**Exhibit 10.38**
**AMENDMENT NO. 2 TO**
**AMENDED AND RESTATED EMPLOYMENT AGREEMENT**
     THIS AMENDMENT NO. 2 to the Amended and Restated Employment Agreement (the “Amendment”) ismade effective and entered into as of December 4, 2004 (the “Effective Date”) by and betweenRemedyTemp, Inc., a California corporation (“Remedy” or the “Company”), and Robert EmmettMcDonough, Sr. (“McDonough”), with reference to the following facts:
     A. Remedy and McDonough are parties to that certain Amended and Restated Employment Agreement,dated January 7, 1998 (the “Original Employment Agreement”), as amended by that certain AmendmentNo. 1 to Amended and Restated Employment Agreement, entered into as of January 18, 2001 (togetherwith the Original Employment Agreement, the “Employment Agreement”).
     B. To incorporate contractual modifications agreed to by the Board of Directors of Remedy (the“Board”), Remedy and McDonough now mutually desire to amend certain provisions of the EmploymentAgreement.
     NOW, THEREFORE, in consideration of the mutual covenants contained herein, and such other goodand valuable consideration, the parties hereto agree as follows:
     Except as hereinafter provided, capitalized terms used herein shall have the meanings ascribedto such terms in the Employment Agreement.
**1.**  **AMENDMENTS TO THE EMPLOYMENT AGREEMENT****.**
     The following portions of the Employment Agreement are amended as follows:
 **1.1.**  The entire Section 1 of the Employment Agreement entitled “EMPLOYMENTSERVICES AND DUTIES” is hereby deleted and the following is substituted in its place:  “1. EMPLOYMENT SERVICES AND DUTIES
     Effective December 4, 2004, the Company agrees to employ and retain the services of McDonoughas Vice Chairman of the Board of Directors of Remedy (the “Board”), and McDonough hereby agrees tocontinue employment with the Company as its Vice Chairman, for the term of this Agreement. Whileemployed as Vice Chairman of the Board, McDonough shall be an officer of Remedy and shall beentitled, subject to the provisions of this Agreement, to all rights and privileges attendant tosuch position with the Company. McDonough agrees to perform his duties as Vice Chairman of theBoard faithfully, to the best of his ability and in the best interests of the Company, and topreserve and protect the confidential information of the
 

 

Company, and to perform his duties as directed by Remedy’s Chief Executive Officer and theBoard.”
 **1.2**  The entire Section 2 of the Employment Agreement entitled “TERM OFEMPLOYMENT” is hereby deleted and the following is substituted in its place:  “2.TERM OF EMPLOYMENT
     The Company agrees to employ McDonough, and McDonough agrees to serve, as Vice Chairman forthe period commencing December 4, 2004 and ending on December 3, 2007 (the “Employment Period”).In the event of McDonough’s death during the term of this Agreement, this Agreement shallimmediately terminate and the Company shall have no further obligation to McDonough’s survivingspouse, estate or legal representatives, except for payment of McDonough’s accrued but unpaidsalary and vacation at the time of such termination.”
 **1.3**  The entire Section 3 of the Employment Agreement entitled “COMPENSATIONTERMS” is hereby deleted and the following is substituted in its place:  “3.COMPENSATION TERMS
     The Company agrees to compensate McDonough for his services rendered as Vice Chairman underthis Agreement as follows:
     (a) Commencing on December 4, 2004, McDonough shall receive an annual base salary of $100,000.McDonough shall not be entitled to receive any bonus during the Employment Period unless theCompensation Committee, in its sole discretion, determines to award McDonough a bonus.
     (b) McDonough shall be entitled to and shall receive any and all other benefits generallyavailable to executive employees of the Company, including participation in health insuranceprograms and retirement plans and reasonable expenses.
     (c) During the Employment Period, McDonough shall be entitled to maintain his current officespace at the Company; provided that, as determined by the Board in its reasonable discretion,McDonough reasonably complies with all applicable workplace regulations, standards and laws.Additionally, alternative office space at the Company shall be provided to McDonough in the eventthat the executive office area is physically reconfigured. Furthermore, during the EmploymentPeriod, McDonough shall receive office perquisites and amenities generally available to theofficers of the Company, including part-time secretarial services.
     (d) The Company shall pay any and all premiums that become due and payable on or beforeDecember 4, 2004 on any of McDonough’s six existing life insurance policies. After December 4,2004, including in the event that McDonough is no longer Vice Chairman or employed by the Companyin any other capacity, the Company shall continue to pay such life insurance premiums as requiredunder each and every life insurance policy, provided that the total aggregate amount of premiumspaid for such life insurance policies shall not exceed $75,000 per year. In such event, McDonoughmay designate which policy premium(s) that the Company should pay consistent with the foregoingprovision.
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     (e) The Company shall indemnify McDonough in accordance with the terms and conditions of itsthen current indemnification agreements with directors of the Company.
     (f) In the event that McDonough becomes disabled and is unable to perform his duties as ViceChairman, he shall continue to receive as disability income the amount of his base salary underSection 3(a) through the end of the Employment Period, but the Board may elect anotherperson to serve as Vice Chairman of the Board during the period of McDonough’s disability.
     (g) The Company shall provide McDonough with an automobile allowance in the amount of $1,000per month for an automobile for use by McDonough in the performance of McDonough’s dutieshereunder. Following execution of the Agreement, the Company shall transfer to McDonough the titleto the gold 1998 Jaguar XJ that he has been driving. McDonough shall be responsible for and shallpay all of the costs and expenses related to such automobile (including, without limitation, DMVregistration, insurance and maintenance costs and expenses).
     (h) The Company shall continue to reimburse McDonough for one “social” membership at theMarbella Country Club, located in San Juan Capistrano, California for the duration of theEmployment Period.
**2.**  **EFFECT ON EMPLOYMENT AGREEMENT****.**
     This Amendment shall supersede and replace any inconsistent provisions of the EmploymentAgreement. Except as amended hereby, the Employment Agreement shall continue in full force andeffect in accordance with its terms.
**3.**  **GOVERNING LAW****.**
     This Amendment shall be interpreted and construed under California law.
**4.**  **COUNTERPARTS****.**
     This Amendment may be executed in one or more counterparts, each of which shall be deemed anoriginal, but all of which together shall constitute one and the same instrument.
[Signatures appear on the next page]
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     IN WITNESS WHEREOF, the parties hereto have executed this Amendment on the date and year firstabove written.         REMEDYTEMP, INC.                 By:          Name:          Its:                             Robert Emmett McDonough, Sr.  
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