange for their shares of Apex Systems common stock, subject to certain proration features. The maximum number of shares of On Assignment common stock to be issued in connection with the merger will not exceed 17,485,898 shares and the maximum cash that will be paid is $383 million. The maximum cash amount is subject to adjustment in certain circumstances, based upon Apex Systems’ net working capital, cash, debt and expenses as of closing. The target working capital amount is based on 13% of the net sales of Apex Systems for the 12 months ended prior to closing. In our discussion, we refer to the number of shares of On Assignment common stock to be received for each share of Apex Systems common stock as the “stock merger consideration,” the amount of cash to be received for each share of Apex Systems common stock as the “cash merger consideration” and the stock merger consideration together with the cash merger consideration as the “consideration.”

Covenants

On Assignment and Apex Systems have each undertaken certain covenants in the Merger Agreement concerning the conduct of their respective businesses between the date the Merger Agreement was signed and the completion of the merger or the termination of the Merger Agreement. The following summarizes the more significant of these covenants:

Board’s Covenant to Recommend. The Board has recommended that On Assignment shareholders approve the share issuance proposal.

The Board agreed in the Merger Agreement that it may not withdraw or modify its recommendation to its shareholders and that it will use its reasonable best efforts to solicit and obtain shareholder approval, provided that the Board may disclose information to On Assignment shareholders pursuant to fiduciary duties and applicable law after consulting with On Assignment’s outside counsel. Unless the Merger Agreement is terminated prior to the shareholder meeting, On Assignment is required to call, give notice of, convene and hold a shareholder meeting and permit its shareholders to vote on the share issuance proposal (Proposal 1).

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Restrictions on the Parties’ Businesses Prior to the Closing. In general, until either the completion of the merger or the termination of the Merger Agreement, Apex Systems is required to carry on its businesses in all material respects in the ordinary course and to use commercially reasonable efforts to preserve its business operations, organizations and goodwill substantially intact and maintain its existing relations with customers, suppliers, employees and other material business associates. Each of On Assignment and Apex Systems has also agreed that (except as contemplated or permitted by the Merger Agreement), without the prior written consent of the other party, it will not:

amend its certificate of incorporation or bylaws or other comparable organizational documents;

declare, set aside or pay any dividend or make any distribution (whether payable in cash, stock or property) or payment in respect of its equity interests, except for certain cash distributions;

split, subdivide, recapitalize, combine or reclassify its equity interests; or

agree to take any of the foregoing actions.

In addition, Apex Systems has also agreed that (except as contemplated by the Merger Agreement), without the prior written consent of On Assignment, it will not:

issue, deliver or sell any equity interests;

enter into, amend or modify in any material respect, or terminate prior to the scheduled termination date set forth therein, material contracts, or otherwise waive, release, assign, cancel or compromise any material debt, claim, benefit, obligation or right, or bill and collect accounts receivable other than consistent with past practice;

make any capital expenditure or enter into any commitment in excess of $100,000 for any single expenditure or series of related expenditures;

change its authorized or issued equity interests;

modify or amend any right of any holder of outstanding equity interests;

hire or terminate any employee, consultant or director (except for the hiring of non-executive employees with aggregate annual compensation below $150,000 hired in the ordinary course of business);

increase or establish, or commit to increase or establish, any form of compensation or benefits payable by Apex Systems, including without limitation, pursuant to any employee benefit plan (except as required by law);

adopt, enter into, establish, amend, modify or terminate any employee benefit plan (except as required by law), increase the benefits provided under such employee benefit plan, or accelerate the vesting or payment of any compensation or benefits under any employee benefit plan;

grant any equity or equity-linked awards or any other cash bonus, incentive, performance or other incentive compensation plan;

enter into, modify or terminate any employment, termination, labor or collective bargaining agreement, make any commitment or incur any liability to any employee or labor organizations or effect any reduction in labor force, lay-off, early retirement program, severance program or other program or effort concerning the termination of employees;

incur, redeem or assume any long-term or short-term indebtedness for borrowed money, enter into any hedging or off balance sheet financing arrangements, or become liable or responsible for the obligations of any other person;

make any loan, advance or capital contribution to, or investment in, any other person;

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subject to any lien any properties or assets, except for certain permitted liens and liens that will be released at or prior to the closing of the merger;

acquire any material properties or assets;

sell, assign, license, transfer, convey, lease or otherwise dispose of any properties or assets (except for the purpose of disposing obsolete or worthless assets or in connection with the merger);

abandon, fail to maintain or allow to expire (other than at the natural expiration of its term), or sell or exclusively license to any person, any material intellectual property;

adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization (other than the merger);

change any of the accounting methods materially affecting its assets, liabilities or business, except for such changes required by GAAP, as concurred by its independent public accountants;

enter into any agreement or arrangement that materially limits or restricts Apex Systems or, upon completion of the merger, On Assignment or our subsidiaries from engaging or competing in any line of business or in any location;

cancel or terminate any material insurance policy naming Apex Systems as a beneficiary or a loss payee without prior notice to On Assignment;

materially modify standard warranty terms for services and products;

commence any legal proceeding or compromise, settle, pay or discharge any legal proceeding or dispute, except settlements that involve solely cash settlement payments paid out of cash on hand, provide for the full and unconditional release of Apex Systems from any and all liability in respect of the matters underlying such settlement, and do not include an admission of guilt on the part of Apex Systems or impose any restrictions on the future conduct of Apex Systems;

make, change or rescind any material tax election, file any amended material tax return, enter into any closing agreement or settle any tax audit or proceeding, surrender any right to claim a refund for a material amount of taxes, consent to any extension or waiver of the limitation period applicable to any tax claim or assessment, or settle or compromise any tax liability if such action would have the effect of increasing the tax liability or adversely affecting the tax position of On Assignment in a post-closing taxable period; or

enter into any agreement, contract, commitment or arrangement to do any of the foregoing actions.

In addition, On Assignment has also agreed that (except as contemplated by the Merger Agreement), without the prior written consent of Apex Systems, it will not:

issue, deliver, sell, pledge or otherwise encumber or subject to any lien, except liens permitted pursuant to the Merger Agreement, any equity interests, other than pursuant to the On Assignment 2010 Incentive Award Plan;

merge or consolidate with any person, other than the transactions contemplated by the Merger Agreement;

take any action that would cause a breach of the representations and warranties regarding the debt financing; or

enter into any agreement, contract, commitment or arrangement to do any of the foregoing actions.

These restrictions are subject to certain qualifications set forth in the Merger Agreement.

Commercially Reasonable Efforts to Complete the Merger. Each of the parties agreed to cooperate with each other and to use its commercially reasonable efforts to take or cause to be taken all appropriate actions and do or cause to be done all things necessary, proper or advisable under the Merger Agreement and applicable laws to complete the merger and the other transactions contemplated by the Merger Agreement, including using commercially reasonable efforts to satisfy conditions, obtaining all necessary regulatory approvals (including the expiration or termination of the waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976), and to use commercially reasonable efforts to obtain all necessary consents under contracts or permits in connection with the merger.

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Other Covenants. The Merger Agreement contains certain other covenants, including covenants relating to On Assignment’s receipt of debt financing in the amount of $540 million from Wells Fargo Bank, National Association, Bank of America, N.A., and Deutsche Bank Trust Company Americas, public announcements, access to information, cooperation on tax matters, exclusivity, confidentiality, maintaining Apex Systems employee benefit plans, director and officer indemnification insurance and negotiation of senior executive employment agreements.

Listing of On Assignment Common Stock

We have agreed to use our reasonable best efforts to cause the shares of On Assignment common stock to be issued in connection with the merger to be approved for listing on the NASDAQ Global Select Market, subject to official notice of issuance. Approval for listing on the NASDAQ Global Select Market of the shares of On Assignment common stock issuable to Apex Systems shareholders pursuant to the merger, subject only to official notice of issuance, is a condition to the obligations of On Assignment and Apex Systems to complete the merger.

Representations and Warranties

The Merger Agreement contains representations and warranties made by each of On Assignment, Merger Sub and Apex Systems to the other parties thereto as of specified dates.

The representations and warranties of On Assignment, Merger Sub and Apex Systems relate to:

corporate existence, qualification to conduct business and corporate standing and power;

subsidiaries;

corporate authority to enter into, and carry out the obligations under, the Merger Agreement and the enforceability of the Merger Agreement;

absence of a breach of the certificate of incorporation and bylaws (or their equivalents), applicable law or material agreements as a result of the merger;

required approvals and consents as a result of the merger;

capital structure;

financial statements and, in the case of On Assignment, filings with the SEC and disclosure controls and procedures;

absence of undisclosed liabilities;

absence of certain changes or events;

legal proceedings;

material contracts;

tax matters;

employee benefit plans;

compliance with laws and permits;

the existence of certain unsuitable payments;

information provided for inclusion in this Proxy Statement;

required shareholder votes and, in the case of Apex Systems, appraisal rights;

in the case of Apex Systems, real and personal property;

in the case of Apex Systems, intellectual property;

in the case of Apex Systems, insurance;

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in the case of Apex Systems, environmental matters;

in the case of Apex Systems, labor and employee matters;

in the case of Apex Systems, related party transactions;

in the case of Apex Systems, bank accounts and safe deposit boxes;

in the case of Apex Systems, payment of fees to finders or brokers in connection with the Merger Agreement;

in the case of On Assignment, the delivery of an executed financing commitment letter;

in the case of On Assignment, the opinion of Moelis;

in the case of On Assignment, shares of On Assignment common stock issuable as part of the merger; and

in the case of On Assignment, the formation and activities of Merger Sub.

Several of the representations and warranties in the Merger Agreement are subject to important qualifications and limitations agreed to by On Assignment and Apex Systems in connection with negotiating the terms thereof, including in certain cases the qualification that only items that would result in a “material adverse effect” would be deemed to make the representation and warranty untrue or other similar qualifications.

As used in the Merger Agreement, the term “material adverse effect” means, when used with respect to any party, any change, effect, event or occurrence or state of facts that either, individually or in the aggregate:

is or would reasonably be expected to be materially adverse to the financial condition, business, properties, assets, liabilities or results of operations of such party, taken as a whole in the case of On Assignment and Merger Sub, excluding any change, effect, event or occurrence resulting from:

general changes in economic, financial or capital market, regulatory or political conditions that do not have a disproportionate adverse effect on such party;

changes in conditions generally applicable to the industries in which such party operates that do not have a disproportionate adverse effect on such party, relative to other participants in such industries;

any natural disaster, act of terrorism, sabotage, military action or war (whether or not declared) or any other social or political disruption, in each case including any escalation or worsening thereof, that does not have a disproportionate adverse effect on such party;

changes in the law or accounting regulations or principles or interpretations thereof; or

any failure, in and of itself, by such party to meet any internal or published projections, forecasts or revenue or earnings predictions; or

prevents the consummation by such party of the merger.

Indemnification

The Merger Agreement provides that following completion of the merger On Assignment, on the one hand, and the former Apex Systems shareholders (severally and not jointly), on the other hand, will indemnify each other against losses, fines, costs and expenses incurred as a result of breaches of representations and warranties and violations of covenants contained in the Merger Agreement, subject to exceptions, or as a result of certain pre-closing taxes of Apex Systems.

The respective indemnification obligations of each party are subject to customary limitations. No claim may be made as a result of a breach of the representations and warranties unless aggregate losses as a result of breach of the representations and warranties is at least $3 million (and recovery may only be received for losses in excess of that amount), subject to certain exceptions. In addition, no party may recover in excess of $25 million for losses as a result of most breaches of the representations and warranties. In addition, no party may recover for losses as a result of a breach of the representations and warranties after the end of the survival period for the applicable representation and warranty. Most of the representations and warranties contained in or made pursuant to the Merger Agreement will survive the closing of the merger for a 15-month period. Many of these limitations are subject to additional exceptions.

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The right to indemnification is the sole and exclusive remedy of the parties to the Merger Agreement in connection with losses arising out of matters set forth in the Merger Agreement, other than in the case of fraud, intentional misrepresentation or willful or criminal misconduct or the right to seek injunctive or equitable relief.

Conditions to the Completion of the Merger

The parties’ respective obligations to complete the merger are subject to the satisfaction or, to the extent legally permissible, the waiver of the following conditions in the Merger Agreement by us and Apex Systems at or prior to the closing:

the receipt of the approval of the Merger Agreement by Apex Systems shareholders by delivery of the written consent of Apex Systems shareholders (which was delivered in connection with the execution and delivery of the Merger Agreement), and the receipt of the approval by On Assignment shareholders of the share issuance proposal;

the expiration or termination of the waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (which condition we expect to be satisfied on April 30, 2012);

the absence of any law, judgment, injunction, decree or other order by a governmental entity that prohibits or enjoins the consummation of the transactions contemplated by the Merger Agreement; and

the receipt of the approval for listing by the NASDAQ Global Select Market of On Assignment common stock to be issued pursuant to the merger, subject to the official notice of issuance of the stock.

In addition, individually, the parties’ respective obligations to effect the merger are subject to the satisfaction or, to the extent legally permissible, the waiver of the following additional conditions at or prior to the closing:

the representations and warranties of the other party being true and correct as of the date of the Merger Agreement and as of the closing date of the merger unless such failures to be true and correct (without giving effect to any materiality or material adverse effect qualifications or exceptions) in respect of those representations and warranties would not, individually or in the aggregate, result in a material adverse effect on the other party (subject to certain limitations or exceptions);

the other party having performed and complied in all material respects with all covenants required to be performed and complied with by it under the Merger Agreement;

the absence of a material adverse effect on the other party since December 31, 2011; and

the receipt by each party of a certificate from an executive officer of the other party with respect to the satisfaction of certain of the closing conditions.

In addition, Apex Systems’ obligations to effect the merger are subject to the satisfaction or, to the extent legally permissible, the waiver of the following additional conditions:

the receipt of payment by On Assignment of the merger consideration; and

On Assignment having made grants of restricted stock units to certain employees of Apex Systems, subject to the recipient of the restricted stock unit grants having executed and delivered to On Assignment a Non-Compete Agreement.

Furthermore, On Assignment’s obligations to effect the merger are subject to the satisfaction or, to the extent legally permissible, the waiver of the following additional conditions:

the funding of debt financing in an aggregate principal amount of $540 million by Wells Fargo Bank, National Association, Bank of America, N.A. and Deutsche Bank Trust Company Americas;

the receipt by Apex Systems of certain required consents in connection with the transaction;

the receipt by On Assignment of payoff letters evidencing that certain indebtedness of Apex Systems has been or will be repaid in full and that certain liens on Apex Systems and its assets have been or will be released and discharged as of the closing of the merger; and

all loans payable to Apex Systems from officers and directors of Apex Systems having been repaid in full.

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Termination of the Merger Agreement

Right to Terminate. The Merger Agreement may be terminated at any time prior to the completion of the merger in any of the following ways:

by mutual written consent of On Assignment and Apex Systems;

by either us or Apex Systems:

if the merger has not been completed by July 18, 2012 (or such other date to which On Assignment and Apex Systems may agree upon in writing because one or more of the closing conditions has not been satisfied); provided, that a party may not terminate the Merger Agreement pursuant to this provision if such party’s willful breach of any of its obligations under the Merger Agreement caused, or resulted in, the failure of the closing to occur on or before July 18, 2012;

if a court of competent jurisdiction has entered into a judgment, injunction, decree or other order that has become final and non-appealable and has the effect of permanently preventing the consummation of the merger; provided, that a party may not terminate the Merger Agreement pursuant to this provision if such party has not used commercially reasonable efforts to prevent the entry of and to procure the removal, reversal, dissolution, setting aside or invalidation of such judgment, injunctions, decree or order;

if any closing condition of the terminating party’s obligation to consummate the merger becomes incapable of satisfaction; provided that the right to terminate the Merger Agreement under this provision will not be available to either party if such party’s willful breach of any of its obligations under the Merger Agreement caused the condition to become incapable of satisfaction; or

by On Assignment:

if there has been (i) a non-curable breach of any representation, warranty, covenant or agreement of Apex Systems in the Merger Agreement that makes the satisfaction of certain closing conditions in the Merger Agreement impossible or (ii) an uncured breach (30 days after written notice thereof) of any representation, warranty, covenant or other agreement made by Apex Systems, and the breach or failure to perform would result in the applicable closing condition to the merger not being satisfied; provided that On Assignment will not have the right to terminate the Merger Agreement under this provision if On Assignment is in material breach of any of its representations, warranties, covenants or agreements contained in the Merger Agreement; or

Apex Systems:

if there has been (i) a non-curable breach of any representation, warranty, covenant or agreement of On Assignment or Merger Sub in the Merger Agreement that makes the satisfaction of certain closing conditions in the Merger Agreement impossible or (ii) an uncured breach (30 days after written notice thereof) of any representation, warranty, covenant or other agreement made by On Assignment or Merger Sub in the Merger Agreement, and the breach or failure to perform would result in the applicable closing condition to the merger not being satisfied; provided that Apex Systems will not have the right to terminate the Merger Agreement pursuant to this provision if it is then in material breach of any of its representations, warranties, covenants or agreements contained in the Merger Agreement.

Termination Fees/Reimbursement of Expenses. On Assignment will be required to pay a termination fee of $21 million to Apex Systems in any of the situations below arising from the failure of On Assignment to secure the debt financing:

if Apex Systems or On Assignment terminates the Merger Agreement because the closing of the merger does not occur on or before July 18, 2012 (or such other date to which On Assignment and Apex Systems agree upon in writing) because one or more conditions to the obligations of Apex Systems or On Assignment to consummate the closing have not been satisfied; provided that the terminating party’s willful breach of any of its obligations under the Merger Agreement has not caused or resulted in the failure of the closing to occur on or before July 18, 2012 (or such other dated to which On Assignment and Apex Systems agree upon in writing);

if Apex Systems terminates the Merger Agreement because there has been (i) a non-curable breach of any representation, warranty, covenant or agreement of On Assignment or Merger Sub in the Merger Agreement that makes the satisfaction of certain closing conditions in the Merger Agreement impossible or (ii) an uncured breach (30 days after written notice thereof) of any representation, warranty, covenant or other agreement made by On Assignment or Merger Sub in the Merger Agreement, and such breach or failure to perform would result in the failure of certain conditions to Apex Systems’ obligation to consummate the closing to be satisfied; provided that Apex Systems is not in material breach of its representations, warranties, covenants or other agreements contained in the Merger Agreement; or

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if On Assignment terminates the Merger Agreement because conditions to On Assignment’s obligation to consummate the merger are incapable of satisfaction; and

(i) all other conditions to On Assignment’s obligations to consummate the closing (other than receipt of the debt financing) have been or are capable of being satisfied prior to July 18, 2012 and (ii) Apex Systems has confirmed in writing that if the debt financing were funded and all the conditions of Apex Systems’ obligation to consummate the closing were satisfied, it will take actions that are within its control to cause the closing to occur.

The termination fee must be paid within five business days of termination of the Merger Agreement as described above. If On Assignment fails to pay to Apex Systems the termination fee when due, then On Assignment must reimburse Apex Systems for all costs and expenses incurred by Apex Systems (including reasonable fees and expenses of counsel) in connection with the collection of the termination fee.

The Shareholder Representative

The Apex Systems shareholders have appointed Jeffrey E. Veatch as the Shareholder Representative to serve as their true and lawful agent and attorney-in-fact. In such capacity, the Shareholder Representative may take any action on behalf of the shareholders of Apex Systems, and may bind them under the Merger Agreement and any other related agreement.

Amendments and Waivers

Amendments and Waivers. The Merger Agreement may be amended prior to the closing by On Assignment and Apex Systems. Any amendment after the closing requires approval by On Assignment and the Shareholder Representative. An amendment to the Merger Agreement must be in writing signed by the required parties. All waivers must be in writing and signed by the party against whom the waiver is to be effective. On Assignment does not have any current intention to waive any condition to the merger and cannot predict the circumstances under which it would do so. On Assignment would re-solicit the votes of its shareholders if it decided to waive a material condition to the merger.

Governing Law. The Merger Agreement is governed by the laws of the Commonwealth of Virginia, other than with respect to certain remedies provisions and actions related thereto that are governed by the laws of the State of New York.

The Investor Rights Agreement

At the closing, we will enter into the Investor Rights Agreement with certain Apex Systems shareholders listed on the signature pages thereto, who will become shareholders of On Assignment upon completion of the merger, and Jeffrey E. Veatch, in his capacity as the Shareholder Representative under the Merger Agreement.

Composition of the Board

The Investor Rights Agreement will provide that the Shareholder Representative will have the right to designate two nominees for election to the Board for so long as Brian J. Callaghan, Edwin A. Sheridan, IV and Jeffrey E. Veatch (whom we refer to in this proxy as the “Founders”) own in the aggregate at least 17% of the outstanding shares of On Assignment common stock and one nominee if the Founders own in the aggregate less than 17% but more than 10% of the outstanding shares of On Assignment common stock; provided that if the former Apex Systems shareholders collectively sell more than 5,000,000 shares of On Assignment common stock pursuant to the initial registration described below, then the 17% referred to in this paragraph will be reduced to a percentage equal to the percentage of the outstanding shares of On Assignment common stock held in the aggregate by the Founders upon the closing of the sale of shares of On Assignment common stock pursuant to the initial registration minus 0.5%. The remaining members of the Board will be nominated by the Nominating and Corporate Governance Committee of the Board. At each meeting of On Assignment shareholders following the completion of the merger at which directors of On Assignment are to be elected, On Assignment will agree to nominate for election to the Board and recommend that the shareholders elect to the board each of the Shareholder Representative’s designees, subject to certain limitations to comply with law or if a nominee is deemed to be unfit to serve as a director of a publicly traded company or otherwise does not meet applicable eligibility criteria in a material respect.

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Based on the amount of shares of On Assignment common stock outstanding as of March 31, 2012 of 37,575,777, immediately following the closing of the merger, the former Apex Systems shareholders are expected to own between 27.6% and 31.8% of the outstanding shares of On Assignment common stock, and the Founders are expected to own between 22.0% and 25.3% of the outstanding shares of On Assignment common stock. This calculation is based on Apex Systems’ estimated capitalization immediately prior to the closing of the merger. Pursuant to the Investor Rights Agreement, the Board at the effective time of the merger would be comprised of two designees of the Shareholder Representative and five other directors currently serving on the Board (which are expected to be all of On Assignment’s existing directors). The Shareholder Representative will be entitled to have one of his designees, who will initially be Theodore S. Hanson, serve on the On Assignment Stock Option Committee, which determines grants to non-executive officers of On Assignment.

Registration Rights

Pursuant to the Investor Rights Agreement, the Apex Systems shareholders who will become On Assignment shareholders pursuant to the merger will have certain registration rights with respect to the shares of On Assignment common stock acquired pursuant to the merger.

Initial Registration. Subject to certain exceptions, within 45 days of the closing of the merger, On Assignment will use its reasonable best efforts to effect, as soon as reasonably possible, the registration under the Securities Act of the shares of On Assignment common stock issued to the Apex Systems shareholders in connection with the merger. On Assignment will be responsible for paying the expenses of any such registration.

Demand Registration. Following the six-month anniversary of the closing or withdrawal of the initial registration, any of the Founders may require On Assignment to register shares of On Assignment common stock issued to the Apex Systems shareholders in connection with the merger for resale under the Securities Act in an underwritten offering. The Founders may exercise this demand registration right on up to three occasions. These demand registration rights will be subject to customary conditions and limitations. On Assignment will be responsible for paying the expenses of any such registration.

Piggyback Registration. If we propose to register any securities under the Securities Act, each Apex Systems shareholder who will become an On Assignment shareholder pursuant to the merger must receive notice of the registration and may include its shares of On Assignment common stock in the registration. These “piggyback registration” rights will be subject to customary conditions and limitations, including the right of the underwriters of an offering to limit the number of shares included in such registration and On Assignment’s right not to effect a requested registration. On Assignment will be responsible for paying the expenses of any such registration.

Transfer Restrictions

Restrictions on the Founders of Apex Systems. From the date of the closing of the merger to the third anniversary of the closing, the Founders may not transfer their shares of On Assignment common stock without the written consent of On Assignment; provided that if the Founders are in breach of their Non-Competition Agreement during such period, then the end of such period will be extended to the third anniversary of the last such breach.

So long as a Founder has not breached his Non-Competition Agreement, the Founder may transfer (a) shares of On Assignment common stock in a registration effected in accordance with the Investor Rights Agreement, (b) shares of On Assignment common stock to certain permitted transferees, provided that certain conditions are satisfied, or (c) up to $7.0 million of shares of On Assignment common stock per year pursuant to a Rule 10b5-1 plan to be established by such Founder.

Restrictions on Senior Executive Holders of Apex Systems. Without On Assignment’s prior written consent, Randolph C. Blazer and Theodore S. Hanson (whom we refer to in this Proxy Statement as “Senior Executive Holders”) shall not be permitted to Transfer any shares of On Assignment common stock during the period commencing on the closing of the merger and ending on the third anniversary of the closing. In the event that a Senior Executive Holder’s employment with On Assignment or our subsidiaries terminates for any reason at any time during the three-year period, then the end of such period will be extended to the date that is the third anniversary of the date of the termination. Also, if a Senior Executive Holder is in breach of his Non-Competition Agreement at any time during the three-year period, then the end of such period will be extended to the date that is the third anniversary of the last breach.

So long as a Senior Executive Holder has not breached his Non-Competition Agreement,

pursuant to the initial registration effected in accordance with the Investor Rights Agreement, a Senior Executive Founder may transfer up to a number of shares of On Assignment common stock equal to 30% of the shares of common stock issued to such Senior Executive Holder pursuant to the Merger Agreement;

after the closing or withdrawal of the initial registration effected in accordance with the Investor Rights Agreement, a Senior Executive Holder may transfer up to a number of shares of common stock issued to the Senior Executive Holder pursuant to the Merger Agreement equal to (A) one-third of such shares after the first anniversary of the closing of the merger, (B) two-thirds of such shares after the second anniversary of the closing of the merger and (C) all of such shares of common stock after the third anniversary of the closing of the merger; and

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a Senior Executive Holder may transfer shares of On Assignment common stock to certain permitted transferees provided that certain conditions are satisfied.

Restrictions on Other Employee Holders of Apex Systems. Without the Company’s prior written consent, each holder of On Assignment common stock that is a signatory on the signature pages to the Investor Rights Agreement, other than a Founder or Senior Executive Holder (whom we refer to in this Proxy Statement as “Other Employee Holders”), shall not be permitted to transfer any of the shares of On Assignment common stock issued to such Other Employee Holder pursuant to the Merger Agreement during the period commencing on the closing of the merger and ending on the third anniversary of the closing, provided that in the event that such Other Employee Holder’s employment with On Assignment or our subsidiaries terminates for any reason at any time during such three-year period, then the end of such period will be extended to the date that is the third anniversary of the date of the termination. Also, if an Other Employee Holder is in breach of his or her Non-Competition Agreement at any time during such period, then the end of such period will be extended to the date that is the third anniversary of such breach.

So long as such Other Employee Holder has not breached his Non-Competition Agreement:

Other Employee Holders may transfer up to a number of shares of common stock issued to such Other Employee Holder pursuant to the Merger Agreement equal to (A) one-third of such shares after the first anniversary of the closing of the merger, (B) two-thirds of such shares after the second anniversary of the closing of the merger and (C) all of such shares of common stock after the third anniversary of the closing of the merger; and

Other Employee Holders may transfer shares of common stock to certain permitted transferees; provided that certain pre-conditions are satisfied.

Voting Restrictions

Pursuant to the Investor Rights Agreement, the Founders will vote all of their shares of On Assignment common stock in support of the Board’s slate of directors as described above.

In addition, on all other matters to be voted on by shareholders of On Assignment for the first 12 months after the closing of the merger, the Investor Rights Agreement provides that the Founders will vote their shares of On Assignment common stock in accordance with the recommendations of the Board or, in the absence of such a recommendation, in the same proportions as all other shares of On Assignment common stock that are voted on such matter. The Founders will also be present, in person or by proxy, at all meetings of the shareholders of On Assignment so that all such shares owned by the Founders may be counted for the purpose of determining the presence of a quorum at such meetings.

These restrictions on voting will remain in effect until the date on which the Founders own less than 10.0% of the outstanding shares of On Assignment common stock.

Board Observers

Pursuant to the Investor Rights Agreement, so long as the Founders hold greater than 10% of the outstanding shares of On Assignment common stock, the Shareholder Representative will have the right to appoint to the Board three observers, who must be reasonably acceptable to On Assignment. At any time the Shareholder Representative is entitled to designate only one person for nomination for election to the Board, then the observers must include two of the Founders designated by the Shareholder Representative (each of whom we refer to in this Proxy Statement as a “non-executive observer”). Upon completion of the merger, the initial observers will be Randolph C. Blazer and Theodore S. Hanson, and Jeffrey E. Veatch (who will be the non-executive observer). Each observer will be able to attend all meetings of the Board, subject to certain restrictions as set forth in the Investor Rights Agreement.

The Non-Competition Agreements

Founders and Senior Executive Holders. Simultaneously with the execution of the Merger Agreement, we entered into the Non-Competition, Confidentiality and Non-Solicitation Agreement (which we refer to in this Proxy Statement as the “Non-Competition Agreement”) with the Founders and Senior Executive Holders. The Non-Competition Agreement will become effective upon the completion of the merger. Each of the Founders and Senior Executive Holders have agreed that, among other things, for seven years after the closing date:

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they will not engage in the business of Apex Systems in any country in the world in which Apex Systems conducts business as of the closing of the merger or the date of termination of such Founder or Senior Executive Holder’s employment with On Assignment and its subsidiaries;

they will not disclose any confidential or proprietary information relating to On Assignment, our subsidiaries or Apex Systems; or

they will not (i) solicit or hire employees of Apex Systems or any of its subsidiaries, or (ii) cause any of Apex Systems’ customers or suppliers to cease doing business or reduce the level of business with Apex Systems or any of its subsidiaries.

The “business of Apex Systems” means the business of recruiting or staffing personnel for or on behalf of businesses or providing personnel to businesses on a temporary or permanent basis, and any other business conducted by Apex Systems as of the closing of the merger.

Other Employee Holders. At the closing of the merger, we will enter into Confidentiality, Noncompetition, Nonsolicitation and Nondisclosure Agreements (which we refer to in this Proxy Statement as the “Other Non-Competition Agreements”) with the Other Employee Holders who will become shareholders of On Assignment pursuant to the merger. The Other Employee Holders have agreed that:

they will not, directly or indirectly, other than in their capacity as an employee of On Assignment or its subsidiaries, perform any employment activities of the type performed by the Other Employee Holder for Apex Systems, On Assignment or our subsidiaries for any business that provides services that are the same or substantially the same, and competitive with, the business of Apex Systems within a 50-mile radius of any office in which the Other Employee Holder regularly worked during the two-year period before the termination of his or her employment with the Apex Systems, On Assignment or our subsidiaries;

they will not disclose any confidential or proprietary information relating to On Assignment, our subsidiaries or Apex Systems; or

they will not (i) solicit or hire our employees, or (ii) cause any of our customers or suppliers to cease doing business or reduce the level of business with us or any of our subsidiaries.

The restrictions will be in effect for three years following the closing of the merger, 18 months following the termination of an Other Employee Holder’s employment with On Assignment and its subsidiaries, or 18 months from the date a court of competent jurisdiction enters a final order enforcing the terms of the Other Non-Competition Agreement, whichever is later.

The “business of Apex Systems” means recruiting or staffing scientific, engineering, technical, computer, telecommunications, information technology, information systems or applications personnel, or related technical, clerical, legal or financial personnel, for or on behalf of businesses, or providing such personnel to businesses on a temporary or permanent basis, any other business conducted by Apex Systems, On Assignment or our subsidiaries as of the date of termination of employment of the Other Employee Holder with Apex Systems, On Assignment or our subsidiaries.

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INFORMATION ABOUT APEX SYSTEMS

Apex Systems Business

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

The following table summarizes selected statement of operations data expressed as a percentage of revenues:

	Year Ended
	December 31, 2011			December 25, 2010			December 26, 2009
Net sales		100.0	%		100.0	%		100.0	%
Cost of sales		72.6			71.6			70.5
Gross margin		27.4			28.4			29.5
Operating expenses		20.7			23.3			21.8
Income from operations		6.7			5.1			7.6
Other expenses:
Interest expense		(0.4	)		(0.5	)		(0.3	)
Other expense, net		(0.0	)		(0.0	)		(0.0	)
Total other expenses		(0.4	)		(0.5	)		(0.4	)
Net income		6.3	%		4.7	%		7.3	%

* Columns may not foot due to rounding.

Results of Operations for the Year Ended December 31, 2011 Compared with the Year Ended December 25, 2010

	Year Ended						Change
	(in thousands, except percentages)
	December 31, 2011			December 25, 2010			$			%
Net sales	$	705,228		$	546,996		$	158,232			28.9	%
Cost of sales		511,825			391,589			120,236			30.7	%
Gross margin		193,403			155,407			37,996			24.4	%
Operating expenses		146,190			127,238			18,952			14.9	%
Income from operations		47,213			28,169			19,044			67.6	%
Other expenses:
Interest expense		(2,904	)		(2,502	)		(402	)		16.1	%
Other expense, net		(156	)		(142	)		(14	)		9.9	%
Total other expenses		(3,060	)		(2,644	)		(416	)		15.8	%
Net income	$	44,153		$	25,525		$	18,628			73.0	%

Net Sales. Net sales increased $158.2 million, or 28.9%, to $705.2 million in 2011 from 2010 mainly due to increasing market share in existing accounts as well as adding new clients. In 2010 and 2011, net sales from new accounts accounted for 7.5% and 5.1% of net sales, respectively.

For the years ended December 31, 2011 and December 25, 2010, entities affiliated with Wells Fargo Bank, National Association and Bank of America, N.A., which are providing debt financing in connection with the merger, were the largest and fourth-largest clients, respectively, of Apex Systems based on net sales. Entities affiliated with Wells Fargo Bank, National Association accounted for 13.4% and 15.4% of Apex Systems’ net sales for the year ended December 31, 2011 and December 25, 2010, respectively.

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Gross Margin. Gross margin increased $38.0 million, or 24.4%, to $193.4 million in 2011 from 2010. The year-over-year gross margin increase was primarily due to higher net sales, which was partially offset by a slight increase in cost of sales as a percentage of net sales. The slight increase in cost of sales was due to increased wage costs for information technology professionals. Cost of sales includes wages, taxes, and benefits as well as any associated contractor travel costs.

Operating Expenses. Operating expenses include field operating expenses, such as costs associated with our network of staffing consultants and branch offices, including staffing consultant compensation, rent, other office expenses, marketing and recruiting expenses for our contract professionals. Operating 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 and other general and administrative expenses.

Operating expenses increased $19.0 million in 2011, or 14.9%, to $146.2 million from $127.2 million in 2010. The increase in operating expenses was primarily due to a $17.0 million increase in compensation and benefits. The increase in compensation and benefits was due to a $14.4 million increase in bonuses, commissions and stock-based compensation as a result of increased revenue and the attainment of incentive compensation targets as well as a $2.6 million increase in compensation expenses as a result of increased headcount. Operating expenses as a percentage of net sales decreased to 20.7% in 2011, compared with 23.3% in 2010.

Interest Expense. Interest expense was $2.9 million in 2011 compared with $2.5 million in 2010, representing a 16.1% increase. This increase was related to a higher average outstanding balance on the credit facility created by a year over year increase in borrowings under credit facilities of 19.3%, primarily to fund current operations and dividends to shareholders.

Results of Operations for the Year Ended December 25, 2010 Compared with the Year Ended December 26, 2009

	Year Ended						Change
	(in thousands, except percentages)
	December 25, 2010			December 26, 2009			$			%
Net sales	$	546,996		$	383,468		$	163,528			42.6	%
Cost of sales		391,589			270,456			121,133			44.8	%
Gross margin		155,407			113,012			42,395			37.5	%
Operating expenses		127,238			83,780			43,458			51.9	%
Income from operations		28,169			29,232			(1,063	)		(3.6	)%
Other expenses:
Interest expense		(2,502	)		(1,265	)		(1,237	)		97.7	%
Other expense, net		(142	)		(94	)		(48	)