Exhibit 10.4

 

Date:

 

August 3, 2005

 

 

 

To:

 

Emmett McGrath

 

 

 

From:

 

Peter Dameris, Chief Executive Officer and President

 

 

 

RE:

 

Notice of Contingent Restricted Stock Unit Award

 

You were granted a Contingent Restricted Stock Unit Award (an “Award”) by On
Assignment, Inc. (the “Company”) on August 3, 2005. Your Award is subject to
certain terms and conditions in this letter.

 

1.                                       Amount of your Award: The amount of
your Award is $459,425, payable in stock units or cash as specified in paragraph
2 below.

 

2.                                       Payment of Your Award:  Subject to
approval of the Plan Amendment (as described in paragraph 3 below), if you
remain employed by the Company until the date of the Company’s 2006 Annual
Shareholders Meeting, you will be granted stock units representing shares of the
Company’s common stock with a value equal to the amount of your Award.  The
value will be determined based on the closing price of the Company’s common
stock on the date immediately prior to the Company’s 2006 Annual Shareholders
Meeting.

 

Notwithstanding the preceding paragraph, if the Company under goes a Change of
Control (as defined in the attachment to this letter) prior to the Company’s
2006 Annual Shareholders Meeting and you remain employed by the Company (or its
successor) until the Change of Control, upon the consummation of the Change of
Control, you will receive a grant of stock units representing shares of the
Company’s common stock (or the common stock of the Company’s successor as
determined by the Company’s Board of Directors), with a value equal to the
amount of your Award.  The value will be determined based on the closing price
of the Company’s common stock on the date immediately prior to the consummation
of the Change of Control.

 

If in connection with a Change of Control the Company fails to obtain the
agreement of the buyer to issue stock units in settlement of your Award or the
Company otherwise determines that stock units cannot be issued, in lieu of being
granted stock units, you will instead be paid an amount in cash (less applicable
withholding taxes) upon the consummation of the Change of Control equal to the
amount of your Award as shown in paragraph 1 above; provided, that, you remain
employed by the Company (or its successor) at the time of the consummation of
the Change of Control.

 

3.                                       Other Important Terms and Conditions: 
Your Award is

 

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contingent upon the approval by the Company’s Board of Directors (the “Board”)
and the shareholders of the Company of an amendment to the Restated 1987 Stock
Option Plan (the “Plan”) increasing the number of shares available for grant as
awards other than stock options (the “Plan Amendment”), except to the extent a
Change of Control occurs prior to the date of the Company’s 2006 Annual
Shareholders Meeting.  If the Board and the shareholders of the Company do not
approve the Plan Amendment at or prior to the Company’s 2006 Annual Shareholders
Meeting, and a Change of Control has not occurred prior to the date of the
Company’s 2006 Annual Shareholders Meeting, you will not be granted stock units
or receive a cash payment in respect of your Award and your Award will
immediately lapse.

 

If the Board and the Company’s shareholders approve the Plan Amendment (or a
Change of Control occurs) and you are granted stock units in satisfaction of
your Award, the stock units will be subject to the terms and conditions
determined by the Compensation Committee, including a required vesting
schedule of thirteen equal quarterly installments.  Any payment of your Award
shall be reduced for applicable withholding taxes.

 

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Definition of a Change of Control

 

A “Change of Control” shall be deemed to occur upon the consummation of any of
the following transactions:

 

(i)                                     a merger or consolidation in which the
Company is not the surviving entity, except for a transaction the principal
purpose of which is to change the state of the Company’s incorporation or a
transaction in which 50% or more of the surviving entity’s outstanding voting
stock following the transaction is held by holders who held 50% or more of the
Company’s outstanding voting stock prior to such transaction; or

 

(ii)                                  the sale, transfer or other disposition of
all or substantially all of the assets of the Company; or

 

(iii)                               any  reverse merger in which the Company is
the surviving entity, but in which 50% or more of the Company’s outstanding
voting stock is transferred to holders different from those who held the stock
immediately prior to such merger; or

 

(iv)                              the acquisition by any person (or entity)
directly or indirectly of 50% or more of the combined voting power of the
outstanding shares of Company capital stock; or

 

(v)                                 during any period of two (2) consecutive
years (not including any period prior to the date of this letter), individuals
who at the beginning of such period constitute the Board of Directors of the
Company (the “Board”) (and any new director whose election by the Company’s
stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was so approved), cease for
any reason to constituted a majority thereof; provided, however, that any
individual becoming a director subsequent to the date of this letter whose
election, or nomination for election by the Company’s stockholders, was approved
by a vote of at least a majority of the directors then comprising the Board on
the date of this letter (the “Incumbent Board”) shall be considered as though
such individual were a member of the Incumbent Board, but excluding, for
purposes of this proviso, any such individual whose initial assumption of office
occurs as a result of an actual or threatened election contest with respect to
the election or removal of directors or other actual or threatened solicitation
of proxies or consents by or on behalf of a person other than the Board.

 

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